Case study of Mcdonald's brand extension into McCafe in Singapore.

Abstract

Brand extension has always been a popular marketing strategy for companies around the world. This paper is a case study of McDonald’s brand extension into the gourmet coffee outlet industry through its McCafé concept in Singapore. By drawing upon research in areas such as the perceived fit of a parent brand to its extension category, consumers’ perceptions on brands and brand naming, this study focuses on a few main objectives. One objective is to assess the level of perceived fit between McDonald’s and the gourmet coffee outlet industry. Another is to assess if a more positive perception of McDonald’s and a greater perceived fit between McDonald’s and the gourmet coffee outlet industry would improve consumers’ perceptions towards McCafé. Lastly, this study would also be used to assess the suitability of the McCafé brand name and whether it should have been launched under a different name. The results suggest that there is low perceived fit of healthiness of menu items and store environment between McDonald’s and the gourmet coffee outlet industry. In addition, brand awareness, preference and loyalty for McDonald’s were found to be the most important factors in influencing consumers’ perceptions towards McCafé. Another key finding was that naming of the extension brand played a crucial role in affecting consumers’ perceptions towards McCafé. These findings have certain implications for managers in decision making. To increase consumers’ perception towards McCafé, new programs can be introduced to increase brand awareness, preference and loyalty for both McDonald’s and McCafé.