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Krispy Kreme Doughnuts - Case Study Example

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Krispy Kreme Doughnuts

Dunkin Dollars is one of the strongest donut chains worldwide enjoying the sales of forty fiver percent from the market. Tim Hortons is a Canada based company which has international operations in many countries. What Dunkin Donuts did to boost up its sales and earn customer loyalty was to focus more on selling coffee and other beverages instead of donuts. Dunkin Donuts became a strong brand in the market in less time than expected. Credit for this probably goes to their strong advertisement campaigns, attractive slogans and drive thru service. Tim Hortons, although not as popular as Dunkin Donuts and Krispy Kreme, is a top brand for donuts in Canada and New York. Apart from the direct competitors, indirect competitors such as bakeries, cafes and retailers play a vital role in challenging the profits of Krispy Kreme Doughnuts. Although the competition in the industry is growing but Krispy Kreme is fairly satisfied with the revenue it generates from its franchises by selling donut mixes, donut making equipments and royalty. The Organization Krispy Kreme owns a simple organizational structure. It relies heavily on the revenues it earns from its franchising strategy. With this strategy, the company is in a way a little relaxed because major responsibility falls on the shoulders of Krispy Kreme’s franchise owners. Moreover, the franchising option comes with a little risk and more revenue generating methods such as selling authentic donut mixes, donut manufacturing equipments, franchising fees and royalties. Brand image of Krispy Kreme was outstanding so it was never difficult to attract franchisers from various locations. The overall strategies pursued by Krispy Kreme were not really suitable in the competitive environment. This is because they focused only on the sales of donuts-a confectionary item which is sold by a number of bakeries and cafes. So the product was easy to imitate. Whenever Krispy Kreme opened up its franchise in any new area, it brought benefits to the competitors. Donuts, being an average confectionary item have never gained so much attention among the public. With the opening of Krispy Kreme, people gained awareness on how good and light can little donuts make them feel. So indirectly, the sales of competitors rose up. In the mid of year 2004, it was announced by Krispy Kreme that they are launching an inquiry into the accounting system and later in the same year they reported some accounting errors that were expected to cause a drop the annual sales and net income from an estimated 2.7 percent to 8.6 percent.. The same year, the share price of Krispy Kreme dropped from forty dollars to the range of 10 to 13 dollars per share. This was a huge setback for Krispy Kreme. Time had come when the company’s top heads seriously need to think of ways to save the company from drowning. Marketing Strategy It must be admitted that Krispy Kreme does not have a well developed marketing department so their marketing efforts are limited. The company only relies on its advertisement campaigns, most of which are associated with the opening of new stores. They also earn revenue from local publicity, newspapers and majorly from word of mouth. When new outlets of Krispy Kreme are opened, media does free publicity and communities associated also become a part of this event. Although Krispy Kreme was opening ...Show more

Summary

Situational Analysis Krispy Kreme Doughnuts, Inc was officially incorporated in the year 1937 and headquartered in Winston Salem in North Carolina. Krispy Kreme is one of the leaders in producing fresh and delicious donuts. Krispy Kreme has always performed outstandingly in the industry until the dark years of 2004 and 2005, when the company began to slow down financially…
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