As I mentioned in my last post”Growth Oriented Companies Pay Attention To Customer Goals”, a few weeks ago I attended a 2 day conference titled Realizing Opportunities for Profitable Growth. The conference was jointly organized by the Marketing Science Institute and the Kellogg Graduate School of Management. I am taking my notes from the conference and posting here on HorizonWatch some of the the key thoughts that resonated with me.
One of the presentations on the agenda talked about how a mature company can go about revitalizing its brand that perhaps had seen better times. The case study that was discussed was McDonald’s.
Back in 2002, McDonald’s was in a tough spot. Overall, it’s customer base was declining, competition was taking business away, brand reputation was taking a hit, company-wide morale was low, and the stock price was at an all-time low. In 2003, the McDonald’s executive team launched a strategy it called “Plan to Win” to drive an ongoing, customer informed revitalization of the business.
Our discussion during the conference centered around strategy behind the revitalization and how it came to life through customer-facing initiatives. There were six takeaways for me.
1. Improving Customer Experience. Center to the strategy to revitalizing any brand is a renewed focus on continuous improvement of product and service quality. Many firms get too focused on cost reduction at the expense of improving the customer experience. Firms that don’t have a program to continuously improve customer experience will eventually see a degradation of product and service quality. McDonalds helped restaurants understand what customers value with regard to customer experience and then developed programs designed to achieve operational excellence. For example, in Singapore, customers value delivery in the congested areas of the city, so bikes and food carts have been used to enhance food delivery service.
2. Product/Service Innovation. Innovation is also a key part of any brand revitalization strategy. In McDonald’s case, a disciplined new product pipeline management system was developed resulting in a dramatic improvement in new product success rate. Examples of successful McDonald’s innovations include white meat McNuggets (white meat is healthier), Milk Jugs (the jug is reseals better than milk cartons), and the Chicken Snack Wrap (has good price points and appeals to lighter eaters).
3. Re-Establishing The Brand Promise. Improved marketing programs focusing on reestablishing the brand’s promise is critical for any brand revitalization. The brand promise is an articulation of the relevant and differentiating experience that the brand will deliver to every customer, every time. Brand revitalization means defining where you want the brand to be and then deciding how to get there. Starting in 2003, marketing programs began stressing McDonald’s brand promise in order to restore the relevance of the brand. Marketing programs based on on McDonald’s brand promise were built around the five P's (people, product, place, price and promotion).
4. Rebuilding Trust. Brands that have been beaten down need to re-establish trust. For McDonald’s, rebuilding trust was also critical. Consumers today are demanding more openness, more social responsibility and more integrity. One way McDonald’s has done this is through its Shrek movie promotion with a new meal for kids that packaged apples, milk, and white chicken McNuggets.
5. Balance Global vs. Local. Finally for global brands, any brand revitalization plan must be able to balance both global and local priorities. There needs to be a clear understanding of consumer similarities and differences across markets. For each market, an understand of consumer buying framework of who, what when, where, why is necessary. From the global perspective, brand managers need to identify business and brand building initiatives that "will travel" worldwide. For McDonald’s examples included offering 24 hour operation, cashless transactions, drive-thru, salad entrees, low price point snack-wraps.
6. Leadership. Brand revitalization needs the courage and perspective of strong leaders. While many factors contributed to McDonald’s turnaround, the number one factor contributing to success of the brand revitalization was executive leadership. McDonald’s execs were insistent and persistent in assuring the consistent implementation of the “Plan to Win”.
I really enjoyed this presentation and the discussion we all had as a result. Thanks to the Marketing Science Institute for putting on such a great conference!!