Wednesday, March 18, 2009

"Hear it and live it" in order to judge it!

My husband, always having others' needs and likes in mind, was kind enough to record a short news piece on Nightline for me. The feature was on Dunkin' Donuts boom versus Starbucks' "stagnation", so to say.

I've always admired Starbucks' as a company. I particularly like the fact that, while being in the coffee business, they are actually selling something quite less tangible: the "have coffee in a living-room experience", which happens to be accompanied by lattes and frapuccinos. I first entered a Starbucks in 1999, and immediately was sold on the concept and the coffee. Years went by and I still remember how a friend of mine and I developed a market analysis to take Starbucks abroad to Montevideo, Uruguay. The project was for college, and we excelled in it. It was a fun project. I was thrilled when my sister proudly announced "Starbucks arrived in Brazil!!!" (last year!), and during my time at the Marriott, there was hardly a day on which I did not get something from our Starbucks lobby cafe. (sigh!...)

It took me by surprise that Dunkin' Donuts opened 800 stores last year and is expecting growth of 5% this year. Starbucks does not seem to be experiencing the same boom. In fact, many stores are closing and baristas are losing their jobs. Given the current economic and financial situation, this taught me a good lesson in customer loyalty and effective marketing. You see, I took the time to visit a Dunkin' Donuts store today, and was pleasently surprised by the variety of drinks, food (including healthy options!), good customer service and employee knowledge. It was great to see an "anytime breakfast" menu and impressive to learn the store is open 24/7! I sat there for a moment and analyzed the environment: the dining room does not compare to Starbucks. The ambience is totally different. The product is different. I briefly thought that Nighltine was a bit off when comparing Starbucks and Dunkin' Donuts, simply focusing on the fact that both serve coffee products. But that's the only thing they have in common.

The product they are marketing is different. It is two different things, like apples and oranges. Both are good. But not comparable, really. I believe it's actually not fair to compare both. I am happy to have taken the time to watch it on TiVo, and to have gone to Dunkin' Donuts today. I will be back. I was pleased with everything. I will not leave Starbucks behind, though. I go to Starbucks to experience the atmosphere, the "we share something unique" type of community feeling when you spend some time in there, and the coffee drinks.

The fact that Dunkin' Donuts is experiencing success is because they are marketing correctly. Starbucks' "we sell you an experience" might not be enough in these times, and its momentum has been lost a little. Dunkin' has competitive prices, fast service, appealing marketing campaigns and strong celebrity endorsements. It has created a menu that satifies our hunger and that works well for various age groups, tastes and needs. Loyal tenants don't give it up for anything, and newcomers like what they see. It is accessible, efficient and basic.

Simply put, it efficiently fits the time and circumstance we are living in today.

This was my "hear it and live it experience" of the day. I'm looking forward to reading/hearing your comments!


doglando said...

Wow Denise... great peice.

You know, I am a bit partial to Dunkin Donuts... not a big donut fan, but something about the aroma and taste of their regular coffee is so much more mouth watering to me than a regular, non flavoured coffee at Starbucks.

I think Starbucks thrives when people can afford to follow a trend, but when trend dies or slows down, so does their business.

For caffeine addicts or coffee fanatics, I would compare these times to smokers... I am sure when the economy was better, smokers smoked a cigarette of their choice, and now even though one would think smokers would try their darn hardest to stop smoking, I think they still do, but they have switched to smoking a brand that may still taste somewhat decent, does, satisfies their needs and is more affordable...

TS said...

Last year while running my VIP Sedan Service I happened to load a VP from Dunkin' Donuts. He was very personable and explained to me that he was in Phoenix, AZ for a meeting about expanding on the west coast. He told me, and this really surprised me, that Dunkin' Donutes averages 75% of their sales from coffee purchases alone.
I was in total disbelief. How could a Donut Shop be such a coffee powerhouse? Then I remembered a job I did in Boston for a month of field work. Boston is saturated with Dunkin' Donuts to the point that there were very few fast food establishments compared to most cities I have visited.
Personally I think the only reason Starbucks is doing so poorly is their coffee prices are high. These high prices are a direct result of Starbucks offering very attractive medical benefits to associates working over twenty hours a week.
It appears that where you purchase your coffee may have further reaching implications than most would realize. If I was an active coffee drinker, I would choose Starbucks. They take care of their people and their coffee is double the caffeine of Dunkin' Donuts.

Denise Zaldivar with IES said...

You are right about Starbucks taking care of their employees. What makes me wonder, though, is that usually, and we know that, companies that take good care of their employees are usually the successful ones. I would like to know how Dunkin' differentiates itself in regards to internal marketing...