Competitive Watch: McD's, Starbucks and Dunkin' Go Head to Head

Beginning this week, McDonald's is expected to launch the long-awaited national campaign for its new coffee line, touted as the biggest launch in the restaurant chain’s history.<br clear="none" /> <br clear="none" /> While the company won't detail how much it is spending, McCaf&#x00E9; is expected to receive an outpouring of more than $100 million fanned out across TV, print, radio, outdoor, internet, events, PR and sampling, Advertising Age reported. <br clear="none" /> <br clear="none" /> And there's a lot riding on the budget: McCafé is expected to add about $1 billion to McDonald's bottom line in the United States&#x2014;about $75,000 per restaurant&#x2014;and the chain is banking on national advertising to realize that financial goal, the report stated. <br clear="none" /> <br clear="none" /> "I assure you that we're going to be surrounding the consumer with very relevant messaging," says Neil Golden, chief marketing officer for McDonald's USA. He said initial ads "will pulse on and off very strongly through the summer, with sustained weight well into 2010." <br clear="none" /> <br clear="none" /> McDonald's already has started the push with coupon booklets in newspapers for McCaf&#x00E9;, which initially includes cappuccinos, hot and iced lattes and mochas, hot and iced coffees, and hot chocolate. McDonald's will add smoothies and frappes to the beverage line later this year and into 2010, according to Advertising Age.<br clear="none" /> <br clear="none" /> One of the new TV spots incorporates the accent mark from McCaf&#x00E9;. When you "McCaf&#x00E9; your day," a commute becomes a commut&#x00E9;. When a pal drops by your cubicle with an iced mocha, it's a cubicl&#x00E9;. "There's a wit and charm to the brand, and to the products and to McDonald's," explained Marlena Peleo-Lazar, McDonald's USA chief creative officer. <br clear="none" /> <br clear="none" /> The chain understands it faces a quality-perception hurdle with first-time buyers, so it's focused on "making the product the hero" in TV spots, adds Peleo-Lazar. McCafe's African-American and Hispanic campaigns will reflect preferences based on consumer insights. African-Americans are more interested in sweeter beverages, while Hispanics tend to be coffee and espresso experts, so they need assurance on quality. <br clear="none" /> <br clear="none" /> Radio spots will teach consumers "How to Speak McCaf&#x00E9;" by using the accent mark, while an online effort uses actors from Chicago's Second City comedy theater, the magazine reported. <br clear="none" /> <br clear="none" /> McDonald's spokeswoman Danya Proud says the chain will examine more opportunities like its sponsorship of Mercedes-Benz Fashion Week, in which the chain built a McCaf&#x00E9; lounge and served drinks to attendees. Chicago also holds Free McCaf&#x00E9; Mondays, when anyone can drop in to McD's for a free drink, Advertising Age reports. <br clear="none" /> <br clear="none" /> In addition, McDonald's is doing summer giveaways with Visa, including two $50,000 grand prizes for 100-word entries about why McDonald's should "McCaf&#x00E9; Your day." <br clear="none" /> <br clear="none" /> <b>Starbucks Corp. </b><br clear="none" /> <br clear="none" /> Meanwhile, Starbucks Corp. this week will lower pricing on select items in some of its markets to better convey the brand's value message. Prices will drop on some popular items, but prices also will increase on others, Nation’s Restaurant News reported. <br clear="none" /> <br clear="none" /> Howard Schultz, Starbucks chairman, chief executive and president, says the pricing changes will be accompanied by a multimillion-dollar advertising campaign, set to begin today. The campaign will combat the notion that the coffeehouse chain offers only expensive lattes and that fast-food rivals are stealing market share. <br clear="none" /> <br clear="none" /> "Speculation that Starbucks is losing retail market share to competitors has been grossly exaggerated," Schultz says. "Our customers are not trading down." <br clear="none" /> <br clear="none" /> He says the weak economy is continuing and customers remain focused on value. "But customers are looking for meaningful value," he says, "not just a lower price, but quality."<br clear="none" /> <br clear="none" /> Starting today, prices will be "fine-tuned" in select markets to make some popular items more affordable. A grande iced coffee, for example, will be priced under $2&#x2014;reportedly a 45-cent savings in some markets, according to Nation's Restaurant News.<br clear="none" /> <br clear="none" /> <b>Dunkin' Donuts </b><br clear="none" /> <br clear="none" /> Not to be outdone, Dunkin' Donuts announced yesterday that all participating shops in the New York Tri-State area will roll back prices for its entire line of latte beverages. The rollback applies to all sizes, flavors and varieties of hot and iced lattes, including the Latte Lite, the chain’s DDSMART menu option made with skim milk and Splenda.<br clear="none" /> <br clear="none" /> Latte prices will be reduced by roughly 15 percent, the company reported. <br clear="none" /> <br clear="none" /> "This rollback allows consumers in the New York Tri-State area to purchase a latte for less than $2," Dunkin' Donuts Field Marketing Manager Louis Conte said in a statement. "In these difficult economic times, we're hoping that rolling back prices will help keep America running and moving forward. This latte offer reaffirms our commitment to offer high-quality beverages at an everyday value for our customers."<br clear="none" /> <br clear="none" /> The New York Tri-State area includes the following counties in New York: Bronx, Dutchess, Kings, Nassau, New York, Orange, Putnam, Queens, Richmond, Rockland, Suffolk, Sullivan, Ulster and Westchester counties. New Jersey counties included in the promotion are: Bergen, Essex, Hudson, Hunterdon, Middlesex, Monmouth, Morris, Ocean, Passaic, Somerset, Sussex, Union, and Warren. In Connecticut, Fairfield County is part of the promotion. <br clear="none" /> <br clear="none" /> <br clear="none" /> Source: <a href=" target="_blank">Convenience Store News</a>