All That Advertising Brings Buzz for Coffee Marketers

CHICAGO (AdAge.com) -- The coffee wars generated a flurry of advertising in May. McDonald's launched its first McCafe blitz, Dunkin' Donuts made its first concerted doughnut push in more than a decade and Starbucks began its first pure branding campaign. While it's too soon to say what the impact on sales has been, all three marketers saw a major uptick in buzz, as measured by Brand Index.
Dunkin' led McDonald's and Starbucks in buzz and value perception. Brand Index, which tracks more than 1,000 brands by conducting 5,000 daily interviews from a panel of 1.5 million consumers, monitors key brand attributes, including buzz, value perception, quality ratings and customer satisfaction to compile its index (which has a range of -100 to 100).
Dunkin' began May with a 24, peaked at 33 mid-month and settled at about 32 this week. McDonald's started with a 15, peaked around 24 and had dropped off to 16 by June 9. Starbucks' campaign, which has been confined to newspapers and select outdoor markets in its initial phases, has been more cyclical. The company began May with a score of 1, shot up to 11 within a week and plummeted again. In the past week, the chain's buzz has shot up to double digits again.
Those numbers may seem low, but ratings vary dramatically by category. Within the fast-food sector, a good buzz rating is considered to be anything above 10. Ratings closer to zero mean consumers have heard an even number of positive and negative things about a brand.
"Over the last few weeks, Starbucks has generated buzz through a variety of channels, including our national 'Coffee value and values' campaign hitting its stride, beginning our sponsorship with 'Morning Joe' on MSNBC and being named No. 1 best coffee by the Zagat survey," Starbucks' senior VP-marketing, Terry Davenport, said in a statement. He added that the retailer's online activity, including using Facebook and Twitter to tout its efforts, has also built excitement among baristas in its stores.
Dunkin' did not immediately respond to a request for comment.
McDonald's spokeswoman Danya Proud said the burger chain has been "extremely pleased" with the results of its coffee push. In particular, she said, the chain's "McCafé Your Day" online competition with Visa has gotten more than 10,000 entries. That response rate makes it "by far the most successful online sweepstakes in the company's history," Ms. Proud said.
Starbucks tries 'a different tack'But all three companies got a pretty strong jump in buzz, said Ted Marzilli, global managing director at Brand Index. Starbucks' jump, he said, had the "highest magnitude," especially because it was coming from about zero. He said Starbucks should be heartened that it not only made a splash when its competitors were outspending it but got a second spike in interest as McDonald's and Dunkin' were leveling off.
"They're probably going to be outgunned by McDonald's and Dunkin'," he said, noting that those brands spend more on advertising. "Starbucks is trying a different tack in last couple of months, getting people to think about bigger concepts. How expensive is a $3 latte when you think about other things like providing health care, working with farmers in areas where coffee is imported? That slightly different tack seems to be making a mark."
Mr. Marzilli said an increase in buzz can trigger shifts in other metrics, but not always. And as it stands, Starbucks is still struggling with its "value" perception, or whether consumers view the brand as giving them the most bang for their bucks. The chain has been hovering around -26, with a small spike last week that seems to have already corrected. McDonald's is just behind Dunkin' in value perception, around 25 to Dunkin's 26.
But when consumers want to treat themselves, all these numbers may go out the window. According to Brand Index, 43% of adults asked where they were most likely to purchase a "premium coffee drink" said Starbucks, 15% picked McDonald's, 11% sided with Dunkin' and 31% had no preference.
5 Comments

By Rodney33 FRISCO, TX June 12, 2009 01:13:18 am:
Grande Distribution.Distribution has been overlooked in the "coffee wars." But it shouldn't, here's why;Dunkin' Donuts has launched plans to grow beyond their core markets in the NE and Chicago.This aggressive roll out was timed well as Dunkin' Donuts not only has premium coffee at a value price, but also large metro distribution and a strong breakfast food menu enjoyed by many of the same demos as Starbucks and differentiated from McDonald's menu.Dunkin's expansion was designed to grow new markets into a truly national network with a very loyal customer base that follows Dunkin' in markets where it has substantial distribution. Dunkin' carefully aligned with blue chip franchisees with stellar credit and cash on hand. Dunkin' did a good job of lining up favorable financing for their best new partners, so that those partners wouldn't have to tie up a lot of their own personal cash into market build outs, to encourage more aggressive expansion goals.But Dunkin's expansion credit crumbled. Some of their important franchisee partners have gotten out their contracts and are in the process of selling the stores they developed, simply because they cannot operate in large metro markets without substantial scale, which has been slowed or halted by the credit crunch.That leaves in a national coffee war, Starbuck's and McDonald's with Dunkin' a strong regional player in many core markets and expansion on a more distant horizon.McDonald's sales have surged in the recession, Starbuck's have nosedived. McDonald's doesn't need to open new stores, they are the heavyweight champion of distribution, they've built out McCafe's in a good portion of their footprint and they aren't closing many if any existing stores.Starbuck's, who also had heavyweight distribution, has been closing stores, lowering their prices on their super premium coffee and reducing their already weak food offering.The retrench moves by Starbuck's and their inability or willingness to expand their menu beyond core coffee drinks means McDonald's is easily the Grande of all things coffee, no matter how you order it.If Dunkin' can get their expansion financing and partners in order, they've got a good run in front of them, for they have alternative morning foods McDonald's has never done well with on a national basis - Donuts and Wraps, all of which also trump Starbuck's current go-to-market strategy.Starbuck's best hope is to take calculated risks and not cut back on distribution or the price of their coffee, but instead work on their food menu to offer differentiated, value priced food, through their distribution channel. Procter and Gamble uses price brands to drive category traffic and premium brands to deliver margins. Starbuck's could use value priced food in the same way to drive more traffic and use premium priced coffee to deliver their margins.The French bistro model and heavy distribution served Starbuck's well. Why can't the value priced French bakery, with super premium coffee all driven by sizable distribution? Rodney Mason, CMOMoosylvaniaThe Great State Of Designhttp://www.moosylvania.com/www.twitter.com/rodmoosewww.twitter.com/moosylvania
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By Rodney33 FRISCO, TX June 12, 2009 01:21:51 am:
Starbucks - not Starbuck's
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By firekid San Francisco, CA June 12, 2009 03:03:31 pm:
lity is that there isn't much difference about walking into a Starbuck's versus a McDonald's or Dunkin Donuts these days. The above comments uniformly voice complaints about what was once (and should still be) Starbuck's Holy Grail: the experience. Walking into a Starbuck's used to be like crawling into a blissfully warm, coffee-scented Snuggie. Now it's like pulling over at an Appalachia truck stop. Fix the experience. Clean it up. Fact is Starbuck's got too big, too greedy. Their appeal was perceived as intimacy. Now there's a Starbuck's in every grocery store, gas station and lowest common denominator outlet out there. You can't sell "premium" out of the backseat of a Pinto. Would Louis Vuitton sell their bags at Wal-Mart? The bigger problem may be that the commoditization of coffee is unavoidable (uh, coffee IS a commodity by the way). The customer "base" is only a base if people have money in their pockets. In a market where almost 1 in 10 people is jobless, you can bet that premium coffee is on the short list of things to pass up. Bye bye base. Starbuck's has it rough—they want the perception of premium but they've developed the reputation of something much lower than that. Pitching against "low brow" competitors like McDonald's drops that perception even lower but what to do? Appealing to a premium minded base that has largely been dismantled by a floundering economy isn't going to magically make people decide that "premium" coffee is a top-priority. Take away: If there is so very much of something (16,000 stores), it can't possibly be that premium. It's going to be a hard sell this time around.
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By firekid San Francisco, CA June 12, 2009 03:04:29 pm:
Differentiating themselves from the competition based on qualities like healthcare and fair-trade doesn't seem like the wisest approach at this point for Starbuck's. The reality is that there isn't much difference about walking into a Starbuck's versus a McDonald's or Dunkin Donuts these days. The above comments uniformly voice complaints about what was once (and should still be) Starbuck's Holy Grail: the experience. Walking into a Starbuck's used to be like crawling into a blissfully warm, coffee-scented Snuggie. Now it's like pulling over at an Appalachia truck stop. Fix the experience. Clean it up. Fact is Starbuck's got too big, too greedy. Their appeal was perceived as intimacy. Now there's a Starbuck's in every grocery store, gas station and lowest common denominator outlet out there. You can't sell "premium" out of the backseat of a Pinto. Would Louis Vuitton sell their bags at Wal-Mart? The bigger problem may be that the commoditization of coffee is unavoidable (uh, coffee IS a commodity by the way). The customer "base" is only a base if people have money in their pockets. In a market where almost 1 in 10 people is jobless, you can bet that premium coffee is on the short list of things to pass up. Bye bye base. Starbuck's has it rough—they want the perception of premium but they've developed the reputation of something much lower than that. Pitching against "low brow" competitors like McDonald's drops that perception even lower but what to do? Appealing to a premium minded base that has largely been dismantled by a floundering economy isn't going to magically make people decide that "premium" coffee is a top-priority. Take away: If there is so very much of something (16,000 stores), it can't possibly be that premium. It's going to be a hard sell this time around.
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By Everett78 New York, NY June 12, 2009 04:58:33 pm:
Only ONE Dunkin Large Area developer is selling stores back and that is because they "listened" to Dunkin corporate and got into high rent structures and wasted lots of money. The market they are in is also saturated with mom and pop donut stores so the approach needed to be different but it was not. Every other LAD is doing very well and Dunkin is thriving in this recession. Starbucks will never reach the masses it once did since the days of paying $5 for a coffee are over. McDonalds will do well as long as it keeps pumping tens of millions into nationally advertising the McCafe's. Once they stop no one will go back since they are not that good and people do not associate a latte or cappuccino with a fast food hamburger. They do have the advantage in the number of locations nationally but they only have a limited amount of stores that have the McCafe's in them right now. Dunkin's huge expansion plans are second to none if they are strategically sound they can gain a huge market share as they move west and dominate not only the coffee market but the breakfast market as well.

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