Brand Positioning Strategy -McDonald’s, An Example

The first step for any new business is to ponder how to occupy space inside a target consumer’s mind, which is called ‘Brand Positioning’. It can also be termed as a consumer’s perception of a brand with respect to competing brands.

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Why does your brand need to enter his or her mind? If you ask a consumer to name a cola drink, ‘Coke’ name will spurt out. If you ask the consumer to name a toothpaste that comes immediately to the mind, most probably, Colgate name would pop out. If you ask about a photocopying brand, ‘Xerox’ name will spurt out. If you ask them the name of an energy drink, the red bull name will rush out. If you ask an Indian to name a noodles brand, most of the time ‘Maggi’ would jet out.

Why do these brand names stay at the top of the consumer’s mind so that it can be recalled immediately?

Coke is the first cooldrink to enter the consumer’s mind under Cola category. Seven-up is the first cooldrink under the Un-cola category. Redbull is the first cooldrink under ‘energy drink’ category. Xerox is the first brand under the ‘photocopying’ category.

Being №1 in a consumer’s mind will help a business to grab a major market share and have a sustainable business. The above brands show that the easiest way to get into a person’s mind is to be first.

So, how can a business enter a consumer’s mind by being first? The business has to create a new category that doesn’t exist in a consumer’s mind.

What is the need for categories? Our human brains are wired for categorisation to help us remember things. Without that, we would be quickly overwhelmed by the vast amount of information.

Nicole Branan writes in ‘Scientific American’, Picture a living thing — say, a dog. Now imagine a hammer. Thinking of a dog activates an area that deals with animate objects, whereas a hammer excites one that processes inanimate things even if you had never seen a dog or a hammer before.

Whenever we come across new things, subconsciously, we would file them under different known categories in our memories. If a consumer sees your product, he would automatically file the product under a known existing category. The problem with this filing under the existing category is — your product would be filed several layers below the other products and the consumer would fail to recollect your brand name at the top of the mind. Example -Coke is the first product under the cola category. Pepsi is the second brand. Do you remember the third brand? Fourth brand? If you ask people, they may not recollect beyond two names. How many energy drinks can you name other than Redbull?

How To Create A New Category? -The new category should be based on the value offerings a brand can offer to the customer. For that, the company has to observe customers’ needs, desires, pains and choose value propositions that will solve customer’s pains and also match the business’ core strengths and core values. This is also called ‘Brand Differentiation’.

Michael Porter writes, “A company can outperform rivals only if it can establish a difference that it can preserve. It must offer greater value to customers or create comparable value at a lower cost, or do both”

We build a sustainable business by widening this differentiation and evolving the value propositions based on the changing needs and attitudes of customers.

BRAND POSITIONING OF McDonald's

Observing Changing User Attitudes and The Context -In the 1930s, the ‘fast food’ concept was spreading among the masses. A lot of drive-in restaurants sprouted in many places. The fast-food menu was revolving around Barbecue Beef, Pork and Chicken. Into this scenario, in the year 1937, two brothers Maurice and Richard McDonald started their own fast-food restaurant at San Bernardino. The business soon attracted a lot of teenagers and continued to grow rapidly.

The Red Queen Effect -After world war II, the brothers felt that they were not making enough profits. They realised that one of the reasons was that they were selling too many items like every other competitor. Their resources were stretched to the limits, affecting the quality and the timely service.

“It takes all the running you can do, to keep in the same place.” -Through The Looking-Glass.

The Need For Positioning -McDonald brothers realised that their offerings were becoming like ‘me-too’ products. A product for everybody is like a product for nobody. Most ‘me-too’ products would fail to achieve reasonable sales after some time because their positioning is based on ‘better than the competitor’ rather than the ‘Value to the customer’. McDonald brothers did not want to fall into that kind of trap. They wanted to focus on providing something different, something valuable to the customer.

‘Hamburger’ was a common favourite food in America at that time. What value differentiation, McDonald brothers could provide?

NEW VALUE PROPOSITIONS

McDonald brothers observed the type of customers who visit their places at various times and tried to understand their important needs and the reason why they visit their places. Based on their research, they derived the following value propositions.

Fast and Efficient -Their research showed that most of the customers expected a ‘Quicker service’ which none of the competitors offered. McDonald brothers felt that this could be a strong differentiation.

Quicker Service -Would it be possible to reduce the time taken to deliver? Mcdonald brothers realised that cutting down the number of items on the menu would free the resources to help in a quicker delivery.

“It is better to do one product well than two products in a mediocre way,” -Reed Hastings.

Their research showed that Hamburgers and French fries brought almost 80% of the revenue. They felt that it would be a wiser decision to focus on only those two items. They shortened the menu.

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Lean Process -To further reduce the time to deliver, the brothers copied lean-manufacturing process used in automobile companies and the war machines assembly units during the world war II.

Earlier, McDonald’s used to prepare sandwiches in batches and keep them warm in ovens. This would reduce the serving time, but the wastage increased on the days when the demand was less. To deal with this, they then started to keep patties, salad and other ingredients ready, and combine them into finished sandwiches, only when an order is placed. The time taken during this process was only a few minutes, enabling a quick response to any change in demand. Inventory was also brought down. Thus the risk of wastage was eliminated.

They also began to develop assembly line machines to prepare hamburgers, french fries and beverages. The machines drastically reduced the time further. The tests showed that consumers were happy and pleasantly surprised when they received orders quickly.

Price -The assembly line machines brought down not only the inventory cost but also the labour cost too. As the machines delivered quickly, the volume of sales increased and further helped McDonald’s to sell quality hamburger cheaper than other competitors.

Quality in Product -As the machines handled most of the tasks, McDonald brothers were free to work on the quality of the product at every step. That further enhanced the quality of Hamburgers, fries and beverages. They saw that competitors were mixing small quantities of other ingredients in the beef patties to save cost which was affecting the quality of their product. The brothers took responsibility to ensure that McDonald’s would sell only one hundred per cent beef patties. No compromise on quality. Similarly, they took extra efforts to ensure that each patty would contain exactly nineteen percentage of fat content. Their french fries were also better than any other competitor in the town.

Sell Experience -It is impossible to become a leading sustainable brand if the company’s quality is associated with only the products. McDonald brothers not only focused on the quality of products, services and processes but also on the quality of infrastructure for enabling awesome experiences. They designed the store to enhance the quality of everything the customers see, touch, hear, smell and taste. The huge arches, the octagonal structure, glass partitions between kitchen & delivery areas and so on. They gave particular attention to ‘Aroma’ as it plays a vital role in the store experience. The premises were kept clean. The employees were trained to interact friendly with their customers. McDonald’s was also about building experience environments.

Cleanliness -The chances of a customer turning loyal to a brand is high if he leaves the premises with a positive service experience about the brand. One of the factors that have the potential to hinder the positive service experience is Customer’s hidden anxieties. It was important to address the elements and design every customer touch point in a way that would not trigger those anxieties in the customer.

McDonald brothers observed that one of the common worries of most of their customers was food hygiene and safety. They felt that it was important that none of the customer touch points should trigger this emotion -They took efforts to keep high standards of hygiene & cleanliness, in and around the restaurant. They made sure that employee’s attire also would reflect hygiene and cleanliness. They motivated employees to adhere to the hygienic standards all the time. The customers were allowed to view the kitchen and the supporting areas where the food is prepared & processed.

The Positioning -So, initially, McDonald’s positioning strategy was just ‘Quicker Service of Hamburgers’ but their efforts in reducing the time led to the evolution of the positioning strategy. People began to view McDonald’s as ‘Low-Priced, Quality Hamburger with Quicker Delivery’. Quality Experience and Cleanliness became a part of the Quality Hamburger.

As per Porter’s definition of Strategy, McDonald was offering both value and low price to customers.

Note:

The above content is part of the following book.

How Brands Built Its Sustainable Competitive Advantage? by Shah Mohammed M On Amazon.com.

AVAILABLE ON AMAZON -

21 Essential BUSINESS LESSONS From The World’s BEST BRANDS: -A Guide for Every ASPIRING ENTREPRENEUR by Shah Mohammed M.

References: Positioning: The Battle Of Mind by Al Ries-Jack Trout, Grinding It Out by Ray Kroc.

21 Essential BUSINESS LESSONS From The World’s BEST BRANDS: -A Guide for Every ASPIRING ENTREPRENEUR by Shah Mohammed M.

Written by

Secular Humanist, Business Growth Consultant, Design Thinker, India. Reach me at mmshah8@gmail.com. or https://www.shahmohammed.com

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