Marketing to a multicultural audience — Starbucks and McDonald’s
All businesses today must be multicultural to some extent (Makgosa 2012). The Internet has opened up new portals to multicultural, multinational consumer audiences. More foreign nationals in developing nations aspire to imitate the American, consumerist life they see portrayed in the modern media. America itself is growing increasingly diverse, which demands a more carefully-segmented approach to marketing. However, this creates a problem for global businesses such as Starbucks and McDonald’s. On one hand, the core foundation of their business is based upon marketing a particular type of lifestyle, a lifestyle grounded in an image rooted in Americana (or in the case of Starbucks, a very American vision of a European cafe). The core problem of today’s multicultural marketing is that changes must be made to address an increasingly diverse audience: an audience which demands more than mere tokenism or a few visual representations of diversity in a commercial. Minority populations do not necessarily see themselves as ‘minorities’ at all, and also may have complex relationships to their cultures, as they embrace global, American, and local identities simultaneously.
Market segmentation is obviously not a new concept for businesses, even in the case of relatively large companies with a fairly generic outreach such as fast food companies. It has also been observed that there are many different forms of multiculturalism, including those which honor diversity and the specific economic needs and life habits of consumers vs. ones which attempt to hold on to brand identity while still infusing diversity into marketing campaigns (Burton 2002). This paper will explore two companies that have adopted the latter strategy: both McDonald’s domestically and Starbucks internationally have embraced multiculturalism but have also made a commitment to holding fast to certain brand identity concepts. Multiculturalism and differentiation is achieved through different emphasis rather than a ground-up rebuilding of the brand. This is the new multicultural marketing — one which is fluid as well as segmented.
Diversification of the American marketplace: McDonald’s multicultural strategy
Marketers must always have an eye upon the youth market because this is where market growth is occurring and these customers have the potential to have long brand relationships. In the United States, such market growth is increasingly non-Caucasian. In fact, 80% of population growth is nonwhite, predominantly because of the growth of the Hispanic, African-American and Asian populations. Hispanics alone make up 54% of contemporary total population growth and are having more children per couple, a coveted portion of the fast food market, as manifested by the popularity of ‘Happy Meals’ and other children’s meals (Palacios 2011). This indicates that marketing to Hispanics is far from a ‘niche’ market — the Hispanic market is increasingly synonymous with the American mainstream.
A company with a general marketing outreach must diversify its marketing strategy in recognition of a new reality. For companies with a very broad demographic appeal like McDonald’s, there is no single target market, merely a series of ‘versions’ of that market. McDonald’s embodies what could be called a “hybridization, or co-adaptation of cultures, meaning a compromise between the local, the national, the ethnic, etc. And the universalism of consumer culture” (Krzysztofek 2000).
Even before the current ‘flat’ world and globalized marketplace, McDonald’s frequently featured non-white actors to promote its products (Krzysztofek 2000). This can be seen in this vintage McDonald’s advertisement from the 1970s:
[Image credit: Prism]
Most firms, when marketing to non-whites, have traditionally adopted a ‘general’ strategy primarily focused upon Caucasians, and then modified this strategy to make it more ethnic, often with the help of another advertising firm. McDonald’s multicultural marketing is an outgrowth of its core strategy and it is increasingly stylizing itself as a multicultural company. It puts just as much money into ads targeting Hispanic or African-Americans themes as ads featuring a more general audience image (Helm 2010). In its generic focus groups for new products, McDonald’s uses a disproportionate number of nonwhites compared to other organizations and, in fact, the company’s marketers are often asked to market a new product as if the majority population was nonwhite (Helm 2010). In short, McDonald’s does not modify its product for what was previously considered the mainstream — it views the current diverse market as the mainstream.
This has reaped substantial dividends for the company — even as McDonald’s has become less symbolically central and more demonized in an era where health concerns are predominant in marketing food, specific and more price-conscious elements of the loyal fast food marketplace have cleaved to McDonald’s, particularly high-volume users infatuated with the dollar menu (Helm 2010). Thus, McDonald’s marketing is segmented, yet also cleverly designed to captivate individuals more inclined to make frequent use of the restaurant on a regular basis who tend to be of particular ethnic origins. In an industry where high-volume sales are important, this is a must. Also, given that young people are vastly more apt to consume fast food than older consumers and the minority demographic skews youthful, a multicultural marketing strategy likewise behooves McDonald’s (Paeratakul 2003: 1332). This is keeping with McDonald’s values of cheap, fast, fatty, sweet convenience foods with an aura of , but with a savvy multicultural eye upon a desirable and loyal demographic.
Of course, because of this (extremely effective) multicultural strategy, McDonald’s has drawn the ire of many critics, who stress that McDonald’s is unfairly targeting lower-income customers when many of its higher-income customers have been trying to shop more healthfully. However, from a marketing standpoint, McDonald’s approach has made the company relevant again after it began to lose market share with the negative publicity generated by the anti-fast food documentary Supersize Me. 37% of the adults and 42% of the children report eating fast food on a regular basis, and McDonald’s advertising campaign is strategically designed to capitalize upon a very desirable segment coveted by its brand rivals (Paeratakul 2003: 1332). The idea that McDonald’s embodies a rainbow of diversity and honors the lifestyle of African and Hispanic-Americans has enabled it to stand out and withstand charges that it is homogenized in terms of its product culture.
International expansion and creating a multicultural brand: Starbucks
The need to have a multicultural marketing strategy while still holding fast to one’s brand image is embodied by another stalwart American food brand, that of Starbucks. Once, expensive coffee was considered a relatively niche, boutique item confined to urban locations — Starbucks made it part of the United States mainstream. All stores have a distinct character even while selling the Starbucks brand and manifesting certain styles and flavors that make it uniquely Starbucks. There is greater diversity between stores than more traditional fast food companies like McDonald’s. Starbucks has been called a ‘hegemonic brandscape’ — a brand that is symbolic of American cultural homogeneity and dominance like McDonalds on one hand, yet also of broad, overreaching scope in terms of its adaptability not only to local dining tastes but also dining habits. (Thompson, C. Arsel 2004: 631).
However, interestingly enough, unlike McDonald’s, multicultural specificity is less in evident in Starbucks’ American incarnation as it is in its relationships abroad. Starbucks has always made a point of partnering with local entities, which have a greater knowledge of how to do business in terms of dealing with local regulatory agencies, and, most importantly, the culture of consumption of the region. Partnering with local entities can help navigate the difficult marketing terrain of a new nation (Johnson & Tellis n.d.). However, finding the right balance between holding to the Starbucks brand and diversifying that brand enough to suit local tastes has been a challenge. Starbucks manifests many of the problems in the new multicultural marketing of the 21st century.
Starbucks’ decided to enter Japan first when it expanded to the Far East because the Japanese market was known to embrace novelty, Americana, and yet be relatively similar in its consumerist values to the United States. It partnered with a Japanese company and over time and trial and error, changed many of its product offerings (Bentros 2011). After its first flush of success, demand declined as can be seen in the following graphic:
Image credit: What Japan Thinks.
However, this changed with the introduction of a new menu that included more teas and green tea version of its Frappuccino. However, other aspects of Japanese life worked well for Starbucks’ brand concept. Tokyo living quarters are extremely compact, so more people use cafes as a ‘home away from home’ than they do in the United States. Store layouts were reconfigured to allow for more physical space to allow dining. Since customers were also more inclined to order meal-like foods at cafes and the Japanese, like most Asian nations, have a less sweet palate than the United States, more facilities had to be added to allow for cooking (Starbucks to open landmark 1,000th store in Japan, 2013, JDP). However, this is in keeping with Starbucks self-conception of itself as a brand — Starbucks stores are meant to offer a ‘third place’ for consumers that is neither home nor work, and thus offers them a sanctuary from both public work and private home and family life (Patterson Scott, & Uncles 2010).
While it adapted to Japan, Starbucks still attempted to hold fast to some of its ethical principles and company ideals even while altering its exterior appearance. While Starbucks’ Japanese stores have a very particular character, versus Starbucks in the United States, there was also a noteworthy shift in Japanese coffee culture. Before Starbucks opened, Japanese coffee drinkers in Japan were a distinct minority and smoking was rampant in Japanese public spaces (Starbucks to open landmark 1,000th store in Japan, 2013, JDP). However, Starbucks does not permit smoking under any circumstances given that the familiar smell and taste perceptions of the coffee upon entering is part of the Starbucks brand. Japanese flock to Starbucks despite the smoking ban and as a result of Starbucks’ influence, coffee is beginning to overtake tea as the hot beverage of choice of most Japanese (Patterson Scott, & Uncles 2010). But Starbucks is more than willing to modify other aspects of store design, such as creating stores that look more like traditional Japanese teahouses, including layout and its use of local art (Starbucks to open landmark 1,000th store in Japan, 2013, JDP).
While it has been forced to reduce its number of stores domestically, Starbucks has also made China and India as important components of its growth strategy. In the United States, Starbucks currently occupies a ‘mid-level’ strategy — it is neither a premium nor a discount coffee. However, in the developing world, American chain food often has a cultural cache it lacks in the U.S. — this indicates a potential for growth as a result of multicultural marketing. In both China and India, Starbucks offers different foods and beverages suited to local markets (Starbucks eyes Japan growth, India market, 2010, Reuters).
In China, as in Japan, Starbucks has offered a wider array of teas and savory foods. In India, it stresses vegetarian protein, chicken, and lamb (since beef is not consumed by Hindus and pork is not eaten by Muslims). It also promotes a special Indian espresso roast produced in conjunction with the local company Tata Coffee, stressing the ‘local’ nature of this enterprise, despite its reputation as a homogeneous company (Starbucks continues expansion, 2013, Starbucks). It has improved its instant coffee, as instant coffee is a popular product outside of the U.S. (Starbucks eyes Japan growth, India market, 2010, Reuters). Starbucks has thus attempted to create a kind of ‘fusion’ multiculturalism, blending localism with its global brand image and in Asia, it has particularly found that certain domestic cultural elements integrate well with its business model. “A growing number of China’s 500 million urbanites favour Starbucks for its ambience, which is seen as an important signal of service quality, and Starbucks’ design concept rests easily with China’s consumers, who tend to lounge with friends while sipping coffee” (Patterson, Scott & Uncles 2008).
However, Starbucks’ strategy has not proven to be universally effective in all regions. Starbucks was forced to close 3/4rds of its Australian stores in 2008 (Patterson, Scott & Uncles 2008). Despite the fact that the Australian premium coffee market was growing, Starbucks did not deploy its multicultural strategy in an effective fashion. It did not adapt its product to suit local tastes. Australians found the coffee weak and overly milky compared with other local competitors (Patterson, Scott & Uncles 2008). The Australian market (unlike the other Pacific Rim nations) already had a thriving coffee culture, one which particularly emphasized very strong espresso. Starbucks’ model was not welcome as a result. Australians did not like the large, American sizes and in Australian coffee culture there is often a great deal of loyalty to individual baristas, in contrast to the Starbucks model (Patterson, Scott & Uncles 2008).
Thus simply because a brand ‘does’ multiculturalism well in one context does not mean this will universally be the case in all contexts. Starbucks’ corporate culture and product lines merged well in Japan and China, as nations’ the coffee cultures there were just developing. In a nation with a mature coffee culture whose consumption habits clashed with core aspects of the Starbucks brand as in the case of Australia, the business floundered.
The precise formula to create an effective multicultural strategy can be difficult to discern. The cases of McDonald’s and Starbucks show that a multicultural strategy of segmentation and tailoring the approach to a specific ethnic market can be beneficial in some cases — such as in drawing new Latino and African-Americans to the McDonald’s brand or making coffee-drinkers out of the nation of Japan — and in other cases highly problematic, as can be seen in Starbucks’ approach to Australia. It remains an open question as to how multicultural marketing will evolve in the future, particularly abroad where responses to American-based products can be difficult to predict. For example, in a study of Chinese students vs. American students, when exposed to advertising promoting various U.S. brands, although the Chinese students “belonged to the majority group in their own country,” they, in the view of the researchers “occupied varied positions in the global racial hierarchy” and reacted negatively to some ads in which Chinese persons were prominently featured vs. Americans, particularly in certain advertisements for products such as computers (the effects were not as pronounced as for beer) (Gao et al. 2013). These findings illustrate “inadequacy of the center-periphery approach to global advertising planning, expose the limitations of the social identity theory in predicting racial attitudes in international settings, and outline the ethical challenge for global advertisers to develop effective multicultural advertising” (Gao et al. 2013). Multiculturalism is important but even the concept of ‘multiculturalism’ cannot be deployed in a cookie-cutter fashion to be effective for advertisers.
However, although the concept of multiculturalism in marketing will surely evolve in the 21st century, the need to use it as a strategy cannot be ignored. The examples of McDonald’s and Starbucks have highlight that as unified as a brand identity as these icons may have, to the extent to which every store abroad seems remarkably similar, to create an overly hegemonic image that cannot bend with the needs of a specific region or ethnic group risks brand obsolescence. Consumers themselves are increasingly diverse in terms of how they embrace multiculturalism: some may be willing to embrace the brand’s more hegemonic markers of Americana (like no smoking in cafes), while others may resist (Makgosa 2001). Multicultural marketing is situational in nature, both domestically and internationally, and works best when it merges with core brand concepts while still takes a distinct ‘spin’ particular to the needs of a group or region.
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