Companies target and enter the coffee market to counter Starbucks

Warren Buffett once referred to cigarettes as the perfect product: "The cost of cigarettes is only one penny, but it is sold for a dollar. It is also addictive."

The current coffee business is very similar to cigarettes. No matter how expensive the price of coffee is (Starbucks's latte is priced at around US$3.5), its raw materials are just a glass of water, a small amount of milk, a tablespoon of coffee beans, and then processed for 30 seconds. Starbucks took advantage of consumers’ coffee love and earned $6.4 billion in annual revenue. The company’s cafes have nearly 6,000 and currently there are an average of five new stores opening every day. As a result, many other coffee sellers are eyeing Starbucks for its high market share.

The Wall Street Journal recently pointed out that Dunkin\'s donuts are introducing new types of food supplies and renovating some stores into cafe styles. Susanne Norwitz, a spokeswoman for the chain, said that these changes, together with new advertising campaigns aimed at telling consumers, “We don’t have comfortable sofas and wireless internet access, but we sell food. Excellent value and convenience.” Although Duncan Donuts' intention to strike Starbucks is known to Sima Zhao’s heart, Nowitz insists that he is not trying to snatch Starbucks (based in Seattle). She said, "We are just sticking to the usual practice of attracting outspoken and serious old customers."

McDonald's also began selling new high-end coffee in stores and joint marketing with Newman\'s Own. Even the 7-Eleven has started selling cappuccinos and promoting its own soy content in its drinks.

But Wharton marketing experts warn that these moves may make these companies astray. Out of the envy of the Starbucks business, some companies may give up their original loyal customers.

Coffee on Demand: Bill Cody, executive director of retail projects at Wharton Business School at Wharton, believes that Starbucks and Peet\s Coffee and Tea in San Francisco and Kerry\'s Coffee in Minneapolis ( Many smaller companies, such as Caribou Coffee, are aware that consumers are increasing the threshold for accepting certain types of coffee. Some customers, even if they do not want to spend 4 dollars to buy a latte, he does not want to drink too much coffee from the coffee filter pot.

Robbie Price said that as a fixed purchase of goods, coffee can also promote the sale of other goods. Price is the chief marketing officer of a chain store called Wawa in Pennsylvania and he is an adjunct professor at Wharton. “Coffee always seems to be sold together with morning papers, donuts, or breakfast sandwiches.” People buy coffee on an average of five to seven days a week, and they often buy in the same store. The most favored business is such loyal customers.

The popularity of coffee culture allows more people to leave coffee all day, which means that businesses like dolls can sell more coffee. Price points out, “Quality coffee has actually gone to the masses. Some of our high-end competitors are trying to capture the hearts of customers with a comfortable environment and high prices, but letting coffee become a luxury that almost all ordinary people can enjoy. It's not difficult."

Price's comments are undoubtedly referring to Starbucks. Duncan Donuts' company website can find more words about the company's "start a war, fight back high prices, wait for a long time, and dazzling glass size". "Everyone who has ever bothered to read the Starbucks menu knows that Starbucks calls the average-sized coffee cup as tall, the middle cup as grande, and the largest cup as venti (although many customers still keep small when ordering.) The cup is called small, the medium cup is medium, and the big cup is large.” Duncan Donuts also claimed that its “Italian espresso revolution provides customers with genuine and authentic daily enjoyment at a popular price.”

However, Starbucks itself does not take any of these cynicism. Its spokeswoman May Kulthol wrote in an e-mail that Starbucks is "very proud to be able to create today's specialty coffee industry that has made many cafes prosperous. But helping us stand out from the crowd is unique , the original Starbucks experience, and our expertise in coffee and the relentless pursuit of quality coffee."

David Reibstein, a professor of marketing, said that Starbucks sells coffee and other beverages, as well as wonderful music, comfortable sofas, and free unlimited Internet access. Customers buying expensive coffee are actually paying for these enjoyment experiences.

Contrary to Starbucks, people don’t usually choose Duncan Donuts as a place to relax. Many of its stores don't offer a canteen service. Customers can't sit down and taste the fried apple pie or "frozen coffee rolls." Some stores offer up to one simple bar. Rubinstein asked, "How can Starbucks and Duncan Donuts compete with each other in this situation? Yes, their stores are all over the place and they sell coffee and cakes, but they are not competitors at all."

The professor of marketing, Feld, agrees. He said that today's businesses emphasize quality and price too much. Just as coffee vendors are too picky about the quality of coffee beans, whether or not they are competitive often depends on forgotten customers. demand. He said, “Customers may just want to buy a cup of coffee within 45 seconds. But even if they want it to be convenient, many businesses are still tirelessly improving quality or lowering prices.” If customers want quick service, you give They have a cup of coffee comparable in quality to Starbucks, but they have doubled their waiting time, which is almost no help to increase revenue, and may even result in loss of customers.

Fide also said that although the breakfast shop was blindly imitating Starbucks' sales of high-quality coffee, they seemed to have “stumbled into their respective market segments.” Starbucks took the high-end route, Duncan Doughnuts has always been known for its convenience, McDonald's And other fast food chains win with the price. Feder said sarcastically, "I don't know if someone is going to McDonald's to pursue quality, but it's very likely that they should be attractive to the price."

Walmart to Target

The status quo of other retail formats also indicates that market segments are feasible. Fide pointed out that "in Wal-Mart and Target, they seem to be in the same market segment, but consumers have a lot of reasons to visit both Wal-Mart and Target. The same has been positioned as a chain of department store discount stores, but Wal-Mart has historically been pursuing low-cost routes and providing faster merchandise cycles, while Target has sold fashion clothes and general merchandise at cheap prices.(News recently reported that Wal-Mart is in some stores Selling more high-end apparel and high-quality home appliances, trying to break into the market segments that Target holds." Similarly, we can go to Duncan Donuts to buy breakfast in the morning and Starbucks in the afternoon to enjoy our leisure time. Duncan donuts don't have to worry about competitive pressure at all. Customers may have different needs at different times of the day. ”

Even if Starbucks, with its booming business selling high-quality coffee, faces challenges, it must continue to grow rapidly while maintaining a smooth operation and retaining loyal customers. As a listed company, Starbucks must continue to expand its scale to meet expectations from Wall Street. But its future development is obviously full of many risks.

The company has begun to add more menus, but this practice may cripple operations and reduce profit margins. Dreize said, “When I heard Starbucks started to increase the variety of food supplies, I felt that they were also desperate. This practice often leads to a blurring of their unique market image.” In addition, Starbucks is trying Providing a free meal ordering service may also hurt the brand. Rubinstein pointed out, “If a clerk says to you, 'Hold, this is your coffee,' then it may be more like a normal cup of coffee. If you just want to buy a cup of coffee, then no problem, but you are willing to spend a big Does the price buy only cups of taken away coffee instead of sitting down to experience it?"

Valdez makes a comeback

Juan Valdez, a Colombian coffee farmer, is an unknown victim of this coffee war. As the world's most famous coffee grower, Valdez is just a virtual advertising figure and a fictional image spokesperson for the National Federation of Coffee Growers of Colombia. The purpose of the organization to create this character is to promote its own canned coffee, they said that their coffee matches coffee sold in other grocery stores, and to ensure that retailers to pay a lot of money. The federation even persuaded some retailers to print its trademark (a portrait of Juan riding a blindfold) on a coffee can.

Marketing professor Patti Williams pointed out that this is "the first canned coffee brand to publicize itself as a "high-quality coffee," and people are also appalled by the recognition of Juan Waldez. And this brand image comes from a trivial organization. "But the coffee revolution keeps the federation's revenue shrink. Starbucks and other regional chains promoted the concept to customers in marketing activities. Only freshly roasted and ground coffee beans can make the best quality coffee, and it is difficult to find this freshly ground coffee in grocery stores. “Now

People think that all canned coffee is bad coffee. ”

Valdez started fighting back and he also became a "bartender" (the Italian bartender, used by many coffee shops to refer to espresso baristas). The Federation opened the Juan Waldez Cafe in New York, Washington, DC, and Seattle. The Seattle store held a grand opening ceremony on April 16th. The store's location is near the original Starbucks store. But the president of the federation, Juan Esteban Orduz, told the Seattle Times that the purpose of opening a café was not to challenge the roast coffee giant but to make it a USA. "Pop music charts", to promote the quality of Colombian coffee to a new generation of coffee.