When McDonald’s Corp. special-ordered its new TV ad campaign slated to break Oct. 3, it asked ad agency DDB Needham Chicago to hold one traditional ingredient: the price discount.
Instead, the Oak Brook-based fast food giant is concentrating on creating a new image for the brand–one that’s free of any price-discounting messages, at least for now. In a break with recent tradition, the company is leaving it up to franchisees to decide how best to fight price and product battles in their own territories, a marketing source familiar with McDonald’s plans said Tuesday.
That strategy already has brought McRib sandwiches back to the menu in Chicago and in Columbus, Ohio, where they had proved especially popular in the past. Similarly, customers across the country can expect to see local McDonald’s stores adjust their menus and prices to reflect the market.
“New York and Oklahoma have different attributes, different styles and different tastes,” said Lehman Brothers analyst Mitchell Speiser. “There’s definitely more of a focus on unit-level operations. That’s where the battle is being fought.”
When the new ads break next week, casual viewers probably won’t recognize the signs of McDonald’s new decentralized strategy, announced during the summer when it restructured its U.S. operations into five regional zones.
But this, the first campaign since the restructuring, will feature five new 30-second TV spots devoid of the price promotions that have characterized marketing by McDonald’s, and most other fast food restaurants, for the last four years.
McDonald’s instead will count on the ads to rebuild an image that has been all but abandoned since price and value became driving marketing forces in the highly competitive industry.
And some analysts say it’s a strategy McDonald’s desperately needs right now. Same-store sales are stagnant, and the company has been reeling from significant marketing blunders, including most recently the failure of its big 55-cent national sandwich promotion that was scaled back after only six weeks when franchisees complained that it confused customers.
In the meantime, McDonald’s faces its own battles with archnemesis Burger King.
The Miami-based chain raised the stakes in the burger wars earlier this month by launching the Big King, its own version of McDonald’s trademark sandwich, the Big Mac. Burger King says that the sandwich, priced at an introductory 99-cent price, is doing “better than expected” at 3 million per week.
McDonald’s has been testing versions of its own Whopper-killer in selected markets under different names.
But the company maintains there are no plans to roll out a Whopper-like sandwich nationally anytime soon.
Some analysts are weighing the risk McDonald’s is taking by stepping away from a national focus.
“Given the stumbles, it’s important to spend the money on image repair right now,” said Ron Paul, president of restaurant consultant Technomic Inc., based in Chicago. “On a competitive basis, competition locally is price and product. The good news for McDonald’s is that they have the ability to do both. I think they can still outspend their competitors by competing on price and image.”
McDonald’s wouldn’t comment Tuesday on its marketing plans. But sources who have seen them describe the new campaign’s first round of spots as using humor to focus on “situations in everyday life” that lead up to the new, “Did somebody say McDonald’s?” catch phrase.
One 30-second ad takes place in an office building. A worker tells a co-worker that he’s going to McDonald’s for lunch. That starts a chain reaction among other co-workers who end up giving their orders to the guy.
When he finally leaves the building to head for the restaurant, the camera pulls back to show hundreds of employees with their noses up against the windows, watching him go for the order, according to a source who has seen the ad.
“The object is to use the line as a trigger to get customers back into the stores,” said one McDonald’s marketing source. “The company doesn’t want it to be just a tagline.”
It is the first campaign since Needham wrested control of the main McDonald’s domestic ad account from crosstown rival Leo Burnett Co. this summer. The ad agency switch was the latest in a series of major changes McDonald’s instituted to try and re-energize the company’s stores; the measures included the expulsion of some senior executives at the chain.
Significantly, the company’s reorganization of its U.S. operations set up an individual management structure in each of the five regions.
The new regional presidents have set up meetings with franchisees beginning next week to discuss in detail what types of discount promotions or new sandwiches will work in their parts of the country, franchisees said.
But the local regions already have been reacting more quickly to competitors.
For example, McDonald’s launched the Big ‘N Tasty in California to battle a successful new burger, called Big Star, from hamburger chain Carl Jr.’s. In the Southwest, where spicy seasoning is a local favorite, McDonald’s is running a short-term promotion on a sandwich called the Cajun McChicken.
Reflecting the company’s new strategy, some sandwiches will become permanent menu items just in those markets, according to a McDonald’s spokesman.
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