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Starbucks and Dunkin Donuts: Growth Strategies

A summative SWOT analysis of Starbucks and Dunkin Donuts can be seen in Table 1 and Table 2, respectively. Starbucks core strengths are its expansive chains, solid marketing and establishment of its brand image, high-quality coffee, strong digital presence, and useful and convenient-to-use app, but the weaknesses are its high price, limited coffee-focused menu, lower dominance in the East, and the lack of delivery service (Grewal & Levy, 2020). Dunkin Donuts’ strengths are high-quality donuts and coffee, dominance in the East, a powerful app with delivery service, high customer loyalty, and sports-related marketing, but its weaknesses are a low number of chains and low dominance in the West (Grewal & Levy, 2020). Correspondingly, the opportunities can be found in the elimination of their weaknesses, and the threats are new entrants.

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Table 1. Starbucks SWOT

Strengths
Expansive chains
Solid marketing and brand image
High quality coffee
Strong digital presence
Useful and convenient-to-use app
Weaknesses
High price
Limited coffee-focused menu
Lower dominance in the East
No delivery service
Opportunities
Expanding the menu
Target marketing in the East
Integrating delivery service in the app
Increasing customer loyalty
Threats
New market entrants, such as McDonalds
Loss of customers due to inability of gaining customer loyalty

Table 2. Dunkin Donuts SWOT

Strengths
High quality donuts and coffee
Dominance in the East
Powerful app with delivery service
High customer loyalty
Sports-related marketing
Weaknesses
Low number of chains
Low dominance in the West
Opportunities
Expanding through chain increase
Improving digital presence
Dominance in the West
Threats
New market entrants, such as McDonalds
Loss of customer loyalty
Loss of marketing ROI due to downfall of sports

It is important to note that the key growth strategy of Starbucks is market penetration. The given strategy primarily focuses on increasing a company’s market share without creating new products or entering new markets (Lavasani et al., 2016). In other words, the main approach is centered around utilizing the existing resources or products in order to become more competitive and dominant in the current market. Starbucks specializes in the coffee market, and all of its strategies are aimed at dominating the given market by occupying the largest market share. In the case of Dunkin Donuts, the primary growth strategy is diversification, where a company attempts to introduce a new product into a new market. Therefore, the company entered a new market of coffee with novel coffee products during the “espresso revolution” in 2003 (Grewal & Levy, 2020). Since then, Dunkin Donuts was able to become a direct competitor to Starbucks. The future strategy for the latter will most likely be market penetration through more expansive marketing measures, whereas the future growth strategy for Dunkin Donuts will be product development through offering new products, such as donuts, for coffee drinkers because it was already successful in other markets.

The most helpful marketing metrics for an executive in charge of developing new products for a coffee chain will be customer loyalty. It is stated that “metrics can help measure the effectiveness of the product in relation to the customer problem and help drive key decisions in both the product and business aspects of the startup” (Shanbhag & Pardede, 2019, p. 283). The main reason why customer loyalty will be the most plausible metric to measure is that new market entrants with well-established brand names will continue to enter the market of coffee. It means that there will be a wide range of companies offering high-quality coffee, and since coffee products can be improved only so far, customer loyalty to a brand will be the main decisive predictor of market share. Therefore, it is important for coffee chains to be able to utilize powerful marketing strategies in order to gain loyal customers who identify themselves as consumers of a specific brand.

References

Grewal, D., & Levy, M. (2020). Marketing (7th ed.). McGraw-Hill Education.

Lavasani, M., Jin, X., & Du, Y. (2016). Market penetration model for autonomous vehicles on the basis of earlier technology adoption experience. Transportation Research Record, 2597(1), 67-74. Web.

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Shanbhag, N., & Pardede, E. (2019). A metrics framework for product development in software startups. Journal of Enterprising Culture, 27(03), 283-307. Web.

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StudyCorgi. 2022. "Starbucks and Dunkin Donuts: Growth Strategies." September 6, 2022. https://studycorgi.com/starbucks-and-dunkin-donuts-growth-strategies/.

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StudyCorgi. (2022) 'Starbucks and Dunkin Donuts: Growth Strategies'. 6 September.

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