This analysis is part of my answer to Essay Questions in IBM 6015 – Marketing Management (Prof. Roland Gau) Take Home Exam 1
Consider a mass-marketed product, like franchised fast food, in terms of its PODs and POPs (Points of Difference and Points of Parity). What is your favorite fast-food franchise? Please describe this brand, what the positioning of this brand is, and how this brand is marketed. Show real-life evidence for your descriptions.
My favorite fast-food franchise is McDonald’s, which sells affordable yet standard quality food like cheeseburger and French fries. It consists of a worldwide chain of franchisees in 118 countries (ref: corporate website[1]). Since its establishment in 1955, it constantly adapts to changing customer profiles, in terms of both demographic and geographic, and responds to increasing social awareness calls by making healthier options and initiating charity activities.
In order to assess McDonald’s positioning from an objective perspective, I observe its core values, brand mantra, and brand promise, from which I arrive at a holistic evaluation of its positioning strategy. In each of the arguments, I elaborate a selection of real-life evidence of how this brand is marketed.
First of all, according to McDonald’s corporate website[2], its latest version of core values is:
- Serve: We put our customers and people first
- Inclusion: We open our doors to everyone
- Integrity: We do the right thing
- Community: We are good neighbors
- Family: We get better together
Most of these values have sustained for years. For one, inclusion has been consistently matched by McDonald’s global expansion and presences in various cultures and their people, namely its localized menu items adapting to different tastes (e.g., wraps in Australia, toasted sandwich in France, McCurry in India, McArabia in Saudi Arabia, and McVegan in Finland). For another, Community and Family have been realized by the company’s charity initiatives (e.g., Ronald McDonald’s House for Children), designated dining zones, and improved employee training system. Although brand core values can be a fair account of what the brand is, we need to take a closer look at what the brand really is by its brand mantra which dictates every detail that makes itself a brand.
Second, the brand mantra of McDonald’s consists of three words: fun, family, and food. It echoes the company’s commitment to recognizing local needs. For instance, as soon as the company’s marketing intelligence detects trends of demographic changes, it responds by revising in both local and global levels.
- In local level, it adapts to local preferences (e.g., the inception of McCafé in the Australia market, aiming at working professional segment) and adjusts menu items (e.g., salad bowl and fresh apple slices were introduced as side alternatives) to meet customers’ changing profiles. Especially, when income polarization became the new norm, McDonald’s started selling both $1-dollar menu and premium options, in order to catch the sales opportunities. Such resilient actions are coherent with the brand mantra, continuously serving local customers and earn the company a brand equity in addition to its classic fast-food image.
- On a global level, it has sponsored the Olympic games and established charities in many countries, which in turns add value to the brand. Event sponsorships not only highlight the mantra of fun and family, but produce a mundane association between its food and happiness.
Third, the current brand promise of McDonalds’ “I’m lovin’ it” expresses a democratized enjoyment regardless of age, nationality and social status. It not only emphasizes the accessibility and quality of the restaurants, but also highlights an affordability facing different demographics.
Yet, since the inauguration of its current CEO, Chris Kempczinski, McDonald’s positioning is set to change. According to CNBC[3], McDonalds’ used to tolerate “late-night socializing between senior managers and rank-and-file employees.” Although such a culture is relevant to the “fun” element of its positioning, Mr. Kempczinski seems to seek for a replacement with a more serious term. In brief, the positioning change of McDonald’s is to be observed.
To conclude, the positioning of McDonald’s conveys a mundane culture that diversity inclusion is valued, an affordable quality satisfying both low- and medium- income customers, and a welcoming attitude toward all king of guests, be them family, kids, youth and working professionals. However, the positioning has been changing for years. The current positioning may be altered under its newly-elected CEO who seeks a replacement of the “fun” element to the brand. We shall closely watch the development of McDonald’s future positioning strategy.
Please consider the points of difference and points of parity for this brand. What are PODs and POPs, and how are they used, in general. What are the PODs and POPs of this brand?
PODs and POPs are associations perceived by customers (i.e., beliefs) about the brand, when compared with other brands in a similar positioning.
PODs are the distinguished attributes a brand possesses, which are desirable for its customers.
For instance, in the fast food industry, McDonald’s preparation time is shorter compared with Burger King, its main rival (ref: personal experience), implying a POD of speed. Also, the design of McDonald’s recycling/trash bin, although complicated, indicates the company’s commitment to environmental protection. Moreover, its outlets are increasingly equipped with kiosks on which customers can browse the menu, make orders, pay by cards, and enjoy delivery-to-table service that is relevant and desirable by customers in the age of pandemic when people are aware of social distancing. Last but not least, McDonald’s toilets are often equipped with an efficient hand dryer machine which is desirable and necessary for customers who are going to eat with their hands. Many competitors (e.g., MOS) do not have the same level of features. These PODs help McDonald’s to stand out from the competitive frame of reference (e.g., Burger King, KFC, and MOS). In practice, a brand that has more strong PODs better differentiates itself and thus occupies more wallet share from its customers. As of my case, I always go to McDonald’s whenever I want to have French fries.
Although PODs are perceived associations, the company must have the capability to deliver its promise, too.
For example, despite stating clearly on its website about the menu items suitable for vegetarians (ref), there are rumors that McDonald’s actually mixes the oil used for chicken with those for French fries, which lead to the question of whether French fries are vegetarian or not. The lack of credibility poses doubts for the deliverability of the PODs. In addition, while McDonald’s highlights its quality standard (i.e., a POD) that French fries go from freezer directly to oil tank, ensure best quality and taste, sometimes I observe French fries were stored at room temperature (e.g., on the kitchen table). This also questions whether the claimed PODs are delivered or not. As a consequence of PODs non-delivered, the company may be taken advantage of by its competitors who showcase the steady quality of their products.
While PODs signify the sufficient differentiation of a brand, POPs demonstrate its necessary nature of a product to be considered under the category it claims belonging to. PODs are common features across similar brand offerings, and can be devised in three basic ways: category, correlational, and competitive POPs. First of all, Category POPs are the basic attributes customers expect to perceive from a brand under the self-claimed category.
In the case of McDonald’s, it necessitates these POPs: fast, hygiene, standardized offering to be accepted into the fast food restaurant category. However, as customers are updating their expectations of the category (e.g., increasing demands for McDonald’s to minimize its value chain partners’ environmental impacts, as well as to increase its occupational health/safety for employees, etc.), companies have to renew their understanding of customers from time to time.
Second, correlational POPs are associations between the company’s strength and weakness. In other words, correlational POPs link two inverse PODs where the company is good in one while weak in the other.
For instance, McDonald’s POD of fast may limit itself as a “cool place to chill out” or “relax sphere for a coffee.” To address the concern, McDonald’s redesigned its restaurant layout to include a designated area with big tables for people who want to socialize, and a special counter for McCafé which overcame the issues of correlational POPs.
Finally, competitive POPs are armors protecting the weaknesses of the brand, designed to against the PODs of its competitors.
For example, despite being weaker in the perceived healthiness of its food, McDonald’s adopts competitive POPs facing the threat of Subway in the fast food market. By sponsoring for the Olympic Games, McDonald’s establishes an association between itself and the image of work-out and health. Furthermore, McDonald’s also include healthier items into its menu, as part of competitive POPs, to protect itself from losing customers to Subway.
We discussed a “straddle positioning” in class, using Fiber One as an example. Take a position on whether or not you believe that a straddle positioning would be effective for your favorite fast-food brand, and explain why.
Straddle positioning is the best strategy for McDonald’s to enlarge its market coverage and exploit its consumer base. Given its fast food restaurants operation in Taiwan, McDonald’s has actually multiple competitive frames of reference, namely coffee shop (i.e., McCafé) and delivery food provider (i.e., McDelivery), where it enjoys different levels of straddle positioning. I will first briefly introduce these frames, identify the POPs and PODs, then prioritize the frames of reference for competition. To sum up, I argue that the straddle positioning of McDonald’s is effective so long as it delivers the PODs it promises on a constant basis.
The initial POP and PODs of McDonald’s in fast food restaurant business are summarized as below:
POPs: fast, hygiene, reliable quality, easily affordable price, variety of menu items
PODs: positive brand image, vegan-friendly items, and standard operation process in kitchen
These same sets of POPs and PODs can be reversed to match the majority of PODs and POPs in food delivery and coffee shop businesses. I will elaborate more how McDonald’s straddle positioning is effective in these two businesses.
The top priority for McDonald’s to employ an effective straddle positioning is delivery food provider, for instance, McDonald’s has started McDelivery in Taiwan since 2008 (ref: corporate website[4]). Key competitors in this business are Pizza Hut and Domino’s, whose common POPs include short waiting time, reliable and good-looking delivery team, and stable quality. To stand out from the competition, the fast food restaurant’s POPs (i.e., McDonald’s) such as diverse variety of menu item, suitability for family and kids, affordable pricing, and convenient for personal order (i.e., more suitable for office lunch than pizza that needs to be shared among colleagues) are of unique strength, hence are considered PODs in the food delivery market.
The second priority is coffee shop business. McCafé was brought to Taiwan in 2003 which operates inside existing outlets of McDonald’s (ref: Commercial Times[5]). Its key competitors are Louisa and Cama, with whom it shares several common POPs including experienced barista, huge coffee machine, selections of snack, and calm atmosphere. Still, McCafé differentiates itself by strong PODs of longer open hours, wider price range (from cheap americano to premium arabica coffee), and a diverse selection of snacks and meals. In other words, the POPs of fast food restaurants become PODs for coffee shops, so McDonald’s enjoys the straddle positioning.
Although coffee shops have good potential for straddle positioning, the current pandemic of COVID-19 largely limits consumers’ likelihood of frequenting for coffee. Thus, I prioritize coffee shops after the food delivery business. When the pandemic situation is removed, consumer traffic increases, we shall see huge potential and greater profit margin from McCafé, as compared to McDelivery.
The least attractive frame of reference for McDonald’s is in the health food business. Although its current menu includes items such as Caesar Salad with Spicy Fried Chicken Filet, McDonald’s does not have many POPs that can be leveraged as PODs for the health food business, nor does it possess PODs which can be converted to POPs. Still, the increasing threat from Subway witnesses a shift in consumer appetite. McDonald’s shall be prepared for it.
Yet, these POPs on which a straddle positioning depends, are quite common among other fast food restaurants, e.g., KFC and Burger King. Hence, they may also consider entering the same sets of businesses after considering the same frames of references. Consequently, McDonald’s still faces severe competition. Nonetheless, whether McDonald’s adopts a straddle positioning or not, its competitors in the fast food restaurant business certainly does. For example, both KFC and Burger King are running delivery by themselves or partnering with Food panda, an app-based delivery service. KFC is also starting to provide premium coffee (e.g., Lavazza) in its outlets.
Finally, it is also important for McDonald’s to assure its customers that these POP and PODs are constantly deliverable. Issues such as hygiene and human resources shortage must be prevented, even when a change in labor regulations concerning delivery crew (e.g., we have seen an ongoing debate of whether delivery personnel is considered as contractors or employees in Taiwan) is foreseeable. Therefore, McDonald’s can make sure it expands market coverage and consumer base by straddle positioning.
[1] https://www.mcdonalds.com/gb/en-gb/help/faq/18525-what-countries-does-mcdonalds-operate-in.html
[2] https://mcfamily.mcdonalds.com/article/how-were-showing-up-for-our- communities-hear-from-our-leaders-at-wwc.html
[3] https://www.cnbc.com/2020/01/06/mcdonalds-new-ceo-takes-aim-at-the-companys-party-culture.html
[4] https://www.mcdonalds.com/tw/zh-tw/newsroom/2019/20190917.html
[5] https://www.chinatimes.com/newspapers/20161017000099-260204