Saturday, December 20, 2008

McDonald's Picks a Fight with Starbucks

McDonald's recently launched an aggressive advertising campaign aimed at converting Starbucks customers. Focusing on Starbucks' home turf of Seattle, the burger giant has strategically planted a whopping 140 billboards placed near Starbucks locations. Beckoning loyal coffee drinkers to save a few bucks and get their espresso from Ronald McDonald instead, the new ad campaign is an aggressive move designed to promote McDonald's foray into the premium coffee market.  In a concept dubbed "McCafe," McDonald's has attempted to recreate their own version of the Starbucks experience, offering highly caffeinated espresso-based beverages in a cafe setting to their BigMac-munching clientele (translation: eat BigMacs faster).

Despite Starbucks' recent woes and dour outlook for the new year, McDonald's is aggressively seeking to gain share in the caffeinated realm, an area that has grown rapidly in the last two decades. Their answer to the phenonmenal success of Starbucks over the last several years is a bold, albeit late, attempt with McCafe.  (I searched for a McCafe near me in California.  There used to be one in Palo Alto but it closed its doors a few years ago.)

Is McCafe a threat to Starbucks?  Former CEO Jim Donald doesn't think so:
“Well, we have read that McDonald’s is going into a premium cup of coffee, to serve a premium cup of coffee, and we are in that business. We are in the premium bean segment, and we think that the more the consumer gets educated on premium coffee, the more (that) bodes well for all of us that are serving that type of coffee. We watch it closely, but at the end of the day, we think that it helps educate the customer on what really a great cup of coffee is all about.”
With 47 million customers walking through their front doors daily, the the McCafe concept will no doubt succeed in the short run by helping the burger behemoth squeeze a few extra bucks out of each customer, but those customers probably wouldn't have gone to Starbucks anyway. By increasing category awareness for lattes, cappuccinos, and macchiatos, McDonalds is raising a new breed of Starbucks customers who otherwise might not have felt comfortable enough to order an Italian-style beverage.


Joe said...

coming up with the McCafe line was genius; McDonald's must have a top notch marketing/product development team