So I’m not sure if you are aware of it, but it turns out that all of the people in the world can be divided into one of two different groups. These groups consist of people who like to get their morning coffee from Dunkin and people who like to get their morning coffee from Starbucks. Traditionally once you’ve picked which group you want to belong to, you will never change your mind. The product managers at Dunkin have decided that they want to grow their market and so they are preparing to change their product development definition and do battle with the Starbucks product managers in order to see if they can win some more customers over to their way of doing coffee.
So let’s face it – a company can only charge so much for a cup of coffee. Where the real money to be made is when you start to serve fancy cups of coffee. Dunkin is planning on going after Starbucks where they think that they have the best chance of hurting them: quality expresso. Perhaps we should take a moment and make sure that we all know what we’re talking about here. Espresso is coffee brewed by expressing or forcing a small amount of nearly boiling water under pressure through finely ground coffee beans. As a result of the pressurized brewing process, the flavors and chemicals in a typical cup of espresso are very concentrated. Dunkin started providing their customers with machine-made espresso 15 years ago.
What Dunkin plans on doing is revamping their lattes, cappuccinos, and Americanos. These are going to be a major change to Dunkin’s menu. What the Dunkin product managers are trying to do is to get customers to view Dunkin as being cheaper than Starbucks while at the same time thinking about them as being just as good as Starbucks is. The way that they want to help this happen is by dropping “Doughnuts” from Dunkin’s name and by offering cold-brew coffee in their stores along with offering iced coffee in grocery stores.
Dunkin is coming after Starbucks at a time at which Starbucks is especially vulnerable. Starbucks has had poor financial results in the past few financial quarters from their U.S. stores. At the same time, they are now facing increased competition when it comes to selling high-quality coffee. Currently, a 16-oz hot latte costs $3.59 at Dunkin while the same cup of coffee costs $4.19 at Starbucks. The Dunkin product managers want their customers to believe that there is no longer a reason to go to Starbucks any more.
Why Dunkin Thinks It Can Win The Coffee Battle
The challenge that the Dunkin product managers are laying down to the Starbucks product managers comes with its own set of risks. Traditionally, Dunkin has been known for serving smooth coffee – not the bold type of coffee that expresso represents. In order to show their customers that they are committed to coffee, Dunkin has gone ahead and remodeled their stores and they have added cold-brew coffee taps and additional drive-through lanes for mobile orders. The Dunkin product managers will be facing the same set of issues that the Starbucks product managers are facing: how to attract more customers to their stores.
Dunkin had some good news lately when their same-store sales grew by 1.4%. This growth was caused by customers spending more when they came to the store and this helped to offset a decrease in the number of customers that they had. This would look good on any product manager’s product manager resume. Currently Dunkin is trailing in terms of expresso sales even as the expresso category expanded to become the fastest growing segment of coffee in cafes. The product managers have decided that the new Dunkin expresso beverages will be sold at all 9,200 Dunkin U.S. stores. The drinks will be served in bright orange cups in an attempt to distinguish them from other Dunkin drinks that come in white or clear cups.
The Dunkin product managers are hoping that their new focus on expresso will allow them to serve more customers in the afternoon. This time of day has been a real challenge for both Dunkin and Starbucks. Dunkin is committed to this effort to become a coffee destination for more customers. The company has decided to invest US$100M in restaurant technology and this includes expresso machines. To help make this program a success, Dunkin franchisees have also committed to making an investment in upgrading their stores.
What All Of This Means For You
It turns out that we are on the brink of an all-out coffee war. The product managers at Dunkin have taken a look at their product manager job description and decided that they are willing to go to war with the product managers at Starbucks over coffee. Previously the world has been divided into Dunkin coffee drinkers and Starbucks coffee drinkers and now the Dunkin product managers want to change this.
Dunkin product managers have decided to go after Starbucks by improving their offering of expresso coffee drinks. Dunkin has been offering these types of drinks for 15 years, but now they want to take on Starbucks. What Dunkin plans on doing is revamping their lattes, cappuccinos, and Americanos. They want customers to realize that they can get good coffee from Dunkin at a lower cost. The Dunkin product managers want customers to no longer believe that there is a reason to go to Starbucks. Dunkin has not traditionally been known for serving bold coffee like expresso. Dunkin is currently trailing in the selling of expresso. However, they are revamping their stores and will be offering expresso in all of their 9,200 stores. The hope is that by offering expresso they will be able to get more customers in the afternoon.
The Dunkin product managers have a real challenge on their hands. Starbucks has established itself as the place to go if you want a good cup of coffee. The Dunkin product managers are going to have to make sure that the expresso that they are serving is viewed as good coffee by their customers. Then they are going to have to get the word out that they are now the cheaper place to go to get good coffee. If they can accomplish this, then they just might have a chance to become as popular as Starbucks when it comes to the place that people decide to go when they want a cup of joe!
– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Product Management Skills™
Question For You: What would be the best way for Dunkin product managers to let the world know that they have a new expresso product?
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What We’ll Be Talking About Next Time
As product managers, the one thing that I believe that most of us feel that we have a pretty good handle on is how new products are created and introduced. I mean, we’ve worked at companies where this was probably part of our job and so we’ve had to sit through all of the planning meetings, review designs, work with sales, and find ways to get the product actually manufactured. However, in our constantly changing world, things are once again changing and how new products get introduced is being replaced with microbrands.