Born-again meets marketing

Larry Light served as Global CMO for McDonald’s from 2002 to 2005, during the beginning of the company’s turnaround process. In “Six Rules for Brand Revitalization,” he and his co-author Joan Kiddon present six rules culled from that successful revitalization

	Title:	Six Rules for Brand Revitalization
	Author:	Larry Light and Joan Kiddon
	Pages:	240pages
	Publisher:	Wharton School Publishing
	Price:	$24.99

Six Rules for Brand Revitalization: Learn How Companies Like McDonald’s Can Re-Energize Their Brands (Wharton School Publishing, 2009) is a somewhat unusual business school publication. Most often, business school presses offer on the one hand, books tending to the theoretical and on the other, cases grounded in company management. This book is a bit of a hybrid: as grounded as a case, as long as a book. Part of this can be explained by the fact that it is authored not by two professors but by two marketing experts, Larry Light and Joan Kiddon, respectively CEO and COO of Arcature LLC. Larry Light also served as McDonald’s Global CMO from 2002 to 2005.

When Larry Light came on board, McDonald’s stock had lost 60% over three years. Jack Greenberg’s growth strategy had focused on the opening of new stores, but had resulted in lower sales per store. In 2003, the former head of the international division, Jim Cantalupo, was wooed out of retirement to right the firm. The Australian COO, Charlie Bell, asked Larry Light to take on the position of global CMO, with the mission of revitalizing the brand. By 2005 same-store sales were at their highest level in seventeen years. By 2006 the share had risen from its 2003 low of $13 to $32.

Light and Kiddon draw six lessons or brand revitalization rules from the successful McDonald’s tenure.

Refocus the organization
Revitalizing begins with a renewed sense of brand purpose. In the case of McDonalds, renewal passed through a look back at Ray Kroc’s original vision. Kroc did not envision McDonald’s as merely cheap and convenient but as a happy place to which customers would return regularly. The previous brand intent had been “to be the world’s best Quick Service Restaurant.” The renewed intent was “to be our customers’ favorite place to eat and drink”.

Behind the word favorite lay the desire to see customers favor McDonald’s and not just frequent it. Behind the inclusion of the world place, lurked a return to cleanliness and comfort as well as a modernization of the facilities. Behind the word eat and drink stood a diversification of the menu, in particular towards salads and fruits as well as new beverage ideas (e.g. McCafe which had been created by Charlie Bell in Australia).

In this chapter, the authors make a number of other recommendations. Perhaps the most remarkable is that brand intent should be defined from within, not from without. Ultimately, it is management, not the customer, that must define the brand purpose. Think of a Trumanian desk with a sign reading “the brand stops here.”

Restore brand relevance
Brand irrelevance occurs in particular when the company wants customers to buy what it is prepared to supply as opposed to supplying them with what they want, or perhaps even better, what they will want. In such a situation, the company has shifted too much toward selling, convincing customers to buy what the company knows how to provide and too far away from marketing, providing what customers want or will want.

In an era when mass marketing is going the way of the V8, restoring brand relevance implies market segmentation. To segment a market the authors call upon what they call Rudyard Kipling’s six little friends: Who, What, Why, How, When, How, Where (“I keep six honest serving-men (they taught me all I knew); their names are What and Why and When And How and Where and Who,” The Elephant's Child (1902)). Segmentation then works from the premises that what people want is a function of who they are, why they use the product and the context in which they use it (how, when and where they use). The chart below shows how the segmentation could have looked to the creators of the original Starbucks concept.

McDonalds chose to focus on three key segments with different needs: great tasting food and fun for kids; healthful eating for young adult mothers; satisfying food for young adult males.

Brand relevance gets summarized in the brand promise. Think of this promise as the business equivalent of the social contract dear to 17th century philosophers: the contract made with the customer that summarizes the brand experience to be delivered. As input to definition of the brand promise, the authors use a brand pyramid.

The formulation of the promise integrates the pyramid features in the following manner: For people with these values, who seek these rewards, our brand with this personality is best at providing these benefits, because it has these features. Once a brand promise has been defined it needs to be summarized for communication purposes. The authors call this sort of compelling phrase that captures the core spirit of the brand a brand essence. For example, the development of McDonald’s new brand promise led to the brand essence “Forever young”.

Reinvent the brand experience
Reinventing the brand experience, in the authors’ view, is best effected by attending to the five action Ps: people, product, place, price and promotion. With regard to people, they remind the reader that just because a business is customer-focused does not mean that customers come first. Employees play a key role in creating the brand experience and that is why they come first and why “people” is the first action P.

McDonalds pays particular attention to its training experience. To this effect, it maintains its university with six satellites as well as hundreds of regional training centers. As examples of other companies that understand the front-line role of employees, the authors cite Ritz-Carlton (ladies and gentlemen serving ladies and gentlemen) and Disney (which pays particular attention to the customer training of its custodial staff since often visitors will ask directions of them).

Building a new brand experience in McDonalds case meant offering new products. Salads were introduced in 2003 and as a result mothers who brought their children to the restaurant but would not eat there themselves started buying food. The beverage choice was also extended with the introduction of fruit juices and mineral water. These product innovations were the first major successes since the introduction of the McNugget in 1983.

Similarly, place was attended to. Improvement took place on two fronts: dehomogenization and modernization. Led by Denis Hennequin in France, a new localized, customized approach to store design was adopted. For modernization, McDonalds turned to Lippincott Mercer, a design firm that had led Nissan’s successful efforts to upscale its dealerships.

On the pricing front, the authors caution against a single-minded focus on low price, that can lead to brand demoting. The authors think in terms of a value equation with the quality of experience in the numerator and cost of experience in the denominator. This value equation means that while cost reduction can be helpful in that it reduces the denominator, it does not affect the numerator. Companies need to attend to the numerator, the quality of experience. In the author’s words, sole attention to cost cutting can lead to brand anorexia. At best, low price creates deal loyalty; it’s the total experience that creates brand loyalty, a more sustaining asset.

Much as with pricing, caution must be exercised against demoting the brand through short-term sales tactics.  Driving sales at the expense of reputation is demotion, not promotion. The authors also argue for a certain amount of promotional continuity (see box on i'm lovin' it).

Reinforce a results culture
A results culture promotes measurement, recognition and reward. In the case of McDonalds this meant learning to differentiate between low-quality and high-quality growth. Low-quality growth destroys brand value even while revenues increase. Mc Donald’s had fallen into a frequency-loyalty trap - they had come to mistake frequency and loyalty. Brand loyalty is more than just repeat purchase – it means that your brand is the customer’s favorite. As McDonald’s brand loyalty fell at the turn of the century, it became more vulnerable to competitive offers.

To reinforce the results culture, McDonalds built up a Balanced Brand Scorecard, which graced one wall of the COO’s office. The scorecard included metrics across the 5 actions Ps: employee commitment and employer reputation for People; food rankings for Product; cleanliness and comfort metrics for Place; value for money for Price; brand trust for Promotion. Unfortunately, the book goes into less detail than a case might on the constitution and refining of this scorecard.

Rebuild brand trust
Trust cannot be bought; it must be earned and re-earned. Trust takes time to build and unfortunately it can be lost suddenly, witness the 1990 Perrier affair in the US. In their dealings with their clients as in their work at McDonald’s, the authors work around five trust-building principles. The first is that you are what you do, not what you say. Enjoining customers to trust you is an ill-founded resort to electioneering. The relaunch of the Nissan Z in 2002, McDonald’s launch of chicken Caesar salad in 2003 are the type of actions that build trust.

A second principle is to not to hide from debate but to lead it or join it. The authors cite as example the CEO of Chipotle, a smaller fast-food chain which uses free-range meat and organic ingredients. Along the same lines, the third principle argues that openness is an opportunity. McDonald’s head in France, Denis Hennequin, created an Open Doors program whereby teachers and children could view cooking and cleaning operations in the restaurant and talk with crew members about those daily operations.

The fourth principle states that trusted messages must come from trustworthy sources. In putting together its new menus, McDonald’s called upon a Global Advisory council of doctors, nutritionists and pediatricians. In Australia, for example, a respected group of accredited dieticians, the Food Group, endorsed the new menu items. The last principle is to be a good citizen. While corporations cannot solve social problems alone, they can and should participate, in particular because their influence is often greater than their market share. The authors cite the example of PepsiCo Ethos campaign where for every bottle of water sold, five cents were donated to organizations helping children around the children get access to clean drinking water.

Realize global alignment
Following the precept that none of us is as good as all of us, realizing global alignment is about focusing organizational creativity rather than limiting it. What the authors call Freedom Within a Framework provides boundaries within which to be creative. An organization like McDonald’s should be striving for harmonization not standardization. Realizing that sort of global alignment requires what the authors call a Plan to Win (see box)

Having come to the end of our presentation, let us return to our opening comments regarding the hybrid nature of this book, something like a book-length case. From the case side, it does provide an inside look at McDonald’s but a less detailed one than most business school cases might offer. Perhaps space or confidentiality considerations explain this lack of technical detail. From the book side, it is a clear introduction to some marketing principles, which proved effective at McDonald’s in particular. As such, it will be of interest to marketing managers and of use in introductory marketing courses. Rather than attempting to offer untested marketing insights, the book presents proven ones.