B2C Marketing Plan for the expansion of Dunkin Donuts to San Francisco, California (for a class in International Marketing)

1. EXPANSION: SAN FRANCISCO
International Marketing: Prof. Marco Protano - Fillmore Cohort - Mariana Francisco

2. STRATEGIC ALTERNATIVES: Enter the Financial district market with a best
customer relations proposition, enter it with a best cost proposition or opt
to enter first in a different neighborhood where Starbucks hasn’t entered
yet.
STRATEGIC RECOMMENDATION: Enter the Financial district market with a Best
CR proposition, achieving 20% of the market share in 5 years.
STRATEGIC OPPORTUNITY: The possibility to enter the Financial District of San
Francisco market by the end of 2015, which has the potential of a 20% market
share in 5 years.
• INSIGHT: This is the SF neighborhood with the highest number of
Starbucks locations - our company’s main competitor
• IMPLICATION: The opportunity is risky but highly profitable if accomplished
EXECUTIVE SUMMARY
2

3. MATURE COMMODITY WITH STABLE
DEMAND
CATEGORY:
Coffee Beverages
(commodity product)
DEMAND:
3,453,556 units/ year
(Growth = 0%)
NEED:
Energy and comfort
WANT:
Tasty, high quality Arabica
coffee beverage
• Mature, commodity product implies ability to easily “steal”
market share by having lower prices and/or production costs CATEGORY
3

4. MARKET ATTRACTIVENESS IS MEDIUM-HIGH
4
MITIGATING
FACTORS FOR
THREAT OF NEW
ENTRANTS:
!
→ Lower prices
→ Differentiated products
MARKET
ATTRACTIVENESS
INDEX = 78.6
CLICK HERE TO SEE THE
PORTFOLIO ANALYSIS
Bargaining
Power of
Suppliers
Low to moderate
Threat of New
Entrants
High
WHY?
Profitable market,
commodity product,
low entry barriers. WHY?
Commodity product,
many cafés/coffee chains.
WHY?
Energy products/hot
beverages = imperfect
substitutes.
Threat of
Substitutes
and Technological
Obsolescence
Moderate
Bargaining
Power of
Buyers
Low to moderate
Industry
Rivalry
Moderate to high

5. SUPERIOR CONSUMER SATISFACTION MIGHT
BE OFFSET BY LOWER BRAND LOYALTY
5
S
W
Superior innovation and consumer attraction
→Competitive advantages to succeed in entry
Top ranked in the American Customer Satisfaction Index (79)
→ Useful know-how for the launch of the SF store
SWOT REFERS TO THE U.S. MARKET AS A WHOLE UNLESS OTHERWISE STATED
Inferior Brand Loyalty compared with Starbucks (main
competitor)
→ An investment in brand equity might result in high growth
rates
Highest profit margin in the industry
→DD has an advantage in case of price rivalry intensification
COMPETITION
/COMPANY
No access connections - uncertain supply-chain
→ Inferior access can hinder the expansion’s success
Coffee considered inferior than others’ currently in the market
→Hardship in creating loyalty from demanding consumers
✓ ✓
✓
✓

6. 6
CLICK HERE TO SEE THE FULL-SIZED GE/MCKINSEY MATRIX
New$Market$Entry$
Improve$Posi5on$
Invest$to$Grow$
Improve$Posi5on$
Protect$Posi5on$
Invest$to$Grow$
Protect$Posi5on$
Improve$Posi5on$
Op5mize$Posi5on$
Harvest$
Improve$Posi5on$
Op5mize$Posi5on$
Invest$to$Grow$
Protect$Posi5on$
Op5mize$Posi5on$
Harvest$or$Divest$
Mone5ze,$
Harvest,$or$Divest$
Mone5ze,$
Harvest,$or$Divest$
100$
80$
60$
40$
20$
0$
MarketAttractiveness
Competitive Position
0$ 20$ 40$ 60$ 100$80$76
78.6
CLICK HERE TO SEE THE PORTFOLIO ANALYSIS
T
O
Most competitors in San Francisco have a worse value area
→Getting in the better value is the key to succeed as an entrant
Starbucks already established itself as the California market
leader
→ DD won’t succeed if it can’t differentiate itself from Starbucks
Local cafés are preferred in SF
→ Potentially difficult to have high trial rates in the market share
performance tree
Less than 0.5 Relative Market Share to Starbucks but higher
profitability and growth
→ Increasing relative market share would potentially increase
more than linearly the profitability and growth
INVESTING IN GROWTH THROUGH A BETTER
VALUE PROPOSITION

7. THERE IS AN UNSATISFIED DEMAND FOR QUALITY
SERVICE
7
CONSUM
ERS
CUSTOM
ERS
CUSTOMER !
= !
CONSUMER!
=!
ANY BUSY PERSON
THE TARGET CONSUMER
ISN’T VERY PRICE
SENSITIVE BUT
DEMANDS HIGH QUALITY
SERVICE
RELATIVEPRICE
PERCEIVED PERFORMANCE
HIGH
SUPERIORINFERIOR
LOW
SOURCE: YELP SAN FRANCISCO - FINANCIAL DISTRICT
OPPORTUNITY
DUNKIN’ DONUTS HAS A
HIGHER RANKING IN THE
ACSI THAN THE CURRENT
SF MARKET LEADER
(STARBUCKS)
DD = 79
STARBUCKS = 76
CLICK HERE TO SEE THE CUSTOMER SATISFACTION INDEX CHART

8. HIGH INCOME AND INNOVATION-
ORIENTED CULTURE
8
CONTEXT
!
E San Francisco is one of the highest household incomes cities in the
country→ Opportunity for higher margins.
!
S Local trends for gourmet coffee beverages and organic
products→Niche that’s not reached.
!
S Preference for local establishments instead of chains → Increased
difficulty to penetrate the market.
!
T High concentration of early adopters of new social
media and mobile apps → Opportunity for promotion
that can be a threat in case of dissatisfied customers

9. VISION: ”DELIVER HIGH QUALITY FOOD AND BEVERAGES QUICKLY,
AFFORDABLY AND CONVENIENTLY IN A WELCOMING ENVIRONMENT”
GOALS: BE THE MARKET LEADER
OBJECTIVES: ACHIEVE 25% U.S. MARKET SHARE IN 10 YEARS
STRATEGIC ANALYSIS:
DD HAS A HOLISTIC APPROACH TO MARKETING STRATEGY
9
Best Product
Best Customer
Relations
Best Total Cost to
Customer
High
Medium
Low
MARKETING STRATEGY:
WIERSEMA’S CUSTOMER INTIMACY MODEL
TARGET: BEST CUSTOMER RELATIONS,
WHILE ACHIEVE ABOVE-THRESHOLD COST TO
CUSTOMER AND PRODUCT QUALITY

10. 10
DECISION TREE
STRATEGIC
ALTERNATIVES
WAIT/
OTHER AREA
BEST COST
PROPOSITION
BEST CR
PROPOSITION
FINANCIAL
DISTRICT
+ LESS RISK!
!
- MISSED OPPORTUNITY
+ STEAL MARKET SHARE!
!
- LOSE BRAND EQUITY
+ INCREASE BRAND EQUITY!
!
-“STUCK IN THE MIDDLE”?

11. 11
BEST
CUSTOMER
RELATIONS
+ -
• Growth in Brand Equity
• Appealing to the service
quality-demanding
target market
• Possibility of high gross
margins while still being
affordable
ALTERNATIVE 1: ENTER THE FINANCIAL DISTRICT WITH A BEST
CUSTOMER RELATIONS PROPOSITION
• Risk of being “stuck in
the middle”
• Possibility of being in
the worse value area of
the perceptual map
→ESTIMATED NMC OF $1,949,000
CLICK HERE TO SEE THE QUANTITATIVE ANALYSIS

12. 12
BEST
COST
TO
CUSTOMER
ALTERNATIVE 2: ENTER THE FINANCIAL DISTRICT WITH A BEST COST
TO CUSTOMER PROPOSITION
+ -
• Ability to be in the
better value area of the
perceptual map
• Possibility of stealing
market share from
many pricier cafés
!
• Risk of losing brand
equity
• Low price-sensitivity of
target consumers
makes this option less
attractive
→ESTIMATED OPPORTUNITY COST = NMC OF $1,949,000
→ESTIMATED NMC OF $115,000
CLICK HERE TO SEE THE QUANTITATIVE ANALYSIS

13. 13
W
AIT
/
OTHER
NEIGHBORHOOD
ALTERNATIVE 3: WAIT AND/OR ENTER IN A DIFFERENT
NEIGHBORHOOD WHERE STARBUCKS HASN’T PENETRATED YET
+ -
• Less competition
→ less risk
• Possibility to further
understand the market
• Chance to be the
market leader in the
new neighborhood
• Possibility of missed
opportunity
• Difficulty to compete
with Starbucks will only
increase with time
→ESTIMATED OPPORTUNITY COST = NMC OF $1,949,000
CLICK HERE TO SEE THE QUANTITATIVE ANALYSIS

14. STRATEGIC RECOMMENDATION: ENTER THE
FINANCIAL DISTRICT WITH A BEST CUSTOMER
RELATIONS PROPOSITION
ENTER THE FINANCIAL DISTRICT MARKET WITH
A BEST CR PROPOSITION, ACHIEVING 20% OF
THE MARKET SHARE IN 5 YEARS.
ESTIMATED GROSS PROFITS: $2,324,000
“INTENATIONAL” MARKET ATTRACTIVENESS
INDEX= 80.8
APPEALING TO THE SERVICE QUALITY-
DEMANDING TARGET MARKET
POSSIBILITY OF HIGH GROSS MARGINS WHILE
STILL BEING AFFORDABLE
14
CLICK HERE TO SEE THE INTERNATIONAL MARKET ATTRACTIVENESS INDEX

15. TACTICAL MARKETING PLAN
SOLUTION
BRANDED
15
INFO&INCENTIVES
Quality coffee beverage that is affordable and served quickly
Social Media
Supermarket Coupons
Free Samples
→ Estimated Marketing Expenses: $375,000
→ Estimated NMC: $1,949,000
Estimated SDI: 4.48%
Estimated MSI: 39.4%
CLICK HERE TO SEE THE FULL PRODUCT POSITIONING

16. 16
VALUERELATIONSHIP
Usage Of Reduce-Focus Pricing To Establish The Optimal Price
Average Price Per Coffee Beverage: $6
ACCESS
TACTICAL MARKETING PLAN
Open 2 stores in the first year, in addition to a food truck, which
would have its location announced through the social media
channels
In addition to applying the current programs DD Perks and DD
Card, there should be constant activity through social media
networks, most importantly twitter and facebook, where popup-
challenges could be easily implemented.
REDUCE-FOCUS
PRICING

17. Chapter Tool(s) Slide(s)
1 Customer Satisfaction Index 2
2 NMC, Relative Market Share/ Profitability 25;24
3 Product Life Cycle, Market Share Performance Tree 3;29
4 Value Map 7
5 Segment Marketing Profitability 25
6 Industry Forces Analysis 4
7 Product Positioning 26
8 Product Life Cycle- Based Pricing 30
9 Marketing channel profitability 31
10 Marketing communications and customer response 29
11 GE/McKinsey Matrix 6/20
IM International Market Attractiveness Index 32
? Porter’s 5 Forces, SWOT, Protano’s 11Cs 4/21;5/6; 5
MARKETING TOOLS CHECKLIST
17

18. EXHIBITS
18
http://finance.yahoo.com/q/co?s=DNKN
DNKN SBUX YUM INDUSTRY
Market Cap: 5.30B 56.31B 32.43B N/A
Employees: N/A 182 N/A 18.80K
Qtrly Rev Growth (yoy): 0.13 0.12 0.01 0.00
Revenue (ttm): 713.84M 15.34B 13.08B N/A
Gross Margin (ttm): 0.78 0.57 0.26 0.31
EBITDA (ttm): 336.95M 3.05B 2.72B N/A
Operating Margin (ttm): 0.40 0.15 0.15 0.12
Net Income (ttm): 146.90M 116.80M 1.09B N/A
EPS (ttm): 1.36 0.15 2.36 1.51
P/E (ttm): 36.14 483.77 31.02 N/A
PEG (5 yr expected): 1.74 1.45 1.62 N/A
P/S (ttm): 7.53 3.69 2.46 N/A
Direct Competitor Comparison

19. 19
Market Forces (30%)
Relative
Importance
Attractiveness
Rating
Attractiveness
Score Differentiation Advantage (40%)
Relative
Importance
Attractiveness
Rating
Attractiveness
Score
- Market Size 40% 80 32 - Product Quality 40% 80 32
- Growth Rate 30% 80 24 - Service Quality 30% 100 30
- Buyer Power 30% 100 30 - Brand Image/Reputation 30% 80 24
- Total 100% 86 - Total 100% 86
Competitive Environment (40%) Cost Advantage (40%)
- Price Rivalry 50% 80 40 - Cost of Goods Sold 70% 80 56
- Ease of Competitor Entry 30% 80 24 - Market and Sales Expenses 20% 80 16
- Number of Competitors 20% 40 8 - Overhead Expenses 10% 80 8
- Total 100% 72 - Total 100% 80
Market Access (30%) Marketing Advantage (20%)
- Customer Familiarity 40% 100 40 - Market Share 40% 0 0
- Channel Access 40% 60 24 - Brand Awareness 30% 100 30
- Sales/Service Requirements 20% 80 16 - Distribution 30% 60 18
- Total 100% 80 - Total 100% 48
Market Attractiveness Index 78.6 Competitive Position Index 76
Portfolio Analysis
MARKET ATTRACTIVENESS COMPETITIVE POSITION
Portfolio Analysis

20. GE/MCKINSEY MATRIX
20
New$Market$Entry$
Improve$Posi5on$
Invest$to$Grow$
Improve$Posi5on$
Protect$Posi5on$
Invest$to$Grow$
Protect$Posi5on$
Improve$Posi5on$
Op5mize$Posi5on$
Harvest$
Improve$Posi5on$
Op5mize$Posi5on$
Invest$to$Grow$
Protect$Posi5on$
Op5mize$Posi5on$
Harvest$or$Divest$
Mone5ze,$
Harvest,$or$Divest$
Mone5ze,$
Harvest,$or$Divest$
100$
80$
60$
40$
20$
0$
MarketAttractiveness
Competitive Position
0$ 20$ 40$ 60$ 100$80$
76
78.6

21. 21
Bargaining Power !
of Buyers
Low to moderate
Target consumers are price
sensitive, but don’t have
bargaining power
individually
Bargaining Power
of Suppliers
Low to moderate
Huge scale operations give
Dunkin Donuts a high
bargaining power against its
suppliers
Threat of New
Entrants
High
Profitable market,
commodity product and low
entry barriers make the
market attractive to enter
Industry Rivalry
Moderate to high
Commodity product and
huge amount of cafés and
coffee chains intensify the
rivalry
Threat of Substitutes
and Technological
Obsolescence
Moderate
There are energy products
and hot beverages might be
imperfect substitutes for
some consumers
Porter’s 5 Forces of Competitive Rivalry

22. 22
AMERICANCUSTOMER
SATISFACTIONINDEX
100
0
SOURCE: ACSI - 2012
79
DUNKIN DONUTS
76
STARBUCKS
Customer Satisfaction Index

23. 23
http://www.statista.com/statistics/250166/market-share-of-
major-us-coffee-shops/

24. 24
NETINCOME(GLOBAL)INMILLIONUSD
RELATIVE MARKET SHARE
116.8
146.9
0.494 2.025
Relative Market Share/ Profitability

25. 25
BEST OPTION!

26. 26

27. 27
Name Price)x)2.5 Customer)Rating63x5
Specialty's)Cafe)&)Bakery 2,50 1,88
The)Coffee)Bean)&)Tea)Leaf 2,50 2,92
The)Posh)Bagel 2,50 1,25
Working)Girls')Cafe 2,50 2,50
Peet's)Coffee)&)Tea 2,71 2,40
Starbucks 3,25 1,41
Cafe)Madeleine 4,17 2,50
La)Boulange 4,38 1,88
Value Map Source Table

28. 28
Market Share Performance Tree

29. 29
!
Marketing Communications and Customer Response

30. 30
REDUCE-FOCUS
PRICING

31. 31
Marketing Channel Profitability

32. 32
!
International Market Attractiveness Index !
(TAKING CALIFORNIA AS A DIFFERENT COUNTRY)