IntroductionBy conducting the framework, the RT has established a wide overview ofcompetition within the environment.
This information determents to what extend”Dunkin Brands” is profitable compared to other firms within the industry. Theframework consists out of 5 elements covering each another aspect ofcompetition (Competition, 2017). Competitive rivalryIndirect Competition Indirect competition, also known as substitutes isrelated to organizations seeking to fulfill the same need as ‘DD’ but offeringa different product or service.
These indirect competitors might shift intodirect competition as well it can help structure new ideas and create newopportunities for the organization (BusinessDictionary.com, 2017). SubwayThe subway is one of the largest fast-food chains in the world as they have10% of the total market share, owning 45.000 + firms operating in more than 120+countries world-wide (GroundTruth Website, 2017). They offer wide variety offreshly baked sandwiches that can be personalized up to your preferences.Nonetheless, firms do offer Cookies, chips, coffee and chocolate can be orderedas additions.
Nonetheless Subway is competing with large chains by offeringbreakfast-items in order to increase sales volume and puts pressure onorganizations operating within the fast food industry (Theseus.fi, 2017). Nonetheless,subway creates a sustainable competitive advantage by focusing on healthy diet,and nutrition as well enhancing quality and taste of their products.
Burger KingBurger-king is currently the fourth largest quick-service-restaurant in theworld owning 9% of the total market share (GroundTruth Website, 2017). Theyhave 2 strategies that gives burger king a great competitive advantage. Marketdevelopment is one growth strategy, entering new markets and targeting newmarket segments by offering products for a low price. However, this strategy istheir secondary priority as they already have penetrated the market around theworld with their many locations. Therefore, their primary goal is to growbusiness throughout introducing new products in order to compete with otherfirms (Gregory, 2017). Mc Donald’sMc Donald’s (MD) is the leading QSR worldwide focussing on being the finestfast food chain in the world retaining 32% of the total market (GroundTruthWebsite, 2017).
Their aim is to produce food as fast as possible with a lowcompetitive price and high-quality service. MD serves products fitting theculture of the region they are operating in. Nonetheless, burger sales rose by3% as coffee sales by rose by 10% since last year since the introducing oftheir all-day breakfast menu and therefore became Dunkin’s largest threat (Marketrealist.com,2017). Additionally, the biggestachievement of MD is the image they have created among customers; ‘name’, ‘brand’ as well hygiene cautions are the 3 factors to attractnew customers (UKEssays, 2017). Direct CompetitionDirect competition is related to organizations that have a dissimilar advantagewithin the environment. They are a direct threat for the firm as they areoffering the same product or service (SCA News, 2017).
Mc Donald’s – Mc CaféMc Donald’s reintroduced the Mccafé concept since 2017 and has expanded in the US and Europe and offersproducts such as; Americanos, espresso shots and pastries baked-in-house. It isthe goal of Mc Donald’s to “become the #1 place where everyone gets theircoffee”. The Mc Cafe designed their products with bright colors on brown paperbags for a “simple and fresh look” to help it compete against new hipster/ trendy coffee companies (Whitten, 2017). Nonetheless, the fast food chain hasled their focus on resourcing their coffee beans from sustainable farmers andtheir goal is to have 100% sustainably sourced beans by 2020. Moreover, investmentsin new equipment for their coffee machines gives firms advantage by deliveringa wider variety of coffee’s. Nonetheless, the organization will use pricing astheir main key advantage in order to compete with Dunkin Donuts and Starbucksas they will offer regular coffee for $1 dollar and specialty-coffees for $2dollar (Money, 2017). Mc Donald’s is focusing on expanding the Mc Café conceptin the US to compete with large chains, however, Mc Donald’s has alreadysustained their coffee popularity among the UK and rest of Europe (Alexander,2017).StarbucksStarbucks is currently having the largest market share regarding coffee salescompared to Dunking Donuts and Mc Donald’s and is much likely to maintain itscompetitive advantage due to the wide variety of premium products they offer.
This makes competitive advantage with Dunkin Donuts more moderate as they set themselvesapart more ‘exclusively’ (Scholar.harvard.edu, 2017).
Moreover, Starbucksgenerates 75 percent of its revenue from coffee sales and generates revenuefrom selling whole bean coffee and merchandises through supermarkets and onlinesales. Starbucks offers selected food service outlets the chance to sellStarbucks coffee and other related products in order to give bring the”Starbucks” experience closer to its consumers and new area’s (Smallbusiness.chron.com,2017). Moreover, food sales have grown by 40% since last year.
This is due tothe fact that Starbucks attracts customers through their mobile app, posingdiscounts for its breakfast offers that includes; bistro boxes, breakfastsandwiches, and oatmeal. This incentive has led to repeating business. Private owned coffee shopsThe coffee industry has become a high repeating and high referral business andsmaller private owned coffee shops find their way to compete this market.”Craft” trends in the food & beverage industry have become popular withinthe whole supply chain and become important for farmers, roasters, buyers, shopowners and baristas as they all contribute to this trend as well competing withlarger organizations. Independent shops offer high qualitative coffee for areasonable price and a variety of food breakfast and lunch items that makes businessrepeatedly. Most independent firms stick to the basics of coffee consumption byoffering ‘quality’ over ‘quantity and variety’ as well using products from sustainableresources.
Therefore, private owned coffee shops being direct competitors forDD (Forbes.com, 2017) Nonetheless, the market increasingly bargains optionsthat adds value for suppliers such as product differentiation and certificationfor more exclusive and special high-quality products or solitary origin coffeebeans. This expands opportunities for suppliers and adds potential value forfirms in order to compete within the market (Cbi.eu, 2017). JAB Beech & Coffee Holdings-company Jab holding is a large privately held investment group that holds several brandsfocusing on offering breakfast and coffee for their target market. These brandsnamed; Keurig Green Mountain, KrispyKreme Doughnuts, Panera Bread, Caribou Coffee and bagel and Peets’s coffee,Balzac, espresso house & baresso competing together against large chains.This interdependent position of different brands gives ‘Jab holding’ a greatcompetitive advantage against large brands as they position themselves on themarket by setting out a very strong competitive based strategy such as productdifferentiation and expansion of franchises in emerging economies as wellselling coffee throughout retailers (Economics-files.
pomona.edu, 2017). The aimof the group is to hold as many breakfast / coffee oriented businesses offeringa wide variety of coffees and sweets in order to make their position within themarket as strong as possible (Firkser, 2017).Conclusion:Analyzing direct competition, above described quick-service-restaurants meet consumerexpectations as they are seeking for on-the-go, cost-effective, healthy foodoptions for breakfast. This need creates a new market for organization as theynow competing with each other on selling breakfast that includes sweets andcoffee in order to boost revenue (GroundTruth Website, 2017). COMPANIES Mc Donald’s / Mc Café Coffee Starbucks JAB Holdings Private owned coffee shops BRANDS 3 6 9 – PROPERTIES APX. 36,900 APX. 27,340 APX.
10,000 APX. – GEOGRAPHIC REACH Middle east, Africa, Latin American, Asia Pacific, Europe, North/South America Middle east, Latin American, Asia Pacific, Europe, North/South America Middle east, Latin American, Asia Pacific, North/South America Middle east, sout-Africa, Latin American, Asia Pacific, Europe, North America GEOGRAPHIC DENSITY Urban / rural Urban / rural Urban / rural Urban / rural TARGET GROUP Students, employees, professionals Students, Young couple, Employees, professionals Students, Young couple, Employees, professionals Students, Young couple, Employees, professionals DIFFERENTATION STRATEGY “Power of franchisees, suppliers and employees working together toward a common goal being world’s leading quick-service restaurant brand” Offering ‘third-place’ experience Coffee of the highest quality International market expansion with the focus on emerging economies Integrating technology Product differentiation Expansion through franchises Sustainable sourced coffee Consumer coffee products Quality above all Using authentic brewing methods “home away from home” environment Less touristic locations / main street locations OWNERSHIP Franchising Franchising Franchising Privately owned (Corporate.mcdonalds.
com, 2017)(Fortune, 2017)(Yanofsky, 2017)(Dudovskiy, 2017) THREAT OF SUBSTITUTE PRODUCTS OR SERVICESCaffeinated alternatives The primary substituteproduct of coffee drinks that is posing a threat towards firms operating withinthe QSR industry are caffeinated soft drinks offered by Albert Heijn –To-Go,Kiosks and other shops that offers snacks and drinks (UKEssays, 2017). However,this threat has become slightly insignificant since consumer preference tend tofocus on ‘healthy alternative’ caffeinated drinks like coffee due to the healthconcerns associated with carbonated soft drinks. However, soft drink organizationsoffering ‘sugar-free’ / ‘dietary’ drinks in order to boost revenue and compete withinthe drink industry (Ibid, 2017).In-home consumptionAccording to NCDT, 54 percent of all people 35+ makes coffee at home (The FirstPull, 2017). This segment has taken a rapid growth and have become a verypopular and diverse market. The consumer market has a wide variety of coffee machinesand coffee types such as; qualities (standard / speciality coffees), origins,blends and product types (whole beans, ground beans, capsules, pods, coffeeextract and instant coffee. These different types of products create new authenticmarketing strategies for organizations and boosts in-home coffee consumption (Cbi.eu,2017).
Speciality coffee According to SCA, themajority of people 59%, chooses speciality coffee over non-speciality (Forbes.com,2017). Many international coffee-brands see smaller national firms entering thecoffee industry, offering consumers speciality coffee with the highest ‘SCAA’degree and therefore competing directly with the large international chains andis seen as a substitute product (Longbottomcoffee.
com, 2017). The coffee marketcan be distinguished among two sub-categories; bulk and specialty coffee. The QSRmarket is highly competitive and giant coffee chains own 70% of the market by focusingon ‘bulk’ supply. The other 30% is dominated by smaller organizations focusing on’specialty’ coffee such as ‘green coffee traders’, ‘local roasters’ and ‘privatelyowned coffee houses’ (Cbi.
eu, 2017). The increasing interest in specialty coffeehas led to a developing industry operated by new privately-owned coffee bars, microroasters, local brands and baristas. These substitutes speciality coffees havebecome a threat to larger chains since more consumers is willing to pay higherprices for high-quality coffee that is sources from sustainable resources and thereforefirms adapt to this new consumer behavior (Ibid, 2017). Fruit / vegetable Smoothies and nutrition bars Fruit/vegetable juices are perceived as more healthy than other sugar-ladenproducts and represent a comparatively value-priced alternative to other typesof snacks, drinks and even meal replacements (Nestlé Professional, 2017).
Moreover,smoothies are easily adapted to consumer preferences with add-on ingredients. Thiscan be a strategic choice for firms to differentiate and generate revenue (NestléProfessional, 2017). Additionally, bars and BARGAININGPOWER OF CUSTOMERSThis is a strong force as the shift from one brandto another might occur due to the following: – Low switching cost (strong force)- Substitute availability (strong force)- Small size of individual buyers (weak force)In this component of the framework, these individual bargaining power of buyersare the most significant forces affecting Dunkin Donuts business. There is highpotential that customers easily shift from Dunkin to other brands because it isaffordable to do so. Reasons can be that other substitutes offering improved productquality as well an availability of more or better services. Nonetheless, thisaspect of the framework shows that one of Dunkin Donut’s top-priority should befocusing on the bargaining power of customers (Wilkinson, 2018).