Fallen Arches?

Karrh On Marketing

In this space a few weeks ago, I outlined the reasons for Kmart's long and dreary slide into bankruptcy. The Kmart example offers useful lessons for any business owner or manager concerned with meeting consumers' needs.

It was easy pickin's. Kmart management had taken its collective eye off the marketing ball for years. The more difficult task, of course, is to make such predictions before the fact. And a student posed just such a question to me in a UALR class three weeks ago: "Who is in danger of becoming the next Kmart?"

Hmmm. I thought of other major American brands in trouble from marketing missteps. Several came to mind, but I rather quickly decided on McDonald's.

Now, there are limits to the comparison. I'm not predicting bankruptcy by any means. In fact, the company is solidly profitable and continuing to expand globally, and there is plenty of opportunity to get the marketing house in order. I just think McDonald's is losing its brand value, and the problems (like Kmart's) have mostly been avoidable.

Back in the day, McDonald's was a beacon of clean and comfortable consistency as America hit the highways. Ray Kroc made sure McDonald's was a kid-friendly family destination. Wasn't it McDonald's that made the kid's playground a fast-food restaurant staple? Wasn't McDonald's a cool place to have your birthday party? The company introduced and showcased Ronald McDonald, the Grimace, Mayor McCheese and the Hamburglar and made them icons. (I faintly remember "the marvelous, magical Burger King" as a Ronald McDonald rip-off that lasted only a short while.)

Although the burgers and fries were OK, McDonald's was really about families. Ronald and the other characters represented the friendly familiarity parents and kids had with the McDonald's brand.

Things have changed — and, I believe, have declined — under the golden arches. McDonald's hasn't had a true new-product success in two decades. They have allowed themselves to compete on the basis of price. They seem to have lost control of fundamentals such as the cleanliness of dining areas and bathrooms (several students shared gross bathroom horror stories).

Kmart's trouble became life-threatening when it ceased to be the leader in anything. Wal-Mart would always win on price because of its cost advantage. Target was more pleasant, cool and stylish. In the world of fast food, McDonald's may be getting stuck in the same corner. It has no price advantage because no operator has a built-in cost advantage. I doubt there's any taste advantage; although I have no data to back this up, Wendy's seems to be the favorite among much of the younger set. There's no product variety issue because competitors like Burger King are doing a better job of product innovation. There may not even be a convenience issue because Subway is multiplying at a rate that would make most rabbits blush.

The most troubling trend? I see a lot more parents and young kids at the nearest Chick-Fil-A.

Yes, the fries are still good. But they can't carry the brand.

The company even poked fun at its own icon in advertising. Introducing the Arch Deluxe as "a burger for adults," McDonald's showed a more mature Ronald in a disco and even on a golf course. They seem to have forgotten Ronald is for the kids rather than for parents.

Earnings have declined for each of the past five quarters. Next week is the worldwide franchisee convention; think there might be some anxious McDonald's folk in Vegas?

Perhaps a current or former McDonald's manager can tell me what I'm missing. Please do. Perhaps some of you gazillion former McDonald's employees could shed some light as well. If there are other marketing lessons to share, I'll do a follow-up column.

What could you do now, if you were a McDonald's marketing executive? Call the talent agents for Mayor McCheese and the Hamburglar and get them back in the fold. Make Ronald prominent again. Do whatever it takes to get control over the customer experience, and be serious about quality. Quit trying to make America eat the McRib (okay, that one's a personal request). And bring some paper towels so we can get at those bathrooms.

(Jim Karrh, Ph.D., is assistant professor of marketing and advertising in the University of Arkansas at Little Rock's College of Business Administration as well as a marketing consultant. E-mail him at jakarrh@ualr.edu.)

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