ANA 2009

Ethnic Insights Form Foundations of McDonald's Marketing

CMO Golden: 'Start With the Ones Who Are Setting the Pace'

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PHOENIX (AdAge.com) -- The marketing at McDonald's is informed first and foremost by ethnic insights that shape the chain's marketing to African Americans, Asians and Hispanics. Then McDonald's lays those insights over work for the general market.

Neil Golden addresses the ANA Annual Conference in Phoenix.
Neil Golden addresses the ANA Annual Conference in Phoenix. Credit: Clarion Pictures
"Ethnic segments are leading lifestyle trends," Neil Golden, chief marketer officer of McDonald's USA, told the ANA assembly. He added that his team decided to "start with the ones who are setting the pace."

They're also where a lot of the money is. Mr. Golden said 40% of McDonald's current U.S. business comes from the Hispanic, Asian and African-American markets, and 50% of consumers under the age of 13 are from those segments. "And they're among our most loyal users," Mr. Golden said.

'No malls in the ghetto'
McDonald's has attempted to understand ethnic segments for decades, hiring Burrell Communications in the early 1970s. But they haven't always gotten it right. Mr. Golden recalled a meeting with Chicago franchisees 15 years ago in which he announced that the African-American population was going to love a new product and marketing program. A franchisee asked him how he knew. McDonald's had done a study. The franchisee asked where it was held. Mr. Golden told him it had been conducted in a mall. "We don't have malls in the ghetto," the franchisee told him.

Since then, Mr. Golden said McDonald's has instituted an "approach that ensures this will never be an afterthought." Now during in the product-development cycle, McDonald's looks for a disproportionate level of ethnic insights, he said. Out of nine focus groups, whenever possible, two are Hispanic, two are Asian, two are African American and the remaining three represent the rest of the market.

When McDonald's takes its ads to market, the chain makes sure that spending behind certain spots represents the country's ethnic makeup, such as 15% behind Hispanic marketing, 12% behind African America, 5% behind Asian.

As for the ad-creative-development process, Mr. Golden said each ethnic agency is given a blank canvas -- within the "I'm Lovin' It" framework -- to create campaigns that will resonate in the respective market. The chain's McCafe launch, for instance, included a Hispanic push aimed at the increasingly empowered Latina. The Asian McCafe work focused on the quality of ingredients. And while McCafe is performing well in the general market, it's doing even better in many ethnically driven locations.

The chain has also looked for more meaningful touchpoints, including a scholarship program for Hispanic students in Texas and tie-ins with Lunar New Year celebrations to target the Asian community.

And it's paying off. McDonald's ethnic marketing continues to receive accolades from trusted names in the communities they're targeting, such as Latina Style and Black Enterprise magazine.

He also pointed out McDonald's "walks the talk" in its C-suite as well. His boss, McDonald's USA President Don Thompson, is African American. Mr. Thompson's boss, Chief Operating Officer Ralph Alvarez, is Hispanic. CEO Jim Skinner has said his goal is not to have to talk about it anymore.

Hard to argue with results
It's hard to argue with McDonald's business results. Since 2002, he said the U.S. business alone has grown by $10 billion, or $750,000 per restaurant. That translates into an additional 1.8 billion customer visits each year, or about 75,000 visits per restaurant. Restaurant cash flow has grown 50% over the same period.

Mr. Golden admitted that his company in 2000 "had lost its way." The company was focusing on limited-time promotions and partnerships with other properties that subordinated the McDonald's brand. At the time, he said, the marketers wanted to get back to the glory of "Nothin' but net" and "You deserve a break today."

"We'd lost our confidence," Mr. Golden said. "Reinventing and modernizing the brand had to be a top priority."

He credited the "Plan to Win," an overall business strategy unveiled in 2002, and the "I'm Lovin' It" theme, introduced in 2003. He said the five-note jingle now enjoys 100% awareness, boosting not only sales results, but also morale.

When asked about the growing momentum toward fast-food regulation, Mr. Golden said, "Our commitment is to evolve what we offer our consumers as consumers change their tastes and needs," pointing to the addition of low-fat milk and apple dippers to kids meals, as well as grilled chicken options and better salads. Now, said the former tennis pro, consumers can eat at McDonald's "six, seven, 10 times a week. I sure do."

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