Multicultural Marketing: McDonald's and Starbucks Strategies

Introduction: The Challenge of Multicultural Marketing

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 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 café). The core challenge of today's multicultural marketing is that changes must be made to address an increasingly diverse audience: one 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 may also 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, versus those 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 while also making a commitment to holding fast to certain brand identity concepts. Multiculturalism and differentiation are achieved through different emphases rather than a ground-up rebuilding of the brand. This is the new multicultural marketing — one which is fluid as well as segmented.

McDonald's Domestic Multicultural Strategy

Marketers must always keep an eye on the youth market because this is where market growth is occurring and these customers have the potential for 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 strategy in recognition of this 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 globalized marketplace, McDonald's frequently featured non-white actors to promote its products (Krzysztofek 2000). Most firms, when marketing to non-white consumers, have traditionally adopted a "general" strategy primarily focused on Caucasians and then modified it to make it more ethnic, often with the help of a separate advertising firm. McDonald's multicultural marketing, by contrast, is an outgrowth of its core strategy, and the company is increasingly styling itself as a multicultural brand. It puts just as much money into ads targeting Hispanic or African-American themes as it does into ads featuring a more general audience image (Helm 2010). In its generic focus groups for new products, McDonald's uses a disproportionate number of nonwhite participants compared with other organizations; in fact, the company's marketers are often asked to market a new product as though the majority population were 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 approach has reaped substantial dividends. Even as McDonald's has become less symbolically central and more demonized in an era where health concerns dominate food marketing, specific and more price-conscious segments of the loyal fast food market have cleaved to McDonald's, particularly high-volume users drawn to the dollar menu (Helm 2010). McDonald's marketing is segmented yet cleverly designed to captivate individuals more inclined to frequent the restaurant regularly, who tend to be of particular ethnic backgrounds. In an industry where high-volume sales are critical, this is essential. Additionally, given that young people are vastly more likely to consume fast food than older consumers and that the minority demographic skews youthful, a multicultural marketing strategy is especially advantageous for McDonald's (Paeratakul 2003: 1332). This approach is consistent with McDonald's brand values of cheap, fast, convenient food with an aura of child-focused family fun, but with a savvy multicultural eye on a desirable and loyal demographic.

Because of this highly effective multicultural strategy, McDonald's has drawn criticism from those who argue that the company unfairly targets lower-income customers at a time when many higher-income customers are trying to shop more healthfully. However, from a marketing standpoint, McDonald's approach has restored the company's relevance after it began to lose market share following the negative publicity generated by the anti-fast food documentary Super Size Me. Approximately 37% of adults and 42% of children report eating fast food on a regular basis, and McDonald's advertising campaign is strategically designed to capitalize on a very desirable segment coveted by its brand rivals (Paeratakul 2003: 1332). The idea that McDonald's embodies diversity and honors the lifestyles of African-American and Hispanic consumers has enabled it to stand out and withstand charges of cultural homogeneity in its product culture.

Starbucks and International Brand Adaptation

The need to maintain a multicultural marketing strategy while still holding fast to one's brand image is embodied by another stalwart American food brand: 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 Starbucks stores have a distinct character even while selling the Starbucks brand and manifesting the styles and flavors that make the experience uniquely Starbucks. There is greater diversity between stores than in more traditional fast food companies like McDonald's. Starbucks has been called a "hegemonic brandscape" — a brand symbolic of American cultural homogeneity and dominance on one hand, yet of broad, overreaching adaptability to local dining tastes and habits on the other (Thompson & Arsel 2004: 631).

Unlike McDonald's, multicultural specificity is less evident in Starbucks' American incarnation than in its relationships abroad. Starbucks has made a point of partnering with local entities that have greater knowledge of how to do business in terms of local regulatory agencies and, most importantly, regional consumption culture. 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 it enough to suit local tastes has been a challenge. Starbucks manifests many of the central problems in 21st-century multicultural marketing.

Conclusion: Multicultural Marketing as a Situational Strategy

The precise formula for an effective multicultural strategy can be difficult to discern. The cases of McDonald's and Starbucks show that a multicultural strategy of segmentation and tailoring the approach to a specific ethnic market can be beneficial in some cases — such as drawing new Latino and African-American consumers to McDonald's or making coffee-drinkers out of the Japanese market — and in other cases highly problematic, as seen in Starbucks' approach to Australia. It remains an open question how multicultural marketing will evolve in the future, particularly abroad, where responses to American-based products can be difficult to predict.

For example, in a study of Chinese students versus American students exposed to advertising promoting various U.S. brands, although the Chinese students "belonged to the majority group in their own country," they, in the view of the researchers, "occupied varied positions in the global racial hierarchy" and reacted negatively to some ads in which Chinese persons were prominently featured versus Americans, particularly in advertisements for products such as computers (Gao et al. 2013). These findings illustrate the "inadequacy of the center-periphery approach to global advertising planning, expose the limitations of the social identity theory in predicting racial attitudes in international settings, and outline the ethical challenge for global advertisers to develop effective multicultural advertising" (Gao et al. 2013). Multiculturalism is important, but even the concept of "multiculturalism" cannot be deployed in a cookie-cutter fashion and still be effective for advertisers.

Although the concept of multiculturalism in marketing will surely evolve in the 21st century, the need to use it as a strategy cannot be ignored. The examples of McDonald's and Starbucks highlight that no matter how unified a brand identity these icons may project — to the extent that every store abroad can seem remarkably similar — creating an overly hegemonic image that cannot bend to the needs of a specific region or ethnic group risks brand obsolescence. Consumers themselves are increasingly diverse in terms of how they embrace multiculturalism: some may be willing to accept a brand's more hegemonic markers of Americana (such as no smoking in cafés), while others may resist (Makgosa 2001). Multicultural marketing is situational in nature, both domestically and internationally, and works best when it merges with core brand concepts while still taking a distinct spin particular to the needs of a specific group or region.

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