Innovation Is Overrated

cj · 09-23-2003

excellent article ... i would have liked to see an additional paragraph "The right balance between innovation and imitation'

this is a really good paragraph - very relevant to our industry

LESSON THREE: Markets Have More Niches Than You Think
Part of the benefit of competition is it forces companies to think more carefully about what exactly they’re offering customers. The differences between rivals may be greater than they look on the surface. Dunkin’ Donuts, Starbucks and Krispy Kreme all sell pastries and caffeinated beverages, so they’re obvious competitors. But beneath that similarity, they’re serving different markets. Krispy Kreme’s customers visit only occasionally but buy dozens of donuts; that chain is peddling a dietary splurge, not daily sustenance. “This is a destination experience, one that’s more of a treat,” says Krispy Kreme marketing chief Stan Parker. Starbucks, like Dunkin’, tries to infiltrate customers’ daily routines, but Starbucks chief Howard Schultz has always seen his stores as neighborhood hangouts, a sort of nonalcoholic “Cheers” setting with comfy chairs, porcelain cups and, increasingly, wireless Internet access. Dunkin’ Donuts, in contrast, is increasingly built on speed. Most of its new stores feature drive-throughs, and the chain bills itself as a pit stop for harried commuters. (One recent TV ad features a cops-and-robbers chase in which everyone stops for coffee before resuming the pursuit.) As Starbucks goes after Dunkin’ strongholds, Dunkin’ managers think endlessly about how to get even faster. “We’ve had these raging debates about self-service condiment bars,” says Kussell, referring to those setups in rivals’ stores where customers add milk or sugar to their own coffee. No question: Dunkin’s tradition of having workers customize drinks behind the counter adds to service times. But so far the chain has decided to keep this small luxury.

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09-23-2003	#2
cj Members Want to see your own Advertising Here! Join Date: Oct 2002 Location: Down Under Posts: 5,202	excellent article ... i would have liked to see an additional paragraph "The right balance between innovation and imitation' this is a really good paragraph - very relevant to our industry LESSON THREE: Markets Have More Niches Than You Think Part of the benefit of competition is it forces companies to think more carefully about what exactly they’re offering customers. The differences between rivals may be greater than they look on the surface. Dunkin’ Donuts, Starbucks and Krispy Kreme all sell pastries and caffeinated beverages, so they’re obvious competitors. But beneath that similarity, they’re serving different markets. Krispy Kreme’s customers visit only occasionally but buy dozens of donuts; that chain is peddling a dietary splurge, not daily sustenance. “This is a destination experience, one that’s more of a treat,” says Krispy Kreme marketing chief Stan Parker. Starbucks, like Dunkin’, tries to infiltrate customers’ daily routines, but Starbucks chief Howard Schultz has always seen his stores as neighborhood hangouts, a sort of nonalcoholic “Cheers” setting with comfy chairs, porcelain cups and, increasingly, wireless Internet access. Dunkin’ Donuts, in contrast, is increasingly built on speed. Most of its new stores feature drive-throughs, and the chain bills itself as a pit stop for harried commuters. (One recent TV ad features a cops-and-robbers chase in which everyone stops for coffee before resuming the pursuit.) As Starbucks goes after Dunkin’ strongholds, Dunkin’ managers think endlessly about how to get even faster. “We’ve had these raging debates about self-service condiment bars,” says Kussell, referring to those setups in rivals’ stores where customers add milk or sugar to their own coffee. No question: Dunkin’s tradition of having workers customize drinks behind the counter adds to service times. But so far the chain has decided to keep this small luxury.