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Justin Dizon

MKT 3260-01

Spring 2013

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Table Of Contents

Cover Page ................ 1

Table of Contents ................. 2

Part I .............. 3 - 5

Store History, Background, & Mission Statement ..... 3

Relationship Marketing & Underlying Strategy ...... 3 - 5

Part II ..................... 5 - 7

Ownership Structure & Store Based Strategy Mix ..... 5 - 6

Online Site vs. Physical Site .......... 6 - 7

Part III ............... 8 - 10

Target Market & Store Location ........... 8 - 9

Management Structure ........ 9 - 10

Human Resource Planning ...... 10

Part IV .................. 10 - 17

Merchandising Strategy. 10 - 12

Pricing Strategy.. 12

Promotional Strategy ... 13

Retail Image .................. 14 - 15

Retail Future & Suggestions ...16 - 17

References .................. 18 - 20

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PART I

Store History, Background, & Mission Statement

Founded by William Rosenberg in the year 1950, the first Dunkin Donuts store

was opened in Quincy, Massachusetts. Over the next five decades, Dunkin Donuts

continues to expand their brand by introducing a wide variety of choices on their menu.

These introductions brought muffins, bagels, breakfast sandwiches, Munchkins, and

different sorts of beverages both hot and cold. Through the years and continued

expansion of Dunkin Donuts, they have successfully forever cemented their name in

modern society. Becoming the worlds leading baked goods and coffee chain, Dunkin

Donuts has become one of the most recognized and loved brands.

The mission statement of Dunkin Donuts stores was originally derived from the

original founder himself stating, Make and serve the freshest, most delicious coffee

and donuts quickly and courteously in modern, well-merchandised stores. In addition

to this statement, Dunkin Donuts follow twelve key values and principles as a guide to

further success. The values include: honest, transparency, humility, integrity,

respectfulness, fairness, and responsibility; while the principles consist of: leadership,

innovation, execution, social stewardship, and fun.

Relationship Marketing & Underlying Strategy

Relationship marketing has always been an area Dunkin Donuts has excelled in

as a company. Building customer relationships and striving for customer loyalty is

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an important aspect for Dunkin Donuts when it comes to marketing their brand. To

make this possible, Dunkin Donuts takes multiple steps through different outlets of

marketing including promotions, partner and sponsorships, and social media. Probably

the most important area in their marketing strategy is through email and social media

where they can constantly keep customers informed while also receiving feedback.

Through the various outlets of online communication, it allows Dunkin Donuts to offer

any special offers, promotions, coupons, or sweepstakes that customers can participate

in. An example of this would be the Dunkin Donuts Perks Card and Loyalty Program

where customers receive one Dunkin Dollar for every $20 spent at a Dunkin Donuts

store location.

Moreover, Dunkin Donuts has held multiple contests online on their official

website to not only attract customer participation but in hopes of gaining new ones.

These contests and sweepstakes have been important especially the past decade when

building customer relationships. Creating the next donut was one contest held online

where individuals had the opportunity to make the next Dunkin donut in hopes of

winning, along with a cash prize. Furthermore, Dunkin Donuts is continuing to expand

their image in the social network world through an official Mobile App and multiple

social media sites including Facebook, Twitter, and Foursquare.

In recent years, Dunkin Donuts has partnered up with sports teams based on

store locations. Such as in the Northeast of the United States, Dunkin locations

organize partnerships with the New York Giants, Yankees, Mets and Jets with

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sweepstakes and even team-themed donuts. Also, promoting upcoming movies like

Captain America and Men In Black through customized themed beverages. One current

promotion taking place today is a free donut with a purchase of a large coffee for all

AARP members. All in all, Dunkin Donuts underlying strategy mainly centers a

customer driven strategy. Through the continuation of these many marketing outlets

and practices, Dunkin Donuts will continue to attract the 3 million customers they serve

per day and more to come in the future.

PART II

Ownership Structure & Store Based Strategy Mix

When it comes to the ownership structure of Dunkin Donuts, nearly all locations

are franchisee owned and operated. Moreover, the store-based strategy mix can

actually be composed of more than one of the types of retailers. Looking at Table 5-1 in

the Retail Management textbook, it can be concluded that Dunkin Donuts is a food

oriented convenience store with aspects of a specialty general merchandise store.

Looking at Dunkin Donuts as a convenience store, it perfectly fulfills all necessary traits.

Most Dunkin Donuts stores are well-located, food-oriented that are open long hours,

and carry a moderate number of items. Many Dunkin Donuts are typically located in a

neighborhood location but can also sometimes be in a business district. Moreover,

many Dunkin Donuts are open 24 hours, 7 days a week for customer convenience and

carry different food items such as donuts, breakfast sandwiches, and most importantly,

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coffee.

On the other hand, Dunkin Donuts can also be a specialty general merchandise

store. Their specialty goods dominantly being food and beverages or broken down

more specifically, coffee and donuts. In addition, Dunkin Donuts has demonstrated

scrambled merchandising where goods or services that may be unrelated to each other

are added to the firms original business. Especially in recent years, Dunkin Donuts has

introduced new menu items as well as limited time seasonal items. New menu items

vary depending on seasonal and holidays from pumpkin muffins, dark hot chocolate,

turkey sausage breakfast sandwich, apple orchard donuts, and French toast bagels.

Other non-food items include travel mugs and tumblers, Christmas ornaments, Keurig K-

Cups, and official Dunkin t-shirts. All in all, Dunkin Donuts practices an assortment

with a narrow width and a deep depth.

Online Site vs. Physical Site

The online presence of Dunkin Donuts has been an important and growing

aspect to the company especially the past few years. Not only does Dunkin Donuts

provide an official website but, they also offer several different online outlets especially

in the social media world. Social media websites like Facebook, Twitter, and Instagram

are used for promotions, customer interaction, and special contests. When comparing

Dunkin Donuts online presence with its store presence, there are definitely some

similarities and differences between the two. One key feature kept consistent in both is

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the colors that represent the Dunkin brand: orange, pink, and brown. Also, specific

activities that can be done at both sites include gift card registration and balance,

viewing the full menu, and buying particular merchandise such as coffee grounds,

thermoses, and coffee mugs. Both sites also promote identical products and new items

that are available at the physical site.

The difference between the online site and physical site more than anything else

is the ability to receive the actual product physically in your hands. While in a physical

Dunkin Donuts store, you have the opportunity to actually consume any food or

beverages while online you cannot whatsoever. In addition, while in a physical store

you are able to see and smell the products and environment in person, which may add

an important dimension in the shopping experience. The online website also offers an

elaborate nutrition catalog of all food items offered which is limited at a physical site.

Apart from physical stores and the online website, Dunkin Donuts is limited

when it comes to selling through other outlets. Any other Dunkin Donuts branded

merchandise that can be seen outside of a Dunkin store will narrowly be grounded

coffee bags at local neighborhood supermarkets. Ready to eat donuts, sandwiches, and

coffee are exclusives available only at Dunkin Donuts store locations.

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PART III

Target Market & Store Location

Since its conception, Dunkin Donuts has grown to have a very broad target

market that covers a wide range of individuals. The one specific location I personally

visited and also work at draws this very kind of audience. We serve almost every one of

all ages, races, genders, and occupations; from families with children to business people

going to work. Most customers, if not all, come to Dunkin Donuts as a stop during a

trip to get a quick fix whether it is coffee or a quick snack. This particular Dunkin

Donuts, located in Piscataway and borders South Plainfield, is located in a significant

trading area where business is consistently flowing. Based on its definition of

encompassing 50 to 80 percent of a stores customers, this location is surely based in

a primary trading area.

Moreover, the location of this Dunkin Donuts store is located in a central

business district, basically what is considered downtown for Piscataway and South

Plainfield where many other retailers are present nearby and vehicular traffic is very

high. Working at this Dunkin Donuts, it is easy to conclude that we are a destination

store. There are many different options nearby to purchase coffee and breakfast, but

many customers will take the time and choose to come to Dunkin Donuts. In addition,

you almost never see this Dunkin Donuts empty without customers. Having a 24/7-

store operation, it is convenient for consumers to come and go whenever they like.

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Additionally, the location of this Dunkin retailer is prime because of the easy

access to major highways and transportation. The location gives customers the ease of

entrance and exit to the store. Also, the parking provided is abundant where spaces are

available all around the store both in front and back of the store for customers. All in

all, Dunkin Donuts targets all markets especially individuals who have an on-the-go

lifestyle providing fast-service and convenience, staying true to their motto, America

Runs on Dunkin.

Management Structure

The management structure at this location is fairly simple containing five specific

job positions. The franchisee, who essentially owns the store itself, is responsible for

making important end decisions regarding the store while keeping a consistent

leadership role. The next position is the general manager; at this location our general

manager manages multiple stores and visits each of them on a daily basis. His

responsibilities include distributing payroll, explaining any new tasks, and keeping the

overall image of the store in order. Next is the store manager who is present daily at

the actual store location and help manages the employees. Responsibilities of the store

manager include creating the weekly work schedules, assigning specific work duties, and

financial tasks while working closely with the general manager. The last two job

positions are where I currently stand as an employee at this store location; shift leader

and crewmember.

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As a new employee of the store, you begin as a crewmember, which is

essentially working at the register, taking orders from customers, and serving them their

orders. As a crewmember, you have many different job assignments, which are often

done in job rotation where a different employee is assigned a different job each day.

Some of these job assignments include sandwich maker, meats re stocker, and

equipments washer. From crewmember, there is opportunity for advancement to

become a shift leader where more responsibilities and decision making is given. As shift

leader, in addition to crewmember jobs, you are responsible to count out the registers

at the end of the shift while helping manage other crewmembers is kept consistent.

Human Resource Planning

Like the management structure, the human resource planning for this Dunkin

Donuts location is fairly simple. The store manager primarily does the hiring of

employees by looking over potential employee applications and contacts them for an

interview. When looking for employees, this store location merely places a Now

Hiring sign at the stores front window in hopes for potential prospects. The hiring

process is relatively flexible where all individuals have an equal chance for employment.

PART IV

Merchandising Strategy

Upon Dunkin Donuts merchandising plan, they rely much on forecasts by

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predominantly using staple merchandise and basic stock lists. With a retail restaurant

like Dunkin Donuts, it is fairly easy to project the expected sales for giver periods.

Staple merchandise including donuts, coffee, bagels, and muffins will have a consistent

quantity in sales which creates a clear guideline for inventory re stocking. Another

factor in the merchandise plan is assortment. Like previously mentioned in part 2 of this

paper, Dunkin Donuts has a narrow width and deep depth in their assortment. To

illustrate this further, Dunkin Donuts carries coffee, donuts, baked goods, and breakfast

sandwiches, making it a narrow width assortment. Between each of these categories

there are different flavors of coffee, varieties of donuts, types of baked goods, and

combinations of sandwiches- making it a deep depth assortment.

One last factor affecting the merchandise plan of Dunkin Donuts is timing. One

may not think, but Dunkin Donuts merchandise is effected by seasons and holidays.

Every month, a new food item, drink flavor, or donut is introduced to coincide with the

current season, holiday, or other intangibles. Sometimes, special promotions for

current events like the Super bowl or upcoming movie releases are influenced in Dunkin

Donuts merchandise (and promotional) strategy.

Altogether, Dunkin Donuts merchandise strategy plan focuses on the idea of

inventory management. With inventory orders and deliveries made twice a week at a

typical Dunkin Donuts store, this demonstrates inventory and assortment planning as a

pivotal strategy for Dunkin Donuts. Another aspect of this includes the delivery or

baking of fresh donuts, bagels, muffins, etc. on a daily basis at Dunkin Donuts

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contributes to the merchandise strategy by serving fresh items while keeping sales

and inventory constant.

Pricing Strategy

Dunkin Donuts uses many different types of pricing strategies. The overall

prices on the menus of different Dunkin Donuts stores follow the idea of horizontal

price fixing. Because of different franchise owners of each store, the prices may vary by

a few cents but generally all follow a similar set price. Another strategy Dunkin Donuts

focuses on is market penetration pricing which is setting low prices and selling many

units in seeks of large revenue. This strategy benefits Dunkin Donuts because it

positions them as a much affordable brand when being compared to such counterparts

like Starbucks who follows a market skimming strategy.

The implementation of these price strategies is established through various ways

of pricing including odd pricing, multi unit pricing, bundled pricing, and markdowns.

Examples of odd pricing used at the Piscataway Dunkin Donuts store is one dozen

donuts for $7.99 or one donut for 99 cents. Secondly and example for multi unit pricing

would be the sale of the pounds of coffee where two pounds can be purchased for

$16.99 rather than one pound for $9.99. For bundled pricing, several items are put

together for a grand total price such as a Box O Joe and a Dozen Donuts together for

$23.04. Lastly, markdowns often take place at Dunkin Donuts mainly through monthly

promotions, coupons, and special deals. Examples of this would be 6 donuts for $3.99

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or 99 cents any size iced teas.

Promotional Strategy

Dunkin Donuts promotional strategy includes several elements of the retail

promotional mix. Probably the mostly invested promotional effort would be

advertising. This includes everything from print ads, newspapers, radio, television

commercials, and on the web. In relation, social media and public relations has been a

huge impact to Dunkin Donuts recently by giving publicity through the different online

outlets. Online blogs, Facebook, Twitter, and Instagram help bring awareness,

enhances image, and demonstrates innovativeness. Another significant promotional

strategy to Dunkin Donuts includes sales promotion which can include displays,

contests, sweepstakes, coupons, frequent shopper programs, prizes, samples,

demonstrations, referral gifts, and other limited-time selling efforts.

Mentioned in part one of this paper, social media is used by Dunkin

Donuts to keep communication intact with consumers online. Tying in sales promotion

with public relations, online contests are sometimes held online using social media. In-

store contests also take place such as the Create The Next Donut contest as mentioned

in part 1 of this paper. Moreover, POP displays are always used at Dunkin Donuts

stores that help promote new food items, seasonal coffee flavors, or a current sales

promotion.

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Retail Image

To maintain and present a proper retail image, Dunkin Donuts follows the

different components that make up a retail firms image. Relevant components

followed by Dunkin Donuts include: target market characteristics, store image and

atmosphere, store layout and facilities, and community relations. The target market

characteristic is important to Dunkin Donuts image because it reminds consumers that

their brand is targeted to everyone. Dunkin Donuts is a nationwide brand that

especially targets America hence their slogan, America Runs On Dunkin.

Furthermore, the store image and atmosphere is critical to a store like Dunkin Donuts.

A place where fast paced service is valued, it is important to make the in-store

experience enjoyable for the customer both exteriorly and interiorly.

The Dunkin Donuts that I personally work at excels in both store interior

and store exterior. The stores exterior includes two doors for entrance and exit,

windows with multiple displays and posters on the windows, and a color coded building

fit to the Dunkin Donuts brand image. The colors of orange, pink, brown, and beige run

throughout the store both exteriorly and interiorly creating a uniqueness compared to

surrounding stores. Additionally, the exterior includes abundant parking all around the

store with wide enough driving lanes to prevent congestion. The building is an

acceptable size, large enough to be seen and to be identified as a Dunkin Donuts store

from afar.

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Walking inside the store, the first thing one notices is the scent of coffee

which is a trademark of Dunkin Donuts. The flow of customers runs smoothly with an

appropriate placement of the customer line and cash registers. The interior of the store

is boarded with glass windows as walls which give the store a bright, friendly, and

welcoming atmosphere. The fixtures including tables for dining , merchandise displays,

and overall cleanliness are all also demonstrated at this specific store. The price display

(or menu) is bright with legible font and provides pictures of the food items for

customer reference. Lastly, the store offers free wireless Internet which contributes to

not only the stores technology and modernization but also innovation.

Overall, with all these aspects, they all in fact work well together to create an

identifiable image for Dunkin Donuts. The image for Dunkin Donuts being non-driven

by status, simple and no-frills, down to earth, regular average people, and efficient.

Through the years, Dunkin Donuts has earned the image of being an affordable brand

especially when compared to competitors. This image definitely works for all store

retailers because it puts Dunkin Donuts as reliable and positive in the eyes of their

customers. Their tagline says it all, America Runs on Dunkin, indirectly saying how

Dunkin Donuts will help and be responsible in serving the customers of America the

overall country.

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Retail Future & Suggestions

Looking at both the short-term and long-term future of Dunkin Donuts, all one

can see is more customer loyalty, innovation, and global recognition. The short-term

future of Dunkin Donuts may include opening more store locations in the United States

but, possibly more non-traditional stores like in Colleges & Universities or major

transportation hubs. For the long-term future, Dunkin Donuts can focus on opening

more store locations abroad and to create a more international global image that can

compete with Starbucks. Also, for further future development, Dunkin Donuts should

continue their presence in the online world which is a good direction for the retailer.

Continuing to market the brand as technologically friendly will not only make the future

brighter for Dunkin Donuts but also strengthen their brand image.

Other suggestions include more coupons and, the continuation of affordable

pricing and menu diversity. Having more coupons will not only create more customer

awareness but they will help further the brand image of the store. Coupons are

relatively inexpensive and low on investment; and ultimately make the brand popular

among end-users. Moreover, affordable pricing should be a constant aspect. Relatively

low and affordable prices sets Dunkin Donuts apart from its competitors and ultimately

draws more customer revenue. Lastly, the continuation of menu diversity is a positive

aspect Dunkin Donuts should continue to develop. Introducing new food items or new

beverage flavors will keep the retail brand fresh and new with frequently new items

added on the menu. Not only will current customers become more loyal but also,

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new customers can be attracted. Potential new products can also create more brand

awareness for Dunkin Donuts and solidify their brand image. Overall, Dunkin Donuts

has been taking the right steps in improvement and innovation. Which takes us back to

the original mission statement, continuing to serve the freshest coffee and donuts

courteously in modern, well-merchandised stores. This will not only continue to make

Dunkin Donuts run America but in hopes of running the world.

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