Dunkin’ Donuts Case Study
Table of Contents
Dunkin’ Donuts Marketing Approaches
One marketing approach would allow Dunkin’ Donuts to gain leverage in geofencing, a program that would allow the company to get information from competitor customers in its locations defined by its geofence (Kaufman & Horton, 2014). The resulting advantage is that DD will be able to offer coupons to mobile devices of its competitors’ customers. Another marketing approach would allow DD to incorporate social marketing in its marketing strategies (Dooley, Jones & Iverson, 2012). Technological advancement causes consumers to engage more in social media, and DD can take advantage of whatever social media platforms offer. Social marketing would allow DD to be more audience-inclusive by encouraging fans and consumers alike to share their experiences and suggestions on the company’s social media pages such as Twitter, Facebook, Instagram, YouTube, and Vine.
Current and Recent Status of DD
Currently, Dunkin’ Donuts offers a comprehensive line of coffees that gives customers a variety of choices to make. The company has about 10,000 stores in 32 countries, serving approximately 3 million customers daily with sales amounting to nearly $9 billion (Watrous, 2014). The company is focused on expanding to the Asian market. Dunkin’ Brands Group, Inc., has expanded its partnership with The J.M. Smucker Company and Keurig that would expand the manufacturing, marketing, distribution and sale of Dunkin’ K-Cup® packs at retailers’ nationwide in the U.S. and Canada as well as online. This partnership will extend the company’s reach into homes and grocery outlets.
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Strengths and Weaknesses of DD
One of the major strengths of DD is its brand. The company’s brand name resonates well with customers all over the world, and this is the reason it has managed to retain its fair share of the market, rivaled only by Starbucks (Boone & Kurtz, 2014). Secondly, DD’s reputation as a maker of premium coffee and donuts has led it to become one of the world’s best coffee stores, serving up to 3 million customers daily. Thirdly, the company offers a comprehensive range of coffees providing customers with a variety of choices. Additionally, DD has managed to introduce a mobile application that allows customers to decide how they want to have their coffee, and the company makes it according to the customer’s taste. One weakness is that it has a lower geographical presence in the Eastern half of the United States. Secondly, the company does not invest enough in advertising unlike its rivals like Starbucks and McCafe (Boone & Kurtz, 2014).
Opportunities and Threats DD is Faced With
One opportunity DD can take advantage of is advanced technology of geofencing. This will enable the company receive and learn information regarding purchasing behavior of competitors’ consumers. Asia’s potential market is another opportunity due to the region’s large population and increase in coffee consumption trends (Boone & Kurtz, 2014). The growing number of health enthusiasts also offers an opportunity for DD to make coffees and donuts that are a healthy option in this market.
The company faces threats from the slowing economy as consumers may opt for cheaper substitutes. Additionally, the ever-growing number of competitors in the QSR breakfast market also threatens DD’s market share. Stiff competition from Baskin-Robbins U.S., McDonald’s, Starbucks and Burger King Worldwide, coupled with the innovativeness of these companies, threaten DD’s sales growth (Watrous, 2014a).
Marketing Ideas for DD
Although there are numerous marketing ideas, DD can only benefit from those that are aligned with its vision and mission. One idea is customer relations management where the company would need to effectively manage and analyze customer interactions so as to provide the best possible service. Due to the dynamic nature of the industry, DD should price its products differently for different markets. This will help the company retain its market share since customers will turn to cheaper yet quality substitute products that the company makes. Due to the large traffic in airports, DD should put stickers on baggage carousels with information on all products DD is offering. This should be done in all major airports in DD markets.
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DD’s Competitor Analysis
DD’s major and direct competitors are McDonald’s and Starbucks. Starbucks earns 75.0% of its revenue from coffee, while McDonalds generates about 51% of its revenue from its McCafé line of beverages (Watrous, 2014a). Recent analysis has shown that in 2016, Starbucks will surpass the market share of McDonald’s due to the latter’s stagnation for the last couple of years. McDonald’s reported declined sales and this even forced Don Thomas, the CEO, to step down in January. This may attribute to the fact that consumers are today leaning towards quality rather than low cost. Starbucks’ ability to make quality coffee has allowed it to increase its prices without necessarily losing its market share. It is expected that Starbucks’ annual sales will rise up to $17 billion, while McDonald’s is expected to lose $27 billion (Watrous, 2014a).