Starbucks vs. McDonalds, Good to the Last Drop
Starbucks, the undisputed king of coffee has recently been challenged by another heavyweight competitor in the War over the Morning cup of Joe. McDonalds, a powerhouse in the fast-food world has been looking to expand into the specialty coffee business and replicate its burger success into the Java Realm. Both companies are great examples of iconic brands, and have had tremendous success and market resilience. It’s no surprise, that these two companies have come to be such bitter competitors because the breakfast and specialty coffee markets are two of the fastest growing fast food segments. People are living much faster paced lives in general and are seeking ways to combine breakfast and coffee on the go. The question remains, who will ultimately win out in the specialty coffee war? I will adopt Sun Tzu principles from the Art of War, to show how Starbucks has built a superior offense and is similarly well fortified in securing its number one marketshare position.
Using Sun Tzu’s 13th principle, the Use of Intelligence, we can see that Starbucks not only understands its competition but more importantly, they understand and know their target customer. When McDonalds introduced the low-priced specialty coffee they were targeting the typical Starbucks patron that was also price conscientious. One of McDonalds’ core competencies is delivering excellent customer value. On basic review, this strategy seems well suited to capture a fair share of business from the incumbent Starbucks. When we look deeper, the ideal target customer for Starbucks is not looking for just coffee, but the custom tailor-made experience of having your coffee the exact way you want it and not from a mass-producing machine designed to crank out coffee flavored beverages to keep up with a busy drive-through line. Starbucks understands that what they are selling is an experience that is made in a variety of different ways from decaf...
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