Customer desire and preference greatly influence the fight, so each company is fighting to expand menu options and physical store locations to reach and better serve a greater customer base and draw consumers away from the competition.
Starbucks began 30 years ago with one store and has experienced phenomenal growth and success. It is often considered the go-to coffee place to work and socialize, a concept that corresponds with the company’s marketing approach. From development, Starbucks has aimed at creating a place for consumers to stop between work and home, and formed concepts for physical locations that provide customers a relaxed atmosphere and overall experience. The tactic has had great success, reflected by Starbucks’ 2015 revenue of nearly $18.5 billion.
1) Dunkin’ Donuts
Dunkin’ Donuts peacefully coincided with Starbucks for decades. When the spokesman for its initial donut-focused ad campaign retired in the late 1990s, Dunkin’ began putting more emphasis on the growth of its coffee business. The company introduced its first specialty coffees and drinks in the early 2000s and slowly began making a name for itself as more of a destination coffee shop. In 2006, Dunkin’ upped the ante and declared war against Starbucks. The company has continued to expand its menu, augmenting its product line with more substantial food items.
Dunkin’ Donuts launched its “America runs on Dunkin” ad campaign in 2006, part of its new approach to marketing. Where Starbucks has a more wealthy and upscale feel, relying on word of mouth to spread its name, Dunkin’ Donuts approaches customers with traditional advertisements, representing itself as a brand for all-American consumers. The tactic has worked around the world, though the company’s 2015 revenue of $783 million for 2015 falls substantially behind Starbucks’.
At over $26 billion, McDonald’s revenue for 2015 was higher than Starbucks’ and significantly higher than Dunkin’ Donuts. However, this is due in part to the fact that McDonald’s has a much larger menu. McDonald’s has traditionally been known as a fast food restaurant and is not well-known for its coffee. However, after introducing flavored and iced coffees in the mid-2000s, McDonald’s put its hat in the ring alongside Starbucks and Dunkin’ Donuts.
McDonald’s is also revamping its marketing and advertising strategies. The company has been using the “I’m lovin’ it” slogan for more than 10 years, but the company recently found that the campaign was not trending as well as it had in its initial years. For the past several years, McDonald’s has employed research and development (R&D) specialists of various ethnic and experience backgrounds. New commercials and advertisements rolling out in the coming year will fall in line with Dunkin’ Donuts’ approach, pushing McDonald’s as a brand for the common American with emphasis placed on embracing people of every educational and cultural background.
The Retail Coffee Game
Starbucks, Dunkin’ Donuts and, recently, McDonald’s compete for customers in terms of dry coffee goods as well. All three companies offer coffee beans and ground coffee in retail and grocery stores around the world. Thus, two companies that are known for such products, Maxwell House and Folgers, have become competition for Starbucks as well. Maxwell House is one of the top-selling lines Kraft Corporation offers, and it is one of the best-selling coffee brands; Folgers is not far behind. While these two brands currently dominate the dry coffee goods market, they are not in complete competition with Starbucks due to their lack of physical stores and additional product offerings. In South Africa, instant coffee Brands Cafe Enrista, Nescafe are the two main competitors.