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Making distinctions

Released at: 03:36, 02/07/2014

Making distinctions

The key to success is identifying your rivals' weaknesses and emphasising how you are different.

by Huyen Thanh

When Starbucks and McDonalds entered Vietnam, Dunkin’ Donuts couldn’t avoid the battle to come. The appearance of three major fast food brands has made the country’s food and beverage chain market more competitive than ever before. Dunkin’ Donuts’ strategy of “Coffee & More” has proven popular among Vietnamese consumers. But it must not only compete with the big foreign brands but also many local brands. Both Starbuck and McDonalds focus on coffee in the localisation strategies, so what can Dunkin’ Donuts do to be successful?

It has chosen to not directly compete in price, but this will not be enough. “We focus on offering high-quality food and beverages, including our world famous coffee and donuts, which all served quickly and are great value,” said Mr Marc DaSilva, Director in Southeast Asia for Dunkin’ Brands. “We feel very well positioned against the competition with this strategy.” More importantly, however, it claims that Starbucks is not its rival, with local coffee shops and international coffee chains being its main competitors. With “Coffee & More”, Dunkin’ Donuts offers a core menu that includes coffee, Coolatta frozen drinks, Dunkaccino frozen beverages, breakfast sandwiches, snack sandwiches, donuts and other baked goods. It also offers items tailored to local tastes, including Suadaccino - a frozen twist on iced coffee.

According to Mr Hoang Tung, Founder/Manager of Pizza Home Hanoi, “Coffee & More” isn’t a good marketing strategy, as the brand is ignoring its strength - donuts. Starbucks’ strength is coffee and McDonald’s is hamburgers, and while their menu includes coffee it must focus more on its core product. “People will think coffee is key in a strategy of ‘Coffee & More’, not donuts,” said Mr Tung. “It would be a challenge for the brand to focus on donuts, because they are not popular among Vietnamese consumers.”

Mr Tung said that Dunkin’ Donuts needs to define who its competitors are and then base its development strategy in Vietnam on the answer. “If the brand focuses more on coffee than on donuts, what it needs to do is reposition its rivals such as Highlands Coffee, Trung Nguyen, and Starbucks,” he said. “Speed is the weakness of all of these rivals.” With fast food, good products mean not only good taste but also quick production. A successful fast food brand is one that can make good food quickly and cleanly. And “if Dunkin’ Donuts can serve coffee quickly, it should send a message along the lines of ‘Time is money, come to Dunkin’ Donuts’,” he said. “Indentifying the weakness of its rivals and reverse positioning should be the marketing strategy Dunkin’ Donuts adopts.”

Dunkin’ Donuts, however, remain confident that they are already known for their fast service and convenience, which meet the demand of customer to grab something to eat drink to take away. 

Last year Dunkin’ Donuts signed a franchise agreement with the Vietnam Food and Beverage Co. Ltd., whose partners have a proven track record of success in the local restaurant industry, to develop the brand in Vietnam. Dunkin’ Donuts’ two restaurants in Ho Chi Minh City are 252 square metres and 175 square metres - larger than some of its competitors. This year it plans to open as many as eight new restaurants in Ho Chi Minh City and Hanoi and continue to develop throughout the country over the next few years.

Many will target Starbucks’ customers to position a new coffee chain in Vietnam, and Dunkin’ Donuts must adopt a better marketing approach.

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