McDonald's Hispanic Marketing Case Study

Laura Peck & Antoinette Francis

Comm 497B

October 22, 2009

McDonald's Hispanic Marketing Case Study

According to the McDonald's Web site, in 1940 Dick and Mac McDonald opened a restaurant in San Bernardino, Calf. called McDonald's Bar-B-Que. It was a drive-thru and offered car hop service. In 1948, the restaurant was shut down for renovations and reopened with a smaller menu. This consisted of hamburgers and cheese burgers, potato chips, pie and beverages like soft drinks, milk, coffee. At the time, a hamburger cost 15 cents. The french fries and milkshakes were added a year later in 1949. The famous founder, Ray Kroc, visits the McDonald's restaurant and learns that the owners are looking for a nationwide franchising agent. He gives up his job as a multimixer salesman and joins the McDonald team, turning it into the largest fast food restaurant chain in the world. The first McDonald's restaurant opened in Des Plaines, Illinois in 1955. The first day sales on April 15 were $316.12 (McDonald's History). "In 1961, Kroc bought out the McDonald brothers for $2.7 million" (McDonald's Corporation). And by 1965 there were over 700 restaurants, The current McDonald's mission is to "be our customers' favorite place and way to eat." Our worldwide operations have been aligned around a global strategy called the Plan to Win centering on the five basics of an exceptional customer experience – People, Products, Place, Price and Promotion. We are committed to improving our operations and enhancing our customers' experience (McDonald's History).

McDonald's is a publicly traded company (NYSE: MCD) and according to Hoover's "nearly 80% of the restaurants are run by franchisees or affiliates." (McDonald's Corporation). Some of McDonald's competitors include Burger King, Wendy's, Subway, Chick-Fli-A and YUM! restaurants international which runs A&W, KFC, Long John Siver's, Pizza Hut, and Taco Bell. According to Hoover's, McDonald's leads the industry in annual sales ($23,522.4 million), employees (400,000) and market cap ($64,149 million). It also leads the industry in gross profit margin (37.55%) and net profit margin (26.87%) (McDonald's Corporation). It is able to stay ahead by offering consistent quality food products at it's franchises, no matter the location. It is also always developing new menu items. It's most recent the Southern-style chicken biscuit in breakfast and sandwich form and it's widely publicized and advertised McCafé (McDonald's Corporation). Unlike other industries, quick-service companies are thriving. According to McDonald's most recent quarterly earnings press release, there was a "10% increase over the Company's previous quarterly dividend rate and brings the total quarterly dividend payout to about $600 million" (McDonald's Raises Quarterly Cash Dividend By 10%).

One of psychological competition facing the quick-service restaurant industry is the criticism of large obese population in the U.S. It is especially true of the value meals which provide extra large portion sizes of unhealthy foods. The nutritional value of quick-service restaurant food have sparked campaigns and legal action. According to New York City Department of Health and Mental Hygiene, On January 22, 2008, the Board of Health approved an amendment to the Health Code that requires certain food service establishments (FSEs) to post calorie information prominently on menu boards and menus (Calorie Posting Regulations). Other criticize of McDonald's occurred after the documentary Supersize Me was released in 2004. The documentary involves filmmaker Morgan Spurlock and his quest to eat nothing but McDonald's for breakfast, lunch and dinner for a month. He has to eat everything on the menu once and has to supersize his meal anytime he is asked. His health is documented and tracked and the results are astonishing. The documentary does not paint McDonald's or the quick-service restaurant industry in a good light (Super Size Me (2004)). One of the biggest outcries was about the soc-economical reasons behind the combination of inexpensive fast food and the obesity rates among people below the poverty line. This is especially prevalent among two targeted publics, Hispanic and black populations, who have a pre-disposition to obesity and heart disease. "McDonald's continues to be a target for critics who charge the company's food lacks nutritional value and may be contributing to increasing rates of obesity, especially among children. In response, McDonald's has introduced healthier menu items and shifted its marketing towards children to show a more active Ronald McDonald" (McDonald's Corporation).

McDonald's provides fast-food products and friendly service to consumers. According to Hoovers, McDonald's is a part of the fast food and quick-service industry (McDonald's Corporation). It was one of the first of it's kind and led the way for other fast food franchising chains like Burger King and Wendy's. And have influenced it's competitors with innovating ideas like the dollar menu. McDonald's is also making strides when it comes to incorporating a diverse workforce. According to McDonald's.com, "more than 55% of [its] headquarters and U.S. company workforce are members of a racial or ethnic minority, and approximately 61% are women. More than 40% of [its] U.S. owner/operators and an even higher percentage of the people in training to become owner/operators are minorities and women." They also "purchase more than $4 billion a year in food and paper products from U.S. minority and women-owned businesses." Because of their diversity initiatives, McDonald's has been awarded a number of awards including Among Top 50 Places for Hispanic Women to work in 2004 by Latina Style, Among 50 Best Companies for Minorities in 2003 by the National Hispanic Corporate Council and Top Company for Hispanics in 2005 by Hispanic Business Magazine (People). Furthermore, "McDonald's Hispanic franchisees, when combined, represent the largest single Hispanic business in the country" (Diversity).

Furthermore, with the Hispanic population growing in size, McDonald's has focused some of it's marketing towards the ethnic group with the campaign "Me Encanta." It is the literal Spanish translation of McDonald's global slogan, "I'm Lovin' It." According the VPE Public Relations, the Hispanic specializing pr agency that works with McDonald's, "In 2004, the country’s estimated 40 million Hispanics are spending nearly $700 billion on goods and services. If this country’s Latinos were a nation, its gross domestic product (GDP) would rank ninth in the world, just below Canada. By 2008, researchers predict that Hispanics’ buying power will be about $1 trillion per year, representing an astounding growth rate of over 450 percent since 1990. Latinos are the largest and youngest ethnic minority group in the United States. By 2050, one of every four Americans will be Hispanic, a number that will exceed 100 million" (Hispanic Snapshot).

According to VPE Public Relations' Web site, "since 1992, VPE has played an instrumental role in strengthening McDonald's standing as the favorite quick-service restaurant of Hispanic families. VPE works hand-in-hand with the company's Communications and Marketing departments to adapt national initiatives in a meaningful way to the Hispanic market. Examples of successfully executed assignments include national concert tours for artists like Enrique Iglesias, Alejandro Fernandez and Molotov; major events like Fiesta Broadway and Calle Ocho; national promotions like Monopoly and Happy Meals; corporate responsibility initiatives like Go Active!; and sporting events such as World Cup, Olympics and All-American basketball. VPE has also worked closely with Ronald McDonald House Charities in establishing its HACER Scholarship Program as the country's largest serving Hispanic high school students" (McDonald's). Alma DDB, an integrated advertising agency specializing in the Hispanic market is also working on the Me Encanta campaign since 1994. According to Alma DDB Communications Manager, Olimpia Del Boccio, they "managed all the communications in terms of advertising and image for the Hispanic Market." The agency has produced many things for McDonald's including TV, print, radio and interactive ads. These campaigns and advertisements have won a number of awards including National Gold, District Silver, Local Silver and Local Gold at Addy Awards. They have also won Silver at the Best of Ad Age, Gold at Ad Age Hispanic, Gold at CRESTA and more (Awards).

One of their services including the entire "Me Encanta" Web site. The Web site is easy to navigate and is in both Spanish and English. Some of the videos however, such as the Tips from Missael Espinoza, from the Mexico Soccer team in only in Spanish and does not contain any subtitles unlike the rest of the videos. The links are relevant and sort the information into four categories: Your Music, Scholarships, Mexican National Team and Latin Pride. The Scholarships tab is the only one that leads to a bigger Web site designed to inform Hispanic students and parents about college and applying for scholarships. The Web site is only for consumer use.

McDonald's slogan or campaign theme of "Me Encanta" is clever and shows that although McDonald's is marketing towards Hispanics, the population is still part of the general population. Sometimes campaigns designed around a certain racial or ethical group will distinguish their differences instead of their strengths, morals and values. The public members (the Hispanic community) will relate to the theme and will enjoy that their material is available in both English and Spanish.Some of the video clips are available in Spanish and then in an accented English. McDonald's also uses the phrase "Mi Lado Latino" which means My Latino Side. This campaign is to promote Latino pride by providing consumers with computer wallpapers, t-shirt iron-ons, stencils, etc. with both the slogan and the McDonald's logo. While the idea is great, there isn't anything behind the campaign. There should be some information about Hispanic organizations, National Hispanic Month and things people could be proud about rather than just brand placement.

From a media standpoint, there isn't any links talking about what McDonald's is doing through its Hispanic marketing (Me Encanta). Surprisingly, the media center at McDonald's.com did not contain a general McDonald's press kit including a fact sheet or a backgrounder. The only material was pertaining to specific campaigns. And does not have that many press releases and none dealing with Hispanic marketing and campaign programs. It did have information on it's African-American Campaign 365Black and their work for Black History month. There were nothing about Hispanic History Month or the Me Encanta campaign (Electronic Press Kits Archive). The news releases that were found about "Me Encanta" were hosted on Web sites like PRnewswire.com and were pertaining to scholarships giving to Hispanic students. The majority of these documents concentrated on who received the money and how much money McDonald's had donated so far. There were also a number about college workshops being hosted in a number of high schools across the country. The documents concentrated on the scholarships rather than the restaurant (McDonald's Hispanic news on PRNewswire.com). However, on the general McDonald's Web site there is an electronic press kit for the entire McCafé campaign, and includes an fact sheet in Spanish (McCafé Perks Up Coffee Lovers Coast-To-Coast).

McDonald's also does not release information about their planning or marketing procedures. Attempts were made to contact representatives via phone calls and twitter and both times we were directed to the McDonald's Web site. The contact us student section states, "If you cannot find the information you are looking for on our website, then the information is either not available or it is considered proprietary/confidential. As such, we would not be able to answer your questions. And it went one to say "oftentimes, students ask very specific questions about McDonald's sales, business strategies and product information. However, due to the highly competitive nature of the quick-service restaurant industry, we simply cannot respond to questions of this nature" (Contact Us: Students). Contacting a representative from VPE Public Relations was also unsuccessful and as previously stated Alma DDB would only tell us what type of work they do for McDonald's. Therefore it is hard to find what particular planning measures that were taken prior to the launch. It is hard to know what type of research was conducted prior to the launch of the "Me Encanta" or "McCafé" campaign. However, because McDonald's is working with an agency and firm who specialize in the Hispanic market, it is general "Me Encanta" advertisement, which are merely the normal ads translated into Spanish. Having the English version of the Hispanic advertising spoken with a Spanish English accent was good move because it shows that many Hispanics speak English and that you don't have to just market only Spanish. It also shows that there are more to Hispanic culture than just the language (McCafé - Your search). And it is estimated that McDonald's McCafé campaign "is expected to receive an outpouring of more than $100 million fanned out across TV, print, radio, outdoor, Internet, events, PR and sampling" (Allison, Melissa). For the execution of the general McCafé campaign, McDonald's offered "Mocha Mondays" where they would give free samples of either their Iced Mocha or Hot Mocha beverage (McDonald's(R) Anticipates Giving Away an Estimated 10 Million Samples). They were also hosting a contest "McCafé Your Day" during the launch of the product, in including a grand prize of a $50,000 Visa gift cards (Perking Up This May, McCafé). Without information provided by McDonald's or the agency/firm, it is hard to tell if any evaluation was conducted after the launch to see if it was a success within the Hispanic markets. However, McDonald's is up for Ad Age's Marketer of the Year and received a lot of press on it's big McCafé advertising push (Vote for Ad Age's 2009 Marketer of the Year).

Overall the "McCafé" campaign was well planned and executed. Some of the strengths of the campaign was that it had it's own interactive Web site in Spanish and English just for the Hispanic market and was able to play off their cultural and societal values. It also created advertising in both Spanish and Spanish accented English just for the Hispanic Market. Some of the weaknesses was that there didn't seem like a lot of articles picking up on the specialized and specific Hispanic marketing initiatives that McDonald's. And other than the Web site or advertising McDonald's didn't appear to have particular promotions or contests involving the McCafé in the Hispanic community. It would have been a good idea to have McCafé sponsor events or concerts centering around the Hispanic community. An opportunity for McDonald's is their upcoming sponsorship of the 2009 Latin Grammy's concert tour. They would have given out free samples and information at these events across the country. A threat for McDonald's is the importance that coffee and espresso products play in Hispanic culture. McDonald's is truly trying to bring society awareness that a fast food company can provide coffee products at low prices without compromising the quality. Strategies and tactics that work well with this audience is making things family and music orientated and quality at a low price. McDonald's does this through it's McCafé section on Me Encanta, where it plays a Latin "Café" song and talks about the quality ingredients that goes into the product (McCafé - Home). Also by creating McCafé coffee shop it is promoting an atmosphere were the entire family can enjoy McCafé products.

Competitors in the quick-serve food industry are also jumping on the Hispanic marketing bandwagon. Burger King is "putting ads in such publications as Poder and Hispanic Enterprise" (Del Valle, Elena). According to the Director of MultiCultural Marketing for BKC, Alexandra Galindez, "Burger King Corp. is committed to engaging Hispanic consumers in a meaningful and relevant way" (Burger King). Burger King's main Hispanic campaign is "Futbol Kingdom" an interactive Web site with games and information about their "Futbol Kingdom" city tour (Futbol Kingdom). However, Burger King has made some "offensive" advertising for the European market, including one depicting a "little bit" Mexican man wearing the Mexican flag and promoting the Texican Burger. (Mexico protests Europe Burger King Texican Whopper advertisement's use of Mexican flag). Another quick-service food industry competitor is Wendy's. However, their site offered even less than Burger King's even though it references Vidal Partners for handling their Hispanic advertising (News). At the top right hand corner you could change the Web site from US English to US Espanol. However, this just translated the already present material and cut down on some of it's content. It removed the news & offers, ads and about us sections (Wendy's). Out of the three quick-service restaurants, McDonald's definitely not only had the most available for Hispanics when it came to advertising and interactive Web sites but also researched the market so not to offend the Hispanic market and community. Neither Wendy's nor Burger King had Hispanic oriented social media. Although they both had a general twitter (@theBKlounge, @therealwendys) and a facebook pages. This is the same as McDonald's (@McDonald's) and perhaps a spanish-only assumed that not much research had to be conducted for this particular campaign and that the agency/firm were familiar with Hispanic culture, society and values. As for the tactics, the goal of the campaign is to increase awareness and sales of McDonald's new coffee line, McCafé. And furthermore, to create positive attitudes of Hispanic consumers towards fast food coffee and espresso products. For the "Me Encanta" and "McCafé," McDonald's hosts interactive Spanish-English Web sites. According to the Alama DBB Web site, "Hispanics have a cultural relationship with coffee; they can sense when it isn't fresh or when it's been watered down. They trust their senses and know when something is real because they can see it, feel it, hear it, smell it and taste it. That's why our ideas was to take consumers to experience McCafé coffees with their 5 senses. We created www.meencanta.com/McCafé, a site with a great variety of activities that give consumers a space to interact with the product while stimulating their senses, using their webcam, microphone, headphones, mouse and keyboard" (McCafé).

Also the advertising for McCafé are made specially for Hispanics compared to the

facebook and twitter account will be soon implemented by the fast-food giants.

McDonald's currently has a website specifically tailored to the Hispanic community in both English and Spanish: www.meencanta.com. On this website, viewers will see a colorful display with interactive features to keep them enticed. Within that website, viewers will find a page for the McDonald's "McCafé." It also has an interactive display with Hispanic-styled music; the website is in both English and Spanish.
Through McDonald's Electronic Press Kit for their McCafé, viewers will see their mission statement, stating, "McDonald's McCafé espresso-based coffees are available nationwide, giving consumers a variety of customizable beverages that can be enjoyed any time of the day, as morning pick-me-ups or indulgent afternoon treats... McDonald's McCafé beverages include espresso-based coffees such as cappuccinos, lattes, mochas, iced lattes, and iced mochas, as well as hot and ices Premium Roast brewed coffees and hot chocolate." (“McDonald’s Electronic Press Kit.”) On this website, there are press releases, and promotional images and videos, specific to McCafé. The images they place on this site, not only include the product, but the images are of where the products are from with photographs of coffee farms and coffee beans. This goes to show consumers and the media that McDonald's McCafés are fresh and natural.

Upon entering the Hispanic McCafé website (http://www.meencanta.com/mccafe/index_english.jsp), viewers will be first see the eye-catching layout and then hear the McCafé music, modeled from Hispanic beats. The lyrics to the short music bit repeats: "cafe, caliente, soloso, my cafe," translated to coffee, hot, alone, my coffee. As the view moves throughout the site, they will experience all 5 senses of the McCafé: touch, taste, hear, smell and sight. The first link will bring the viewer to an interactive page where they can "touch" coffee beans by playing around on their keyboard. The second link will bring the viewers to another interactive page that explores the "taste" sense by putting the viewers face within the coffee's reflection. The third link will bring the viewers to a music bit that explores the "hearing" sense through aromatic sounds of brewing, pouring, and drinking coffee. The next and fourth links will bring viewers to a page that allows them to play with coffee foam, which represents the "smell" sense. The final and fifth link that explores the "sight" sense will bring the viewer to two commercials for the McCafé.
In "The Seattle Times" article, "McDonald's outspends Starbucks 4:1 on new ad campaign, reporter Melissa Allison describes how McDonald's is bringing in heavy competition for Starbuck Coffee Company. She says, "Now Starbucks is trying harder, with a brand campaign that launched this week as McDonald's begins an ad blitz for its espresso drinks, which have been rolling out for years but finally reached more than 11,000 stores." ("Coffee City McDonald's outspends Starbucks 4:1 on new ad campaign Seattle Times Newspaper.") The articles says how McDonald's will probably bring in more than $100 million through this new advertising campaign, using television, print, radio, internet, events, PR and sampling means of promotion.

"It’s cornered the market on Big Macs, fries, and shakes. And now McDonald’s is riding a massive marketing campaign to make gastronomic gains in premium coffee," states "The Boston Globe" in a June 18, 2009 article. ("McDonald's gains ground on coffee rivals Dunkin', Starbucks - The Boston Globe.") Reporter Jenn Abelson describes how with the introduction of the McDonald's McCafé, there is going to be a increased competition in the coffee industry. "McDonald’s is 'like a 9,000-pound gorilla,' said Dennis Lombardi, executive vice president of food service strategies for WD Partners, a restaurant and retail design and development consultancy. "They have made a very strong push to build share with its McCafé brand and to show it is an alternative to coffeehouses.'" ("McDonald's gains ground on coffee rivals Dunkin', Starbucks - The Boston Globe.")
ABC News states, "McDonald's Corp. on Tuesday began a more than $100 million marketing campaign including TV, radio, print, online and outdoor ads for its McCafé line of espresso drinks. The drinks are now being rolled out to the chain's 14,000 U.S. locations." ("Coffee Retailers Heat up Advertising, Cut Prices - ABC News.") This article talks about the drop in prices advertising prices as the competition to advertise goes up.
In a blog on HispanicAd.com, Manny Gonzalez describes in detail the four "P" of advertising within McDonald's McCafé Campaign. He states that within the product domain, the McCafé has contributed to about 2.8% increase in McDonald's U.S. sales. He goes on to say that the cause of McDonald's success is their diverse pricing strategy. Within the place domain, what also contributes to this success is the direct relationship between franchises and corporation. Through this direct relationship, McDonald's helps franchises become well-represented ethnically, as the most prominent and successful franchisees are in LA and NY, where many Latinos reside. He then examines McCafé's promotions and concludes that McDonald's marketing is centered around the multicultural aspect. They realize that they need to be marketing to a diverse population. (http://www.hispanicad.com/blog/?p=169)
In "McDonald's Mobile Campaign Targets Hispanics," reporter Mark Walsh says that 10 million samples of the McCafé will be given away on "Mocha Mondays" "as part of its broader push behind the new McCafé coffee line." Working with a mobile ad network, McDonald's, specifically targeting the 2.3 million New York Hispanics, created a mobile text messaging system that will remind users to take part in the "Mocha Mondays," where they will receive a free 7 oz. Iced McCafé Mocha or an 8 oz. Hot McCafé Mocha. ("MediaPost Publications McDonald's Mobile Campaign Targets Hispanics 08/06/2009.")

On May 5, 2009, McDonald’s released their “McDonald’s McCafé Perks Coffee Lovers Coast-to-Coast press release. It examines the new McDonald’s McCafé beverages. In the press release, the slogan “McCafé Your Day” is introduced as well as a contest and sweepstakes where “consumers are invited to visit www.mcdonalds.com/mccafe to submit a story and photo about why they or someone they know deserve a chance to be one of two grand prize winners, each taking home a $50,000 Visa gift card and $500.” ("McCafé Perks Up Coffee Lovers Coast-To-Coast.") The news release goes on to explain the enormous launch of the McCafé:

In 2006, McDonald’s successfully introduced Premium Roast dip coffee. In 2007, the company introduced iced Coffees to the menu and began testing the full-line of espresso-based specialty coffees in selected U.S. markets. The national introduction of McCafé marks McDonald’s largest product launch in 30 years, since the introduction of the Egg McMuffin sandwich to its national breakfast menu in 1977. ("McCafé Perks Up Coffee Lovers Coast-To-Coast.")

The July 9, 2009 press release, “McDonald’s Anticipates Giving Away an Estimated 10 Million Samples during the ‘McCafé Mocha Monday’ Nationwide Sampling Event Starting July 13,” introduces the McCafé Mocha Monday, where consumers can get free (specified) coffee each Monday from 7 a.m. to 7 p.m. at participating restaurants from July 13 to August 3. This press release states that this is the largest sampling initiative McDonald’s has ever taken. Like in the previously-mentioned press release, this release goes over the McCafé Contest and Sweepstakes, as well as a brief overview of the McDonald’s brand coffee. (McDONALD’S® ANTICIPATES GIVING AWAY AN ESTIMATED 10 MILLION SAMPLES DURING THE “McCAFÉ® MOCHA MONDAY” NATIONWIDE SAMPLING EVENT STARTING JULY 13.)

Found on Hispanic PR Wire, a press release, “Gavina Coffee Helps Put the Accent on McDonald’s New McCafé Brand,” goes into a detailed overview of coffee supplier behind the McCafé. It talks about how a family-owned company, known as Gavina Gourmet Coffee of Los Angeles “helped formulate the company’s successful line of McCafé specialty coffee drinks recently launched on a national level.” ("Hispanic PR Wire - Gavina Coffee Helps Put the Accent on McDonald's(R) New McCafé(R) Brand.") The press release goes into a history and ends with a quote from the owner of the supplier; he says that “McDonald’s has given [the company] an opportunity to prove [themselves.]” ("Hispanic PR Wire - Gavina Coffee Helps Put the Accent on McDonald's(R) New McCafé(R) Brand.")

Overall, the media coverage seems to be similar to McDonald’s messages. There have not been any controversies around the new McCafé beverage, so there are not different in messages. All the media coverage seems to center around how McDonald’s is new competition for other coffee brands and how McDonald’s has invested so much into their McCafé campaign. The press releases typically talk about what McCafé is and how it came to be. They also illustrate the different events to help promote the McCafé. The media seems to use this same information about the fact of McCafé in their coverage.
When compared to McDonald's competitors the brand is far ahead when it comes to Hispanic marketing but furthermore, it's outreach allows Hispanic consumers to connect on a deeper level with the brand. It shows effort to produce Hispanic oriented commercials in both Spanish and Spanish-accented English. And their Hispanic oriented Web site, Me Encanta, is impressive along with their specific product interactive Web sites. Hispanics should be proud to know that their consumer buying power is being taken seriously and that companies are specifically adjusting to meet their needs, culture, values and norms.

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