Question

Marketing Planning Helps Dunkin’ Donuts Score Big in Coffee Customer Loyalty

A key goal for a marketing manager is to make sure that the company’s brand stays relevant. Successfully realizing this goal requires a marketing planning process that is both thorough and grounded in best practices, and also flexible enough to allow the firm to react to (and hopefully stay ahead of) changing customer preferences and shifts in values. Over its 67 years in business, Dunkin’ Donuts has shown that it can stick to its core mission while also regularly updating its marketing strategy, and thus remain relevant within the highly competitive “out-of-home coffee” category.⁵⁷

In 1950, Dunkin’ Donuts was a single restaurant in Quincy, Massachusetts, with a simple mission: serve high-quality donuts and coffee at affordable prices with fast and friendly service. Today, with over 12,000 restaurants in 45 countries, the chain’s mission is still basically the same, but many aspects of its marketing strategy have changed to keep the brand fresh and relevant against fierce competition.⁵⁸

In the first five decades of its history, Dunkin’ was mostly about the donuts. In the early 2000s, it decided to shift the focus more to the drink into which the donut was about to be dunked—the coffee. It squarely took on market leader Starbucks by offering a less expensive (yet really tasty) alternative, one that was faster and more user-friendly—the “average Joe’s average joe.” In 2006, Dunkin’ got even more serious about coffee with its famous and highly successful “America Runs on Dunkin’” campaign. Today, although it certainly still sells plenty of donuts, Dunkin’ sells an incredible 1.9 billion cups of coffee per year—that’s 60 cups per second!⁵⁹

In recent years, a major focus of Dunkin’ Donuts’ marketing planning has been its digital strategy, especially by enabling engagement with customers through social media. Examples include the “create Dunkin’s next donut” contest a few years back, and the more recent integrated #mydunkin campaign on Twitter. In the latter, fans were encouraged to share their experiences via Facebook and Twitter with how Dunkin’ keeps them running, with the most enthusiastic fans appearing in Dunkin’ TV ads. Using these tools has helped the company hear the stories of its customers, retell the stories, and interact with these loyal fans on a regular basis.⁶⁰

Although Dunkin’ scores lower than Starbucks in the number of social media interactions, experts importantly give Dunkin higher marks in terms of the quality of those interactions. According to Dunkin’s ad agency executives, “More than ever, Dunkin’ is a brand that listens to its guests, through multiple channels, at all levels of the organization. Dunkin’ puts its fans at the center of its social media strategy—they’re an active and passionate tribe that’s fueled by interactions with the brand.” And Dunkin’ also manages to take a jab at the competition now and then. Recently, its top Facebook post was a photo of a Dunkin’ T-shirt emblazoned with the message “Friends don’t let friends drink Starbucks.”⁶¹

Marketing (Big M) and marketing (little m) combine strategic and programmatic/tactical approaches to provide a comprehensive focus on a company’s most important stakeholder: the customer and his or her experience with the brand. Witness Dunkin’s highly successful loyalty Page 76program, DD Perks Rewards, which is a key competitive differentiator for the company. With over 5 million members, this program is one of the fastest-growing loyalty programs in the quick service restaurant (QSR) industry. As a member of DD perks, customers earn points for every dollar spent and receive a free drink when they accrue 200 points. On becoming a DD Perks Rewards member, the customer receives a personalized welcoming e-mail message explaining the benefits of the program. Additional e-mails are also sent, and customers receive special offers on their device through Dunkin’s mobile app (which has been downloaded over 16 million times since its launch). The app is also the platform for Dunkin’s On-the-Go-Ordering, with which customers can place their order in advance and pick it up on arrival.⁶²

The superior customer experience that Dunkin’ Donuts provides has earned them industry accolades. No doubt to the ultimate chagrin of Starbucks, in the Brand Keys Customer Loyalty Engagement Index^®, Dunkin’ Donuts has been number 1 in coffee customer loyalty for the past 11 years in the out-of-home coffee category and the number 1 brand for packaged coffee category for the last five years. This index recognizes brands that surpass competitors in delighting customers and meeting their expectations for taste, quality, and service, as well as brand value.⁶³

Because of superior marketing planning and marketing strategy execution, Dunkin’ Donuts has successfully made the shift in focus from donuts to coffee, but it does operate in the shadow of Starbucks, which has 36 percent of the U.S. market to Dunkin’s 24 percent. And make no mistake about it, Starbucks is also very committed to digital and social media marketing and also has a loyalty program and a mobile app.⁶⁴ As each company engages with its customers, Dunkin’s marketing managers will have to stay at the top of their game and continue to deploy a strong market planning process, monitor and adapt to customer trends, and respond with strategies designed to keep the Dunkin’ Donuts brand relevant and strategically differentiated against the competition.

QUESTION:

What are the key differences between the marketing strategy of Dunkin’ Donuts and its chief competitor, Starbucks? What else could the company do from a marketing manager’s standpoint to successfully compete with and clearly differentiate Dunkin’ from Starbucks?

Answer 1

Key differences between the marketing strategy of Dunkin' Donuts and its chief competitor , Starbucks:

The Marketing strategy is composed of the marketing mix which consists of the 4Ps, Product, Price, Place and Promotion

Lets us find out the difference on each of the parameters for both the brands.

Product: Starbucks is all about coffee but Dunkin's donuts is about coffee and donuts . Dunkin donuts has a variety of donuts along with different types of coffee.

Price: Starbucks is more costly than Dunkin' donuts. The ambiance of a Starbucks store is posh with expensive interior unlike Dunkin' donuts which focuses on the product and quick service rather than ambiance and interiors.

Place: Starbucks is located at the high end places of a city while Dunkin Donuts is located in places symbolizing affordability.

Promotion: Strabucks appeal to the high end customers to taste their coffee in their stores while Dunkin Donuts focus on affordability and quick service in their promotion campaigns.

What else could the company do from a marketing manager’s standpoint to successfully compete with and clearly differentiate Dunkin’ from Starbucks?

Dunkin Donut' has to continuously strive to differentiate their target set of customer . They have to keep on appealing about their quality at an affordable price. Key differences like pre-booking through the mobile app, available of coffee powder sachets in departmental store can be another strategy to encourage customer taste the same coffee at home. Increasing its presence in price-sensitive markets in the Eastern world can be a challenge to countries where Starbucks already exist. Change in the donut taste as per tastes and preferences in various countries can also be tried along with their standard products including the coffee.