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Coffee wars exercise Coffee wars exercise Document Transcript

  • Brand Management | Coffee Wars ExerciseMELISA CARRASCO
  • MELISA CARRASCO Brand Management | Coffee Wars ExercisePage | 2TABLE OF CONTENTSCOFFEE WARS INTRODUCTION................................................................................................................4BRAND IDENTITY.........................................................................................................................................5McDonald’s McCafé..................................................................................................................................5Company Description............................................................................................................................5Core and Extended Identities................................................................................................................5Product .................................................................................................................................................5Organization..........................................................................................................................................5Person ..................................................................................................................................................6Symbol..................................................................................................................................................6Concerns ..............................................................................................................................................6Starbucks ..................................................................................................................................................6Company Description............................................................................................................................6Core and Extended Identities................................................................................................................6Product .................................................................................................................................................6Organization..........................................................................................................................................6Person ..................................................................................................................................................7Symbol..................................................................................................................................................7Concerns ..............................................................................................................................................7Dunkin’ Donuts..........................................................................................................................................7Company Description............................................................................................................................7Core Identity and Extended Identities ...................................................................................................7Product .................................................................................................................................................7Organization..........................................................................................................................................7Person ..................................................................................................................................................8Symbol..................................................................................................................................................8Concerns ..............................................................................................................................................8Conclusion ................................................................................................................................................8PERCEPTUAL MAP......................................................................................................................................9Perceptual Mapping for McCafé, Starbucks and Dunkin’ Donuts..............................................................9Mcdonald’s McCafé...................................................................................................................................9Starbucks ..................................................................................................................................................9Dunkin’ Donuts........................................................................................................................................10Conclusion ..............................................................................................................................................10
  • MELISA CARRASCO Brand Management | Coffee Wars ExercisePage | 3BRAND EQUITY..........................................................................................................................................11McDonald’s McCafé................................................................................................................................11Customer Value Proposition (CVP).....................................................................................................11Value Delivery.....................................................................................................................................11Brand Personality................................................................................................................................12Other Brand Assets.............................................................................................................................12Starbucks ................................................................................................................................................12Customer Value Proposition (CVP).....................................................................................................12Value Delivery.....................................................................................................................................13Authenticity .........................................................................................................................................13Brand personality................................................................................................................................13Other Brand Assets.............................................................................................................................14Dunkin’ Donuts........................................................................................................................................14Customer Value Proposition (CVP).....................................................................................................14Value Delivery.....................................................................................................................................14Authenticity .........................................................................................................................................14Brand Personality................................................................................................................................15Other Brand Assets.............................................................................................................................15Conclusion ..............................................................................................................................................15CONCLUSION.............................................................................................................................................16EXHIBITS....................................................................................................................................................17Exhibit 1 ..................................................................................................................................................17Exhibit 2 ..................................................................................................................................................17Exhibit 3 ..................................................................................................................................................18Exhibit 4 ..................................................................................................................................................18Exhibit 5 ..................................................................................................................................................19................................................................................................................................................................19
  • MELISA CARRASCO Brand Management | Coffee Wars ExercisePage | 4COFFEE WARS INTRODUCTION―May I please have a medium hot coffee with two sugars and skim milk?‖ This is a typical order one mightoverhear when standing in a coffee shop. However what is coffee exactly? Coffee, by standard definition isa beverage made by the percolation, infusion, or decoction from the roasted ground seeds of a coffee plant.Simple, when thinking of the complicated processes other beverages undergo. Yet coffee for manyindividual has much more different implications and significances. For some, coffee is a typical morningroutine, the ―daily pick me up‖ the morning fuel to get the day started. Others regard coffee as a tastybeverage to enjoy with friends over light conversation. For numerous college students, coffee is the energyfuel that keeps them awake throughout a long night of studying or the ―cool‖ beverage high school studentssip through their morning classes. Coffee plays a different and unique role for each individual, for some itmay be significant while other individuals view coffee as frivolous. The question now is where does each ofthese unique individuals purchase their coffee? Consumers have a myriad of brands at their disposablefrom which they can purchase their coffee beverages from. Moreover, preference varies among cultures,countries and individuals. Americans tend to value more efficiency and convenience, while Europeans lookfor high quality coffee. A coffee war has been brewing between three competitors McDonald’s, Starbucksand Dunkin’ Donuts who are in the race for the lead position in the coffee industry.In order to demonstrate how each brand wins in their niche market I will use Brand Management tools –Brand Identity, Perceptual Map, and Brand Equity – which will allow me to perform a thorough analysis. Asa brand manager I will show how Starbucks focuses on the gourmet retail coffee market, Dunkin’ Donuts inthe middle-class demographics who value convenience, and McDonald’s sub-brand McCafé’s ability tosuccessfully position itself in the middle of the other two brands by maintaining a balanced strong brandidentity. Even though they do have some overlapping clientele, ―the brutal competition… has made eachone stronger in relation to the overall retail coffee market… They each present a different qualitativeexperience with a strong and loyal following and that is unlikely to significantly change in the foreseeablefuture‖.31 Picture of Coffee and coffee beans: http://blogs.wayne.edu/web/2011/09/14/coffee-wars-the-results-are-in/2 Picture of 3 competitors: Spring 2012 Brand Management Powerpoint Class #63Golde, Michael J. "Starbucks vs. McDonalds: Filtering Through the Coffee Wars - Seeking Alpha." Stock Market News & Financial Analysis. 29 June 2009.Web. 13 Mar. 2012. <http://seekingalpha.com/article/144546-starbucks-vs-mcdonald-s-filtering-through-the-coffee-wars>.
  • MELISA CARRASCO Brand Management | Coffee Wars ExercisePage | 5BRAND IDENTITYBrand Identity is a unique set of brand associations that a brand strategist aspires to create or maintain;these associations represent what a brand stands for and imply promises to customers from theorganization’s members. Brand identity provides direction, purpose and meaning for a brand. As a brandmanager, there are a myriad of ways to manage the specified brand. However, there are brand identitytraps that must be avoided such as brand image, brand position, the external perspective trap and product-attribute fixation trap.Brand strategist David Aaker states a brand identity needs a core and an extended identity. Core identityrepresents the timeless essence of the brand and rarely changes. Unlike, extended identity which can bealtered and transformed, extended identity provides texture and completeness to the brand.Moreover, Aaker advises a brand manager to consider the brand as a product, an organization, a personand a symbol in order to ensure texture and depth. Aaker suggests that the purpose of this system is tohelp clarify, enrich and differentiate an identity for each brand. Exhibit 1 has a pictorial depiction of Aaker’sBrand Identity.McDonald’s McCaféCompany DescriptionMcCafé originally founded in 1993 in Melbourne, Australia by a licensee is a coffee house style food anddrink chain that reflects the latest consumer trend towards espresso coffees.4 The McCafé chain proceededto open many locations worldwide outside of Australia. McDonalds is the leading global foodservice retailerwith more than 33,000 local restaurants serving nearly 68 million people in 119 countries each day.5Moreover, not only does McDonald’s restaurants worldwide carry the McCafé’s menu serving gourmetcoffees it also serves Paul Newman’s Own Organic Blend coffees in Northeast United States.Core and Extended IdentitiesThe core identity of McDonald’s would be fast food, value-offering, and service that’s fast and accurate.The extended identity of McDonald’s would be its sub-brands including McCafé, its slogan: ―I’m Lovin’ It‖,Ronald McDonald character, family friendly and its golden arches. McCafé would be under McDonald’sextended identity because McDonald’s recently entered the coffee segment, McDonald’s as a companywould be able to survive as a billion dollar company without the sales from McCafé, unlike the other twocompetitors.ProductThe overall product scope of McDonald’s is towards fast food such as hamburgers and French fries forexample. However, with McDonald’s sub-brand McCafé, McDonald’s has been working on its specialtygourmet espresso beverages. McDonald’s is able to reach a larger scope of consumers due to its size incomparison to Starbucks and Dunkin’ Donuts.OrganizationAs an organization McDonald’s is a giant global corporation, it is involved with many charitable foundationsincluding its very own, Ronald McDonald House Charities.4http://en.wikipedia.org/wiki/McCaf%C3%A95http://www.aboutmcdonalds.com/mcd/our_company.html
  • MELISA CARRASCO Brand Management | Coffee Wars ExercisePage | 6PersonAs a person the brand McDonald’s is friendly and family oriented as well as caring and sociable.McDonald’s offers products that are health conscious (salads) and friendly product packages (HappyMeals).SymbolThe symbol for McDonald’s is the red haired, white faced clown named Ronald McDonald and the goldenarches (Exhibit 2).ConcernsMcDonald’s sub-brand, McCafé, sells good quality coffee but McDonald’s is not a desirable place to hangout, although many locations now offer free Wi-Fi connections. McDonald’s targets customers who are in ahurry and a looking for a good value, essentially not lingerers. Moreover, the quality of McDonald’s coffeemay not be up to par to Dunkin’ Donuts and Starbucks in the perception of the customers. Also McDonald’scould possibly be in the brand position trap – when a customer thinks of getting a cup of coffee, the firstplace to come to mind might not be McDonald’s, considering the company recently entered the coffeebeverage industry.StarbucksCompany DescriptionWith the name inspired by Moby Dick, Starbucks first opened its door in 1971 as a single store in Seattle’shistoric Pike Place MarketToday. Today with more than 15,000 stores in 50 countries, Starbucks is thepremier roaster and retailer of specialty coffee in the world. With every cup, we [Starbucks] strive to bringboth our heritage and an exceptional experience to life.6From the beginning, Starbucks set out to be adifferent kind of company. One that not only celebrated coffee and the rich tradition, but that also brought afeeling of connection.7Core and Extended IdentitiesStarbuck’s core identity is high quality, premium coffee and exceptional coffeehouse experience (thirdplace). Starbucks extended identity would consist of the company’s baked goods, sandwiches,personalization of beverages and friendly environment.ProductAs a product Starbucks has a myriad of beverages both caffeinated/non-caffeinated such as brewed coffee,chocolate beverages, espresso beverages, smoothies, frappucino® blended beverages, Tazo® Teas,bottled drinks and kid beverages.8 Starbucks also provides many baked goods and sandwiches.OrganizationAs an organization, Starbucks can be seen as respectable. Striving to earn the trust and respect ofcustomers, partners, and neighbors by being responsible and doing things that are good for the planet andone another.96http://www.starbucks.com/about-us/our-heritage7http://www.starbucks.com/about-us/our-heritage8http://www.starbucks.com/menu/drinks9http://www.starbucks.com/responsibility
  • MELISA CARRASCO Brand Management | Coffee Wars ExercisePage | 7PersonStarbucks as a person represents a coffee connoisseur, like its CEO and President Howard Schultz, wholooks for a quality cup of coffee.SymbolStarbuck’s symbol is its logo, a mermaid (Exhibit 3).ConcernsAs a brand manager some concerns for Starbucks have risen. First Starbucks has recently changed theirlogo which may cause some confusion to new or future customers. Also Starbucks as a brand continues toexpand into the beverage industry, with beer and other alcoholic beverages.10 Starbucks as a brand canonly expand as much as the customer allows them; hopefully with this extension Starbucks will be able tokeep their CVP in balance and is accepted by its customers. Moreover, some Starbucks locations have thedrive-thrus feature, by doing this Starbuck’s customers lose the Starbucks’ ―coffee-house experience‖which could potentially hurt the company. Lastly, with the increased competition and economic recessionStarbucks may have to reconsider some of their prices in order to maintain or grow their market share inthe coffee beverage industry.Dunkin’ DonutsCompany DescriptionDunkin’ Donuts is an international donut and coffee retailer founded in 1950 by William Rosenburg inQuincy, Massachusetts. With over 2,600 stores in 30 countries outside of the U.S., Dunkin Donuts hasbeen serving loyal customers around the globe for over 27 years. From Asia to Latin America andeverywhere in between, you [consumers] can count on Dunkin Donuts for delicious coffee and espresso,cool Coolatta, delectable donuts, sandwiches and more.11Core Identity and Extended IdentitiesThe core identity of Dunkin’ Donuts would be ―on-the-go‖ coffee, donuts, good priced items, and reliability.The extended identity would be ―America runs on Dunkins‖, efficiency, and corporate social responsibility.ProductThe company as a product is a bit mixed. Given the company’s name a customer who does not have priorknowledge of Dunkin’ Donuts as a company might think it is just a donut shop. Consequently this mightplace the company in the brand identity trap of brand image trap – donuts in a perspective of a foreigncustomer. Dunkin’ Donuts serves a variety of caffeinated beverages and baked goods.OrganizationAs an organization Dunkin’ Donuts’ vision is to be recognized as a company who serves their guests,franchisees, employees, communities, business partners, and the interests of our planet.12 As anorganization the company Dunkin’ Donuts truly cares about its surroundings. Moreover as an organizationthe company is very reliable with many locations open 24 hours to the public.10http://www.forbes.com/sites/benzingainsights/2012/01/26/will-starbucks-beer-wine-menu-benefit-these-companies/11http://www.dunkindonuts.com/content/dunkindonuts/en/company/global.html12http://www.dunkinbrands.com/Responsibility/
  • MELISA CARRASCO Brand Management | Coffee Wars ExercisePage | 8PersonThe brand as a person is the ―Average Joe‖ the typical middle class American looking for a coffeebeverage, sandwich or pastry during their break or in a hurry.SymbolAs a symbol the company is easily recognized by the capital orange and pink DD (Exhibit 4). Also by theircurrent slogan: ―America runs on Dunkins‖.ConcernsAs a brand managerI have some concerns for Dunkin’ Donuts. The growth story of Dunkin’ Donuts is thatthe company serves many rural markets to which Starbucks isn’t exactly economically feasible.13Moreover,the coffee ascension of McDonald’s might be a bigger threat to Dunkin’ Donuts than Starbucks.McDonald’s presence is almost everywhere, such as rural areas for example. Although, Dunkin’ Donutshas a global presence it does not compare to that of McDonald’s or Starbucks. As for demographicsDunkin’ Donuts appeals to the middle class even with the emergence of Starbucks (higher class) andMcDonald’s (lower class), additionally with many 24 hour locations Dunkin’ Donuts has the late night crowd.ConclusionA major development in the coffee beverage industry is instant coffees. The new phenomenon has beenthe Keurig machines, which individuals can purchase almost at any major retailer and have the ability tomake instant coffee at home. Companies such as Green Mountain have been taking many sales from thethree competitors. Customers can have quality coffee, hassle free in the comfort of their own home.14 As aresult both Dunkin’ Donuts and Starbucks have responded to the latest trend. As a brand manager I seethis could potentially benefit Dunkin’ Donuts because it fits perfectly with the Dunkin’ Donuts core identitywhich is ―on-the-go‖ and convenience, it appeals to their customer base that needs coffee in a hurry.However, in terms of branding this may have not been a wise move for Starbucks. Yes, their customers canconsume Starbucks quality coffee at home, however customers lose the ―Starbucks experience‖ which isreally a big part of the company’s core identity; the company’s added emotional value.13http://seekingalpha.com/article/144546-starbucks-vs-mcdonald-s-filtering-through-the-coffee-wars14<http://www.newsweek.com/2010/09/14/neither-starbucks-mcdonald-s-win-coffee- war.html>.
  • MELISA CARRASCO Brand Management | Coffee Wars ExercisePage | 9PERCEPTUAL MAPThe second analysis we are going to conduct is Perceptual Mapping in order to conduct a multi-brandanalysis.The output is a map of brands depicted in attribute space, yielding a pictorial representation. Theattributes we have chosen are high price, low price, emotional benefits, and functional benefits, as depictedbelow.Perceptual Mapping for McCafé, Starbucks and Dunkin’ DonutsMcdonald’sMcCaféWe chose to place McCafé, McDonald’s sub-brand, in the upper left quadrant but closer to the center line.Firstly, McCafé’s beverages are reasonably priced; they don’t charge a premium like Starbucks however itis a bit more expensive than Dunkin’ Donuts. Two of McDonald’s core identities is fast and conveniencewhich creates a lot of functionality to its customers. Moreover, McDonald’s has been upgrading theirrestaurants adding free Wi-Fi connection adding emotional benefits to its customers, which is why weplaced it close to the centerline. Although, McDonald’s has been upgrading its restaurant it still doesn’thave the ambiance of ―third place‖ like Starbucks.StarbucksAs a brand manager I placed Starbucks in the upper right quadrant. Our model shows Starbucks as beinghigh priced with high emotional benefits. We believe Starbucks should be placed in this quadrant becauseStarbucks charges a premium for their coffee compared to the other two competitors. Also added is theadded emotional benefits customers receive when they go to Starbucks. Starbucks provides its customersfree Wi-Fi connection, background music, an overall a great ambiance, the feeling of third place.
  • MELISA CARRASCO Brand Management | Coffee Wars ExercisePage | 10Dunkin’ DonutsAs a brand manager I placed Dunkin’ Donuts in the lower left quadrant. Dunkin’ Donuts is very functional, ithas many locations open 24 hours a day providing fresh coffee for its customers at any time. Dunkin’Donuts coffee beverages are reasonable priced, less when compared to its competitors.ConclusionThe perceptual mapping analysis allowed me as a brand manager to architect and infer attributes to thedifferent brands and compare and contrast them against the same attributes. It allowed betterunderstanding for us and the reader of the current position of each brand and the market structure.
  • MELISA CARRASCO Brand Management | Coffee Wars ExercisePage | 11BRAND EQUITYAs a brand manager I opted to follow Kopp’s model in order to analyze each brand’s Brand Equity. Thismodel focuses on what you need in order to build a strong brand from the bottom up. ―Strong brands arecreated by aiming for five driver variables that are the underpinning: customer value proposition, valuedelivery, brand personality, authenticity, and brand assets‖.15Professor Kopp defines Brand Personality asa net of thinking and feeling based thoughts. A Gestalt concept, that is brand elicited feelings and likingsare the results of both cognitive and emotional modes of thinking. Furthermore, Kopps’ Brand Personalitymodel states, often brand personality is the only thing between your brand and the competition. Kopporganizes the variables in a pyramid which demonstrates hierarchy and low flexibility (Exhibit 5).McDonald’s McCaféCustomer Value Proposition (CVP)McCafé offers customers a desirable combination of benefits relative to the price. They not only serveregular coffee but also ―several gourmet coffee choices: cappuccinos, lattés, and iced and hot mochas.They’re brewed with rich, bold espresso and made with real steamed milk, real chocolate and whippedcream‖.16 However, the perceived quality of McCafé’s coffee is low. Consumers argue that the quality islower compared to Starbucks, particularly given the price. In terms of pricing they compete with bothStarbucks and Dunkin Donuts. Their gourmet coffees are still a little cheaper than Starbucks, while theirregular coffee prices compete with Dunkin Donuts.Value DeliveryIn terms of location, there is no doubt that McCafé wins. They have 33,000 restaurants in more than 119countries; this global expansion gives them a significant competitive advantage. Furthermore, McCafé haschallenged Starbuck’s unique experience by providing a comfortable ambiance in their locations as well.―McCafé is designed for comfort and includes leather couches, chairs and bistro-style tables with vintageFrench posters, lace curtains and mahogany and granite accents decorating the space‖.17By 2009, McDonald’s had ―spent over $100 million promoting McCafé‖18which definitely help theirpopularity. In terms of promotion, McCafé’s increase in share of voice has increased share of market.AuthenticityMcCafé, being an endorsed brand of McDonald’s, reassures consumers about who they are and what kindof products they offer. A McDonald’s regular customer will associate McCafé with McDonald’s reputation oflow prices, efficiency, friendliness and great tasting food. McDonald’s confirms McCafé’s authenticity in theeye of the consumers.15https://blackboard.babson.edu/bbcswebdav/pid-773132-dt-content-rid-27640_1/courses/2012Spring-MKT4515-02/2-Overview%20of%20Brand%20Equity%20%28kopp%29.pdf16"McCafe." McDonalds. McDonalds. Web. 11 Mar. 2012.<http://www.mcdonalds.com/us/en/food/food_quality/see_what_we_are_made_of/your_questions_answered/mccafe.html>.17"McDonalds Opens First McCafeIn U.S." Entrepreneur. 14 May 2001. Web. 13 Mar. 2012. <http://www.entrepreneur.com/article/40494>.18Abelson, Jenn. "Coffee Competition." Boston.com. The Boston Globe, 18 June 2009. Web. 11 Mar. 2012.<http://www.boston.com/business/articles/2009/06/18/mcdonalds_gains_ground_on_coffee_rivals_dunkin_starbucks/>
  • MELISA CARRASCO Brand Management | Coffee Wars ExercisePage | 12Thinking-BasedThoughtsBrand PersonalityOther Brand AssetsMcCafé’s name itself is an asset for the brand; the linked endorsement ―Mc‖ clearly identifies it as a sub-brand of McDonald’s which generates credibility and trust from customers. Nevertheless, McCafé wassuccessfully differentiated from McDonald’s with the different font they use, which shows sophistication andsuggests good quality coffee.StarbucksCustomer Value Proposition (CVP)Starbucks offer customers a unique combination of benefits for the price. Even though their coffees arepremium priced, Starbucks does not only sell coffee; they are all about the experience. Starbucks providescustomers with a friendly place where they can relax and truly enjoy coffee. Howard Schultz had a vision tomake Starbucks ―A place for conversation and a sense of community. A third place between work andhome‖. 19Furthermore, they guarantee high quality and their variety is much wider than McCafé’s andDunkin Donuts’. They were able to include emotional benefits in what seemed to be a very functionalproduct. However, Starbucks’ recent decision to change their logo and expand beyond offering coffee maydamage the balance of their CVP, which will be addressed in further detail.19Morrison, Maureen. "Starbucks Hits No. 3 Despite Limited Ad Spending." Advertising Age. 2 May 2011. Web. 11 Mar. 2012.<http://adage.com/article/news/starbucks-hits-3-limited-ad-spending/227316/>.Feelings-BasedThoughts“McCafe, I’m Lovin’ It”Says you can enjoyquality coffee on a budgetMutually supportive and consistentGood price for the value Fast and easy
  • MELISA CARRASCO Brand Management | Coffee Wars ExercisePage | 13Thinking-BasedThoughtsValue DeliveryStarbucks’ global strategy has allowed them to be present in 50 countries with more than 15,000 stores.20Nevertheless, part of their promise and CVP is that in every store, the drinks and quality will be the same.Their employees undergo intensive training before they start working in order to be fully prepared for thejob. Furthermore, Starbucks’ main competitive advantage lies on their stores. They offer a very romanticcoffee experience because customers can feel relaxed and at home. ―Our stores become a haven, a breakfrom the worries outside, a place where you can meet with friends. It’s about enjoyment at the speed of life– sometimes slow and savored, sometimes faster‖.21In terms of promotion, Starbucks believes in smart advertising and thus, does not spend much money.―They are outspent on advertising anywhere from two to eight times by rivals… Its more about justcultivating a brand than traditional advertising… Starbucks has done its advertising more efficiently. Itsbeen all over social media, mobile payments—stuff that elevates the image of brand‖.22AuthenticityStarbucks has been around since 1971. Their mission – inspire and nurture the human spirit – one person,one cup, and one neighborhood at a time – has been the same ever since. During the last 40 years theyhave been forming a reputation of high quality coffee, great customer service, and a very satisfyingexperience. Because they have kept real to their authenticity, they have many loyal customers that trulytrust them. They have managed to transform their brand into more than just a coffee house, a friend.Brand personality20"Starbucks Coffee Company." Starbucks Coffee Company. Web. 14 Mar. 2012. <http://www.starbucks.com/>.21"Starbucks Coffee Company." Starbucks Coffee Company. Web. 14 Mar. 2012. <http://www.starbucks.com/>.22Morrison, Maureen. "Starbucks Hits No. 3 Despite Limited Ad Spending." Advertising Age. 2 May 2011. Web. 11 Mar. 2012.<http://adage.com/article/news/starbucks-hits-3-limited-ad-spending/227316/>.Feelings-BasedThoughts“Starbucks, I want”Says you enjoy high qualityat premium priceMutually supportive and consistentPremium quality bestcup of coffee aroundFriend ambiance andgreat service
  • MELISA CARRASCO Brand Management | Coffee Wars ExercisePage | 14Other Brand AssetsOne of Starbucks’ biggest asset is, or at least used to be, their logo. The green circle with the siren in themiddle was recognized by everyone as Starbucks. Even though many do not know why the logo is a siren,it was still easily recognizable. For Starbucks, the siren represents the ―seafaring history of coffee andSeattle’s strong seaport roots… She means something different for everyone who sees her, who knowsher‖.23 But we all know that it means great coffee in a comfortable place waiting. In 2011, Starbucksannounced a change of their logo; they were dropping the words ―Starbucks Coffee‖ and leaving the sirenstand by herself in the iconic green circle. This new logo represented future growth and expansion sincethe company was looking to expand beyond just coffee. The responses from the public were both positiveand negative. The question is whether the siren will be strong enough to stand by itself or not. Even thoughis too soon to tell, it is evident that such a decision has somewhat shifted Starbucks image and thus, settheir Brand Equity out of balance. Many customers have changed their perceptions on the brand, positivelyor negatively, which could represent a big risk for the company.Dunkin’ DonutsCustomer Value Proposition (CVP)Dunkin Donuts has been very successful in keeping their CVP in balance. They offer a fair quality coffee forvery low prices for those who value efficiency and convenience. In the coffee business, Dunkin offers ―fromfreshly brewed hot coffee in up to nine flavors, to refreshing Iced Coffee‖.24 Their promise is ―convenientlydelivering high-quality food and beverages in a welcoming environment, quickly, and at affordable prices‖.25Value DeliveryDunkin Donuts ―has more than 10,000 restaurants in 32 countries worldwide‖26 which gives them adisadvantage compared to McCafé and Starbucks. Nevertheless, they differentiate themselves by offeringefficiency. Customers are loyal to Dunkin Donuts because they appreciate not having to make a line aslong as the ones in Starbucks.Dunkin Donuts has decreased their advertising spending during the last 2 years. However, they haveinvested in loyalty programs. ―Dunkin Donuts is a daily ritual for many of our guests and were dedicated tooffering them a program that celebrates and rewards their passion for the brand‖.27 They understand thatretaining customers is easier and cheaper than gaining new ones, and thus are focused on enhancingloyalty.AuthenticityAs previously mentioned, Dunkin’ Donuts was founded in 1950 in Quincy, Massachusetts by WilliamRosenberg.28 The brand acquired dimensions of character from him because he ―embodied the Americanspirit of hard work and passion… Mr. Rosenberg was an entrepreneur whose positive attitude, personalintuition and customer focus helped change the business landscape‖.29 From him comes Dunkin’ Donutsfocus on convenience, customer service and low prices which is why loyal customers trust this brand.23 "Starbucks Coffee Company." Starbucks Coffee Company. Web. 14 Mar. 2012. <http://www.starbucks.com/>.24"Our Brands - Dunkin Donuts." Dunkin Donuts.Dunkin Brands.Web. 11 Mar. 2012. <http://www.dunkinbrands.com/ourbrands/dunkin_donuts.html>.25"Our Brands - Dunkin Donuts." Dunkin Donuts.Dunkin Brands.Web. 11 Mar. 2012. <http://www.dunkinbrands.com/ourbrands/dunkin_donuts.html>.26"Our Brands - Dunkin Donuts." Dunkin Donuts.Dunkin Brands.Web. 11 Mar. 2012. <http://www.dunkinbrands.com/ourbrands/dunkin_donuts.html>.27 Morrison, Maureen. "Starbucks Hits No. 3 Despite Limited Ad Spending." Advertising Age. 2 May 2011. Web. 11 Mar. 2012.<http://adage.com/article/news/starbucks-hits-3-limited-ad-spending/227316/>.28"Our Brands - Dunkin Donuts." Dunkin Donuts.Dunkin Brands.Web. 11 Mar. 2012. <http://www.dunkinbrands.com/ourbrands/dunkin_donuts.html>.29"Our Brands - Dunkin Donuts." Dunkin Donuts.Dunkin Brands.Web. 11 Mar. 2012. <http://www.dunkinbrands.com/ourbrands/dunkin_donuts.html>.
  • MELISA CARRASCO Brand Management | Coffee Wars ExercisePage | 15Thinking-BasedThoughtsBrand PersonalityOther Brand AssetsDunkin’ Donuts ―DD‖ along with the orange and pink colors is one of the brand’s greatest assets because itimmediately triggers recognition in whoever sees it. Furthermore, their slogan ―America runs on Dunkins‖ isanother important asset which supports the brand’s personality and CVP. It positions Dunkin’ Donuts as thefuel on which Americans function every day, as a necessity. It makes consumers believe that they needtheir coffee as well as their baked goods to make it through the day.ConclusionKopp’s Brand Equity model has allowed us to gain a broad understanding of each of the brands’ equity. It isclear that each company has different strengths – McCafé has a very strong brand personality and valuedelivery, Starbucks wins with quality in the market place, and Dunkin’ Donuts offers great benefits for themoney. Each individual brand wins in its own niche market.Feelings-BasedThoughts“Average Joe running onDunkins”Says an average man/woman canenjoy a good cup of coffeeMutually supportive and consistentConvenient, good cup ofcoffeeCheap and reliable
  • MELISA CARRASCO Brand Management | Coffee Wars ExercisePage | 16CONCLUSIONAfter completing the series of analyses, as a brand manager I have concluded that there are no winners inthe coffee war. Each of the three companies we analyzed are essentially creating the same thing;caffeinated beverages whether its coffee, lattes, frappucinos, etc. What makes each company stand outand last in consumers’ minds is how the brand is perceived.Each of the brands analyzed compete in the coffee industry in a certain niche market. Starbucks targets theupper class and the coffee connoisseurs who are willing to pay a premium price around the globe. Incontrast, Dunkin’ Donuts targets mostly the northeast United States and suburban regions. Dunkin’ Donutscustomers typical buy from Dunkin’ Donuts because it’s convenient and reliable. McDonald’s McCafétargets a whole range of customers worldwide, typically those on a budget and cannot afford to pay a greatamount of money for coffee and other related items. Although McDonald’s has a share of voice in themarket due to its large size, it is not known among customers for its coffee.―Each fan base is loyal, so there are limits to how much tinkering either of these iconic eateries can getaway with. But theres plenty of middle ground -- occupied by a customer who is happy to frequent theseany chain.30Overall, there is no winner in this coffee war. Each brand serves a niche market, whether it’s a moreaffluent class, consumers on a budget or consumers living in a rural area, each brand serves a purpose fortheir niche market; each brand is able to make a connection with people and communicate a distinctadvantage, as a result no winners.30http://money.msn.com/investment-advice/mcdonalds-or-starbucks-who-wins-brush.aspx
  • MELISA CARRASCO Brand Management | Coffee Wars ExercisePage | 17EXHIBITSExhibit 1Exhibit 2
  • MELISA CARRASCO Brand Management | Coffee Wars ExercisePage | 18Exhibit 3Exhibit 4
  • MELISA CARRASCO Brand Management | Coffee Wars ExercisePage | 19Exhibit 5