Read the opening vignette in chapter 6 on Dunkin Donuts. Each group should then answer the following questions:

QUESTIONS

1. What is Dunkin Donuts strategy?
2. What is unique about their market segmentation strategy?
3. Are there weaknesses in the Dunkin Donut strategy? If so, what are they?
4. Do you see any uncovered market segments? If so, what are they? How would you exploit this?

ompanies today recognize that they cannot appeal to all buyers in the market- Dunkin' Donuts' targeting and positioning are pretty wel summed up in its long-running ad slogan "America Runs on Dunkin'." No longer just a morning pit stop, Dunkin now bills itself as America's favorite all-day, everyday stop for coffee and baked goods. "We remain committed to keeping America running with environment at a great value," says Dunkin's chief global market ing officer. Nothing too fancy-just meeting the everyday, all-day Again, however, in refreshing its stores and positioning, Dunkin' Donuts has stayed true to the needs and preferences of the Dunkin' tribe. Dunkin' is "not going after the Starbucks coffee snob," says one analyst, it's "going after the average Joe." So far so good. For seven years running, Dunkin' Donuts has ranked number one in the coffee ategory in a leading customer loyalty and engagement survey, ahead our great coffee, baked goods, and snacks served in a of number-two Starbucks. According to the survey, Dunkin' Donuts was the top brand for consistently meeting or exceeding customer expectations with respect to taste, quality, and customer service. needs of the Dunkin' tribe. friendly Market segmentation Dividing a market into distinct groups of buyers who have different needs. characteristics, or behaviors and who might require separate marketing strategies or mixes. C place or at least not to all buyers in the same way. Buyers are too numerous widely scattered, and varied in their needs and buying practices. Moreover, compa- nies themselves vary widely in their abilities to serve different market segments. Instead, like Dunkin' Donuts, companies must identify the parts of the market they can serve best and most profitably. They must design customer-driven marketing strate right relationships with the right customers T Market targeting (targeting) Evaluating each market segment's attractiveness and selecting one or mass marketing on segmento to their coffee shop, Dunkin' fans viewed Starbucks as preten- SPUNUT RIGA RUNS ON First Stop I stay at home." place"-outside eting ate and Dunkin' Donuts: Targeting the Average Joe customers in cities around the country $100 a week to buy A few years back, Dunkin' Donuts paid dozens of faithful coffee at Starbucks instead. At the same time, the coffee chain gaid Starbucks customers to make the opposite switch. When later debriefed the two groups, Dunkin' says it found them so polarized that company researchers dubbed them tribes,' each of which loathed the very things that made the other tribe loyal plain and unoriginal. "I don't get it, one Dunkin' regular told researchers after visiting Starbucks. "If I want to sit on a couch, powerhouse, on par with Starbucks, the nation's largest cof- expansion, the chain has been moving upscale a bit, but not too far. and non-breakfast items like a steak sandwich and breaded chicken Sandwich with barbecue sauce. Dunkin' has also made dozens of hous and trendy, whereas Starbucks loyalists saw Dunkin as fee chain. But the research confirmed a simple fact: Dunkin long-running ad slogan "America Runs on Dunkin." is not Starbucks. In fact, it doesn't want to be. To prosper Tim Boyle: Getty Images twants to serve and how. Dunkin' and Starbucks target very different store and atmosphere redesign changes, big and small, ranging from customers who want very different things from their favorite coffee adding free Wi-Fi, digital menu boards, and more electrical outlets shops. Starbucks is strongly positioned as a sort of high-brow "third the home and office-featuring couches, eclectic for laptops and smartphones to playing relaxing background music. And Dunkin' franchisees can now redecorate their stores in any of music, and art-splashed walls. Dunkin' has a decidedly more low four Starbucks-esque color schemes, including "Dark Roast," Cap- brom, "everyman" kind of appeal. puccino Blend," and "Jazz Brew," which features "dark orange and Dunkin' Donuts's research showed that brand fans were large brown cozy booth seating, as well as hanging light fixtures that lend ly bewildered and turned off by the atmosphere at Starbucks. They a soft glow to wall murals printed with words such as 'break, 'fresh! groused that crowds of laptop users made it difficult to find a seat. and 'quality" They didn't like Starbucks's "tall, grande," and "venti" lingo for small, As it inches upscale, however, Dunkin' Donuts is being careful medium, and large coffees. And they couldn't understand why any not to alienate its traditional customer base. one would pay much for a cup of coffee. "It was almost as though There are no couches in the remod- they were a group Martians talking about a group of Earthlings, eled stores. Dunkin' even renamed says an executive from Dunkin's advertising agency. The Starbucks a new hot sandwich a 'stuffed customers that Dunkin' paid to switch were equally uneasy in Dunkin' melt" after customers com- shops. "The Starbucks people couldn't bear that they weren't special plained that calling it a "pa- Dunkin' Donuts anymore," says the ad executive. nini" was too fancy, it then targets the "Dunkin' Such opposing opinions aren't surprising, given the differ- ber faithful customers thought tribe"-not the Starbucks coffee ences in the two stores' customers. Dunkin's customers include was too messy. "We're snob but the average Joe. Dunkin more middle-income blue- and white collar workers across all age, i to isn't like Starbucks; it doesn't race, and income demographics. By contrast, Starbucks targets a walking (a fine] line," says want to be. higher income, more professional group. But Dunkin' researchers the chain's vice president concluded that it was more the ideal, rather than income, that set of consumer insights. "The the two tribes apart: Dunkin's tribe members want to be part of thing about the Dunkin' tribe is, a crowd, whereas members of the Starbucks tribe want to stand they see through the hype." Over the past several years, out as individuals. You could open a Dunkin' Donuts right next to both Dunkin' Donuts and Starbucks Starbucks and get two completely different types of consumers," says one retailing expert. have grown rapidly, each targeting its own tribe of customers and riding the wave of America's growing thirst for coffee. Now, both are Dunkin' Donuts built its positioning on serving simple fare at rea- looking for more growth by convincing "grab-and-go" morning cus- Sonable prices to working-class customers. It gained a reputation as tomers to visit later in the day and stick around longer. Although still a morning pit stop where everyday folks could get their daily donut smaller than Starbucks-which captures a 36 percent U.S. market and caffeine fix. But in recent years, to broaden its appeal and fuel share versus Dunkin's roughly 24 percent share-Dunkin' is currently the nation's fastest-growing snack and coffee chain. It hopes that It has spiffed up its stores and added new menu items, such as lattes the recent repositioning and upgrades will help keep that momentum going. Dunkin' plans to add at least 4,000 more U.S. stores in by 2020. antage dropped it altogether when 169