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How has McDonald’s competed in price wars?

by on May 3, 2012

McDonald’s started a price war with Starbucks as Starbucks has expanded as a growing chain. In 2008, during the pit of the recession  McDonald’s lowered coffee prices even more to compete with Starbucks.  Using 100 million dollars McDonalds has improved the quality of the coffee yet uses automated machinery to quickly produce higher quality coffee. McDonald’s coffee costs $ 2.39 while Starbucks costs $2.80.  Convenience is a huge factor in the busy lives of people today. Money is lost in the eyes of people for time lost. There are more McDonalds drive throughs than Starbucks so it easier to grab coffee at the McDonald’s drive through. Further, coffee at McDonald’s often involves less time to prepare than Starbucks so for someone in a hurry and who just wants caffeine McDonald’s offers the speedy preparation. Dunkin’ Donuts followed closely behind McDonalds with faster service than Starbucks and Lower Prices.

The 100 million dollar campaign through TV, radio, print, online and outdoor advertisements have brought more customers to buy the extremely cheap coffee at their convenience within the 14,000 stores. The advertisements focus on cheering up people and having a great day through coffee with higher quality but lower prices than competitors. Through hard economic times McDonald’s has thrived for coffee is a luxury and the high priced coffee at Starbucks is unaffordable.

Further, McDonald’s added coffee bars and different seating to appeal to costumer service to compete with Starbucks more relaxed feel. Convenience has become more important as people care more about time and money during hard economic times. The thousands of locations with drive throughs allows for minimal time to be spent obtaining coffee while it takes much longer to go in and get a Starbucks coffee. Getting coffee means one is not working and losing money. McDonald’s stores are everywhere offering a grab and go appeal. Dunkin’ Donuts although has lower prices than Starbucks coffee but a bit higher than McDonalds is not as wide spread so is not available for all consumers. Availability has become linked to low prices causing McDonald’s to become a flourishing business and money maker even through difficult times in the United States.

How does McDonald’s discover what factors appeal most to society when looking for fast-food?

http://www.foxnews.com/story/0,2933,519078,00.html

http://www.fastcompany.com/blog/chris-dannen/lab/competition-how-mcdonalds-will-kill-itself-killing-starbucks

http://www.msnbc.msn.com/id/30583933/ns/business-us_business/t/mcdonalds-commits-million-coffee-war/

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One Comment
  1. msmuntz permalink

    Interesting information on the price war over coffee, your broader points are well made, but the specifics are difficult to understand.

    You say: ” Money is lost in the eyes of people for time lost.” –which is not the most clear way to explain what I assume you mean. the opportunity cost of the time spent parking a car, and waiting in line at a Starbucks is greater than that of using a McDonalds Drive-thru. Dont be afraid to use more vocabulary words if they help you make your point!

    Otherwise there are some portions that are hard to understand:
    ” Dunkin’ Donuts followed closely behind McDonalds with faster service than Starbucks and Lower Prices.”
    ” Dunkin’ Donuts although has lower prices than Starbucks coffee but a bit higher than McDonalds is not as wide spread so is not available for all consumers.”
    These sentences, among others, obscured your point rather than clarified it. I think there is good information here, but be careful how you express it!

    9.

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