Starbucks, Mcdonalds and Marketing Strategy

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Starbucks, McDonalds and Marketing Strategy

Both McDonalds and Starbucks are looking into dayparts penetration as a growth strategy: McDonalds now owns the breakfast segment and is moving fast to take over the afternoon and evening segments, Starbucks is moving in the other direction and going from primarily a breakfast and afternoon snack stop to lunch and evening Starbucks is still focused on opening new stores whereas McDonalds seems to have slowed down it’s expansion, these expansion funds seem to be re-allocated to improving stores and service.

At this stage, I’d bet my money on the success of McDonalds’s strategy and here’s why: Dayparts expansion is natural to McDonalds: the brand stands for fast food and afternoon and evening snacks are… well, fast food. Starbucks on the other hand stands for coffee, and coffee is great in the morning or an afternoon pick-me-up for some consumers, but one hardly makes a quick leap from coffee to evening snacks or lunch fare.

Process changes in converting ovens and hot plates from grilling sausage patties to grilling burgers is far more straight forward than introducing ovens that cook lunch but that preserve the aroma of coffee in a store. McDonalds faces less risk in the strategy than Starbucks. From a Marketing standpoint McDonalds is a winner too given that it positioning does not change: it is still a purveyor of fast food, whereas Starbucks incurs the risk of  “getting stuck in the middle”: it does not want to be viewed as a QSR and yet it wants to compete in that space. More disturbing still is that Starbucks carved a whole category for itself and is now expanding into areas where the competition is fierce, instead of accepting a lesser but defensible growth rate within the confines of the “coffee shop” market, it is now exposing itself to competitive risks in the QSR market.

McDonalds’ investment in traditional advertisement pan out when it pursues strategies like this one: given its high brand...
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