Dunkin Donuts: Dunkin the Corporation
In 1950, Bill Rosenberg founded the Dunkin' Donuts chain (www.dunkindonuts.com) by
opening the first location in Quincy, Massachusetts. By 1975, 1,000 locations nationwide
were grossing a collective $300 million in sales. At the beginning of 2008, there were
7,988 Dunkin' Donuts stores worldwide, including 5,769 franchised restaurants in the
United States and 2,219 internationally. The company clocked worldwide sales of $5.3
billion during fiscal year 2007.
This impressive growth would not have been possible without extensive marketing
research and a commitment to quality. Bill Rosenberg began the culture within the
company of listening to what the customer wanted and then providing it and the
tradition continues today. Marketing research in the form of focus groups and survey
research revealed that customers select a coffee and donut shop based on five factors
accessibility, quality, variety, image, and affordability. The company's business is built
around these factors. From research, Dunkin Donuts found that its customers wanted a
coffee and donut shop that was very accessible—close to work or home and easy to get
to. To accompany its stand-alone locations, Dunkin' Donuts has opened locations in
Home Depot, Wal-Mart, 7-11, and Stop & Shop stores to add to the convenience that
customer’s desire. Every location is strategically placed and designed with these
customers' preferences in mind. Because these purchases are so convenience driven,
the locations can be placed close together without cannibalizing business. Marketing
research further revealed that quality translates to freshness in the donut business.
Marketing research further revealed that quality translates to freshness in donut
business Therefore. Dunkin' Donuts makes donuts at least four times a day. Upon
conducting research with survey questionnaires and taste testing in many different
markets, Dunkin' Donuts found the blend of coffee that customers favor the most. This
coffee is brewed and then allowed to sit for no longer than 18 minutes. After the 18-
minute window, the coffee is poured out, and a fresh pot is brewed. This commitment to
quality was made as a result of what the customer desired in a cup of coffee.
The company also offers variety-52 flavors of donuts. Recently, Dunkin' Donuts has
expanded its coffee line (again, due to research and taste testing) to include iced coffees,
cappuccinos, lattes, espressos, and flavored coffees, such as hazelnut coffee. Marketing
research showed that customers preferred an image that related to the common person.
They did not want a coffee shop that was flashy with lots of bells and whistles; they just
wanted a common shop that made a great cup of coffee. Therefore, Dunkin' Donuts
appeals to just about everyone. During the late 1970s and the 1980s, the ad campaign of
"Fred the Baker" brought this image to life. With commercials showing him waking up
in the middle of the night with a commitment to quality, he appealed to the common
person. The Mercedes and the pickup truck come together in an egalitarian Dunkin'
Donuts parking lot. In addition, Dunkin' Donuts is affordable. Just about any consumer
can afford the Dunkin' Donuts experience. Dunkin' Donuts is much less expensive
compared to Starbucks and other upscale coffee shops. Dunkin' Donuts realizes that
first and foremost its donuts and coffee need to be up to par to customers' expectations.
Already the retail market leader in donuts and bagels, Dunkin' Donuts knows that it
takes a commitment to marketing research to stay there. Bob Pitts, the current
Technology Product Developer, demands a continuing commitment to listening to what
the customers prefer. Again, this manifests itself through constant research and taste
testing. The customer is a very important source of wisdom and insight at Dunkin' and
customer opinion and feedback is important. Customers' preferences have not only
shaped the recipes of donuts and bagels, but they have also prompted the introduction
of the Dunkin' Decaf and flavored coffees such as Hazelnut and French Vanilla. The huge
success of these introductions reaffirmed the importance of customers to Dunkin
Donuts and its new products. This journey of innovation has continued with the launch
indulgent coffee drinks, such as cappuccinos, lattes, and espressos. In August 2007,
Dunkin' announced a partnership with Procter & Gamble. In this alliance, P&G roasts
Dunkin's packaged coffee according to Dunkin's specifications and is responsible for
distribution as well as a national marketing campaign based on the coffee shop chains
current "America runs on Dunkin'" theme. The initiative helps P&G gain entry into the
premium coffee market, and Dunkin' Donuts gets P&G's distribution expertise and a
new source of income. The packaged coffee is available at Kroger, Wal-Mart, and other
stores. Speaking to customers and getting their insights is a crucial part of Dunkin'
Donuts' marketing research strategy. The use of focus/consumer groups and market
surveys for taste testing and feedback is an ongoing process. With a commanding
presence in the market, reliance on marketing research has had obvious positive effects
that are sure to continue in the future, and Dunkin' Donuts can continue dunking the
competition.
Marketing research has kept Dunkin' Donuts relevant appealing to people across the
world throughout the years. Dunkin's positioning as an everyday, accessible store for
everyone has helped it to foster a bond with its customers. This relationship of respect
and humility has endured even as Dunkin' has expanded its product portfolio to include
more varieties and target newer customers, all without alienating its existing
customers. The emphasis that Dunkin' places on using marketing research to make the
customers critical stakeholders who provide feedback and insight and help direct the
innovation process has reaped rich benefits for Dunkin' Donuts.
Questions
1. Discuss the role that marketing research can play in helping a coffee shop such as
Dunkin' Donuts formulate sound marketing strategies.
2. Dunkin' Donuts is considering further expansion in the United States. Define the
management decision problem.
3. Define an appropriate marketing research problem based on the management
decision problem you have identified.
4. Use the Internet to determine the market shares of the major coffee shops for the last
calendar year.
5. What type of syndicate data will be useful to Dunkin' Donuts?
6. Discuss the role of qualitative research in helping Dunkin' Donuts expand further in
the United States.
7. Dunkin' Donuts has developed a new line of pastries with a distinctive French taste. It
would like to determine consumers' response to this new line of pastries before
introducing them in the marketplace.
References
1. www.dunkindonuts.com. Accessed January 15.2009.
2. "Dunkin' Donuts Competes with Coffee Chains with Latte Offerings in Michigan.
Tribune Business News (March 19, 2004).
