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Marketing Plan
4/18/2011
By, Maham Asghar (09-2678) Zoya Asghar (09-2679) Farrukh Kazi (09-2600) Jawad Saleem (09-2638)
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Letter of Transmittal
As authorized by you to complete the course Marketing Management. Here by, we are submitting this report. The product we have selected is Doughnut by Dunkin Donuts. The reason behind selecting this product is that it is a consumer good. We would like to thank a few people who have helped us in completing this report; first of all we would like to thank our teacher, for guiding us so well and Mr Syed Masroor Hussain, the Assistant Brand Manager of Dunkin Donuts, who has supported us throughout this project and has helped us overcome a lot of problems that we faced while preparing this plan. We hope that this Marketing Plan will prove to be satisfactory. If you have any queries regarding this report please feel free to contact us. Maham Asghar. Zoya Asghar. Jawad Saleem. Farrukh Kazi.
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Table of Contents
Letter of Transmittal ........................................................................................................................ i Executive Summary ....................................................................................................................... iv Section 1.1: Company & Product Profile ....................................................................................... 1 The company............................................................................................................................... 1 The product ................................................................................................................................. 1 The Market .................................................................................................................................. 2 Consumer Need ........................................................................................................................... 2 Section 1.2: Consumer Profile ........................................................................................................ 2 Consumer Segmentation and Targeting ...................................................................................... 2 Section 1.3: Market Profile ............................................................................................................. 4 Situation/Marketing Analysis ..................................................................................................... 4 Trends ......................................................................................................................................... 4 Threats......................................................................................................................................... 4 Competitors Analysis .................................................................................................................. 5 Market Share of Direct and Indirect Competitors....................................................................... 5 Competitive Field........................................................................................................................ 5 Section 2.1: Marketing Mix ............................................................................................................ 6 Product ........................................................................................................................................ 6 Positioning .............................................................................................................................. 6 Positioning Map: ..................................................................................................................... 7 Differentiation/Unique selling proposition ............................................................................. 8 Branding .................................................................................................................................. 8 Product Strategy: ..................................................................................................................... 8 Product Lifecycle: ................................................................................................................... 8 Pricing ......................................................................................................................................... 9 Distribution ................................................................................................................................. 9 Promotion.................................................................................................................................. 10 ii | P a g e
Section 2.2: Financial Evaluation ................................................................................................. 12 Cost of Promotional Activities.................................................................................................. 12 Contribution Income ................................................................................................................. 13 Break-Even Market Share ......................................................................................................... 13 Projected Sales .......................................................................................................................... 13 Section 2.3: Implementation ......................................................................................................... 14
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Executive Summary
The main purpose of this report is to present a Marketing Plan for doughnuts a product of Dunkin Donuts. The report starts with a brief introduction of the company, the product and the market in which we will be introducing the product. Also, we give a detailed information of how we have segmented the market and which of these segments are we targeting. Later, the market profile includes detailed market and situational analysis including the trends, threats and competitor analysis. In the second section we have first focused on the Marketing Mix for the product that we aim to launch. We have defined our product on the basis of customer level hierarchy. We aim to position our product as an everyday, all day stop for coffee and baked goods. We differentiate our product on the basis of form, features and conformance quality. The pricing strategy we will follow is perceived-value pricing, customer segment pricing and bundling pricing. Our distribution will be intensive following both direct and retail selling. Our promotional objective is to reinforce conviction by communicating superior quality through our brand positioning and also through product quality. We also need to increase awareness through our promotional efforts in order to increase the consumers share of mind and heart alike. Finally, we have discussed the financial evaluation of this plan including the promotional costs for our product. And in the end we have discussed the time period and the ways in which we will be implementing and evaluating our plan.
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The product
The product which we will market is doughnut. Dunkin Donuts sells 52 varieties of donuts. A donut is a type of fried dough food popular in many countries and prepared in various forms as a sweet snack that can be homemade or purchased in bakeries, supermarkets, food stalls and franchised specialty outlets. They are usually sweet, deep-fried from flour dough, and shaped in rings or flattened spheres that sometimes contain fillings. There are ten different donut flavors offered in Pakistan which are chocolate sprinkle, coconut, munchkins, chocolate frosted, french cruller, apple filled cinnamon, strawberry sprinkle, boston cream, chocolate, chocolate marble, original glazed, lemon sprinkle, strawberry filled, apple and spice.
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The Market
Few bakeries can compete with their quality, variety and consistency of their food stuffs. Currently, other than the average bakery, there is no direct competitor to Dunkin Donuts that can challenge their dominance in donuts. However, bakeries in general do serve customers with donuts and they tend to be on the more affordable side. Their price is a little steep if we compare it with other Donuts available in market but it is justified due to high quality. Dunkin Donuts are giving donuts for Rs. 70/- each while other local bakeries have their donuts for Rs. 20/- to Rs. 30/- each, though there quality doesnt match that of Dunkin Donuts. The few competitors in the market are Costa Coffee, Espresso, caf coffee day. Overall we can conclude that Dunkin holds a dominant and almost monopolistic hold on the Pakistani market for donuts until more multinational competitors move in. However they face much more competition in the coffee business. We will be reintroducing DD Donuts to the existing market to increase awareness, as well as reaching out to and tapping into more promising market segments.
Consumer Need
Dunkin' Donuts goal is to satisfy its consumers expressed needs and unexpressed needs. Thus Dunkin Donuts aim is to be an every day, all-day stop for coffee and baked goods. Our consumers want to experience premium quality food stuffs and hot beverages in an environment which offers a bright, clean and comfortable atmosphere. This out emphasis is on quality which justifies our premium prices.
Finally the Family segment is actionable as it is within the companys resources to target effectively. Young individuals in the 18 35 age segments lead a hectic lifestyle and require quick light snacks and beverages to cater to their time constraints. Thus Dunkin Donuts is ideal for these individuals as we provide a fast service, offer light snacks and hot/cold beverages. Availability is also good; DD has select stores which serve consumers 24/7. However, in terms of number of outlets, Dunkin Donuts has just enough coverage and will undoubtedly expand into farther territories. There are 7 outlets in Karachi alone. Considering the above segments, we are using selective specialization as multi-segmenting will be diversifying the firms risk, increase brand awareness and offer increased profits. Increasing globalization has resulted in a lot of Pakistanis adopting aspects of western culture which has bought a change in their lifestyles and thus we see that individuals in our targeted market segments are increasingly attracted western foods. In case of Dunkin Donuts, we serve a traditional snack which is popular In the US and Europe which appeals to the shift in cultural changes in our society. Research shows that western food products have received a generally good response and were confident the same success will carry over to our product line. Reference groups will be an important factor, those individuals that lie in the 18-35 segment of our target market are most susceptible to being influenced by their membership group which tend to have a direct influence on the purchase habits of consumers, more specifically these groups are knows as Primary groups. Family groups will influence the purchase decisions in our family segment of the target market. Children who find our donuts appealing will influence their parents into making the purchase decision. Thus we must carefully target the family segment. Age and lifecycle stage will also influence the purchase decisions, the 18-35 segments are considered as the getting started stage. At this point these individuals prefer quick on the go meals. Economic situation of our consumers will also be important, our consumers generally tend to be middle to upper class families, who can afford our product easily. Our consumers need to have a higher spendable income. Personality and Self-concept greatly affects the choice of a consumer since they try to relate their own personality with Brand Personality and prefer products that best relate with them. Our marketing strategy should clearly define what our product is about and how it is best suitable for the consumer. Lifestyle greatly influences consumer`s choice since people who are prone to multitasking would prefer our product. Being a convenient product it will make their lives easier and comfortable. 3|Page
Trends
One major trend is the adoption of western ideologies which is witnessed in the growing number of foreign restaurants. Furthermore, the population structure of Pakistan consists mainly of young individuals, those that find our product the most appealing. People today are very busy in their lives and prefer readymade food items, so that they dont have to spend time cooking in the kitchen. Also, light foods i.e. items that have low sugar content are preferred so; Dunkin Donuts has a chance to develop in the present market. People have become more status conscious and they prefer to eat in quality restaurants.
Threats
Many threats exist which may hinder the launch of our product. First of all, there is a growing trend that consumers are becoming more health conscience and are looking for alternative solutions. We must acknowledge this fact and design our strategy around it. The market for snack food has little barriers to entry so we need to be wary of any potential competitors entering the market i.e., Starbucks and Krispy Kreme. McDonalds and KFC both have begun serving hot beverages, similar to Dunkin Donuts. Local bakeries also present a threat; they offer donuts at much cheaper rates. Whilst not on the same quality level as Dunkin Donuts, it is a threat none the less. Political, Economic and law & order situation means that there are frequent strikes and
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curfews which affect the whole market. Inflation is also an issue as rising prices means that families tend to try and save more of their income.
Competitors Analysis
The restaurant industry is one that is in constant competition, with trends that tend to vary. There will always be persistent competition between sectors (i.e. fast food vs. table-served restaurants; snack food vs. health food, etc.). Advertising is the paramount step in distinction from the competition. The coffee house sector has become one of the largest growing in food service. The competition does not just start and end with nationalized coffee house chains, but also includes the smaller local coffee house businesses. These mom and pop coffee house endeavors appear more and more in smaller localities as well as large market cities. Dunkin Donuts receives the most competition from Costa Coffee, Starbucks, and McDonalds. These three brands share the market with Dunkin Donuts in the sectors of snack food restaurant, coffee house, and breakfast foods respectively. Since Dunkin Donuts holds as the largest distributor of coffee-by-the-cup, they will increase their focus on their coffee beverages. While McDonalds has dominated the fast food sector and does not appear as obvious competition, Dunkin Donuts poses an indirect threat to the McDonalds breakfast line and vice versa. A lot of local bakeries are a significant threat to Dunkin Donuts as none other brand offers donuts in Pakistan except the bakeries, and they provide them on very cheaper rates which are affordable by lower and middle classes.
Competitive Field
Dunkin Donuts is the market leader itself in the Pakistani doughnut market. Also, other small competitors like local bakeries and local caf are present, but they occupy very small market share. In Pakistan the market is consolidated since, DD enjoys a huge market share and faces less challenges but globally the market has more dominant competitors like Starbucks and Krispy Kreme. It faces a serious threat from these firms because if they start promoting and operating in Pakistan people will switch from DD to other brands because of this fact DD has to keep on innovating and to bring new flavors and products in the market so, that their consumers don`t get bored and stay loyal to the brand. 5|Page
Positioning
Dunkin' Donuts goal is to satisfy its consumers expressed needs and unexpressed needs. Thus Dunkin Donuts aim is to be an everyday, all-day stop for coffee and baked goods. Our consumers want to experience premium quality food stuffs and hot beverages in an environment which offers a bright, clean and comfortable atmosphere. This out emphasis is on quality which justifies our premium prices. The first brand that should strike into our consumers minds when they think of high quality doughnuts is Dunkin Donuts. Since we have very little direct competition presently in Pakistan we have a good opportunity to capitalize on the share of mind.
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Positioning Map:
High Price
Costa Coffee
Mcdonalds
Krispy Kreme
Low Quality
High Quality
Tim Hortons
Local Bakeries
Low Price
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Branding
Our Products name will be same that is Donuts. Similarly, the logo will also remain unchanged. Since, our customers already recognize it and its well established.
Product Strategy:
It is the most profitable product line for Dunkin Donut as it accounts for the majority of our profits. Our main product strategy is Market Penetration as we are seeking to increase consumption of our doughnut product line. The methods that we will adopt to achieve this goal will be discussed later on.
Product Lifecycle:
Our product, doughnuts our in the growth stage. As people in Pakistan has become more aware and the demand for the product is increasing, which increases our profit margins. This is proved by the increasing sales revenue of Dunkin donuts, the doughnuts industry is progressing continuously all over the world. However, the doughnut industry of Pakistan has DD as the market leader so it has the most sales revenue. DD`s revenue increased from $3,200,000 to $5,220,000 from the year 2007 to 2011. Ranging its profits from $277,360 to $475,020.
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Pricing
In respect to our product strategy we are going adopt Product-quality leadership so we can position ourselves as leaders in quality, with premium pricing and very loyal customers. The Final Consumer Price which we will sell at will be the standard of 70 rupees. This premium price is justified as we are adopting the perceived-value pricing method. In this method our perceived value is made up of several elements including quality, taste, brand image and stylish outlets decorated by professional interior decorators. We will also be introducing customer-segment pricing to target students with special discounts in order to gain a foot hold in that market. Bundling pricing will also be adopted to offer customers greater value; this will be done by offering Dunkin Donut Coffee Combos of 150 rupees where with a purchase of this deal includes a coffee and any one donut. We will also utilize a Penny Profit vs. Percent Profit strategy where a single donut prices at 70rs yields 450% profit whilst a dozen is priced at 630rs yields 350% profit. However in terms of cash, the dozen yield more rupees than a single donut even though the profit margin is less. Our margins are substantial at around 450%, with a doughnut costing anywhere from 10 to 15 rupees depending on flavor.
Distribution
Our distribution strategy is basically to make our product available for people at their door step or in other words we will be involved in Intensive Distribution. Because, our target market includes both executives and student who are pretty busy with their daily lives, it is best for them to purchase our doughnuts within their convenience. So, we aim to choose the most effective communication channel. We will be involving ourselves in to direct selling and retail selling. By direct selling we mean taking orders on phone and via mail, while at the same time we will be ensuring high quality. We aim to modify feasible outlets, in Karachi, Islamabad and Lahore, and provide our customers with a drive-thru facility as none of them offers one at the current stage. There are a lot of distribution channel conflicts which can arise since our strategy aims to make our product available everywhere and anytime. The biggest conflict can be the competitors channel, it is important for DD to first analyze and evaluate their competitors strategies and the reason behind using a specific channel. If there is a leader following a particular channel, we have to come up with new and innovative ways. Unless you have strict exclusive territories throughout your distributions system, problems will still arise. You'll always have some kind of conflict (two direct representatives or two resellers fighting over who should have an account), but at least you would eliminate cross-channel conflict, which can be particularly complex and nasty. 9|Page
DD has around 18 outlets including kiosks in Pakistan and at every outlet our product will be available. We will be involving ourselves into contracts with other companies and Departmental stores such as Naheed Super Market, Agha`s, The Forum and Park Towers. Thus, making it easier for the customers to find our product by spotting the nearest available outlet or franchise. Two of our main branches which cover main commercial areas of Karachi are the Tipu Sultan Road branch and the Schoncircle Branch. We have a main display case in each of our outlets which are full of freshly baked different flavored donuts which makes it easier for the customer to see and decide which flavor they want to buy. However, the after sales presentation of the doughnut includes 3 different sized boxes specific for 1 single doughnut (small), a dozen pack (medium) and a 1 dozen pack (Large). These boxes are colorfully designed, which have the Dunkin Donuts logo printed on them and also, fresh and delicious, anytime you visit is printed on these boxes reminding our customers that they have made the best choice.
Promotion
The key message we wish to communicate to our customers is of fun, excitement, quality and cleanliness. Our promotional objective is to reinforce conviction by communicating superior quality through our brand positioning and also through product quality. We also need to increase awareness through our promotional efforts in order to increase the consumers share of mind and heart alike. The Promotional Mix will be aggressive and economical, making the use of several mediums with a strong focus on print media. Print media is often the most economical solution to create awareness and when strategically done can allow us to target a large portion of the market whilst keeping advertising expenses low. The presented image will be the main theme of the bulk of our advertisements and the slogan Fresh and DeliciousEverytime! will reinforce our quality standards.
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Billboards and Mobile Billboards are a traditional source of advertisement for Dunkin Donuts and can be very effective if strategically placed. Some places such as Shahra-e-Quaideen; Shahrae-Faisal; and the Airport where traffic is substantial and many office commuters travel through.
Newspapers will allow us to target our chosen segments more accurately as we are aiming to cater to the middle-upper class, executives and student so we can advertise on Dawn, The Metropolitan, and The News etc. Online advertising will also allow us to target the middle-upper class segment as they generally tend to have internet access. Some popular Pakistani websites include www.apniisp.com, http://www.cokestudio.com.pk/. Furthermore, we have a YouTube and Facebook channel which we can utilize to increase awareness of our product. We will also be involving ourselves into Direct Marketing by which we mean will be giving coupon books and frequent visiting cards. Coupons will enable students to avail special discounts; these coupons will be distributed amongst colleges and universities. Similarly, frequent and loyal customers can take advantage of our frequent visiting cards, the more they purchase from us the more points they earn. After enough points have been earned, they can exchange those points for our doughnuts.
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PRINT MEDIA
Billboard Tariq Road PNS Karsaz Clifton Nazimabad Gulshan-e-Iqbal Others TOTAL
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Contribution Income
On each 70rs doughnut, Dunkin Donuts makes a profit of 50 to 55 rupees. A contribution of approximately 70-80%. The average profit/contribution margin per doughnut is thus 52.5rs/75%. Break-Even Thus, to break even on a promotional budget of 20,320,000 rupees, Dunkin Donuts must sell 387,050 additional units or approximately achieve 27,093,500 rupees of additional revenue to break-even.
Projected Sales
We expect a strong response to our marketing effort, as discussed the market is experiencing high demand for premium quality snack/food items due to progressive globalization and westernization of the consumers. Thus we expect to sell an additional 1,000,000 units within the first year with additional revenues of 52,500,000 rupees.
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