Image from: http://3.bp.blogspot.com/_-PPTG9oEKk8/TOJ1FQGSdUI/AAAAAAAACfw/3l22XE9ls-g/s1600/mcdonalds_free_coffee.jpg
Angus Todd blogged about McDonald’s goal to gain market share in the coffee market. McDonald’s decided to expand their McCafe line, advertising quality at a lower cost. In particular, McDonald decided to market their McCafe brand by renovating their stores and handing out free coffee, allowing consumers to judge for themselves how McDonald’s coffee stands against other, more prestigious brands.
Starbucks fought back with their own campaign. However, Angus then stated that Starbuck’s marketing campaign had little impact because consumers are looking for cheaper alternatives amidst an economic downturn. To some extent, I agree with Angus, in that some consumers will substitute away from Starbucks to McDonald’s due to the price difference, but Starbucks will always have their own niche in the coffee market.
Over the years, Starbucks has developed a brand name synonymous with taste and quality, whereas McDonald’s became known for their speed and low prices. True coffee addicts everywhere have been groomed into thinking that Starbucks is coffee, and nothing else will do. This customer loyalty is a result of years marketing campaigns, excellent customer service, and non-rushed coffee preparations. Starbucks isn’t just coffee, it is an experience, and as such, McDonald will have difficulty competing.
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Video from: http://blogs.starbucks.com/blogs/customer/archive/2009/04/30/sneak-peek-at-new-ad-campaign.aspx