Dunkin Donuts: Strategy and Strategic Management Essay
Dunkin Donuts: Strategy and Strategic Management
Ⅰ. Introduction of the Company
Dunkin’ Donuts is an American global doughnut company and coffehouse chain based in Canton, Massachusetts. In 1948, William Rosenberg opened his first restaurant as Open Kettle, in Quincy, Massachusetts. In 1949, the name ‘Open Kettle’ was changed to ‘Kettle Donuts’. In 1950, it was founded by William Rosenberg in Quincy, Massachusetts. And the now corporate name Dunkin’ Donuts adopted. In 1955, Rosenberg sold franchise of Dunkin’ Donuts to others. In 1959, Rosenberg was began lobbying for Dunkin’ Donuts at the International Franchise Association. In 1963, the chain’s 100th restaurant opened.
In 1979, Growth was exponential starting. The chain had 1,000 restaurants. In 1990, the chain had 2,000 restaurants.
In 1992, the chain had 3,000 restaurants.
In 1996, bagels were introduced to the Dunkin’ Donuts menu.
In 1997, breakfast sandwiches were introduced to the Dunkin’ Donuts menu.
Dunkindonut.org was founded by a customer, for disgruntled consumers and employees to lodge complaints about the company. In 1999, the site appeared before the company’s own website in many search engines, and received national media coverage before being purchased by Dunkin’ Donuts. In 2002, Rosenberg passed away from bladder cancer at the age of 86 in his Mashepee, Cape Cod home. In 2004, the company’s headquarters were relocated to Canton. In 2006, Dunkin’ Donuts began using the slogan “America Runs on Dunkin” which continues to be used in many advertisement campaigns. In 2007, Dunkin’ Donuts featured tear-off pieces on its coffee cups and created a promotional campaign centered on a coffee cup named Joe Dunkin. In 2008, Dunkin’ Donuts opened its first “green” restaurant in St. Peterburg, Florida that is Leadership in Energy and Environmental Design(LEED) certified.
On December 10,2008, Nigel Travis was appointed Chief Excutive Officer of Dunkin’ Donuts’ Brands.
Dunkin’ Donuts offered a 99 cent latte, cappuccino, and espresso promotion from 1-10 pm. In 2009, Nigel Travis assumed the role of Dunkin’ Donuts President.
Dunkin’ Donuts temporarily stopped the sale of Dunkaccino and hot chocalate because of concern of a possible salmonella poisoning at a suppplier’s facilities.
The Kainos Partners Holding Co., which owned and operated 56 Dunkin’ Donuts, filed for bankruptcy. In 2010, Dunkin’ Donuts’ gloabal system-wide sales were $6 billion. In 2011, Dunkin’ Donuts ranked first for customer loyalty in the coffee category by Brand Keys.(~2016) In 2012, Dunkin’ Donuts switched its beverage provider from PepsiCo to The Coca-Cola but Canadian restaurants.
Dunkin’ Donuts launched its first-ever mobile application for payment and gifting for iPhone, iPod touch and Android smartphones. In 2013, Nigel Travis assumed the role of Chairman of the Board and Paul Twohig was appointed to President, Dunkin’ Donuts U.S & Canada.
Dunkin’ Brands was bought by French beverage company Pernod Ricard S.A. The Dunkin’ Donuts chain in Thailand used an advertisement that contained a photograph of a woman in black face-paint, and then was criticized by racist. In 2014, Dunkin’ Donuts is owned by Dunkin’ Brands Inc. that also owns Baskin-Robbins.1
Ⅱ. Background of the Case
Case7 is Strategy and Strategic Management parts.
The group will try a combination of the Dunkin Donuts SWOT analysis coming out to Takeaway7.2 in it. Dunkin Donuts is located firmly in the brand image itself a product called donut when viewed in terms of Strength first. So, you are ahead of the exclusive position in the same line of business. Loyal customers of Dunkin Donuts are sufficiently secured as much as the preemption. In addition, there is a confidence in marketing as much as maintaining the top spot by far the confectionery industry, also the ability of marketing, it is world-class standards. In the second Weakness surface, recognition of the donut is high, awareness of Dunkin coffee is insufficient. In addition, due to excessive low-price policy, image of low-cost coffee are planted. And with the exception of coffee, drink alternative missing. In addition, the sense of crisis has increased the advent of direct competitors, such as Krispy Kreme.
However, in Opportunity surface, Life patterns of consumers, rather than rice and miso soup with bread and coffee were changed. The greatest opportunities is that number of competitor is small. So is that customer acquisition potential of the donut market is large. Bean market has many competitors. However, the possibility of development of the market potential has a number of advantages. Finally let’s look at the part of the threat. Not good visual of Fast Food. And Due to the recession, consumer sentiment will have been shrinking. Due to preemption of coffee bar in the coffee market will be larger for the anxiety.
Next the group will explain 4P strategy.
First, let’s look at the side of the Price of 4P. Donut has maintained the price of 700-900 yens, Coffee is between 1900-2900 won the traditional coffee brands to be priced much lower than. This leads to a competitive product that can be together a delicious coffee and donuts at 4000 yen is the price of a cup of coffee Starbuck. However, the image of coffee poor quality of low-cost, there is no competitiveness. So, Dunkin ‘Donuts is tried to produce a new production for Fussy appetite domestic consumers. Reasonable price in terms of taste and quality as well as Dunkin’ Donuts is an advantage. In terms of the product, Dunkin’ Donuts is the core of the approximately 50 more Donuts and recently more diverse is the coffee. Use only Al Rabika John coffee beans, management and strict retention period, use only the high quality that meets packaged (packaging), Dunkin coffee is inclined efforts of most clean and freshness. In addition, The basic idea of the Dunkin ‘Donuts is the QSC. Q is quality of the product (Quality), S is the course all services (Service), C is means cleanliness most important in food (Cleanliness). In order to protect the QSC, Apart from other products to make the donuts each region operates 10 plants twice a day produces fresh donuts.
In addition, if the distribution is limited to 12 hours per day overdue. Made on the day of the donut, but can sell to consumers with strict internal discipline. In third aspect place, It is intended for office workers and college students in their 20s and 30s are the most important core layer, Dunkin Donuts, important Jongno, and university district and Gangnam which I opened a store such. Lung shop rate and stay in less than 5%, I’m running the first also to ensure the distribution chain. However, as important as the fact that increasing the number of stores is the atmosphere of the store. Went to make the image work and home, and during the middle of the store through the ads in a variety of media. Strategy to place a comfortable third he was successful in the same way as home. Gentrification of these places is as important as to gentrification the quality of the product.
Finally, promotion, for connecting in relation to consumer intense, yet friendly awareness of Dunkin ‘brand that is already known in order to solidify to consolidate its position as one of the existing market in, I was the advertising executive on a large scale. It was great results from a subject and rapid industrialization, the office workers in their 20s and 30s that are always busy with work, we performed aggressive marketing that appealed to the sensibility. When you eat a donut to be out from the sale of donut simple, always, enjoys with coffee, women in their 20s and 30s like Lee Byung Hun, Kim Jae Won, advertisements that put a strong message, by the executive with the actor handsome young like Otani Ryohei, and attracted the eyes of these.
Ⅲ Answers to Questions
Ⅲ-1. what does a Porter’s Five Forces analysis reveal about the industry in which Dunkin Donuts and starbuck’s compete, and what are its strategic implications for Dunkin Donuts?
Dunkin Donuts make challenge to Starbucks. Tony Fabez who is the COO of Dunkin international said “You can drink fresh brewed coffee only passed 2~4 weeks at Dunkin while you drink coffee made by coffee bean which passed 6 months from roasted.” Dunkin actually originally have sell coffee, but Dunkin challenge king of coffee shop-Starbucks,2 so Dunkin is new entrance of coffee market. Dunkin’s competitive benefit is overwhelming number of franchises and cheaper price. Starbucks original coffee costs 2.5$ while Dunkins original coffee costs 1.9$. Primarily coffee market has low entry barrier. I learned in society class that coffee producing country can’t start price fixing because coffee is easy to growing. Rivalry among existing firms is intensive. There are so many coffee shops like Starbucks, Hollys coffee, Tom and Toms coffee, etc.. Saturation is exact. In other word, a lots number of coffee shop are presenting the large needs of coffee. Suppliers-as you know, there are abundant suppliers- buyers easily gets coffee beans. And competitors also can easily gets coffee beans. Actually coffee suppliers are selling it for too cheap price so buyer takes too much benefits.3 except coffee bean supplier, there are coffee roaster supplier, but I think their tiny company can’t exert their influence to major companies.
Buyer-I think those company should take care of the buyers, the most should pay attention, buyers are sensitive at taste and price but they take a serious view of accessibility, service, awareness and atmosphere. Dunkin has better accessibility but if buyers first meet friend in a long time or meet people in business, they will go to Starbucks not dunkin! It means Starbucks’ competitive benefit is formality. Subtitute products-What can subtitute coffee? There are no tea franchise. Except alchol, there aren’t any ‘hot’ beverage like coffee. Recent 5 years, coffee importation market become 3 times bigger. I think anything can’t subtitute coffee yet.4 Dunkin donuts covet Starbucks unsing huge funds power and distribution network. The business doesn’t needs heavy investment and decision. Dunkin get bigger and bigger and invasing other companies. But coffee market has low entry barrier. Dunkin could be threated by bigger major company at any time. If Dunkin want survive at market, it should develop their new own competitive benefit. For example, Starbucks distribute soluble coffee which has brand of Starbucks.
Ⅲ-2 Q: In what ways is Dunkin’ Donuts presently using strategic alliances, and how could cooperative strategies further assist with its master plan for growth?
Dunkin’ Donuts often partners with a select group of retailers-such as Stop & Shop and Wal-Mart. This activity has found another new market in those people who need to have a rest in shopping. The cooperative strategies are very useful in fierce market, it can low the cost of open new coffee store and acquire more profit. Dunkin’ Donuts has been joining with many theme parks, ball parks, important places and lodges. They also have expanded to sporting venues like Fenway Park and the TD Bank north Garden. Partnering with popular companies and organizations helps them gain popularity and shows how popular places support Dunkin’ Donuts.
Dunkin’ Donuts has come up with a brilliant new strategy for growth within the coffee industry. In 2002 the company formed an alliance with Stop & Shop Supermarkets. The agreement allowed Dunkin Donuts to have a full service coffee shop in over 5,000 stores throughout Massachusetts, Connecticut, Rhode Island, New York and New Jersey. This partnership benefitted the Stop & Shop Supermarket’s business because it added value for the customers to drink gourmet coffee during grocery shopping.5
Ⅲ-3 Q: Do you see evidence of strategic leadership in Dunkin’s U.S. expansion plans if so how?
Expand into new markets using a disciplined approach. They believe that the Western part of the U.S. represents a significant growth opportunity for Dunkin Donuts. Specifically, in the near-term, they intend to maintain a focus on development in contiguous markets that are adjacent to their existing base, and generally move outward to less penetrated markets in progression, providing for marketing and supply chain. Although Dunkin’ Donuts has a strong presence in Northeastern U.S., they do not have a strong presence in other areas of the country. The map below depicts the abundant amount of stores in the East compared to the rest of the country. By 2020, however, they plan to have a total of 15,000 stores in the United States which would almost double their current U.S. presence. In addition to the United States, Dunkin’ Donuts has been serving customers internationally for over 40 years and currently operates over 3,100 stores in 32 countries. Their growth is successful due to their store consistency and strong franchises; out of their approximately 10,000 stores worldwide, about 7,000 of them are franchises.
Therefore, consistency between these stores is of great importance. Dunkin’ Donuts now offers Dunkin’ Donuts K-Cup® portion packs, making “America’s Favorite Coffee” available for use with the Keurig® Single-Cup Brewing system. Sold exclusively at participating Dunkin’ Donuts restaurants in the United States, Dunkin’ K-Cup® portion packs are offered in five popular flavors, including Original Blend, Dunkin’ Decaf®, French Vanilla, Hazelnut and Dunkin’ Dark® Roast. Dunkin Donuts has designed a strategy of cost leadership. Cost leadership id defined as offering the same product of equal or better quality at a price that is equal to or less than the competition. Since most consumers today are very price/cost conscious, this type of business strategy is very appealing to them. It makes for a lower profit margin but allows for greater volume of sold product. This strategy can be difficult to attain as it requires great discipline in controlling costs and expenditures.
The overall operations of the business must be kept in check at all times in order to maintain a lower price over its competitors. Dunkin Donuts’ produces more product sales than that of Starbuck’s, its nearest competitor. All prices at restaurant chains are fixed but because Dunkin’ sells a higher volume of product they are able to maintain overall profitability. Dunkin’s carries only a limited number of items which allows for better controls along with superior customer service. Like its competitors, Starbucks and McDonald’s, Dunkin’ Donuts offers the same great service at each one of its independently owned locations. Most Dunkin’ Donuts Stores are placed strategically in centers with a lower rent factor. Furthermore, since all of Dunkin’ items come from the same vendors, costs can be easily controlled. Should any of these vendors choose to increase prices, Dunkin’ can easily find new vendors.6
IV. Compare with another company in similar issue of chapter.
1. Basic strategy
– Expand the U.S market, Entry into the world’s major regions Through the expansion of the store any region can see a dunkin. Dunkin images in life that can be planted.
2. Enhanced coffee beverages sold.
Drink 50% Coffee 20% Meal 30% sales. Coffee market, trying to stand up .
3 .Dount is favorite food from Meal replacement food by repositioning.
Dunkin Donuts coffee in the morning to visit and eat.
American peoples wake up and eat breakfast at the Dunkin Donuts..
4. Star marketing using celebrities and characters.
The stars who appeared in the popular, If planted in high-quality give consumers the impression that donut. (Michael Vale trademark Dunkin 80s)
5. Dunkins’ image
In life with the trends in consumer preferences the timely development of new products. Made by other companies inside the trend Dunkin had their own way, the product is immediately released quickly. Dunkin has released bagels a lot of revenues.
6. Live to die.
Almost all companies when his company is unlikely to change the advertising strategy. But dunkin is different. Brand power is at highest out a new advertising. AS a result, today’s Maker of the world’s largest coffee and bakery is growing. The change in the timing of the match and the change to a new level, because it changed the brand marketing strategy .
Krispy Kreme Donuts.
2004 in Korea first open.
On December 16, 2004 , the first “HOT NOW” neon sign was turned on in Korea for the first Time in Asia. As of 2012, Krispy Kreme provides customers with warm and fresh doughnuts In its about 70 nationwide stores.
Strength – LOTTE shopping with partnership.
LOTTE is experience in distribution and catering business and know-how plenty. So it is possible to differentiate the taste of donuts.
So it was trying to create a brand image of sophisticated.
Unique marketing (Offer free donuts , Word-of-mouth marketing , The unique packaging) Automated Production Systems.
Showed the customers manufacturing process (Experience for customers) If you buy a lot offered a discount ( dozen)
The sweetness of the donut and High calorie.
Therefore Koreans are likely to not fit national mouth.
Low accessibility , High price.
So the price is low and 10 junior and senior high school students prefer a sweet food. You can easily buy a hand and Satisfies the needs of their preferred products So twenties is main targeting customers.
.To have a family and have a wonderful time out to take advantage of as many Take-out.
The low level of competition in the donut market.
Formed before the start of business from word-of-mouth.
Because of Dunkin Donut products consumers there is recognition that the Dunkin Donuts Dunkin first mover advantage market → Market share 90%
The spread of cultural well-being.
In addition, a number of competitors have entered the country. (Mr.Donut , Tono studio dount)
Totally compared [Dunkin VS Krispy Kreme]
Doughnut market is Dunkin Donut is the first shop in itaewon in 1994. Dunkin is 10 years donut market has been monopolized. But the killer is Dunkin Donut’s Krispy Kreme donuts are made in korea market entry in 2004. Broke an official Dunkin=Donuts. Krispy Kreme donuts could reason against because the only way to differentiate manner. Hard and we have domesticated white powder donuts , fluffy and warm donuts is the impact of new. Dunkin Donuts does not have a special representative of the product. Unlike Krsipy Kreme made directly from the store piping hot representative of the original glazed products layer was targeting mania. Also, instead of receiving undue criticism PPL ad, A neon sign is turned on “hot now” give away free donuts, hot offers and events, Consumers are prepared to look at a donut unveiled. Because of this differentiated strategy, Krispy Kreme donuts in the domestic market in two years revenue grew by 200%. While Dunkin Donut’s is market share decline and there was no revenue growth.
More, Dunkin Donuts is the number of stores is often compared to its competitors However, revenue can be compared to its competitors is the third. More difficult for the economy, the donut market has a booming. Dunkin Donuts since 2010, a day 3-5time directly from the store baked donuts providing customers with introduced the system PFD(Premium Fresh Donuts). Made at the factory was trying to get out into the image. While, Krispy Kreme donuts, making the product directly to retail stores is expansion difficult to operate. So, distribution you can quickly produced a small donut shop was opened in fresh shop. As a result, its plans to increase market share. Dunkin Donuts stores are conscious of latecomers to bake donuts that directly is because Krispy Kreme as its competitors it is a threats. These days, focusing on the side of coffee than donuts, so will get lost in a lot of donuts customer. Krispy Kreme is makes it easy to find the customers, if you expand the number of stores. One will be able to go higher than the top of the industry.7 V.
So in this report, we are decided Dunkin’ Donuts has five competitive point Similar as Porter’s five forces.
A. Substitute product : Krispy Kreme
Dunkin Donuts does not have a special representative of the product. Unlike Krsipy Kreme made directly from the store piping hot representative of the original glazed products layer was targeting mania. Also, instead of receiving undue criticism PPL ad, A neon sign is turned on “hot now” give away free donuts, hot offers and events, Consumers are prepared to look at a donut unveiled. Because of this differentiated strategy, Krispy Kreme donuts in the domestic market in two years revenue grew by 200%. While Dunkin Donut’s is market share decline and there was no revenue growth. More, Dunkin Donuts is the number of stores is often compared to its competitors
However, revenue can be compared to its competitors is the third. More difficult for the economy, the donut market has a booming. Dunkin Donuts since 2010, a day 3-5time directly from the store baked donuts providing customers with introduced the system PFD(Premium Fresh Donuts). Made at the factory was trying to get out into the image. While, Krispy Kreme donuts, making the product directly to retail stores is expansion difficult to operate. So, distribution you can quickly produced a small donut shop was opened in fresh shop. As a result, its plans to increase market share.
B. New Entrants: Mister Donut
Now almost all Mister Donut stores have changed their names to Dunkin’ Donuts, and Mister Donut no longer exists anymore in America. However, before Mister Donut was acquired, both Dunkin’ Donuts and Mister Donut had started to do business in Japan in the 1970’s. Dunkin’ Donuts was run by a food company, Yoshinoya, which mainly provides a meal known as beef rice bowl. Mister Donut was run by a cleaning company, Duskin, in Japan. Dunkin’ Donuts failed in Japan and withdrew, but Mister Donut succeeded and dominated the doughnut industry in Japan. Even now, Mister Donut continues to be the most popular doughnut chain in Japan, even though you can’t find it anymore in America. On the contrary, you can’t find any Dunkin’ Donuts in Japan, even though it is the world biggest doughnut chain.
C. Suppliers: Coca-Cola
Reuters reports that Dunkin’ Donuts has dropped PepsiCo drinks in favor of Coca-Cola products at its 9,400 Dunkin’ and Baskin Robbins shops across the U.S. Terms of the deal haven’t been disclosed, Reuters notes, but the move likely left a bad taste in the mouths of Pepsi executives. In January, Dunkin’ revealed plans to double the number of existing Dunkin’ Donuts stores over the next two decades, according toThe Consumerist. Still, Pepsi released a polite statement, noting that, “Dunkin’ Donuts has been a valued partner of PepsiCo over the last five years and we’ve enjoyed being part of its success.” Enterprise News reports that the Dunkin’ Donuts deal covers Coke’ juice, energy drink and water brands, including Powerade, Minute Maid, Simply, Dasani and Vitaminwater. Coke beverages will appear at Dunkin’ Donuts and Baskin-Robbins shops by late spring, and all Pepsi drinks will disappear by August
In Opportunity surface, life pattern of the consumer rather than the rice and miso soup, I began to turn into bread and coffee. And, it has the characteristics associated with Take-out culture on the theme of coffee and a donut to eat easily Dunkin Donuts. The greatest opportunity is that the acquisition of potential customers donut market is large by competitors in the market of donut is very small. And while competitors often market of beans, potential for development of the potential market also has a number of advantages.
Dunkin Donuts’ have its own strategy. They have grown as the doughnut market leader. In spite of several competitors and new entrances, they continuously have developed their own strategic management. For fulfilling customers’ demand, they will study the best strategy from now and on.