Krispy Kreme has been in the doughnut business for over 64 years and has been a specialty retailer for doughnuts from the very beginning. Krispy Kreme implements a differentiation strategy, attempting to distinguish their donuts based on taste, quality and simplicity. The company’s goal since its infancy has been to satisfy customers by providing a unique experience. This bold strategy has differentiated them from their competition and created a competitive advantage. Customers are allowed to see how the doughnuts are made through the Doughnut Theatre then served the newly baked treats hot and fresh. The bright neon light that shines from every Krispy Kreme location reads “Hot Doughnuts Now,” is one of Krispy Kreme’s key marketing strategies. When this sign is lit up, customers know that they will get fresh doughnuts that have just been made.
Krispy Kreme provides Code of Ethics which covers a wide range of business practices and procedures. It focuses on recognizing, dealing and reporting any ethical issues. Krispy Kreme’s commitment to social responsibility shines through their fundraising program, which offers three different ways of raising profit for your school or organization. Krispy Kreme has assisted non-profit organizations raise over 46 million through fundraising.
Although Krispy Kreme has many competitive advantages, it has its disadvantages as well. The first is the extremely unhealthy nature of its products. By the time a person takes the first bite of their second Krispy Kreme donut, they have already exceeded the USDA’s recommended fat intake for the entire day. This is sure to turn off all consumers who have health concerns or are watching their weight.
The second disadvantage is the single product concept and the lack of variety of Krispy Kreme products. Historical success for quick service type products revenue growth is slowest among any restaurant type. The product is not a necessity in hard times and external environmental conditions could hurt consumer’s willingness to buy.
Krispy Kreme will encounter many indirect and direct challenges as it continues to increase its market share across the globe. Recent improvements in IT have reduced mistakes in distribution and lowered the amount of computer malfunctions, but there is still room for improvement. Krispy Kreme will have to continue to supply the baking technology to their new factory stores which will be costly. Communication, along with the distribution of production technology and needed ingredients to each individual store can be difficult. Preserving order will be possible only through identifying certain technologies that will assist in the process of distribution and communication.
With the recent upgrades, the employees must be able to operate the new technology without experiencing problems that could damage consumer confidence in the company.
Another challenge to Krispy Kreme is the lack of publicity through advertisements. Krispy Kreme depends solely on name recognition and reputation of its business. By choosing to not spend its money on commercials, they risk the chance of having no recognition in certain areas. Moreover, McDonald has a great relationship with its younger consumer base though its mascot and Starbucks has worked out deals with Barnes and Noble to have its coffee shops located inside the bookstore.
This way people do not just have to get their coffee and leave, they can relax and read at the same time. Krispy Kreme offers none of these benefits. One of the major problems in their current strategy is that they do not have different approaches in their marketing at all. They do not factor in age or demographics in their methods. No matter what area Krispy Kreme is located, everything will be exactly the same.
Finally, growth may cause Krispy Kreme to become less attractive as they become more mainstream. Krispy Kreme may want to slow their growth in location to maintain the authenticity and exclusiveness associated with high quality products.
As a universal product and a global brand Krispy Kreme considers its market as truly anyone and anywhere. This concept allows the company to move ahead with their proved business model in all markets. Although some markets will be more successful than others, in my opinion Canada will emerge as the success story for Krispy Kreme. The Canadian market is more accustomed to the idea of having a donut as breakfast or a snack item versus other foreign markets. Although Canada has Tim Hortons as a popular donut shop, Tim Hortons is not famous for their donuts. Moreover, Canada is similar to the U.S. market in terms of demographics and this will play a great role in its success.
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7. Miller, Beth. “The New Doughnut Dynamic”. St. Louis Business Journal (05/20/04)
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