Dunkin’s Donuts operates two main brands, which are Dunkin's Donuts and Baskin-Robbins, in more than 60 countries using a distribution of more than 1800 franchises located in different parts of the world. One of the biggest challenges facing the growth of the Dunkin’s Donuts is the existence of poor franchise relationship that has resulted to numerous law suits every year. It acts as a major setback towards the development and expansion of the company since such lawsuits ruin its reputation; thus, scaring away investors from investing in the company. For instance, in 2010, the company experienced a total of 15 legal suits from separate owners (Reinhard). The company needs to devise a credible strategy that would guarantee a strong franchise relationship for its operations.
The coffee industry is experiencing new entrants in the market because of reduced operational costs. It serves as a big threat to Dunkin’s Donuts; hence, the need to device ways of lowering the cost of production. The most suitable business strategy for the company is the cost leadership strategy in the United States coffee and snack shop industry. The strategy will ensure that the company can offer better quality products and services at low prices, which are less than those of its close competitors in the industry (Schermerhorn 43). The strategy will provide the best approaches towards providing lower prices for the products and services offered without compromising their quality.
The level of competition in the coffee and snack shops industry is growing tremendously in different parts of the world. For Dunkin’s Donut to continue being competitive in the industry, I would recommend the adoption of the international expansion plan for its operations. It would guarantee enough market for its products and services through the expansion of the already existing operations in United States, Latin America, and Europe. Besides, the company should also focus expanding its operations in the Middle East and Asia as well as introducing its operations in Australia and Africa. It would place it in a good position to compete with other big companies in the industry, such as McDonald’s, KFC or Starbucks, which have operations in all parts of the world (Brizek 3).
Considering the high level of competition within the industry in which Dunkin Donuts operates, the company is under the pressure of intensifying its marketing strategies to keep them at par with those of the main competitors. I would recommend for the adoption of more promotional strategies within the marketing mix of the company. The most common promotional strategies adopted by Dunkin Donuts are advertisements through the print media, such as newspapers and magazines. However, these strategies are not comprehensive enough to meet the current marketing demands amidst the rapid globalization (Schermerhorn 58). I would recommend the company to change its promotional strategies from the mere advertisements in the print media and focus more on the online marketing. Online marketing has a wider outreach compared to the print media and it’s very flexible for rapid changes in the nature of the market.
The final strategic recommendation I would make for the company relates to the range of the products and services offered by the company. Due to the changing tastes and preferences of the consumers around the world, the company ought to remain innovative and devise new products and services to suit its client's preferences. The company currently focuses on majorly offering breakfast products and services unlike its main competitors in the industry how to offer a wide range of products for breakfast, lunch and even dinner (Reinhard). Therefore, I would recommend the company to invest more of its resources in product development activities to ensure that it produces a wide range of foodstuffs to cater for lunch and dinner meals while checking on the amount of calories in the product given the fact that many consumers have become very health-conscious about what they consume.
Justification of strategy
The first strategy recommendation for Dunkin Donuts Company concerns the issue of the poor relationship with franchises, which has resulted to numerous law suits from separate persons thus ruining the reputation of the company. For the company to boost the relationship with the franchisees, it needs to remain focused on a very innovative and flexible menu that can allow the franchisees to continue growing and expanding with minimal interference by the company. The company should only engage into franchise contract with franchises that portray a high level of concern for building long-lasting relationships with customers in this dynamic business world (Richards, Hampartzoumian, George and Lee). Therefore, it should only enter into franchise contracts that meet the strategic objectives of the company to ascertain that very minimal conflicts arise from the interaction; hence, reducing the number of lawsuits resulting from the poor franchise relationships.
The cost leadership strategy would be one of the best moves for the company because it will offer quality products and services at lower prices compared to those of the main competitors. The cost leadership strategy by the Dunkin’s Donuts can be attained through the production of bulky products; thus, resulting in high asset turnover through spreading the fixed costs over the large number of units produced (Reinhard). The efficient management of the company’s supply chains will enable the company to cut on the huge costs of product distribution and instead focus on product development.
The customers around the world are very sensitive to the product quality and product prices because of the emergence of numerous product substitutes in the market. Therefore, having strong relationships with the suppliers will play a major role in keeping the costs low. The company will have a competitive advantage over its main competitors regarding prices for the products and services thus ensuring that the company gets increased revenues from all its outlets (Richards, Hampartzoumian, George and Lee). The profitability of this strategy is quite high considering that the amount of revenues resulting from the sale of products and services depend on the prices of those products. Besides, this strategy will be in line with the mission statement of the company, which stresses on the passion of the company towards offering its guests with delicious products that are nutritious and healthy at affordable prices.
The company has the opportunity to implement the international expansion strategy as soon as possible through venturing in new markets in Africa where its main competitors, such as McDonald’s and KFC are already well established (Brizek). The developing nations provide a good business opportunity because their economies are very promising, and the availability of both material and human resources to run the company operations. Dunkin Donuts already has approximately 19,000 total locations around the world, and the strategy of international expansion will suit its strategic objectives of being the leading provider of fast food products and services in the world. The company should focus more on the emerging markets in Middle East, Asia, Australia and Africa because the already developed economies are saturated. The company has enough resources to finance this international expansion considering that it has many franchise contracts with investors who finance its operations in overseas outlets. Besides, the returns from the international expansion will be enough to sustain the growth because the projected profitability is very huge.
The strategy recommendation on the change of the marketing promotional mix is effective considering the high level of competition in the fast foods industry. The era of intensive use of print media as the modes of advertisement has been overcome by the online advertisement platforms. Social media advertisement on Facebook, Twitter and Instagram are the most effective mode of product promotion in the current market. Therefore, my recommendation for the change of promotional strategy is based on critical factors such as the flexibility of the mode of advertisement, the cost of advertisement and the general outreach of this method. The company resources will be able to finance the new promotional strategies because they tend to be cheaper compared with the print media advertising techniques (Turban, Strauss and Lai 80). The profitability of adopting this strategy is also worthy because the revenues arising from the online advertisement are immense.
The need for a wide range of products and services offered by Dunkin Donuts is increasing as a result of high competition within the fast foods industry. Most of its competitors have a wide range of products that cuts across all the meals unlike the Dunkin Donuts products, which mainly focus on breakfast products. It results in divided loyalty of the customers as the company is not in a position to offer a wide variety of products to cut across all the meals. Therefore, the strategy recommendation for more innovation and product development will suit the market trends in the fast foods and beverages industry (Richards, Hampartzoumian, George and Lee).
Upon introduction of menus for all the meals, the company will be comprehensive enough to offer totally exclusive products and services to its customers. However, the cost implications of research and product development are intense, and the company may have constrains in its resources (Turban, Strauss and Lai 83). In return, the full implementation of product diversification strategy will yield high profits for the company. Therefore, the tradeoff between the cost implications of product diversification and profitability is a positive one hence the company should be obliged to adopt this strategy.
Works Cited
Brizek, Michael G. Coffee Wars: The Big Three Starbucks, McDonald’s, And Dunkin 'Donuts. Journal of Case Research in Business and Economics, 5.1 (2014):1-11. Print
Reinhard, Katharina. Differentiation as the key to success. A marketing plan for Starbucks, 2015. Print
Richards, Kim, Adrine Hampartzoumian, Loyola George and Lee, Jun Wan. Forming International Strategic Alliances. 2015. Web. 2016
Schermerhorn, John R. Exploring Management In Modules. Hoboken, N.J.: Wiley, 2007. Print.
Turban, Efraim, Judy Strauss and Linda Lai. (2016). Marketing Communications in Social Media. In Social Commerce (pp. 75-98). Springer International Publishing.
