Will McDonald’s drink Starbucks’ latte?

Is it any surprise McDonald’s has brewed itself boldly into the coffee business? The McDonald’s menu has evolved dramatically since its founding days in the 1950s, back when it was a simple spot to get a burger, fries and a drink. The company has adapted to shifting consumer tastes, wants, and demands, and has become a major player at breakfast, in chicken, in snacks, salads, and more. There have been a few flops along the way, but in the last six years, McDonald’s menu innovations, better service, and improved atmospherics, have pulled in new customers and boosted profits. Now, thanks largely to Starbucks, Americans now crave fancy coffee drinks, and want them for breakfast, in the afternoon, and even after dinner. It’s no surprise McDonald’s is seeking to capture all these newly evolved coffee cravers.

McDonald’s mochas, lattes, and cappuccinos have gotten positive buzz; even people who prefer Starbucks have given the McDonald’s drinks pretty high marks. And coffee drinkers who get their caffeine fix at McD’s can pocket the savings over the same drink at Starbucks. In recessionary times, that’s a powerful advantage. One survey found that 60% of consumers will trade to McDonald’s if the coffee drinks are cheaper and made faster. There’s also the convenience factor – you can grab a latte while picking up a happy meal for your kids, in a part of town Starbucks hasn’t yet hit, or on a road trip. Starbucks is fighting back against the McCafe invasion with an ad campaign focusing on quality adherence; they’re also experimenting with a breakfast value menu and one dollar coffee. However, we’re betting plenty of consumers will choose McDonald’s premium coffee along with its iconic food offerings over coffee at Starbucks accompanied by its made-off-premise bakery items and microwaved sandwiches.

On the day premium coffee at McDonald's debuted, my wife’s comment after taking her first sip: "Starbucks is in trouble."

We’re All Shopper Marketers Now

Spending on shopper marketing, along with agencies and consultants that have popped up to support it, has grown rapidly. Is shopper marketing just a “gussied-up name for trade promotion”, as a recent article in Ad Age suggested? After all, as the Ad Age piece points out, shopper marketing lacks even a commonly accepted definition. Within shopper marketing, there is no hotter bandwagon than neuromarketing. Since the publication of Martin Lindstrom’s Buyology book, there has been a spike in print, internet, and blog coverage of neuromarketing, a field of marketing that considers consumers’ brain response to marketing stimuli.

Perhaps neuromarketing can offer some interesting insights into how people view, interpret, and act on advertisements. However, the flashy science and technology sometimes gets too far out in front of practical reality and actionable results. Adweek reports that Japanese advertising agency Hakuhodo has taken a stake in Buyology, a new neuromarketing consulting company established by Lindstrom. Perhaps neuromarketing is the future of shopper analytics; after all, Japan is the country of the future, where scientists have developed robot exoskeletons to assist aging farmers and robot teachers that they hope to activate in the next five years. However, it’s all too likely that high tech brain scans and electronic imaging won’t be able to replace careful studies of shopper behavior any time soon. As David St. Hubbins said in Spinal Tap, “It's such a fine line between stupid and clever.”

The camera never lies...

...but lots of people do, especially when they’re talking to researchers or otherwise responding to surveys. A part of it might be attributable to the Lake Wobegon effect, from the mythical town of Garrison Keillor, where it is said all the children are above average. More technically, another driver is social desirability bias. This is where the respondent wants to provide an answer that will be looked at by others as favorable.

• A recent poll asked Americans who they voted for in the last election. This poll showed Obama thrashing McCain by more than 20 percentage points -- far greater than the actual Obama margin of victory on Election Day.

• When people are asked if they voted in a presidential election, the percentage of self-reported turnout is inevitably 10-20 percent higher than actual turnout.

• About 40 percent of Americans say that they attend church regularly. Counting and tracking methodologies used to determine true church attendance found that about half that number can actually be found in the pews.

• A number of years ago, a survey found that upwards of five million people claimed to be New Yorker magazine readers—an unlikely number given that circulation was barely above half a million.

People want to be on the winning team, and want to look virtuous and smart. So when we ask them to self-report, we often get responses that are wildly inaccurate. Researchers are exploring tools such as anonymous online polling and expressionless computer avatars in order to obtain more accurate survey results. But no matter how sophisticated surveys become, there is no substitute for the careful capture of actual human behavior, as we do with video-enabled behavioral analytics to see into the realities of shoppers in the shopping aisles.

As Yogi Berra once said, “You can see a lot by observing.”

Retail charm offensive

Bill writes: In his early stand-up days, Jay Leno used to tell the story of the frustrations of being in line at the supermarket. He waits. And waits. And waits some more. Then it’s his turn, and the checker doesn’t even look up to say hello. She’s got her head down in scanning mode. When it’s time to pay, he – thinking he’s a valued customer at a store where he’s just forked over more than $200 – still doesn’t receive an acknowledgment. Not able to contain his frustration, he says to the checker that a simple thank you would be nice. “Why should I?” she says, scoffing, “it says it right here on the receipt.”

Over the years, I’ve seen plenty of cluelessness and rudeness in stores—maybe not quite as bad as the Leno story. I once asked a clerk to help me locate an item that was obviously not in the aisle where I sought his help—he just happened to be the only person anywhere in the store I could find. He stood very still, pivoted his head around to be able to see everything within a three-foot radius of his body, and then proudly proclaimed the item was not there. I suppose it’s not so different from being in a restaurant and asking a passing waitperson for a spoon, only to be told this isn’t their station.

Times are different. There’s a charm offensive going on everywhere. Store traffic is thin—and precious. I get a greeting like royalty as soon as I walk in almost anywhere—even big box stores, where sucking up to customers has never been part of the operational orthodoxy. Employees are now dropping what they’re doing to help and lead and show and answer—and thank. It’s all rather nice, although sometimes a bit desperate—and annoying. I was at Walgreens the other day, needing “navigational remediation” as we sometimes call it in the shopper analytics business. I was taken to the item I sought, and then given a “helpful” two-minute discourse on all the reasons why another brand would be better than my selection.

Oh well. It was better than being taken for granted.