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Why Dunkin’ Donuts needs to move faster.
Starbucks is the big boy of coffee. With 11,000 units, it’s the world’s biggest coffee chain. With a focused brand and brilliant marketing, Starbucks has convinced me and millions of others to trade up from our .50 cup of joe to a $3 cup of indulgence.
So what’s next? Starbucks has plans brewing to triple its size and become the world’s largest fast-food brand. Not to mention its foray into the music and movie business. (I won’t get into the insanity of those moves.)
I believe Starbucks can and will be the monster global “coffee” brand. I just don’t think they can or should be a global “fast-food” brand. Why try to be everything to everybody? It adds costs, cuts profits and weakens your brand. Why go down the same road of mistakes that McDonald’s has over the years?
In spite of a number of stupid line extensions (remember the Starbucks’ chicken pot-pies?) Starbucks has managed to grow rapidly because no one has been able to compete effectively against them. Why?
All the major coffee competitors have used the “same but cheaper strategy” which never works against the “real thing.” Ever since Avis did “We try harder,” every other also-ran thinks they can say the same and succeed. What they forget is the fact that most people still want to buy from the leader unless the No. 2 can provide a real alternative.
Today, Avis flounders, because trying harder just isn’t enough. In fact, Enterprise is now No. 1 in rent-a-cars because they brilliantly exploited the insurance replacement market against No. 2 Hertz which focuses on airport rentals.
In the coffee category, I think there is one brand that has a shot at owning the No. 2 position if they play their cards right. Which I’m not sure they will, but maybe if they read my blog, they might consider it using the idea.
Dunkin’ Donuts is a 55-year-old company that was acquired last month by a consortium of private equity firms. The new owners have launched what they call “the most significant repositioning effort in company’s history focusing on American values of hard work and fun.” The campaign carries the tagline “America Runs on Dunkin’.”
In the next decade, Dunkin’ Donuts also wants to triple in size by entering new markets (they are most prevalent on the eastern seaboard) and by expanding the menu beyond breakfast. Oh boy, there is that nasty “expansion” word! The idea sounded great until they started talking about the expansion of the menu.
Dunkin’ Donuts successfully built its brand on donuts. But expanding waistlines have moved people away from donut shops and into the Starbucks’ coffee culture. Of course, Dunkin’ Donuts was known for its coffee, too. And it must drive them nuts to see Starbucks successfully pre-empt a product that Dunkin’ Donuts pioneered.
In the past few years, Dunkin’ Donuts has been chasing the latest trends, adding bagels, muffins, hot sandwiches and high-end coffee. All products they have no credibility in.
What should the new owners of Dunkin’ Donuts do with the brand? Well, I believe they do have credibility in coffee, but not the Starbucks stuff. They need their own coffee twist. They need to be the opposite of Starbucks. Strong No. 2 brands don’t emulate the leader, they become the opposite.
Listerine was the bad tasting mouthwash, so Scope became the good-tasting mouthwash. Home Depot was male and messy, so Lowe’s became female and neat.
Starbucks is expensive, slow and snobby. Some people like that. But there are always opportunities to be the opposite.
Dunkin’ Donuts is affordable, fast and down-to-earth. A place without pretense, where hard working Americans feel appreciated. I believe that some of that is coming across in the new campaign, but it’s not strong enough. They need to hammer the idea that Starbucks is the enemy. To truly succeed, they need to focus on “fast.”
Forget about “affordable.” People already know that. Furthermore, affordable is not a benefit. It tells consumers that Dunkin’ Donuts coffee is not as good as Starbucks coffee.
“Fast” has another benefit. It tells consumers their time is valuable. It especially appeals to the upscale crowd who typically head for Starbucks.
Having to wait at Starbucks is probably the consumers’ No. 1 complaint, with cost right behind it. Going after speed is going to require getting rid of menu items. And unless they nail speed, they will never beat Starbucks. Consumers are willing to wait in a Starbucks, not in a Dunkin’ Donuts.
Dunkin’ Donuts can use the same strategy that made Miller beer famous many years ago. At 5:00 pm, after a long, hard day on the job, it’s Miller Time.
What Miller did in for the evening, Dunkin’ Donuts can do for the morning. Make Dunkin’ Donuts your first stop. Your quick stop.
It’s Dunkin’ Donuts’ Time. The place to stop for busy Americans who don’t have the time (or money) to waste at Starbucks.
* Also check out what John Moore has to say over at Brand Autopsy on April 8th, he is right on. Dunkin’ Donuts need to accentuate the hate. Starbucks is the enemy and the brand differences need to be exaggerated, making Dunkin’ Donuts more like Starbucks is totally the wrong direction to go in.