Download - On the fence coffee wars
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NOBODY WINS!Shoney Yakubjanov
Roshan Talera
Sophie Higgs
Duke McMorris
Stanley He
Coffee
Wars
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Because…
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.
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Core
‘Third Place’
Premium
European experience
Friendly
Urban
Pre
miu
m
Pri
ce
Mor
e Ca
fé, L
ess
Coffe
e
Upscale
Comfortable
Seating
‘Cool’ Hangout
Target market:
Affluent, slightly pretentious, urban, coffee-appreciating social types
CVP:
Premium quality, customized coffee in a personable, atmospheric environment for a high price
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Core
Quality coffee
Down-to-earth
Quick & Efficient
Doughnuts
Bre
akfa
st Ite
ms
Value-For-Money
Mod
erat
e
Pric
eLo
go &
Colo
rs
Target Market
‘America runs on
Dunkin’Target market:
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
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Core
‘Unsnobby’ Coffee
Good Quality
Affordable
Friendl
yNOT Starbucks
Scr
ipt
&
Col
ors
Sim
ple
yet
prem
ium
Unpretentious Com
fortable
InteriorsTarget market:
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
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Premium Quality
Value Quality
Grab-and-go Premium Experience
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Why Starbucks will not win
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
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Why Dunkin Donuts will not win
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
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Why McCafe will not win
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
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Competitor
Brand Identity
CVP Target market
Customer perceptio
ns
Brand loyalty
•Gourmet coffee•Experience
•Tipping out of balance
•Affluent, coffee-loving, urbanites
•Either love or hate the pretentions
•Very high or none at all
•Down-to-earth•Efficient and accurate
•In balance
•Those who like to patronize both Starbucks and McCafe
•Honest •Quality coffee•Grab-and-go
•Very high among users
•BUT only on East coast
•Unsnobby coffee•NOT Starbucks
•In balance but weaker than the other two
•Those who like to patronize Starbucks
•Linked to McDonalds in a major way•Low perceptions
•Fairly limited as target market is too broad
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Potential Brand Dilution - McCafe
McDonald’s core identity:Fast food (burgers, french fries, soft
drinks)
McCafe:Premium quality coffee
Specialty Coffee ≠ Fast Food
VS.
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Potential Brand Dilution - Starbucks CVP already 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
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Similar Ad Spend
SOV=SOM All three companies are equally
aggressive in their advertisingAdvertising does not provide a competitive
edgeHas 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
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Conclusion
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
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Future of the Coffee Wars 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
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THANK YOU
ANY QUESTIONS?