For my reflection essay, I would like to dig deeper into the topic of tastes and preferences and their influence on demand. Our textbook defines non-price factors that influence demand as “income, taste, and expectations that help to determine the demand for a product” (63). The text continues, “Taste, fashion, and popularity. The demand for “in” items typically increases; and when an item is “out,” demand decreases… A good, catchy advertising campaign that makes a product popular can increase demand” (63).
I found this aspect of non-price factors particularly interesting. As a thoughtful, rational consumer, advertising oftentimes affects my choices in the market even if I don’t realize it. An article from VOA News illustrates this same idea in the context of Yum Brands outlets, like KFC and McDonalds. The article suggests that image trouble may be the culprit for falling profits. “Industry analysts say the fast-food giants need to innovate to keep pace with a changing business landscape and changing tastes,” the article reads.
Nowadays, consumer trends lean towards customizable, healthful menus that are perceived to be of high quality. In an effort to meet consumer’s changing tastes and preferences, McDonald’s has recently made some adjustments to their menu. An article from adage.com says that McDonald’s removed high-fructose corn syrup from its sandwich buns and taken artificial preservatives out of items including Chicken McNuggets “as it tries to appeal to diners hungering for more clarity and cleanliness in what they eat.”
“Part of McDonald’s strategy is telling people more about how it gets and prepares its food,” the article says. In fact, one look at McDonald’s website shows the phrase “The simpler the better” alongside an updated web design that makes finding nutrition facts and food sourcing details more accessible.
McDonald’s is viewed by many consumers as “unhealthy junk-food” (Business Insider). McDonald’s CEO Don Thompson says that “We are also strengthening our creative messages by placing greater emphasis on the quality of our food,” and that’s exactly what they did. Take a look at this picture from the current McDonalds website. The about our food page reads, from left to right, “Commitment to quality, quality food, our food philosophy, nutrition calculator, and our food experts.” This clearly shows the chain’s efforts to shift tastes and preferences by appealing to consumers’ demand for quality, humanely sourced, and nutritious food.
But has this revamped marketing campaign worked for McDonald’s? If we take a look at the stock market price for Mc.Donald’s at the beginning of 2013, when they first launched their healthy marketing campaign, to the present, we see a slight increase in stock market price over the five year period.
Surprised? Don’t be. Mc.Donald’s is not the first company to revamp their marketing campaigns in an attempt to appeal to consumers. For example, take a look at this Coca-Cola commercial compilation, from the 1950s to present day. You’ll see how popular culture, especially celebrity endorsement, is utilized to alter consumers’ perception of the Coca-Cola brand. Here is a Diet Coke commercial featuring Taylor Swift playing with kittens while holding a Diet Coke. If that’s not a blatant appeal to popular culture, I don’t know what is!
Some consumers may find this manipulation of tastes and preferences appalling. In my opinion, consumers’ rational decisions in a mixed market economy act as the driving force of both price and the overall success of a business. McDonald’s efforts to change its public image likely resulted from falling profits. Realizing consumers were becoming more health conscious, McDonald’s changed their menu, quality of service, and entire image! From this perspective, consumers have tremendous power over the success of big-businesses in our free market economy.
Sources:
Welch, Patrick J., and Gerry F. Welch. Economics: Theory & Practice. 11th ed., John Wiley & Sons, Inc., 2016.
https://www.voanews.com/a/shifting-consumer-tastes-change-fast-food-industry/2814926.html
http://adage.com/article/cmo-strategy/mcdonald-s-cleans-food-appeal-u-s-tastes/305277/
https://www.mcdonalds.com/us/en-us/whats-hot.html
http://www.businessinsider.com/mcdonalds-changes-to-improve-business-2014-9
21st Century Citizenship 