Home > Articles > Business & Management

From Minority to Majority: McDonald's Discovers the Woman Inside the Mom

  • Print
  • + Share This
While most companies have come to accept that women are the most powerful force in the world’s increasingly consumer-driven economy, many still face the challenge of creating successful strategies to reach those women who have changed dramatically during the past 50 years. This excerpt from The Power of the Purse discusses the dramatic shift in the marketing focus of these companies.
This chapter is from the book

To help revive the company’s sales and profits, McDonald’s shifted its strategy toward women from one of "minority" consumers who served as a conduit to the important children’s market to one in which women are the company’s majority consumers and the main drivers behind menu and promotion innovations.

For Bill Lamar, chief marketing officer, McDonald’s USA, 2002 was about to go down as one of the worst years in his almost 20-year career with the fast-food giant. On December 17 of that year, McDonald’s posted a quarterly loss of $343.8 million, its first-ever decline since the company went public in 1965. Happy Meals, a cash cow for close to 25 years, were in a three-year sales slump. Same-store sales—which tracked the sales in restaurants open more than a year and served as a crucial gauge of how well McDonald’s was performing with return customers week after week—had slid every month in 2002.1 The ad campaign "We love to see you smile" wasn’t a huge hit, and sales of new products like McSalad Shakers were so poor they were going to be pulled from the menu.

Something was definitely amiss at the Golden Arches. But just what was wrong? On the surface, McDonald’s was doing okay. More than 20 million people were still eating at the company’s more than 13,000 restaurants in the U.S. every day, bringing in sales of more than $18.6 billion through November 2002.2 The hamburger and fries were still America’s two favorite foods. Yet throughout McDonald’s quiet, wooded headquarters in Oak Brook, Illinois, a suburb just outside Chicago, there was a sense that the company’s tried-and-true strategies of expanding overseas, opening new stores, and focusing primarily on men and children in its marketing were failing to work their magic.

In Lamar’s corner of the company, there was pressure to find a strategy that would put the company back in the good graces of its consumers—and turn around the embarrassing slide in sales for a company that had turned a profit for nearly 50 years. Marketing certainly wasn’t solely responsible for the problems at McDonald’s—nor did anyone think that it would be the company’s savior. But marketing was one of the first places that new chief executive Jim Cantalupo turned to for help. Cantalupo had been called out of retirement to replace Jack Greenberg just 12 days before the fourth-quarter sales were announced.

Marketing couldn’t single-handedly pull the company out of the nosedive. But it might be able to help in the short term with a new advertising campaign or promotional strategy that would begin to turn around the company’s sales and brand image. It had happened before. Over the years, the advertising the department had helped create, with the aid of some of the biggest and best ad agencies, had defined McDonald’s to billions of consumers around the world. Many of its jingles had become pop culture icons. People could recite the Big Mac song with its riff of "twoallbeefpattiesspecialsaucelettucecheesepicklesonionsonasesameseedbun" more readily than the Pledge of Allegiance in some cases. McDonald’s promotions—especially the Happy Meal toys tied to popular movies and television programs—were legendary for driving customers into the restaurants to try new products and enjoy old favorites.

Lamar needed answers fast to what had put one of the world’s best and biggest brands into a sharp downward spiral. He turned to a new senior vice president of marketing recently hired from Procter & Gamble (P&G), Kay Napier, for help. Napier had built her marketing muscles at the company credited with creating today’s modern brand marketing tactics. In her last job at P&G, she was vice president of North America pharmaceuticals and led the company’s women’s "health and vitality product" unit. To her, there was a simple answer to what was wrong with the company she had joined in October 2002. But the problem, she knew instinctively, wouldn’t be solved with yet another advertising campaign.

"We simply had stopped being relevant to women," Napier says bluntly.3

Colliding with the Power of the Purse

McDonald’s had run headlong into the challenge that many companies will face in the coming decades if they haven’t already collided with it: the power of the purse. While most companies have come to accept that women are the most powerful force in the world’s increasingly consumer-driven economy, many—like McDonald’s—still face the challenge of creating successful strategies to reach those women—112 million in the U.S. alone—who have changed dramatically during the past 50 years.4

In the U.S., women control far more money than they ever have in history—$7 trillion in consumer and business spending combined, to be exact—a number that exceeds Japan’s economy.5 In an economy so dependent on consumer purchasing—personal consumption accounts for close to 70 percent of all spending in America—women have a vast impact on what keeps America growing and thriving. Women control the vast majority of what America buys, from cars to computers to healthcare to hamburgers. Women are responsible for or buy 94 percent of home furnishings. They influence 91 percent of home sales and buy 51 percent of consumer electronics. They buy 60 percent of cars and trucks. They make up 50 percent of business travelers.6

Women are no longer the "minority" market so many companies have considered them for decades. Women are the majority market. But that effect doesn’t stop with women’s immense purchasing power. In fact, women’s propensity for shopping is just the beginning.

Women and society are being radically transformed by women’s growing economic power and their escalating acquisition of money through work. Today, more than 60 percent of adult women work outside the home, up from about 30 percent in 1955 when Ray Kroc began selling his burgers, fries, and shakes to America’s middle-class families.7 Back then, 80 percent of Americans lived in a traditional nuclear family. By 2003, just 50 percent of Americans lived in such family structures—a shift driven in part by women’s ability to pay their own way. According to the 2000 U.S. Census, single people now head 26 percent of American households, with 58 percent headed by women and 42 percent by men.8 More than one quarter of women age 15 and over have never married; a third of men in that age group are single too.9 If and when women do marry, they bring with them far more economic power than any generation before them—shifting the balance of power in families as well as in society.

Historically, women’s work and the money it brought into the household were often considered vital to a family’s economic stability. But women were not considered to be "in control" of those funds or the primary financial caretaker of families. In the 21st century, women are increasingly the primary breadwinners in families. In 30.7 percent of marriages where women work, women now out-earn their husbands, according to new data from the Bureau of Labor Statistics and the 2000 U.S. Census, as noted by Newsweek in its 2003 cover story, "She Works. He Doesn’t."10 Women are now the sole providers in more than 800,000 U.S. families. From 1995 through 2010, women are expected to accrue 85 percent of the $12 trillion in personal wealth that will be amassed during those years, according to figures from global publisher Conde Nast.

In 2004, U.S. women earned 80 percent of what men earned, up from 62 percent in 1980, according to new statistics from the U.S. Department of Labor, showing a marked increase from a period of stagnation in the 1990s.11 When women and men of equal education, abilities, and similar social status are compared—for example, single men and women with college degrees and no children—the pay disparity disappears.12 Those women make as much as, if not more than, their male counterparts. Forty-one percent of the 3.3 million Americans with incomes exceeding $500,000 are women. While women still lag behind men when it comes to getting to the corner office—only a handful of the Fortune 500 companies have female chief executives—women-owned businesses now employ more people in the U.S. than those Fortune 500 companies employ combined. That makes women a far more powerful force in business than has been recognized traditionally, according to statistics compiled by the National Council for Research on Women.

Education is driving much of this increase in women’s economic power as women’s education levels outpace men’s. According to the National Center for Education Statistics, 37.2 percent of women between the ages of 18 and 24 were in college in 2002 versus 30.7 percent of men. Since 1992, there has been an 11 percent increase in the number of women in college, but in that same 10-year period, the number of men in college has edged up only 3 percent. The NCES projects that by 2012 a million more women than men in that age group will be in college.13 In 2002, women earned the majority of bachelor’s degrees, 57.2 percent, according to the American Council on Education. The Pell Institute for the Study of Opportunity in Higher Education found that while the number of men receiving bachelor’s degrees has increased 20 percent in the last 30 years, the number earned by women has increased 117 percent. In graduate programs, women now make up 49 percent of law school attendees and 50 percent of medical school rolls. "On their twenty-first birthday, only about one in four men are in college full-time, compared with one in three women," writes Peter Francese in American Demographics.14 There is literally no end in sight for the continued escalation of women’s economic power. Economists and historians predict that women will continue to gain economic power in exponential amounts in the coming decades in the U.S., Europe, and especially throughout the developing world. Many countries are now realizing that one of the quickest and most effective ways to boost their economies is to educate women and give them access to the business world.15

Yet, even as women undergo this social and economic revolution, many companies haven’t changed the way they think about women. They haven’t taken that next important step beyond accepting that women are the majority market. Many have heard and even agree with management guru Tom Peters that "women are opportunity No. 1 for the foreseeable future."16 But many companies still haven’t explored how the social, economic, and cultural shifts that brought about women’s access to money and power are affecting how those women think about brands, business, products, and services. The reasons for this lack of exploration are obvious. There’s only recently been agreement that women are indeed the world’s most powerful consumers. While the social and economic trends have been building for decades, they are just now beginning to resonate and radiate into business as they have become entrenched in the mainstream of American society.

Delving deeper into the trends that are profoundly changing women is the next big step that many companies simply haven’t been forced to take—yet. But, like McDonald’s, they will. As Napier put it so simply: McDonald’s had stopped being relevant to women. Why? The women the company targeted through traditional advertising pitched to children, and menu items created in the mid-1950s, had ceased to exist—if they ever had. Women had changed even as McDonald’s had stood still. McDonald’s continued to talk to women through traditional roles and stereotypes even as those roles and stereotypes had long since stopped making sense to a growing number of women. "The change at McDonald’s is driven by seeing women through the complexity of their lives. They are playing multiple roles at the same time. So we began to realize that we needed to see women as more than moms. They wanted to be a woman first and then mom second," says Wendy Cook, vice president McDonald’s U.S. menu management. "Women simply didn’t like be talked to as a stereotype. They want to be talked to as the women they are today."17

So, who are the women of today? That’s the question McDonald’s and the other companies featured in this book have set out to answer. These companies have taken that next important step to dig deeper into the psyche of their most important consumers. What they are finding is an ever-shifting, ever-evolving group that defies any and all stereotypes. This is no longer the monolithic homogenous "women’s market" of recent history where a single advertising campaign or a few tweaks to a car’s interior make it acceptable for all women. Today’s women’s market is vast, varied, and in constant motion. Women require far more than one-off ad campaigns or subtle changes to product—the standard operating procedure for "marketing to women" in the past—to draw them to a brand or product. These companies have learned that female consumers require far more targeted, holistic, and long-term approaches that meet them where they are in their lives today and where they are going in the future—not where marketers think they are based on outdated stereotypes and traditional roles. That kind of deep and broad approach requires that companies view women through a new lens that encompasses all their roles and responsibilities in society—some from the past, some from the present, and some just being formed for the future.

For companies such as McDonald’s, The Home Depot, and Nike, the shift has been first to see women as majority consumers and then to rethink those women in new ways, throwing out presumptions about who they think their female customers are. "Mostly moms" was how McDonald’s traditionally thought about women. It learned that such stereotypes were far from the truth. The Home Depot had to cast off assumptions about women and home renovations—for example, that they liked painting rooms and buying furniture and appliances. The Home Depot learned that women and men were working together on home renovations and that women often were taking charge of the toughest of the home improvement tasks. Nike had to slough off several stereotypes, such as thinking that women would respond like men to marketing featuring well-known sports stars, in order to finally get at a strategy that rang true with women.

For companies such as Procter & Gamble, DeBeers, and Kodak, digging below the traditional stereotypes has been a matter of combining the past with the present. Even as women have moved deeper and deeper into the workforce, women continue to hold on to traditional roles and responsibilities of the past. "It is very difficult for many women to relinquish the traditional roles. They wanted to be both a terrific breadwinner and a terrific wife," says Randi Minetor, author of Breadwinner Wives and the Men They Marry.18 Women are still often the emotional centers of their family. They cherish family and friends while driving hard up the corporate ladder. They still worry about a clean home and fresh laundry. They still want the engagement ring even as they out-earn their potential husbands in the workplace. This tension between the old and the new, the pull of the past and the push of the present, has created opportunities for companies that have looked beyond the "corporate superwoman" and "soccer mom" stereotypes that have been popular for decades.

Kodak found a place for its digital cameras with women who enjoy being the emotional centers of their households even as they move rapidly into spheres once considered totally male—like technology. DeBeers sought to balance the "power of the right hand to rule the world" with the "left hand that rocks the cradle" to draw a whole new group of purchasers of diamond rings: women. Even companies whose primary consumers have always been women have had to shift their thinking in the face of this struggle between the traditional and the new. P&G found that it needed to delve into just what a clean house—once a sterling example of a woman’s achievement—meant to a modern woman. Uncovering the desire for a clean home despite all the changes in women’s lives led P&G to create the Swiffer, one of the most successful new brands in its history.

Indeed, companies and industries that thought they knew women well have found themselves facing a future that is still being mapped by a new generation of women. These women continue to evolve the definition of what it means to be a woman in the 21st century. Avon, long a leader in knowing what women wanted, felt the future bearing down on it as it realized what had resonated with women for decades no longer made sense to a new generation of women. Torrid, an upstart division of teen retailer Hot Topic, set the fashion industry on its heels when it rolled out belly tees and racy undergarments for teenage girls in sizes 15 and up. Barbie, the doll that had come to define so many of the stereotypes of beauty and womanhood, has been knocked from her pedestal by a group of dolls called Bratz. The dolls were created by listening to dozens of young girls who were looking for friends to play with, not a blonde stereotype.

For all these companies, the process of digging deeper in terms of women and the social and economic revolutions that are shifting and shaping their world has done more than attract more women to these brands. These strategies have turned around sales slumps, recharged executives, emboldened newcomers, and often drawn as many male consumers to their strategies as they have the target these companies set out to hit: women.

For McDonald’s, finding out who women were meant dismantling a notion the company and the fast-food industry had held about women for decades. Since 1955, when Ray Kroc began selling burgers and fries, women consumers had fallen into two broad categories in the fast-food industry. They were either ignored in favor of focusing on men— generally considered the industry’s most frequent users and therefore its most important consumers—or they were cast in the role of moms who were simply conduits to their children.

When it came to women, the standard operating procedure for many fast-food companies was to pursue children with a steady and constant diet of marketing. This strategy worked for many years. In the early days of the fast-food industry, a trip to McDonald’s was a treat, a once-a-month respite from cooking at home or to celebrate a birthday or a winning soccer game. Happy Meals, introduced in 1979, played into that treat-like atmosphere with toys that captivated children and easy finger foods like fries and Chicken McNuggets. By 2002, Happy Meals made up 20 percent of McDonald’s annual sales, about $3.5 billion, according to company reports. The success of the toy giveaway had made McDonald’s one of the largest distributors of toys in the world, with tens of millions of items distributed every month. The importance of Happy Meals, however, went beyond their sales. McDonald’s surveys showed that receipts that included a Happy Meal were 50 percent higher than those without, indicating that Happy Meals were being bought along with other meals, most likely meals bought by moms.19

But Happy Meals’ decades-long success story masked big problems, problems exacerbated by the fact that McDonald’s was paying scant attention to the women who opened their wallets to buy those Happy Meals. McDonald’s marketers could quite accurately predict what toy would tempt toddlers, but they hardly knew the women who brought the toddlers into their restaurants. Yet over the two decades since Happy Meals were introduced, women and moms had changed considerably as America’s social and economic fabric shifted dramatically. A trip to McDonald’s was no longer a treat by the early 2000s. It was often the easiest way to feed the kids as longer work hours, soccer practices, and ballet classes began to eat up the evenings of many Americans. The drive-up window had become the way America made dinner. The shift from once-in-a-while treat to a weekly, if not daily, occurrence was a boon to fast-food sales. By 2002, McDonald’s sales had surged to more than $38 billion globally and $18 billion in the U.S. But the shift also represented a huge problem for the company. McDonald’s food—those burgers, fries, and shakes—had been created as treats, not as everyday lunch. By 2002, the food that McDonald’s had built an empire on had become one of its biggest liabilities—especially for women.

By the turn of the 21st century, trends in obesity and weight-related illnesses began appearing across a broad swath of the U.S. When McDonald’s went public in the 1960s, Americans weighed 25 pounds less than they did in 2002. Men weighed an average of 191 pounds in 2002, up from 166.3 pounds in 1960. Children ages 6 to 11 had put on 10 pounds, averaging 74 pounds. Women weighed an average of 164.3 pounds in 2002, up from 140.2 in 1960.20 Weight-related diseases were on the rise, including diabetes and high blood pressure. Bariatric surgeries—where stomachs are reduced to the size of an egg to help grossly obese people lose weight—had become so popular that they were shown in great detail on television morning shows.

As Americans watched their waistlines expand, the statistics that flowed out of the Surgeon General’s office and the National Institutes for Health served as a wake-up call. Women, as McDonald’s would realize, were the most likely to make changes in their own diets and those of their children—no matter how much their kids asked to be taken to McDonald’s for a Happy Meal and the toy.

"Women are a large influencer of how we eat in this country," said Harry Balzer, vice president of market research firm NPD Group in Chicago.21 In fact, women are often the "early adopters" of nutrition and diet trends. Such influence already was playing out throughout the vast multibillion-dollar food industry. For example, the organic food industry had seen a huge increase in interest and sales as women searched for healthier and better food. The industry grew from a tiny niche in the 1980s to a $10.8 billion industry by 2003, according to the Organic Trade Association’s 2004 Manufacturer Study. "While studies show that interest in organic foods cuts across many demographic categories, it’s still predominantly women who buy organic foods," said Katherine DiMatteo, executive director of the Organic Trade Association.22 Women also would be behind the sharp rise in sales at fast-casual restaurants such as sandwich maker Panera Bread, soup seller Zoup!, and a host of Mexican fast-food chains like Baja Fresh and Qdoba that pitched themselves as fresher alternatives to the traditional burger and fries.

Given McDonald’s dominance in the food industry—it serves close to 50 million people globally every day—it wasn’t long before women’s concerns about diet and health began to hit the company’s radar with increasing regularity. In a sign that McDonald’s was listening, the company ordered its suppliers to stop using antibiotics and growth hormones in many of its meat products. Those moves, however, didn’t reflect a real change in the way McDonald’s perceived the women customers it had neglected for years. It would take the dismal year of 2002 to force McDonald’s to dig deeper to determine what drove modern women when it came to food and health—and to create products that would make sense for both women and McDonald’s.

  • + Share This
  • 🔖 Save To Your Account