Note: Sample below may appear distorted but all corresponding word document files contain proper formattingExcerpt from Essay:
Marketing to a multicultural audience -- Starbucks and McDonald's
All businesses today must be multicultural to some extent (Makgosa 2012). The Internet has opened up new portals to multicultural, multinational consumer audiences. More foreign nationals in developing nations aspire to imitate the American, consumerist life they see portrayed in the modern media. America itself is growing increasingly diverse, which demands a more carefully-segmented approach to marketing. However, this creates a problem for global businesses such as Starbucks and McDonald's. On one hand, the core foundation of their business is based upon marketing a particular type of lifestyle, a lifestyle grounded in an image rooted in Americana (or in the case of Starbucks, a very American vision of a European cafe). The core problem of today's multicultural marketing is that changes must be made to address an increasingly diverse audience: an audience which demands more than mere tokenism or a few visual representations of diversity in a commercial. Minority populations do not necessarily see themselves as 'minorities' at all, and also may have complex relationships to their cultures, as they embrace global, American, and local identities simultaneously.
Market segmentation is obviously not a new concept for businesses, even in the case of relatively large companies with a fairly generic outreach such as fast food companies. It has also been observed that there are many different forms of multiculturalism, including those which honor diversity and the specific economic needs and life habits of consumers vs. ones which attempt to hold on to brand identity while still infusing diversity into marketing campaigns (Burton 2002). This paper will explore two companies that have adopted the latter strategy: both McDonald's domestically and Starbucks internationally have embraced multiculturalism but have also made a commitment to holding fast to certain brand identity concepts. Multiculturalism and differentiation is achieved through different emphasis rather than a ground-up rebuilding of the brand. This is the new multicultural marketing -- one which is fluid as well as segmented.
Diversification of the American marketplace: McDonald's multicultural strategy
Marketers must always have an eye upon the youth market because this is where market growth is occurring and these customers have the potential to have long brand relationships. In the United States, such market growth is increasingly non-Caucasian. In fact, 80% of population growth is nonwhite, predominantly because of the growth of the Hispanic, African-American and Asian populations. Hispanics alone make up 54% of contemporary total population growth and are having more children per couple, a coveted portion of the fast food market, as manifested by the popularity of 'Happy Meals' and other children's meals (Palacios 2011). This indicates that marketing to Hispanics is far from a 'niche' market -- the Hispanic market is increasingly synonymous with the American mainstream.
A company with a general marketing outreach must diversify its marketing strategy in recognition of a new reality. For companies with a very broad demographic appeal like McDonald's, there is no single target market, merely a series of 'versions' of that market. McDonald's embodies what could be called a "hybridization, or co-adaptation of cultures, meaning a compromise between the local, the national, the ethnic, etc. And the universalism of consumer culture" (Krzysztofek 2000).
Even before the current 'flat' world and globalized marketplace, McDonald's frequently featured non-white actors to promote its products (Krzysztofek 2000). This can be seen in this vintage McDonald's advertisement from the 1970s:
[Image credit: Prism]
Most firms, when marketing to non-whites, have traditionally adopted a 'general' strategy primarily focused upon Caucasians, and then modified this strategy to make it more ethnic, often with the help of another advertising firm. McDonald's multicultural marketing is an outgrowth of its core strategy and it is increasingly stylizing itself as a multicultural company. It puts just as much money into ads targeting Hispanic or African-Americans themes as ads featuring a more general audience image (Helm 2010). In its generic focus groups for new products, McDonald's uses a disproportionate number of nonwhites compared to other organizations and, in fact, the company's marketers are often asked to market a new product as if the majority population was nonwhite (Helm 2010). In short, McDonald's does not modify its product for what was previously considered the mainstream -- it views the current diverse market as the mainstream.
This has reaped substantial dividends for the company -- even as McDonald's has become less symbolically central and more demonized in an era where health concerns are predominant in marketing food, specific and more price-conscious elements of the loyal fast food marketplace have cleaved to McDonald's, particularly high-volume users infatuated with the dollar menu (Helm 2010). Thus, McDonald's marketing is segmented, yet also cleverly designed to captivate individuals more inclined to make frequent use of the restaurant on a regular basis who tend to be of particular ethnic origins. In an industry where high-volume sales are important, this is a must. Also, given that young people are vastly more apt to consume fast food than older consumers and the minority demographic skews youthful, a multicultural marketing strategy likewise behooves McDonald's (Paeratakul 2003: 1332). This is keeping with McDonald's values of cheap, fast, fatty, sweet convenience foods with an aura of child-focused family fun, but with a savvy multicultural eye upon a desirable and loyal demographic.
Of course, because of this (extremely effective) multicultural strategy, McDonald's has drawn the ire of many critics, who stress that McDonald's is unfairly targeting lower-income customers when many of its higher-income customers have been trying to shop more healthfully. However, from a marketing standpoint, McDonald's approach has made the company relevant again after it began to lose market share with the negative publicity generated by the anti-fast food documentary Supersize Me. 37% of the adults and 42% of the children report eating fast food on a regular basis, and McDonald's advertising campaign is strategically designed to capitalize upon a very desirable segment coveted by its brand rivals (Paeratakul 2003: 1332). The idea that McDonald's embodies a rainbow of diversity and honors the lifestyle of African and Hispanic-Americans has enabled it to stand out and withstand charges that it is homogenized in terms of its product culture.
International expansion and creating a multicultural brand: Starbucks
The need to have a multicultural marketing strategy while still holding fast to one's brand image is embodied by another stalwart American food brand, that of Starbucks. Once, expensive coffee was considered a relatively niche, boutique item confined to urban locations -- Starbucks made it part of the United States mainstream. All stores have a distinct character even while selling the Starbucks brand and manifesting certain styles and flavors that make it uniquely Starbucks. There is greater diversity between stores than more traditional fast food companies like McDonald's. Starbucks has been called a 'hegemonic brandscape' -- a brand that is symbolic of American cultural homogeneity and dominance like McDonalds on one hand, yet also of broad, overreaching scope in terms of its adaptability not only to local dining tastes but also dining habits. (Thompson, C. Arsel 2004: 631).
However, interestingly enough, unlike McDonald's, multicultural specificity is less in evident in Starbucks' American incarnation as it is in its relationships abroad. Starbucks has always made a point of partnering with local entities, which have a greater knowledge of how to do business in terms of dealing with local regulatory agencies, and, most importantly, the culture of consumption of the region. Partnering with local entities can help navigate the difficult marketing terrain of a new nation (Johnson & Tellis n.d.). However, finding the right balance between holding to the Starbucks brand and diversifying that brand enough to suit local tastes has been a challenge. Starbucks manifests many of the problems in the new multicultural marketing of the 21st century.
Starbucks' decided to enter Japan first when it expanded to the Far East because the Japanese market was known to embrace novelty, Americana, and yet be relatively similar in its consumerist values to the United States. It partnered with a Japanese company and over time and trial and error, changed many of its product offerings (Bentros 2011). After its first flush of success, demand declined as can be seen in the following graphic:
Image credit: What Japan Thinks.
However, this changed with the introduction of a new menu that included more teas and green tea version of its Frappuccino. However, other aspects of Japanese life worked well for Starbucks' brand concept. Tokyo living quarters are extremely compact, so more people use cafes as a 'home away from home' than they do in the United States. Store layouts were reconfigured to allow for more physical space to allow dining. Since customers were also more inclined to order meal-like foods at cafes and the Japanese, like most Asian nations, have a less sweet palate than the United States, more facilities had to be added to allow for cooking (Starbucks to open landmark 1,000th store in Japan, 2013, JDP). However, this is in keeping with Starbucks self-conception of itself as a brand -- Starbucks stores are meant…[continue]
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