Analysis of Dunkin' Donuts's Marketing Strategy and Its Strengths

Michael Porter, Harvard scholar and consultant, says that the first step in crafting a good strategy is to understand the nature of competition within an industry. This requires solid analysis, something that benefits from the strategy based on these “five forces”: competitors, new entrants, suppliers, customers and substitutes. Dunkin’ Donuts’ biggest competitor is Starbuck’s, founded in 1971, an American coffee company and coffeehouse chain, known for offering some of the world’s finest fresh-roasted whole bean coffees and with 30,000 locations operating worldwide. According to them, Starbucks’ coffee buyers personally travel to coffee farms in Latin America, Africa and Asia to select high quality beans, which helps in attracting more customers. Considering that Starbucks has a wider range of locations, makes it easier for customers around the world to reach. When it comes to substitute goods, in my opinion, Dunkin’ Donuts is not as threatened, as it offers a wide range of products, starting from coffee and donuts, the trademark of the company, to breakfast sandwiches and wraps, hot/iced/frozen drinks and a variety of snacks. Another “force” recognized by Porter is New Entrants. As far as we know, Starbuck and Dunkin’ Donuts are probably the biggest and most successful coffee shops that operate worldwide, as they also have many years of experience in the field. New competitors might take more time to be a “threat”. From what I understood, Dunkin’ Donuts uses a cost leadership strategy, which means they seek to operate with lower costs than competitors. However profiting it may be, they still stay behind Starbucks.

Strengths:

• Reputation for quality
• Core products
• Simple and straightforward morning snacks
• Appeals to modest, cost-conscious customers

Dunkin’ Donuts aspire to keep up with the early tradition of offering simple snacks to cost-conscious customers, but at the same time, staying true to its roots, without expanding too much overseas. I consider this as one of the company strengths, because they are working in a certain environment, while knowing the possible risks and coming up with the right solutions at the right time, without experiencing loss.

Weaknesses:

• Lack of customer rewards
• Selective partnership

The lack of customer rewards will not be a positive incentive to attract new potential customers, as they believe they should get something for being regular, besides the good service. The selective partnership might be a setback for the company’s growth, because, by choosing specific partners, DD might lose out on other markets that could bring a lot of customers.

Opportunities:

• Growth of existing market
• Partnerships/franchises
• Launching new products

Even though the selective partnership could be a setback, it still helps in the company’s growth of existing market. This way, they can reach another market with potential customers. The same effect has the launching of new products. Other than competitors and the younger demographic, I do not see another threat to Dunkin’ Donuts. They have to know the market where they are operating very well, in order to have the right answers to the possible problems coming up. If the products offered are similar, they have to work harder on improving quality, customer service and attract as many customers as possible. As about younger people, they might see Dunkin’ Donuts as an uncool “yesterday’s brand”, that is still living and staying true to its tradition.

As I mentioned in the beginning of the paper, Starbucks is one of Dunkin’ Donuts biggest competitor. What makes it strong in the coffeehouse market is the almost 50-year experience and its holistic approach to ethically source high quality coffee. The company’s fresh-roasted whole bean coffees attract customers of different age groups. They have spread worldwide and compete strongly in the market with other coffeehouses, outside of the United States as well. However, despite all the success, they serve mostly coffees in order to stay true to their brand, but have included in the menu teas, pastries, sandwiches etc. Other than bringing profit, it does not harm the company’s growth at all. Starbucks gives great attention at the growth, preparing and serving of coffee. On the other hand, we have Dunkin’ Donuts that has been operating for almost 70 years. For most of its existence, its main product focus has been expressed by its name: donuts and coffee in which to dunk them. But, ever since Stan Frankethaler became executive chef and vice president, DD has launched about 25 new products annually. These new products include baked goods, breakfast sandwiches, snacks as well as different types of drinks. Unlike Starbucks, they have been more focused in the “inside” market rather than focusing in worldwide expansion. Of course you can find Dunkin’ Donuts in Europe or Asia, but they are not as frequent. According to the company representatives, this is so they can avoid the omnipresence and as a result dilute the essential brand appeal and alienate longtime customers who respect its history of simplicity. Dunkin’ is on the right track for as long as they keep working towards their goal and mission, without losing its trademark. In my opinion, it will not be more of a copycat player, because it looks like they are set on their objectives and tend to stay true to their own roots.