Dunkin’ Donuts Wants To Be Consumers’ Only Choice

Feb 05, 2004

By George Anderson

Dunkin’ Donuts chief executive, John Luther, told Reuters in a recent interview he wants everyone to drink his company’s coffee and he expects that will be the case in
the near future.

“My view is that in five years, if you are making a choice for coffee, there should only be two choices and we had better be one of them,” he said.

Dunkin’ Donuts has stepped up its bid to narrow the list of shops consumers consider when they’re looking for a java fix by rolling out a new line of espresso drinks and supporting
it with a massive marketing campaign in a category, coffee foodservice, that is not usually promoted so heavily in the mass media.

Mr. Luther said, “We’re really the only company, believe it or not, that is advertising, on this basis, lattes and cappuccinos. Others do print and some TV for their other specialty
drinks but nobody is really advertising on a national basis lattes and cappuccinos.”

Dunkin’ Donuts is pricing its espresso beverages at 20 percent lower than the competition.

Starbucks, at least publicly, does not seem overly concerned about Dunkin’ Donuts’ adventure into latte land. The world’s largest coffee shop chain believes its emphasis on the
experience is a key differentiator to competitors such as Dunkin’ Donuts.

Moderator’s Comment: Where do you think taste, price, experience and other variables
rank in consumers’ decision where to buy coffee? Are the major coffee shop businesses such as Starbucks and Dunkin’ Donuts vulnerable to competition based on the purchasing decision
hierarchy of consumers?

Our research is strictly anecdotal but Dunkin’ Donuts’ new line of espresso drinks appears to be a hit in our little piece of New Jersey.

Many consumers, primarily women by our eyeballs, are ordering the espresso drinks as well as Dunkin’ Donuts’ Chai beverage. We’ve even had a couple of customers
volunteer they prefer Dunkin’ Donuts’ latte to Starbucks’.

It may be in many parts of the country, the Dunkin’ Donuts and Starbucks customers form distinctly different demographics. Here, however, it is common to
hear quality comparisons between the two chain’s beverages. Price and experience rarely come up.
Anderson – Moderator

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