As a coffee-lover myself, I found Gabriel’s blog post on “Coffee Troubles” to be very intriguing and relevant to the concerns that many coffee business currently face as a result of the increase in customer’s demands in brand preferences, quality and price. Focusing on the Canadian coffee industry alone, competition between Tim Hortons and McDonald’s can be evidently seen with their strategies in cornering a market segment.
Despite Tim Hortons’ dark roast coffee blend that was just recently introduced, the company’s sales haven’t been growing at a significant rate in the last quarter. In fact, its coffee sales have decreased 3% since 2009 while McDonald’s has gone up 5%. According to the comments from the article, some customers are reluctant to try the latest blend as their past experiences with Tim Hortons coffees had been quite unpleasant.
On the other hand, McDonald’s free small coffee and advertising campaigns are effective in targeting cost-conscious customers. Its recent launch of take-home ground coffee also seems to create the most potential for sales growth as a report shows that two-thirds of coffee drinkers brew their own drinks at home.
Below shows a perceptual map that I have created in regards to quality vs. cost for coffee. In addition to McDonald’s and Tim Hortons (in red), I have included a few other Vancouver coffee shops that are quite popular for the purpose of comparison.
Sources:
https://blogs.ubc.ca/gabrielcheung/2013/11/14/coffee-troubles/
http://business.financialpost.com/2013/10/28/tim-hortons-dark-roast-coffee/