NOBODY WINS!Shoney Yakubjanov

Roshan Talera

Sophie Higgs

Duke McMorris

Stanley He

Coffee

Wars

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.

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

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

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

Premium Quality

Value Quality

Grab-and-go Premium Experience

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

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

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

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

Potential Brand Dilution - McCafe

McDonald’s core identity:Fast food (burgers, french fries, soft

drinks)

McCafe:Premium quality coffee

Specialty Coffee ≠ Fast Food

VS.

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

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

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

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

THANK YOU

ANY QUESTIONS?