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You are here: Home > Current Topics > Mind your Business > 29 March 2004 |
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My kids often ask if I will take them to McDonald's. I dismiss their requests, regaling them about the lack of goodness in a McDonald's and the fact that they seem more interested in the free toy than in what they get to eat. There is something about the smell of those chips though! I don't know where their desire to eat at McDonald's has come from. Neither my wife nor I have ever been a McDonald's aficionado, but it seems that somehow they have been drawn into the McDonald's family. When they go to a birthday party at a local store they really look forward to it and I am not altogether sure why. 
Maybe it has something to do with the $1.4 billion (£750 million or €1.13 billion) a year the company spends on advertising? Maybe it has something to do with the fact that wherever you go in the world there's always a McDonald's close by. Maybe it's something to do with the smell of those chips? Am I being a really mean dad by diverting my kids away from something they clearly seem to like? I console myself with the thought that I am helping in some small way to stall the rising tide of obesity that seems to be the focus of so much discussion these days. Image: Can McDonald's be part of a healthy diet? Source: Holger Dieterich, stock xchng In September 2003, a court in the US threw out a law suit filed by two teenagers from the Bronx in New York that alleged McDonald's had contributed to their obesity and health problems. A spokesperson for McDonald's said that the judgement was a victory for common sense and that McDonald's food can "fit into a healthy, well balanced diet based upon the choice and variety in our menu" (Source of quote: Walt Riker, Spokesperson, McDonald's Corporation). 
Morgan Spurlock, a budding film maker from West Virginia also saw the comments from McDonald's and decided to test out the theory that the food was indeed healthy. He filmed a documentary reflecting the views of Americans on fast food, obesity and corporate responsibility in his first film 'Super Size Me'. The film is more than just a run of the mill documentary however. At the heart of the film is a record of Spurlock's health and state of mind as he exists on a diet of nothing but McDonald's menu items, three meals a day for 30 days. Images reproduced by kind permission of Super Size Me. 
Spurlock put on 2 stone (12.7 kilos), suffered stomach pains, mood swings, vomiting, a reduced sex drive, headaches, palpitations and liver problems. Hardly surprising you might suggest if that is all he eats! Certainly the McDonald's Corporation looks at it that way. Walt Riker suggests exactly that, pointing out that it proves nothing other than "if you stuff yourself with food and stop exercising it's probably not a good idea" (Source of quote: The Daily Telegraph, Friday March 19th 2004). However, in March this year, McDonald's announced that it was phasing out its supersized drinks and fries portions in an attempt to give customers choices and support a balanced lifestyle. The film has certainly aroused interest in the US. It won Spurlock the 'Best Director' award at the recent Sundance Film Festival in Utah. It is due for release in May in the US and whatever people think of the actions of Spurlock, it will make uncomfortable viewing for McDonald's as it tries to counter the ever growing concern about the problems of obesity in the developed world and its contribution to those problems. |
Promotion is one of the key elements of the marketing mix. Invariably, it is associated with advertising and whilst advertising certainly plays a part in promotion, it is just that - a part. Promotion involves much more than just advertising. It is about ways in which the business makes the consumer aware of the existence of the product or service and where that product or service can be acquired.
Other elements of promotion therefore include gifts, competitions, user testing, direct mailing, roadshows, sponsorship and public relations. This last point is very important for many businesses. Years can be spent building a brand image for a product. That image has to be positive and often takes time and money to burn the idea into the nation's consciousness. The length of time spent building a brand image can be brought to nothing if there is some form of public relations disaster whereby the messages being communicated to the public are the wrong ones.
Image: McDonald's - a global business. McDonald's roadside sign in Germany. Source: Max Peter, stock xchng
Two very good examples may serve to highlight this.
Of course, the jewellery was not high quality - at the prices they charged it was never likely to be, but as consumers, we do like to think that we are getting a good deal. Mr Ratner presented a speech at the Institute of Directors in 1991 and was aiming to clarify the winning formula he seemed to have hit upon. In the speech he referred to one of the products sold in the shops as being 'total crap' and pointed out that some products were cheaper than an average sandwich. Shoppers at his stores probably knew deep down that what they were buying was not 22 carat but they do not want to be told that they are buying 'crap' by the head of the business.
These two examples highlight the reasons why so may businesses take great care to protect their hard won image and to be very careful about the way they present their product and what is said about it. An extension to this is to view the product in a much wider sense and to think about how the business as a whole is perceived. McDonald's for example, proudly announce that it serves 47 million customers a year. That may be good news for shareholders but it can be seized upon by environmental groups who point to the waste that is created by 47 million customers disposing of the packaging that the products come in. McDonald's therefore has to find ways of countering such criticism.
Corporate Responsibility is some measure of the impact that a business has on society and the environment as a result of its business actions. Such actions could impact on the level of land, sea and air pollution, be relevant to the way in which a business views it key stakeholders, how it treats its workers, how it interacts with the community and so on. McDonald's is keen to stress its commitment to meeting its social responsibilities and their Web site has plenty of information relating to these issues. Many companies now have a similar section in their Annual Report with details of its impacts and how it is seeking to minimise them.
Some however, claim that such reports are merely an attempt to gloss over the true impact that they have and that the notion of increasing profit for shareholders and protection of the environment for example are inherently incompatible!
Access the McDonald's Social Responsibility Report (http://www.mcdonalds.com/corp/values/socialrespons.html) and look at the highlights of the main report (it will download quicker). Compare this to the Environmental and Social Review published by BP (http://www.bp.com/liveassets/bp_internet/globalbp/STAGING/global_assets
/downloads/E/Environmental_and_social_report_2002.pdf).
Access the McSpotlight Web site (http://www.mcspotlight.org). It is a site that claims to offer information about how multinational corporations behave and puts different views about their activities in the public domain. There is plenty of information about McDonald's but in the 'Beyond McDonald's' section, you can also get information about other companies. Find the information on BP. (http://www.mcspotlight.org/beyond/companies/bp.html)
1. Discuss the ways in which the two companies present their social responsibility reports.
This question encourages you to look at the approach to the reports taken by the two companies. The way you answer it therefore depends on how detailed a look at the reports you have made. As a guide to some of the issues to consider in your discussion, look at the type of language used by the two companies in their report. Do the companies manage to quantify the impact of their activities on society as a whole? Are the reports a means of communicating information on the impact of the companies' activities or a means of showing what they are doing to promote the business? Are they primarily quantitative or qualitative in approach?
2. Compare the information provided at this site with the information contained in the two companies' social responsibility reports.
The information from the McSpotlight site will obviously give you some different perspectives on the two businesses chosen. Remember, that it is important to critically analyse anything you read - do not get caught out by accepting everything you read as being true! For example, one comment from the information on BP implies that BP opposed a bill pursued by the State of California to improve tanker safety. This sounds, on the face of it, a damning indictment of BP. If you are critically analysing such information you should ask yourself the question, what were they opposing? Was it all of the bill or certain aspects of it? The site quotes BP as having spent $171,000 (£92,630) opposing the bill. Think of how much money this represents to BP, after all the company did turnover £232.5 billion in 2003. The money spent therefore represents 0.00000398% of their total turnover! When you consider the information in this light it starts to look a little different! In some cases, you might not be able to answer your own questions but the very fact that you have raised them shows that you are thinking about the issues you are reading and trying to make sense out of them as well as making judgements about these issues.
3. Using all the evidence you have looked at, assess the importance and value of social responsibility reports in a businesses promotion strategy.
There are two questions to answer here. One asks you to consider the importance of these reports to business strategy. The answer will be likely to be reflected in the number of businesses that are now seeking to incorporate such information in their annual reports and the time and expense taken in generating the information. Looking at some of the details of the figures provided by BP, for example, gives some indication of what is involved in monitoring activity. Highlighting the company's image is, we have suggested, an important part of public relations within the promotion element of the marketing mix.
The second asks you to consider the value of the reports in business strategy. This is hinting at the suggestion by those opposed to such organisations that they merely seek to gloss over the truth. You will need to make a judgement as to whether what you have read suggests to you a 'fudge' or whether the quality of the information provided is sufficient to withstand robust scrutiny from outside agencies. If you believe that what you have read is merely 'hot air' or an exercise in marketing some of the charitable activities of the company concerned then you will need to support your view by reference to appropriate sections of the report or use quotes, etc. to provide some evidence for your judgement.
