Brand Winners... And Losers: McDonald's and Government
The Marketing Doctor says:
Loser: The Government
It’s been another challenging week in the market with a lot of evidence that things will get tougher before they get better —and, of course, that the tough will have to get marketing. This week’s brand winner and loser reflect these current conditions.
I’ve spent almost every day this week on Fox’s Strategy Room with the good folks at the round table talking about the marketing of everything from politics to business, so I’m a little out of breath and will keep it short:
McDonald’s just announced same store sales up 8.2% over last year, and its CEO went on to say that he thinks McDonald’s will do just fine in this environment.
Nobody —not even Wal-Mart, that superb marketer— seems to be doing this well. Here’s the link to the story.
McDonald’s is confident, and they have a very good reason to be.
Marketing is what has gotten McDonald’s here. Marketing often gets relegated down the ladder when times get tough. What a mistake that is, because real marketing is the life blood of every business that is successful for the long-term.
In McDonald’s case, real marketing means three things:
1) Having a brand identity that is strong and stands for definite things in the mind of the consumer (i.e., value for money and consistency of experience);
2) Building into that brand identity the flexibility for constant change, adaptation and customer outreach; (In other words, customers are used to McDonald’s trying to win their business and get their attention in good times and bad.)
3) Always being ready to address customers’ changing needs (value meals, low-fat salads, sophisticated coffee drinks at a low price, et cetera).
The big things about McDonald’s cosmetic image (i.e., colors, designs, clown mascot) have never essentially changed. Neither has the basic serving and restaurant setup. But as with every great marketer, they have made thousands of course adjustments that have ensured that they continue to satisfy customers’ needs. Unlike other businesses whose brands look shaky when they start to reach out to customers in tough times, McDonald’s brand stays solid because they are always doing this. Fuggedaboutit. This is marketing and branding at its very best.
So when tough times come along, McDonald’s makes the appropriate marketing adjustments to remind their regular customers and people who have either fallen away or avoided them in the past that they serve up value —voila, sales go up. Even bistros in Paris are closing, and the work-a-day crowds in the City of Lights are lining up at McDonald’s to get their lunches.
McDonald’s does coupons. They do buy-one-get-one-free. They do movie tie-ins and toy giveaways. They advertise. They engage their customers. And they always have. Here endeth the lesson, folks.
Government. Being competitive and messy is actually a virtue of democracy because it shows that real people with differing ideas are running the show. Disagreement about the way forward is better than the scary efficiency of a dictatorship.
That said, the government brand is still the loser this week. It’s one thing to have a democratic scrap; it’s another thing to have the government show a lack of confidence in a meltdown market in which confidence in government is key.
And that is what Treasury Secretary Paulson has basically done. Here’s the link to the CNBC story. He may argue that he is being flexible and responding to market realities, but there is one glaring bailout branding fact that no one can deny:
TARP stands for and was sold as the “Troubled Asset Relief Program.” But now the “Troubled Assets” of the program are not going to be bought at all.
It made perfect sense that the markets went crazy when they heard this. Basically the package sold to congress isn’t the one we’ve got now. Rep. Dennis Kucinich was right to wonder whether this was classic “bait and switch.”
This is downright awful marketing (and it's part of my mission in this life to make leaders aware that marketing should never be taken for granted).
Even if Mr. Paulson is right in his actions and now needs to spend that money on something else, the marketing problem won’t go away, because he and his team created this problem weeks ago.
How? Through bad planning. Here is a team of financial wizards who are supposed to anticipate risks and weigh different outcomes and possibilities, yet they allowed themselves to be backed into a corner by a label: TARP.
This is not just semantics or a small issue. Psychology is driving the train, and it is imperative that the people in charge look like they know what they’re doing. FDR introduced a dizzying array of programs. Agree or disagree with those programs, their names told people what the programs did.
Backing away from TARP publicly telegraphs to the markets that maybe the Treasury really is just helping out the fat cats and can’t be trusted with taxpayer money. Even worse, it suggests that no one knows what the problem is —and if you don’t know what the problem is how can you fix it? Look at what happened this week when Ben Bernanke suggested further interest rate cuts, historically a major accelerant for market increases: markets went down.
And it’s government that is the loser (not just the Treasury) because, frankly, congressional delay and wrangling probably led to the TARP label and much of this uncertainty. To top it all off, the guys and gals on the Hill are looking very confused about what to do with another looming catastrophe: General Motors.
Fasten your seat belts, we’re in for a bumpy ride!
Remember, it’s always easier when you keep marketing and branding in mind.
TODAY'S TANTILLO TAKEAWAY -
Real marketing is a balance between solid planning and nimble adaptation. Don’t paint yourself into a corner by committing to a name, image or business model that can’t adapt. And don’t be so general that you don’t know what you’re about.