Starbucks vs Dunkin’ Analysis

Establishment and Challenger Brand Analysis

Starbucks revolutionized the coffee shop industry by positioning themselves as the ‘third place’ – a social destination between the home and the workplace. Starbucks is a Challenger brand as they differentiate themselves on 3 fronts:

1. Redefined space
Starbucks changed the coffee shop experience by creating a gathering place in the neighborhood to meet family and friends. Inspired by Milan’s coffee houses, ex-CEO Howard Schultz created a warm and inviting ambience within the stores through aesthetically designed interiors and attention to detail. A consistent brand experience is delivered in stores across cities integrating a bit of a local touch, valuing the culture of every region. The space goes beyond its function and aims to create memories with their culture of inclusion where everyone is welcome.

2. Employees as partners
Starbucks became the first to offer full health insurance, company stock options and other benefits to make employees a ‘partner’ in the business. Employees are trained brand ambassadors and Starbucks focuses on delivering a warm and more human experience through them.

3. Premium product
Starbucks follows a product differentiation strategy by offering specialty coffee of high quality and unique blends along with an option to customize. They are a responsible and socially ethical company, which reflects in their sourcing and packaging materials. 

 

Starbucks’ mission is to inspire and nurture the human spirit – one person, one cup, and one neighborhood at a time. Starbucks changed the way we drink coffee by focusing on ‘experience’ rather than ‘value for money’ and thus created an emotional connection leading to a creation of a community of loyal consumers.

Dunkin’ is an Establishment brand as it has adopted a cost leader strategy offering standardized good quality products. They operate on a 100% franchisee model with a standard QSR format experience delivered across all of its stores. They target the middle class consumer and offer a quick breakfast and coffee fix for people on the go. They are an average Joe brand with a friendly pink and orange logo that appeals to the mass consumer. Dunkin’ operates in a highly competitive market with several other QSR, restaurants and convenience stores offering similar low price, good quality and easy access food options.

 

Dunkin’s mission is to be the leading provider of a wide range of delicious beverages & baked products in a convenient, relaxed, friendly environment that ensures the highest level of quality product and best value for money. Dunkin’ is currently like a commodity brand and is placed low in Maslow’s hierarchy of needs. It lacks differentiation and an emotional connect, thus allowing consumers to easily switch brands with a lower probability of creating a ‘cult’.

In order to act like a Challenger brand, Dunkin’ could do the following:
 

1. A breakfast a day keeps America running 

The category that Dunkin’ competes in currently is focused on offering coffee and complementary snack options as a simple solution to hunger. Dunkin’ could break out of this category norm and create a differentiated product offering that doubles down on the consumer’s breakfast needs. To keep America running, people today need the right kind of nutrition from the food and the beverage of their choice. They could tailor meal combinations that are best suited to people with different health needs and preferences such as plant-based, nut-free, lactose-free, kosher, pre-workout, post-hangover etc. Customization can be offered to get the consumer exactly what they need or desire. Dunkin’ has already dropped Donuts from its brand name and might have to sacrifice the focus it had on donuts in their product offering. With the ubiquity of Dunkin’ stores and value for money that Dunkin’ offers, consumers can make Dunkin’ their go-to brand for a perfect start of the day.

 

2. At your doorstep, everyday, just how you like it

People usually visit the same coffee shop near their home or workplace to get their coffee. Regular drinkers usually have a go-to coffee and complementary snack that they order repeatedly. The order-ahead option on the Dunkin App already allows for quick ordering of repeat orders for faster turnaround of being served. More and more consumers today are ordering food online (more than 110 million food delivery app users in the US in 2020) – a result of growing digitization, pandemic effects, WFH, etc. Dunkin’ can tap into this opportunity and create a subscription model allowing members to set up their choice of coffee & food order and get it delivered at their home or workplace at their preferred time every day. This needs to be set up once a month and then deliveries will take place automatically, with an option to change settings whenever required. The consumer gets tied into the brand and also guarantees sales to the brand. The brand enters the daily life of a consumer and becomes an integral part of their routine – almost like physical newspaper subscriptions in the past. This leads to an emotional connection with the brand, increasing brand loyalty.