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De La Salle University

Ramon V. del Rosario College of Business


Management and Organization Department

Go Nut Donuts Case Analysis

Submitted
in Partial Fulfillment of the Requirements in
MKT535M Marketing Management

To:
Ms. Regina Dy
By:
Lim, Rapunzel
Siao, Limuel
Mercado, Melchor

20 January 2014

COMPANY BACKGROUND
Go Nuts Donuts is a food chain that was founded in 2003 by the Trillana and De
Ocampo family. They initially attempted to bring the American based donut company Krispy
Kreme but were denied so they decided to create their own and founded the Donut People
Incorporation -- the parent company of Go Nuts Donuts. To date, there are 27 stores in the
Philippines, majority of which are in Metro Manila and are currently being managed by Mr.
Michael Trillana.
The products that they sell are almost similar to what Krispy Kreme is offering but
cheaper, bigger and less sweet. At one time, the company was selling around 20,000 donuts per
day and in 2012, IP Ventures Retail Group, owner of the local franchise of Highlands Coffee
brought 40% stake in the company that enabled them to offer customers with Coffee on top of
their Regular, Premium and Prima (more premium) doughnuts, Pizza and Non-coffee
beverages. (Gokongwei-Cheng L. 2004; Go Nuts Donuts 2015; Wikipedia 2014)

STATEMENT OF THE PROBLEM


How can Go Nuts Donuts increase its market share given that there are many
competitors?

OBJECTIVE
This paper aims to:

Suggest a marketing strategy by analyzing the current state of the company to aid it in
increasing its market share.

Research the facts and appreciate the current operations, history and vision of the
company and its competitors.

AREAS OF CONSIDERATION/ASSUMPTIONS
The group would take the point of view of the Mr. Michael Trillana (President) in solving
the case study. The areas for consideration are the facts, competitors and marketing strategy
Go Nuts Donuts should employ to increase its market share and the group would also assume
the following:

The group would assume that the this case study was held in 2012
IP Ventures has recently entered the partnership with Go Nuts Donuts
J.Co Donuts has just entered the market

SEGMENTATION, TARGETING AND POSITIONING


It is important for a company to define its market first before proceeding with market
segmentation. Go Nuts Donuts belong in the food industry. But with market segmentation, it will
unlikely be covering the food industry overall. It is necessary to divide the food industry into submarkets. Go Nuts Donuts is classified under the bakery industry. The company chose to focus
on doughnuts as its main products. Go Nuts Donuts is a Filipino-owned company established in
the Philippines.
Go Nuts Donuts cannot address the needs of all consumers. People have different
needs and wants which cannot be provided by only one kind of product. Thus, it is important for
the company to allocate its products to cater to different kinds of consumers or a particular
market. This is where the Market Segmentation, Targeting and Positioning (STP) Process enters
the scene. STP will guide Go Nuts Donuts to control the factors that influence consumers to
purchase its products, by developing an effective marketing mix.
Market Segmentation
Segmentation allows Go Nuts Donuts to divide the market into groups based on similar
characteristics; behavior and responses. This will enable the company to serve its market
effectively. Go Nuts Donuts is not confined to only one market segment. The market
segmentation variables for Go Nuts Donuts are geographic, demographic and psychographic -a combination of three among the six variables.
A. Segment Evaluation
After identifying the market segments, it is important that theyd be evaluated against a
set of criteria. The first criterion is homogeneity. Whether the consumers in each segment are
similar in terms of characteristics and their needs? In the case of Go Nuts Donuts, the company
was created to be an international brand. Nonetheless, the companys stores were divided into
regions and even countries. Majority of its market is from Metro Manila ranging from mega malls
to small outlets. It also expanded to regions outside Metro Manila such as Davao City, parts of
Luzon area and Visayas. In 2006, it fulfilled its dream to become an international brand by
franchising to countries such as Kuwait, Malaysia, China and Australia.
With demographic segmentation, the company looks into different consumer
characteristics such as age, occupation, social class, income and etc. In this case, Go Nuts
Donuts appeals consumers in every age. Their products look as inviting as their names such
Amazing Glaze, Chocolate Frost, Yummy Vanilla. They also cater to both high-income to lowincome individuals as their baked goods were priced reasonably. Since it is affordable, many
people were enticed to buy in boxes.
Lastly, psychographic segmentation involves consumer lifestyle, preferences, opinions
and interests. Go Nuts Donuts spent an enormous effort in their Research and Development to
formulate a product that is less sweet than the usual baked goods. Their rationale is that

sweeter goods tend to lose their appeal as time goes by. It is indeed true for most people. To
innovate, the company introduced products such as Go Nuts Donuts LITE, low carbohydrate, no
sugar baked goods to address to the needs of the health-conscious consumers. Their products
also last for a longer period which allows people to buy them for pasalubongs.
Recently, the company formed a partnership with Highlands Coffee to be sold in their
outlets. It understood the fast-paced lifestyle of its target market. Food industry is increasing
rapidly. A number of consumers prefer to eat out, grab a quick snack and coffee on their way to
work or after school.
The second criterion is heterogeneity. It is expounded above that Go Nuts Donuts
market was clearly divided into different groups. It is important for the company to know that
each segment is unique and that each segment has different needs. The third one is
measurability and the fourth is substantiality. Will the company be able to measure the size of
the market segment? Is the market large enough in terms of sales? Yes. During its first launch,
Go Nuts Donuts was able to sell 700 doughnuts in its only store at Bonifacio High Street. With
its expansion, their sales increased to 20,000 more doughnuts in a day.
The fifth criterion is its accessibility. The segment should be reachable in terms of
distribution. The company has 27 stores in the country and majority of which is in metro manila
but they were able to expand to provincial areas and internationally. The sixth and seventh
criteria are actionability and responsiveness respectively. These criteria require the
implementation of a marketing mix which will be discussed further on the Market Targeting
section of this paper.
B. Construct Segment Profiles
In this stage, consumers in each segment are being described for the purpose of
comprehending what they want and what they need. The first market segment is geographic. It
has stores nation-wide and international. This is the said market segments profile. Consumers
within Metro Manila prefer food stores that are accessible Because of their fast-paced lifestyle
and congested area, consumers go to food stores in the malls, shopping centers, near schools,
along the streets on their way to the LRT/MRT or the jeepney stop.
Consumers in the provincial areas will try anything that is new. The only way to keep
their loyalty is the quality and affordability of the product. Accessibility is not big of a concern but
launching first inside a mall is preferable. Because the company desires to be an international
brand, it already opened franchises in Kuwait and other countries. It also delivers abroad thru
DHL or FedEx which makes it accessible.
The second one is the demographic market segment. Since this market is broad, the
company can target the following sub-sections: age, occupation, social class and income. Go
Nuts Donuts made its products lighter, softer and less sweet with a melt-in-your mouth quality.
This definitely appeals to consumers of all ages. Adults will love the slightly sweet taste while

the children will love the colorful decorated doughnuts and its mouth melting texture.
Consumers in this market are particular whether the price meets the quality. Fortunately for Go
Nuts Donuts, its products are at affordable price and can be bought in bulk.
The third one is psychographic. Consumers in this market will be the most challenging
because this market is based on their opinion, interests and lifestyle. It will be quite difficult to let
one product cater to different types of people with different preferences. Nonetheless, Go Nuts
Donuts was able to produce health products which are the current craze in the food industry.
Diet food is the trend these past few years.
C. Market Segment Evaluation
The last step in market segmentation is to evaluate the attractiveness of each segment
which requires extensive research and gathered data. This may involve quantitative methods in
combination with qualitative assessment of the company. This paper designates 10 as the
highest rating and 1 as the lowest.
Geographic Segment

Demographic Segment

Psychographic
Segment

Financial Issues
Segment Size

10

10

Segment Growth Rate

10

10

Profit Margins

Competitors

10

10

Distribution Channels

Strategy

10

Goals

10

10

10

Structural
Attractiveness

Strategic Direction

Marketing Expertise
Resources

Capability

10

10

10

Growth Options

10

10

10

TOTAL:

95

98

84

Role of brand

Opportunity Cost

Market Targeting
Among the market segments above-mentioned, the company then chooses which
market segment it should focus on. The quantitative evaluation above presented that the
demographic segmentation has the highest rating. In this case, Go Nuts Donuts tend to focus its
efforts in this segment. Under this segment, there are several factors such as age, social class,
income, etc. It can be deduced that Go Nuts Donuts applies mass marketing. It said that the
company has little advertising but are taking steps to promote its products gradually.
Mass marketing or undifferentiated marketing designs a marketing program for a product
with superior image that can be sold to the broadest number of buyers via mass distribution.
This strategy creates the largest potential market at the lowest costs. Go Nuts Donuts has
outlets from malls to the streets catering to the masses. It has both mass-produced and freshlybaked doughnuts. Because of its affordable price, people often buy in boxes.
Market Positioning
Market positioning allows the company to differentiate its product in a big industry. It is
used to be perceived differently from its competitors. With this, the company can highlight the
best characteristics of its products and promote its competitive advantages. The main goal is to
become the choice for its target market or consumers.
Go Nuts Donuts is well-known for its unique taste experience having a less sweet but
lighter, softer and melt-in-your mouth quality. This is what the company calls as the New
Generation Doughnut. It also has a whacky brand personality with its inviting doughnut names
such as Amazing Glaze or Yummy Vanilla. Most of its goods are also freshly-baked when
served as opposed to the usual mass-produced products of its competitors. It is ideal for take
home treats because of its longer shelf life compared to other doughnuts in the market.
Marketing Mix

Management marketing decisions are classified into four using the 4Ps or the Marketing
Mix. This is necessary to determine the products brand offer. Go Nuts Donuts is one the key
players in the industry catering to almost every type of consumers. The company has store
outlets operating at malls to crowded streets in Metro Manila. It also has franchise outlets in the
provinces and certain countries abroad. To understand where Go Nuts Donuts is today,
marketing mix model will provide a better analysis of how the company operates.
Product
Doughnuts are the main products of the company. Before Go Nuts Donuts launched its first
flagship store, its research and development team worked with American partners to develop
the New Generation Doughnut. Its products are now desired by many because of its less
sweet, lighter, softer, melt-in-your mouth quality. The company believes that products which are
too sweet tend to lose their appeal over time. This specific taste is also created to target the
international market. Its doughnuts also has a longer shelf life of 3 days compared to its
competitors which makes them ideal for pasalubong and take home treats.
Together with its expansion, Do Nuts Donuts has new products introduced aside from its usual
Amazing Glaze. It has cro-nuts, pocket pies, Go Nuts Donuts pizza. It also has Go Nuts Donuts
LITES, low carbs, high fiber, no sugar products for the health conscious consumers. Recently,
the company is in partnership with Highlands Coffee. It already sells beverages such as juice
and coffee.
Price
Go Nuts Donuts products are priced from P36 and up. What makes it so affordable is the price
of products bought in boxes. These prices can range from P90 to P285 only. The company
caters to all types of consumers, both high income and low income. This paper will present a
comparison of the Go Nuts Donuts prices and other key players product prices.
Dunkin Donuts regular doughnuts costs P20, while their premium and croissant doughnuts can
range from P35, P75 and up. Mr. Donut offers the cheapest but limited products which can
range from P12 to P15. Its other products such as pies and bread costs P20 to P40. The
biggest players in the industry were Krispy Kreme and J. Co. Their product starts with the price
of P42 and up.

Place
Go Nuts Donuts has about 30 stores in the Philippines and a number of them are also
franchises. Its first flagship store is located at Bonfiacio Global City. It currently has several
shops and kiosks in Metro Manila commercial areas. It expanded outside Metro Manila such as
Davao City and certain parts of the Luzon area. Because it has a goal of becoming an
international brand, Go Nuts Donuts opened its first international store in Kuwait. It now has
franchise stores in Malaysia, China and Australia.
Promotion
Go Nuts Donuts is not big on advertising. People also often tend to confuse Go Nuts Donuts to
be somewhat similar with Dunkin Donuts or Mr. Donut. The company relies on word-of-mouth
marketing and franchises. It promotes thru its fliers and social media, such as Facebook, Twitter
and Instagram. It captivates customers thru its mouth-watering product designs, whacky and fun
doughnut names. Overall, Go Nuts Donuts has very little advertising.
THEORETICAL FRAMEWORK and SWOT Analysis
Despite its tremendous success, it cannot be disregarded that there are many players in
the doughnut store industry. Only Mr. Donut and Go Nuts Donuts are local brands and majority
are international brands. It is vital to understand and study the factors influencing a business
operation. This paper will tackle the external factors involved in the case of Go Nuts Donuts thru
Porters Five Forces Model of Competition.
Michael Porter has identified five forces that determine the intrinsic long-run
attractiveness of a marker or market segment. 1 The company has to consider the industry
competitors, new entrants, substitutes, buyers and suppliers. This is an application of Porters
Five Forces Model in the case of Go Nuts Donuts:
Figure 1: Go Nuts Donuts Porters Five Forces Application

Threat of New Entrants


New competitors pose a threat to existing competitors in an industry. A profitable
industry, where entry barriers are low, will attract new players. As a consequence, new
competitors entering the industry can decrease the market share and profitability of existing
players.
1 Kotler, P. & Keller, K.L. (2012). Marketing Management. New Jersey: Prentice Hall.

The increasing number of new startup competitors is the biggest threat faced by
established small and medium businesses.2 The new player in the industry, in the case of Go
Nuts Donuts, is the J. Co Donuts & Coffee. This is, however, not a start-up company but a wellknown international brand which recently entered the Philippine market.
Threat of Substitute Products
Consumers can shift to alternatives if they wish to do so since bakery industry consists
of a wide-range of products. Baked goods are not only limited to doughnuts. If a consumer
craves for sweets, he can buy a cookie or a cupcake priced cheaper than a doughnut. We are
also currently in the height of health and organic food craze. Consumers may prefer traditional
white bread or wheat bread over doughnuts.
Threat of Bargaining Power of Customers
Consumers are price sensitive and this can put the companies under pressure.
Companies also struggle to keep consumer loyalty. It is a threat to businesses when buyers
possess a strong bargaining power. They can shift from one product to another at their liking
and most businesses will try adjusting to their wishes. A good defines is to develop superior
offers which strong buyers could not refuse.
Threat of Suppliers Bargaining Power
2 Torrance, J. (2014). Growing number of startup competitors is biggest threat to businesses. Real

Business. Retrieved from: http://realbusiness.co.uk/article/27360-growing-number-of-startup-competitorsis-biggest-threat-to-businesses.

Suppliers are the sources of raw materials, machinery, services. Without the suppliers, a
company will be forced to manufacture its own raw materials which will require extra time and
expenses. Suppliers can take advantage of a companys and an industrys profitability by
increasing the prices of their raw materials. Thus, it is important for a business to develop a
harmonious relationship with its supplier and to be able to negotiate fairly.
Industry Rivals
Rivalry among companies in the same industry is normal. However, intense competition
also poses a threat to a business operation and success. Competition will eventually lead to
price wars, advertising competitions, introduction of new products. This will mean more
expenses to most businesses.
SWOT Analysis
HELPFUL
I
N
T
E
R
N
A
L

E
X
T
E
R
N
A
L

STRENGTHS

Consumers research base is


strong

House hold brand name

Consistent and coherent core


products

Differentiated Price strategy

freshly made doughnuts

3 day shelf life

HARMFUL
WEAKNESSES

Lack of product originality

Ineffective/low advertising

Strict franchising process

Few outlets compared to its


competitors

Some products are made in


response to fads (E.G.Cronuts)

Declining customer loyalty

OPPORTUNITIES
THREATS
Repositioning of brand and image

Large competitors in the market


through their partnership with

Consumer loyalty dwindling


Highlands coffee

Change in consumer preference in

Release new and easier


terms of snacking healthier
franchising process

Changing eating habits of target

Use of new marketing channels


consumers
to retouch with customers

Entrance of J.Co which intensified

Capitalize on the use of social


the existing competition
media to increase brand
awareness.

ALTERNATIVE COURSES OF ACTION


In order to increase their share of the Doughnut consumer market, GoNuts Donuts may take
several courses of action. After analyzing the facts and data that were discussed in the paper
the group came up with three (3) alternative courses (ACAs) of action that could aid the
company increase its market share. The alternative actions are further discussed below:
1) GND can revamp their franchising process to ensure that the fees will be more
affordable to a prospecting franchisee. They can do this by sourcing more inexpensive

equipment and materials that will bring down the cost of putting up a GND store,
hopefully attracting more potential investors.
2) Establish a solid marketing plan by concentrating their efforts on their new partnership
with Highlands Coffee. Future Go Nuts Donuts stores could be put up alongside new
Highlands Coffee stores and synergize their products. The 2 companies could do what
several Krispy Kreme and Jamba Juice stores are doing by putting up a store next to
each other. The stores will not only create the perfect pairing (Doughnuts and Coffee)
but it will also give the consumers the complete experience of enjoying premium coffee
with excellent doughnuts that GND has to offer.
3) Invest in a customer relationship management (CRM) systems. CRM is defined as
strategies and technologies that enable companies to manage and evaluate customer
data in order to increase sales and market share by strengthening relationship with
customers (Rouse 2014). We are now in the digital age wherein companies, government
and even normal people gather and analyze data to ensure they have informed
decisions. The company could invest in a CRM designed specifically for them with their
goal, strategy and vision in mind in order to gain competitive advantage in the market.
The company could also employ a simple CRM tool to gather data in order to get to
know their customers more so that they could create strategies and promotions targeting
these types of customers by analyzing the data they could acquire. They could also use
this system to address customer complaints and suggestion to make sure that these old
customers would be loyal and come back again.
Each of the ACAs would definitely have increased Marketing efforts namely internet
marketing, end-user marketing, and advertising and consumer research. This would include the
increase in internet presence focusing on social media like Facebook, Twitter and food blogs
that have a wide following. For the data produced in the researches, this will help streamline the
product-line of GND. Phasing out the products that have shown weak customer following and
strengthening the products that have increased market sales.
RECOMMENDATION AND ACTION PLAN
The group finds that a combination of ACA 1 and 2 would be the most beneficial
alternative for GND. An increase in the companys franchisee would also increase the
customers served by increasing the number of stores in and around Metro Manila. ACA #2 will
also give GND an opportunity to ride the popularity of their new partner, Highlands Coffee. As
previously mentioned in the ACA, future franchised stores may be paired with new Highlands
Coffee shops. This is to increase the whole Coffee and Doughnut experience that if combined,
will be the perfect light pick-me-up snack for people on the go.

REFERENCES

Gokongwei-Cheng, L. (2004 February). THE MANNY PACQUIAO OF THE DOUGHNUT


WORLD retrieved on 18 January 2015 from: http://www.newsflash.org/2003/05/tl/tl012282.htm
Go Nuts Donuts (2015). Retrieved on 20 January 2015 from: http://gonutsdonuts.com/
Rouse, M (2014). Customer Relationship Management retrieved on 20 January 2015 from
http://searchcrm.techtarget.com/definition/CRM
Kotler, P. & Keller, K.L. (2012). Marketing Management. New Jersey: Prentice Hall.
Torrance, J. (2014). Growing number of startup competitors is biggest threat to businesses.
Real Business. Retrieved from: http://realbusiness.co.uk/article/27360-growing-number-ofstartup-competitors-is-biggest-threat-to-businesses.