Battle of the Beans: Starbucks vs. Dunkin Donuts

Starbucks and Dunkin Donuts are the two largest food chains in the US that specialize in coffee. Although the companies have similar menus and marketing strategies, their business models differ in key areas relating to scale, branding, and store ownership. As you might have guessed, Starbucks is the more popular and more successful of the two, despite opening 20 years after Dunkin. In 2014 Starbucks earned $16.4 billion in revenue, while Dunkin had just $749 million. These numbers are not just because the coffee is awesome, but because Starbucks has about twice as many stores as Dunkin, due to their aggressive expansion in the early-mid 2000's. 

One key reason attributing to the success of Starbucks is that they expanded more extensively beyond the US. They currently have over 10,000 stores divided between 65 different counties. Dunkin also has some international presence, but most of these locations are Baskin Robbins ice cream stores (a Dunkin' Brand) rather than Dunkin Donut stores. 

Another key factor that differs the brands is how they franchise. Almost all of Dunkin locations are franchises while just 47% of Starbucks are. This simple fact tells us a lot about the coffee industry, which is that customers like consistency with their brand. Franchises can be a great way for companies to grow their business, however that comes at a cost. Consistency is key, and Dunkin's consistency is far from perfect. From my own personal experience, Dunkin employees are not as nice as Starbuck's (probably because of the franchise owner is not wanting to pay extra on pay roll even if their store suffers because of it) and I’ve had the same order, drink and food, come out very different at different locations. To me, this makes me feel as though the franchise owners don’t care about the quality of their products, which leads me to my next key difference between the brands which I will discuss in my next blog: quality. 

Nike

This week I'm taking a look at what makes Nike such an iconic brand. Nike is one of the biggest brands in both women and men's athletic clothing. They make shoes, sports gear, professional gear, everyday wear, accessories, glasses, exercise equipment, and the list goes on and on. But why do people buy into this brand so much? And what could their marketing team be doing so well that they continue to grow indefinitely?

 A huge part of it is their use of name association, (in other words, they like to name drop. ALL THE TIME.) They decide what and who is "in" by sponsoring certain teams and individual athletes. Nike is seen to be the top dog in the sports industry, so much so that people associate the brand with how good or successful the athlete wearing it is. 

Not long after the brand's conception, Nike started seeking athlete endorsements. They hesitantly signed NBA rookie, Michael Jordan unbeknownst to them that they set themselves up for market domination. At this point in time, Nike was only making sports shoes, and they promised Michael Jordan his own line, which became one of their biggest revenue drivers. 

Another great move Nike made in the beginning was with their slogan. In 1988, Wieden + Kennedy came up with “Just Do It” which is still used today, more than two decades later.In the ‘90s, Nike showed up in the sports apparel market by designing the uniforms for the World Cup winning Brazilian National soccer team.  In the late ‘90s, Nike rolled out their famous, “If you let me play” campaign which targeted women athletes. 

Nike’s commercials were a mix of everyday looking people, and professional athletes, which is a clever marketing tactic that they still use today. In ’96, Nike signed a contract to sponsor Tiger Woods, an unknown young golfer, much like Michael Jordan in the sense that as his popularity grew, so did the brands. Nike's use of athlete endorsements has really sprung them into success, from the beginning to now, everyone knows who wears Nike.

Coca Cola Brand

The Coca-Cola brand began in 1886 when an Atlanta pharmacist named Dr. John S. Pemberton discovered that he could create a distinctive tasting soft drink that he could sell at soda fountains. He first created a flavored syrup and mixed it with carbonated water, and voila! Coke was born.

After Pemberton got the flavor perfected, he turned to his partner who was a bookkeeper, Frank M. Robinson, who created the famous Coca-Cola trademark which is seen and noticed all around the world today.

During the first year, sales averaged a very modest nine servings per day. Today, the daily serving of Coca-Cola beverages are estimated to be around 1.9 billion around the world.

As Pemberton grew older, he sold portions of his business to several other parties. One person, he sold to in particular turned out to be a huge help for the stagnant company. Asa G. Chandler, a Georgia businessman took the brand and expanded beyond soda fountains to bottles. This was the very first bottled soda in the world. As the demand for Coke started to grow, the owners noticed that the distinctive beverage needed a distinctive bottle. They agreed on the classic contoured Coca-Cola bottle which they had trademarked in 1977.

The first marketing the company did was executed through coupons which promoted free samples. This was an excellent way to get the name out, and the owners believed that once the consumer tasted the product, they would be hooked.

In 1970, Coca-Cola's advertising method switched and is consistent with their method today. The brand made the move of connecting the product with fun, friends, and good times. Through the years, several slogans came out of this underline happy theme, such as, "I'd like to buy the world a coke," and "Have a coke and a smile."

The most recent branding change for Coke was in 2009, when they rolled out the "Open happiness" campaign. This was seen in stores, billboards, tv and print ads, and just about anything else you can think of, and was rolled out globally. This has been their most successful campaign to date because it is simple, memorable, and can be translated correctly in all languages.

Victorian Era Advertising

In Europe during the 1700’s, when the government realized that ads weren’t going anywhere, they realized that there was a hugely profitable opportunity. By forcing taxes on the ads, they could not only make money off of them, but it also helped them to regulate goods and services.

Surprisingly, this did not deter any businesses from making ads, and instead, the industry kept growing.  In fact, by the early 1700's between 25-75% of newspapers were made up of advertisements. This is really when the advertising industry exploded. The increase in need for ads caused an increase in ad agencies, and they started popping up left and right. This of course led to agencies lowering their prices to be competitive, which allowed even more shop owners to be able to afford these previously expensive ad spaces. When the 1800’s arrived, ads began to spread to other mediums, not just newspapers and into more creative methods. During the Victorian Era, one of the most popular of these mediums were ads on trading cards. These trading cards were similar to modern day flyers, only smaller.  These ads were given by merchants to pedestrians, who often collected and kept them in scrapbooks (due to the fascination of newly printed color ads.) The cards typically had a visual on the front along with the details of the service or good on the back.