Running head: HOW MCDONALDS AND STARBUCKS 1

How McDonalds and Starbucks are Able to Establish their Brands

Paul M. Johnson

American Public University System

HOW MCDONALDS AND STARBUCKS 2

INTRODUCTION

McDonald’s and Starbucks are two of the most popular global brands in the

world. Both companies have invested a lot of capital into the development of their

brands and marketing initiatives both domestically as well as internationally. Even

though both organizations have had their fair share of trials and tribulations, they have

both been successful in establishing their brands to fit local markets across the globe.

In this essay we will take a look at the two companies individually and find out what

basic strategy was problems they’ve encountered and what basic strategies they

followed to counteract those problems to succeed.

McDONALD’S

One of the ways that McDonald’s has been able to stand the test of time and

remain a relevant force in the fast food industry is its ability to engage its customers

successfully. Even though the company went through a rough spell due to its poor

marketing strategies from the 90s up until around 2003, it found its way back to success

by responding to a fundamental concept of branding; which is to create and reinforce a

profitable and enduring bond between the brand and the customer (Light, 2009). In

part, it has done this through the architectural design of its stores. This past May,

McDonalds announced that it will invest $1 billion in store renovations to help turn its

stores into “modern, contemporary eateries with a homey inviting appearance

(Silverstein, 2011). McDonald’s has made some minor décor renovations in its stores in

the past as well (most recently in 2006) in an attempt to show that it could keep up with

the times and what its customers want. The company also recently showed its ability to

engage its customers in local markets and culture by using it’s own rendition of

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“interactive marketing” in Sweden. McDonalds started engaging its customers using a

classic game of Pong via a mobile application that is linked to a giant billboard for

everyone to see. The customer plays the computer and if the customer can last longer

than 30 seconds he/she is rewarded with a digital coupon for free food at the nearest

McDonald’s (Waltzer, 2011). McDonald’s showed its ability to effectively use e-

commerce as a tool for developing its brand in early 2007 when it introduced the Angus

Third Pounder burger. They hired an advertising agency to build a flash website that

gave customers the ability to download a coupon for the new burger. The end goal was

to attract 50,000 visits in the first month with 4,000 downloaded coupons. This was

surpassed when in the first month it received 59,000 visits with 29,000 coupon

downloads (LSF Interactive.com, 2010).

STARBUCKS

One of the most intriguing ways that Starbucks has utilized its e-commerce

strategy to engage its customers was when the company developed the free Starbucks

mobile application for the iPhone, and then later on offered similar apps for Android and

Blackberry smart phones. These apps allow customers with a Starbucks card to pay for

purchases while in-store, check balances on the card, reload it, look up Starbucks

Rewards Stars, and find the nearest Starbucks location. In addition to the company’s

digital makeover, in 2010, Starbucks began offering free Wi-Fi to all of its customers

where as before it was only free to Starbucks cardholders, and for only two hours a day

(Eaton, 2010). In 2009, Starbucks opened a new store in Seattle to feature its new

store design concept. The concept was the company’s effort to have all of its stores

worldwide certified green by the end of 2010. The plan was to use local materials and

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green design in order to enhance its customers’ experience (Sbx_Rnis, 2009).

According to Sbx_Rnis, the design included the following environmentally smart

elements:

Material Reuse:   The leather on the face of the bar is scrap leather obtained from shoe and automobile factories.

Table Reuse: The community table has had many lives. Before arriving here, it graced a local restaurant and before that, a Seattle-area home.

Restroom: The partitions are made from 100% recycled laundry detergent bottles.

Waste Diversion: During construction, 99% of the waste was diverted from the landfill. Wood, metals and concrete were reused or recycled.

Energy Efficiency:In using energy-efficient hand dryers and lighting, this store is committed to reduce energy consumption by 25%.

Recycling:The condiment station offers an opportunity to recycle both the hot & cold cups (starting March 30 in the City of Seattle).

CONCLUSION

All in all, both McDonalds and Starbucks were able to come up with effective

strategies to help develop their brand names and marketing initiatives both domestically

and internationally. They were able to accomplish this by finding new ways to engage

their customers. Renewing store designs, updating e-commerce strategies, and

renewing their service commitments to local markets and culture are a few of the ways

they were able to do this.

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