Industry Analysis of the Coffee Industry Essay
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Ex: A child’s toy available at a dollar store may be cheaper, but the quality may not be as great compared to a similar toy at a higher priced toy store. The company must market the value of the toy to the consumer rather than the price.
Industry AnalysisThe Coffee Industry has been booming for years, but recently many new players have come onto the scene such as Caribou Coffee, Starbucks Coffee Co., and even Dunkin’ Donuts. Each company offers numerous different blends, flavors, and roasts, but each claims their own to have different qualities that appeal to different markets.
The veteran of the bunch is actually Dunkin’ Donuts, which has been serving coffee, and various baked goods since 1950. The company was founded by Bill Rosenberg and has grown from five locations in 1954 to over 6,000 locations in 30 different countries. It is considered the largest coffee and baked goods chain in the world and is tagged by the slogan: ” The Dunkin’ Difference”. Dunkin’ Donuts had seemingly monopolized the industry until Starbucks Coffee Company came along in 1971. Their mission:”To inspire and nurture the human spirit-one person, one cup, and one neighborhood at a time.
“Howard Schultz joined on with Starbucks in 1982 as director of retail operations and began direct marketing to fine restaurants and espresso bars. By 1995 Starbucks had developed into a full-blown coffee company with its own line of glassware, coffee mugs, and even in store music sales. Today there are over 5,000 Starbucks locations in numerous different countries and a booming following of customers. Their target audience consists of a broad spectrum of Music, Art, and Coffee lovers which all can convene in a warm, musical atmosphere. Last but not least, the new comer to the scene, Caribou Coffee, which was established in 1992, based on the idea:”…that if true passion, hard work and excellence go into an endeavor, the outcome will be a quality experience, and therefore rewarding.”Although a much smaller company, only comprised of around 500 locations, Caribou Coffee strives to create a unique experience for coffee drinkers that has that “aha moment” as they describe it.
So if these three companies are obviously all selling coffee, why do they have very passionate followers, who would seemingly rather stop drinking coffee than go to one of their competitors to get their morning jolt?Dunkin’ Donuts, like many other current companies are showing an enormous interest in the economic situations of their consumers. One of their current promotions is a “Free Turbo Shot” in any iced coffee purchased. Not only is the word FREE enticing it also offers some sort of financial relief and suddenly becomes a bargain in the eyes of their consumers. They are also very well known for their advertisements throughout the years, whether it is through the media in their numerous television commercials, or even in their print advertising in multiple magazines and coupons in newspapers.
This is one of their key selling points over Starbucks because Starbucks as a company believes in word of mouth advertising rather than actual advertisements. Another campaign currently being run by Dunkin’ Donuts is for one lucky customer to create the company’s next donut. Not only are they getting their customers involved in creating the donut, they are allowing anyone with access to their stores and website to vote on the numerous entries in the contest. Although this may somewhat alienate a small portion of their clientele by creating a donut that not everyone likes they are able to take the mass market and narrow it down to what a large portion of their consumers are interested in seeing as a product. Although this is a great concept they are not the only company willing to include their consumers in their product production.
Starbucks has a strong hold in many aspects of the coffee industry due to their intense strategic orientation as well as their product management. The company is not only very interested in what their customers have to say about their products, but also are interested in what their own employees have to say. They do frequent coffee and tea sample-tasting to develop not only buzz about the launch of their new products, but to get feed back on what should stay the same and what needs to be changed. Through this communal version of brainstorming Starbucks can better understand their consumers and their employees needs. Another huge selling point of the Starbucks brand is in fact the actual logo that represents the company.
The green circle boldly stating STARBUCKS COFFEE around the picture of a singing Siren is known throughout the world. It has become one of the most recognized symbols in the world and is a great advertisement in and of itself. Each Starbucks store also utilizes point of purchase marketing very efficiently. Throughout every store there are numerous signs and posters advertising upcoming sales on merchandise, new product lines, and even current products coupled with enticing pictures of not only their beverages but their delectable treats as well. Through something Starbucks likes to call the “Third Place” they are able to create a peaceful environment away from work and home that people can come to relax, enjoy great music, and even better coffee.
Caribou Coffee is somewhat of a different breed. Dunkin’ Donuts focuses on the fast paced grab-n-go lifestyle, Starbucks is centered on tranquility and relaxation, but Caribou Coffee is all about adventure and exploration. Their founders actually created the company thanks to a trip through the Alaskan Wilderness, after a strenuous climb to the summit of a mountain. Their belief is that excellence is a product of hard work, and that life is too short for anything else. Caribou Coffee is not necessarily the cheapest coffee company around, but they definitely offer financially affordable drinks for people to enjoy. One of their current promotions is “Set Your Wild Free”, which is centered on their most recent launch of a line of “8 Delicious Wild Coolers”. It sticks to their adventurous theme as well as giving a little extra enticement to their new product line.
So if these companies are doing so many things right through community involvement, Public Service Announcements, marketing their products, and creating a unique, and individualistic feeling in each store, what modifications can be made to their marketing tactics? First off Dunkin’ Donuts has proven to have longevity in their product due to their willingness to adapt and grow with their surroundings. They could however obtain an account planner in order to help them better understand other demographics that who they are currently marketing to. Maybe the inclusion of music selections in their stores, or even adding a few health conscious choices to their menu would boost their sales and increase their return on investment. Starbucks on the other hand who does feature in store CD selections as well as health conscious drink options needs to focus more on the financial side of their business.
They need to begin taking into account that the economy is in a slump, and even though they have a very marketable product, it will get them nowhere if the common man can’t afford to buy they products let alone consume them. I’m sure if they took a deeper look into their pricing and the actual cost of their product a happy medium could be obtained that would still benefit the company and the consumer as well. They also need to develop stronger marketing concepts that allow them to have more outside advertisements such as billboards, commercials, and maybe even coupons, which seem to be unheard of to the Starbucks brand.
Finally, Caribou Coffee is actually in a great position to market their products because they have a great argument for opportunity cost to their consumers. They have a highly comparable product to the more pricey Starbucks line and are able to target a more accessible audience than the Starbucks brand. Marketing to the “every day Joe” will give them the opportunity to pull in people that may have never tried their coffee before but are willing to do so because of the price difference. Once discovering that their product is ironically similar to Starbucks in quality, but is more financially acceptable they are more likely to return as well as spread the word to others. In turn helping to increase revenue and benefiting the companies’ sales and popularity.
In closing all three companies do a wonderful job of representing the coffee industry and have made millions marketing themselves as household names throughout the world. Slight adjustments for each company would allow them to grow and develop into even more productive companies that will prove to have great sustainability as well being dependable sources of that little extra boost that so people have come to rely on in their daily routines. Through in depth SWOT Analysis, Integrated Marketing Communication, and intense advertising these three companies has become a beacon of success. They will continue to illuminate the path to the future of coffee as well as our morning, afternoon, and sometimes late night buzz that we as warm blooded Americans crave.
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