Posted: April 13th, 2023

Marketing Discussion essay

Improving Decisions with Marketing Information
In 1946 Bill Rosenberg launched Industrial Luncheon Services, delivering meals, snacks, and coffee to factory workers in the Boston area. From his daily sales totals, Rosenberg knew his working-class customers loved his coffee and doughnuts. Rosenberg thought a sit-down restaurant with these two menu items could be a success, and a few years later Dunkin’ Donuts was born. Back then Dunkin’ charged just 5 cents for one of its 52 varieties of doughnuts. Although Dunkin’s 10 cent cup of coffee sounds like a bargain today, it was double the going rate. Nevertheless, customers saw its higher quality coffee—always served fast and hot—as a good value.
By 2005 Dunkin’ had grown to 6,000 franchised locations in the United States and abroad. Coffee represented almost two-thirds of its sales; doughnuts and sandwiches each accounted for about 17 percent. Dunkin’s flavored coffees, lattes, Chai, iced coffee, and other beverages put it in direct competition with Starbucks. With 90 percent of its stores in the northeast-ern United States, it saw a big opportunity for growth. Yet Dunkin’s marketing managers wondered if they should change its marketing strategy to better fit evolving customer behavior, changing competition, and new target markets.
Dunkin’ managers knew they had many options: for ex-ample, adding new sandwiches, offering catering and delivery services, and providing cozier seating. Copernicus Marketing conducted research and designed Dunkin’s “store of the future.” Product design software evaluated more than two billion combinations by varying portion sizes, exterior store design, interior music selection, and more. With data from a nationally representative sample of more than 1,000 customers and prospects, sales and costs were forecast for each combination and the most profitable options identified. This research guided the construction of experimental proto-type stores—which emphasized Dunkin’s quality coffee and its speed of service at the counter and drive-through window. When the new stores exceeded sales and profit targets, its managers knew they had a future direction.
Dunkin’ Donuts knew it needed to better understand its loyal coffee drinkers—and those of its chief rival, Starbucks. So, the company paid dozens of its most dedicated customers to buy coffee at Starbucks—while simultaneously paying a similar number of Starbucks loyalists to come to Dunkin’ Donuts.
After debriefing interviews, the two groups were found to be so different that Dunkin’ researchers dubbed them “tribes.”
What each tribe detested about its rival’s store was exactly what made it love its usual outlet. For example, Starbucks’ regulars found Dunkin’ outlets boring, austere, and unoriginal. They didn’t like that workers dumped standard amounts of milk and sugar in their drinks—they didn’t feel special at Dunkin’ Donuts. Although Dunkin’ tribe members wanted newer looking stores, the Starbucks experience turned them off. All those laptop users made it hard to find a seat—and they wondered why coffee shops needed couches. They complained about Starbucks’ higher prices and the slower speed of service. They did not like Starbucks’ “tall,” “Grande,” and “venti” lingo; just give us “small,” “medium,” and “large” please! This exercise convinced Dunkin’ that there were customers out there who wanted an alternative to Starbucks—and it could fine-tune a marketing strategy to provide it.
A psychographic survey offered further insight on the attitudes, values, and interests of Dunkin’ tribe members. They are busy, love routine, prefer simple with no frills, and see them-selves as down-to-earth folks without pretentions. One-third of Americans fit this profile, but these people are more common in the Midwest and South than in the Northeast. So, Dunkin’ quickly targeted new stores in cities in Ohio, Tennessee, and Florida. This research also guided the “America Runs on Dunkin’” advertising campaign featuring office and construction workers getting through their days with the chain’s help.
Dunkin’ Donuts’ Executive Chef Jeff Miller (see picture) and his staff whip up innovative additions to the menu. But before these foods go to market, they get input from customers. Dunkin’ chefs developed a new line of hearty snacks for drive-through customers looking for an on-the-go snack. Focus groups liked the smoothies and hot flatbreads, but the tiny stuffed pinwheels did not satisfy their hunger. They liked it better when Dunkin’ came back with larger size “bites” filled with pork and other ingredients.
Dunkin’ encourages customer feedback and listens closely for ideas to fine-tune its marketing strategy. A group of its best customers serve on the Dunkin’ Advisory Panel where they regularly complete online surveys and participate in on-line focus groups. The company also closely monitors its website and social media efforts—reading what Facebook fans and Twitter followers write and using analytical software to collect and analyze buzz on the Internet. Dunkin’ knows why and how people come to its website.
Data even drives the precise location of each Dunkin’ Do-nuts shop; a software program analyzes data on demographics, competition, and traffic patterns at the neighborhood level. This program predicted sales would increase at one store by adding a drive-through lane and moving the store just 100 yards—from one end of a strip mall to the other. After the move, sales jumped more than 50 percent.
Dunkin’ Donuts wondered if the costs and discounts of a loyalty program would be offset by higher sales and profits. So, they conducted an experiment. A group of customers’ purchases were monitored before and after they received a prototype Dunkin’ Donut’s loyalty card.
After getting the card, customers visited Dunkin’ 30 percent more often and spent 40 percent more. Decision made. Now more than 3 million customers have a DD Perks Rewards card. The new cards bring in more data—data that Dunkin’ uses to target sales promotions. With 60 percent of sales coming before 11 a.m., there are opportunities to grow sales later in the day. Therefore, DD Perks members who regularly visit Dunkin’ in the morning are offered big dis-counts to come back for an afternoon snack—which often becomes a new habit.
Dunkin’ is still growing—it has more than 11,000 stores in 36 countries. To keep growing, Dunkin’ Donuts will keep collecting, analyzing, and acting on data for its marketing strategy planning, implementation, and control.
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