Dunkin’ Donuts has been perfecting its coffees and donuts since 1948. They target consumers who are in a rush, and who do not have time to wait for expensive gourmet coffees found elsewhere. Dunkin’ Donuts is a subsidiary of Dunkin’ Brand, INC., which also owns Baskin Robins. Like their name portrays, Dunkin’ Donuts offers “50+ varieties of donuts, but [customers] can also enjoy dozens of premium beverages, bagels, breakfast sandwiches and other baked goods” (Dunkin’ Donuts, 2017, Page 1).
The Core Products/Services Dunkin’ Donuts offers
At Dunkin’ Donuts core, they are a coffee and donuts shop. In the summer of 2014, “Dunkin’ Donuts chief financial officer, Paul Carbone, said, “[W]e are a beverage company”” (Cooper, 2014, Page 1). Most of Dunkin’ Donuts profits comes from coffee, although they still make and sell donuts, bagels, and sandwiches. Dunkin’ Donuts offers an assortment of coffees, lattes, and macchiato that come both hot and iced. Dunkin’ Donuts also sells their coffee grounds in grocery stores as well as their pastries.
History of Dunkin’ Donuts
Bill Rosenberg debut the Open Kettle in 1948 in Quincy, Massachusetts. The little shop sold coffee and donuts to shipyard workers, where customers were able to watch bakers make their donuts fresh daily. Despite the shops success Bill changed the name to Dunkin’ Donuts as it seemed more fitting to him, because customers frequently dipped their donuts into the coffee. Bill later opened his first franchised Dunkin’ Donuts in 1955, despite having opened a few other Dunkin’ Donuts in Somerville, Natick, Saugus, and Shrewsbury already. It was not until Bill’s son, Robert, took over the chain from 1963-1999 that Dunkin’ Donuts “introduced muffins, bagels, donut holes (Munchkins), croissants, breakfast sandwiches, Coolattas and other beverages” (Seid, 2016, Page 1). The business has since grown and the rest is history.
Key Current Competitors
Although there are many coffee vendors in America and around the world, there are few who rival Dunkin’ Donuts. Two that can rival Dunkin’ Donuts are Starbucks and Green Mountain, but each have their own niche in the coffee business. As previously stated Dunkin’ Donuts targets customers in a hurry who don’t want to pay an arm and a leg for a decent cup of coffee, and who enjoy donuts, bagels, etc. Starbucks sells gourmet coffees for up to $7.50 a cup, while Green Mountain focuses on customers who want gourmet coffees they can brew in their own homes.
SWOT Analysis: Strengths
Lower priced coffees.
Dunkin’ Donuts offers a substantially cheaper cup of coffee then its competitors, while still making plenty of profit on their coffee. Each cup sells for approximately $2.00, and the cost for Dunkin’ Donuts to make the coffee is 10 cents (Cooper, 2014, Page 1).
Since 1948, Dunkin’ Donuts has been providing a premium cup of coffee and assorted pastries. They have 11,300 Dunkin’ Donuts worldwide and have the highest customer retention rate in the Quick Service Restaurant industry (Dunkin’ Donuts, 2017, Page 1). Almost everyone in the United States has heard of or even been to a Dunkin’ Donuts.
Fast customer service.
One of Dunkin’ Donuts largest targeted customer bases are those who do not have time to wait around for their coffee and pastries. Dunkin’ Donuts excels at servicing this need and setting itself apart from competitors.
SWOT Analysis: Weaknesses
Through the application of Dunkin’ Donuts financial business planning, they carry “$2.5 billion of long-term debt, which is 74% of total assets” (Downie, 2017, Page 1). Dunkin’ Donuts debt is a loss that if addressed could be used for more product development.
Dining environment appeal.
Dunkin’ Donuts restaurants do not have the greatest appeal to make customers want to stay and enjoy their beverage and or pastry inside the restaurant.
Despite having such an established brand name, Dunkin’ Donuts customer loyalty is faulty at best. Most customers who claim to frequent Dunkin’ Donuts restaurants also mention Starbucks more when talking about coffee (Cooper, 2014, Page 1).
SWOT Analysis: Opportunities
To-Go coffee brand.
As previously stated, Dunkin’ Donuts target consumers are those who do not have time to wait in long lines for more expensive coffee. With On-The-Go ordering being utilized customer satisfaction with less waiting in line is through the roof (Dunkin’ Brands, 2017, Page 1).
Consumer packaged goods.
With more marketing effort put towards Dunkin’ Donuts store bought packaged coffee beans, Dunkin’ Donuts could begin pulling more customers from other competitors. Their brand name alone would steal the show.
In 2015, Dunkin’ Donuts “international revenue contributed less than 4% to Dunkin’ Donuts’ branded stores revenue” (Downie, 2017, Page 1). With expanded strategic planning towards international marketing Dunkin’ Donuts could increase international revenue and increase its global branding.
SWOT Analysis: Threats
Even with higher coffee prices Starbucks has a higher customer loyalty when it comes to coffee. The quality of the premium coffee grounds used, and Starbucks investment in restaurant comfort for those looking to enjoy their coffee gives Starbucks a leg up in customer satisfaction.
Green Mountain Coffee Roasters packaged coffee grounds.
Green Mountain Coffee Roasters coffee grounds quality is a mix between Starbucks Indonesian Arabica beans and Dunkin’ Donuts Latin American beans. The use of both gives them a much broader selection for customers to choose from.
Rising concerns for healthier choices.
Dunkin’ Donuts pastries and sandwiches have seen a decline in sales over the years with American families rise in health concerns. This has forced Dunkin’ Donuts to lean more towards the coffee aspect of their business to make profits.
Marketing Plan Focus
Based on my research and SWOT analysis, Dunkin’ Donuts should invest more in its strategic planning of global franchising to increase its international revenue and overall profits. To aid in this endeavor, I believe that Dunkin’ Donuts should market itself in countries outside of the United States less as a quick service restaurant and appeal more as a more typical coffee house dinner. In doing so, Dunkin’ Donuts will appeal more towards other countries that do not value speed or quantity over quality. I also believe this would inherently increase Dunkin’ Donuts’ food sales in countries outside of the United States. Dunkin’ Donuts’ focus towards its international footprint will be the focus of my marketing plan.
The broad possibilities of the different consumers in any given country makes it very difficult to pick any specific segment group. I believe a simple change in the restaurant setting will aid in pulling in consumers in other countries with the focus of the marketing plan being towards international sales. By converting Dunkin’ Donuts restaurants to a more relaxing setting for consumers to sit and socialize will pull in more customers. The target group being foreign consumers in their home countries would require Dunkin’ Donuts to also bring in some new pastry ideas based off the culture in the country.
As previously stated, limiting my target to any specific segmentation would be foolish, with coffee and pastries being so versatile. The change in place would allow more consumers to take an interest in Dunkin’ Donuts, while also maintaining a degree of quick service to those on the go.
Dunkin’ Donuts restaurants would enable consumers in other countries a place to socialize comfortably and enjoy pastries more associated with their culture while experiencing the brand that is Dunkin’.
Marketing Mix Details
Marketing Mix: Product
Dunkin’ Donuts core products are coffee and donuts and have been since its conception. As Paul Carbone stated, Dunkin’ Donuts has become a beverage company and with coffee booming in countries like China companies could capitalize on the growing desire for vendors in such countries. Dunkin’ Donuts will have to resort to increased efforts in promotion and placement both physically and online without a strong brand established in countries such as China. Another factor that Dunkin’ Donuts should consider before entering a culture is how to include the established cultures tastes into Dunkin’ Donuts menu. “John Costello, the chief global marketing and innovation officer for Dunkin Donuts, told Reuters that Dunkin’ Brands is also developing milk tea and bagels with pork floss topping to cater to tastes in China” (Danubrata, 2012, Page 1). This is a vital endeavor for Dunkin’ Donuts to research, because if Dunkin’ Donuts brought a product such as this to Indonesia it would flop. With most of the Indonesian population being Muslim, a product with pork would insult the entire culture and Dunkin’ Donuts would fail in its venture into the country before it began.
Marketing Mix: Place
In today’s age it is vital for companies to establish an online presence to ensure flourish. Especially a company who is looking to imprint its brand on new consumers. Dunkin’ Donuts debut into the Chinese market is a prime example of the importance of Place in the online world. You have to dig deep online to find a website showing locations in cities, Shanghai alone (Cavender, 2009). Dunkin’ Donuts needs to establish a better online presence for Chinese consumers who are not as familiar with the brand. Dunkin’ Donuts has to do so with any other country as well. Without doing so Dunkin’ Donuts will miss out on a lot of potential consumers with how plugged in they are. Obviously the country in which Dunkin’ Donuts conducts its business will change, but the store design also has to change to assimilate more into the social factor of foreign culture. In other words, like the Chinese, foreign cultures are very social and most stop to enjoy tea and coffee with friends and family. Dunkin’ Donuts had to take this into consideration while designing their restaurants in China, and should continue to do so in other countries that emphasize social gatherings. This does not mean that Dunkin’ Donuts has to alter the quick service aspect, which can still attract those who are on the go throughout the day.
Marketing Mix: Price
Profit maximization would be Dunkin’ Donuts pricing strategy after having already established itself in America as a beverage company, and the profit margins available to Dunkin’ Donuts with coffee. Dunkin’ Donuts would be able to take on a volume maximization in foreign countries that do not indulge themselves with food as much as Americans do. Dunkin’ Donuts would have to exercise price discrimination in different countries due to inflation differences in countries such as Indonesia, where the American dollar goes a lot further. According to the Bloomberg Market, the United States dollar would be the equivalent of 13,349.00 Rupiah in Indonesia (2017). Dunkin’ Donuts profit margins are high with the price of a large coffee from Dunkin’ Donuts being approximately two dollars compared to the ten cents Dunkin’ Donuts pays to produce a cup. This is penetration pricing at its finest when it comes to competitors such as Starbucks who charge upwards of seven dollars for similar sized coffee. With the variation of currency in different countries, it would be easy to adjust the price of coffee while still maintaining the high profit margin.
Marketing Mix: Promotion
As previously stated, Dunkin’ Donuts will not have the established brand in other countries, as with America. So promotions that Dunkin’ is known for will not work in other countries like “America Runs on Dunkin’” did. Dunkin’ Donuts will have to design a more all-encompassing global brand narrative. Dunkin’ will have to position itself as a company the world runs on. By establishing culturally adapted restaurant setting that bring consumers together in one place, I believe Dunkin’ Donuts can do this. Recently Dunkin’ Donuts has been conducting data pools on possibly changing the company name to simply Dunkin’. I believe this will aide Dunkin’ Donuts in its international venture in promoting the idea that the company is as it says, a beverage company. As stated by Madeline Farber with Fortune, “while Dunkin’ will still sell donuts, it wants to be known first and foremost for its coffee” (2017, Page 1).
The success metrics of the new style locations and products could be measured in comparison to American restaurants. With the sales clearly being lower upon entering the market, Dunkin’ Donuts could measure the success through customer satisfaction rating on social media as well as on the established websites designed specifically for the target country. Dunkin’ Donuts mobile app alone would aid the company in monitoring sales and customer satisfaction with its on-the-go service. Another metric Dunkin’ Donuts could monitor is Advertising. By monitoring competitors advertising techniques, like Starbucks who already has a strong presence in countries like China, Dunkin’ Donuts could develop similar marketing strategies to employ in those countries and similar countries.
Adhering to international laws would be a major consideration for Dunkin’ Donuts when entering countries. Laws vary by country and some may clash with those laws from the United States, where Dunkin’ Donuts has already established its home base in Massachusetts. Cultural considerations should be factored into the design of the restaurants before entering the countries market, and when designing new pastries to promote in the country as well. Ethical considerations should be made as well. By implanting itself into the communities of desired countries Dunkin’ Donuts would bring jobs and much needed trust to the countries. Dunkin’ Donuts “built a coffee roasting plant in South Korea — their first outside the United States — to better serve the local market” (Florida International University, 2016, Page 1). In doing so, Dunkin’ Donuts built trust in the community and much needed work, which is giving back to the community in which they want to serve.
Not all countries are on the move like Dunkin’ Donuts, and those that are not could still use the products and service that the company provides. Affordable and enjoyable coffee and pastries that can be enjoyed on-the-go or around a coffee table downtown. At Dunkin’ Donuts core they are a coffee and donuts shop, and that is something they can bring to the entire world.
Bloomberg Market. (2017). USDIDR Spot Exchange Rate. Retrieved from https://www.bloomberg.com/quote/USDIDR:CUR
Cavender, Ben. (2009, December 17). The problem with Dunkin’ Donuts in China. Retrieved from http://www.imediaconnection.com/articles/ported-articles/red-dot-articles/2009/dec/the-problem-with-dunkin-donuts-in-china/
Cooper, Ted. (2014). Everyone Is Getting Rich in the Coffee Business: Starbucks, Dunkin’ Brands, and Green Mountain Coffee Roasters Lead the Way. Retrieved from https://www.fool.com/investing/general/2014/01/15/super-compelling-headline.aspx
Danubrata, Eveline. (2012, March 05). Here’s How Dunkin’ Donuts Plans To Dominate In China. Retrieved from http://www.businessinsider.com/dunkin-donuts-battle-plan-for-china-focuses-on-pork-donuts-and-lebron-james-2012-3
Downie, Ryan. (2017). Starbucks Vs. Dunkin’ Donuts: Comparing Business Models. Retrieved from http://www.investopedia.com/articles/markets/120215/starbucks-vs-dunkin-donuts-comparing-business-models.asp
Dunkin’ Brands. (2017). Dunkin’ Brands Reports Fourth Quarter and Fiscal Year 2016 Results. Retrieved from http://investor.dunkinbrands.com/releasedetail.cfm?ReleaseID=1011160
Dunkin’ Donuts. (2017). About Us. Retrieved from https://www.dunkindonuts.com/en/about/about-us
Farber, Madeline. (2017, August 04). Dunkin’ Donuts Is Considering a Name Change. Retrieved from http://fortune.com/2017/08/04/dunkin-donuts-name-change/
Florida International University. (2016, July 25). Challenges of International Marketing. Retrieved from edu/articles/challenges-of-international-marketing.aspx”>http://cmba.fiu.edu/articles/challenges-of-international-marketing.aspx
Seid, Michael. (2016). The History of Dunkin Donuts. Retrieved from https://www.thebalance.com/the-history-of-dunkin-donuts-3973232
White, Sarah. (2012). Principles of Marketing [Electronic version]. Retrieved from https://content.ashford.edu/
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