FNU Principles of Marketing Dunkin Donuts and Starbucks Pricing Strategy Discussion

Dunkin’ Donuts is rapidly expanding into a national coffee powerhouse on par with Starbucks, the nation’s largest coffee chain. Its research has confirmed a simple fact: Dunkin’ is not Starbucks. To succeed, Dunkin’ must have its own clear vision of just which customers it wants to serve and how to serve them. Dunkin’ and Starbucks target very different customers, who want very different things. Dunkin’ Donuts built itself on serving simple fare at a reasonable price to working-class customers. To broaden its appeal and fuel expansion, the chain has recently been spiffing up its stores and adding new menu items. However, as it inches upscale, Dunkin’ Donuts is being careful not to alienate its traditional customer base. Dunkin’ Donuts’ research has shown that although loyal customers want nicer stores, they are bewildered and turned off by the atmosphere at Starbucks. And they can’t understand why anyone would pay so much for a cup of coffee. The Starbucks customers that Dunkin’ studied were equally uneasy in Dunkin’ shops. In refreshing its positioning, Dunkin’ Donuts has stayed true to the needs and preferences of the Dunkin’ tribe. Dunkin’ Donuts’ positioning and value proposition are pretty well summed up in its popular ad slogan “America Runs on Dunkin’.”

Questions

1.Consider yourself as a coffee and pastry consumer. Do you think you fall into the Dunkin’ Tribe or the Starbucks’ Tribe? Explain.

2. Recall the slogan, “America Runs on Dunkin’.” What does it mean, and how is it central to Dunkin’s segmentation strategy?

3. Visit the websites of Dunkin Donuts and Starbucks – What are each website’s strong points and which are its weak points. Which website you prefer and why?

ANSWER THE QUESTIONS BY WRITING AT LEAST 2 PAGES USING APA 7 FORMAT (Excluding the references page).