This document discusses the "Coffee Wars" between major coffee chains like Starbucks, Dunkin Donuts, and McDonald's McCafe brand. It analyzes each brand's identity, customer value proposition, brand positioning, personality, and equity. Starbucks targets customers looking for a premium coffee experience in a cafe environment, focusing on quality, variety, and personalized service. Dunkin targets busy customers on-the-go looking for an affordable, convenient caffeine fix. While McCafe has grown financially, its brand is weakened by associations with McDonald's fast food and lacks the trust of coffee drinkers. Going forward, Starbucks faces challenges maintaining its identity as it expands offerings, while Dunkin risks falling into a "brand image trap" dictated by

1. COFFEE WARS
Brand Management
Professor Fisher
Zach Golden
Alex Glazer
March 11th, 2012

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Introduction
Just as the coffee pot boils early in the morning, the Coffee War between national
beverage chains is heating up as each tries to obtain optimal market share and strengthen
their brand. The McCafe sub-brand of McDonald’s, Dunkin Donuts, and Starbucks all
participate in the coffee-café segment of the US market, with the latter two emerging as the
clear front-runners. For the two leaders, however, drastically different coffee drinkers are
their targeted consumers. Dunkin attempts to appeal to the consumer on the run or in a
rush, and is looking for caffeine to get them through the day. Conversely, Starbucks has
traditionally been seen as a destination, a national chain of coffee shops attempting to
replicate quaint cafes where consumers can sit down with their beverage and do work or
visit with friends. While both targets are drastically different, each company has done an
admirable job reaching their selective markets. Going forward, however, it is clear that
while Dunkin is sticking to their established branding tools, Starbucks is evolving and
losing parts of their brand.
McDonald’s McCafe
It is known that the most important thing a strong brand does is portray a sense of
trust to the consumer. For McCafe, the issue of trust is extremely fragile as customers order
from the “coffee shop” in the same place they order Quarter Pounder with Cheeses, and sit
down to enjoy their beverage with the smell of French fries in the air. For coffee drinkers,
the self-expressive benefits of drinking a coffee that comes from McDonald’s are limited, as
it represents getting their caffeine fix from the same place where Happy Meals and Big
Macs are amongst the most popular menu items. McCafe revenue was able to grow to over

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$24 billion in 20101, primarily by marketing themselves as offering the same products as
Starbucks at a discounted price, as shown in Exhibit 1. However the discounted premium
beverage does not offer consumers the same self-expressive benefits, and the connection
between buying sophisticated beverages from a chain that has Ronald McDonald as its
mascot does not align. While McCafe may be doing well financially, it most likely benefitted
from the recession forcing consumers to buy at discounted prices, and the lack of trust it
conveys weakens the brand in the long term future. For these reasons, McCafe cannot be
considered as one of the leaders of the Coffee Wars.
Brand Identity
Representing what the brand stands for in the mind of consumers, brand identity is
crucial for building value and brand equity. For each of the two brands, their brand
identities focus around Aaker’s 4 themes: product, person, organization, and symbol.
Starbucks
Starbucks has a strong, clear brand identity, though it is different in application of
the perspectives. As a product, Starbucks is known for its wide variety of flavors and coffee
varieties. With 42 types of coffee available2, the variety and choice Starbucks provides its
customer, combined with the known quality of its drinks form the product identity of the
brand. Starbucks can also be seen as a person, with the personality traits of being trendy,
cool, and sophisticated, and building a reliable, personalized customer relationship. All of
these traits combine to make Starbucks into a highly self-expressive brand, something that
will be covered in discussing the CVP, but also something that strengthens its identity as a
symbol. The green siren, as shown in Exhibit 2, is powerful enough to generate recognition
and recall by itself, so much that recently Starbucks decided the logo was visually
1
Passikoff
2
Starbucks Menu

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commanding, enough to remove the text “Starbucks Coffee”. Starbucks CEO Howard Shultz
noted that “throughout the last four decades the Siren has been here through it all” and that
the recent move to remove the text “ensures we remain relevant and poised for future
growth”.3 However although the siren is a strong visual image, the dropping of the
“Starbucks Coffee” from the logo is indicative of Starbucks possibly evolving parts of its
identity. In its core, Starbucks includes its café-type environment, personalized service,
trendy personality, and high quality coffee. The extended identity of the brand has
traditionally included its Seattle heritage, green color, and trendy consumer base, but is
now beginning to include brand extensions such as the addition of different food products
and beer and wine to its menu. The evolution of its product line, combined with changing of
its logo could be telling of major transformations to the Starbucks brand, and whether it is
able to keep its core identity in-tact will be in question in the future as well.
Dunkin Donuts
Dunkin focuses on its functional attributes, such as its flavors of coffee and breakfast
sandwiches being able to re-fuel the customer in a hurry. This theme of providing
rejuvenation for the person on-the-go is also evident when looking at their other identity
perspectives such as a person, where Dunkin can be seen as the individual on his way to
work or on a break from work, or a busy mom driving her kids to practices and other
events. Dunkin caters to the busy person, which is also seen in their symbol of the running
man (Exhibit 3). This symbol is memorable and represents the brand, because as an
organization Dunkin also values quick, effective service to keep their customers moving.
They are able to serve a variety of different types of customers, from businessmen on the
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Kavilanz

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way to work, to construction workers on a break, to soccer moms, Dunkin as a brand is able
to cater to all of these types of customers because of the common trait of consumers being
busy and needing a quick pick-me-up. Providing convenient, good-tasting food and drink
make up Dunkin’s core identity, as they are the timeless essence of what Dunkin Donuts
stands for. To complement their core, elements such as their New England heritage, other
food products, and their orange and pink colors add completeness to a brand that clearly
identifies itself with consumers who make buying DD coffee habitual. It is this identification
that can also lead to falling into a brand identity trap, however, namely the brand image
trap. This trap occurs when consumer perceptions take the primary role in strategic
decisions and the consumer is able to dictate who the company is. For Dunkin, because
their customers are mostly busy and on-the-go, their strategy is primarily centered on
catering to their needs, curtailing any other image they may try to present. Despite this
brand image trap, Dunkin’s identity is still clear in many different perspectives, and
provides a firm foundation for the value proposition and expansion.
Customer Value Proposition
As Aaker states, “a brand’s value proposition is a statement of functional, emotional,
and self-expressive benefits delivered by the brand that provides value to the customer”4.
Once again, similar to the brand identity, both brands are able to accomplish this and have
a strong CVP, although they achieve it in different ways. Starbucks
For Starbucks, the quality as well as the quantity of flavors makes up its functional
benefits, but it is their emotional and self-expressive benefits that really drive the CVP.
Designed to replicate a café or small town coffee shop, Starbucks stores can become the
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Aaker

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neighborhood coffee destination. Unlike Dunkin Donuts stores where customers rush
through with their orders, Starbucks serves as a meeting place and a setting for customers
to sit and talk. As well as the close-knit feeling of the coffee shop is the personalized
experience consumers get. The relationship with the barista adds to the emotional benefits
of the customer, as they feel important and their individuality is able to be expressed by the
type of drink they choose. This is also why they ask for your name after ordering, to
establish a deeper, more personal and emotional connection with the barista. The strong
emotional benefit Starbucks provides is combined with the self-expressiveness of drinking
a cup of coffee with the Starbucks logo. For consumers, having the green siren on their cup
draws attention to themselves, and the “look at me” self-expression contributes to
customers paying just as much for the logo on the cup as they are the coffee inside. A
Starbucks consumer is flaunting their ability to pay premium prices for coffee, and wants to
show their affluence. This is an important factor, because as Professor Kopp argues, CVP is
about “benefits-for-the-money”.5 Not only is the quality of the coffee contributing to the
traditionally higher prices, but also the ways in which Starbucks allows its customers to
define their personality and self-image.
Dunkin Donuts
Dunkin Donuts is also able to provide their customers with value, starting with its
functional benefits of being good tasting and with fast customer service that provides the
necessary wake-up quickly to the consumer. However Dunkin lacks strong emotional
benefits for individuals, as the quick customer service and lack of atmosphere in its stores
does not provide the individual with positive emotional feelings. Despite the lack of
5
Kopp

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emotional gains by the brand, a customer drinking Dunkin Donuts is able to express their
readiness to take on the day. Fueling up with Dunkin says that they are important and busy,
and do not have a minute to spare. A Dunkin Donuts customer is able to express their
willingness to attack the day and take on whatever task lies ahead by the brand being
recognized for quick service and coffee and food products that provide a necessary
rejuvenation at any point in the day. Customers also will not find premium prices like they
do at Starbucks at Dunkin, and although it is not as fancy or stylish, drinking Dunkin Donuts
is able to allow consumers to display their self-image.
Brand Position
According to Aaker’s model, brand position is an accumulation of brand identity,
CVP and personality, but even more specifically comprised of target audience, competitive
advantage, active communication and a subset CVP, (Exhibit 4).
Starbucks
Starbucks is clearly positioning itself in a much different way than Dunkin Donut’s
strategy to achieve their desired clientele base. The company knows that their coffee is
overpriced for the industry, but does not lower it because their services are allowed to
demand a premium. The baristas handle the coffee and people who come through the store
with extra care. The personal connection that people establish with Starbucks, or rather the
CVP, can be seen in a variety of ways. For example, when someone goes in to Starbucks, the
target customer is going to like using a complicated spell of words that can be translated
into their very own unique and specialized caffeinated beverage. On this same note,
Starbucks customers know there is a lot of variety at Starbucks so they can chose to be
loyal to a signature drink, or have the freedom to choose otherwise from the wide variety
of products offered, inclusive of a secret menu only known to few. It is important to realize

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that this consumer’s needs are quite the opposite of what one would normally called needs
or basic goods. The Starbucks type of customer is going to like frivolous things and
spending for luxury as opposed to “need based” decisions.
Dunkin Donuts
The Dunkin Donuts brand position model is strategically very different from that of
the Starbucks model, largely because the target market is so different. The customers who
come to Dunkin Donuts are looking for a quick fix for an on-the go experience, whether
they are on a commute to work, a mom doing errands or have only a short time for a break.
Customers do not come to Dunkin Donuts looking for lots of options, but rather a straight
forward cup of coffee that gets the job done, meaning it keeps them alert and caffeinated for
the day ahead. In addition, most people who purchase at Dunkin Donuts are also more
inclined to buy a pastry or breakfast, as opposed to Starbucks where the foods are not as
habitual to purchase. Dunkin Donuts has established reliability among the consistent
quality it produces, although consumers know they are not expecting much every time they
visit (which is actively communicated). Their competitive advantage lies in the products
they produce, The Dunkin Difference as opposed to Starbucks and their focus on service.
This CVP is definitely high benefits – low cost which yields a very high value to customers.
The company is very different from Starbucks, but they know how there are different and
have been successful in maintaining their separate client base.
Brand Personality
Brand personality is said to be the final component adding up the brand position,
comprised of influences from customer value proposition and identity. In addition, brand
equity cannot be evaluated without first looking at the brand personality of the company as

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it plays a large role in determining how the company is perceived, and accepted by
customers.
Starbucks
Starbucks has a very special brand personality that is unlike the other mainstream
coffee shops in a very distinct way. Unlike the commercial coffee shops, Starbucks’
competitive advantage is their ability to feel like a neighborhood coffee shop despite the
fact they may have 12,000 different storefronts across the country. According to Aaker’s
wheel of human characteristics, Starbucks would be sophistication, because of their
elaborate menu and prestige in coffee, sincerity because of their wholesomeness and fair
trade coffee, and competence, because they are reliable, with consistent quality and have
typically made intelligent strategic moves. The self-expressive model of CVP ties very
closely to Starbuck’s brand personality. Starbucks’ brand historically, has revolved around
the fact that people who come to Starbucks are willing to take their time, have a leisurely
experience and get what is perceived as higher quality coffee for a steeper price. The
people who come to Starbucks like to portray that they have the time and money to spend
on a coffee cup that comes with a green straw and mermaid logo. Brand personality is said
to reflect the owner and creators of the company. Howard Schultz was the son of a blue-
collar worker who instilled the mindset “treat people like family and they will be loyal and
give their all” (Fiscal Report 2003). This is the attitude he has toward his employees, and in
turn the employees act the same way to the customers.
Kopp’s Brand Personality Model looks at thinking and feeling based thoughts, and
combines them together for one overall “Gestalt” that is the brand personality. This is one
way of making sure the company has a solid vision that is seen throughout all aspects of the

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company. The thinking based thoughts for Starbucks are generally mature, coffee with a
higher quality, pricey, reliability, and successful. Recently however, the feeling based
thoughts of Starbucks have started to shift away from appreciation for the exclusivity to
feeling one of many in a diluted, mass brand. Typically the Starbucks experience would
yield feeling based thoughts like I feel special and privileged to drink Starbucks. Not yet has
the Starbucks name completely lost its integrity, however the gestalt model is beginning to
show signs of unbalance.
Dunkin Donuts
Bill Rosenberg founded the first Dunkin Donuts with the vision to "make and serve
the freshest, most delicious coffee and donuts quickly and courteously in modern, well-
merchandised stores” (About Us). As mentioned before, companies will develop a
personality reflective of the characteristics from the internal part of the company. Clearly
Dunkin Donuts incorporates this mission statement in to the business even 60 years later
today as it can be seen in the company’s core identity. Nowadays, chief global customer and
marketing officer John Costello shortens this motto to “fast, friendly, helpful” (How Dunkin'
Donuts Keeps Its Customers) and that is exactly what the company produces. Dunkin Donuts
may not be a homey environment, but that is not what it is intended to be. Superfans
appreciate the business because of the low maintenance experience and transparency of
the company, thus primarily serving to meet a functional needs model. Using Aaker’s
human characteristics wheel, Dunkin Donuts possesses traits such as sincerity, competence
and excitement.

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Brand Equity
There are several different approaches to looking at Brand Equity, to be specific
there are 7 different models available in our brand management toolbox. In looking to
assess the brand equity of both companies combating the coffee wars, we will use Aaker’s 5
part model. The model broken down clearly in exhibit 5 for both companies is comprised of
associations, awareness, quality, loyalty and other proprietary assets. Loyalty is the
summation of the first three elements and brand assets covers everything else of value.
Starbucks
The brand equity model for Starbucks showcases where the company’s strengths lie
and how their customers play a crucial role in dictating the success of this brand. Despite
the fact that Starbucks began as a brand with a very niche market, they have expanded
globally and have high recognition and recall. This is also particularly interesting because
according to the Share of Voice = Share of Market model, with Starbucks using little to no
advertising and relying on a worth of mouth architecture, the company should not have a
very large share in the market. In further analysis of the brand equity, we will see if
perhaps Shroer was right after all. As mentioned, word of mouth is important to Starbucks
and thus so is the associations with the brand. Starbucks has historically been perceived as
the coffee choice of luxury, and associated with prestige, status, and relaxation. Recently,
Starbucks has begun to dilute their brand so much that it is losing its title as people outside
of this niche have begun drinking and are seen with the product, resulting in a decrease of
the self-expressive benefits for the user. For many, the quality seems to be better, but can
only be supported by individuals preference. Paying a premium for this coffee and
experience was justified when the experience still felt personalized. Now with the brand
becoming commercialized, the individuality of the brand is fading and the service isn’t as
“VIP”, morphing the idea of quality. There are many people who are loyal to Starbucks

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coffee but still will go to a Dunkin Donuts if they are in need of a quick fix. The loyalty of
Starbucks can be measured by the fact that they do not advertise and still maintain a
consistent customer base. However, Starbucks should be warned that the loyal consumers
are typically the ones with more disposable income, who are also the ones who are more
likely to be bothered by brand dilution and loss of value in their green straw. Other brand
assets for Starbucks include the green siren and the tagline “It’s Not Just a Coffee, It’s
Starbucks.”
Dunkin Donuts
Through this 5 part model, Dunkin Donuts brand equity appears to be extremely
high. First, awareness which takes in to account the familiarity of the brand is very high
with Dunkin Donuts. Recent surveys gathered that 97 % of all Americans are able to
recognize the Dunkin Donuts brand name and logo (About Us). In additional to high
recognition, Dunkin Donuts is definitely if not the first-to-mind, the second company that
customers will think of when asked about the coffee industry. There are definitely not in
jeopardy or anywhere near becoming a graveyard brand because they have accurately
balanced their CVP. In terms of associations, the perception of the brand is extremely
accurate. DD customers seek coffee in a quick and convenient manor for a pick me up.
Quality of the Dunkin Donuts brand has become very reputable, marketed through their
“Truth is Out Campaign” from 2008, (Exhibit 6). Despite previously perceived value because
of a lower price point, survey results from a taste test conducted by A&G Research Inc.,
concluded that 54.3% of the sample preferred DD coffee over Starbucks with only 39.3%
(Awards). In addition, in 2011 alone, Dunkin Donuts came away with 5 very reputable
industry recognition awards including: #1 in iced regular/decaf/flavored coffee, #1 in

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hot/regular/decaf/flavored coffee, #1 in donut category, #1 in bagel and muffin category
and #2 in breakfast sandwich servings (About Us). In terms of loyalty, Dunkin Donuts
sweeps the category again with the #1 loyalty rating for the past 6 years determined by
Brand Keys (The World Leader in Customer Loyalty and Engagement Metrics) (About Us).
Ifaddition, Dunkin Donuts maintains loyalty by still brewing the same recipe blend of coffee
that they did 60 years ago when the first store opened in Quincy. The company also actively
encourages participation and feedback from the clientele with compensated surveys,
contests and rewards programs. The brand assets that Dunkin Donuts obtains are also very
powerful, including the orange & pink colors that are easily distinguishable, and the tagline
“American Runs on Dunkin”.
Brand Architecture-Brand Extensions
Expanded Menus
Recently, both brands have begun to expand their menus beyond the coffee that
they have grown their reputation on. In select areas across the country Starbucks has
begun to introduce menu items such as “beer, wine and premium food” to provide choices
for customers in the afternoon, generally a slower time for the coffee provider. 6 Similarly,
Dunkin Donuts has expanded their menu to include items such as iced tea, flatbreads, and
deli-type sandwiches such as tuna and ham and cheese. While both brands are extending
their image outside the realm of just coffee, Dunkin has already been known for this with
their breakfast sandwiches and their namesake, donuts.
High quality coffee, included in their name, is more of a part of Starbuck’s core
identity, as it is a timeless part of their brand, and extending into areas such as alcoholic
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beverages does not seem to match their identity. It will be up to the consumer to allow
Starbucks to expand into alcohol distribution, but after Starbucks announced their brand
extension shares of their stock fell 2%.7Meanwhile Dunkin has added the sandwiches to
provide options for busy customers at any time of the day, with Chief Global Marketing
Officer John Costello saying the move “reflects our commitment to meeting our guests'
changing eating habits and expectations for more fast and satisfying menu items that can
be enjoyed any time of day”.8 Since the most recent menu additions in early February,
Dunkin stock prices have risen 10%, a sign that customers have allowed the brand to
extend to afternoon time snacks.
Instant Coffee
As well as in-store menu additions, both brands have also begun to provide instant
coffee solutions to their customers who cannot come to the actual store to get their coffee.
Dunkin has introduced K-Cups to match with customers who have a Keurig Instant Coffee
Machine, while Starbucks has begun selling their own instant coffee under the sub brand
Starbucks Via. The move into the big instant coffee market aligns perfectly with the Dunkin
Donuts identity of convenience and supporting the busy customer who is in a rush.
Starbucks, however, bases their identity on the coffee-shop experience and enjoying the
coffee leisurely in a café setting with personalized service. The instant coffee available to
consumers in their home does not align with their core identity, and Starbucks has risked
straying away from their quaint café type coffee shop identity with their brand extensions.
Whether consumers will allow Starbucks to evolve their identity remains to be seen, but
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Dow Jones
8
Dunkin’ Donuts

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the brand is at risk of eroding its timeless essence with the extensions to alcohol and
instant brew-it-yourself coffee solutions.
Conclusion
In looking at the industry, it is clear that McCafe does not relate to the coffee drinker
as they provide nothing unique and little self-expressive benefits. While McCafe can be
ruled out, the battle between Dunkin Donuts and Starbucks is highly competitive. Each
brand has its distinguished market segment, and originally, our group believed Starbucks
would prevail over the perceived ”cheap” value offering of Dunkin. However as the brand
audit transpired, the effectiveness of Dunkin’s trusting relationship with its customer
became clearer with its strong brand equity and ability to maintain its core identity. With
this said, the overall loyalty and trust that Dunkin has with its customers gives it the ability
to be crowned as winner of the coffee wars. Dunkin’s victory is not only a testament to their
strength, but also some of Starbucks’ questionable decisions such as brand extensions that
do not align with their identity (instant coffee) and dilution of their brand equity through
expansion and customers losing the exclusive, personal feeling they once had inside a
Starbucks store. The moves that Starbucks has elected to take, could however turn into
tremendous successes for the brand. The coffee wars are an on-going battle that are still
fiercely competitive, and if the customers decide to allow Starbucks to evolve their brand,
then they could soon be declared the winner over Dunkin. For now though, America is
running with Dunkin’, the current winner of the Coffee Wars.

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Exhibit 1: McCafe Advertisements
Exhibit 2: New Starbucks Logo
Exhibit 3: Dunkin Donuts Logo

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Exhibit 4: Brand Position Model (Aaker)
Target
Audience:Searching
for luxurious coffee
with choices and
personal experience
Actively Sbucks Create Advantage:
Communicate:
Varieties illustrate
personal choices for
Brand Personalized
relationship with
product and barista
consumer Position
Subset CVP: High cost
but high emotional
and self-expressive
benefits

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Exhibit 5: The Truth is Out Campaign (Dunkin Donuts, 2008)
Exhibit 6: Brand Equity Model (Aaker)
Awareness Awareness
Other
Associations Other Assets Associations
Assets
Brand Brand
Equity: Equity:
Sbucks DD
Loyalty Quality Loyalty Quality

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