Earlier this week I came across a blog post about the new McDonald’s advertising campaign, “four bucks is dumb. Now serving espresso”. It made the case that McDonald’s is unlikely to be effective against Starbucks.
Unlikely to be effective against Starbucks? Hmm… . I think someone is missing the point. So, what is the point?
McDonalds is a quick-service restaurant that competes against other quick-service restaurants. It’s in the breakfast business, the lunch business, the dinner business and the late-night business. It’s continuously striving to grow its sales in each of these time slots. That’s its business.
To me it’s obvious—coffee is a great way for McDonald’s to grow its own breakfast business and steal market share from its competitors. It gives customers another reason to visit McDonalds in between meals, on their way in to the office, or during the day and evening. And, McDonald’s McCafé (what a great concept) provides a nicer and more comfortable environment than its competitors for its customers to linger and enjoy a cup of coffee.
Does Starbucks view McDonald’s as a key competitor? I don’t think so. It’s also unlikely that McDonalds views Starbucks as a key competitor. Their customers have different needs and so are seeking different benefits.
McDonald’s competitors are other quick-service restaurants: Wendy’s, Burger King, Subway, Tim Hortons, etc. These companies directly compete against McDonald’s for its quick-service meal business.
So, why would McDonald’s choose to run the headline: “four bucks is dumb. Now serving espresso” when these competitors sell a similar sized regular coffee for $1.49, and don’t serve Espresso? Smart brand positioning is the answer.
Brand positioning refers to the specific, intended meaning for a brand in a consumer’s mind. It is a managerial concept and framework that is used by marketers to ensure that the brand’s vision is shared across the organization. It serves to enhance organizational focus and foster alignment in the tactical execution of the brand’s marketing.
It may also be used tactically to support the communications for a new product or service brand. McDonald’s “four bucks is dumb. Now serving espresso” advertising headline is a case in point.
A brand’s positioning statement usually comprises of a brief paragraph that is written in language that is easily understood by all stakeholders of the organization: management, employees, partners, etc.
One authoritative sourcecomments as follows:
Formats and terminology for presenting a brand’s position vary by company, but certain components are generally viewed as critical:
1. A brief description of the targeted consumers in terms of some identifying characteristics, such as [needs or benefits sought] demographics and psychographics (activities, interests, opinions). These characteristics are typically selected on the base of category and brand usage.
2. A statement of the target’s goal that will be served by consuming the brand, commonly referred to as the frame of reference [F.O.R.]. The F.O.R. may guide the choice of targets, identify situations in which the brand might be used, and define relevant competitors (i.e. Brands that claim to serve the same goal.
3. An assertion regarding why the brand is superior to alternatives in the F.O.R., referred to as the point of difference [P.O.D].
4. Supporting evidence for claims related to the F.O.R. and P.O.D., referred to as reasons to believe. This final element is more important when the claims are relatively abstract (credence claims) versus concrete (verifiable) because concrete claims are their own reason to believe.
What might a glimpse at the McDonald’s brand positioning reveal?
This is where it gets interesting. That’s because McDonald’s has used an approach in its construction of its brand positioning for this advertising campaign that has been leveraged successfully by leading brands in other categories.
It has claimed a F.O.R. that provides it with a competitive advantage versus the coffee offerings of its direct competitors, i.e., Wendy’s, Burger King, Subway, Tim Hortons, etc., and not Starbucks. It uses Starbucks as its F.O.R. for this purpose.
Kraft and Tropicana both took the same approach.
When Kraft launched DiGiorno Brand frozen pizza in the United States in 1995, it craftily compared its offering to delivery pizza— thought of by most consumers as the gold standard for in-home consumption. Remember the line, “It’s not delivery, it’s DiGiorno.” This established support for its claimed P.O.D. of “superior” to other frozen pizza brands.
Tropicana orange juice competes against other frozen concentrate brands. However, it has never positioned itself against these brands. It compares itself to the gold standard for consumers, that being fresh squeezed orange juice.
McDonald’s is employing the same approach to its coffee advertising. It is choosing not to position its coffee directly against that of its quick-service competitors, but rather to the gold standard for many consumers, Starbucks—a pretty neat move. This sets up the premise that for its quick-service customers (different than the target customers for Starbucks), McDonald’s coffee is superior because it’s most like the industry gold standard, only less expensive.
That’s great positioning. It’s a clever reframing of what the consumer gets from the brand: a gold standard cup of coffee. That’s the point!
Kudos to the McDonald’s marketing team!
 Tybout, Alice, M. and Sternthal, Brian, Chapter 1, “Brand Positioning,” Kellogg on Branding: the marketing faculty of the Kellogg School of Management, United States: John Wiley & Sons, Inc., 2005, Print