Tuesday, April 07, 2009

The Starbucks/Dunkin Battle - A Matter of Movements

It may not be to you, but it's still pretty interesting to me that Starbucks is now doing television commercials. A concept that is fairly difficult to explain to the average person, in terms of basic consumer appeal, is apparently not that difficult to capture within a 30 or 60-second spot. More than Starbucks doing commercials, the new angle of the advertising brings about an interesting question - as it relates to the Starbucks/Dunkin Battle. Which coffee house can position itself in this new economy to gain the competitive advantage? Check out the video.

Let's look at the two positions and the circumstances that give them value in the market. For Starbucks, the brand has successfully pulled off a premium price tag with a highly repetitive audience. The Starbucks brand has many social components that in many ways add value to the overall experience. Dunkin, on the other hand, has a moderate price tag, with a mainstream audience. Unlike Starbucks, a Dunkin patron is probably not going to be prancing around the office with a Dunkin coffee cup as though it was a little bag from Tiffany & Company. It's more of a commodity to them. However, the experience brings about old-fashion and more traditional options that are normally associated with coffee - DONUTS.

For either company, this new economy has created a few challenges that will more than likely force both companies to make some slight adjustments in brand position. As you see with the Starbucks ad, it makes sense from a cost perspective to leverage the brand on social issues that lend political cover on products deemed excessive in this turbulent market. With Dunkin, the move has been more of an All-American approach, which is designed to capture two mobile segments - Starbucks Defectors and the segment of consumers that are finding themselves at McDonalds instead of the local dine-in restaurant.

Both approaches are risky, but necessary. I would like to know your opinion on how both brands will perform six months from now.

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