Starbucks and Dunkin Donuts

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Before analyzing the differences between Starbucks and Dunkin Donuts one should first analyze each separately to determine what are the key profitability factors of each are as well as what industry actually compete in. Starting with Dunkin Donuts, Dunkin Donuts is most relevant in the fast food breakfast industry; this is where McDonald’s holds major market share. In this industry buyers have a high level of bargaining power. Customers have many choices to buy from, in terms of coffee and affordable breakfast snacks, such substitutes are Starbucks, McDonalds, Mary Lou’s, Honey Dew, etc. In regards to bargaining power of suppliers, there are numerous coffee bean suppliers to choose from, so the supplier power is low because they are not the only ones Dunkin Donuts can purchase from. In addition, there are numerous suppliers to choose from when in regards to breakfast items. Dunkin Donuts has developed the reputation for having good coffee and food items at a reasonable price. This low price good quality pricing strategy separates them from Starbucks because Starbucks adopted a high price/high quality selling strategy. When looking at the threat of entrants we must analyze the entry barriers to the industry. In order to compete with Dunkin Donuts new entrants must be able to provide similar products Dunkin Donuts provides at the same quality and price if not better. Starbucks is in the premium coffee industry as well as the specialty eatery industry. Starbucks uses store location, store atmosphere differentiation and a distinct product mix to establish their brand within the industry. In the industry there are a few substitutes from buyers to choose from such as Caribou Coffee, however Starbucks owns the majority of the market share. Buyers have very low bargaining power due to a lack of substitutes who can’t compete in terms of production with Starbucks. Dunkin Donuts has recently made attempts to penetrate the specialty food market by providing specialty lunch...
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