Marketing case analysis on Dunkin Donuts

Executive Summary

Since its inception, Dunkin' Donuts has transformed itself from a small store into a global enterprise. After beginning their business by selling donuts, they have now ventured into new business by selling coffee, sandwiches and other baked items making it a fierce competitor in the coffee industry. The main competitors of Dunkin' Donuts are McDonalds, Krispy Kreme, Starbucks, and various bakeries and convenient stores. Since competition has forces them to reduce their prices, their profitability has decreased to a great extent. They are not struggling to increase their profitability so that their stakeholders may benefit.

The management has come up with three possible alternatives in order to stimulate growth and increase its profitability. They include venturing into new markets, selling branded products in convenient stores, and opening satellite stores. Each of these alternatives have been analyzed and reviewed in detail in order to come up the best solution to help improve the profitability.

It is recommended that Dunkin' Donuts open satellite stores in order to capture a larger share of already captured markets. The advantage of this alternative is that sales can be increased by slightly increasing the costs. In this way, not only the revenue will increase but the profitability on capital employed will also be increased.

Table of contents

Background1

Brand2

Customers2

Company Analysis2

Strengths2

Weakness3

Problem Statement3

Definition of Issue3

Multiples stores in one region4

Over capacity4

Lack of Motivation4

Unprofessional managers5

Family business5

Analysis of case data5

Alternatives6

Decision criteria6

Objectives7

Vision7

Analysis and Evaluation of Alternatives7

New markets7

Branded products8

Satellites9

Preferred Alternative9

Implementation plan10

Recommendations10

References11

Background

Dunkin' Donuts, the world's most famous coffee and bakery franchise chain currently serves millions of customers per day. Opened by William Rosenberg, the company makes more than 50 varieties of donuts, several types of coffee, and a variety of baked goods and sandwiches.

First opened in Quincy Massachusetts in 1950, Dunkin' Donuts initially offered only donuts and coffee (www.dunkindonuts.com). Later in 1955, it started issuing licenses to retailers to use its branding, rights and business model. In the 1980's franchising had gained popularity and at the end of 1987 there were 1,478 Dunkin' Donuts units all over the United States most of which were franchised. It was during this time that it started using international franchising licenses to retailers in North America (Feldman, 2011).

Dunkin' Donuts has several competitors; shops, restaurants, convenience stores, and bakeries were all giving a tough competition to the company. Indirectly, it also competed with snack franchises like various gourmet cookie shops, coffee chops, and ice cream parlors.

Competition from supermarket bakeries and convenience stores was continuously increasing with several thousand such stores spread in all parts of the country. Interestingly, one of the largest selling items in these bakeries was donuts. These bakeries were easily accessible compared to Dunkin' Donuts since they were located in every part of the country. The only drawback of bakeries and convenient stores was that they used to sell packed donuts which were usually not fresh. Dunkin' Donuts on the other hand has a policy of only selling fresh items (www.dunkinfranchising.com).

Dunkin' Donuts franchises also competed with one another since there were cases in ...