Costs and Choices

by Krishna on April 6, 2007

There was an interesting comment to my previous post (“Motivations and Reasons“) and I thought it deserved a blog post as reply. There are many things I really liked in the comment, especially about McDonald’s market research, introduction of new products and other facts that I was not aware of. Here is my reply.

My take on the McDonald’s and obesity issue is that it makes no sense. People have countless choices when it comes to buying and eating food. They decide what and how they want to eat and nobody is forcing them to do otherwise. Now, because of the fact that the food industry is huge and dispersed, it is very difficult to sue multiple companies and so McDonald’s is usually targeted.

I am not sure how it will turn out in the court system, but the anti-obesity advocates are pretty motivated and organized. A few recent movies like “Fast Food Nation” and “Super Size Me” has also received national prominence (while their rebuttals not so much) and certain local government bodies have also got into the issue. When politicians get involved, issues are resolved on emotion instead of common sense.

The point I was trying to get across in my previous article was that one prominent reason drowns out or masks other reasons. When a person wishes that there was a vegetarian choice at McDonald’s, he or she may have several other reasons to think so – not related to the health issue that seems to grab all the headlines. I would like to hope McDonald’s does take all such reasons into consideration and consciously decides not to do anything about it. That would be good business thinking.

The commenter did explain how such demand is actually pretty low for a big company to handle and that there are other options for people. But there are other factors – again McDonald’s may have thought about this and decided it was not worth it, but still, here you go:

  1. McDonald’s and its competitors are “fast” food restaurants. If I have time, I can shop for groceries and cook with the type of ingredients I want. But if I am on the road or late for a meeting, I want to grab something quickly and eat it within the shortest period, preferably on the drive-thru. As a Catholic/Muslim/Jew/Hindu/Buddhist/Jain in this situation, I just want something to eat that will not violate my religion and do it fast.
  2. I don’t want a lot of choices – just something I can eat to fill my stomach. A competitor of McDonald’s (purposely not named) does have exactly one such item and I go to them instead. It is not the best meal in the world, but that is all I have time for. If McDonald’s had even one offering like that, I would visit it instead. For example, the McDonald’s near Lexington on I-95 highway is very convenient, but I am forced to take another exit.
  3. When a non-vegetarian is with a vegetarian and they want to have some fast food, they invariably visit the place where the vegetarian person has at least one choice. This happens a lot during short business trips or when friends get together.
  4. Many of the other communities are immigrants and have more children than long-time American citizens. In the long run, that is a valuable set of customers who will not see McDonald’s as often.
  5. Common visitors to McDonald’s would try out the new item just for the sake of variety.

I really don’t know how much income this would translate to. Perhaps it is really small. Is it a growing market? Could McDonald’s make something out of it? As I said, the competitor’s vegetarian offering is not high quality, but they definitely attract some business because I have found that item in almost every outlet I have been to. So is this money simply left on the table?

In a general sense, a market leader has to cater to the most common demands in its market. Doing otherwise may result in high operational inefficiencies and violate the principle of maximum profitability. That is how niches open up – they take advantage of the market segments that are not served by existing producers.

If the niche market segment remains small, the market leader continues to maintain pre-dominance in the market. If it increases, then the leader may find its market share slowly diminishing. It can try to provide a competitive offering at that point – chances are that the niche producer has already established mindshare and it is difficult to wean those customers away. It is not impossible, but it has become a tougher task.

In conclusion, I would say that most customers (like me) do not care about political agendas or ideologies. They are primarily wrapped in their own lives and make decisions that are purely driven by personal motives – call it selfishness, if you will. When a business can meet those selfish needs, it becomes successful with those customers.

{ 2 comments }

Lynne Eldridge M.D. April 7, 2007 at 12:20 am

I applause your comments.

Why shouldn’t I as an educated individual. I like to think I make my own choices in life, and that I am not “controlled” by the fast food industry.

Yes, fast food fare is unhealthy in general. We know that those who eat fast food two times a week or more are twice as likely to be obese and develop diabetes.

Is it the fast food restaurants fault? For a sober, educated citizen I don’t think so. I really do not see any difference between saying “sorry, I need fast food because I did not have time to cook for my family”, and “sorry officer, I know I was speeding, but I was late for my child’s game”.

Why should the fast food industry be at fault for our lack of planning?

Perhaps, in time, the fast food industry will follow the Philip Morris example, and contribute to health while they please their share holders from our ignorance.

But, for now, it is up to us that our educated enough to know better (that includes my 9 and 11 year olds) to make wise choices on our own and not blame someone else for our mistakes! Thanks!

Lynne Eldridge M.D.
Author, “Avoiding Cancer One Day At A Time”
http://www.avoidcancernow.com

Krishna April 7, 2007 at 7:15 am

Thanks for your comments. If we take personal responsibility for our actions, then we can avoid a lot of problems – health or otherwise.

I saw your book site. Will try to get a copy of it and review it on my main website.

Comments on this entry are closed.

Previous post:

Next post: