Branding Strategy Insider

Big Mac or Coke: who's got it right?

A Big Mac and Coke. Two stellar brands of the 80s that seemed locked in each other's orbit, linked by simple usage occasion, power-brand status and shared origins in US consumer culture. The two brands even supported each other, with McDonald's selling only Coke drinks brands in its restaurants since 1955.

But being the world's number-one carbonated beverage isn't all that it once was as consumers turn to healthier, more natural drinks. Similarly, McDonald's position as the ultimate fast food is secure, but of questionable long-term value as consumers turn to healthier and greener alternatives. 

The fascinating issue now is not whether Coke and McDonald's need to change, but which company has chosen the best strategic transition, given that the two have opted to take very different paths.

Coca-Cola has, internally at least, accepted that the writing is on the wall for carbonated beverages, including its flagship Coke. While the iconic brand will always have a place in the hearts of millions, the company is diversifying its portfolio and growing sales with new and acquired brands. The recent $4.1bn (£2bn) cash deal for vitamin-enhanced water producer Energy Brands, and its star water brand Glaceau, is the latest in a long line of acquisitions and creations that includes Powerade and Nestea iced tea (a joint venture with Nestle)

The Importance of Point of Purchase

Over the past 20 years, retail brands have significantly increased their leverage over consumer product brands because (1) they increasingly control access to products and (2) the environment in which the products are sold and (3) they have point of sale data to which manufacturers are not always privy. And given the relative size of some of the largest retailers (Wal-Mart’s sales of $285.2 billion [year ending January 31, 2005] eclipses P&G’s sales [all brands] of $60 billion), retailers don’t only affect product sales and market share directly through product access/distribution, but also indirectly by contributing to marketplace exposure/brand awareness.

Point of purchase is the place where everything a brand has done either results in a sale or doesn’t. While most consumers still state that product brands are more important to them than retail brands, most would not waste the time to seek out their preferred brand at another store if it is not available where they are shopping. And, according to a March 31, 2005 Economist article, consumers spend no more than 6 seconds trying to find a preferred brand before they give up and settle for a substitute.

So, how can you maximize your product brand’s probability of success at point of purchase? Through the following: