Blog :

The Rise and Fall of an Iconic Brand: Case Study

The Rise and Fall of an Iconic Brand: Case Study

The Fall

The customers’ perception of businesses has changed, and so has everything around us. Any business that wants to remain relevant and a float, will have to follow the leader – consumers; in making the necessary changes.

The McDonald’s Corporation is the world’s largest chain of hamburger fast food restaurants, serving around 68 million customers daily in 119 countries. But come 2003, it was about to make history, but for all the wrong reasons.

As reported by the telegraph newspaper, McDonald’s reported its first ever quarterly loss in Britain, in January 2003. With more than 1,200 restaurants in Britain alone, it made a pre-tax deficit of £198.6 million and an operating loss of £125.6 million in the last three months of 2002. It made a net loss of £212 million over the period but still managed a turnover of £2.4 billion.

The same historical reports were echoed in America, recording its first quarterly loss since going public in 1965. Comparable store sales in America were stagnant for the past decade, and had been falling for 12 months. Mr. Cantalupo, a 28-year McDonald’s veteran was pulled from retirement in January to replace Jack Greenberg, and insisted he would bring changes in just a period of 12-18 months.

 2014-Loss-Stats

 Unhappy Meal

Despite the optimism of a comeback shown by McDonald’s chairman, to others, this losses indicated a change in attitude towards McDonald’s. Research revealed the brand was seen as childish; service was slipping – it was slow and unsatisfactory; the restaurants looked outdated.

McDonald’s, once a good example for good service, was ranked the worst company for customer satisfaction in America for nearly a decade, below banks and health insurers. Their share price plummeted from more than $48 in 1999, to hover around a ten-year low of $12. The fast-food market had also become increasingly competitive as rivals such as Burger King, Wendy’s and Taco Bell fought to maintain their market share.

The consumers did not see what value McDonald’s as a brand added to their lives. They could not rely on them for cheaper, faster or healthier food and services. The happy meal had turned into the unhappy meal; hence McDonald’s with all its open branches and franchises all over the world were stumbling down. Drastic measures had to be taken. This was no 5 year plan; this was a rebranding campaign that was well over due; if it was to have any chance in remaining relevant to consumers and stay afloat.

 Unhappy-Meal

 Meaningful Branding

Mr. Cantalupo worked alongside Larry Light; the global chief marketing officer. Mr. Light acknowledged their need for immediate change and said, “We lost relevance, the world changed, but we didn’t.”

Mr. Light emerged with a new branding strategy and in the campaign, he came up with the slogan, “I’m loving it.” McDonald’s introduced a new healthier menu with items such as: salads; yoghurts; sliced fruit and grilled chicken; after intense criticism that its traditional products were too high in fats, salt and sugar a diet linked to obesity. A new Adult Happy Meal was also introduced in the US that included a pedometer to encourage people to walk more.

This was in efforts to show its consumers why they should choose them over their competitors. Finally McDonald’s was involved in meaningful branding; and this proved to be a change in the right direction because it in turn saw recovery in revenues as it posted its highest sales gain in 30 years. Consumers could now see that McDonald’s cared about their health and cared about providing better services at better prices – with the introduction of the dollar menu.

 Untitled-1

 Lightning strikes Twice

This success from great leadership would be short-lived though, as Mr. Cantalupo dies on April 19, 2004 from a heart attack; he was attending a restaurant franchise of owners meeting in Orlando, Florida, when he fell ill.

This saw McDonald’s shares fall by 80 cents or 2.9% to $26.66 after Monday trading started on Wall Street following the announcement of his death.

“The worries are that perhaps there may not be a strong number two, since he was known as the one with the strong vision,” said Art Hogan, chief market analyst for investment adviser Jefferies & Co.

Despite McDonald’s going through this difficult time; the past 12 months were considered one of the fastest marketing and brand turnarounds in the business history.

Fast forward to the present, October 21st 2014; after a decade of doing well and changing hands in leadership, McDonald’s are once again in trouble. It turns in its biggest drop in quarterly profits, and CEO Don Thompson has acknowledged the calamity and the dire need for much needed change.

 Lightening

 Challenges being Faced

One could argue that McDonald’s has been facing significant short term and unrelated factors in posting a 30% drop in quarterly profits and 5% decline in revenue, which is worse than expected. It also faces international challenges: In China a meat supplier scandals continues; in Europe the economy is declining again; and in Russia authorities interfered with their operations in the last quarter.

Obviously all these are factors that are affecting McDonald’s ability to make any revenue and profit. But its biggest problem is that America and the global consumers alike no longer perceive clear meaningful reasons as to why they should choose McDonald’s over any other place to grab a bite. Consumers do not believe the food provides a satisfactory combination of great customer service; fast; convenient and healthy enough menu choices anymore.

“If we do not learn from the mistakes of history, we are doomed to repeat them. George Santayana.” This is something that is too familiar with McDonald’s.

McDonald’s also has been losing its influence and brand standing with its franchisees, who are forced to rely on Monopoly and McRib to see them through and with its traditional customer bases. Teenagers and young adults used to fill up McDonald’s because of the affordable prices, and it had a certain cool factor as a hangout; those days are long gone. And rivals such as Chick-fil-A have seized McDonald’s once-indisputable place at the top of preferred fast food restaurant for families.

 challenges

 Back to the Drawing Board

It’s time for McDonald’s to go back to their drawing board. The same purposeful and meaningful branding it carried out a decade ago is the only way forward. It needs to reassure it’s consumers it can be a consistent brand. Providing what they promise in their branding campaigns and following through. Consumers need a reason to go to McDonald’s as opposed to any other restaurant.

This is a challenge it will tackle head on if they are to remain relevant and functional in consumers’ lives. Consumers and competitors alike will be watching to see how it approaches and solves the underlying problems and it will be interesting to see what path it chooses. This will mean the difference between being a successful brand or a failed brand.

Will McDonald’s choose to make a stance to be a meaningful brand, with a clear purpose that makes an honest attempt to better the lives of its consumers and bring on the change that people want to see, or will it continue selling features and benefits of the burgers and remain irrelevant and die off? The consumers have spoken; the ball is in their court

Untitled-3

 

Why have a Brand with Purpose

Why have a Brand with Purpose

Why have a Brand With Purpose?

Consumers and marketers have conflicting ideas about brand purpose: They disagree on where brands should concentrate their efforts, and on which people are most receptive. As reported on a new research from the World Federation of Advertisers.

Only 40% of marketers thought that listening to and acting on customer needs was important to brand purpose, but in a parallel study by PR Agency Edelman, consumers chose “Listens to customer needs and feedback” as the number one attribute that builds brand trust.

The traditional function of brand positioning has come to a standstill. In other words, it is more rewarding to find your brand purpose and promote it, rather that promoting a competitive edge. One of the Key speakers at the IMC Conference, Jonty Fisher explains why.

“Having a clear and well established purpose for your business will help create much more relevance with consumers by focusing on what is a brand’s real motivation: What is the WHY underneath the HOW and WHAT that you do, hence seamlessly connect with the consumers on a belief and purpose level; as opposed to something that is purely based on a functional benefit that might not necessarily move them emotively. As we know consumer make decisions based on emotive benefits and post rationalize decisions based on the functional benefits that the brand holds. In summary, your functional benefits are your permission to play but your emotive or purpose is your way to win in modern market.”

 


This is the way forward from the standstill in modern market that will enable marketers to reach their intended consumers. This is what Stance Branding Agency thrives to provide all its clients on a daily basis.

 

What is Purpose?

Purpose is the deepest expression of a brand, drawing on its essence to determine its path in the world. It captures the relationship between corporation and community, touching on the financial, social, and environmental arenas. Today, people think of companies as corporate citizens. They expect companies to put their skills and resources to work for the common good, and they’re ready to reward those that do.

In China, 80% of consumers say they are willing to pay a premium for a product that supports good causes, compared with just 28% in the U.K. and 39% in the U.S. In India, it’s 71%, while 55% of Brazilians and Malaysians are prepared to pay more.

five-shocking-credit-card-debt-statistics

 

 

What is Brand Purpose?

Brand purpose is a natural outgrowth of the values embedded in your corporate culture. Call it corporate citizenship or corporate social responsibility; companies that have integrated this approach into their business strategy are seeing the profound benefits of taking an active role in changing the world. Social good and business good are deeply entwined in today’s corporate model.

The WFA surveyed 828 brand marketers from 33 countries, representing more than 400 companies and together accounting for $170 billion in global marketing spend, via email. The Edelman consumer study, which surveyed 8,000 consumers in 16 markets, makes it clear that brand purpose in 2014 is more about customer relationship management than corporate social responsibility.

Mr Loerke added, “It becomes clear that purpose isn’t necessarily about saving the planet. It doesn’t have to be worthy per se; it can be about taking small and meaningful actions.”

Marketers may be convinced that having purpose is crucial: 88% agreed that it is increasingly important to building brands. That is why huge companies are changing their marketing strategies with marketing campaigns to ensure they have a meaningful brand that appeals to the public in an deeper, emotional level. Showing that they are part of consumers’ lives and not just pushing for their products and services blindly, because the consumers are the market kings thus dictating the markets share.

Meaningful-Brands

What drives your Brand?

Purpose driven branding, while not new, has taken on new significance in this era of anxious consumers; not to mention anxious employees. A company that looks at its brand and asks not simply what promise does it make, but what purpose does it serve, to its customers and its shareholders, and brings this purpose to life through every customer experience will be the company most likely to beat its competition.

The consumers have spoken, and if any marketer wants not only to remain in the modern market but also remain relevant and profitable; they have to embrace this ideology. That’s why here at STANCE we help you answer the question “What value do I provide?” in a positive way, hence at the end of the day both your brand and your audience benefit.

“In this ever-changing society, the most powerful and enduring brands are built from the heart. They are real and sustainable. Their foundations are stronger because they are built with the strength of the human spirit, not an ad campaign. The companies that are lasting are those that are authentic.” ― Howard Schultz

Howard_Schultz_Banner

Read More

Branding is all about Consistency

Branding is all about Consistency

Maintaining brand consistency is extremely important for any business, as it’s the key to successful branding. To avoid confusing your consumers you must deliver a consistent message across all advertising channels. You must stay relevant and bring fresh, new ideas to your campaigns while ensuring that everything you do remains consistent with your brand message if you are to achieve successful branding over time.

The first way to maintain brand consistency is to keep your visuals consistent. Whether it’s on newsletters or on billboards, the images and colors you use across your campaigns should correspond with one another. If your company has a friendly, youthful look in your ads, don’t give your emails a stuffy, formal aesthetic and vice-versa. Paying attention to little details like these will greatly improve your brand consistency over the long run.

 

The second thing is establishing your voice. Your voice is the personality that you use to communicate with your customers. Your company could be geeky and smart, quaint and old-fashioned or elegant and refined. Whatever the persona, make sure to be consistent across all of your marketing efforts. This will ensure your customers remember you much better.

Brand consistency is an absolute necessity in this day and age where marketing stretches across so many different mediums. Standardizing your brand will help you build relationships and maintain your customers’ trust over time. It’s been proven that customers are more likely to choose the brands they are more familiar with; and the best way to achieve that familiarity is to have clearly identifiable images and messaging in your communications so that there is no confusion about who your company is and what you do.