DUNKIN DONUTS (E)

1988 Distribution Strategies

INTRODUCTION

In 1950 William Rosenberg coffee & doughnut shop in Quincy, Massachusetts In 1955 business format franchise In 1987 1478 stores:- 1449 franchised. No. 1 ranking in customer loyalty Customer preferred Dunkin Donuts because fresh and consistency of the product, Convenience of location Categorized purchase by occasion: Social, Work & family

CUSTOMERS

Association Customers strongly associated the store with donuts (85%,75%) and coffee (30%, 52%). Purchase reasons Customer chose Dunkin Donuts primarily because of the freshness and the consistency of the product. Convenience was another purchase reason. (work related purchase) Satisfaction level High and flat the company found it tough to increase the satisfaction level and doughnut was getting the lowest scores.

CUSTOMER
Segmentation

Consumption Location

Purchase Occasion

Time of last purchase occasion

Frequency of Purchase

Weekday In shop - 3 Social -11%

Breakfast/Snack at shop

Heavy -22%

In Car - 4
Family 70% At work - 2 In Home - 1 Work -19%

Breakfast/Snack Takeout
Noon Snack Takeout Late Night Snack Takeout

Medium 48%

Weekend
Breakfast/Snack Takeout Late Night Snack Takeout

Light- 30%

DISTRIBUTION STRATEGIES

The management was convinced that the decreasing sales growth, stiffening competition and worsening sales to capital ratio required a new emphasis on expanding distribution We know were not going to get people to eat a lot more doughnuts, but by increasing our distribution we can get a lot more people to eat our doughnuts Three approaches: 1. New Markets 2. Sale of Branded Products 3. Opening Satellite retail outlets

NEW MARKETS

Opening new stores in less saturated markets

Focused company development of specific markets Use of area franchising

Focused Company Development Area Franchising

Sub franchising Exclusive development franchising

BRANDED PRODUCTS

Supply branded products to convenience store chains Local franchise could deliver fresh products twice daily to 10-15 convenience stores Delivery vehicles on lease Managers believed convenience store customer differs from doughnut shop customers

SATELLITES

Non producing units, which were serviced from full producing units Could take the form of a storefront, a stall in a mall or a cart in a train station Lower cost and more profit margins than a full producing unit

RECOMMENDATION
Combination of New Markets and Satellites The sales growth is almost stagnant for Dunkin. In order to have an increase in sales growth , entering new markets stand to be the better option. Entering new markets would mean being unaware of customer behavior and preferences, hence making Sub franchising the correct model. Excel 1