McDonald’s Advertising in China
McDonald’s and KFC in China: A taste of Home
After being in China for a long time, do you sometimes get the urge to turn to KFC & McDonald’s for a “taste of home”?
Many expats in China have had the same experience, and I have no idea why it happens. Maybe it’s because it is almost impossible to get a cheap and tasty sandwhich in most places in mainland China, and KFC or McDonald’s is the closest thing . Whatever the case may be, KFC & McDonald’s, unappealing back home, have a strange attractive power in China. Do you agree?
Yesterday I was reading another article about McDonald’s new advertising campaign in China (partially talking about the introduction of the Quarter Pounder into the Chinese marketplace), and it almost compelled me to grab a Quarter Pounder for lunch. Almost. Here is the article about McDonald’s new advertising strategy in China, translated from Chinese into English out of Modern Weekly:
McDonald’s Move in China
Is it a hamburger made up of a special wrapping? Uh, of course not. It’s just McDonald’s saying that they should be the beef leader of China.
28 year old Xiang Qiang regrets that before recently he never knew what difference there was between Colonel Sanders and Ronald McDonald [or Uncle McDonald as they refer to him in China]. Fried chicken, chicken sandwiches, and ice cream were all “clone” products to him, and he always would just pick the most convenient of the two on his way home. But now he knows, if you want to buy a tasty beef hamburger in China, you have to run to the golden arches and their sweet aroma.
At the same time, Gary Rosen is welcoming this new type of customer, and is filled with confidence over McDonald’s recent advertising campaign in mainland China. Rosen, an American born beef eating vice-president and president of marketing and sales of McDonald’s China, is carrying out a bold experiment in China. He wants to transform McDonald’s image from a family friendly, magical place to a more alluring place. As many other multinational companies throughout the world are becoming more and more ‘localized’, McDonald’s is carrying out its own “localization movement” in China, letting off the savory aroma of beef.
Beef hamburgers are McDonald’s signature dish, and people in China “are happier to see a McDonald’s that represents its roots”, says Rosen, who says he understands this notion and wants to make it stick in China.
McDonald’s Advertising in China
Gary Rosen repeatedly emphasized that the recent advertising campaign is a new milestone for McDonald’s in China. But it doesn’t mean the inviting lips in McDonald’s new China advertisements can convince a customer to eat at a McDonald’s in China. They just represent McDonald’s rebirth in China.
All of these changes are for beef, and there’s more than just the new advertisements mentioned above.
Have you seen the double golden arches’ “advertisement tissue” in Chinese newspapers and magazines? Can you imagine what you could do with this enormous napkin? Think for a moment how you could use it to wipe away sauce from your mouth… so much sauce, it will cover your entire mouth… it’s like the napkin can speak. That’s right, the napkin is saying “thicker, with more sauce”. That’s McDonald’s quarter pounder with cheese sandwich in China.
In addition to these sensory experiences, McDonald’s is making use of its comprehensive marketing advantage in the Chinese market, developing a long-term “Beef” education campaign. Relying on its “do you have enough beef?” slogan, McDonald’s is using many marketing channels to “challenge” young Chinese people. You can register within stores as a “beef person”, join the “beef club” online, share in the “beef experiences” of stars, and of course engage nutritionists from the China beef promotion. All of this just goes to show, the nutritional value of beef will be ingrained in the minds of Chinese consumers.
This time around, McDonalds wants to solve the problem from the inside out. “The ultimate beef experience that we are creating in McDonalds in China is a result of customer research and feedback.” Says Gary Rosen. This is McDonald’s true strength in China: Keeping up with the lifestyle changes of Chinese consumers, and providing the absolute best Chinese fast food experience after analyzing these changes.
The difference this time around is that McDonald’s is leading the way in the Chinese fast food market. McDonald’s now seems as if it is throwing aside the “Chicken Battle” among its fast food competitors in China. In most markets around the world, McDonald’s and KFC have traditionally been defined by the “KFC’s fried chicken, McDonald’s hamburgers” dichotomy. Both McDonald’s and KFC had their own turf, and they lived in peace with one another. But McDonald’s quietly ripped apart the “beef hamburger” menu it had in the rest of the global market, and released a similar menu to KFC’s in the Chinese marketplace. McDonald’s China menu was filled with chicken products.
But the numbers prove that McDonald’s “Chicken Battle” in China was not successful. In 2005, Pepsi-Cola Company’s China operations had a 19% profit margin, but according to fast food industry analysts, McDonald’s profit margin in China was likely only 10-11%. In addition to this, McDonald’s 760 stores is approximately 1/2 of KFC’s store count in China. KFC is also adding new stores in China at the torrid rate of one store per day.
McDonald’s failure in the “Chicken Battle” caused it to reconsider its China strategy. Along with the increasing wealth of China’s growing middle class, beef consumption is increasing at a faster rate than pork or chicken consumption, and their success in marketing the Big Mac in China has made McDonald’s realize it needs to push beef products in China. “This is our tradition, and it is also our speciality.”
An Authentic McDonald’s in China
And just in this way, young Chinese consumers began to find out McDonald’s “speciality”. Even though more than half of McDonald’s fast food meat sales in China are still Chicken products, with only 35% of sales made up of beef, Gary Rosen is quite satisfied.
How much the “taste for beef” can take up among China’s future fast food meat sales in China depends on Chinese consumers, Rosen says, but what is certain is this: In China, no other fast food restaurant is able to provide high quality and protein-laden fish, chicken, and beef, at least not all together. This is McDonald’s stepping stone in China, and the “speciality” that sets it apart from its fast food competitors in China.
Without a doubt, McDonald’s hopes it can return to its American tradition of beef in China. In September, when it changed its China menu, McDonald’s adhered to convention in keeping the number of items on the menu the same to help customers more effectively make choices. When the new menu came out, McDonald’s asian flavored beef, chicken, and sticky rice wedges disappeared from McDonald’s China menu.
Does this mean that McDonald’s is giving up its local flavor in China in order to become thoroughly “American”? Gary Rosen‘s answer is strongly in the negative: “We would absolutely not 100% ‘localize’ our menu in China, since McDonald’s is a Western brand, but we are also hard at work in the flavor laboratories we have in mainland China and Hong Kong, coming up with menu items that meld with the lifestyle of Chinese people, and that suit the taste buds of Chinese consumers.”
And reality shows that the “Quarter Pounder” in China is not exactly the same as the American one. Cucumbers replace pickles, and tomatoes and spicy sauce were added, ingredients that appeal to Chinese taste. This is the result of doing taste tests with 16 different combinations of various ingredients complimenting the Quarter Pounder.
While McDonald’s has thought about introducing the rice sandwiches/hamburgers it has brought out into Taiwan, Hong Kong, and Singapore into the Chinese market, consumer taste tests have revealed that the reason consumers in China go to McDonald’s is to eat McDonald’s specialties, not simply to eat local-like food.
Hence, the consumer is the final decision maker in the choice between McDonald’s returning to its American roots in China or going local. And a slab of beef is not enough to convey the local American flavor McDonald’s wants to show off in China.
What is developing behind McDonald’s turn in China is a return to its core competitive sphere. McDonald’s is implementing a strategic adjustment that includes not just suitable food products and menu re-creation in China, but the re-design and feel of stores, setting up strategically located new stores, establishing drive through stores, and overhauling such things as purchasing, supply chain building and management, and much more.
All of this ties into the question of whether McDonald’s will be able to reach its 1000 stores in China goal by 2008. But what Chinese consumers care about the most is whether McDonald’s style of authentic Western taste is able to fulfill their Chinese appetite.