Marketing Coffee Shop Analysis Essay Example

build and maintain a loyal customer base, including having consistent store hours across all locations.

Intelligentsia should consider increasing their advertising efforts, particularly for their gift cards, in order to promote their brand and minimize expenses. To subtly promote their company, Intelligentsia could leverage word of mouth marketing. In contrast, Starbucks offers customers high-quality specialty beverages and encourages them to unwind and savor their drinks in their coffee shops. Although Starbucks is commonly recognized as the dominant coffee retailer, they only provide one brewed option, which is the Pike's Place blend. To cater to a broader range of coffee enthusiasts, Starbucks should diversify their daily brewed coffee options. Introducing a rotating "coffee of the week" selection would be an effective approach to achieve this.

As part of the "Go Green" movement, Starbucks should launch a marketing campaign emphasizing the environmental advantages of using their travel tumblers and ceramic mugs when enjoying their beverage in-store. Additionally, to attract new customers, they could have special promotional events where they sell apparel and accessories, which would provide a form of cost-free advertising for the company.

By observing the practices of all three retailers, they can learn from each other and attract new customers and increase profitability by implementing the same techniques as their rivals. We have gathered primary and secondary data, analyzed our observations, and provided recommendations on how competing coffee retailers can enhance their image, marketing mix, and human resources to become more profitable in the coffee industry. Introduction to Industries pic] History Dunkin' Donuts was established in 1950 by William Rosenberg in Quincy, Massachusetts. Today, it is a subsidiary of Dunkin' Brands, Inc., which is owned by private equity

companies including Bain Capital, The Carlyle Group, and Thomas H.

Lee Partners. Dunkin’ Donuts is recognized as the world’s largest chain for coffee and baked goods, serving in excess of three million customers each day. Dunkin’ Donuts offers a wide assortment of 52 different types of donuts, complemented by over a dozen coffee beverages, a selection of bagels, breakfast sandwiches and flatbreads, plus various other baked goods. According to the company’s year-end figures for 2008, the integrated stores, Dunkin’ Donuts and Baskin Robins, are entirely franchised, resulting in a collective presence of 14,848 locations across 44 countries worldwide. This includes a total of 9,087 stores situated within the U.S.

S. Dunkin’ Brands achieved total global system-wide sales of $6.9 billion in 2008, with over 8,300 locations in 30 countries and more than 6,000 stores in the U.S. Their goal is to exceed customer expectations and deliver a superior quick service experience through their brands. They are dedicated to offering excellent menu items for customers to eat, drink, and enjoy.

Intelligentsia Coffee was founded in October 1995 by Doug Zell, Emily Mange, and Geoff Watts with the objective of procuring, roasting, and serving the best coffees available. The company obtains its coffee from trustworthy importers and growers across the globe, placing a strong emphasis on quality to ensure customers enjoy a truly fresh and flavorful cup. To accomplish this, Intelligentsia strives to collaborate with environmentally and socially conscious growers and exporters. Their vintage German roasters are utilized daily to roast their coffee.

Mission Statement: Our philosophy is to treat people and the environment with compassion, as we believe it leads to better quality.

History: Starbucks Coffee Company was initially founded as

Starbucks Coffee, Tea and Spices in Seattle's Pike Place Market by Howard Schultz in 1971. After a trip to Italy, Schultz was inspired by the prosperous espresso bars in Milan and introduced the concept back to Seattle. By 1987, Starbucks had grown its presence to several major cities including Chicago and Vancouver. Throughout time, Starbucks has established multiple agreements, relationships, and partnerships with various other companies.

Howard Schultz is the current chairman and CEO of Starbucks, a company that provides an extensive range of products. These offerings consist of over 30 blends and single-origin coffees, handcrafted beverages, espresso machines, coffee brewers and grinders, premium chocolate line coffee mugs and accessories, fresh food, and entertainment. Starbucks has a robust presence nationwide in all 50 states as well as the District of Columbia. They manage a total of 7,087 company-operated stores and 4,081 licensed stores. Moreover, Starbucks operates in 43 countries around the world.

Mission Statement: Our objective is to establish Starbucks as the primary supplier of extraordinary coffee globally, all the while maintaining our fundamental principles during our growth.

Mission Statement Analysis: Dunkin' Donuts concentrates on delivering convenience to customers, especially those with hectic schedules like parents, professionals, and students. They set themselves apart through their unique coffee blends. On the other hand, Intelligentsia prioritizes treating others with respect and empathy, believing it to be the optimal approach in conducting their business.

Both Intelligentsia and Starbucks value employee happiness, recognizing its positive impact on dedication and commitment. Additionally, both companies prioritize obtaining high-quality products while maintaining an environmentally friendly approach to ensure customer satisfaction. Starbucks also strives to provide exceptional coffee sourced from diverse regions and companies that align with

their principles.

Dunkin Donuts, Intelligentsia, and Starbucks each have their own unique focus. Dunkin Donuts prioritizes customer satisfaction, while Intelligentsia values the quality of its products and the well-being of its employees. Meanwhile, Starbucks places a strong emphasis on its product offerings. However, all three companies share the common goal of meeting consumer needs and desires through their service and products.

When it comes to marketing mix strategy, Dunkin Donuts stands out by offering a diverse range of food and beverages beyond breakfast and coffee. Their menu resembles that of a fast food chain with an extensive selection of hot drinks such as various coffee flavors, Dunkachinos, lattes, espresso, hot chocolate, and hot tea. They also provide cold options like fruit Coolattas, smoothies, iced coffee,lattes , iced tea,and turbo coffees.All these items are customized for customers upon order.

Dunkin’ Donuts stands out from other coffee shops, like Intelligentsia, due to its extensive selection of beverages and food options. With over thirty beverage choices, primarily for on-the-go customers, Dunkin’ Donuts offers a wide range of options. For breakfast, they have 20 different sandwiches with various ingredients available. They have also introduced a new egg white flatbread sandwich for health-conscious individuals. In addition to sandwiches, they offer omelet breakfasts and personal-sized pizzas. Customers can opt to enjoy their breakfast sandwiches with hash browns and coffee in a format similar to a fast food value meal. Overall, Dunkin’ Donuts provides an inclusive menu featuring their main entrees such as the new egg white flatbread sandwiches, omelet breakfasts, and personal-sized pizzas.

Dunkin' Donuts offers a wide variety of breakfast options such as donuts, muffins, bagels, coffee rolls, croissants, cookies, and munchkin donuts. They

also have a range of coffee flavors like blueberry, caramel, chocolate, cinnamon, coconut,French vanilla,hazelnut,raspberry,toasted almond,and turbo hot. In addition to that,
they provide Fruit Coolatta choices including lemonade,strawberry fruit,and Tropicana Orange. Customers can choose from different breakfast sandwiches and egg white flatbread sandwiches with veggies or turkey. They also serve personal pizzas with options like cheese ,sausage ,pepperoni ,veggie ,and supreme. Alongside these items found at the counter,Dunkin' Donuts has a refrigerated ready-to-drink case featuring Pepsi products,Tropicana orange juices,and milk. However,during our visit to the Michigan Avenue location,the store did not have bottled milk which resulted in an unsatisfied customer who left.As for product displays both Dunkin'Donuts locations we visited showcased their bagged coffee selection.The displays varied ,with one location using a stand and the other using a shelving unit.

Intelligentsia, a coffee shop located on Michigan Avenue, stands out by its commitment to using organic and natural ingredients. The shelves of the shop are empty, as there are no bags of coffee beans displayed. Instead, Intelligentsia presents their coffee menus in smaller picture frames. Unlike Dunkin’ Donuts and Starbucks, Intelligentsia offers a limited selection of thirteen classic drinks. The menu assures customers not to worry about the small size of the options available; it is designed to help them make a decision. The variety at Intelligentsia includes espresso, macchiato, con panna, cappuccino, latte, mocha, Americano, brewed coffee, chemex for two people, hot chocolate, seedling cider, and their house chai. Customers can also customize their drink by choosing the size (small medium or large) and whether they want it served from an urn or in a cup.

Intelligentsia focuses primarily on serving high-quality and enjoyable beverages that are

not complicated by numerous ingredients. Along with coffee and tea, Intelligentsia also provides paninis and light pastries, although the specific options may vary depending on the location. These delicious treats, such as pastries, cupcakes, and banana bread, are displayed in a glass pastry case near the cashier. Interestingly enough, they are not listed on the menu to uphold Intelligentsia's reputation as a specialty coffee and tea shop.

In terms of variety, Intelligentsia takes pride in serving their drinks without any additional flavors or "shots." They are well-known for selling freshly bagged seasonal coffee sourced from different regions around the world. Additionally, Intelligentsia offers a chilled ready-to-drink display featuring Odwalla juices.

Regarding product displays, the Jackson location of Intelligentsia has smaller displays compared to the Randolph branch. However, both locations offer items like mugs, organic clover tea, and even chocolates for purchase.

The Randolph location offers a variety of products including coffee presses, coffee makers, tea sets, organic clover tea, mugs, and tumblers. Starbucks is well-known for its ubiquitous presence and extensive selection of coffee flavors and types. Their diverse menu consists of specialty drinks like Vivannos, Caffes, Frappuccinos, Cappuccinos, Tazo Teas, Macchiatos, Espresso, White Chocolate Mochas, hot chocolate, Shaken Iced Tea Lemonade, and seasonal beverages. Apart from beverages, Starbucks also serves light food options such as the standard sausage-egg-cheddar breakfast sandwich,
praline muffin,
cinnamon coffee cake,
bagels,
chewy fruit and nut bar,
apple bran muffins,
and Starbucks classic coffee cake.
However,
the availability of these food choices may vary by store.

When comparing food options, Starbucks has the fewest compared to Intelligentsia and Dunkin' Donuts. However, Starbucks is well-known for their coffee. They have a wide variety of Frappuccinos including flavors like caramel, coffee, double chocolaty chip,

java chip, mocha, strawberry and creme blended creme, Tazo green tea blended creme, and vanilla bean blended creme.

• Starbucks offers a specialty tea brand called Tazo. Some options include Tazo hot tea, Tazo iced tea ,Tazo joy tea,Tazo green tea latte,and Tazo green tea blended creme frappuccino.
• In addition to coffee and tea choices, Starbucks also provides European-style coffees called Caffe options with stronger flavoring.Examples include Americano,
  Latte,
  and Misto.

In terms of pre-packaged items in a refrigerated case at Starbucks you can find Ethos water bottles,
Naked juices,
San Pellegrino,
bottled Frappuccinos,
Starbucks canned Double Shots,
Horizon Organic milk,Tazo bottled Teas
juice boxes ,
a fruit and cheese platter
protein platter
and bananas.

Starbucks displays show a wide range of products and merchandise.On average there are three to four different displays at each store with one dedicated to showcasing their bagged coffee selection.The most popular display currently is the VIA Instant Coffee packets.

At the Taylor Street Starbucks, there were 3 distinct displays and two window decals that promote their new product. Both Starbucks branches showcased their “Green” tumblers, showing Starbucks' commitment to environmental sustainability and diminishing paper waste. Customers who buy and use the tumbler will eliminate the need for a paper cup and receive a 10 cent discount on every coffee purchase. The display shelves hold glass mugs, coffee presses, and cups, all featuring the Starbucks logo. Furthermore, customers can conveniently purchase showcased CDs near the cash register.

The coffee industry has experienced intense competition in both price and quality. Below is a chart of prices at observed locations. Dunkin’ Donuts pic]Dunkin’ Donuts is renowned as the preferred on-the-go coffee stop.

Prices at Dunkin’ Donuts reflect the quick service industry, as each store produces large quantities of coffee at once to maintain low prices. A medium-sized cup of coffee costs $1.

Dunkin' Donuts offers a competitive rate of 65 in comparison to other coffee shops. The use of machinery enables them to keep the prices of their specialty drinks low, even compared to high-end coffee spots. While many people consider Dunkin' Donuts' brewed coffee to be the best tasting, their specialty drinks are prepared with artificial machines instead of an espresso machine.

Therefore, in order to keep their prices competitive, the restaurant offers breakfast combos throughout the day, reflecting the fast food quality and prices. Unlike any other coffee shop, their combos allow them to sell more items by bundling them together, making it cheaper for their customers. For instance, a customer only pays $2.99 for a #1 (two donuts with coffee), as opposed to paying $3.

Dunkin' Donuts is appealing to customers due to its cost saving aspect, as it sells each item separately for $3. On the other hand, Intelligentsia, the premier Chicago coffee and tea shop, offers its own distinct brand of coffee and tea blends. Renowned for its high quality and trendiness, the shop serves custom-made and hand-crafted drinks. While Intelligentsia's urn coffee is available for only $1.

Intelligentsia specializes in crafting customized, single-cup coffees for their customers. They offer a selection of beans and sizes to choose from and employ top-of-the-line machines that produce premium quality brews. The pricing for these bespoke beverages starts at $3 and increases accordingly. For their espresso drinks and hot chocolate, Intelligentsia uses high-quality, natural ingredients, making their costs

slightly higher compared to fast-paced shops like Dunkin' Donuts. Additionally, all of the pastry items available at Intelligentsia are made using natural or organic ingredients.

By using pricier ingredients, Intelligentsia charges a higher price for their pastries. For instance, their coffee cake is more costly compared to Starbucks'. However, some patrons argue that the expense is justified by the superior quality. Although Starbucks is the most renowned coffee chain, they do not offer competitive prices. In fact, they are the most expensive among all the coffee shops we examined. Numerous customers have noted that the high cost does not match the quality. [pic]

Starbucks dominates the market by charging $1.85 for a cup of brewed coffee and using its popularity to sell high-priced coffee and food products. The Starbucks logo represents prestige and creates a sense of belonging among its customers. In contrast, Dunkin' Donuts locations are typically found on street corners, although there are exceptions where stores are situated within blocks or co-located with a Baskin Robbins.

Among the Dunkin’ Donuts locations we examined, we observed that the South Michigan store was not very busy during our observations, while the Jackson store was moderately busy. Dunkin’ Donuts has stores not only in cities, but also in smaller towns with fewer residents. In general, these locations are strategically positioned to serve customers across all markets, from bustling areas to less busy ones. Some stores specifically cater to high foot traffic generated by shopping stores and centers.

Dunkin' Donuts strategically places its stores in convenient locations for business people and those traveling for work. They even have stores in emerging areas. Customers can conveniently purchase various coffee blends,

tea, merchandise, equipment, and gift cards through Dunkin' Donuts' online store. Orders can also be made over the phone or directly at their physical stores. Intelligentsia [pic]Intelligentsia locations are often found in the middle of city blocks.

Both researched locations are situated within the same block, making them not easily noticeable from a distance. These four retail locations are exclusively found in major cities, with Chicago boasting three stores and Los Angeles housing one. Intelligentsia offers a wide selection of coffees, teas, brewers, grinders, merchandise, and other products, all accessible for online purchase or in-store visitation.

The type of customer who visits the Intelligentsia stores is determined by their location. The store on Randolph between Wabash and Michigan is near restaurants and shopping on State Street, attracting customers seeking a relaxing experience. On the other hand, the Jackson location, surrounded by business establishments, attracts individuals from those businesses and is only open during business hours.

During the day, this location is bustling with business people. Starbucks locations are typically found on corner lots at intersections, and can also be found within stores, grocery stores, and malls. For instance, Macy's on State Street houses three Starbucks locations and Dominick's has one.

The Starbucks stores are present in 43 countries worldwide, including locations outside the U.S. Customers can buy coffee, tea, brewing equipment, and other items online. Additionally, coffee packages are available for purchase at Starbucks stores and select locations. Starbucks caters to both customers looking for a relaxed atmosphere and business individuals seeking to-go orders at all its locations.

Starbucks stores are expanding their presence, reaching not just larger cities but also smaller ones. Meanwhile, Dunkin' Donuts is running a

comprehensive promotional campaign at a national level. Their efforts include leveraging celebrity endorsements, a memorable tagline, coupons, and a recently launched healthy food line. Celebrity chef Rachel Ray has joined forces with Dunkin' Donuts as their spokesperson. In their commercial, she demonstrates how she seamlessly incorporates an iced coffee into her jam-packed schedule.

Despite her busy schedule, she manages to make time for a Dunkin’ Donuts drink. The company's commercials, centered around the slogan "America Runs on Dunkin," have been incredibly successful. They actively promote their products through coupon campaigns in various areas, distributing coupons in local newspapers and advertising through direct mail. Additionally, they place print ads in numerous popular publications and engage in outdoor advertising on billboards and sidewalk decals. On the other hand, Intelligentsia has a more modest promotional approach.

They primarily use mainstream press and a customer blog forum on their website to generate buzz. Nevertheless, their word-of-mouth advertising is effective as they have received recognition in prominent newspapers and magazines such as Forbes, Chicago Sun Times, Crain's Chicago Business, and New York Times. Doug Zell, the owner and founder, even appeared in a commercial for American Express which displayed his name and the company.

Having one of their baristas win the United States Barista Competition greatly increased the brand's exposure, leading to more newspaper stories. However, as an exclusive coffee shop that is not in the mainstream spotlight, their promotional campaign is limited. It is important to note that Starbucks is the most recognized brand in the coffee industry.

Starbucks is the leading choice for coffee enthusiasts, boasting a greater number of locations than any other coffee retailers. Their brand has experienced rapid and

impressive growth, leading to widespread media coverage and various controversies. This rapid expansion has overshadowed other coffee chains, resulting in a negative perception of Starbucks. Nevertheless, they continue to market their in-store products, such as bottled Frappuccinos and Doubleshots, through captivating commercials that feature catchy jingles set to popular songs like “Eye of the Tiger” and “Hey.” Additionally, Starbucks offers extensive seasonal promotions.

During the holiday season, they offer coupons for holiday beverages, as well as for their summer and fall phases. They have also implemented various programs, such as the treat receipt, which allows customers to bring their morning receipt back after 2 p.m. and purchase a drink for only $2.00.

Starbucks utilizes various promotional strategies such as placing coupons in local papers, as well as implementing print, billboard, and special event promotions. In addition, the company has joined the (Product)red campaign, which aims to eradicate AIDS in Africa. Moreover, they have introduced a new website, http://news.starbucks.com, which offers press and social responsibility information about the company to the public.

Customer Interview

Questions

1. About how many times a week or month do you frequent (Dunkin’ Donuts, Intelligentsia, or Starbucks depending on location)?
2. Do you prefer (Dunkin’ Donuts, Intelligentsia, or Starbucks depending on location) to any other brand of coffee? If so, why? (Because of price, taste, quality? )
3. Do you purchase food items with your beverage? Why or Why not?
4. What did you purchase today?

Do you always purchase this item?

Customers of Dunkin’ Donuts have the largest number of people who buy their coffee and leave the premises. The Dunkin’ Donuts locations had few, if any, customers sitting and enjoying their beverage and/or food item in the store. The Dunkin’ Donuts located on Michigan Avenue does not provide seating for customers, while the location on Jackson had a bar with five stools. Neither location encourages an atmosphere for working or socializing with friends for extended periods of time, which likely explains their fast, time-conscious customer base.

Many customers of different demographics walked in, knew what they wanted, and walked out; these demographics varied from mid-twenties to mid-sixties, lower to middle income, including blue and white collar workers, and an even mix of males and females. The wide range in age contributes to the perception that Dunkin’ Donuts is the least trendy among the three coffee companies. The simple act of ordering a medium, plain black coffee is appealing to their loyal customer base.

Furthermore, Dunkin' Donuts stands out among the three coffee companies due to its affordable prices. The idea of getting more coffee for less money is also appealing to their customer base. Moreover, Dunkin' Donuts customers have a strong inclination towards the taste and quality of their coffee. In fact, all the surveyed customers agreed that they did not find the bitterness of coffee from other chains to be appetizing or enjoyable.

Dunkin’ Donuts, an unpretentious and quintessential American coffee company, will continue to attract devoted customers for the foreseeable future. A noteworthy customer revealed her practice of purchasing Dunkin’ Donuts coffee and preparing it at home every morning. Additionally, this loyal customer frequents Dunkin’

Donuts multiple times a month and consistently buys food items alongside her beverage. This scenario is highly advantageous for Dunkin’ Donuts as it allows them to expand their customer base and revenue by selling coffee beans, while also retaining their existing customers in their physical stores.

One customer who visits Dunkin' Donuts once or twice a week used to order food alongside his coffee, but he stopped doing so because he is concerned about his health. While Dunkin' Donuts has made efforts to improve the healthiness of their food offerings, this remains an ongoing problem. People desire both satisfying and nutritious options at an affordable cost. Given the current state of the economy, Dunkin' Donuts needs to promote their food items along with beverage purchases even more.

Based on our research, approximately half of the customers purchased food items, while the other half did not. This implies that there is potential to generate additional profit by introducing the right product at the right price, offering lower prices overall, or enhancing the flexibility of combo meals. Regarding customer visits, some came in as frequently as five times a week, while others only visited a few times a month. Interestingly, those who visited less frequently showed a strong preference for Dunkin' Donuts over its competitors.

They are an excellent market for Dunkin’ Donuts to target as they are loyal followers of the brand, but may need some extra incentive such as a price drop or a loyalty card that offers a free drink after a certain number of purchases. The customer base for Intelligentsia, a coffee company, varied between the locations we visited. At the Randolph location, the atmosphere is

more low-key with primarily solo customers quietly working on computers. On the other hand, the Jackson location is filled with corporate executives, often in pairs or small groups, grabbing a quick cup of coffee and discussing business. Both groups of customers are generally in their mid-twenties to mid-forties, which is slightly younger than the customer base of Dunkin’ Donuts. This difference is understandable considering that Intelligentsia is the trendiest company out of the three that were researched.

The coffee shop creates a contemporary atmosphere, inspired by European coffee bars, particularly Italy. The clientele mirrors this ambiance, consisting of fashionable individuals and accomplished professionals who are well-connected. On every visit to both locations, we observed a consistently bustling environment with every table occupied. Customers can be seen sitting down, engaging in various activities such as working or leisurely using their laptops, reading books, or conversing with friends or colleagues.

There are customers who also come in and take their beverage and (or) food item to-go, either individually or with someone else. Several times, particularly at the Intelligentsia on Randolph a few customers walked past, looked back, turned around, and came in. The fact that this location is located nearly a block away from one end of Millennium Park and nearby more retail shopping areas opposed to the business area that the Jackson location plays a part in the atmosphere. The Intelligentsia on Jackson seemed to be more of a destination type of store where people went to conduct informal business meetings. From the customers that were interviewed, they too, just like Dunkin’ Donuts customers, view Intelligentsia coffee above the rest. It was mentioned by several customers they prefer

the rich, dark roasted, almost European type of coffee without the bitter taste.

Customers at Intelligentsia seemed to visit the coffee shop more frequently than those at Dunkin’ Donuts. Several went once or twice a week, while many visited a couple times a month. Unlike Dunkin’ Donuts customers, Intelligentsia customers were predominantly white-collar individuals from middle to upper income classes, which explains their frequent visits. Moreover, a larger number of Intelligentsia customers were seen purchasing food items or pastries along with their beverages. This could be due in part to the fact that all of Intelligentsia’s food items are organic, making them more appealing to health-conscious individuals. Additionally, the comfortable seating arrangement encouraged customers to indulge in a cup of coffee and a treat.

Starbucks and Intelligentsia have a similar customer base, consisting of white-collar, middle to upper level income individuals. However, Starbucks has a wider age range, attracting customers from their twenties to the upper sixties or seventies. Similar to Intelligentsia, Starbucks' tables were always occupied during each visit. Customers at Starbucks engage in various activities such as working, reading, or socializing with friends. In comparison to Intelligentsia, Starbucks appears to have a greater number of customers visiting in pairs.