It's hard to discuss these two marketers' approaches to coffee without pondering Starbucks' year. The Seattle-based company has just about single-handedly democratized specialty coffees in the U.S. market since it went public in the early 1990s. Of late, however, the company has experienced Venti-size issues with investors, citing a loss of focus, overexpansion and the recession as contributing to its woes. Starbucks saw a 3% decline in same-store sales and a 53% profit drop in fiscal 2008. It also sought to close down unprofitable stores at the end of a transition year, in which former CEO Howard Schultz took back the reins of the company.
Starbucks, long admired by many for building its brand with only a passing interest in traditional advertising, faced a wave of activity last year from two very well-drilled media marketers in Dunkin' Donuts and McDonald's, which were looking to gain ground in this high-margin business.
Dunkin' Donuts is not new to coffee, having served cappuccinos and lattes since 2003. Despite its name, it earns 65% of its revenue from beverages. Its strong national media push in 2008 directly targeted Starbucks in a high-profile comparative ad campaign that included a blind taste test reminiscent of the Pepsi/Coke wars.
Not to be outdone, McDonald's aggressively promoted its own coffee as a value proposition; increased the availability of coffee facilities across its nationwide restaurant network; launched new products such as iced coffee and sweet tea; and rolled out a regional program to support openings of its branded McCafes.
So how did their media campaigns compare?