Dunkin Donuts faces a very competitive environment in the coffee and snack industry. A major threat is posed by other large competitors, including Starbucks Corporation, Peet's Coffee, and new entrants such as McDonald's McCafe, with the most significant threat coming from Starbucks. While Dunkin Donuts, as of April 2011, holds 16.1% of the market, Starbucks holds 32.6% of the market sharexxiii. While competitors and larger chains pose a greater threat in terms of total loss of profits, local bars are definitely worth mentioning. A small coffee shop may be able to poach customers within a certain area through low-cost local advertising and word of mouth. These small shops may also be able to control quality more efficiently and have more agility in providing a product suited to local markets. Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get an Original Essay In the coffee and snacks industry, rivals will be able to compete on product quality, service quality, and pricing. Product quality may vary based on the type of beans purchased, the best method of preparing coffee and food products, and the presentation of those products. Although a company like Starbucks can more easily standardize processes and product quality, due to Dunkin Donuts' choice of 21 franchises, it may face a more difficult time presenting a standardized, quality product. This may be due to less adequate training practices or the execution of training procedures in stores. Another way Starbucks or other rivals can compete on quality is through service and atmosphere. While Dunkin Donuts has historically provided a quick shopping experience, Starbucks offers an atmosphere where customers should feel comfortable enough to stay and relax or work. This could lead to a more pleasant customer experience and repeat purchases with each customer visit, but it could also contribute to higher costs and be outside of Dunkin Donuts' strategy. The higher costs incurred in creating service quality and atmosphere could allow Dunkin Donuts to compete with rivals on price. If your target market is not looking for a seated experience, but rather a bargain price, on-the-go experience, this may be a more successful strategy. Other companies have succeeded similarly: While Wal-Mart provides lower-quality products and fewer services than some retail competitors, they have succeeded in providing a lower-priced alternative to some shoppers. Please note: this is just an example. Get a custom paper now from our expert writers. Get a Custom Essay The costs of switching a customer from Dunkin Donuts to a rival, or from a rival to Dunkin, are relatively low. A coffee or snack is an occasional, short-term purchase and requires little to switch brands. There are some factors that can increase switching costs. Starbucks has a very specific ordering system and set of options, and the customer will have to relearn the titles for sizes and ingredients. This can also contribute to brand loyalty if a customer feels attached to “their drink” with a list of additions. Additionally, rewards programs, such as the Starbucks Gold Card, may represent an opportunity cost of switching to a different coffee brand.xxiv The company operates a similar program for Dunkin' Donuts called "DD Perks Rewards."xxv In.