Key findings

Strong Brand Name – Dunkin’ Donuts is a popular American brand and is also well-known in Europe. The survey conducted in this paper showed that 72% of the respondents had heard of the brand Dunkin’ Donuts, and that about 60% of the respondents would be open to visiting a Dunkin’ Donuts if a restaurant were to open in their neighborhood (Appendix 6, pp. 1 & 6).

This shows that Dunkin’ Donuts already have a strong potential customer base before they have even entered the market.

Experience in Europe – As Dunkin’ Donuts already has entered several European countries including Germany and Spain, they will have gained valuable insights into operating a

business in Europe, e.g. dealing with the European Union. This is valuable experience, which they will be able to use, when entering the Danish market. This also means that they have experience in adapting their menu to the local tastes, and know how to use their well-known American brand name when dealing with the large local competitors.

Figure 9: TOWS

Internal factors

External factors

Strengths

1) Strong brand name 2) Experience in Europe 3) Quality coffee & donuts 4) Brand loyalty

5) Large corporation

Weaknesses

1) Unhealthy (reputation) 2) No online sales

3) Price as competitive factor 4) Brand perception in DK

87 Opportunities

1) Immature coffee market 2) Coffee drinking nation 3) Online sales

4) Health trend

6) No strong Donut chains 7)Positive attitudes toward American products/brands

S1,O6) Use strong brand name to introduce Danes to quality donuts

S1,S2,O1,O2) Use knowledge to adapt to the new market and make changes to fit this market

O4,W1,W4) Expand on, and advertise, healthy options W2,O3) Introduce option of buying coffee and

merchandise online to capture the large, growing online market in Denmark Threats

1) Competitors

2) Substitute products 3) Health trend

4) Negative attitude towards donuts

5) High taxes in DK  higher prices

S1,S4,S5,T1) Establish strong brand in DK to gain market share from competitors S2,T4) Use experience from European countries to change Danes’ attitudes towards donuts

S1,S3,T5) Use strong brand to advertise brand and quality rather than price

W1,T3) Refute unhealthy reputation by offering more healthy alternatives

W2,T1) Introduce online sales as a solid way of differentiating from the competitors

W3,T5) Position on market based on brand, quality, and atmosphere rather than price.

Source: Own creation

Quality coffee and donuts – In the United States Dunkin’ Donuts have spent years and years developing and fine-tuning the image that they want. The result is that they are now known for their great quality of both coffee and donuts at low prices (Datamonitor, 2008).

Brand loyalty – In the United States Dunkin’ Donuts have had great success in encouraging brand loyalty among its customers. This has been done through various initiatives such as loyalty programs and maintaining a consistent level of quality, a nice coffeehouse atmosphere, and good service. Brand loyalty is an important success factor, as it ensures a continuously large customer base.

Large Corporation – Dunkin’ Donuts is one of the largest coffeehouse chains in the world with over 10,000 stores in 33 countries around the world (dunkindonuts.com). The size of the company and its presence in a large number of countries, gives Dunkin’ Donuts the

advantages of economies of scale, experience, and widespread brand recognition. These factors all works to their advantage when entering new markets.

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Unhealthy – An inherent weakness in selling donuts is the (unmistakable/unyielding) fact that it is an extremely unhealthy product, and it can be a tough sell in a time when focus in on healthy living. Dunkin’ Donuts discovered this a long time ago and shifted its focus away from donuts and onto coffee (Datamonitor, 2008). However, this shift in focus has not yet reached the Danish consumers, which still view Dunkin’ Donuts as a cheap, greasy, and unhealthy donut chain (Appendix 6, pp. 2-3).

No online sales – Dunkin’ Donuts have established branches of coffeehouses in many

European countries, but they have not yet opened up for the opportunity for the consumers of those countries to buy coffee and merchandise online. This lack of online sales in their new markets, means that the Danes, too, will probably not be able to enjoy the benefits of buying coffee and merchandise online.

Price as competitive factor – In the United States Dunkin’ Donuts uses price as a competitive factor, because they are able to serve quality coffee and baked goods at low prices. This will not be possible to the same extent in Denmark because of the high taxes and wages paid by Danish companies. This fact therefore weakens their existing positioning strategy.

Brand perception in Denmark – The survey showed that among Danes the brand Dunkin’

Donuts is synonymous with the words cheap, fast and unhealthy (Appendix 6, p. 2). As the name suggests, many Danes still consider Dunkin’ Donuts to be a chain that focuses on donuts but also sells coffee. This is the perception that they have attempted to escape in the United States, where they have successfully changed their actual and perceived focus from being a donut shop that also sells coffee, to a coffeehouse that also sells donuts. The difference may seem insignificant, but the change in perception in the minds of the consumer makes all the difference, as their main product coffee is now not a particularly unhealthy one.

Immature market – Pedersen (2014) suggests that the Danish market for coffee is an immature market that continues to grow with every new addition to the competitive environment. Baresso even goes so far as to welcome the new competition from large

American brands like Starbucks and Dunkin’ Donuts, because of the belief that they will help

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develop the market (Pedersen, 2014). This means that it is possible to gain market share without having to steal customers from the competitors.

Coffee drinking nation – According to kaffeinfo.dk (2014) Denmark is among the (most) coffee drinking nations in the world with an average of 4 cups of coffee a day per person. The fact that Dunkin’ Donuts focuses on quality coffee makes Denmark an opportune market for the company.

Online sales – As the Danish consumers grow more and more accustomed to shopping online, a new opportunity of online sales presents itself. Danes enjoy the freedom of being able to buy products from the comfort of their own homes, which is an opportunity for Dunkin’ Donuts to expand their online stores and provide to the Danish people with merchandise and online product delivery services.

Delivery service – providing the Danish consumers with a delivery service, could be something unique for Dunkin’ Donuts in Denmark. If not being able to handle this kind of business, a partnership with for example, Just Eat could be a way to attract a new market.

Further, the Company called Room-Service provides the same service, however this company is closely related to delivering to businesses, which is a completely different segment that Just-Eat.

Partnerships – Dunkin’ Brands announced early in 2014, a multi-year marketing partnership with Liverpool FC in England, to support Dunkin’ Donuts global expansion of the brand. Under the agreement that Dunkin’ Donuts is the official coffee, tea, and bakery partner at Liverpool FC stadium (www.liverpoolfc.com). A similar partnership could be made with clubs in Denmark.

Health trend – The fact that the Danish consumers are being bombarded with tips and tricks to a healthy living can be both a threat and an opportunity, depending on how Dunkin’ Donuts decides to react to this. This coercion from all sides to choose the healthy options can be an opportunity for Dunkin’ Donuts to expand their menu with healthy options, which can also help reposition Dunkin’ Donuts in Denmark. The current negative attitudes towards the brand

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can be altered, with focus shifting from the unhealthy to the healthy, and it may be possible to position Dunkin’ Donuts on quality instead.

No strong donut chains – The Danish market has not yet embraced donuts in the same way that Americans have, which means that there are no existing strong competitors for donuts in Denmark. This means that Dunkin’ Donuts will enter a market with great potential if they can persuade the Danes to start buying donuts.

Competitors – As mentioned earlier, when entering the Danish market Dunkin’ Donuts will be in direct competition with the Danish coffeehouse Baresso and the American coffeehouse Starbucks. These are the two main competitors on the market, and Dunkin’ Donuts will have to be better than them to gain market share from them, or they will have to differentiate from them in order to expand the market and gain new customers.

Substitute products – The substitute products on the market can be divided into categories depending on their use or function. For the people who drink coffee purely because they like the flavor, substitutes to the coffeehouse coffee is the coffee that people make at home, which consists of coffee capsules, coffee grounds and instant coffee. On the other hand, for the people who drink coffee purely for the caffeine energy boost, the fairly new phenomenon of caffeinated energy drinks can become substitute products as these become increasingly popular among certain age groups (Christensen et al., 2014).

Health trend – As discussed in chapter 3.3, Danish consumers are highly affected be the ongoing health trend, which encourages or persuades them to watch what they eat and drink constantly. As Dunkin’ Donuts have a reputation for being unhealthy, they will be negatively affected by this trend unless they take action to avoid this.

Negative attitudes towards donuts – The donut is not yet a strong contender on the Danish baked goods market. Denmark does not have any large donut chains and the donut has not yet gained footing on the Danish market. The only donuts available on the market are dry and of low quality. Furthermore, Danish consumers seem to have a lot of negative assumptions about donuts, such as them being greasy, sugary, fatty, and overall unhealthy (Appendix 6, pp. 2-3).

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High taxes in Denmark  Higher prices – As taxes and wages in Denmark are a lot higher than in the US Dunkin’ Donuts must be prepared to make some changes to either their

production/distribution processes or the price levels in the stores in order to make up for the high expenses. As Dunkin’ Donuts position themselves on price, among other things, this can be a threat to their brand position in Denmark.