Day 043 - 01 Nov 94 - Page 18
1 open page 417 of the fat pink bundle, which is the OPNAD
2 report for 1991, there is a section at the bottom left-hand
3 column headed "Advertising costs incurred by McDonald's
4 Corporation". Do you see that?
5 A. Yes, I do.
6
7 Q. Then there is a table which is not quite as completely
8 legible as the earlier one. Anyhow, the figure total for
9 91 was given as $58.2 million roughly; yes?
10 A. Yes. I see the number.
11
12 Q. The right hand column. "Production" is production of the
13 actual advertisements, is it?
14 A. Yes. That is the cost incurred to develop the
15 advertising.
16
17 Q. Do we have to add that figure of $58.25 million on to the
18 national advertising expenditure, or is it included in it?
19 A. No, it is not included in it; you would have to add it
20 to it.
21
22 Q. As far as I am concerned, Mr. Green, you can put that
23 document away, please. I want to ask you, if I may, some
24 general questions about what you see as being the purpose
25 and effects of advertising. If you spend $780 million a
26 year, perhaps would you agree that that is quite a lot of
27 money, in anybody's terms?
28 A. Certainly.
29
30 Q. The question is: why do you spend all that money on
31 advertising?
32 A. Because it is important in generating sales and to get
33 across to the consumer information about the brand
34 McDonald's.
35
36 Q. Take as long over this answer as you like, but there may be
37 a short answer. Broadly speaking, do you have a view how
38 it is that advertising works in generating sales?
39 A. Well, certainly. Advertising, in itself, is, you know,
40 to positively inform and motivate the consumer, collate
41 information, facts, either on an intellectual or sometimes
42 an emotional basis, and essentially to get them to feel
43 that your product is one that they want, one that they need
44 and that they would like to associate with your product.
45
46 Q. Does that apply equally whether they are new customers or
47 whether they are repeat customers?
48 A. Certainly, it applies to anyone who is watching the
49 advertising. The advertising that we do in the
50 United States is mainly done in order to encourage those
51 who are already quick service restaurant users to come into
52 McDonald's.
53
54 Q. I am coming to the markets in the United States in a
55 minute; I will want to ask you some further detailed
56 questions about that. Do you recognise, in the way that we
57 do in this country -- or our market people do -- a sector
58 called "eating out" or "eating and drinking out"?
59 A. Yes. It is a very broad sector.
60
