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There is an old saying among marketers that goes like this; “we can do whatever we want, we just can’t do everything we want.” Most QSR brand managers I know spend a lot of time agonizing over their marketing calendar trying to figure out what initiatives to pursue and what to leave behind. Should they spread the marketing dollars across several initiatives or focus on only one or two? They want to know the calendar optimization secrets that will keep the brand healthy, customers happy and sales as high as possible?
QSR Marketing Dynamics
Back in 2010 and again in late 2012, Secret Ingredient Marketing studied the QSR category in great detail in an effort to understand QSR marketing dynamics and establish benchmarks that brands could use to guide their planning. Each time we studied marketing communications from 5 leading QSR brands in the US and the UK over a 12 month period. In total, we looked at over 2000 ads (digital, print and TV). We took a total market approach that looked at regional and national efforts as a whole. Our analysis revealed that the advertising from the 5 leading QSR brands can be categorized into FIVE unique marketing platforms.
1. Taste/Quality Platform:
Marketing communications in this area are all about the food. The taste and/or quality of the food is the marketing story. Often this is about dramatizing a taste benefit, but it is also about highlighting the quality of specific ingredients or preparation method. Healthy/better for you options also fall into this category. Examples include ads for McDonald’s Iced Frappe, Wendy’s Pretzel Bun, Taco Bell’s Dorito’s Loco Tacos and KFC’s Grilled Chicken.
2. Price Value Platform:
Efforts in this area are all about communicating a low price point. It is about establishing everyday low price items and price points that match or exceed category expectations and serves the needs of a brands most price sensitive consumers. These could be value menus, low price LTOs, low price combos, etc. The most typical examples here are the various $.99 menus in the category, but also include ads for things like the $5 foot long from Subway and the $10 any pizza from Pizza Hut.
3. Bundled Meal Platform:
This platform is a close cousin to Price Value but differs in that this is more about communicating the amount of food you get for the money rather than the price itself. Often this platform is about re-imagining combo meals as abundant food bundles. From $5 box meals from KFC and Taco Bell, to McDonald’s 40 piece nuggets, to complete meal deals from KFC, this platform demonstrates consumer value by emphasizing the amount of food the consumer gets.
4. Brand Relevance Platform:
While every marketing effort should feel well branded, this platform is about ads dedicated to building the big brand and demonstrating its consumer relevance in a way that transcends the food. Examples include Subway’s use of Olympic athletes, McDonald’s “I’m Lovin’ it” campaign and the provocative Paris Hilton ads for Carl’s Junior.
5. Added Value Platform:
We call this the Added Value Platform because it emphasizes what you get in addition to the food. The most common examples here are kid’s meal toys and contests like Monopoly from McDonald’s. While not every brand uses Added Value initiatives, when used correctly it can be a good way to build traffic around a day-part, boost sales of core products or capture seasonal business.
QSR Marketing Benchmarks
Now that we have identified the key platforms that drive marketing in the category, let’s get back to the first question. How much promotion should each of these platforms get? Is one platform more important than the others in terms of driving sales success? Is there an ideal mix of platform support that a brand should pursue over the course of a year?
The first thing we need to do to answer this question is to separate the sales leaders from the laggards. During the period we studied, McDonald’s and Subway have proven to be the category sales leaders in terms of long term growth. Only in the last two years has McDonald’s struggled (more on this in future posts). Since 2009, Subway has grown 21% and McDonald’s 15%. During the same time period, KFC and Burger King had negative growth. KFC was down -9% and Burger King was down -5%.
The next question to ask is what benchmarks can be derived from studying the marketing behavior of these sales growth leaders and laggards? How do they go to market with respect to these 5 marketing platforms? It turns out that both McDonald’s and Subway go to market in much the same way. And, in a much different way than KFC and Burger King.
The Sales Leaders
For these two brands, the lion’s share of the communication (33%) fell under the Taste/Quality platform. These brands seem to recognize that selling the quality or taste of the food is the most important thing to do. The next most important initiative was Price Value. Twenty-two percent of all communications was related to price. While Taste/Quality and Price Value seem to be the dominate initiatives, 18% of all communication was dedicated to creating Brand Relevance through dedicated brand advertising. The Bundled Meal Platform was the next most important initiative with 17% of communications related to this category. And finally, just 11% was about promoting Added Value offerings.
The Sales Laggards
Not surprisingly, the marketing profiles of KFC and Burger King look very different from these leaders and very different from each other. In the case of KFC, only 12% of their efforts went towards Taste/Quality. In contrast, KFC seems to spend most of their efforts promoting Value initiatives. Specifically, 35% of their effort went to Price Value and another 29% went to Bundled Meal deals. Together, that is 64% of their marketing effort going toward Value and the expense of Taste/Quality. Twenty-three percent of their ads were dedicated to Brand Relevance.
Burger King has been all about promoting Added Value initiatives. A whopping 28% of their efforts was in this area. This is more than double the promotions levels that Subway & McDonald’s did. Like KFC, Burger King did not support Taste/Quality to the same level as McDonald’s & Subway. Only 21% of BKs efforts went toward this platform. BKs support for Brand Relevance and Price Value was on par with McDonald’s & Subway.
QSR Marketing Best Practice?
So, what can we learn from this analysis? First, we learn that taste and/or quality focused marketing communications seems to be a key to sales success. For a brand to be successful, it must continue to appeal to the appetites of its customers. Whether it be introducing exciting new tastes & textures, finding appetizing ways to sell the old favorites, highlighting better for you options or articulating quality preparation methods, smart brands will put the Taste/Quality of the food front and center. KFC and Burger King don’t seem to subscribe to this point of view! Brands would be wise to dedicate approximately one-third of their marketing efforts to promoting Taste/Quality.
But, that’s not the only thing that matters. While Taste/Quality should come first, promoting Price Value (e.g. Dollar Menu items and LTO price offers) is also important. With the encroachment of Fast Casual, on Fast Food’s turf, it is a good idea to reinforce QSR’s Price Value advantage over Fast Casual and appeal to the needs of price sensitive fast food eaters. However, too much Price Value advertising can be counter-productive (more on this in a future post). For example, KFC’s attempt to hang their marketing hat on Value promotions does not appear to be working. It seems reasonable to keep these efforts in the 20-25% range, but nothing higher.
The importance of Bundled Value seems unclear. Subway and McDonald’s have done a little of it, KFC has done a lot of it, and Burger King has done none of it. Still, it seems true that traditional combo meals are being reinvented as box meals, party boxes and home meal replacement with an emphasis on abundance. The notion of getting a whole lot of food for not a lot of money has proven successful. Targeting “big eaters” with compelling Bundled Meal solutions seems like a good idea and keeping these promotions to around 15% or less seems about right.
Perhaps the most overlooked and controversial part of most QSR brand’s marketing mix is dedicated brand advertising. Ad Agencies often say that brand advertising should be first on the list and Clients often want to put it last. Turns out they may be both right. This analysis suggests that a significant effort toward promoting brand relevance is important to sales success, but is not the only thing. Whether it’s a big advertising campaign like “I’m Lovin It” from McDonald’s or a clever tie in with The Biggest Loser for Subway, QSR brands need to find a way to build brand relevance at a level that transcends the food. But this works only if there is sufficient Taste/Quality promotions in place. So, dedicating 20% of your marketing effort toward the big brand does not seem excessive.
Finally, this study seems to suggest that a small amount of good old fashioned sales promotion tactics (e.g. Monopoly from McDonald’s) can help drive sales during slow periods, breathe new life into core products or help steal transactions from competitors during the busy months. Done correctly, it can also add value to the brand. If giveaways and contests feel right for your brand, then by all means do them. But do them sparingly with no more than 10% of your efforts going in this direction.
So, what do you think of this assessment? Does it fit your brands marketing model? Are these “best practices” worth pursuing?
Our view is that this model is a good starting place, but does not explain all that QSR marketers need to know to be successful. While it is important, there is more to QSR sales success than a well-managed promotional calendar. For example, we have not yet discussed the importance of consumer insight and role of innovation. Even within each of the 5 platforms, there is much knowledge that can be shared. It’s one thing to identify Taste/Quality as an important platform, it is quite another to know how to execute effectively within that area.
My next posts will try to put more meat on these bones (pardon the pun) as I will analyze McDonald’s to figure out what has gone wrong. I’ll also look at super successful brands like Chic-fil-A – a brand that has grown 42% since 2009- to show what makes them successful?
In the meantime, if you would like some help getting your brand on track or would like to learn more about our competitive analysis services, please send us an email or give us a call. We would love to hear from you.