McDonalds Case Study
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Transcript of McDonalds Case Study
McDonald’s Case Study
BrandScience Conference
16 Novembro 2007
2
McDonald’s TodayTrends
Emergence of the “Smart consumer”
Growing demand for time saving solutions
Quest for Well-Being “good for the body and for the soul”
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McDonald’s TodayBusiness Results
2005 2006 2007
Rate of Sales Growth
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McDonald’s TodayChallenges
Understanding key business drivers and their potential
Pricing
Extended Hours
Store remodelling
Food innovation
Brand Trust
Operational Excellence
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McDonald’sChallenges
Maximizing our marketing budget in times of limited resources
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McDonald’sChallenges
Balancing short-term and long-term initiatives
FranchiseeMarketeer
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McDonald’s
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McDonald’s and BrandScience
Development of a solution that:
Quantify the impact of business drivers
Aids sales forecasting
The basis for budget optimization, specially the media budget
Econometric modelling
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McDonald’sBrandScience Results
Identifying key sales Drivers
Seasonality Price
Stores
&
Timetables
Promotions
Product
Variants
Advertising
Brand
Performance
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McDonald’sBrandScience Results
Base Price Stores+Timetable Brand Performance Product Promotions Advertising
Base + Seasonality
Quantifying Effects
sale
s
weeks
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Price Timetable Brand Performance Product Promotions Advertising
McDonald’sBrandScience Results
New product launches
Increasing brand consideration
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Quantifying Effects
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McDonald’s
1st w
eek
2nd
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3rd
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Seasonality Learnings
End of Month Effect: results suggest that most people are paid close to the end of the month, as such are more willing to “eat out” in the 2 following weeks. As the end of month approaches, a negative impact is visible
Incr
emen
tal s
ales
Carnival
25 Apr
Corpo Deus
1st school week
5th October
1st November
1st December
8th December
Xmas
Children's Day
Extremely important for promotional activity scheduling
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McDonald’sProduct Insights
Incremental Sales Effect
Eurosaver indicator
Increasing the Eurosaver program’s product offering has proven effects over sales
Incr
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tal s
ales
Synergies' with Summer weeks
Eurosaver offeringweeks
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McDonald’sProduct Insights
The introduction of new products produces a novelty effect that lasts for at least 4 weeks an in a recent period this effect has risen and lasts longer
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1st w
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2nd
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3rd
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4th
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5th
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7th
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1st w
eek
2nd
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3rd
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4th
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5th
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6th
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7th
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9th
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New Product Launch New Product
Launch
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McDonald’sProduct Insights
Happy Meal - different offers have different levels of appeal, hence the effect over sales is also quite different
Incr
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Incremental Sales HM
Xmas
Summer
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McDonald’sPromotion Insights
Two different types of promotion: the 1st offering a price discount, the 2nd implying a special offer when buying a particular product. Both have a significant effect over sales, even though the discount on average has a higher impact
Incr
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Promotion Intensity
Incr
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Special offer distribution waves
Free Gift BNon food item plurchase
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Free Gift A
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TV GRP's Eq. - Brand Campaigns Brand Performance Press - Brand Campaigns
McDonald’sBrand Performance
Increasing brand performance
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McDonald’sROI
Promotions and advertising have very different levels of return on investment.Price discounts produce a high level of return, however it isn’t taken into account the forgone revenue due to a price decrease.
RO
I
Sales upliftInvestment
ROI =““
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PriceDiscount
OtherMedia
Avertising
SpecialOffer
TVAdvertising
Econometric ModellingMedia planning implications
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95%
2%2%
OUTDOOR
PRESS
RADIO
TV
McDonald’s advertising is highly focused on TV, however return by media figures show that radio is also a valuable media.
TV Radio Press Outdoor
RO
I
Media – ROI
95%
2% 2%
Ad Spend by Media RoI by Medium
20052005
20062006
Note: ratecard valuesSource: MediaMonitor
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Bra
nd
New
Pro
duct
Pro
mot
ion
A
HM
Pro
mot
ion
B
RO
I
Media – ROI per campaign Type
RoI by Campaign Type
Promotional or price related campaigns tend to show higher ROI
Different campaign types have different sales impact which affects thelevel of return by medium
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An advertising campaign effect extends beyond its own life period, and how long this effect last is a function of creative, campaign type and media used.Promotional campaigns have a half life period of three weeks, however for new product campaigns this figure is closer to two week
Media – Carryover Effect
1 2 3 4 5 6 7 8 9 10 11
Promotions
Brand
New Product
Half Life by Campaign
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S-shape curves applied to advertising: identifying saturation points and investment thresholds
Media – Advertising Effect
Camp ACamp B
Incr
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Investment
Minimum level of investment
Saturation point
A B C D
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These curves provide guidance in media planning, allowing for wastage minimization
Media – S shape curves
BRANDNEW PRODUCTPROMOTION BPROMOTION A
GRP’s
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S- shaped curves by Campaign Type
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The incremental effect of tv activity tends to be higher when radio campaigns are being aired, there is also a visible effect related to outdoor activity.Tv also enhances other media performance
Media Synergies
TV onlyTV+RadioTV+Outdoor
Time
Incr
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TV
onl
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TV
+Rad
io
TV
+Out
door
Incr
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TV Effect
Rad
ioon
ly
TV
+Rad
io
Radio Effect
Out
door
only
TV
+Out
door
Outdoor Effect
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TV Effect - 1st w eek month
TV Effect - 2nd w eek month
TV Effect - 3rd w eek month
Consumer income doesn’t affect solely the sales pattern but also media performance. Starting an advertising campaign in different weeks of the month affects media return
Media scheduling
Time
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Scenario Evaluation