Porter's Five Forces Model

For buyer power our industry has a high buying power because the buyers have many choices from whom to buy. For example, McDonalds came out with new cold coffee drinks while already having a breakfast menu and Starbucks is already in competition with Dunkin Donuts with coffee. The way DD is reducing the buyer power is by offering certain perks to customers such as a DD coffee subscription. With this subscription that can be done online the customer will get 20% off of the everyday prices. In this sense DD is not too bad with this power but still needs more perks because this industry is still booming. With supplier power our industry seems to have a good supply power because they have high buying power which means they have many suppliers to choose from who make coffee beans and other breakfast items and the supplier power is low because they are not the only ones out there that can provide coffee and other things. Furthermore, when DD supply the item it then becomes a low buying power for the customer because DD provides the trademark on certain things which limits those buyers from getting the same of DD. With switching cost the penalty for a customer switching over to another supplier of coffee and donuts and other breakfast items would be the price. DD has always had a good reputation for good coffee at a reasonable price and they added on to that by adding other food to their menu that is at a great price. An entry barrier that other competitors might find would be to get the same or more variety in their menu with the same quality and price. Furthermore because of this DD’s threat of substitute products or services are high because there are many alternatives to this product and service but at the same time DD has their customer service and competitive prices to help them out with that. With the threat of new entrants DD has had Starbucks who entered the market and knew that they had to provide quality coffee in order to enter that market. However, there still isn’t another Starbucks or DD yet because this market is hard. In order for a new competitor to enter this market they will not only have to provide quality coffee but also have great prices for everything they sell because the market has changed into this since DD provides variety plus cheap coffee. Lastly, with rivalry among existing competitors competition is high in this market. Again, every fast food restaurant offers coffee and even added fancy coffee such as latte and frapp's which is competitive with this market because Starbucks and DD are no longer the only option for someone to get a cup of coffee. However the way DD is trying to lower this by adding on to their menu. Therefore, a customer will not only get a quality cup of coffee at a good price but they can get a sandwich or tuna fish on a toasted bagel.