Caribou Coffee Enjoys 'Little Guy' Status

The number-four coffee chain uses its position behind Starbucks as a marketing tool.

June 20, 2012

MINNEAPOLIS - Caribou Coffee won??t be chasing Starbucks anytime soon. The fourth-ranked coffee chain is quite content to focus on being the best it can be where it is, Advertising Age reports. "We don't have any interest in being the biggest," said Alfredo Martel, senior vice president of marketing and product management for Caribou. "We don't want to be in every aisle of the grocery chains in America. We'd rather be great at what we do."

That doesn??t mean Caribou simply coasts. "We have a product innovation pipeline that answers blow by blow," what the other chains are doing, said Martel. For example, Caribou debuted breakfast in 2010 and lunch items in 2011. This year, new menu beverages include sparkling juices and teas, such as Peach Black Tea and Very Berry Juice.

Caribou is aiming for high-quality without the fuss. The "most important marketing tool is the everyday experience that we deliver. ... It's the most powerful brand tool we have," said Martel. That fits with Caribou??s middle-of-the-road perception. "There's a huge swath in between [the dark roast of Starbucks and light roast of Dunkin?? Donuts], and that's probably 40% to 50% of customers," said Andy Barish, a restaurant analyst with Jefferies.

The chain has a modest 465 U.S. locations, well below Starbucks (10,800) and Dunkin?? Donuts (7,000). Caribou has moved into grocery and club stores, which has boasted its awareness outside markets with stores. "The name's gotten out there before people have had a chance to have [a cup of coffee] in the coffee house, which I think is the heart and soul of the business," said Martel.

Caribou uses little media to market itself, focusing instead on digital space and social media. "We've found that digital platforms are much more cost-efficient in getting impressions," said Martel. "To try and compete with McDonald's and massive broadcast marketers -- we're not going to win that game, so we have to fight a smarter fight. Relevance of message is clearly better achieved through digital and social, as well as the ability to have a conversation. ... [You] can have folks give you immediate feedback."

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