The Political and Technological Intervention into the Dunkin' Donuts' Strategy

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Dunkin Donuts was founded in 1950, when Bill Rosenberg, a local New Englander opened the first of many Dunkin’ Donuts restaurants in Quincy, Massachusetts. A couple of years done the road in 1955, the first Dunkin’ Donuts franchise was opened and since then the brand has grown rapidly with more than 12,000 restaurants in 46 countries. Unlike other chains that originated after World War II, Dunkin’ Donuts focused on building their brand name upon the American Dream and cater their product towards the working class, which attracted a lot of attention. While brands like Starbucks, although successful were often seen as a cultural institution, Dunkin’ quickly became a popular brand with many people throughout the United States. Due to their early success this franchise was able to expand quickly and opened international locatins, such as Columbia, Brazil and Spain as early as 1980. Moving forward to today, Dunkin’s largest international market is South Korea with over 900 locations throughout the country. This report will closely analyze the force of globalization, using Dunkin’ Donuts Inc as an example of how a company can use global marketing strategies to expand internationally. The process of globalization for a business is challenging and if not structured or planned accordingly can negatively affect the company's stakeholders, beneficiaries and customer base.

Key Stakeholders/Beneficiaries:

The chain Dunkin Donuts is currently owned by an organisation called Dunkin Brands, which also occupies Baskin Robbins, an Ice Cream chain, which often shares a location with Dunkin. According to Yahoo Finance Dunkin’ Brands has a few major stakeholders, with a total number of 514 institutions holding shares. The many top institutional holders, such as Price (T.Rowe) Associates Inc (11.23%),Blackrock Inc (9.11%), Vanguard Group, Inc. ( 9.05% ), etc. hold an overall amount of shares which summates to 94.72 % of total shares held by just institutions. Therefore many companies decided to invest in Dunkin Brands as a company, rather than individual owners. (Finance.yahoo.com, 2019) Additionally Dunkin Donuts, unlike competitors franchises 100% of its locations, which gives virtually anyone the opportunity to own a Dunkin Donuts store and due to the many potential markets and loyal customer base many decide to do so. Compared to other competing franchising businesses, Dunkin’ charges a slightly higher franchising fee of 40 - 90 Thousand US Dollars, but subsequently requires a lower starting investment than other chains. In the past few decades, in order to raise awareness Dunkin’ has made may sponsorship deals around the world with a series of major sports teams, including signing a deal multimillion dollar deal with Madison Square Garden, which makes them the official sponsor of New York City's NBA, NHL and WNBA teams. These sports being internationally respected and followed reaches a wide range of potential customers and creates interest about Dunkin’s famous Donuts or Coffee around the world. (Finance.yahoo.com, 2019) In conclusion, the main stakeholders or beneficiaries of Dunkin Donuts are the customers, the franchisees, the many institutions invested in Dunkin Brands, distributors or suppliers and according to Dunkin’s mission statement the overall community and interest of the environment.

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Cultural:

It is crucial for marketers to be culturally sensitive and comprehend each country's distinct culture. According to Hofstede, Culture is a collective programming of the mind that distinguishes groups of people from another. Companies need to gather knowledge about cultures and implement them into their marketing strategy in order to decide whether to pursue standardisation, localisation or glocalisation. In 2012, Dunkin' Donuts first expanded into the Indian market and opened its first franchises there selling there well usual coffee, donuts and breakfast options. When sales were unperforming, Dunkin’ soon realized that they failed to comprehend India’s consumer preference. Indian people generally would rather enjoy a full breakfast with their friends or families in the morning rather than grabbing a light snack, such as a Donut. Additionally consumers would prefer Fast Food chains that offer full meals and don’t only constrict themselves to serving breakfast items. Therefore, after closing some chains Dunkin Donuts altered there menu to better suit the needs based on India’s culture. They added Full meal deals and started selling spicy sandwiches, burgers, vegetarian options, while focusing to match the Indian cuisine adding new flavors and spices, such as Chilli, Saffron and Chickpea. ( Rana, 2019 ) (Garber, 2019) Dunkin Donuts used a Penetration Pricing Strategy by setting their prices about 10 - 15 % lower than competitors. By offering good value for the consumer’s money and adapting their marketing model to fit the Indian culture of eating Dunkin Donuts has since been able to grow as a franchise, opening up to 38 locations in 2014. Due to the distinct cultural circumstances Dunkin’ Donuts markets itself as “ Dunkin Donuts & More “, rather than using their standardized breakfast options. Additionally there has been an increasing popularity for coffee in India, which gives Dunkin’ the opportunity to attract new customers with their adapted menu and cheap prices.

Economic:

The International economic structure of a country and the level of economic development within a target market is very important, while planning a global marketing strategy for a business. Countries vary greatly in consumer behavior based on the level of income and GDP ( Gross Domestic Product ). When deciding whether to expand into a new market, information on the economic wealth, marketers analyze both the economic opportunities and risks. While some countries, such as India may have a steady economy and growing GDP there consumer spending behavior does not include using their money to purchase a Dunkin Donuts product. For instance, recent studies have shown that less retail traffic and an increasing awareness for health concerns around the world has caused some difficulties for franchises, such as Dunkin’ Donuts. In many economies. The risk of a high carb and high sugar consumptions have become more well known, which has led Dunkin’ to remove the “ Donut” from their name at some locations and have started to brand themselves as a “ On the Go” coffee brand that offers healthy alternatives, while still serving their famous Donuts. According to Dunkin Donuts annual reports( Investor.dunkinbrands.com, 2019), South Korea is accounted to roughly 36% of international sales, which is most related with the strong economic structure, national currency and overall economies of scale. Dunkin’ owns a joint venture with South Korean shareholders owning 66.67%, this strengthens overall business in this region, with the joint venture saving costs by manufacturing and supplying all chains.

Poltitical:

The Global Political environment of a host country plays a significant role for marketers and businesses around the world. Many political factors can directly affect a company's financial activities, export and facilitation and state trading. Managers have to understand political risk and take into consideration potential implications, such as tax controls of labour restrictions. Currently the United States if facing severe labour shortage in the fast food / restaurant work force, which has faced Dunkin’ Donuts with a challenge to find minimum wage workers. The increasing economic expansion and expectation to attend college has led the blue collar industry to compete for workers with competitors. According to (Premack, 2019), turnover rates in the fast food industry has risen to highs of 150%. Nigel Travis, CEO of Dunkin Donuts stated in an interview with Business Inside in 2018, that this has been a great struggle for numerous chains. Marketers at Dunkin’ closely analyze the political stability and risks, before entering a certain market and depending on the consumer spending behavior and level of employment advertise themselves to attract the majority of the target market. (Investor.dunkinbrands.com, 2019)

Technological:

The rise of digital or technological dependence around the world has pushed businesses to be more innovative, introducing online e-commerce and being more digitally accessible by consumers. It is important for companies, especially international franchises, such as Dunkin Donuts to stay up to date with the technological advances and focus on developing clear one to one marketing strategies. Dunkin’ first introduced its DD Mobile app in 2012 and has since reached over 10 million downloads, giving customers the opportunity to collect perks, order online and get exclusive coupons. By providing the target market with a new level of convenience and speed, while ordering products, Dunkin has resonated greatly with customers, especially during the busy holiday seasons. The DD Perks Reward loyalty program offers people the chance to earn 5 points for every dollar spent, these points can be used to get exclusive deals. Additionally anyone who first downloads this app and creates an account will be rewarded with a free beverage of choice, which created a lot of initial demand. Additionally this app makes social promotion more effortless, being able to reach the target market directly using a one on one marketing strategy. With technology advancing daily, Dunkin’ Donuts has used this to their advantage by offering a new dimension of conveniency, which increases the opportunity for promotion, while involving an individual customer more intimately with the brand name. (Tode, 2019)

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