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ADV 3300 Media Planning Advertising Media Plan Project Seth Alred, Hannah DeLong, Jordan Dry

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Page 1: Seth Alred, Hannah DeLong, Jordan Dry · PDF fileSeth Alred, Hannah DeLong, Jordan Dry! 2! Executive Summary ... Dunkin’ Donuts positions their brand as a cheaper and simpler choice

ADV 3300

Media Planning

Advertising Media Plan Project

Seth Alred, Hannah DeLong, Jordan Dry

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Executive Summary __________________________________________ 3

Situational Analysis __________________________________________ 4

SWOT Analysis ____________________________________________ 10

Marketing Objectives ________________________________________ 11

Advertising Objectives _______________________________________ 11

Creative Strategy ___________________________________________ 12

Target Selection ____________________________________________ 14

Overall Media Budget _______________________________________ 15

Target Audience Coverage ___________________________________ 16

Regionality ________________________________________________ 16

Seasonality ________________________________________________ 16

Media Mix ________________________________________________ 17

Scheduling ________________________________________________ 18

Weighting, Reach & Frequency ________________________________ 18

Recommended Vehicles ______________________________________ 18

Media Flowchart ___________________________________________ 19

References ________________________________________________ 21

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Executive Summary:

The fast food industry is a fast-growing industry in the United States. McDonald’s

is the world’s largest fast food chain with most of its locations located in the United

States. McCafé provides McDonald’s customers with the option to purchase a variety of

coffee and specialty drinks. The campaign will make McCafé stand out among its

competitors, Dunkin’ Donuts and Starbucks.

McDonald’s is an easily recognizable brand that is also the leader in the fast food

market. Those strengths combined with a focus on quality have made McDonald’s an

established company. Product recalls are a major weakness for McDonald’s, as well as

any company in the food industry. McDonald’s choice to expand their menu by

introducing the McCafé line shows just one opportunity for the company. Threats to

McDonald’s include volatile consumer choices, rising costs and intense competition.

The marketing objectives the campaign suggests for McCafé are a 15% increase

in sales at the end of the year and a 3% increase in market share in the specialty coffee

market. The campaign’s advertising objectives include creating top of mind awareness

and brand loyalty. The objectives will be reached with advertising, in store events and

coupons.

McDonald’s continues to use the slogan “I’m lovin’ it” in their current

advertisements. Advertising for McCafé has previously pushed the idea of a quality drink

at a discounted price. Since McCafé adds new drinks to its menu often many advertising

efforts are focused on promoting the new products. A large portion of McCafé

advertising encourages customers to try their products.

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The target audience is males and females aged 18 to 24, preferably students. Their

media consumption mainly involves television and radio therefore we recommend a

campaign focused on those media. As a budget for the McCafé campaign we recommend

$123 million, about 15% of their advertising budget as a whole. Eighty percent of the

budget would go towards television advertising with 20% for radio advertising.

To accurately reach the target audience we plan to use a pulsing media schedule

throughout the summer and winter months. We aim to reach 80% of the target audience

an average of 5 – 4 times. After the “heavy up” periods the plan intends to reach 60% of

the target audience with an average of 3 times. While there will be a heavier focus on

primetime television, the plan also includes daytime television. Television will be used to

increase reach during the heavier pulsing months. Radio advertising will focus on

morning and afternoon drive segments. Radio will be used to increase frequency. The

recommended vehicles for the McCafé campaign range from a variety of television

networks and radio stations that are popular among our target audience.

Situational Analysis:

Industry/Company Overview:

In the United States the fast food industry is defined as “the sale of food and

drinks for immediate consumption either on the premises or in designated eating areas

shared with other food service operators, or for consumption elsewhere. In 2006, the

United States fast food industry generated total revenues of $55.2 billion. The growth rate

from 2002 – 2006 was 3.7%. Another growth of 3.7% was expected between 2006 and

2011. The value of the fast food industry is expected to reach $66.2 billion by the end of

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2011. This popular industry in the United States reached a volume of 35.5 billion

transactions in 2006. (United States fast, 2007)

The McDonald’s business was founded in 1940. McDonald’s is the world’s

largest fast food chain, and they are known for offering a wide range of foods. All

McDonald’s restaurants offer a standard menu that includes hamburgers, cheeseburgers,

chicken sandwiches, french fries, salads, milkshakes, desserts and ice cream sundaes.

However, the McDonald’s menus vary by region to suit local tastes. (United States fast,

2007) As of 2010, McDonald’s was reporting revenues of $24074.60 million, which was

a 5.85% increase from the previous year. (Mcdonald's corp. (mcd), 2011)

McDonald’s marketing and advertising plans aim to reach many target markets.

With Happy Meal, specially priced children’s meals, campaigns McDonald’s aims to

reach children and parents. The McDonald’s website lists the Dollar Menu, Fruit &

Maple Oatmeal and frozen strawberry lemonade as their current promotions. These

promotions are aimed towards a variety of consumers. ("Promotions," 2011) By serving

an average of 64 million customers daily, McDonald’s is sustaining success. (2010

annual report, 2010, p. 1)

Product Review:

McCafé provides the option of choosing between lattes, mochas, cappuccinos and

premium hot chocolate with options of whole, 2% or skim milk and flavors such as

vanilla, hazelnut and caramel. McCafé uses English terms of Small (12 ounces), Medium

(16 ounces) and Large (22 ounces) with prices ranging from $2.39 for a small to 3.29 for

a large beverage. (Luna, 2009)

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McDonald's McCafé is described as "a very high quality product offered at lower prices

than [its] competitors" and "serving sizes are bigger than what you find at other places."

(Gaffney, 2008)

McDonald's as a company has maintained a strong brand value. The brand has

become synonymous with affordable quality fast food products and possesses high brand

value worldwide. Such strong brand recognition has enabled McDonald's to expand into

other markets with McCafé.

McCafé is an attempt to conquer a new market by combining the characteristics

speed and accessibility of the fast food chain with the increasing variety and affordability

of a quality coffee beverage. The move into this new market for premium coffee

illustrates ability to reinvent itself and appeal to consumers across the spectrum.

(Morrison, 2010)

By expanding to include a new market, a company expects to widen its customer

base, however, in this case it has been a topic of debate. With a tough economic situation

success cannot be guaranteed because the gourmet coffee market is already oversupplied.

Thus, this is a weakness because McDonald's may be investing in a shrinking market. A

second topic of concern is the brand’s image. In many ways, separating McCafé from

McDonald's, its parent company would be ideal to convince consumers the level of

quality is comparable to Starbucks and other competing coffeehouses. The difficulty in

separating the two brands can be problematic because high-end quality is not a common

characteristic associated with McDonald's. Lastly, adding the McCafé line has forced

McDonald's to abandon some of its previous fast food assembly line strategies. It is

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criticized for requiring employees to manage too much. The busier of McDonald's stores

are experiencing a new level of chaos as employees scramble to bring together multi-

dimensional orders, and frustration by customers is growing as profits rise. In 2010, the

company saw the first drop in customer satisfaction since 2005. However, one of the key

strengths of McCafé is that it increases traffic and draws customers to visit McDonalds

where they might purchase additional items from the main menu leading to increased

overall sales for McDonald’s.

Although average number of visits has increased specific patterns became

apparent. For instance traffic in new day parts specifically, breakfast and mid-afternoon

were positively affected by implementing McCafé in McDonald's existing stores. As a

bonus to the sales increase, the expansion will likely benefit the company in terms of a

better reputation and increased popularity. (Coleman, Gao and Kim)

McCafé is growing everyday making up a prominent share of the market. Don

Thompson noted that during the third-quarter earnings call, McDonald’s coffee

percentages in US sales increased from 2% in 2004 to 6% in 2010. Thus, the McCafé line

is responsible for coffee playing a larger part in McDonald's sales. ("Burger business,"

2010)

Competitive Review/Competitive Advantage:

The main national direct competitors for McDonald’s McCafé line are Starbucks

and Dunkin’ Donuts.

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Starbucks:

Starbucks is a roaster and retailer of specialty coffees. The company’s annual

sales in 2010 reached $10, 707.40 million. (Starbucks corp. (sbux), 2011) Starbucks

reported a revenue increase of 9.54% over 2009. (Starbucks Corporation, 2011) In the

gourmet coffee market Starbucks has a 73% market share. If Dunkin Donuts, Krispy

Kreme and other smaller coffee chains are included Starbucks holds 43%. (Iwata, 2006)

Some of Starbucks key benefits include strong consumer loyalty and an extensive menu.

(Starbucks Corporation, 2011)

Starbucks does limited advertising. The company is often “outspent on

advertising anywhere from two to eight times by rivals.” (Morrison, 2011) In 2010 the

company spends $94.4 million on advertising. Previously Starbucks campaigns have

strongly focused on quality and their process for selecting the “best” coffee beans.

(Miller, 2009)

Starbucks strengths include large product and brand offerings as well as strong

financial performance. The company’s wide variety of beverage, food and novelty items

“appeals to a broader customer base and enhances revenue stream.” Due to Starbucks

strong financial performance history, the company achieves the financial stability needed

to expand and diversify. (Starbucks Corporation, 2011)

Starbucks weaknesses include product recalls and an over dependence on the US

market. Product recalls affect the “goodwill and brand image of the company.” Also,

Starbucks “lacks in geographic spread.” Starbucks is an international company but the

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“contribution of revenues” from the international segment is low. (Starbucks Corporation,

2011)

Dunkin’ Donuts:

Dunkin’ Donuts is the world’s leading coffee and baked goods chain. By the end

of 2010 there were almost 10,000 Dunkin’ Donuts stores worldwide. Dunkin’ Donuts is

owned by Dunkin’ Brands, Dunkin’ Brands is owned by many private equity companies.

At the end of 2010, the total global system wide sales reached $6 billion. In 2010 the

Dunkin’ Brands U.S. sales increased by 2.3% from the previous year. ("Media kit," 2011)

The chain holds a 57% market share of “all of the coffee served up by quick service

restaurants.” (Sanati, 2011) Key benefits for Dunkin’ Donuts include highly rated service

as well as a dependence on fresh, fair trade coffee products.

In 2008 Dunkin’ Donuts outspent McDonald’s by 60% for television advertising.

Dunkin’ Donuts positions their brand as a cheaper and simpler choice compared to

Starbucks. A campaign that surveyed coffee drinkers lead to 61% more traffic to the

Dunkin’ Donuts website in 2008. (Young, 2009)

Dunkin’ Donuts was rated the #1 foodservice retailer of “hot brewed, flavored

and iced coffee” the US in 2010. The chain has strong consumer loyalty and high

customer experience ratings. Dunkin’ Donuts also offers a large variety of menu items

from lattes to donuts. Also, all Dunkin’ Donuts stores are franchised which leads to large

opportunities for growth and expansion. ("Media kit," 2011)

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Weaknesses for Dunkin’ Donuts include product recalls and unevenly distributed

locations. Like Starbucks product recalls can harm the image of Dunkin’ Donuts.

Dunkin’ Donuts franchise locations are mostly found on the Eastern side of the US, there

are not nearly as many stores in the Western United States.

Starbucks the primary competitor for McDonald’s McCafé line, and Dunkin’ Donuts

takes the spot as secondary competitor. McDonald’s and Dunkin’ Donuts have both

previously taken “stabs” at Starbucks in promotional campaigns. They both try to market

their brands as a more comfortable, relaxed and cheaper choice compared to Starbucks.

McDonald’s does not promote a dependency on fair trade coffee like Starbuck’s does.

Since Starbuck’s does little advertising, promotion fair trade coffee is their main point.

Consumers view Starbucks as a more mature, professional coffee company. Dunkin’

Donuts and McDonald’s McCafé are viewed as quick service coffee chains with quality

close or equal to Starbucks. (Young, 2009)

SWOT Analysis:

McDonald’s is a strong company that is leading the fast food market. Another

strength is that the brand is easily recognizable and dependable and it also possesses an

international presence. Another strength is that the company is extremely focused on

quality of their products. McDonald’s has established these strengths in the McCafé

brand as well. McDonald’s and McCafé both face one major weakness: product recalls.

This is an issue for any food company. Also, fast food has a negative health image across

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the globe. This weakness can harm McDonald’s and McCafé because of health conscious

consumers.

Opportunities for McDonald’s are abundant. McDonald’s has already begun to

seize the opportunity to expand into the gourmet coffee market with McCafé. McCafé

also has the opportunity to compete with smoothie and juice chains by adding those

products to its menu. Another distinguishable opportunity is that among the market they

are in they are a leader of innovation and menu diversification. The potential threats that

stand out to McCafé and Mcdonald’s are the volatile consumer choices, the rising costs

and intense competition. America has become a “fast food nation” therefore competition

is fierce. For most consumers McCafé is not the first gourmet coffee brand that is thought

of and this threat could harm the McCafé brand.

Marketing Objectives:

The campaign intends to increase McDonald’s McCafé sales nationwide by 15%

by the end of the campaign year. The projected increase in McDonald’s McCafé US

market share is 3%.

Advertising Objectives:

There are many communication objectives for the campaign. The most important

objective is to increase top of mind awareness. Starbuck’s and Dunkin’ Donuts hold the

highest market shares in the specialty coffee market. To increase the McCafé market

share by 3% during the campaign coupons will be distributed and special in-store events

will be held. These events and coupons will enforce top of mind awareness for consumers

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by reminding consumers that McCafé offers competitive prices and convenience.

Another important objective is brand preference. Brand preference will enforce the goal

of increasing sales by 15%. The advertising will create brand preference against the

competitors. The advertising will focus on the fact that McCafé offers convenience

because of the ability to order meals with McCafé drinks.

Creative Strategy:

McDonald’s continues to use the slogan “I’m lovin’ it!” in the company’s existing

advertising theme. Due to the diversity of the target market they advertise for various

menu items using many different tactics. For instance, one advertisement promotes free

Wi-Fi availability by using a Big Mac box to portray a laptop and the recognizable Wi-Fi

symbol on the other side. A second theme of the McDonald’s brand surrounds the

discounted McCafé drinks available for $1. They are promoting these items using

billboards, print advertising and posters. In addition to these traditional forms of

advertising, the company has implemented the use of product placement. For instance, a

massive amount of coffee beans marking the number of days left to get free coffee or

salad to advertise the fresh new salads. McDonald’s has also adopted the phrase “Come

as you are” to advertise the diversity of the company and its target market. The phrase

“Free Mocha Mondays” has been used in a number of creative ads to bring customers in

to try the McCafé Hot Mocha. The 2009 campaign included free 7-ounce samples to all

customers every Monday from July 13 to Aug. 3. McDonald’s spokesperson, Neil

Golden described the campaign strategy as “one of the largest sampling initiatives

[McDonald’s has] taken on as a company.” (Christman, 2009)

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McDonald’s has also taken advantage of the new platforms of technology such as

a Frozen Strawberry Lemonade ad on mobile music players that reads, “To the city that

knows a good remix.” (Kats, 2011)

In Summer 2011, McDonald’s pushed its most recent addition to McCafé’s frozen

beverages with its Mango Pineapple Real Fruit Smoothie. In this campaign, “McDonald’s

put another giant marketing push behind the drink, not only with national television ads

but also with sampling events, a Smoothie Fusion Bus Tour traveling to different events

[...] and several coupon offers.” (Brandau, 2011)

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Target Selection:

Research shows that McDonald’s current advertising focuses on quality and price.

Therefore, the campaign will aim to reach young adults, preferably in college. This target

audience ranges in age from 18 to 24 and includes males and females. According to the

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2010 US Census, this includes 28, 815,000 people. A 2008 report showed that the

average number of cups of coffee consumed per person in the 18 to 24 age group was 3.2

daily. (Preiner, 2008) This age group makes up a large portion of the consumers of the

McCafé products. About 90% of the target audience view television weekly and 85.7%

listen to the radio weekly. ("Utilization and number," 2011) A 2004 survey done at

Indiana University found that half of the students spend money on food and drink at least

1 to 3 times per week. Forty-eight percent of the students said they would spend more

money if businesses fit their needs better with improvements. Forty-four percent of those

students said lower prices would enable more spending. (Iu student spending, 2004) This

profile shows that the target audience is concerned with price and that they access

television and internet often.

Overall Media Budget:

In 2008, McDonald’s overall advertising budget was $820 million. (Goetzi, 2009)

Using this as a base budget, we recommend applying 15%, $123,000,000, of the overall

budget to promoting the McCafé line since it is only a part of the McDonald’s menu but

has proved to have strong impacts on the company sales. We plan to allocate the budget

between television and radio advertising. The plan would allocate 80% of the McCafé

advertising budget to television and the remaining 20% to radio. The weight of the

advertising would differ by season as the summer months of May through August and

winter months of November through February, with special focus during times of college

exams. Also, the weight will differ by region. In the northern regions, the winter months

will receive a larger portion of their budget and the southern regions’ budgets will be

heavier in the summer season.

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Target Audience Coverage:

The proposed campaign plan calls for a pulsing schedule. The “heavy up” periods

would be throughout the summer season and also throughout the winter months. During

the “heavy up” months the plan intends to reach 80% of the target audience an average of

4 to 5 times. In the other months during the year advertising will be slowed down to reach

60% of the target audience an average of 3 times. The index for potential in the target

audience is 113, three points higher than the closest age bracket.

Regionality:

The media plan calls for different weights for five parts of the country: Northeast,

Northwest, Midwest, Southeast and Southwest. There will be more weight in the

Midwest areas because of the cooler climate during the winter season. A cooler climate

creates more demand for hot McCafé drinks. During the summer and spring season there

will be more weight in the Southern regions because of the demand for cold, refreshing

McCafé drinks.

Seasonality:

The media plan calls for different weights across different months of the year

according to a pulsing schedule. McCafé offers warm and cool drinks. From May to

August heavier weight will be established to promote cold drinks like iced coffee.

McDonald’s has previously done this with the “McCafé your day” campaign as

temperatures were rising across the country. (Melnick, 2009) Similarly, from November

to February heavier weight will be enforced to promote hot drinks as temperatures

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decrease. Also, since the target audience has a large percentage of students heavier

weight will be established during exam periods.

Media Mix:

The campaign will focus on the vehicles television and radio. According to MRI

data these are the best choices for the target audience group to become part of the general

mindset. The data for daytime and primetime television are similar but for the target

audience more emphasis should be put on primetime television. For radio advertising the

plan focuses on the morning segments and drive home segments. The quintile average for

television is about 100, and the quintile average for radio is 98. There is plenty of

opportunity to reach the target audience through these media.

The plan stated above will reach the advertising objective. With radio advertising

frequency will be increased. Television advertising will increase reach during the months

that have heavier weight. The television advertising will be split between network and

cable television. Television time is expensive but the CPM is low so the medium is very

cost efficient. Radio advertising is cost efficient as well.

McDonald’s does face some creative constraints. Two 2008 McCafé commercials

followed their competitor’s Dunkin’ Donuts lead and took stabs at Starbuck’s.

Mcdonald’s positioned McCafé as a place patrons can be more comfortable and not fit

into the Starbuck’s “Intellectuals” or “Hipster” stereotype. This tactic did not work

because Dunkin’ Donuts took a more aggressive, straightforward approach. McDonald’s

tends to keep their print ads simple and straightforward. By quickly getting their message

across they are successfully creating effective ads. McDonald’s previously positioned

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McCafé as fun and affordable on the radio. They pushed the idea that McCafé makes

daily tasks enjoyable. (Jargon, 2009) This tactic reminded consumers about the

convenience of McCafé. McDonald’s also has a familiar, catchy radio jingle that works

effectively.

Scheduling:

A pulsing schedule is recommended for the media plan. With a pulsing schedule

more weight will be established from May to August and November to February.

Weighting, Reach & Frequency:

The South and Midwest will receive more emphasis during the “heavy up”

pulsing months. The Southern region will receive more weight from May to August and

the Midwest region will receive more weight from November to February. These two

markets show potential as they were among the highest in the index category.

Temperatures rise to the extreme during the summer in the south and temperatures

quickly drop in the Midwest during the winter months. These factors flow with the

seasonality of the pulsing media plan. By weighting these markets more heavily than the

others the reach and frequency goals should be reached. Television will increase reach

while radio will increase frequency. The plan intends to reach 80% of the target audience

an average of 4 to 5 times during the “heavy up” months (May to August, November to

February) and 60% of the target audience an average of 3 times during the other months.

Recommended Vehicles:

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The recommended vehicles for television advertising are NBC, ABC, FOX, ABC

Family, Cartoon Network, Country Music Television, MTV, VH1, and ESPN. The

television advertising will occur between 6:30 to 8 p.m. during the early news and

primetime time slots. They will be 30-second spots. Radio stations that play alternative

rock, pop, country, or hip-hop will be utilized. The morning drive, evening drive and

nighttime radio spots will be 30 seconds each. Radio stations provide localized and

specialized coverage.

Media Flowchart:

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References  

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Coleman, D., Gao, C., & Kim, H. (2009, March 11). Mcdonald's: Breaching the luxury

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mcdonalds-ups-ad-reach.html

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Iwata, E. (2006, December 20). Owner of small coffee shop takes on java titan Starbucks.

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Jargon, J. (2009, May 4). New ads will stir up coffee wars. The Wall Street Journal.

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Melnick, J. (2009, May 05). Mcdonald's launches nation ad campaign for mccafe invading

territory dominated by starbucks. Medill Reports. Retrieved from

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Miller, C. (2009, May 18). New Starbucks ads seek to recruit online fans. The New York

Times. Retrieved from

http://www.nytimes.com/2009/05/19/business/media/19starbux.html

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Morrison,  M.  (2010,  November  15).  Mccafe.  Advertising  age,  81,  Retrieved  from  

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