Starbucks and Dunkin' Donuts are two very different, and successful marketers. Here, a look at how each coffee powerhouse built and evolved its brand.
If you need a coffee to kickstart (or survive) your day, your options for where to get your fix, and what kind of bean-based beverage to choose, are almost limitless. But even with the rise of the local-in-feel, artisanal "third-wave" shops, amped-up efforts by fast food outlets like McDonald's and the proliferation of environmentally dubious single-serve machines, there is still a good chance you grab your brew at either Dunkin’ Donuts or Starbucks. The two players, which control well over half the coffee market in the U.S., are battling an ever-growing field of competitors, but ultimately they are the Red Sox and Yankees of coffee places (you know, if the Yankees were from Seattle). And it may seem like an innocent thing to do, but you are picking a side every time you buy a Coolatta or a Frappuccino.
A TALE OF TWO MARKETING STYLES
"As a marketer, Starbucks is a cultural crusader that has been extremely successful at creating a lifestyle brand," says Jonah Disend, founder and CEO of innovation agency Redscout. "With its own lingo, menus and services, Starbucks didn’t set out to create and market a chain of coffee cafes. They focused on creating a lifestyle experience with the much-heralded 'third space.'" In some ways, says Disend, Starbucks represents a brand that uses innovation as marketing. "They invest in products and brands that have a life outside their cafés--La Boulange (the bakery business acquired in 2012) still has its own standalone bakeries, (juice brand) Evolution is available at Whole Foods--and then also drive people back into Starbucks while paying back to their core brand."
Of course, at Starbucks' scale and with its reach into new businesses, it becomes ever more difficult to maintain its original, elite position. As a new crop of coffee shops promise a more premium coffee experience, Starbucks' liquid asset itself is no longer seen by some coffee snobs as aspirational (a snippet from an Atlantic piece called "The Future Of Iced Coffee" on the rise of Blue Bottle and the prospects for artisanal coffee: "Starbucks now has a dominant, near-hegemonic position in the American specialty coffee market. All its competitors are a mere fraction of its size. And yet, many people in the coffee industry would say that Starbucks coffee is terrible, or at best, should be buried in a venti glass of hot milk").
And basing your brand on the whole experience means that experience better be smooth. "Where (the approach) falls down is execution," says Disend. "We’ve all been at a Starbucks where you don’t get the service you’re expecting. That breaks the brand’s promise. When you rely on the experience versus advertising you must ensure that experience is fulfilled. In today’s marketing world, one bad experience can spread like wildfire. And for a brand that doesn’t advertise, that could potentially be explosive."