DUNKIN DONUTS

By Lakshay Bajaj
A0101914110
Batch Beta
Study Abroad Programme
MBA class of 2016
AMITY GLOBAL BUSINESS SCHOOL
SINGAPORE

INTRODUCTION
Dunkin' Donuts is a business in food retail. They are the worlds largest coffee and baked goods
chain. Dunkin Donuts have been in business since 1950 and have been franchising since 1955.
This franchise serves more than 2 million customers a day. Dunkin Donuts sells 52 varieties of
donuts and more than a dozen coffee beverages as well as bagels, breakfast sandwiches and other
baked goods.
It is important to look at consumer usage and future trends before entering into the market.
Dunkin Donuts has retained a consistent database of customers, while also gaining additional
consumers through the progression of time and emergence of newer markets. India may not seem
like the most likely place to find good doughnuts, but it turns out the subcontinent is home to a
budding doughnut industry and some amazing-sounding doughnut flavors.
Dunkin' Donuts launched in India in 2012, and has since opened 38 locations. The chain offers
doughnuts as well as India-specific menu items like veggie burgers, Wicked Veg wraps and
Marinated Cottage Cheese sandwiches.
It all started in 1946 when Bill Rosenberg opened his first coffee and donut shop, the Open
Kettle. It was immensely successful and this led Bill to start another shop called Dunkin
Donuts. He opened the first Dunkin Donuts in 1950 in Quincy, Massachusetts in the USA.
Today, Dunkin Donuts can be found in 30 countries worldwide in more than 10,000 locations. It
has become the worlds leading Coffee and Baked Goods chain, serving more than 900 million
donuts and 1.5 billion cups of coffee a year globally. And now its also in India. At Dunkin
Donuts India, you can enjoy a wide selection of donuts, coffee, beverages and sandwiches.
The brand has a high level of customer loyalty and is a socially responsible brand. India is an
attractive expanding economy for global fast food chains such as Dunkin Donuts and offers the
company with a large customer base.

MARKET SHARE OF DUNKIN WITH COMPETETORS

Source: www.socialmediatoday.com

THE MARKET SCENARIO

In the competitive world of the coffee industry and any industry for that matter its crucial for
companies to have a clear understanding of what they do best, and where they can be the best.
Dunkin Donuts has defined its strategic heartbeat as the everyday, easy coffee stop that inspires
rituals that revive. In other words, Dunkin Donuts provides food and drink thats fast, fresh,
and affordable for busy people, leading busy lives. These days there is an incredible interest
across the country in premium coffee. The average consumer is now demanding what Dunkin
Donuts has been providing for nearly 60 years. Dunkin Donutsstandards for coffee excellence
is among the highest in the United States, which is no easy feat. Producing coffee takes more
steps than producing wine, and Dunkin Donuts coffee experts travel around the globe to ensure
quality at each step. Dunkin Donuts identified a new restaurant category called
Quick Quality.
This represents a promise of fresh food fast and higher evolution of the standard quick service
experience. Dunkin Donuts wanted to make a more meaningful promise to deliver on the value
proposition consumers expect, and then some: a promise to offer fresh food, fast, and to offer
more choices, served quickly, in a quality way. That means lots of innovative new products
served fresher and faster than ever before

CHALLENGES FACED BY DUNKIN DONUTS

PRICE: A DISSUADING FACTOR?

Many feel the product is priced in the higher range, which makes it a niche food category
catering to only the urban affluent class. For instance, a single doughnut at Dunkin is at Rs45
and Rs 50, respectively.
The category product is surely targeted at the upper segments of the society, later than sooner
should price be the selling proposition. The people no more are hesitant to shell out a 100 rupee
note for a cup of coffee and there is no reason that the price factor would dissuade a real
connoisseur. The product line is not targeted at the base of the pyramid and is going to stay the
same for some years. Think of how Pizza entered India and now is an omnipresent offering, in all
versions and at all price points, yet we believe it is an Italian dish was meant for discerning
consumers.
To lower costs, Dunkin Donuts is in fact sourcing most of the ingredients locally. A lot of their
initial investment was made to overcome the existing backend challenges in India and that by
removing such challenges, many brands are being able to provide a value proposition to Indian
consumers.

Another challenge that Dunkin donuts is dealing with is competitors. There are numerous
coffee shops all over the world and being able to stand out to generate customers is
important. Their main competitors are Starbucks, McDonalds, and Nestle. It is important
that for Dunkin Donuts to know their competitors and what they are currently doing.

Shares of Canton, Mass.-based Dunkin Brands fell to a 52-week low on Thursday after
the doughnut and coffee chain blamed bad weather for disappointing US same-store sales
growth of 1.8 percent in the second quarter.

STRATEGY TO SURVIVE
Dunkin Donuts offers the American food menu that includes coffee, sandwiches, doughnuts
along with India centric menu items that include vegetarian burgers, spicy sandwiches .The
Doughnuts have also been customized to suit Indian taste with the introduction of flavors such as
Kesar Badam, Soan papdi and milk cake specially targeted for the festive season in India. The
doughnuts are priced at nearly 65 rupees or a dollar each at the stores in India Coffee has become
an increasingly popular product in India and therefore the store is focusing on its strategy to
boost the sales of coffee in India, while facing tough competition from leading global coffee
chains such as Starbucks.
The company has adopted a penetration pricing strategy for its food products in India.
Penetration pricing strategy allows companies to boost sales, quickly gain a larger market share
and gain a market acceptance for the brand by setting a price lower than those of the competitors
The price of Dunkin Donuts products are nearly 10-15 percent lower than those of the
competitors in the Indian fast food industry such as Starbucks and Mc Donalds .Dunkin Donuts
charges INR 45 for a doughnut and INR 75 for a coffee at present. Such a penetration pricing
strategy shall allow the company to position itself as an affordable brand in India and offer value
for money advantage to the Indian customers. Indian customers are highly price sensitive and
prefer products that are of good quality and that are offered at attractive prices. Penetration
pricing strategy shall therefore allow Dunkin Donuts to attract a large number of Indian
customers towards the brand and quickly gain a larger market share in India.
In India, both coffee and donuts market is at a nascent stage. There is a good proliferation of
coffee brands in India. But, there is also huge scope for growth. We are not emphasizing on one
particular category to ensure growth. Consumers will tell us what category will grow fastest. But,
the model of business will not be the same as in US. Our focus will be on localization of product
categories especially to cater to the Indian youth.
Dunkin Donuts is positioning itself as a hang out zone for the urban young. In terms of the
menus too they differ widely, with only doughnuts and coffee in their product portfolio.

The positioning of Dunkin Donuts, on the other hand, is that of an all day food caf. The menu
consists of a whole range of beverages and sandwiches besides doughnuts. Explaining the
business model further, Dunkin Donuts is known for its donuts for sure, but is also about
coffee, sandwiches, all day snacks and other beverages. The brand name in India has the sign of
Dunkin Donuts & More to signify our wide product range and the unique experiences that our
restaurants offer. In addition, there is a chilled out, modern and relaxed environment. We are
confident that Indian consumers will love our format and our product offering.

SWOT ANALYSIS
SWOT Analysis
1.Strong Brand name, recognized world over
2. Brand loyalty amongst customers
3. Over 1000 varieties of doughnuts
4. Popular for a number of bakery products like pastries, bagels,
muffins, biscuits, etc. and hot beverages like coffee, tea
5.Ideal place for having breakfast and coffee
6.Innovative ways to retain customers by issuing coupons and
discounts
7.Worlwide chain of franchisees totalling to 10,000 locations across
32 countries
8.One of the most experienced in the industry
9.Association with major sports teams
Strength

10.Effective marketing and advertising strategies

Weakness

1.Competition from other international snacking joints means

limited market share growth
2.Constant rift with the franchisee owners and numerous instances
of suing them
3. Still hast penetrated into the emerging economies which can be a
huge segment

1.Increase its presence in newer countries and regions of the world

2.To introduce low calorie snacks
3.Increase in disposable income of people in developing countries
Opportunity

4.Increase its reach through effective online marketing

1.People moving to healthier ways of eating
2.Competition even from local cafes and bakeries
3.Increase in the cost of raw materials

Threats

4.Diificult to change the snacking habits of people in certain

countries like India and China
Competition

Competitors

1.Krispy Kreme
2.Mc Donalds
3.Starbucks
4. Mad over Donuts

PEST ANALYSIS

Political factors Politics have play great roles in the business sector. since it began its
operations, Dunkin Donuts has faced a lot of challenges from governmental restrictions
and legal issues like any other company in the world. Tax policy is one issue that the
company has never turned down. More so, the company has also been able to abide to
trade restrictions set by the U.S government or trade bodies, but also set by the
international trade. For instance, the Dunkin Donuts espresso beans are 100% Fair Trade
Certified and picked from the finest and high quality Arabic beans. The company has also
been able to abide to environmental regulations and labor law.

Economic factors Dunkin Donuts has been facing a lot of competition from other
companies like Starbucks and McCafe, but it has been able to overcome tough economic
times that have been facing the market over the years. With new emerging markets in
South America and Asian countries, this presents a great pathway for future investment.
Moreover, rising price of coffee beans may pose a threat to the industry. An increase in

interest rates and inflation rates are economic factors that threaten most companies
offering beverages and related products.

Social factors Social trends vary with age distribution, career attitudes, health concerns
and population growth rates. There has been high concern these days about health issue.
For some people, coffee is a bad beverage for health and many are going for other new
drinks. Today, you can buy fresh fruits at Dunkin Donuts and gather essential nutritional
information from the companys website. The company also offers a training plan in its
website for better health.

Technological factors advent of technology has presented great opportunities for

companies to advance with the changing business world. Dunkin Donuts has taken new
measures on how to market and distribute its products in many countries. new machines
and high-tech equipment have been introduced to help the company stay up-to-date with
the market. The company also gets feedback on its websites concerning the products it
offers. Hence, it comes up with great strategies to make them better and reach a wide
target audience.

PORTERS FIVE FORCES

Porter's Five Forces investigates the attractiveness of an industry by focusing on the threat level
of various factors influencing the industry. These forces include: bargaining power of buyers,
bargaining power of suppliers, threat of new entrants, threat from substitutes and rivalry among
existing players.

Bargaining Power of Buyers

Referring to the chart above, there is a relatively low level of threat from the bargaining power of
buyers. This is due to the fact that there are a large number of buyers with relatively small
purchases. The coffee industry is based around individual customers buying a cup or two of
coffee and a snack, but usually not much more than that. It is important to note, however, that
customers do not face any significant switching costs when moving between coffee shops. This
gives some power to the buyers. Furthermore, coffee drinkers could make the product in their
own house rather than buying it, which also gives them more power.

Bargaining Power of Suppliers

In reference to the chart above, the bargaining power of suppliers poses a very low threat. This is
due in large part to the fact that the inputs for the industry are standard as opposed to
differentiated. This allows companies to switch quickly and easily between suppliers. For these
reasons, suppliers are not necessarily locked in to a specific firm in the industry.

Threat of New Entrants

As depicted in the chart above, there is a relatively low threat of new entrants into the U.S. coffee
and snack shop industry. One reason for this low threat level is that existing firms have a cost
and performance advantage. They are well- established and have already learned how to
continually lower costs and improve performance. Furthermore, these well-established
companies with large market shares have strong brand identities within the industry. A new
entrant to the industry can expect retaliation from existing companies due to the strong
competition for market share. The rivalry among existing companies will be discussed in more
depth later. Although, somewhat difficult, it is still possible for new entrants to thrive in this
market. For example, licenses, insurance, or other qualifications that may be required are not
hard to obtain In addition, since customers incur minimal switching costs when switching
suppliers, they are able to buy from multiple stores.

Threat from Substitutes

As shown in the chart above, there is a very high threat from substitutes in the coffee and snack
shop industry. Many coffee drinkers consider tea, hot chocolate, and energy drinks to be
reasonable substitutes for coffee. In addition to these coffee substitutes, customers can choose to
brew their own coffee rather than buy it from a shop. Since these substitutes do the same job as
store-bought coffee, customers will not incur costs in switching products.

Rivalry Among Existing Players

As the chart above demonstrates, there is a high rivalry among existing players in the coffee and
snack shop industry. One reason for this is that the industry is no longer growing at a rapid pace;
it is considered to be in a mature market. Since there are not any significant product differences
among competitors customers do not incur high costs if they switch from one player to another.
This is, in part, due to the fact that the products are not highly complex, nor do they require

significant customer-producer interaction. Brand identity within the industry is also a huge factor
for the rivalry, as two major brands have captured the majority of the market. It is important to
note, however, that the industry does not have over capacity at the moment.

REFERENCES
DUNKIN DONUTS Press Kit. Available at: http://news.dunkindonuts.com [Accessed 5
January 2015].
Ferrell, O. C. & Hartline, M., 2010. Marketing Strategy. 5th ed. Mason: Cengage Learning.
10 things about Dunkin Donuts launch in India. Available
at:http://www.firstpost.com/business/10-things-about-dunkin-donuts-launch-in-india304001.html
Dunkins Donuts Include Chickpea, Saffron, and Chili. Available
at: http://www.theatlantic.com [Accessed 5 January 2015].
Rana, P., 2014. Dipping Into India, Dunkin Donuts Changes Menu.
Available at: http://www.wsj.com/[Accessed 5 January 2015].
Rana, P., 2014. Diwali Doughnuts Anyone Available at: http://blogs.wsj.com/
Spiegel, A., 2014. Indias Doughnut Flavors Put Ours To Shame.
Available at: http://www.huffingtonpost.com/