Score one for McDonald’s… at the expense of Starbucks and all of the other high-brow coffee shops peddling pricey lattes, cappuccino, espresso and all manner of caffeinated concoctions. Marketing message? You don’t have to be a snobbish, artsy type–real or affected–to enjoy a good “cultured” brew. You don’t have to spend a lot of money to get great café beverages, either. You can actually be who you are–walk into McDonald’s Café and get a great cup of Joe while being an average Joe.
A recent TV ad spot caught my eye, and I have to admit, it made me chuckle. Scene: two average guys are sitting in a highly cultured cafe savoring cappuccinos. One is poring over a book. He sports an arty goatee. The other has a dark turtleneck sweater on with a properly knotted scarf. Both are wearing glasses. This is gravitas. . .
Then, one friend asks the other: “Did you hear McDonald’s has cappuccinos now?”
“McDonalds?” the other repeats.
“Yeah.”
“That’s awesome. I can shave this thing off my face!”
The guys now feel liberated and euphoric: they can now watch football! No more art films. The scarf and sweater come off. Even better: they can walk into a local McDonald’s Café–on Mondays until 2:00 PM–and try a free McCafe coffee–a latte, cappuccino or mocha.
This is interesting marketing on a number of levels. It takes a swipe at the Starbucks type coffee shops in a clever way, without overtly denigrating their high prices, but by pointing out their snob appeal. It’s tongue in cheek.
Secondly, in this time of economic squeeze, consumers are looking for value for their money. Real value. Not the perceived value that comes from being part of the pricey café scene. How about this for value? A little pampering, a real treat–café coffees free of charge on Mondays until 2:00 in the afternoon–and available at a nominal price any other time.
Thirdly, come as you are. No need for affectation. No need to be high-brow, extremely cultured or rich. These wonderful coffee beverages are to be enjoyed by everybody. These brews are for the masses. Gasp! Come and get it.
Questions:
* Have you tried any of McDonald’s Café Coffees? If so, did you like them?
* What do you think of McDonald’s approach to marketing its new coffee drinks? Does it resonate with you? Why or why not?
* As a consumer, are you actively looking to change brands that offer you more value for your money in this tough economy?
* Do you think McDonald’s will take market share away from Starbucks and other high-priced coffee shops?
I’d love to hear from you.
Related posts:
Ted: I’m still confused as to why you are having trouble seeing the point that John Moore confirms and is my sole beef with your argument: McDonald’s and Starbucks exist in two different orbits that rarely intersect. *Geographically* (to Moore’s point) as well as demographically.
But let’s focus on geography, which seems to be the key flaw to your argument: as many of us have pointed out, due to the demographic-based targeting of store locations, most Starbucks customers don’t have easy access to a McDonalds.
So I’m unclear on how you envision your scenario playing out: will thousands of people suddenly start jumping in their cars and driving a half hour to the nearest McDonalds to save 89 cents on a latter?
Or will they just decide it’s easier to grab a no-name coffee from the local deli/sandwich shop, use the office coffee machine or maybe just go grab a Coke from the vending machine?
Hi Paul,
You’re absolutely right about the coffee culture of Southern Louisiana. And the thought of the great food down there makes me salivate, too. Love your part of the country.
Thanks for making some great points here. If Starbucks is all about “the experience”, then a drive-thru doesn’t cut it. If McDonald’s wants to woo customers to its lattes, the quality and taste had better be there. No matter what the price points are. And, as you point out, consumers have many options in most marketplaces. As Starbucks fails to deliver on customer expectations, and other chains and independents try to capitalize on their vulnerability, it’s going to be interesting to see what happens.
Thanks for adding your thoughts to this conversation, Paul. I appreciate it.
Kate: Thank you for adding your observations. You’re echoing what a number of other commenters have said here:”However, I do think you’re spot on that in many markets the customer bases don’t overlap much. . .”
And making a strong new point here: “and McD’s would do well to focus on converting some of their fountain drink customers to ‘cafe’ coffee drinkers.”
Suzanne: “Starbucks serves as a third place. So that’s why many people go there. McDonald’s will not serve the same function unless you are going there to let your kids play.” Another great point made, and I thank you. I also think you’ve made the kinds of statements most consumers who are not brand loyal are thinking. “Starbucks is expensive and I’m willing to try McDonald’s (or substitute any other brand–national or local); just haven’t gotten around to it yet. . .but I’m already hooked on one of McDonald’s other beverages”. . .so my question remains, are the lines blurring when it comes to consumers and their coffee fixes? Thank you, Suzanne.
I have very much enjoyed reading the different POVs. Since Alan is determined to make the geographic point, I now feel the need to counter.
In large cities geography may affect the decision, but in most mid size cities this is a non issue. Starbucks and McDonalds are both in the same geographic range, in many cases in my town they are in the same shopping center. So for large sections of the country it does come down to a consumer decision, not geography.
I must qualify that apparently I am a “boring” coffee drinker and prefer to make my 8 O’Clock at home, my way. I enjoy some Starbucks products, and not others, always for the coffee, not the atmosphere.
Okay, so now you are beating a dead horse, Alan. Seriously, I don’t want you to be confused. I’m not having trouble understanding that demographic profiles lead to location selections for all retail businesses. In most cities or towns, there are a number of McDonald’s, Starbucks and independents scattered in shopping and strip malls everywhere. They are always found in commercial locations, some more upscale than others. To my knowledge, a few people go to their local favorite coffee shop as a “destination”, ie, they plan to meet friends there or relax with a book to get away from it all. In most cases, however, consumers drop in for a cup of their favorite Joe while running errands, during lunch hour, etc. They then choose to walk to their favorite location, which may be across the street or a couple of blocks away since they already find themselves in a commercial location. So I don’t understand your argument, necessarily.
With the lines blurring: with McD’s trying to offer better tasting, higher quality basic coffees like Paul Newman’s, and with Starbucks changing their offerings to try to appeal to everybody, per John Moore, and with a host of other coffee houses trying to cash in on Starbuck’s “sharp decline”. . .
I’ve asked some provocative questions and made some opinionated comments to make people think, to get this conversation going and to elicit equally strong opinions. Do you think it’s worked, Alan?
Thanks, Sherri. You’re quite right about geography when speaking about mid-sized cities and towns. And obviously, many consumers preferred Eight O’Clock packaged coffee; so did Consumer Report. Gotta love it.
I have to admit: I’m fascinated by people’s opinions and really enjoy a conversation like this one. The Daily Fix is all about the interchange of ideas and people shouldn’t feel intimidated about expressing theirs, whether they go counter to “popular opinion” or not. This is all about getting people thinking. I respect everybody’s POV here. Thanks for weighing in, Sherri.
Question: how will the recession temper your choices, DF readers? Will you continue to frequent your favorite coffee shop regardless of price? Will you simply do it less often? Or are you planning on spending less by trying other options?
Please feel free to post your comments. I’m traveling again today, but I’ll respond as soon as I can. Thanks to everybody for making this a terrific conversation!
Paul and others,
The employees at Starbucks probably make a fraction of what you make so I am not sure why you would characterize them as snobs?
While the tip jar at a drive through is a bit off, it is just an extension of the long standing tradition of coffee shops having tip jars at the counter.
Again, Starbucks and local coffee shops are not snobbish. The primary demographic may be middle class but I see people from nearly *all* classes at coffee shops. But even if we grant that most people who go to Starbucks and local coffee shops are middle-class, how does that denote snobbery?
The idea that coffee shops are snobbish is a throw back to two things:
1. The bohemian sub-culture of the 1950s where there probably was an air of intellectual snobbery in coffee houses in Greenwich Village, etc.
2. When lattes first came into view they were associated with upper middle-class people. Many people perceived coffee shops as places snobbish people went to drink these exotic drinks. Now, lattes and gourmet coffee are available nearly everywhere so it is really hard to make that argument.
Unless we are willing to say that any company that caters to middle-class consumers is a snobbish company and people who buy from them are snobs, then the point is not valid for Starbucks.
I have no doubt that there are some coffee shops with snobbish atmospheres but there are restaurants that have snobbish atmospheres, too.
If you say Starbucks is snobbish, then that is basically saying the relatively low-wage workers who serve the coffee and their middle-class customers are snobs. I do not think that is true. These are all just people trying to get through life like everyone else.
While I laud McDonalds’ efforts as a campaign, I am what one would call a “career barista,” and frankly, their “fancy” coffees are absolutely disgusting. I’ve tried them all, kept an open mind, but when you work in the world of coffee for 10+ years, you know what’s good and what’s not. McD’s can have the best campaign in the world, but it doesn’t change the fact that what they’re trying to market is indeed a sub-par product.
I do like their coffee, though … their regular, plain’ ol’ coffee … but I won’t touch their “fancy” stuff for a reason – it’s gross.
Interesting post -
It made me think about the actual brand extension by McDonald’s and does it work?
I have not tried the coffee, caps etc., but judging from previous comments, if the coffee is not of real value (i.e. tastes special, great) and considering the experiential differences between Starbucks and McDonald’s, I am not convinced that McDs will gain significant #s of Starbucks customers who are paying for good coffee, options and experience etc.
Does it make sense to extend the brand into coffee without experience or great taste? Not if you are looking to attract consumers seeking and paying for it. Will it get more bodies through the door to buy something else or serve as an upsell to existing McD customers. Possibly.
This has been an interesting conversation to follow. When Jesse talks about his professor’s take on why people shop at Walmart it brought back something I’d read elsewhere that went `People forget what you said, they forget what you did but they don’t forget how you made them feel’
And I think how a product or an experience makes a person `feel’ unconsciously determines his/her attitude towards the brand. It is this `feeling’ of the customer that the marketer must aim to get right – be it in the advertisements or the product usage itself.
So Jonathan is never going to forget the `insulted’ feeling the McD ad left with him and that’s going to matter when McD tries to target him and others like him in any offering in the future!
What I find interesting lately is how often when I suggest going to coffee with someone, the comment is “Any where but Starbuck’s! They burn the coffee.” Yes, atmosphere makes a large difference because if it is to meet to become acquainted with someone and become friends and possibly may be a client, I prefer a coffee house atmosphere. There isn’t a feeling of “get -n, get out” , rather an invitation to stay awhile. Since I am in the Seattle area, it is more likely a Starbuck’s on every corner than in other places.
interesting MceeDee’s ad, they are the epitome of a demographic-engineering joint
Neil: I think Paul was being facetious with his comment about the ultimate snobbery at Starbucks being a tip jar on the sill of a drive-thru window. If anything, that kind of thing really detracts from Starbucks image as an upscale operation, doesn’t it?
Stacy: Interesting observations. McD’s basic coffee rocks but its lattes do not. I’ll bet lots of folks are going to be willing to try them just the same, given the incentive in the ads. Trying a latte free of charge will likely draw customers in. Whether they like what they taste is the next challenge for McD’s. Not everybody is going to be converted, right?
Thanks for sharing your thoughts, Neil and Stacy.
Thanks for thinking this proposition through, Mayrbeth. McD’s customers likely qualify the experience of the brand quite differently from Starbucks customers. For upscale customers to try McD’s or any other value-priced options, the experience will have to be improved somehow. As Paul B pointed out in an earlier comment, McD’s is experimenting with upgrading its look and feel:
http://fastfoodcritic.com/feature-stories/ffc-on-location-new-look-mcdonalds/ Question is, will that make enough of a difference to consumers? And how about McD’s approach to testing some free-standing cafes as well? Time will tell, right?
Thanks for adding additional substance to this conversation, Mayrbeth. I appreciate it.
Wonderful observation, Deepa. How we interpret marketing messages, and how they and the actual experiences we have with brands make us feel, go to the heart of this discussion. Thank you for your insightful, articulate statements.
Lee,
The whole issue of having a Third Place to meet people, linger over coffee or latte and not feel rushed goes to the heart of Starbucks’ brand positioning. Obviously, this still resonates with many of Starbucks’ devotees. And, as Lewis Green pointed out, there are times to go to Starbucks to enjoy the coffee and the experience if you’re a fan, and times to run into an in and out environment just to get your caffeine fix and go on your way. . .
Question is: can brands like McD’s change their enviroments and coffee offerings enough to woo consumers away from other brands, Starbucks included? Especially with the fundamental changes in consumerism that are taking place now? Thanks, Lee, for adding to this conversation.
Thank you, WOMMA (Word of Mouth Marketing) for commenting on this post and linking to it on your own terrific blog. I appreciate it. If Daily Fix readers want to read more about the coffee wars, please go to WOMMA’s blog at:
http://www.womma.org/blog/links/
In response to the question of whether or not McDonald’s can change their environment enough woo people away from other options:
When my local Mickey D’s was rebuilt (to allow for better use of a corner lot and the addition of a 2nd drive thru lane) they used the newer look for the inside.
It is nice: warmer colors, lighting looks more high end and less like standard flourescent, shiny new TVs and the seating is a slight bit better than your standard fast food place.
You know what, its still McDonald’s. There are still kids playing on the indoor playground, people are still in line for their burgers and fries.
I do notice that more of the retired/senior citizen set hanging out there now then they did before the renovation, but I doubt that McDonald’s target demographic will follow suit for fear of throwing off the age curve.
*chuckle*
Kate
Too funny, Kate. As you pointed out, in a re-thought, nicer environment, people may choose to linger a bit longer at McD’s in some instances. . .they may also purchase more food/beverages as a result of staying longer? Thanks for your comments. We all need a laugh on Mondays, don’t we?
I’m wondering now about how their free-standing cafes are doing. I understand McD’s is experimenting with them abroad, but I’m not aware of any stateside. Have any DF readers visited any of McD’s separate cafes yet? If so, how was the product, value and environment like? How would you rate the experience?
I think the real coffee shift, at least during this recession, is that a lot of people are going to switch from specialty drinks to regular coffee.
So Starbucks, McD’s, and your local coffee shops might want to get back to basics and make sure they can make a really good cup of coffee at a good price. Of course, there are many people who will stay with their favorite specialty drink at their favorite coffee shop.
There is no coffee war between McD’s and Starbucks. I think we have established that. Time for McD’s to call a cease-fire and each brand focus on what they do best and marketing to their optimal segments.
McD’s should not waste time during a recession trying to get people to buy lattes but instead focus on the fact that they sell inexpensive food. Ideally, in my opinion, they would develop more healthier items, which I think they have done more of in recent years.
Regardless of recession, I think people are still going to be concerned about their health. As baby boomers age and their doctors sternly warn them about diet, McD’s does not want to end up on the wrong side of that advice. They should be thinking hard about that.
Starbucks over-expanded. Unfortunately, for the employees of these shops, Starbucks is forced to reel things back in.
I think they already realize they need to get back to their focus on quality as they even closed their shops part of a day to do training on making good expresso drinks and so on. They need to continue that push to make consistently good coffee and consistently good specialty drinks at all locations.
The Starbuck’s staff at the two shops within walking distance from me are very friendly and cheerful even at 5:00 AM. If my perception is correct, I think Starbucks must treat their employees pretty well (pay, benefits, etc.) compared to many chains. They should not compromise that in the name of cost cutting as that cheerfulness is very hard to completely fake at 5:00 AM.
Starbucks must keep those hard working front-line employees in mind, whatever wrenching decisions they have made and have still to make.
This is an interesting point, Neil: “I think the real coffee shift, at least during this recession, is that a lot of people are going to switch from specialty drinks to regular coffee.” You may be right.
As to McD’s new campaign that’s taking swipes at its upscale competitors in the coffee wars, I don’t think that kind of strategy will ever go away with marketers in many industries.
You may be interested in reading a Business Week article that appeared in December, about SBUX baristas, unionizing and the company, Neil. I’m not sure how many readers are aware of Starbucks’ employee relations situation, so I think this might be an eye opener.
I think the real coffee shift, at least during this recession, is that a lot of people are going to switch from specialty drinks to regular coffee.
http://www.starbucksunion.org/node/2087
Thanks for adding another dimension to his discussion, Neil. I appreciate it.
Again, there is no coffee war. If McD’s thinks they are in a coffee war with Starbucks then they are engaged in a Quixotic quest.
They would be better served to focusing their marketing energy elsewhere.
I doubt Starbucks will fire back as they will probably have the sense to recognize a non-war when they see one.
If the term “coffee war” seems overstated, let’s just say competition is definitely heating up, Neil. Read an article in the Wall Street Journal today dubbed “Starbucks Plays Common Joe”, forwarded me by friend and fellow Daily Fix blogger, Paul Barsch. The article states that McD’s has a new billboard up in Seattle. Message? “Four bucks is dumb.” Wonder who and what they could be alluding to?
Thanks, as always, Neil, for expressing your POV. I enjoy it very much.
I’m in Asia and starbucks succeeds here (for now) because it is seen an expensive, if it was cheap it wouldn’t succeed when you can buy coffee at a normal cornershop for around 10% of starbucks price.
For the young affluent generation in Asia a higher price means it has to be a better product.
It’s interesting to note this isn’t working in Australia and starbuck stores are starting to disappear.
Thanks, James, for giving us perspective from two other continents. It’s nice to find out first-hand from someone who knows what’s going on in Asia and Australia. What you have said about young Asians is right on the money. With their new-found affluence, young Asians want to buy into luxury and upscale Western brands. We’ll see what happens as the global recession deepens, though.
That’s interesting news about Australia that I was unaware of. I’m sure Daily Fix readers appreciate hearing from another part of the world. Thanks again, James.
McDonald’s coffee is delicious and the price is right. “Snob appeal” has always turned me off so for me their commercials are perfect. I’ll take substance (a good cup of coffee for a reasonable price) over the symbolism of being part of the Starbuck’s crowd any day. Yes, I’m a bit more conscious of paring down the fat when it comes to spending, but not overly so. I think there is no question that McDonald’s will take market share from Starbuck’s. We’ve created a culture of fancy coffee addiction and those addicts are feeling displaced. They may not admit to getting it McD’s, but they will. Thank you for a really good article. Happy to provide input and always happy to add more if you need it.
Teresa,
Thank you for taking such a common sense approach to this marketing issue. I believe you are quite right. ” I’ll take substance (a good cup of coffee for a reasonable price) over the symbolism of being part of the Starbuck’s crowd any day.” While not every consumer is hard hit yet by the economic situation the country finds itself in, just about everybody is eschewing excess and “style” over substance now. That really goes to the heart of this marketing study, as well as many others, doesn’t it?
Thank you for articulating your points so well, Teresa. I appreciate it.
Wow. Always missing the point. AS USUAL, advertising agencies are horrible at developing the proper message.
Where is the value proposition? What is your product, why is it different and why should I really care?
Being less expensive or less snobish is not a differentiating factor. So what?
Give me one compelling reason why I should take money out of my pocket and purchase the product. There is none. – Taste? Quality?
The real message of the poorly conceived by stodgy old ad men on behalf of McD’s:
Show up at a noisy fast-food hut to have pimply-faced greasy-haired high school kids with minimal brain power serve me coffee. Of course, the atmosphere will be inspiring as I sit down next to the play land with Ronald giving me the evil eye as I attempt to use the non-existent WIFI.
http://greencheesemedia.blogspot.com/
Hi Carl,
Enjoyed reading your decidedly strong POV. The one compelling reason: coffee beverages at lower cost?Proposition: more value for shrinking disposable income? Is this advertising appeal going to resonate with everyone? No. You can see that for yourself with the comments that this post has generated. Thanks for adding your equally valid thoughts to this post, Carl. I appreciate it.
As some have noted, I don’t think this ad is targeted at the core Starbucks audience. It is targeted at those with an open or latent resistance to the SB experience. This reinforces their POV — “yeah, those guys are snobs!”. The opportunity for McD’s is for this audience to now select them over other coffee servers — Dunkins, etc.
Nancy,
There are always powerful brand adherents who are quite loyal. Around that loyal core, are consumers who might be wooed away to try competitors’ products. McDonald’s has a very different image than Starbucks of course. Having said that, its cafe business might be the beneficiary of a weakened economy since consumers are becoming increasingly conscious of their spending habits. Also, as you aptly point out, McD’s is also competing with Dunkin Donuts and other brands that are scrambling for more coffee business. Thanks for adding some more cogent thoughts to the post, Nancy. Much appreciated.
Bad ad, bad message, poor contrast and comparison. Infective.
Walter,
You don’t state your reasons for feeling as you do, but your opinions are as valid as mine and everyone else’s. Thank you for posting your comments here.
Is anyone else reminded of the Mac v. PC formula here? The humorous jab as a delivery mechanism?
Is anyone else reminded of the Mac v. PC formula here? The humorous jab as a delivery mechanism?
Interesting parallel, Joanie. Of course there is humor behind the Mac vs. PC marketing campaign. The focus there is not on the price to value ratio. It focuses squarely on the efficacy of Mac’s operating system vs Microsoft’s Vista operating system, which has been a nightmare. . .hasn’t it?
Thanks for adding your query, Joanie. It’s a good one.
Interesting parallel, Joanie. Of course there is humor behind the Mac vs. PC marketing campaign. The focus there is not on the price to value ratio. It focuses squarely on the efficacy of Mac’s operating system vs Microsoft’s Vista operating system, which has been a nightmare. . .hasn’t it?
Thanks for adding your query, Joanie. It’s a good one.