January 2022
A Coffee Company Comparison:
Starbucks versus Dunkin’
1. Transforming Society’s Coffee Culture
Starbucks has redefined the way the world interacts with coffee. From their store design to internal branding to reserve roasteries, the company’s strategic decisions have differed from their competition and have shaped new expectations for an entire industry. Despite their dominant market position, Starbucks is a successful challenger brand. Every decision the company makes is reflective of its initial goal of creating a community and a ‘third place’ between work and home. The extensive menu, unique language, including words like ‘venti’ and ‘frappuccino’, personalized ordering, and the inscribed white and green cup are all distinctly Starbucks’ experiences. Starbucks has successfully transformed society’s coffee culture; creating an experience steeped in emotion and a space where people enjoy gathering – this redefinition of the coffee industry, particularly against brands like Dunkin’, clearly indicates Starbucks’ challenger spirit.
2. Overcommitting to Consistency, Cohesion, and Culture
One of Starbucks’ key business strengths is its consistency. Made possible by their corporate ownership rather than a franchise model like Dunkin’, their consistent business decisions are evident when examining their internal branding as well as their retail locations. Starbucks refers to its employees as ‘partners’, providing comprehensive training and education programs, along with a robust benefits package. The company understands their cohesive internal culture is reflected in their external branding, separating Starbucks from their competition. Another testament to their brand consistency is their unified presence across the globe. While there are exclusive menu items available in different areas of the world, Starbucks’ product quality, brand reputation, and retail stores are remarkably similar. Starbucks’ overcommitment to consistency makes the brand recognizable, earning them a permanent space in consumers’ minds.
3. Solidifying Challenger Brand Status
The first to launch a mobile order-ahead app, curate a brand of at-home coffee, and introduce roasteries, Starbucks is continually idea-centered – a key trait of a challenger brand. Starbucks also breaks from its past, evidenced by the recent departure from a location-based business model. Previously a gathering place, the pandemic significantly impacted Starbucks’ main revenue stream, yet the company quickly determined the shift in consumer behavior may be permanent and altered their strategy by investing in suburban drive-thru areas instead of metro stores. Decreasing the company’s overhead and proving their ability to alter industry expectations, Starbucks’ pandemic response solidified their challenger brand status.
4. Keeping America Running
While Starbucks is constantly innovating and leading the market; one of its famous competitors, Dunkin’, is gearing up to compete. As a successful establishment brand, Dunkin’ conjures up images of pink and orange signage, high-profile advertisements, and associations to friendly and convenient service. Dunkin’ has been a key player in the American coffee market for decades, appealing to family values and keeping American communities running. Originally a donut shop, the company has turned its attention to alternative coffee beverages and menu innovations to appeal to a broader audience. The evolution from Dunkin’ Donuts to Dunkin’ articulates this new focus. While Dunkin’ has amassed a cult-like following and adapted to contemporary culture, they have yet to transform the coffee industry, like Starbucks.
5. Fueling the Next Generation of America
Their name change may enable them to better compete in the coffee category, but to shift to a challenger brand, Dunkin’ needs to address inconsistencies in their strategy and create a unique experience. The company has implemented various initiatives, from engaging with Top Chef and Shark Week to national sports league partnerships, and Dunkin’ shoes and beer. While sales and growth are doing well, the brand strategy feels fragmented. To appeal to two of Dunkin’s key audiences, family and sports fanatics, Dunkin’ should take inspiration from their northern neighbor, Tim Horton’s, and invest in a youth sports program. Branding the initiative as ‘Munchkinz’, a play on their donut holes, the program would highlight Dunkin’s investment in community, family, and sport; it also aligns well with their recent focus on breakfast and health and is a natural evolution from their existing sports partnerships. Through the ‘Munchkinz’ initiative, Dunkin’ can fuel the next generation of America - creating an experience that defies the expectations of the coffee industry and has the potential to position the company as a challenger brand.
Written for SVA’s Business and Branding Strategies, January 2022.