There are lessons to be learned in
the real word -- real being defined as anything outside of travel.
I found more than one lesson in a recent article in the Wall Street
Journal.
It turns out that a
bit of a battle is brewing in the opening salvos of the Coffee War.
Dunkin Donuts (David) is going after Starbucks
(Goliath).
True, Dunkin Donuts
sells 2.7 million cups of coffee a day in the U.S. But Starbucks
sells 4 million. And whereas Dunkin average cup of java goes for
$1.19, Starbucks sells for an average of $1.55.
Dont assume that
the higher price means that Starbucks coffee is better. Few
customers realize that Dunkin Donuts has an advisory council that
travels across Central America in search of the finest quality
coffee beans.
Though Donuts is
part of their moniker, Dunkin stores now realize 65% of revenue
from coffee.
Dunkins strategy in
the early 1990s was to be full-service: Stores were partnered with
Baskin-Robbins and other outlets owned by the parent company. They
wanted to be full-service drive-ins, and they had posters in their
windows advertising virtually anything having to do with the brands
inside.
While this was
going on, Starbucks created what they call a third place, i.e., a
place outside the home or office. Their customers are upscale, they
spend more per visit and they buy upscale coffee products. They
like the specialization. They dont go to Starbucks for pizza or ice
cream; they go to sit on the couches, to work on their laptops, to
be in a place where they feel special.
This parallels
exactly where many in the retail sector were in the 1990s. Agencies
were full-service, full-throttle. We thought we could be all things
to all people. Want doughnuts? No problem. Fried chicken? We do
that, too. Tacos on a stick? Well arrange it.
But now were going
after a new consumer. They are more affluent and they have more
information about our products -- sometimes more than we have. They
are spoiled, and they want -- need -- to feel special. They will
spend $4.50 for a cup of coffee but only if the experience feeds
their ego as well as their need for a morning caffeine fix. These
are our customers. These are the folks with disposable
income.
Dunkin Donuts
decided to design a more upscale store to be placed in areas where
they might attract a more upscale audience. But then they did
something fascinating: They determined that Dunkin and Starbucks
customers were each members of a tribe, with each tribe sharing
different values.
Dunkin tribe
members liked feeling they were part of a crowd. The Starbucks
tribe member has a strong desire to stand out as an
individual.
One hundred Dunkin
customers were paid to shop at Starbucks for a week. The same offer
was made to Starbucks customers. The reactions, according to the
Journal, showed clear lines of demarcation. These tribes are not
alike. Much in the same way that the upscale traveler and the
blue-collar traveler differ in their expectations.
The key difference
can probably be summed up this way: The Dunkin customers seemed to
feel that buying a cup of coffee had little to do with making them
feel important, but the Starbucks customers clearly sought out
services that tended to make them feel important. Think
one-of-a-kind travel experiences, limo to the airport, hard-to-get
reservations.
The reaction of the
Dunkin Donuts customers to their experiences inside Starbucks
seemed to reflect a mild amusement. Men and women didnt quite
understand why a big cup of coffee was called a venti while a
little cup was called a tall. The Dunkin people didnt understand
who was sitting on those couches; who has the time? They expressed
some degree of pity for all the lonely people they saw sitting
alone with their laptops.
The Starbucks
customers were really uncomfortable over at Dunkin Donuts. What
bothered them the most? The way the workers at Dunkin would pour
cream into their coffee instead of letting them do it themselves.
They wanted options, skim milk or half-and-half, and they wanted
control. Decor was important to them. They wanted to feel like they
fit in. The Dunkin folks wanted to get what they needed and
leave.
Right now, most of
you are probably serving the needs of both kinds of customers:
those who want it fast and hot and those who want it in an elegant
package, something to make them feel unique and special. You are
serving two groups of clients: those who want you to put the cream
in their coffee as quickly as possible and those who need to feel
that although you are making the coffee, they are pouring their own
cream.
Whenever you pass a
Dunkin Donuts or a Starbucks, it might be wise to remember that in
our business, we need to meet the needs of both, whatever we happen
to be brewing.
Industry
consultant Richard Turen owns the vacation-planning firm Churchill
and Turen in Naperville, Ill.