2. All three competitors have
Distinct Brand Identities and CVPs
Fundamentally different and very loyal target markets
Separate brand positions
Either the CVP, brand personality, or market
presence is not strong enough.
Potential for brand diluting activities.
SOV=SOM parity.
3. Upscale
Target market:
Core
Affluent, slightly
pretentious,
urban, coffee-
appreciating
social types
CVP:
Premium quality,
customized
coffee in a
personable,
atmospheric
environment for a
high price
4. Value-For-
Money
Target market:
Core
Average down-to-
earth, middleclass,
hardworking
Americans not
driven by status –
people who are
‘busy living’
CVP:
Premium coffee
quickly for a
relatively low price
5. Unpretentious
Target market: Core
Everybody. In
particular, those with
young kids and those
who don’t like
Starbucks
CVP:
Simple range of
premium quality
coffee at ridiculously
low prices
7. Concept of masstige – consumers are trading
down during the recession
CVP has become out of balance in recent years
Premium price however:
Malignant expansion has turned the once unique coffee chain into a
commodity
Queue times lengthened due to proliferation of grab-and-go
customers
Image as fuel for corporate robots
Experience not that special anymore
Have strayed from their core target market
8. Very specific target market:
Grab-and-go consumers
Self-expressive benefits limits growth potential in this
regard. ‘America runs on Dunkin’ not ‘America relaxes
with Dunkin’
Does not offer the experience of Starbucks
Lack of presence in West Coast limits its ability
to compete long-term as other coffee chains
achieve dominance
9. Potential negative impact of the linkage to the
master brand
Consumer perceptions not good
CVP is in balance however:
Has not got the potential to become a trusted friend like
DD or a badge brand like Starbucks
Haven’t/can’t reach the very top of the emotional
ladder
Target market is too broad
Does not offer the strong emotional motives that the
other two brands do
Loyalty is limited
10. Competitor Brand CVP Target Customer Brand
Identity market perceptions loyalty
•Gourmet •Tipping •Affluent, •Either love •Very high or
coffee out of coffee- or hate the none at all
•Experience balance loving, pretentions
urbanites
•Down-to- •In balance •Those who •Honest •Very high
earth like to •Quality among users
•Efficient and patronize coffee
accurate both •Grab-and- •BUT only on
Starbucks go East coast
and McCafe
•Unsnobby •In balance •Those who •Linked to •Fairly
coffee but weaker like to McDonalds in limited as
•NOT than the patronize a major way target
Starbucks other two Starbucks •Low market is
perceptions too broad
11. McDonald’s core identity:
Fast food (burgers, french fries, soft drinks)
McCafe:
Premium quality coffee
Specialty Coffee ≠ Fast Food
VS.
12. CVPalready precariously tipping out of
balance
Instant Coffee and iPhone ordering
Can increase awareness BUT completely eradicates
the remnants of its emotional and self expressive
benefits
Potential alcoholic brand extensions
Kopp Brand option model – no common benefit or
common meaning
Unsure whether the consumer will allow this extension
13. SOV=SOM
All three companies are equally aggressive in
their advertising
Advertising does not provide a competitive edge
Has become a necessary, huge non-variable
expense in this industry
Important for competitors to break consumer’s
routine in order to gain traction in war
14. To win this coffee war, one company must
broaden its consumer base without unbalancing
the CVP and maintaining it’s core brand identity
without alienating its current customers
One company must increase ad spend to a much
larger degree than its competitors
15. Opportunities to pinch customers still exist
DD can steal the McCafe consumers who are not
attracted by the McDonalds association
Both DD and McCafe can steal Starbucks’s disgruntled
grab-and-go consumers
3 giants will continue to fight for the limited
common market of switchers
Ad spend will continue to rise to ridiculous levels
pushing out independent retailers
Consolidation of the market into three nice segments
Editor's Notes
These points reflect the fact that the company has drifted away from its strong brand identity and CVP as a premium coffee drinking experience provider. Their primary differentiator has been sacrificed in the name of efficiency and growth. An additional problem in relation to the coffee wars, is that as their competition improves their coffee to near par levels, the grab-and-go consumers who value speed of delivery above all else may start the view the hefty price and long queues as unacceptable. Have strayed from their core target market of coffee-loving sophisticates by chasing the more lucrative grab-and-go segment
All of the above have helped Dunkin position its brand as the ‘whatever you need, whenever you need it’ coffee shop, helped by its mainstream approach towards customer selection. Looking at Aaker’s brand equity wheel – Dunkin Donuts has a very loyal fan base, but has zero awareness on the West Coast and in other parts of the world which can skew comparisons with other brands somewhatBriefly, as mentioned above, one of the problems that Dunkin might face is its lack of presence in the West Coast markets which may hinder expansion plans since this has allowed Starbucks and McDonalds to dominate the market. Additionally, the ‘America runs on Dunkin’ tagline may limit overseas growth potential.
The brand is still inexorably linked with McDonalds and the unhealthy, bad quality image that goes along with it.The CVP of this brand is in balance, however it does not offer the strength of Dunkin Donuts, nor the potential to achieve iconic status through badge branding like Starbucks.Main differentiator is that McCafe is NOT StarbucksThis leads to brand personality which, from Aaker’s view, does not look particularly strong. McCafe can be said to embody the human characteristics of competence and sincerity, but not nearly to the extent that Dunkin manages to. Through its advertising, McCafe appears to be trying to create the personality of a fun, quality-driven, affordable band that will make even the most mundane tasks more enjoyable and exciting.It appears to me that McCafe does not offer the strong emotional motives to customers to offer their loyalty to McCafe as Dunkin’ Donuts does or Starbucks should.
In essence, for those coffee-purists who want to enjoy the experience and expect the smell of freshly ground coffee wafting through the air, Starbucks is the only competitor for them. For those consumers you just want value and convenience, and like to patronize Starbucks, McCafe is the obvious choice. Finally, those consumers who consider themselves ordinary, middle class hard workers with better things to be doing (and who like to patronize both Starbucks and McCafe) naturally gravitate towards Dunkin.
Linkage with McDonalds – does not equate with McCafeBrings the brand down and confuses the customerIn the long-term McCafe cannot win in the US because of this negative associationIn the US – McCafe is not separated from the everyday operations of McDonalds – order coffee as you order the fast foodEurope – cordoned off from the rest of the chain with a different atmosphere and seating area
http://www.msnbc.msn.com/id/41969287/ns/business-consumer_newsIphone:http://theweek.com/article/briefing_blog/207/starbuckshttp://theweek.com/article/index/208383/starbucks-gamble-on-beer-and-wine-will-it-%20workCVP already slightly out of balance because of Starbuck’s chasing grab-and-go consumers, therefore instant coffee may completely eradicate their former differentiatorStarbucksCVP Imbalance:Electronic phone ordering reduces in – store experienceCore Identity ≠ Extended Identity:Core Identity is premium specialty coffeeAlcoholic brand extensions are imbalances to core identity
In essence, for those coffee-purists who want to enjoy the experience and expect the smell of freshly ground coffee wafting through the air, Starbucks is the only competitor for them. For those consumers you just want value and convenience, and like to patronize Starbucks, McCafe is the obvious choice. Finally, those consumers who consider themselves ordinary, middle class hard workers with better things to be doing (and who like to patronize both Starbucks and McCafe) naturally gravitate towards Dunkin.segmenting helps yield higher profits by taking advantage of thisEach company is specialized in satisfying different customer needsEach target market has a different disposable income levelNecessary to build brand and construct marketing communication
However, some opportunities to pinch one another’s customers still exist. Dunkin has the potential to attract those McCafe customers who want unpretentious, cheap, quality coffee but who are not particularly attracted to the McDonald associations. Additionally, both Dunkin and McCafe have the opportunity to steal the grab-and-go customers from Starbucks who have become tired of the long queues and marginally better coffee for a much higher price. In addition to this, these brands have a limited common target market of switchers who do not care either way. All three companies will probably continue to compete viciously for this small, overlapping market however, according to Schroer, this is a necessity to defend what little market share you do have. This will also have the added benefit of maintaining relevance with the current and future consumer base. This ad spend battle will cause the three major players discussed above to simply become stronger competitors against each other with the result that independent coffee retailers will not have the resources nor the energy to try to compete, consolidating the market into three nice segments.
