READ THE CASE AND WATCH THE VIDEO TO RESPOND TO THE QUESTIONS:
Video
https://online.fiu.edu/videos/?vpvid=f49b9004451e4d89ba5236dec9e16fda
ANSWER THESE THREE QUESTIONS:
Question 1: According to the second video, segmenting markets is central to McDonald’s marketing strategy and advertising efforts. Based on this video case, what are the advantages of McDonald’s marketing approach? What do you think about this approach?
Question 2: If you were a segment manager at McDonald’s, how would you target coffee products in Latin America? Describe which population segment you would focus on and why.
Question 3: Describe the strategy that McDonald’s used to obtain/assure their supply of (quality specifications and quantity) raw materials in India to produce their menu offerings.
ANSWER THESE TWO RESPONSES:
Response 1: Due to the lack of agricultural, communications, and transportation technologies India holds versus that of the US, McDonald’s was able to fix this problem by working closely with local producers to get their supplies. Because of this, McDonald’s was able to build relationships with local farmers and suppliers. Through working hand and hand with their suppliers, McDonald’s was able to introduce their standards and technology to the locals. McDonald’s works to increase its suppliers’ quality of work by improving their irrigation technology. This was they were even able to improve their national support and avoid problems from importing products.
Response 2: McDonald’s marketing approach is very different from other companies. As was stated in the video, the company usually has a manager for each product the company sells, but McDonald’s has segment managers for target marketing. Although all companies use target marketing, McDonald’s uses it at another level. They are able to market to every segment, not just one or two. They use various ads to market the same product but advertise them in a different way for each consumer. This comes to an advantage to McDonald’s because they can profit well by attracting all consumers not just one. I think this approach is a smart one that McDonald’s took to try and reach every consumer in the market.
CASE 27 McDonald’s and Obesity
that use celebrities to market high-calorie foods. According to
USA Today , one study found that the average American child sees
10,000 food ads a year, mostly for high-fat or sugary foods and
drinks.
Traditionally, in developing countries, the poorest people
have been the thinnest, a consequence of hard physical labor
and the consumption of small amounts of traditional foods.
But when these people in poor countries migrate to cities, obe-
sity rates rise fastest among those in the lowest socioeconomic
group.
Even as food companies’ battle U.S. lawsuits and legislators
who blame them for inducing childhood obesity, they’re being at-
tacked on another front—Europe—which is threatening, among
other things, to ban advertising icons such Tony the Tiger and
Ronald McDonald. “I would like to see the industry not advertis-
ing directly to children,” said one European health commissioner.
“If this doesn’t produce satisfactory results, we will proceed to
legislation.” The European Health Commission has called for the
food industry to set its own regulations to curb so-called junk-food
advertising aimed at the European Union’s 450 million citizens—
or face bans similar to the tobacco industry.
The ominous comparison to cigarettes is increasingly being
made in the United States as well. Commenting on a McDonald’s
plan to send Ronald McDonald to schools to preach about nutri-
tion, an aide to a U.S. senator said, “No matter what Ronald is
doing, they are still using this cartoon character to sell fatty ham-
burgers to kids. Once upon a time, tobacco companies had Joe
Camel and they didn’t get it either.”
Also under fi re is TV advertising of kids’ foods, as calls for
curbs or bans rise around the world. “If the rise in [the] child obe-
sity trend continues, within fi ve years we’ll be in the same situation
as America is today,” said a senior child nutritionist at the Univer-
sity of Copenhagen who sits on the board of Denmark’s National
Board of Nutritional Science. “Banning TV ads that are targeting
kids is an important strategy to adopt.” But there is an argument
that those measures won’t help. “In Sweden, Norway and Quebec,
where food ads are banned from kids’ TV, there’s no evidence that
obesity rates have fallen.”
A new law in France will force food marketers to choose be-
tween adding a health message to commercials or paying a 1.5
percent tax on their ad budgets to fund healthy-eating messages.
Other measures under consideration in Europe include banning
celebrities and cartoon characters from food ads aimed at children
and preventing food marketers from using cell phone jingles to
reach kids.
Ireland bans celebrities from food and beverage ads aimed at
children and requires confectionery and soft-drink spots broad-
cast in programs where half the audience is younger than 18 years
of age to carry a visual or voice-over warning that snacking on
sugary foods and drinks can damage teeth. Ireland is a small mar-
ket, but there are fears that these measures could spread to the
United Kingdom and then to the rest of Europe, especially since
many advertisers run the same campaigns in the United Kingdom
and Ireland.
THE PROBLEM
Governments and infl uential health advocates around the world,
spooked that their nations’ kids will become as fat as American
kids, are cracking down on the marketers they blame for the explo-
sion in childhood obesity. Across the globe, efforts are under way
to slow the march of obesity.
In the United States, roughly 30 percent of American children
are overweight or obese. According to the U.S. Centers for Dis-
ease Control and Prevention (CDC), an estimated 64.5 percent of
Americans tip the scales as overweight or obese, the highest per-
centage of fat people of any country in the world. However, adults
and kids in other countries are catching up.
THE WORLD
The World Heart Federation reports that globally there are now
more than 1 billion overweight adults and that at least 400 million
of those are obese. An estimated 155 million children are over-
weight worldwide including 30–45 million who are obese. 1
In many countries, the worst increases in obesity have oc-
curred in young people. About half a million children in Europe
are suffering classic middle-aged health problems because they
are too fat. Obesity among European children has been on the
rise over the last 25 years. The number of overweight children
in Europe did not change much from 1974 to 1984; then the rate
started to creep up during the next 10 years, and it exploded
after 1995.
In Britain, one in fi ve children is overweight or obese; in Spain
30 percent; and in Italy, 36 percent. While less than 1 percent of
the children in Africa suffer from malnutrition, 3 percent are over-
weight or obese.
Perhaps the most distressing data come from Asia, where the
measure of being overweight used in Western countries may un-
derestimate the seriousness of weight-related health problems
faced by Asians. In Japan, for example, obesity is defi ned as a
body mass index (BMI) level of 25 or more, not 30 as it is in West-
ern countries. But Japanese health offi cials report that a BMI of 25
or more is already causing high rates of diabetes. About 290 mil-
lion children in China are thought to be overweight, and research-
ers expect that number to double in the next 10 years. The World
Health Organization has warned of an escalating global epidemic
of overweight and obesity.
GLOBAL REACTIONS TO OBESITY
One of the perplexing questions is why there has been a relatively
sudden increase of obesity worldwide. Some opine that fast-food
portion sizes are partly to blame; the average size order of French
fries has nearly tripled since 1955. Some people say advertis-
ing is to blame, particularly ads aimed at children, such as those
1“Obesity,” World Heart Federation, May 2007, http://www.world-heart-federation.org.
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Cases 2 The Cultural Environment of Global Marketing
Size Me , 2 McDonald’s Corp. broke a U.K. campaign called
“Changes” with poster ads that omit the Golden Arches for
the fi rst time, replacing them with a question mark in the same
typeface and the tagline “McDonald’s. But not as you know
it.” Promoting ongoing menu changes, the posters feature items
such as a salad, a pile of free-range eggshells, pieces of fruit,
and cups of cappuccino. The effort preceded a direct-mail cam-
paign to 17 million households touting healthier menu items
and smaller portion sizes.
McDonald’s aim was to cause people to think differently
about McDonald’s and to make the public aware of new products.
“There’s no intention to abandon the Arches” but only to focus
attention on the “healthy” additions to the menu. Despite the new
campaign, research showed the chain hadn’t received the hoped-
for awareness for some of the newer items on its menu, including
the all-white-meat Chicken Selects and the fruit bags. More wor-
risome, a research study revealed that frequent users didn’t like to
admit to friends that they ate at McDonald’s. “We don’t want to
have closet loyalists.”
One researcher urged more time for McDonald’s “Changes”
campaign to get traction. “The market position and market stature
of McDonald’s in the U.K. is not nearly as strong as it is in the U.S.
and accordingly, you have to stick with the program longer,” he
said. But he warned that the “Changes” campaign could backfi re.
“Trying to suppress the logo is not likely to change the hearts and
minds of many fast-food voters in Europe.”
In anticipation of the release of the documentary Super Size
Me in the United Kingdom, McDonald’s in London went on
the defensive with full-page newspaper ads discussing the fi lm.
The ads, headlined “If you haven’t seen the fi lm ‘Super Size
Me,’ here’s what you’re missing,” have appeared in the fi lm-
review sections of six newspapers to coincide with fi lmmaker
Morgan Spurlock’s appearance at the annual Edinburgh fi lm
festival. The copy describes it as “slick and well-made,” and
says McDonald’s actually agrees with the “core argument” of
the fi lm—“If you eat too much and do too little, it’s bad for
you.” However, it continues: “What we don’t agree with is the
idea that eating at McDonald’s is bad for you.” The ad high-
lights some of McDonald’s healthier menu items such as grilled
chicken salad and fruit bags. A spokeswoman for McDonald’s
said it ran the ads to ensure there was a “balanced debate” about
the fi lm. Super Size Me distributor Tartan Films has retaliated
by running identical-looking ads in newspapers promoting
the fi lm.
As a direct response to government calls for food marketers to
promote a more active lifestyle, McDonald’s U.K. launched an ad
campaign aimed at kids featuring Ronald McDonald and animated
fruit and vegetable characters called Yums. In two-minute singing-
and-dancing animated spots, the Yums urge, “It’s fun when you eat
right and stay active.”
Unlike France and Ireland, the United Kingdom is trying a
more carrot-and-stick approach, encouraging self-regulation with
legislation as a last but threatened resort. The U.K. government
published health recommendations giving the food and beverage
industries until early 2007 to act more responsibly or face formal
legislation. The document followed a high-profi le U.K. govern-
ment inquiry into child obesity. Marketing and agency executives
called to give evidence were grilled publicly over the use of celeb-
rities in ads, inciting kids’ “pester power” and high salt and sugar
content in foods.
The paper’s proposals include clamping down on using cartoon
characters to appeal to kids in food and beverage ads, potentially
dooming brand icons such as Kellogg’s Tony the Tiger. There have
also been calls for a ban, like Ireland’s, on celebrity endorsement in
“junk-food” advertising. In a country where the biggest grocery-
store brand, PepsiCo’s Walker’s Crisps, relies on celebrities in its
ad campaigns, that’s a big deal.
The Nordic countries are the most militant about enacting laws
to ban or restrict marketing of foods that they consider unhealthy
to children and fi ghting to extend those restrictions to the rest of
Europe. The toughest laws against advertising to children have
long been in Scandinavia, where the health risks of obesity and
diabetes from high sugar consumption are sometimes compared
to tobacco. The legislatures in Sweden, Finland, and Denmark are
all considering even tighter controls on marketing sugary foods.
Denmark’s National Consumer Council has petitioned the gov-
ernment to ban marketing “unhealthy food products” to anyone
under 16 years of age, and Finland’s legislature is hearing from
health groups that want a total ban on TV ads for sugar-laden food.
Commenting on such proposals, the CEO of the Finnish Food and
Drink Industries Federation said, “Implementing stricter controls
on advertising food and drinks will not be a quick-fi x answer to all
these problems.”
“The European Union is on it, Washington is on it, the ball
is rolling now and the food companies have to do something,”
said one top advertising agency executive. But he added, “I hope
food companies won’t be bullied into doing things that play to
the politicians,” noting there are other contributing factors for
obesity, such as low income. He said food marketers could truly
contribute to a solution by putting money into programs like the
USDA’s Nutrition Program for Women, Infants and Children,
a subsidized food and education program that also happens to
be very good at driving sales for the products approved for the
list. The key is to translate the hype to real solutions like physi-
cal education in schools and parents—the most important role
models according to substantiated research—reclaiming respon-
sibility. “If a food has a right to exist, a marketer has the right to
advertise it.”
Marketers are struggling against a crackdown on food adver-
tising amid growing concern over obesity throughout the world.
Marketers are trying to avert a clampdown with greater self-
regulation. But despite a slew of individual company efforts to
shift new- product and marketing focus to healthier offerings, the
industry has, until now, largely shied away from defending itself
more broadly.
MCDONALD’S RESPONSE
For the last few years, McDonald’s has reacted to the obesity
issues in several ways in the United Kingdom and other coun-
tries. Concerned about consumer reaction to the fi lm Super
2Super Size Me is a documentary about the fast-food industry and the addictiveness
of fast food, its allure to children, and so forth. Scenes in the fi lm feature Morgan
Spurlock (the director, producer, and star of the documentary), whose fast-food
feat consists of eating some 5,000 calories a day, twice what his doctor says he
needs to maintain his starting weight of 185 pounds. He also avoids exercise
because, he says, that’s what most Americans do. Spurlock gains weight—
nearly 25 pounds over 30 days. His cholesterol goes up, and so does his blood
pressure. His doctor describes his liver function test results as “obscene.” Spurlock
complains of sluggishness, depression, shortness of breath, impotence, chest
pressure, and headaches.
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Part 6 Supplementary Material
320,000 more people a day than the year before visited McDonald’s
in Britain. Around 90 percent of them are buying traditional prod-
ucts such as burgers, fries, and ice cream rather than the healthier
sandwiches and salads the chain stocks. The estimates mark a
big turnaround for McDonald’s, which bounced back after nega-
tive publicity about fat content in its food. McDonald’s changed
menu—with such items as porridge, smoothies, and chicken
wraps—is one reason for the growing business.
The government has spent large sums on promoting healthier
diets and the message to eat fi ve portions of fruit and vegetables a
day as obesity levels continue to rise. There’s been enough public-
ity about the relentless rise and impact of obesity, but from the
fi gures, it seems the public is choosing to ignore them. More than
88 million visits were made to McDonald’s worldwide restaurants
in one month, up 10 million on the previous year.
THE PRINCE CHIMES IN
Just as the focus on obesity was giving away to concerns about
anorexia and the pressure being put on young girls by so-called
size zero models at a British Fashion Week, Prince Charles, Prince
of Wales and future King of England, tipped the scales back in the
direction of obesity. On a royal visit to the Middle East, the Prince
suggested that McDonald’s was to blame for an obesity epidemic
among children. Charles asked: “Have you got anywhere with
McDonald’s? Have you tried getting it banned? That’s the key.”
His comments were reported internationally, with reactions that
were more positive for McDonald’s than one would expect.
Positive comments from several sources attested to the ef-
fectiveness of the work that McDonald’s had done to improve
its image. Health advocates and nutritionists said a ban on
McDonald’s was “certainly not the answer” to Britain’s obesity
epidemic. Even the press ran articles favorable to McDonald’s.
One referred to the Prince as a hypocrite, because his company,
Duchy Originals (one of the United Kingdom’s leading brands of
organic food and drink), 3 offered fast foods whose fat and calorie
content was no better, if not worse, than McDonald’s. The Duchy
Originals’ Cornish pasty carries 264 calories per 100g, consider-
ably more than the 229 per 100 g of the Big Mac, and the fat
content is 13.6g per 100g, which is higher than the 11.12g in the
Big Mac. A medium portion of fries from McDonald’s contains
298 calories per 100g; again this amount is considerably less than
the 464 per 100g contained in the Duchy Original Organic Hand
Cooked Vegetable Crisps. A 100g serving of Duchy Original’s
Organic Lemon Tart has 337 calories (one-third more than the
McDonald’s Apple Pie).
The Prince’s comments were later downplayed, stressing that
he was merely advocating a balanced diet, especially for children,
and wanted to make the point that burgers and chips were not the
only foods available to them.
McDonald’s took a conciliatory tact stating, “The comment
made by the Prince of Wales appears to be an off-the-cuff remark
that, in our opinion, does not refl ect either our menu or where we
are at as a business. We know that other Royal Family members
have visited and have probably got a more up-to-date picture of
us.” Prince Harry certainly does not share his father’s distaste for
Even though McDonald’s plans to expand its healthier menu of-
ferings, it does so cautiously, so people remember that the Golden
Arches at its core still means burgers and fries.
McDonald’s, throughout Europe and elsewhere, is testing ways
to address the obesity issue. In Scandinavia, for example, popular
healthy local foods have been added to the McMenu, like cod wrapped
in rye bread in Finland. In Norway, some outlets sell a salmon burger
wrapped in rye bread. In Sweden, no salt is added to the food served.
In Australia, McDonald’s took a different approach—it reduced its
budget for ads directed to kids by 50 percent.
McDonald’s French operation raised the ire of the parent com-
pany when it ran a print ad in a women’s magazine quoting a nu-
tritionist’s suggestion that kids shouldn’t eat at the restaurant more
than once a week. While the ad was meant to promote McDonald’s
and seems reasonable since the French only visit quick-service
restaurants every two weeks on average anyway, such a campaign
would have been heresy in the United States. McDonald’s Corp.
later issued a statement claiming that “the majority of nutrition-
ists” believe McDonald’s can fi t into a balanced diet. Later, the
company recruited a pair of French nutritionists who declared
the Big Mac and cheeseburger healthier than traditional French
fare such as quiche.
Marketers in France have lobbied hard to be allowed to use posi-
tive lifestyle messages in ads—like emphasizing the importance
of physical exercise and a balanced diet—rather than grim health
warnings. France’s Ministry of Health appears to be listening and is
now expected to let marketers choose among three or four positive
health messages. Industry experts say the government changed its
mind out of fear that strong warnings might backfi re, causing anxi-
ety among consumers about eating. Moreover, France may hope its
new law, if not too extreme, will become a blueprint for Europe.
Although McDonald’s responded to the obesity issue with
menu changes and reworking its advertising, McDonald’s
didn’t stop advertising to children. The chief executive of
McDonald’s pooh-poohed the idea that McDonald’s should
“go dark on communications” to kids—two-and-a-half million
U.K. customers every day, a fair portion of them under 16 years.
McDonald’s is keeping children fi rmly in its marketing sights.
School’s out, ads for the kids’ big summer movie releases are
slapped on burger boxes, and a trip to McDonald’s is on the hol-
iday menu. McDonald’s defense is that McDonald’s Ronnie’s
YumChum friends are positively bursting with healthy advice.
There’s even a song: “Don’t let your Yum-Chums get glum, put
healthy stuff in your tum.”
One of the casualties of the obesity turmoil may have been the
tie between McDonald’s and Disney’s line of cartoon characters, a
marvel for attracting young children to the Golden Arches. Disney
failed to renew its 10 year exclusive partnership with McDonald’s.
Both parties insist it was a mutual decision that would allow
each to seek more profi table promotions. However, the growing
concern over the obesity epidemic may have proved critical for
Disney, which has become increasingly worried that its links to
McDonald’s would damage its family-friendly image. For its part,
McDonald’s may have wanted to avoid being linked to box-offi ce
fl ops such as Treasure Planet .
THE MARKET’S REACTION
Initially, McDonald’s sales worldwide, as well as in England, suf-
fered. However European sales last year, from restaurants open
all year, was 5.8 percent, outstripping even U.S. growth. Some
3 In 1990, the Prince created Duchy Originals because of his belief in the clear
advantages of organic farming, the production of natural and healthy foods, and sound
husbandry, which helps regenerate and protect the countryside. All of the profi ts from
Duchy Originals are donated to the Prince of Wales’s Charitable Foundation.
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Cases 2 The Cultural Environment of Global Marketing
5. Based on your response to Question 4, recommend both
a short-range and long-range plan for McDonald’s to
implement.
Sources: Jardine and Laurel Wentz, “U.K. Not Feeling the Love; McD’s Puts Slogan on
Ice,” Advertising Age , September 13, 2004; “Thinking Locally,” Advertising Age , March
7, 2005; Alexandra Jardine and Laurel Wentz, “It’s a Fat World After All,” Advertising
Age , March 7, 2005; Steven Gray and Janet Adamy, “McDonald’s Gets Healthier—But
Burgers Still Rule,” The Wall Street Journal , February 23, 2005; Stephanie Thompson,
“Europe Slams Icons as Food Fights Back,” Advertising Age , January 3, 2005; Emma
Ross, “Obesity Hurting Health of European Children,” Associated Press, June 3, 2005;
J. E. Brody, “Globesity,” The New York Times , April 19, 2005; “Disney Drops $1 bn
McDonald’s Deal Amid Health Fears,” Belfast Telegraph , May 10, 2006; “McDonald’s
Defi es Critics With an Even Bigger Big Mac,” The Independent (London), April 24,
2006; “McDonald’s Set to Fight Message in Movie: Chain Warns Franchisees About
‘Fast Food Nation,’ ” Crain’s Chicago Business , April 10, 2006; “McDonald’s . . . Now
With Ethical Sauce. Fast-food Giant Takes on the Critics with Soft Lights, Comfy Sofas
and the Promise of Great Career Prospects,” Mail on Sunday (London), April 23, 2006;
“Prince Wants McDonald’s Off the Middle East Menu as Prince Charles Advises Health
Workers in the Middle East to Ban McDonald’s,” The Aberdeen Press and Journal ,
February 28, 2007; “So Why Does Charles Think McDonald’s Is the Root of All Food
Evil?” The Scotsman , February 28, 2007; “McDonald’s Health Wins Back Custom-
ers,” The Independent (London), January 18, 2007; “Sure, McDonald’s ‘Health Kick’
Is a Ruse—But It’s Better Than Nothing,” The Independent (London), July 23, 2007;
“UK’s McDonald’s Outlets Selling More Burgers than Ever Before,” Hindustan Times ,
January 7, 2008; “McDonald’s Answer to Obesity Fears—A Boom In Burger Sales,”
Evening Standard (London), January 7, 2008.
McDonald’s and often eats their burgers. He even took advantage
of a “buy one get one free” offer, then wolfed down two chicken
burgers outside a McDonald’s in Plymstock, Devon.
QUESTIONS
1. How should McDonald’s respond when ads promoting
healthy lifestyles featuring Ronald McDonald are equated
with Joe Camel and cigarette ads? Should McDonald’s elimi-
nate Ronald McDonald in its ads?
2. Discuss the merits of the law proposed by France that would
require fast-food companies either to add a health message
to commercials or pay a 1.5 percent tax on their ad budgets.
Propose a strategy for McDonald’s to pay the tax or add
health messages, and defend your recommendation.
3. If there is no evidence that obesity rates fall in those coun-
tries that ban food advertising to children, why bother?
4. The broad issue facing McDonald’s U.K. is the current at-
titude toward rising obesity. The company seems to have tried
many different approaches to deal with the problem, but the
problem persists. List all the problems facing McDonald’s
and critique its various approaches to solve the problems.
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