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Another McBlunder ends
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June 4, 1997: 9:27 p.m. ET
Second marketing error leads to concern among franchisees, analysts
From Correspondent Allan Dodds Frank
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NEW YORK (CNNfn) - After posting disappointing U.S. sales in May, McDonald's Corp. is dropping its "Campaign 55" price promotion -- a move applauded by franchisees.
The fast-food giant's 55-cent burger campaign provoked numerous complaints from franchisees worried profits would shrink accordingly. Customers at the chain's 12,000 American outlets were upset, too, because availability varied from store to store.
Scheduled to take effect early next week, the move marks McDonald's second marketing mix-up in 18 months. In last summer's attempt to attract a larger adult market, the much-ballyhooed Arch Deluxe burger flopped.
"That's two strikes against them here in two years," said restaurant analyst Mitchell Speiser of Lehman Bros. "They are going to have to refocus marketing campaigns, which could mean perhaps some management turnover at the marketing senior management level."
Another analyst questioned the image that McDonald's wants to present.
"McDonald's can't decide who it wants to be," said Stacy Jamar of Smith Barney.
Last summer, they tried to go upscale, she said. This year, they've flipped around and focused on price and value, "but they didn't go far enough … for consumers to care." (151K AIF or 151K WAV)
Despite recent gaffes, McDonald's remains a strong brand name and superb marketer that still has a long-term tie-in with Disney.
McDonald's has seen its share of the burger market slip, but at 40 percent, it is still twice as large as the nearest competitor.
McDonald's had six straight quarters of declining profits and market share, and only this spring's Beanie Baby promotion helped break the streak. Even then, customers became angry when stores ran out of toys.
The bottom line, said analysts: the company needs to refine its marketing and menus in the American market. 
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McDonald's Corp.
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