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Ruth A. Schmidt: Acting Head of Department, Department of Retailing and Marketing, Manchester Metropolitan University, Manchester, UK
Brenda M. Oldfield: Research Assistant in the Department of Retailing and Marketing, Manchester Metropolitan University, Manchester, UK
ACKNOWLEDGMENT: This case is based on information obtained in the autumn of 1994 and should be interpreted on the basis of information available to management at that time.
Introduction
International expansion
Dunkin' Donuts is a wholly owned subsidiary of Allied Domecq plc which operates world-wide, making and selling coffee, doughnuts, and other related bakery products. Founded in the USA in 1950, the business started international expansion in 1970, was acquired by Allied Domecq in 1990, and is now the world's leading retailer in its field.
The company mission statement clearly sets out a continued emphasis on growth and market leadership: "Our dream for the future is to be among the world's most recognized and respected brands. To accomplish this, we are passionately committed to pursuing the following values in every interaction with all those whom our system touches:
- trust and integrity;
- teamwork;
- continuous improvement and learning;
- joy.
Our mission is to be the pre-eminent retailer of high quality coffee, doughnuts and related bakery, snack, and beverage products in each market in which we compete. In addition, we wish to be pre-eminent retailers in these product categories as measured by total sales versus any of our competitors throughout the USA."
Corporate advertising
In the USA alone, Dunkin' Donuts currently generates an annual sales volume of $1.4 billion. Pre-eminence in a local market is defined as 4.5 per cent of consumer expenditure on fast foods and multi-media advertising expenditure to match the cost of 44 weeks' TV exposure. The number of distribution points needed to achieve this is based on the area population and advertising. Each store contributes 5 per cent of sales revenue to corporate advertising. Currently the national sales average is $10,500-$11,000 per store per week. However, where pre-eminence is achieved, sales can go up to $17,000 per week.
Rapidly changing environment
Dunkin' Donuts has already accomplished pre-eminence in some parts of the USA, e.g. the Boston area surrounding the corporate headquarters. The experience of operating in these areas serves as a yardstick to set targets for...