Assignment - Promotion and Personal Selling

Please read the following Case Study and answer the questions at the 3 questions at the end.

McDonald's: McDonald's Samples Its Premium Roast Coffee

Canadians love coffee, especially their morning coffee! According to Statistics Canada, on an annual basis Canadians consumed 90 litres of coffee per person in 2009, which nicely works out to be about a cup of coffee per day for every person in Canada or 33.5 million per day, which adds up to about 12 billion coffees a year.67 McDonald's Canada has been battling Tim Hortons, the market leader for out-of-home coffee consumption in Canada, without much success for many years. Consequently, in 2009 McDonald's decided to launch a major coffee offensive using the theme "Let's Start Fresh," whose major thrust was an in-store sampling of a new coffee product.

McDonald's Canada hired Cossette Communications of Montreal to manage the integrated promotional campaign. In April 2009, McDonald's Canada initiated a two-week Canada-wide free coffee give-away of its new premium roast coffee at breakfast time. Customers didn't have to buy any other breakfast items to get the coffee, all they had to do was show up during the breakfast hour at McDonald's and ask for a coffee. Of course, if a customer shows up for coffee, breakfast is likely to go with it, so sales of breakfast items were expected to offset some of the expense of the promotion.

McDonald's Canada spared no expense with the effort. Aside from the direct cost of giving away coffee, it developed a new cup for the product. The "fire-roasted coloured cup" was insulated so it would not be too hot to touch. The promotion was integrated with a number of other supporting media. For example, there was billboard advertising, new outdoor promotions, and, of course, radio and television ads.

The television advertisement had a tag line tie-in to a phrase made famous in the movie Jerry McGuire. The scene shows a young female McDonald's employee moving through a McDonald's restaurant with a tray full of coffees. She offers one of them to a man, asking if he would like to try a free cup of coffee. She goes on to describe how "McDonald's Premium Roast Coffee is made with 100 percent arabica beans, hand-picked and fire-roasted for a full-bodied flavour." As the employee carries on with her description, the man's friends sitting at a nearby table stare with interest when suddenly the man raises his hand and says, "You had me at free," at which point he takes a coffee and joins his friends.

Another part of the promotion involved a "Mug Shot" contest where restaurant patrons could have themselves photographed drinking a McDonald's coffee and then have this picture uploaded to the McDonaldsMugShots.ca contest website. Five finalists were selected and then on-line voters would choose a winner who would receive 500 gift cards for medium-size coffees. Along with the website for the Mug Shot contest, McDonald's also created a Facebook page for coffee drinkers.

McDonald's advertising agency, Cossette, developed a number of localized promotional stunts in Canada's major markets, including skywriting in Montreal, giant steaming cups of coffee and a superboard of a three-dimensional steaming cup of coffee in Toronto. In Vancouver, the agency dressed up a streetlight so it looked like a coffee pot pouring coffee into a coffee cup. In Edmonton, the agency arranged for a "sleep-walking" stunt where actors dressed in pyjamas and carrying teddy bears walked into McDonald's restaurants.

The result of this was that McDonald's reported coffee consumption was up by 1.3 million cups in one month. And how about Tim Hortons, how did the promotion affect them? When asked whether business had been affected, the CEO of Tim Hortons, Don Schroeder, replied, "McDonald's promotional campaign was hardly noticed...The fact is that we actually grew [in] transactions over the two weeks of this competitive activity, demonstrating the tremendous loyalty of our customers, and the entrenchment of our competitive position in Canada."

Questions

1. What do you think the key motivation is behind the choice of a breakfast restaurant? How does a promotion like free coffee affect this motivation?

2. Evaluate some of the ideas presented in the case for promoting McDonald's coffee. What do you think of them? Can you think of any other sales promotion ideas to add to them?

3. Compare Tim Horton's "Roll Up the Rim To Win" promotion, which is discussed in the lesson, to McDonald's free coffee promotion, which is presented in this case. Which do you find more alluring? Explain your reasoning.