The resilience of McDonald’s

McDonald’s is one of the few stocks that actually increased in value during 2008 — a year in which 95% of stocks fell.  Not only that, but sales have continued to grow.  The strength of McDonald’s is amazing! 

Is this simply because a lower cost restaurant will do better in a recession?  If we look at the last recession, the stock price of McDonald’s actually fell rather dramatically.  So it cannot be only the greater economy that is driving McDonald’s performance.

If we look back, we can see that McDonald’s actually began this decade in rather tarnished shape both as a business and a brand.  As a brand it had lost relevance and trust.  In the last recession McDonald’s was weak and in this one it is strong.  In fact, today McDonald’s is one of the strongest businesses and brands in the world.  Remarkable!

How did this happen?  

The changes began at the top, with new leadership.  One of the most important hires, and most counter-intuitive, was bringing Larry Light on as the Chief Marketing Officer.  Larry Light had a storied history working at the advertising agencies BBDO and Ted Bates.  Bringing in someone with that background was unconventional for McDonald’s.

To turn around the McDonald’s brand, Light jettisoned traditional brand positioning.  He was prescient in seeing the traditional brand marketing model as being broken.  In his own words, “We reject the outmoded view of the positionistas… declaring an end to the out-of-date, simplistic concept of brand positioning…”

Light’s great insight was that brand positioning was too limiting for the McDonald’s brand.  It narrowed the potential audience for the brand down to a single market segment.  For the brand to grow, it needed to appeal to many segments of the market, not just one.

He needed a new model for brand marketing.

Always resourceful, Light developed a narrative method for brand marketing.  He called it “Brand Journalism”  It was custom made for McDonald’s.  It was far, far more than just an advertising campaign.  It was the basis for rebuilding the internal culture of McDonald’s, for shaping the company’s business strategy, for changing menus and for redirecting their overall marketing efforts.  Because it was a new model, it also required developing new market research tools and metrics.  Existing market research was designed to assess the key elements of brand positioning.  It was not appropriate for assessing a brand based on the principles of  brand journalism.

“McD’s Abandoning of Positioning is ‘Lunacy'” screamed the headlines in AdAge.

Less than a year later the magazine changed their mind.  AdAge awarded McDonald’s “marketer of the year.”  A turn around indeed! 

Brand Journalism is, at its heart, a narrative method for creating and managing a brand.  The full story of it and McDonald’s turn around remains to be written.

This narrative method is part of the reason why McDonald’s continues to be so resilient today as both a brand and a business.

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