McDonalds and the 1984 Olympics

This story is an oldie but a goodie – and the lessons are just as relevant today as they were in the eighties.

The 1984 “If the U.S. wins, you win!” promotion was designed to capitalise on the spirit of the Olympics and offered free food and drink for every medal the U.S. won. Customers got a scratch card, which revealed an Olympic sport. If the U.S. won gold in that event, the customer would receive a Big Mac; silver wins french fries, and bronze wins a Coke.

In 1976 the U.S. team won a total of 94 medals – 34 of which were gold. They sat 3rd in the overall medal table, beaten by Soviet Union with 125 medals (49 gold) and East Germany with 90 medals (with 40 gold). In 1980, Soviet Union and East Germany continued to dominate, with 195 and 126 medals respectively.

McDonalds will have made their calculations based on these numbers and felt they had a good idea of the cost and future returns of this promotion. Disaster struck for McDonalds however when the Soviet Union lead Warsaw Pact meant that they, East Germany and a number of Eastern Bloc countries boycotted the Games for political reasons.

This meant that the U.S. won a completely unexpected 174 medals. Instead of the 34 gold medals the U.S. won in 1976, the 1984 games saw the Americans win 83. This meant McDonalds had to give away much more free food and drink than they expected to – and over double the number of Big Macs.

Marketers must always be financially savvy; to have an understanding of the numbers and the impact any campaign will have on cost of implementation, footfall, revenue and profit margin. Those in charge of this promotion probably were, and instead fell victim to another fundamental error… not considering the external macro environment.

One of the reasons Soviet Union and East Germany won so many medals in 1980 was because the U.S. team boycotted the Games (hosted in Moscow) in protest at the Soviet war in Afghanistan. McDonalds didn’t consider that they might also boycott now they were hosted on U.S. soil.

What does good look like?

An analysis of the external environment – using a simple tool such as STEEPLE – could have prevented a very expensive campaign. It’s important that marketing plans and analysis such as this aren’t undertaken once a year and left on a shelf until next year’s planning. They, like the business plan, are iterative, working documents. Had they run another STEEPLE analysis at the time of the campaign, they would have identified the situation and been able to tweak the mechanics of the competition.

McDonalds were fortunate to be in a position where their size and high sales volume meant that they could survive this error – but many organisations would struggle with the pressure this put on their cash flow, which shows how important this simple model can be.

Moving forward

What’s the moral of this Bad Marketing story for you? Do you use models like SWOT & STEEPLE in your every day work?

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Chris Rogers

I curate stories of #badmarketing so marketing professionals and business owners like you can learn from the mistakes of others - and produce better marketing that’s right first time. Bad Marketing also aims to be essential reading for marketers, academics & students – and anyone interested in the challenges of marketing.

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