Each chapter has a “Management Decision Case” a the end of the chapter.
Choose a case of your liking.
Read the case; on an APA style paper 4 pages long (including title page and reference page; answer the case questions ; expand on the company profiled and the type of advertising used.
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Management Decision Case
Dunkin’ Donuts is one of the leading coffee retailers in the United States and globally, competing closely with similar companies, such as Starbucks. The firm has, over the years, strived to become a market leader in the country and beyond, providing quality products at a lower price than competitors in the coffee and snack industry. The brand has stood the test of time and proven remarkable by managing to survive significant internal changes, such as the change from being about donuts to focusing primarily on coffee. The brand has a considerably high market size in the US and successful operations in more than 30 countries globally. Although the company experienced challenges, such as brand attachment, it overcame them through effective marketing. Furthermore, the company uses a different strategic model from its main competitor, Starbucks, and Loyalty programs like DD Perks that have propelled its customer loyalty and ongoing market success. The essay responds to three questions about its strategic decision to focus on coffee, its differences from Starbucks, and its loyalty programs.
Question 1
Dunkin’ Donuts made a strategic decision to focus on coffee, not just the donuts. The decision was great for the business, but it caused some risks for the firm by focusing on another product rather than the firm’s one, especially in their name. The main risk for the company is a brand risk when customers find it challenging to identify with the new brand or might fail to transfer loyalty from the previous product to the new one. The product might not be what the customers want, creating a risk of losing them to competitors, such as Starbucks. Marketing strategies can help reduce the risks and increase the probability of firm’s success. For Starbucks, effective strategy included social media strategies to reach the customer directly and send a targeted message about the new brand. Another successful approach could be marketing the new product concerning the previous well-known brand. For example, the company could use the donut in marketing coffee and gradually transition to the new product.
Question 2
Dunkin’ Donuts’ main competitor is Starbucks, which has a 36% market share against 24% for Dunkin. Compared to Dunkin’ Donuts, Starbucks has created a premium brand and more extensive men product customization. Dunkin’ has higher exposure franchises, making a different business model from Starbucks’, mainly an owner-operator model. The different models have critical implications for their cost structures, revenue streams, and capital spending. Although the two companies focus on marketing, especially in social media, their approaches differ in reaching out to more customers. For example, Dunkin’ Donuts has a more aggressive social media strategy, such as Twitter and Facebook campaigns, to directly reach and communicate to customers. Another difference between the two companies is in pricing since Dunkin’ Donuts offers more competitive prices than Starbucks to appeal to the middle class. The company also strives to become the lowest-cost provider while ensuring that customers enjoy quality products and services. Dunkin’ Donuts has managed to maintain lower prices through its lower margins and capital expense than Starbucks. From a marketing manager’s standpoint, Dunkin’ Donuts can create a more inviting environment and market the same to customers who invite customers to sit and enjoy the coffee and a donut.
Question 3
Loyalty programs like DD Perks effectively create customer loyalty, but they are not sufficient because competitors can copy. Therefore, to retain customers and thwart switching, the company should consider other factors that driver brand loyalty, such as excellent customer service and convenient customer experience. Since any of the factors that rivals can easily replicate, the company should blend the factors to build and retain loyalty. For example, although Dunkin’ Donuts should retain DD Perks as a loyalty program, it should blend the strategy with a great customer experience through impressive customer service. The management should continually train their employees to improve customer service skills to ensure that customers enjoy the services and keep coming back for more. The management should understand that although customers might come back for more points unless they feel valued, they will most likely switch to competitors. Therefore, better customer service will create a positive emotional connection to the brand and build long-term loyalty. Customer service employees should develop skills to ensure they listen to and look after customers when they come to have the coffee.
Conclusion
Dunkin’ Donuts is one of the leading businesses in the coffee and snacks industry in the US and globally. The firm competes intensely with other coffee chains, such as Starbucks. While the firm faced brand risk after the strategic decision to enter the coffee world fully instead of donuts, the management mitigated the risks to build a successful brand that customers love. Dunkin’ Donuts has a less market size than Starbucks, but its brand performs well in the market. However, the management should implement other factors that drive loyalty apart from loyalty programs. Dunkin’ Donuts will improve its performance in the local and international market with more effective and competitive strategies.
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