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A market analysis of Dunkin Donuts

Dunkin’s Donut is America’s favorite food and all-day stop for coffee and baked goods. It is a leading retailer of hot and iced regular coffee by the cup in America and it also the largest coffee and baked goods chain in the world. The original Dunkin’s Donuts was a single cup of coffee with a donut. Now Dunkin’s Donut offers a wide range of coffee or coffee related beverages, baked goods and an expanding all day Oven Toasted menu. But they still use their original proprietary coffee blend recipe established by its founder (Franchise Update Media Group 2010). Figure 1 is Dunkin Donuts logo.

Figure 1: Dunkin Donut Logo

Source: http://lovetomorrowtoday.com/wp-content/uploads/2009/06/dd-logo-stack1.jpg

Throughout Dunkin Donuts Company’s planning, they always keep the customer’s interests in mind. They frequently refer to their mission statement which is increase customer satisfaction and loyalty by providing the fastest and most accurate service, the freshest products in the friendliest and cleanest environment. They accomplish this through teamwork, communication, honesty, fun and sharing experiences as they all grow together (Riverside Management 2006).

Today, this philosophy still holds true and it is the foundation that has enabled Dunkin’ Donuts to grow into America’s favorite everyday, all-day stop for coffee and baked goods (Dunkin’ Donuts 2009).

Consumer Decision Process

Consumer behavior looks at the many reasons why people buy things and later dispose of them. Diagram 1 is showing about consumer will go through distinct buying phases when they purchase products (Tanner, J. et al [No Date])

Diagram 1: Consumer Decision Process

Source: http://www.seeisee.com/sam/wp-content/uploads/2007/03/consumer-purchase-descision-process.jpg

Dunkin Donuts has marketed itself as selling coffee for people on the go and their slogan is “America runs on Dunkin”. Dunkin Donuts coffee is what people drink on the way to work while on the car or on the subway (MightyStudents.com 2010). When people rush the time go to work but hungry, they will go to Dunkin Donuts because Dunkin Donuts easy take away and replenishing the energy of them.

When consumer needs to buy something, they will do something information search and make automatic purchase decisions. It is because Dunkin Donuts coffee is a low-involvement product and it carries a low risk of failure and has a low price tag for a specific individual or group making the decision (Tanner, J. et al [No Date]). Consumer will receive the information of Dunkin Donuts from neighbors, colleagues, friend or advertisements.

The outputs of information processing are the belief, attitude that shape decisions and the intentions that predispose certain actions. In beverage, consumers have many choices to choose which one coffee brand they want.

The logo of Dunkin Donuts is pink and orange colour and these colour is memorable everywhere and also has a small cup of hot coffee (CBS Interactive 2010). The price of Dunkin Donuts coffee is less expensive pastry and beverage offerings are made to attract a fast on the move crowd (MightyStudents.com 2010).

In beverage industry, Dunkin Donuts coffee will face many competitors and their largest competitor is Starbucks coffee. Consumer still will choose Dunkin Donuts coffee because they have good service for their customer.

Besides that, Dunkin Donuts coffee has a reputation for brewing high quality coffee. It is because they use 100% Arabica coffee beans and has its own coffee specifications, which are recognized by the industry as a superior grade of coffee however Dunkin Donuts coffee still is less expenses for consumer (Alex Compton 2007).

Finally, consumer will decide whether Dunkin Donuts coffee their purchased is everything it was cracked up to be. If not, they will like to suffer what’s called post-purchase dissonance, so they will rethink their decision after purchasing products and wonder (Tanner, J. et al [No Date]). Dunkin Donuts need to try the prevent buyer’s remorse, so they have a customer service to help their customer to solve their problem. The customer service also will receive any suggestion from their customer and get the new idea to strengthen their business.

In conclusion, consumer decision process does not end when a purchase has been made. The most important of all from a marketing viewpoint is whether the consumer will buy the selected brand again on a later purchase occasion (Baker, M.J. 1999, -).

Psychological Core

Consumer’s buying is influenced by four major psychological factors that are perception, learning, motivation and attitudes.

Perception

Perception is a process that begins with consumer exposure and attention to marketing stimuli and ends with consumer interpretation. Diagram 2 is showing about the nature of perception.

Stimuli

Exposure

Attention

Interpretation

Memory

Purchase & Consumption Decision

Diagram 2: The Nature of Perception.

In Asia countries when people heard about Dunkin Donuts, they just know Dunkin Donuts is selling donuts. It is the donuts word will let them link to this beverage food main product is donuts not the coffee. But expect Asia country, they will know the Dunkin Donuts main product is coffee.

This is why they need communication to reach consumers first and resulting in activating one or more senses, therefore consumer exposure is the start of preliminary processing. Dunkin' Donuts coffee is well-known for their advertising and become popular culture references (WorldLingo Translations LLC 2010).

Dunkin Donuts will through different ways to promote their coffee such as billboards, television adverts, magazines, sides of bus and the others. It is because they need to generate increased consumption their coffee. For example, Dunkin Donuts use the bus advertising to promote their coffee.

They choose this advertising because it is large advertisement areas, novelty interest, high mobility and it can available for corporate hire (Bus Advertising 2006). Figure 2 is showing about Dunkin Donuts’ bus advertising.

Figure 2: Dunkin Donuts Bus Advertising

Source: http://blog.seattletimes.nwsource.com/coffee/roasters/

Nowadays, most people live in an environment that is filled with sensory stimuli but their capacity to handle this information is limited (OpenLearningWorld 2010). So, Dunkin Donuts try to exploit that situation to their advantage before to leave an impact in their consumer (Himansu, S.M. 2009). It is why Dunkin Donuts have their own graphic logo and their shows a tall coffee cup and hot pink and orange colour company name. These two colour are energetic, dynamic and fast, consumer will easy pay attention in their coffee when consumer see these two colour (Logo Design Works 2010).

On the other hand, the often situation, condition, environment or the surrounding of the consumer have an effect on its attention of certain stimuli. In America, Dunkin Donuts consumption object type is office worker and normal worker.

So, Dunkin Donuts stores with limited seating as well as its less expensive pastry and beverage offerings are made to attract a fast, on the move crowd (MightyStudents.com 2010). When consumer rush the time go to work, then they remind Dunkin Donuts coffee and go to buy it.

Interpretation is Dunkin Donuts coffee’s message which to attention the attracted and further analyses in terms of categories of meaning stored in memory (Lombard, A. 2007). Dunkin Donuts and their coffee are symbolic value for consumer and they will attempt to preserve or enhance Dunkin Donuts coffee. Hence, product and service image is very important for Dunkin Donuts in their business.

Motivation

In the motivation theory, we can use Abraham Maslow’s Hierarchy for Dunkin Donuts coffee because this theory is driven by the existence of unsatisfied needs. Diagram 3 is showing about Maslow’s Hierarchy.

Diagram 3: Maslow’s Hierarchy

Source: http://docsiva.files.wordpress.com/2009/01/maslows-hierarchy-of-needs1.jpg

Through about Maslow’s theory, Dunkin Donuts coffee is belong to physiological needs. Food and water are very important for all of people and Dunkin Donuts is providing coffee and donut to consumer. Therefore, they can get the energy from Dunkin Donuts coffee and carry on their activity.

Figure 3: Dunkin Donuts Advertisement

Source: http://farm4.static.flickr.com/3239/3002138691_ed1362d9a2_z.jpg?zz=1

Figure 3 is an advertisement which is cognitive preservation motive in McGuire’s psychological motives and it is the need for objectification of consumer. In this advertisement have a person who wear Dunkin Donuts coffee cup and run on the ways. This action is mating about Dunkin Donuts slogan and promotes their coffee, then can strengthen consumer impression

Learning, Memory and Retrieval

Thinking

Conditioning

Modeling

Learning is a behavioral modification that occurs through experience or conditioning and it included with thinking, conditioning and modeling (IBS Center for Management Research 2010). Diagram 5 is showing about the process of learning consumer.

Diagram 4: The Process of Learning Consumer

Advertising is a method which will be use by all of business because advertising will easy let consumer to remember their product. Figure 4 is showing about Dunkin Donuts slogan advertisement.

Figure 4: Dunkin Donuts Slogan Advertisement

Consumer will easy pay attention for this advertisement because this advertisement is colourful and quite especial, then they will want know what is the mean about the “America Runs on Dunkin”. After that, consumer will start to analysis the product is good or not. They will use different method to measure the value of the product with other same type product. Diagram 5 is showing about competitor perception mapping Dunkin Donuts coffee.

Exotic

Mellow

Aroma

Bland

Starbucks

Dunkin Donuts

Coffee Bean & Tea

McCafe

Diagram 5: Competitor Perception Mapping

After that, consumer will remember Dunkin Donuts coffee in their mind. When consumer see people running, they will quickly association Dunkin Donuts slogan then they will got desire need to drink the coffee and go to buy.

Attitudes

Consumer attitudes are composite of a consumer’s beliefs, feeling and behavioral intentions toward some object. All of them are viewed together since they are highly interdependent and together represent forces that influence how the consumer will react to the object (Lars Perner 2010).

Consumer belief Dunkin Donuts coffee can come from newspapers, television, listening radio, internet and cognitive process. America is a busy country and Dunkin Donuts coffee is what you drink when you are on the go, so consumer will go to buy Dunkin Donuts coffee when they rush their time to work or else.

After consumers consume Dunkin Donuts coffee, they will get some feeling with this coffee. They will think why Dunkin Donuts coffee is so nice and the price also cheap. In addition, the advertising and another consumer comment, it can reinforce the Dunkin Donuts coffee image. Finally, they will choose Dunkin Donuts coffee because they got the affirmation from Dunkin Donuts coffee.

Consumer Environment

4.1 Culture and Subculture

America is a coffee culture and American need drink coffee every morning before they start their work. Besides that, America is freedom country because all of national of America is very recognition of personal freedom. In consumption, they got entitlement to choose anything they want or need.

In order to suitable this culture, Dunkin Donuts coffee given their customer many choice in their menu. Dunkin Donuts not only have different type of coffee, they also have different type of donuts, fancies, munchkins and sticks. Therefore, consumer got many different choices to choose when they need to consumption in Dunkin Donuts.

Group

“Age group can be analyzed as subculture because they often have distinctive values and behaviors. American teenage population has been gaining affluence and fluctuating in size” (Peter, J.P., et al 1999, pg304). Dunkin Donuts coffee will be flourishing in teen market because price of them very cheap but high quality. It is because it’s easy, filling and convenient.

Nowadays in America, teenager’s parent is busy in their work and they not more extra time to prepare home-cooking meal for them. Teenager also the limited budget and Dunkin Donuts is less expensive then they got the consume power.

Lifestyle

America is a busy country, so for the most part they want their food to be quick, convenient and cheap. Americans like thing that are fast and easy, requiring minimal personal or economic sacrifice, regardless of whether they buy it at supermarket or fast food franchise (The Kerr Center, 2010).

Dunkin Donuts coffee is let people drink on the way to work, while on the car or on the subway, so Dunkin Donuts coffee is what you drink when you are on the go. Hence, Dunkin Donuts stores with limited seating as well as its less expensive pastry and beverage offerings are made to attract a fast, on the move crowd (MightyStudents.com 2010).

Political

America’s government will establish Environment Protection Agency to charge with protecting human health and the environment (KOSMIXTM CORPORATION 2010).

Dunkin Donuts unveiled its first LEED certified restaurant in Florida and LEED is recognized as the standard for “green” construction in America. LEED features are energy-efficient insulated concrete foam walls to reduce air conditioning, energy-efficient lighting, including motion sensors for restrooms and offices. They also identifying designated areas within the restaurant for storage/collection of recyclable materials. It is because they want going to do it in a way that is environmentally friendly for the people who live and work in America (DD IP Holder LLC 2010).

Economic

America has an advanced industrial economy that is highly mechanized and the gross national product is the largest in the world. They more than meet its own economic needs and is the world's leading exporter of food. The vast majority of businesses in America are clustered within the service industry, especially fast food business (Advameg Inc 2010).

Therefore, Dunkin Donuts coffee in America will face many competitors such as McDonald, Starbucks and the other. It is because they marketing strategy are similar and all of them are attach importance to their service attitude and speed.

Social

The social classes for consumer analysis are upper Americans (14%), middle class (32%), working class (38%) and lower Americans (16%). Working Americans are “family folk” depending heavily on relatives for economic and emotional support (Peter, J.P., et al 1999, pg318).

Dunkin Donuts coffee is what you drink when you are on the go, so they can save many times to do another things. It also is high quality but low cost of pastry and beverage offering are made to attract a fast on the crowd (MightyStudents.com 2010). Hence, all of American social class can consume.

Technological

America is a technologically advanced country and it becomes an opportunity for Dunkin Donuts coffee in their business. Therefore, Dunkin Donuts coffee should always look forward to develop and improve its technological facilities in order to differentiate themselves in their use of technology.

Dunkin Donuts unveiled “Dunkin Run”, an interactive Website and iPhone application the chain and it will enable customers to solicit and place Dunkin' Donuts group orders in just a few clicks with unprecedented ease, speed, accuracy and fun. Consumers can a group to order with www.DunkinRun.com through their computer or mobile device to view the Dunkin Donuts coffee menu. All Dunkin Donuts core coffee, foods and beverages are presented using interactive product images to make personalizing an order all of them is simple and fun (Stagnito Media 2010).

Global

In global, many country people such as Asian will not consume on Dunkin Donuts. It is because in their first image Dunkin Donuts is selling donuts, so they will not want to consume. They prefer like to drink tea, Nescafe, Milo and others.

Market Controlleted Activity

5.1 Marketing Mix

Dunkin Donuts adopted marketing strategies in four main areas, namely product, price, promotion, and place in America market. Table 1 is showing about Marketing Mix of Dunkin Donuts coffee in America.

Marketing Mix of Dunkin Donuts

Product

Dunkin Donuts is the largest coffee and baked goods chain in the world. They use high quality of their coffee and they have many choice can let their customer to choose. Starbucks is the largest competitor for Dunkin Donuts in the beverage business.

Price

In price, Dunkin Donuts is less expenses and their customer base is middle class people. Therefore, most of people can consume it.

Promotion

In promotion, they offer a holiday coupon in the month of December and they have their own logo and slogan. Besides that, they will prepare set lunch for their customer. Their other promotion method: television, newspaper, website, and the others.

Place

Dunkin Donuts is LEED certified restaurant and their stores is limited seating.

Table 1: Dunkin Donuts Marketing Mix

5.2 STP Statement

5.2.1 Market Segmentation

As of 2009, America claimed 307,006,550 inhabitants within the area of 79.6 sq.km (US Census Bureau 2010). Besides that, America is a very urbanized population with 81% residing in cities. Dunkin Donuts key market segments are student, worker, kids and families. Location of Dunkin Donuts is restaurant outlet in the shopping mall at orchard road. Table 2 is showing about marketing segmentation of Dunkin Donuts coffee.

Geographical Segmentation

Country

United States of America

Density

Urban

Location

Restaurant outlet in the shopping mall at Orchard Road

Demographic Segmentation

Age

18-45

Gender

Both sexes

Income

Medium income

Education

High school, college and university

Occupation

Worker, student and others

Nationality

American, expatriate, tourists, foreign students and other.

Psychographic Segmentation

Social Class

All of social class

Table 2: Marketing Segmentation of Dunkin Donuts coffee

5.2.2 Targeting

Characteristics of target consumer for Dunkin Donuts coffee have three characteristics and it is age 18-25 years old, age 25 years old above and family. Table 3 is showing about characteristics of target consumer.

Characteristics of target consumer

Reasons for targeting

Age 18-25 years old

This entire group is teenager student and young worker and they are limited budget

Age 25 years old above

They are heavy restaurant user group due to busy working lifestyles and they have relatively high incomes and are more flexible in their budgets.

Businessman

This group do not perceive Dunkin Donuts coffee is a luxury food and it is easy take away food when they rush the time go to work.

Table 3: Characteristics of Target Consumer

5.2.3 Positioning

Dunkin Donuts is positioning itself as a brand of choice nationally and internationally. The company’s philosophy is “make and serve the freshest, most delicious coffee and donuts quickly and courteously in modern, well-merchandised stores” (DD IP Holder LLC, 2010).

This philosophy enabled Dunkin Donuts coffee to grow into America’s favorite everyday and all day stop for coffee and baked good. It is leading retailer of hot and iced regular coffee by the cup in America and the largest coffee and baked goods chain in the world (Dunkin’ Donuts 2009).

Today, more than 50% of Americans consume coffee on a daily basis and drink an average of 3 cups per day. Dunkin Donuts coffee is the most popular coffee franchise in America and helps to support this habit by serving nearly 1 billion cups coffee each year (Natural Bias 2009).

Branding

In Asia countries, when people heard about Dunkin Donuts, they just know Dunkin Donuts is selling donuts. It is because this brand calls Dunkin Donuts and the donuts word will let them link to this beverage food main product is donuts not the coffee.

Dunkin Donuts brand has traditionally stood for hot coffee. Today, Dunkin Donuts is a global conglomerate that houses its own brand as well as quick service restaurant brands Baskin Robbins and Togo’s (Brand Channel 2010).

It operates as a quick service restaurant franchisor in the coffee, bakery and ice-cream segments in the America and internationally (Bloomberg L.P 2010). In addition, their internal compass points toward their core values of honesty, transparency, humility, integrity, respect, fairness and responsibility (DD IP Holder LLC 2010). Hence, Dunkin Donuts franchisor boats high brand awareness and it ranked the first in customer loyalty in the coffee category in the “Brand Keys Customer Loyalty Engagement Index” (AllBusiness 2009).

Conclusion

As a conclusion, with the launching of Starbucks, they are opening a new window towards a better future for their customer and also the company. This is why Starbucks can be leading the world in the America fast coffee market. On the other hand, Dunkin Donuts coffee has used their consumer information to determine the market trend and new ways to grow their company. This is why Dunkin Donuts will be in a better position to target their products and services at them.

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