Monday, January 28, 2008

Loyal to your Morning Fix?

MediaPost recently reported that McDonalds is entering the 'Coffee-wars', slated for a big stand-off in 2008. An excerpt here [MediaPost is a fantastic marketing and advertising resource online, free subscription btw]
"MCDONALD'S, WHICH TOOK SOME COFFEE ground from Starbucks and Dunkin' Donuts last year, has announced that it will install coffee bars with Starbucks-like baristas in 14,000 U.S. locations. Along with drip coffee, McDonald's will be serving lattes, cappuccinos, and frappes."

Starbucks made great headway in building loyalty for its brand--I know the second floor Peet's coffee compels some of the employees in my office to regularly take the elevator up to the third floor Starbucks-coffee machine, and less frequently, the opposite happens. However, loyalty erosion seems swift--Starbucks lost ground in loyalty according to the loyalty brand index just in the last year. They are starting to build their $1 coffee test [for the 'i am not paying 4$ for just coffee' people] and Dunkin Donuts is on the offensive, trying to reestablish its Americanness and its price-friendly coffee lineup.

McDonalds' jump into the fray, however, fails to impress me. They tried to jump into the 'salad' bandwagon and the 'fat-free dessert' bandwagon as well, with their USP falling back firmly on their $1 meal and burgers. However, its interesting that the likes of Starbucks is fraying its loyalty a bit. I would think building loyalty is now a lot more than just building cute cozy cafes, its a number of additional aspects to service. Has Starbucks deviated too much into the land of 'mocha-strawberry-blueberry-cinnamon' zone, losing out on the core coffee customers? Are elements like free wi-fi becoming more critical than Starbucks expects? I would think both--especially on service points like free-wifi. Starbucks has been busy building partnerships with T-Mobile for paid wifi for customers, and Apple for free itunes downloads--great! But what percentage of customers are T-Mobile and Apple users? If the mom-and-pop shop down the street offers free wi-fi with 2$ coffee and scone, is that a better alternative? I would think so.

What do you think?

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