Posted: May 25th, 2022

Starbucks and Dunkin Donuts Case Studies

Starbucks and Dunkin Donuts

Comparing Starbucks and Dunkin Donuts Marketing

The differences between Starbucks and Dunkin’ Donuts permeate every aspect of the two company’s cultures and have a reverberating effect in who they attract and keep as customers. The intent of this analysis is to analyze how each of these two companies vary from a marketing standpoint, and how those differences are continually perpetuated in their approach to managing the marketing mix. Of the two, Starbucks is basing their marketing, selling and customer retention strategies on the concept of delivering a unique customer experience and a “third place” where customers can feel free to meet friends and relax (Plog, 2005). The Starbucks marketing mix supports the stores as a hub of personal activity and exceptional customer service, from the hundreds of drink combinations customers can order down to the high-end food items. As the case mentions, Starbucks is considering offering wine, cheese and other high-end food items in the evening (Kotler, Armstrong, 2013). Contrasting this high end customer experience strategy is Dunkin’ Donuts, a chain more focused on the functional aspects of coffee and baked goods and a commitment to customers to be true to their core values (Schmidt, Oldfield, 1999). The Dunkin’ Donuts marketing mix reflects this mindset of pragmatism and unpretension, complete with coffee shops designed for speed and efficiency.

Comparing the Marketing Mix of Dunkin’ Donuts and Starbucks

The distribution strategies of the companies vary significantly based on the customer experience they each are attempting to deliver. Starbucks’ distribution strategy is delineated by couches, free Wi-Fi and other amenities (Kotler, Armstrong, 2013). This distribution strategy for Starbucks customers is calculated and measured to create customer loyalty to not just the drinks or food items, but to Starbucks as a place customers can meet, feel special and individually recognized. Starbucks also is looking at dinner items and higher-end snacks during the evening hours to further this experience-based strategy longer in the day (Kotler, Armstrong, 2013). Starbucks marketing and senior management realize that if they can drive up the number of times a customer comes in a month, the greater likelihood they will transfer their buying loyalty to new Starbucks products over time. This will drive up lifetime customer revenue value and make the entire chain more profitable. Contrasting the high-end distribution strategy of Starbucks is the deliberate decision on the part of Dunkin’ Donuts to concentrate on a more utilitarian, common-man approach to designing and managing their stores (Schmidt, Oldfield, 1999). Dunkin’ Donuts are built for efficiency and speed and use the donuts themselves as part of the merchandising efforts in the store. Dunkin’ Donuts distribution strategy and its customer experience are deliberately designed to stay consistent with the values of its core customer base, who are blue-collar and white collar workers (Kotler, Armstrong, 2013).

Both companies differ significantly in how they approach promotional strategies as well. Dunkin’ Donuts speaks to the common man and the simple pleasure of a hot cup of coffee and a pastry to start their day. Their slogan “American Runs on Dunkin’” connotes the working class nature of the brand too, underscoring their everyman, hardworking image as a brand (Kotler, Armstrong, 2013). Promotional strategies are all aimed at supporting this image of supporting the blue-collar and white-collar workers and giving them the coffee they need to start their day. The many promotions they run in their target markets are careful to stay in the mainstream of supporting their customers’ core values of a strong work ethic and blue-collar beginnings (Schmidt, Oldfield, 1999). Contrasting this is are the promotional strategies of Starbucks that concentrates on accentuating the uniqueness and status of their customers, while also underscoring their need to be recognized as accomplished individuals (Reast, 2005). Starbucks customers are loyal to the brand because all four areas of the marketing mix are aimed at making them feel special, unique and apart from the crowd (Plog, 2005). Promotional strategies at Starbucks are careful to tie together the in-store experience, beverage, food items and most importantly, how customers feel about themselves when they are there.

Dunkin’ Donuts uses its product and pricing strategies to further accentuate the working class roots of the chain and its strong alliance with its blue collar and white collar, working class customers. Their coffee is relatively bland by Starbucks standards, yet is strong and robust in taste based on personal experience. The Starbucks products and pricing are an essential part of the chain’s value proposition as well, as both are deliberately kept affordable for its working-class customer base (Schmidt, Oldfield, 1999). Product and pricing at Starbucks is designed to attract higher-end customers and keep them by appealing to their need to feel special and recognized. Starbucks sets a torrential pace of new product introductions and uses pricing to define its exclusivity, with the main payoff of these strategies from a marketing standpoint being the chance for customers to feel special and individually recognized, even celebrity-like at times (Chua, Banerjee, 2013).

Conclusion

Dunkin’ Donuts and Starbucks are polarized in their marketing mix strategies, each striving to meet and exceed the expectations of their customers. While Starbucks has aligned each of their four marketing mix strategies to underscore the in-store experience and meet the needs of customers to see themselves as unique and recognized (Plog, 2005), all elements of the marketing mix at Dunkin’ Donuts are aimed at strengthening their brand as the working class and white-collar choice for coffee and a pastry to start the day (Reast, 2005). The fundamental differences in their value propositions drive every aspect of their marketing mix.

Bibliography

Alton Y.K Chua, & Banerjee, S. (2013). Customer knowledge management via social media: The case of Starbucks. Journal of Knowledge Management, 17(2), 237-249.

Kotler, P., & Armstrong, G. (2013). Principles of marketing. (14 ed.). New York, NY: Prentice Hall

Plog, S.C. (2005). Starbucks: More than a cup of coffee. Cornell Hotel and Restaurant Administration Quarterly, 46(2), 284-287.

Reast, J.D. (2005). Brand trust and brand extension acceptance: The relationship. The Journal of Product and Brand Management, 14(1), 4-13.

Schmidt, R.A., & Oldfield, B.M. (1999). Dunkin’ donuts – the birth of a new distribution and franchising concept. The Journal of Consumer Marketing, 16(4), 376-385.

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