Mktg.DunkinDonuts12-09

RUN SMARTERGSM425 - Marketing Management

Rachel Bograd

Kelsey Gernert

Andrea Gordon

Nicole Mace

Lauren Mendes

Agenda

• Brand Position

• Industry Dynamics

• Industry Key Success Factors

• Company Analysis and Brand Position

• Competitive Analysis

• Key Issues

• Marketing Goals & Objectives

• Marketing Strategy & Execution

• Financial Projections

• Monitoring & Control

Brand Position

• Customer Value Proposition

• Brand Recognition: 7,500 + restaurants across 40 states

in the US & 3,000 + restaurants across 4 continents in 33

international countries

• 25.5% market share in the coffee and snacks shops

industry

• “America Runs on Dunkin’”

Industry

Coffee & Snack Shops, US

• $30.2 billion in revenue

• $1.8 billion in profit

• #1 Starbucks (37.7%)

• #2 Dunkin’ Brands (25.5%)

• 3.8% expected growth over

the next five years

Quick-Serve-Restaurants

• $225 billion in revenue

• Smaller portions at

affordable prices

• Most popular choice for

consumers age 26-30

• Industry is mature and

competition is high

External Factors and Trends

Political, Legal, Regulatory

• Increasing the minimum wage level, wages account for 26.1% of cost structure

• Social activism (workplace conditions, health)

Economic

• Consumer spending is increasing

• Supply chain: Climate/weather

• Growing foreign demand for coffee

Social Forces

• Healthier options

• Increased snacking between meals

• Faster

Technology

• Mobile accessibility

• Franchise model

• Responsiveness

Key Industry Success Factors & Issues

Success Factors Key Issues for Dunkin’ Donuts

1. Meeting changing consumer demand

2. Expanding brand image to include healthier options

3. Do not alienate the current customer base

Operational efficiency

• Franchise model

Same-store sales:

• Multi-product purchases

• Frequency of purchases

• Limited-Time-Offers (LTO)

SWOT AnalysisStrengths Weaknesses

• Dunkin’ Donuts has exhibited its ability to adapt its marketing strategies in order to compete in the coffee and snack shops industry.• Consumer exhibit predictable purchasing behavior and brand loyalty.• Dunkin’ Donuts provides food and beverage products at low costs; thus, the organization is able to compete on price in the industry.• Dunkin’ Donuts has implemented its own educational program to guarantee uniformity among the products sold in the organization's franchises• Dunkin’ Donuts owns 25.5% of the market share in the coffee and snack shops industry.

• Dunkin’ Donuts has exhibited a stall in its market share growth as a result of high competition. • Dunkin’ Donuts has a limited geographical presence compared to organizations such as Starbucks and McDonalds.• In recent years, there has been an increase in consumers’ desire to have healthier options. Dunkin’ Donuts does not provide an abundance of health conscious products.• Dunkin’ Donuts has experienced some turbulence with its franchisees due to brand non-compliance. • Dunkin’ Donuts brand reputation is built on decades of selling coffee and donuts, and the organization is well-known for its high calorie food and beverage products.

Opportunities Threats

• Dunkin’ Donuts has the opportunity to further expand and promote its business in the global market.• Consumers’ increased desire for healthier food and beverage products presents an opportunity for Dunkin’ Donuts to capitalize on. • Dunkin’ Donuts has the opportunity to expand its DD Smart menu to include more health conscious products as well as market the menu more effectively.

• In recent years, there has been an increase in competition in the coffee and snack shops industry and the cost of switching is low. • In recent years, the cost of coffee has been on the rise; thus, it is difficult for Dunkin’ Donuts to keep the costs of its products down and continue to compete on price.• Dunkin’ Donuts might not be reacting fast enough to the rising trend of health conscious consumers.• Dunkin’ Donuts is threatened because the boundaries of the market are changing to include non-coffee shop competitors

Current Marketing Strategies

Current Performance and AssumptionsQ3'14 Performance:

•Operating income $92.4 million, 12% increase

•Net income $54.7 million, 36% increase

•2015 same-store sales growth, 2% - 4%

•Growth in emerging foreign markets, 20% - 25%

Assumptions:

•Store openings and closings

•Demand increases

•Does not vary based on seasonality, remains stable Q to Q

•Purchasing behavior changes regarding the types of goods

consumed quarter to quarter

•Income

•Franchise fees and royalty income

•Rental income - 24% of franchising fees and royalty income

annually

•Sales at company owned locations

Sales Forecast

Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17

1.55%

1.60%

1.65%

1.70%

1.75%

1.80%

1.85%

1.90%

1.95%

2.00%

2.05%

% In

cre

ase

3 Year Quarterly Sales Forecast

Sales Growth Projection

Competition:

Product: Coffee & Snack Shops / Quick-Serve-Restaurants

Target Market: “Neighborhood,” “Family,” “Friends,” etc.

Pricing: Example: Coffee

• Dunkin’ Donuts: $1.49 - $2.19

• Starbucks Coffee: $1.75 - $2.35

• McDonald’s: $0.90 - $1.29

• Panera Bread: $1.79 - $2.19

Distribution

• Dunkin’ Donuts: 10,000+ stores, 36 states, 32 countries

• Starbucks Coffee: 20,000+ stores, 63 countries

• McDonald’s: 35,000+ stores, 100+ countries

• Panera Bread: 1,800+ stores, 45 states & Ontario, Canada

SURVEY RESULTS

Current Market Segment• The majority of current customers fit the following criteria:

• Female (158/224 respondents)

• Between the ages of 23 and 27 (109/224 respondents)

• Have incomes above $41,000 (135/224 respondents)

• Live in Florida (24), Wisconsin (17), or Massachusetts (124)

Our survey also found the following to be

true of our current consumers:• 73% visit Dunkin’ Donuts 0-2 times a week, and 18% visit

Dunkin’ Donuts 3-5 times per week,

• 7% purchase 6-8 times a week and 2% purchase 8 times

or more per week

• 47% go to Dunkin’ Donuts just to purchase a beverage

• 40% go to purchase both food and beverage

• 14% go for food items alone

Purchasing Behavior

• 60% purchased fast food 0-2 times a week

• 32% said 3-5 times a week

• 8% said more than 5 times a week.

0-2 Times / Week

3-5 Times / Week

5+ Times / Week

Of those interested in healthier product

offerings:• 26% would be willing to pay $0.01-$2.00 for a healthier

food or beverage option at Dunkin’ Donuts

• 41% are willing to pay $2.00-$4.00 and only 1% is willing

to pay over $6.00 for a healthier food or beverage option

at Dunkin’ Donuts

• The healthy food items of greatest interest include:

Muffins (36%, and are already currently offered),

Yogurt/Parfait (36%), Fruit (32%), and Oatmeal (29%, also

already currently offered)

Target Market

• 32% of respondents look for healthy options when they

visit Dunkin’ Donuts or other fast food location

• 43% sometimes look for healthy options at Dunkin’

Donuts or other fast food locations

• 132/163 or 81% of respondents who reported that they

either always or at least sometimes search out healthy

food options at Dunkin’ Donuts or other fast food locations

are women

• Higher income

• Customers in their 20’s

Consumer Awareness

• Only 106 out of 216 respondents were aware of these

healthier food options

• 51% were unaware of any of the healthier food options

available at Dunkin’ Donuts.

• According to our survey 59/160 (or 37%) people who

currently shop at Dunkin’ Donuts are unaware of their

healthy menu options.

• Among those who do not shop at Dunkin’ Donuts currently

56/63 or 89% were unaware of Dunkin’ Donuts’ healthier

product offerings

DDSMART®: RUN SMARTER CAMPAIGN

Overview Marketing Mix

Dunkin’ Donuts Offering Better Choices to Keep You

Running

• Goal:

• To attract new customers who are interested in healthy options and

who see DDSMART® as a credible healthy option.

• Increase awareness of DDSMART® line among current and non-

current customers, increase revenue

• 2% increase in market share annually over 5 years

• Methods:

• Market-penetration using social media and mobile marketing

• Cross-penetration through sponsorship of fitness events

Tactic 1: DDSMART® Value to Customers

Objective: Raise awareness and promote DDSMART®options to current Dunkin' Donuts customers

Goal: Increase Sales and Awareness

Budget: Replacement of current New Years promotions

Promotion Plan: Limited time offer (LTO) via DD Perks® App; DDSMART® options worth 2x points

Media: DD Perks® App

Schedule: LTO rolled out prior to and after New Years 2016

Measure of Success: Exceed annual growth projections

Tactic 2: DDSMART® PartnershipsObjective: Raise awareness and promote DDSMART® options

to current Dunkin' Donuts customers

Goal: Increase awareness of DDSMART® by 25% in the next

year.

Budget: Secondary Marketing through Spartan Race®

(Posters, Media, Billboards), Budgetary Dollars Needed for

Complimentary Food and Beverages at Event – Allot for

Discount from Coupons

Promotion Plan: Sponsor for Spartan Race®

• “Spartans run on DDSMART®”

DDSMART® complimentary food and beverages at finish line.

DDSMART® coupons with identifiable UPC labels for

Spartans

Media: Posters, Media, Billboards

Schedule: Races throughout the year

Measure of Success: Tracking Usage of Coupons

Tactic 3: Smart Swaps

Objective: Introduce Healthy Options

Goal: Increase Sales

Promotion Plan

• DD Perks® App

• Social Media

• Digital Menu Board Pilot

• Employee Training

Budget: Use Existing Platforms

Media: DD Perks® App / Social Media

Schedule: Prior to New Years 2016

Measure of Success: increase in DDSMART®

sales at pilot locations.

Project Timeline

Project start date May 1: Internal launch by the Executive team, CMO

Planning stage 3 months: Marketing, IT, and Budgeting

Testing stage 2 months: Marketing, IT, Executive team

Campaign begins 3 month pre- and post- New Year’s Day : Marketing, IT, Executive team

Ongoing monitoring and improvement activities will continue throughout the year: Marketing, IT, Budgeting, Executive team

Monitoring and Control

Daily and quarterly reporting

Sales revenue for DDMART®

items vs traditional items

Franchisee profitability analysis

• Expense-to-Sales Analysis

Same-store sales analysis

• Multi-product purchases

• Frequency of purchases

Market penetration

• ‘Likes” and App usage rates

• Limited-Time-Offers (LTO)

Monthly and quarterly

Market Share Analysis

Cross-Penetration marketing: Spartan Race®

• 20,000 people per event x 12 events per year = 240,000 potential direct contacts UPC

• Indirect touchpoints: NBC coverage, Reebok

What percentage of current customers are purchasing DDSMART® item?

Questions?

ReferencesBrennan, A. (2014). IBISWorld Industry Report, Coffee & Snack Shops in the U.S. IBISWorld, Inc.

Company Snapshot. (2014). Retrieved November 29, 2014, from https://www.dunkindonuts.com/content/dunkindonuts/en/company.html

Dunkin’ Brands Investor Presentation (2014). Dunkin Brands Inc.

Dunkin' Donuts Prices - Fast Food Menu Prices. (2014). Retrieved December 1, 2014, from http://www.fastfoodmenuprices.com/dunkin-donuts-prices/

England, D. (2014). Obstacle Course Racing Goes Big Time!. Competitor Group, Inc. Retrieved from http://running.competitor.com/2014/05/obstacle-racing-2/obstacle-course-racing-goes-big-time_103101

How Can We Help? (2014). Retrieved November 29, 2014, from https://www.panerabread.com/en-us/customer-service/contact-us.html

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Who is your target market / audience? (2014). Retrieved November 29, 2014, from http://www.mcdonalds.co.uk/ukhome/whatmakesmcdonalds/questions/running-the-business/business-strategy/who-is-your-target-market-audience.html

Xaxx, J. (n.d.). Key Elements of Success in the Fast Food Industry. Retrieved November 16, 2014, from http://smallbusiness.chron.com/key-elements-success-fast-food-industry-24913.html

Yahoo!Finance. (2014). Dunkin’ Brands 3Q 2014 Performance. Yahoo!Finance and Market Realist 11-2014http://finance.yahoo.com/news/must-know-dunkin-brands-records-223144575.html