2. Executive Summary
Starbucks Corporation has been the most successful
coffee chain in the past few decades using their
aggressive expansion strategies to push out much of its
competition.
Starbucks has focused on creating a dense network of
stores all around America, while also opening up new
locations all around the world.
They are currently leading the retail coffee market with
selling their coffee for a premium price to increase their
profitability.
McCafee
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3. Problem
Will the allure of gourmet Starbucks coffee be
maintained or will more appealing options threaten the
success of Starbuck‟s primary product?
Can advertising significantly help maintain Starbuck‟s
image?
A good place to start involves evaluating the current
market for coffee and do a competitive analysis to see
the market performance and to determine the extent to
which designer coffee appeals to current consumers.
McCafee
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4. Overview On Product Growth
Starbucks surpassed Wendy‟s and Burger King in becoming the number
3 restaurants chain posting $9.07 billion restaurant sales last year.
It is expected to gain in one of the fastest-growing day parts in
restaurants for breakfast.
It‟s measured-media budget is a fraction of what come of the other top
chains spend.
Starbucks only spent $94.4 million in media spending compared to
McDonald‟s spent about $887.8 million in the United States only in 2010.
Starbuck‟s has worked with agencies such as Omnicom‟s Goodby
Silverstein & Partners.
“Breakfast is the final frontier of growth in this country and coffee is
growing as well.” David Palmer UBS restaurant and packaged food analyst.
AD Age
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6. Store Locator
Has 12,500
coffee shops in
the United States
McDonald‟s McCafé
Starbucks Dunkin‟ Donuts
Has 6,700 coffee
shops in the
United States
Caribou Coffee
Has over 31,000
restaurants World
Wide.
Has 415 coffee
shops in 16 States
in the United
States
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8. The taste-test advertisement directed towards Starbucks,
actually naming the brand in the commercial, surveying
coffee drinkers. More hardworking Americans preferred the
taste of Dunkin‟ Donuts over Starbucks.
Within a week of the ad‟s launch about 50,000 people
visited dunkinbeatsstarbucks.com
It is a site that communicates the hard-hitting competitive
message with clarity and humor. Entering this site you can: Learn
the Truth (presenting Dunkin‟s coffee story) or Spread the Truth
(sending an e-card to your friends who drink Starbucks)
Weekly traffic to DunkinDonuts.com jumped 61%
Starbucks vs. Dunkin‟ Donuts
“Small is the New Tall.” AD AGE
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9. Starbucks vs. Dunkin‟ Donuts
In March 2009, the company
unveiled an alternative slogan,
“You „Kin Do It!”, and launched
a $100+ million ad campaign to
promote it.
The campaign slated to run
through 2009, includes radio,
print and outdoor advertising, in
addition to in-store point of
purchase, special events, and
sports marketing.
Online marketing, often
leveraging the Boston Red Sox
and the other New England
icons.
Dunkin‟ Donuts Press
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11. Starbucks vs. McDonalds
McDonald‟s has offered breakfast for years, and over the
last couple years has been heavily marketing its McCafé.
Lines of coffee drinks all while continually rolling out new
drinks of both the coffee and non-coffee variety, such as
smoothies and frappes, McDonald‟s version of the
Starbucks frappuccinos.
Starbucks created their frappuccino for the summer
season while McDonald‟s introduced their frozen
strawberry lemonade, a non-coffee beverage under
McCafé.
AD AGE
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12. Starbucks vs. McDonalds
Like Dunkin‟ Donuts, McDonald‟s took a stab at Starbucks
during TV ads as well. The two television ads were titled
“Intellectuals” and “Hipsters.”
Along with a TV ad McDonald‟s set up a website
unsnobbycoffee.com to promote its Washington States
McCafé Outlets.
To email their friends about how they feel about high priced
coffee
In additional to the usual media, McDonalds makes
significant use of billboards and signage, sponsors sporting
events ranging from Little League to the Olympic Games.
AD AGE
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14. Starbucks vs. Caribou Coffee
Caribou Coffee spent $2 million on U.S. advertising in 2008,
compared to the $300,000 it spent in 2007 according to Nielsen
Monitor-Plus. (AD Week)
Analysis of visitor demographics reveals that Caribou Coffee could
possibly have more online success if they pull-in some of the same
types of online visitors as Starbucks does.
While Caribou Coffee attracts a respectable amount of young
adults (32% between the ages of 18 and 34), this does not compare
to the 42% that Starbucks attracts.
Paying for advertisements on social networking sites where
educated young adults visit frequently, such as Facebook, may
likely prove to be a wise strategic move for Caribou
Coffee. Facebook refers 3.92% of Starbucks‟ traffic to the Starbucks
Website, while Caribou coffee lacks in Facebook referrals.
SEO Analysis
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15. Television Campaigns
Dunkin‟ Donuts outspent McDonald‟s 60% on coffee-
specific products in paid media $27 Million to $17 million.
Dunkin; Donuts spent 83% of its budget on TV: two-thirds
of that on spot TV and a third on cable.
McDonald‟s spent 97% of its traditional media budget on
spot TV to support its McCafé rollouts and on regional
promotions in 74 local markets.
AD AGE
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16. Web Campaigns
Dunkin‟ Donuts spent 15% of
its total media budget on
paid internet. This is
considered a significant
amount compared to
competitors in this category.
Ads were posted on a
number of sites
including: Yahoo,
AOL, CNN, CNBC,
MSNBC, Fox Sports,
MLB.com, Good
Housekeeping,
Cosmopolitan, and
Digg.
AD AGE
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17. Tactical Campaigns for Dunkin‟
Donuts
In 2008, Starbucks announced it was simultaneously shutting
down all 7,100 U.S. stores for a restraining effort, Dunkin‟
Donuts was quick off the mark, offering 99-cent espressos.
On Tax Day, Dunkin‟ Donuts held a special promotion to
offer a free doughnut with the purchase of a cup of coffee.
May 15, Dunkin‟ Donuts holds its annual Free Iced Coffee
Day, giving away 4 million cups in 2008.
In June 2008, Dunkin‟ Donuts launched its “Bases Loaded”
campaign, a summer iced-beverage promotion. Iced
beverages came with peel-away sticker that revealed a
one-time login code for participation in an instant-win game
in conjunction with Major League Baseball.
AD AGE
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18. Tactical Campaigns for McDonald‟s
McDonald‟s promoted its national coffee promotions
with special prices.
In 2008, it showed its ice teas in combination with its
chicken sandwich and ice coffees over the summer in
the buildup to the Olympics.
AD AGE
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19. Regional Campaigns
McDonald‟s drives a lot of promotion through outdoor and
print buys in a number of markets: Louisville KY, Chicago,
Detroit, Kansas City, MO, San Diego, and Seattle.
In December 2008, a TV campaign highlighted “McCafé
Mondays,” a promotion that offered customers a free eight-
ounce coffee of their choice.
Urban radio and TV ads in the Midwest regions feature
jingles for McCafé.
Caribou Coffee is offering a limited edition mug that
features Chicago landmark‟s such as Lakeshore Drive, Navy
Pier, and the Chicago Theatre. (Biz Journals)
AD AGE
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20. Market
Starbucks built itself on being the world‟s most powerful and
recognizable brands of high quality coffee and the unique
“Starbucks Experience.”
They were the first to revolutionize the coffeehouse industry
by marketing expensive, high-quality coffee as well as a
“third” place between work and home for customers to go
and escape the chaos of daily life.
As of 2011, Starbucks has a 32.6% market share a good
portion of its industry.
Starbucks currently has over 11,500 stores in the United
States alone.
http://www.wikinvest.com/stock/Starbucks_(SBUX)
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21. Competition
McDonald‟s introduced the McCafe to select stores, where
customers can purchase espressos and cappuccinos priced
in the $2-4 range.
In response, Starbucks teamed up with Burger King and
began selling Starbucks‟ Seattle Best Coffee in about 7,250
U.S. outlets selling for $1-$2.79 replacing Burger King‟s BK Joe
Brew.
Dunkin Donuts is another major competitor, with nearly 5,000
stores in the U,S. overlapping with Starbucks but their
customer experience is more coffee-to-go model rather
than the “third place to work and relax” model.
http://www.wikinvest.com/stock/Starbucks_(SBUX)
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