Day 037 - 14 Oct 94 - Page 10


     
     1        Corporation spent in 1989 1.1 billion dollars worldwide in
     2        advertising promotions.  What is your conclusion on that?
     3        A.  There are several conclusions to draw.  The first one
     4        is that, had I still been in the marketing business,
     5        I would very much like to have had their advertising
     6        account in terms of its sheer volume.  It is a huge amount
     7        of money; it is an enormous sum.  The second thing I would
     8        like to know is what percentage of turnover that amounts
     9        to.
    10
    11   Q.   That is 5 per cent of turnover, I think, something like
    12        that?
    13        A.  Five per cent of turnover.  It strikes me that from
    14        this, and from other information that I will refer to,
    15        McDonald's have achieved a number of very significant
    16        things here.  The world of advertising uses its own
    17        particular language to describe its activities and I will,
    18        no doubt, be using one or two technical words which I will
    19        explain.
    20
    21        The first one is a very simple one, which I am sure
    22        everyone will understand, which is campaign.  People talk
    23        about marketing campaigns, advertising campaigns, and
    24        public relations campaigns.  The clear meaning here is
    25        that you have a marketing effort of some sort that has a
    26        clear objective, a clear start and a clear finish.  That
    27        constitutes a campaign.   The reason this has grown up is
    28        very simple.  Until recently -- perhaps I could say until
    29        the advent of McDonald's -- nobody could actually afford
    30        to continually advertise their products with such amazing
    31        amounts of money.  It simply was not possible.
    32
    33        So, what again would traditionally happen would be that a
    34        campaign would break across whatever media you selected,
    35        your media schedule targeted to whatever audience you had
    36        delineated, and if the campaign was successful you would
    37        see (if, indeed, that was one of the objectives) a rise in
    38        sales; as soon as the campaign had finished you would see
    39        almost a commensurate drop in sales, hopefully not too
    40        much.
    41
    42        What McDonald's seem to have done here is attain the holy
    43        grail of marketing to continually promote themselves,
    44        I should almost say "ruthlessly promote themselves".  That
    45        is a significant achievement.  How they do it I am not
    46        sure.  You would have to examine the economics of the
    47        McDonald's operation in some detail.
    48
    49        The need to do it, however, I think I can comment on.
    50        That is, it seems to me very clearly now, indeed from 
    51        slogans used by the Plaintiffs, for example, "There is 
    52        nothing quite like a McDonald's", the need to do it, 
    53        I believe, arises from the fact that what McDonald's are
    54        essentially selling is not a product or, indeed, a range
    55        of products, but they are selling an image.  A hamburger
    56        is, after all, very much like any other hamburger, whether
    57        it is McDonald's or Burger King or whatever; the
    58        differences are minor.
    59
    60        What McDonald's has succeeded in doing (which I do not

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