Dunkin’ Donuts Marketing Recommendation Report

Dunkin’ Donuts
Mr. Nigel Travis, CEO President

Angela M. First
AAA Consulting, Senior Marketing Manager
March 18, 2018

Executive Summary:
Since Dunkin’ Donuts began pioneering the doughnut industry in the year 1950, the
company has grown exponentially and become a market leader in not only producing
doughnuts, but also savory breakfast sandwiches and a variety of coffees. More recently, the
company has shifted from having a doughnut shop atmosphere to that of a “coffee house”
(Trefis, 2017). As the Senior Marketing Manager at AAA Consulting, my team and I feel that in
order to compete with premium coffee brands effectively, Dunkin’ Donuts must implement a
series of revived marketing strategies to keep its loyal customer base satisfied and draw in new
customers as well. According to the most recent analysis of the market share of the leading
coffee chains conducted by The Statistics Portal (Statista, 2016), Dunkin’ Donuts holds only
21.9% of the market in comparison to Starbucks, 39.8% and McDonalds, 38.3%. Presumably,
the reason Dunkin’ Donuts falls below these competitors is simply due to the fact that the
company started with a focus on donuts exclusively.
Dunkin’ Donuts has, however, evolved tremendously and proven itself a leader in the
coffee industry. The company initiated this transition a little over a decade ago (Cebrynski,
2006) and almost simultaneously began twelve consecutive years of recognition as #1 in
Coffee Customer Loyalty by Brand Keys (Dunkin Donuts, 2018, January 30). It is crucial that
Dunkin’ Donuts continues to make the satisfaction of customers a priority to ensure the
longevity of Dunkin’ Donuts as a coffee competitor. Additionally, in order for Dunkin’ Donuts
to earn a larger share of the market in the coming years, AAA Consulting is focusing our
marketing efforts on:
1. Caring for the Loyal Customer Base: communication, maintain values
2. Campaign Revival: “Frank the Coffee Maker”
3. Reaching New Consumers: partnerships, social media, DD perks/technology
4. Simplification: devotion to coffee, rebrand, concise menu
We believe that focusing our time on these aspects of Dunkin’ Donuts marketing, we will
utilize past strategies that show success and improve current marketing strategies. We are
confident at AAA Consulting that the slowed growth rates Dunkin’ Donuts experienced in 2017
are preventable. It is important that these changes be made strategically and gradually in order
to not shock the customer base. However, by enhancing Dunkin’ Donuts current marketing
agenda, we are confident that customers will feel as if the company values are the same as
they were in 1950, if not improved. In addition, Dunkin’ Donuts will be able to capture a larger
portion of the market share and proceed with advancing other aspects of the company.

Background:
Our team at AAA Consulting decided to focus our efforts on three aspects of the
business model of Dunkin’ Donuts: marketing, technology, and expansion, and how we could
interlace the three. We began our research by digging deep into the history of Dunkin’ Donuts
as a doughnut shop in order to better understand the evolution of Dunkin’ Donuts.
In 1981, “Fred the Baker” emerged as the slogan individual. His tagline, “it’s time to
make the doughnuts” intrigued customers. He represented exactly what Dunkin’ Donuts as a
company valued. That is, “to make and serve the freshest, most delicious coffee and donuts
quickly and courteously in modern, well-merchandised stores.” A news article from 1994
reports that “Fred the Baker” was “extremely effective in increasing sales” during his lifespan.
In fact, 78 percent of people credit Fred as a reason for their purchase in 1991 (Sloane, 1994).
Customers trusted Fred to serve the “common man” a “blue collar” breakfast and coffee every
morning until retirement in 1997 (Riggs, 2000).
With more than 8,500+ locations nationwide, America really runs on Dunkin’ (Dunkin’
Donuts, 2018). In the near future, the executive board is hopeful to surpass Starbucks’s 13,930+
stores worldwide by opening 9,000 new locations, ultimately doubling the number of locations
in the United States (Wiener-Bronner, 2018). Each franchise averages $813,000 in sales, and
$486,000 in profit before capital expenses (Smith, n.d.). Having said that, the potential to
increase revenue in the United States is there. In order to do so, Dunkin’ Donuts needs to
solidify and then expand the market for Dunkin’ Donuts breakfast items and coffee to avoid
simply distributing profits across new nearby locations.
Currently Dunkin’ Donuts employs many local partnerships especially in stadiums.
However, the company lacks a university presence (Dunkin’ Brands, 2015). Many college
campuses have a high demand for coffee and low supply of producers. In comparison to
Starbucks, Dunkin’ Donuts has 225 less campus locations nationwide (Walsh, 2014).
Introducing Dunkin’ Donuts to certain campuses has the potential to draw in new generations
of loyal customers—specifically, students who rely on coffee. Campus locations can implement
low-cost advertising tactics to show younger generations how technologically-savvy Dunkin’
Donuts is with its DD Perks app as well (Dunkin’ Donuts, 2018).
These marketing strategies focus on emphasizing Dunkin’ Donuts as a “beverage-
centric” company, as former chief branding officer described (Cebrzynski, 2006). The name
Dunkin’ Donuts, nonetheless is associated with doughnuts. For Dunkin’ Donuts to make the
ultimate transition to beverages, it is paramount that Dunkin’ Donuts quietly rebrands as
simply Dunkin’ as competitors have done similarly in the past (Devault, 2017). For marketing
specifically, simplification is key for giving Dunkin’ Donuts an edge over its competitors. A
simplified logo will show customers and competitors Dunkin’s true commitment to coffee.

Conclusions:
We determined reasonable means for improvement through marketing by diligently
studying past marketing efforts and past marketing strategies of competitors. Starting by
assuring long-time customers that the quality of Dunkin’ Donuts, coffee, food, and service will
not deteriorate. It is important that Dunkin’ Donuts holds on to the 6.6 million DD Perks
members nationwide. However, Dunkin’ Donuts reports that the app has been downloaded
13.1 million times. In order to maximize profits, this gap needs to shrink as much as possible.
This statistic demonstrates how important it is to gain the loyalty of customers, not just their
visit. Their loyalty is important because it will result in multiple visits to the store later on.
To gain more loyal customers, Dunkin’ Donuts should revitalize “Fred the Baker” and
his values. This time though, he will be a coffee man, (i.e “Frank the Coffee Maker”). The
introduction of a coffee promoting individual will convey Dunkin’ Donuts original goal of
serving deliciously, roasted coffee each and every day. As well as, Dunkin’ Donuts new focus on
all kinds of beverages. “Frank the Coffee Maker” would have a similar effect on sales as people
will credit Frank for their purchase. A redesigned slogan individual promoting coffee of Fred’s
magnitude would not only emphasize the transition, but also boost loyalty which is essential
for the success of Dunkin’ Donuts’ future expansion plans.
A surge of new loyal customers would help Dunkin’ Donuts clench a larger share of the
coffee market. But with today’s rapid technological innovation, Dunkin’ Donuts must pay
attention to their tech-savvy consumers seeking speed and convenience. Only 75 college
campuses nationwide have a Dunkin’ Donuts on site. Showcasing how technologically
advanced Dunkin’ Donuts is through campus advertisements and word-of-mouth is vital for
gaining new customers. In addition, making an early impression on students during some of
the best years of their life is bound to gain loyalty for a lifetime.
Lastly, if Dunkin’ Donuts is to truly become a coffee and beverage focused franchise,
developing the new brand as simply Dunkin’ will communicate the company’s devotion to
beverage and coffee variations. Simplifying the doughnut and breakfast item menu will allow
operations to be more “streamline” as “employee training can be quicker” (Trefis, 2017). This
will incentivize franchisees to expand and Dunkin’ Donuts will be able open new stores.
Moreover, a simplified logo will visually associate Dunkin’ with coffee and bring some
excitement to Dunkin’ no matter what you call it—Dunks, The Dunk, or DD.

Recommendations:
These opportunities are well within reach—to expand Dunkin’ Donuts loyal customer
base and compete as a “beverage-centric” company with esteemed customer service.
Ultimately, anticipating a major expansion plan. With this in mind, we, your devoted
consultants at AAA Consulting, advise the following marketing tools for the company:
1. Caring for the Loyal Customer Base: Send DD Perks members monthly newsletters
relating meaningful company news. These newsletters should communicate both
significant and minor company news in order to really make loyal customers feel
appreciated; as well as suggest a more personal connection to Dunkin’ Donuts. Offer
persuasive customer accounts about how they feel about Dunkin’ Donuts. Additionally,
ask franchisees to oversee cashier interactions with customers to ensure DD Perks is
mentioned often. These newsletters should come from different “big” people at
Dunkin’ Donuts each month in order to demonstrate how much the executives truly
care about their customers. It is key that these newsletters feel authentic and
“leisurely” to prolong trust in long-time customers.
2. Campaign Revival: Hire a new slogan individual with a name like “Frank the Coffee
Maker” to highlight Dunkin’ Donuts new focus on beverages. The current Dunkin’
Donuts slogan, “America Runs on Dunkin’” has been revised as “Keep On”. Although
this new slogan is not colloquially associated with the company as of now, a new slogan
man has the potential to make this impression on customers as “Fred the Baker” did
successfully in the past. The slogan individual would be a real person dedicated to
brewing fresh, sustainable coffee all day to “Keep On” satisfying customers. “Frank the
Coffee Maker” has the capability to equate Dunkin’ Donuts and coffee for good.
3. Reaching New Customers: Research universities that have a large portion of students
living on or nearby campus and do not have a go-to coffee shop on campus or within
walking distance. Establish whether or not there is an opportunity to partner with the
school or town to open a Dunkin’ Donuts window. Once agreed upon, send a Marketing
 Representative group to the location to start acquainting students with the idea of a
Dunkin’ Donuts on campus. Recruit a diverse group of campus representatives that can
reach all groups of people: Greek societies, athletes, LGBTQ+ community, community
service advocates, different fields of study, etc.. Then proceed with opening the new
location and hiring employees.
4. Simplification: Further evaluate how the “Dunkin’” pilot store is doing financially and
socially in Quincy, Massachusetts. Open more pilot stores embodying the simplified,
“beverage-centric” brand—Dunkin’. Avoid any drastic changes to pre-existing store
designs and logos. Promote a concise menu with specialty options monthly including
“throwback” donuts that remind long-time Dunkin’ Donuts customers of earlier times.
It is in your best interest to make sure that these recommendations are implemented
gradually for optimal success. Customer satisfaction is of upmost priority and any substantial
alteration has the potential to shock the demand for Dunkin’ Donuts. In addition, locations
carrying out these recommendations should be monitored regularly for owner, employee, and
customer feedback.

Cost Analyses:
Fortunately, the cost of fully developing some these marketing strategies is already
under consideration by Dunkin’ Donuts. Electronic newsletters will cost relatively nothing
besides time. A new slogan representative, however, will prove to be costly at first. Yet, the
influence on consumers this spokesperson will have is extremely valuable for the company. For
example, the evolution of “Flo” for Progressive Insurance has increased Progressive’s revenues
more than any other insurance advertising campaign. In a cut-throat industry like insurance,
Flo was the key to solving slow growth rates (Rodriguez, 2014) and thus, worth every penny.
Furthermore, in order to open new franchises and partnerships on university campuses,
perspective owners must have at least $250,000 in liquid assets and a net worth of $500,000
(Dunkin’ Donuts, 2018). The opportunity costs of not opening new campus locations is
thousands of coffee-dependent college students and future loyal customers. Without these
campus locations, many coffee consumers would grow dependent upon Dunkin’ Donuts’ major
competitors. As for simplification, Dunkin’ Donuts has analyzed the costs of rebranding
already with the Quincy, Massachusetts storefront. The costs of this marketing strategy will be
on-going for many years as locations gradually transition their storefronts to simply Dunkin’.
Although simultaneously, Dunkin’ will acquire more and more of the market share for coffee
and as a result, experience larger profits margins.
 Works Cited

Cebrzynski, G. (2006). 'Reborn' dunkin' donuts in big daypart push. Nation's 90%Restaurant

News, 40(17), 1-1,6. Retrieved from http://libproxy.lib.unc.edu/login?url=https://search-

proquest-com.libproxy.lib.unc.edu/docview/229412471?accountid=14244

Degrandpre, A. (2017, Aug 06). Dunkin' donuts is looking for a new image. South Florida Sun –

Sentinel Retrieved from http://libproxy.lib.unc.edu/login?url=https://search-proquest-

com.libproxy.lib.unc.edu/docview/1926283679?accountid=14244

Devault, G. (2017, February 28). Research Theory Behind Starbucks Re-branding Success.

Retrieved from https://www.thebalance.com/the-research-theory-behind-starbucks-re-

branding-success-2296860

Dunkin’ Brands. (2015, October 15). Dunkin’ Donuts Expands University Presence by Opening

New Locations On-Campus and in College Stadiums. Retrieved from

http://www.dunkinbrands.com/news/dunkin-donuts-expands-university-presence-by-

opening-new-locations-on-campus-and-in-college-stadiums-3089176

Dunkin’ Donuts. (2018). By The Numbers. Retrived from

https://news.dunkindonuts.com/internal_redirect/cms.ipressroom.com.s3.amazonaws.com

/285/files/20181/DD%20By%20The%20Numbers%20FS%202.6.18%20docx.pdf

Dunkin, Donuts. (2018). Our Commitment to Coffee. Retrieved from

http://www.dunkinbrands.com/internal_redirect/cms.ipressroom.com.s3.amazonaws.com/

226/files/20164/Our%20Commitment%20to%20Coffee%20Fact%20Sheet.pdf
Dunkin’ Donuts. (2018). Process. Retrieved from

https://www.google.com/search?q=dunkin+cost+of+opening+at+university&oq=dunkin+

cost+of+opening+at+university&aqs=chrome..69i57.7990j0j7&sourceid=chrome&ie=U

TF-8

Dunkin Donuts. (2018, January 30). It’s A Dozen For Dunkin’: Brand Keys Honors Dunkin’

Donuts As #1 In Coffee Customer Loyalty for 12th Year In A Row. Retrieved from

https://news.dunkindonuts.com/news/its-a-dozen-for-dunkin-brand-keys-honors-dunkin-

donuts-as

Kirkpatrick, D. & Tode, C. (2017, August 7). Is Dunkin’ Donuts about to become just Dunkin’.

Retireved from https://www.marketingdive.com/news/is-dunkin-donuts-about-to-

become-just-dunkin/448723/

Monllos, K. (2016, June 3). After a Decade, Dunkin’ Donuts Is Evolving Its ‘America Runs On

Dunkin’ Campaign. Retrieved from http://www.adweek.com/brand-marketing/after-

decade-dunkin-donuts-evolving-its-america-runs-dunkin-campaign-171820/

Rodriguez, A. (2014, Novemebr 12) Flo’s Progressive Evolution. Retrieved from

http://adage.com/article/cmo-strategy/flo-s-progressive-evolution/295734/

Smith, L. (n.d.) Share The Wealth With Franchises. Retrieved from

https://www.investopedia.com/articles/pf/07/franchise_model.asp

Sloane, L. (1994, November 14). THE MEDIA BUSINESS: Advertising; Sleepy, shuffling Fred

the Baker is gaining new visibility, beyond his trademark doughnuts. The New York

Times. Retrieved from https://www.nytimes.com/1994/11/14/business/media-business-

advertising-sleepy-shuffling-fred-baker-gaining-new-visibility.html
Starbucks drops name from logo. (2011, Jan 06). Calgary Herald Retrieved from

http://libproxy.lib.unc.edu/login?url=https://search-proquest-

com.libproxy.lib.unc.edu/docview/822841490?accountid=14244

Statista. (2016). Coffeehouse Chains. Retrieved from

https://www.statista.com/study/16942/coffeehouse-chains-statista-dossier/

Trefis: Here's why dunkin' brands is shrinking its donut menu (2017). Chatham: Newstex.

Retrieved from http://libproxy.lib.unc.edu/login?url=https://search-proquest-

com.libproxy.lib.unc.edu/docview/1949137098?accountid=14244

Walsh, T. (2014, August 31). Starbucks’ Bold Strategy for College Campuses. Retrieved from

https://www.fool.com/investing/general/2014/08/31/starbucks-bold-strategy-for-college-

campuses.aspx

Wattles, J. (2017, August 4). Dunkin’ Donuts considers rebranding as Dunkin’. Retrieved from

http://money.cnn.com/2017/08/04/news/companies/dunkin-donuts-name-

change/index.html

Wiener-Bronner, D. (2018, January 9). Dunkin' Donuts wants to double the number of stores.

Retrieved from http://money.cnn.com/2018/01/09/news/companies/dunkin-brands-

double-us-stores/index.html