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Marketing tips, observations & philosophy, plus a few rants and random musings - from those who practice, preach and teach marketing, research, advertising, public relations and business strategy.

Monday, December 20, 2004

Our Continuing Rant on McDonalds

Laura Ries had a great post on Starbucks, McDonald's and the perils of brand extensions today. (By the way, I saw Andy eat a large fries at McDonald's today. Tee hee hee.)

Here's an excerpt from Laura's blog:

In 1966, the average McDonald’s did $275,000 in annual sales. Factoring in inflation that would be $1,533,000 in 2003 dollars. Considering the fact that the average McDonald’s did just $1,633,00 in sales last year, it’s hard to see the advantage of adding those dozen of additional products.


The answer is not to mess with success. Strong brands stay focused. Strong brands stand for singular ideas in the mind. Starbucks should stay focused on coffee. Look at the success of their recent Pumpkin coffee promotion. So forget the egg muffins Howard and stick to the great coffee.


1 Comments:

Blogger Bill said...

I'm sure I'd probably agree with most, if not all of Laura's conclusions about MacDonalds, but in this case the math she uses is really not helpful. Her conclusion assumes that people wouldn't tire of a diet of hamburgers and french fries over 35 years, that MacDonalds didn't have to respond to competitors' pressure for healthy foods, chicken, breakfast, dessert... Most egregious is it assumes that the current revenue of $1.6M is a simple extension of the same menu. If you took the current revenues from the 1966 menu, I'm sure you would find that just sticking to what worked last year would have been devastating. The problem here is not line extensions, it's probably brand relevance.

9:21 AM

 

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