Company Overview
Dunkin Donuts is based in Canton, Massachusetts which is in Great Boston. It is an America based company which deals in donuts and coffee. The company serves at around the world locations. The company’s products are baked goods, iced, hot, frozen beverages, soft drinks and sandwiches. The parent company is the Dunkin Brands Inc. which is a public company. The company is in food and beverages industry. It was started by Bill Rosenberg in 1950 in Quincy with the idea to serve the most fresh and delicious coffee and donuts instantly in very well managed store. The company is still using the very old and original recipe of coffee brought up by the founder (Dunkin, 2014a).
The company has earned the number one position in gaining the customer’s loyalty when it comes to their coffee. At present, the company is operating in 40 countries in more than 11,500 restaurants around the world. Its present chairman and CEO is Nigel Travis. The company is also launched its own mobile application for iPhone and android smartphone for payments and gifts. The company follows the franchising mode of entry to operate around the world (Dunkin, 2014b).
The SWOT Analysis comprises of strengths, weaknesses, opportunities and threats of the company. It is a strategy and analysis tool which helps the marketing managers. It evaluates the overall strategic position of the company and the environment in which the company operates (Hollensen, 2015). The table given below depicts the SWOT analysis of Dunkin Donuts.
|
Strengths |
Weaknesses |
|
Strong niche market Quality customer service Strong brand name Customer loyalty Worldwide hit Franchise model |
Direct and indirect competition Low entry barriers Low penetration in developing economies Lack of marketing efforts |
|
Opportunities |
Threats |
|
Expansion in products and services Invest in online marketing efforts Introduce snacks with low calorie Increase presence in new parts of the world |
Intense competition Cost of raw materials Less market growth Less products |
The strengths of the company are that it operates in a strong niche market of donuts and coffee only where they can focus on the concentrated unique market of deserts. The quality which is served by the company for their famous brewed coffee and variety of donuts upholds the trust of its customers. Company being a very old brad it enjoys the customer loyalty and a strong brand image. The franchise model of the company is very strong as they focus on four requirements that are available market, experience of running a food business, passion for business and the right kind of resources which are required to open a franchise. The weaknesses are the direct competition of the other brands of the same industry and indirect competition with the other bakers and confectioners. The industry has vey less restrictions for the new entrants because of which there is less penetration in the developing economies which can be done through effective marketing efforts in order to acquire more and more customers (Pahl & Richter, 2007).
Current Marketing Situation Analysis
The opportunities for the company are that they should invest in some more products in order to exploit the larger market. Also focus on low calorie products which will attract the health conscious market segment of customers. The company should invest in online mediums of marketing and promotion as in the present era, it is very much essential to sustain. The threats are the intense competition with the direct competitors that are Starbucks, KFC and McDonalds as they offer more products as compared to them. Increase in the costs of raw materials which will affect the prices and therefore the demand of the products in the market which will lead to less market growth (Hollensen, 2015).
The new objective that the company should focus is on investing into healthier alternatives for the customers (Pomeranz, 2012). This is because people around the world are becoming more and more health conscious. Moreover; company being into the food industry and that too deserts that are sweet in taste. They should be made in a way that it harms least to the body without any change in the taste of the products. The company trying to tempt the sweet taste buds of people but at the same time people are alert for their health therefore; the company have to focus on low calorie products which will influence the health conscious ones too (Pomeranz, 2012).
Sugar free products can be for those who suffer from diabetes and health conscious people because donuts are fried products and that too with a lot of sweet ingredients. A lot of sugar intake is bad for health therefore it is important to have concern for the customers as this will make the customers more loyal and happy when they will find the intention of the company which is to give healthy products to their customers (Kahn, 2012).
The new strategy of the company is to drive sale in US in order to achieve the target of expansion. The objective behind the strategy is to open new stores which can be opened by profits that the company will make from extra sales. Sales can be increased by way of increasing the online presence of the company on various social media platforms. Dunkin Donuts digital initiatives will be helpful in driving sales and another way can be by introducing a user friendly mobile pay and order so as to make it easier for customers to reach out and get their desire fulfilled (Nestle, 2013).
New Objective
Segmentation makes the division of the consumer groups into different segments on the basis of their common characteristics (Kotler, 2012). The market segment of Dunkin Donuts is majorly for kids, students, workers and families. The characteristics which can be found common in people are demographic segmentation, geographical and psychographic segmentation. They include the age, gender, occupation, income, interests, area of location, social class of people etc. All these have made the company a big name in the industry of donuts as they have their own niche of deserts only (Kotler, 2012).
The target consumers of Dunkin Donuts are primarily the kids from the age group of 6 to 12 years of age, teenagers, and 25 years old and above basically the whole family as along with donuts the company is renowned for its brewed coffee which is good company with donuts. The primary target consumers are kids because kids are known for influencing the choices of their elders. The positioning of the company is that the company is itself a brand which works on the motto of serving the fresh and delicious coffee and donuts instantly well-mannered and handled store. Coffee culture is very popular in America as on an average an individual consumes almost three cups of coffee a day. Therefore; this culture has helped the company to position themselves as the most popular coffee store (Kotler, Kartajaya & Setiawan, 2010).
The tactics are referred to those strategies which are planned and strived for achieving a particular objective or goal (Baker & Hart, 2008). The promotional tactics used by Dunkin Donuts is for making the products of the company cheaper as the coffee is affordable in comparison to the Starbucks. The breakfast meal of the company is quite effective in order to attract more number of customers which increases the footfalls to their stores. In addition to it, they serve sandwiches, oatmeal, baked cooked food and coffee. The variety in their menu with limited products creates craving among the customers.
In order to act for the future strategy of driving more sales for the company, this will act as a ladder for the company to achieve the goal of opening almost the double number of stores in US. The promotional strategy will play an important role in attracting more and more customers to their stores. This can done by giving the customers a delighted experience so that they remember and urn back over and over again for consumption (Zarrella, 2009).
Strategy and Segmentation, Targeting and Positioning
In relation to the strategy chosen for the company a budget has been prepared which includes the resource requirements, sales forecast, income statement and balance sheet as part of budget preparation. The very first table is the resource requirements which includes the all the requirements of resources that will be required for the new strategy of the company of increasing the sales in the US market. The sales forecast is of donuts and coffee which is calculated on the basis the units to be sold and the price. The income statement shows that the company is making good profits for the next three years. The profit for the year 2017 will be $83,000, 2018 earned $97,150 and 1, 35,008 in 2019 because this income can be further invested for expansion in USA as the company’s strategy is to open more stores by the year 2020. The balance sheet of the company depicts the equity of the company which shows the strong financial of the company. The equity shows the net worth of the company.
|
Dunkin Donuts: Resource Requirements |
|
|
Resource |
Amount ($) |
|
Stores and Supplies |
10,000.00 |
|
Machinery |
50,000.00 |
|
Equipment |
20,000.00 |
|
Labour (30 workers * $500) |
15,000.00 |
|
Office Staff (10 officials * $5000) |
50,000.00 |
|
Working capital |
55,000.00 |
|
Total |
2,00,000.00 |
|
Dunkin Donuts: Sales Forecast |
|||
|
Product |
Units |
Average price |
Total |
|
Donuts |
2000 |
70.00 |
1,40,000.00 |
|
Coffee |
1000 |
60.00 |
60,000.00 |
|
Total |
2,00,000.00 |
|
Dunkin Donuts |
|||
|
Profit & Loss Statement |
|||
|
Amount ($) |
|||
|
2017 |
2018 |
2019 |
|
|
Revenue |
$2,00,000 |
$2,20,000 |
$2,64,000 |
|
A. Total |
$2,00,000 |
$2,20,000 |
$2,64,000 |
|
B. Expenditure |
|||
|
Salary |
$50,000 |
$52,500 |
$55,125 |
|
Utilities |
$10,000 |
$10,500 |
$11,025 |
|
Depreciation |
$7,000 |
$7,350 |
$7,718 |
|
Marketing |
$30,000 |
$31,500 |
$33,075 |
|
Other |
$20,000 |
$21,000 |
$22,050 |
|
Total |
$1,17,000 |
$1,22,850 |
$1,28,993 |
|
Profit (A-B) |
$83,000 |
$97,150 |
$1,35,008 |
|
Dunkin Donuts |
|||
|
Balance Sheet |
|||
|
Amount ($) |
|||
|
Assets |
2016 |
2017 |
2018 |
|
Current |
$1,05,000 |
$1,26,000 |
$1,51,200 |
|
Fixed |
$70,000 |
$70,000 |
$70,000 |
|
Other assets |
$25,000 |
$25,000 |
$25,000 |
|
Total Assets |
$2,00,000 |
$2,21,000 |
$2,46,200 |
|
Liabilities |
|||
|
Current |
$50,000 |
$60,000 |
$72,000 |
|
Non-Current (Borrowings) |
$80,000 |
$75,000 |
$70,000 |
|
Total Liabilities |
$1,30,000 |
$1,35,000 |
$1,42,000 |
|
Equity |
$70,000 |
$86,000 |
$1,04,200 |
|
Total Liabilities & Equity |
$2,00,000 |
$2,21,000 |
$2,46,200 |
Budgetary control refers to the monitoring of the actual spending compared to the standard budget. Control is to monitor that there should not be any overspending and also controlling the variances i.e. the differences which are found in comparison of the actual and standard (Hofstede, 2012). After matching the differences the reasons for the same are found out and further, they will be used to fix the problem. It is an important tool to the company with respect to the financial perspective. In the current case, Dunkin Donuts has prepared a budget of $2, 00,000 which is allocated for meeting out the resource requirements of the new strategy. The company needs to maintain supervision and control throughout process of achieving the goals and objectives of new strategy that is to increase the sales which will help in expanding the business by 2020 (Hofstede, 2012).
Conclusion and Recommendations
From the above discussion it can be concluded that Dunkin Donuts has set its objective to open almost the double its stores in US by the year 2020. This can be achieved by adding on an additional objective of turning to healthier alternatives for showing their concern for the health of their customers. The new strategy of the company is to drive more sales by way of improving its online and digital activities of the company. This will result in more profits and more profits will help in opening of new stores in US. There is an estimated budget also which will lead to the attainment of the objective.
Dunkin Donuts is recommended to make the experience full of delight for its customers as that of its competitor Starbucks which serves its customers by writing initials of their customers on the coffee case which makes the customer feel good. The company should invest in growing markets so that profits generated from the can be invested in opening new stores. The expansion in menus will also help in diversifying the business of the company. Promotions of the company should not only to give the best service to the customer but the best after sales service which will be of great advantage in bringing back the customers (Safko, 2010).
References
Baker, M. and Hart, S., 2008, The marketing book, Routledge.
Dunkin, 2014a, About Us, viewed 20 March 2017 from https://www.dunkinbrands.com/about.
Dunkin, 2014b, Franchising, viewed 20 March 2017 from https://www.dunkinbrands.com/franchising.
Hofstede, G.H. ed., 2012, The game of budget control, Routledge.
Hollensen, S., 2015 Marketing management: A relationship approach, Pearson Education.
Kahn, K.B., 2012, The PDMA handbook of new product development, John Wiley & Sons.
Kotler, P., 2012, Kotler on marketing, Simon and Schuster.
Kotler, P., Kartajaya, H. and Setiawan, I., 2010, Marketing 3.0: From products to customers to the human spirit, John Wiley & Sons.
Nestle, M., 2013, Food politics: How the food industry influences nutrition and health (Vol. 3), Univ of California Press.
Pahl, N. and Richter, A., 2007, SWOT analysis: Idea, methodology and a practical approach (pp. 3-4), Grin Verlag.
Pomeranz, Y., 2012, Functional properties of food components, Academic Press.
Safko, L., 2010, The social media bible: tactics, tools, and strategies for business success, John Wiley & Sons.
Zarrella, D., 2009, The social media marketing book, ” O’Reilly Media, Inc.”.
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