When Retail Marketing Goes Too Far

Marketing by retailers can go too far; this claim should be no surprise. That this has been so even when the marketing comes at the expense of existing customers may be less well-known and thus be in need of some elaboration. The underlying culprit, I submit, is psychological: difficulty with keeping within even societal and even self-imposed constraints. Put simply, the difficulty is with limits. The mentality is thus at the child-stage of development.

Service to the customer is a business mantra. In fact, an increasing number of retailers refer to their respective customers as guests. Target was among the first to do so. Then restaurants followed and even some of the services. One hair salon in Scottsdale, Arizona, even has guest parking, but the signs are technically lies; the slots are actually for customers, who have been conveniently renamed guests. It might be concluded that American business has been trying to outdo itself in how the customer is treated.

Some indications, however, suggest that existing customers may have been increasingly overlooked, at least as of 2019, in favor of gaining additional customers. In some fast-food restaurants in the U.S., for example, promotional signs on the large windows adjacent to the tables obstructed the ability of sitting customers to look outside the building. After spending money for a meal, who wants to look at giant promotions geared to prospective customers approaching or passing by the restaurant?

On an increasing number of city buses, advertisements covering the side windows made it more difficult for existing customers to see outside the bus, whether to enjoy the ride or determine where to get off the bus. In effect, all this says to the existing customers: the people outside are more important than you so regrettably we have to disrupt or detract your experience with us in some small ways. The regret is a lie, as is the lack of choice in the matter, and the impact on customer experience can be large. 

When the value given to existing customers is lessened while the price held constant or even increased, the gain goes to the business and the loss to the existing customers. Even in being hampered in trying to see outside a bus, the passenger suffers a loss because he or she would otherwise get the benefits of being able to see clearly through the windows. In fact, why even have windows if they are to be covered in various colors? Even the feeling of having been passively slighted in some way is part of the loss. From the standpoint of the business, existing customers are a given; the aim is to "grow" the business by attracting new customers even if at the expense of the current ones. 

The practice of taking away from the value that customers receive implies an unwillingness to be constrained even by the value-exchange set up by the companies. Perhaps the hope is that few passengers would notice the change and eventually it would be regarded as part of the status quo. The expectation of being able to see clearly through a bus window is replaced. 

Even in terms of cultural norms regarding the American holidays, retailers have gradually pushed up Christmas displays to September. You know something is wrong when you see Christmas trees and decorations then in front of the Halloween decorations and costumes. This shows that some manager did not even feel constrained to give each holiday its due. This can be viewed as an extension of not feeling constrained (by the existing value-exchange) to give existing customers their due. 

At another Lowes, the Christmas displays completely blocked the Halloween pumkins from being visible from the front aisle. 

McDonald’s Over-Reach: Blending a Restaurant and a Coffee Shop

In spite of essentially flat sales in the U.S. in February 2013 from the same month in 2012, McDonald’s CEO, Don Thompson, said he was confident that the people at the company had sufficient experience to “grow the business for the long term.” Even assuming that a business can be grown as if it were a geranium plant, the claim can be critiqued both in regard to the underlying assumption regarding “growth” and that of long-term viability. Fusing a restaurant with a coffee shop can be said to be an over-reach that had blended the company too much, at least at the store level.
In regard to the company’s long-term viability, changes in the business environment were important. The fast-food industry had obviously changed from 1970 to 2010, as did American society. As restaurant chains like McDonald's gained substantial economies of scale with the proliferation of restaurants, the increasing popularity of healthy meals gradually undercut the prospects for continued growth.

From "Americana" to "Enjoy Getting Fat": A change in the business environment in the last quarter of the twentieth century in the U.S. that impacted McDonalds at its core.    source: McDonalds.com

The management at McDonald's did relatively well in introducing healthy alternatives to its menu by 2010. The strategy also included blending the restaurant with a coffee shop experience, the enjoyment of which had also expanded due to Starbucks. To cut into that market, McDonald's introduced new drinks, such as smoothies, mochas and lattes, and added wireless internet service. As a result of having adjusted to the health-conscious and coffee shop mini-cultures in the business environment, McDonald’s U.S. sales rose 11.1% in February 2012 from the year before.[1] By 2013, Burger King was renovating its restaurants and adding "coffee shop" drinks too. Even so, the flat McDonald's sales figure in February 2013 was a bit of a surprise. Although the problem could have been the newly introduced fish product, I suspect that the market may have been questioning McDonald’s expansion into the coffee shop business as being an over-reach even it did enjoy certain synergies.
McDonald's was admittedly poised to give Starbucks a "run for its money" concerning that the giant coffeeshop chain had gotten away with mass-producing drinks to sell as premium prices. That coffee chain was essentially charging a premium price for non-premium products, given the manner of production. Even though McDonald's could undercut Starbucks on price and thus potentially gain market share, a McDonald's facility looked and functioned more like a restaurant than a coffeeshop where people would feel comfortable hanging out and getting work done or socializing. 
Adding to the discordance was the decision of McDonald's management to continue to stress the “dollar menu” for the “budget conscious” customer. Put somewhat delicately, the business strategy assumed that two very different market segments would co-exist in the same room. Starbucks had the same problem because of its "third place" policy, wherein people could hang out without purchasing anything. I know of at least one Starbucks' store in which the number of homeless "customers" has driven out otherwise paying customers. McDonald's management, through at least the 2010's, was essentially blurring the company's identity by seeking continued sales growth by trying to combine a restaurant with a coffee shop.
In general terms, a company’s senior management (or board of directors) should not get so caught up with important changes in the business environment that the resulting strategic change involves trying to remake the company into something the company is not. A fast-food restaurant is not a coffee shop. Although some people in the fast-food crowd would relish mocha, blending the social distance between the two cultures could result in a bitter drink that satisfies nobody. Had McDonald's management concentrated simply on adding new healthy fast-food (i.e., restaurant) products, sales would probably have improved without risking an identity crisis at the restaurant level. Alternatively, McDonald's could have built real coffee shops, with suitable furniture and decor, and synergies could still have existed. Perhaps fusing different lines of business, in cases in which each has a distinct culture and customer base, is not wise. To keep up with societal shifts and profit from them while not blurring the business’s identity is the sort of balance that a corporate management should attempt to reach and sustain in formulating strategy over the long-term.

For a critique of Starbucks, see Bucking Starbucks' Star, available at Amazon. 

1. Candice Choi, “McDonald’s Sales Drop Despite New Fish McBites,” The Huffington Post, March 8, 2013.