Krispy Kreme Case Analysis

    Krispy Kreme does not have one particular target market and are not categorized as one business type; they have various tactics to appeal to various markets. They also target school, local organizations and businesses. He primary market, those ranging from the ages 20-30 years old, are Krispy Kreme’s main focus. This is where the majority of their business comes from. These are your everyday commuters who desire a sweet treat, or coffee to help outlast a long day at work.

Their purchases may be small or cheap, but business is usually consistent, as are sales. Krispy Kreme appeals to schools as a fundraising opportunity. Doughnuts are very inexpensive when purchased in bulk, and easy to sell. Krispy Kreme offers certificates, coffee, partnership cards, and doughnuts to schools to raise money. Gift certificates are less of a burden, and those selling them don’t have to deal with ordering and delivering doughnuts after you’ve made the sale. This makes things easier for both the customer and fundraiser.

Eventually, the company decided to expand its target market to include young, less-educated and low-income consumers. A large portion of coffee drinkers is found in urban areas of the United States. It is because most of educated and working professionals live in the urban areas. It is because most of educated and working professionals live in the urban areas. With the rapid expansion, Starbucks targeted customers of every age group.

Einstein Bagels

That target market is younger than other coffee shops and is aimed at people between age 25 and 50.

Dunkin Donuts

Dunkin Donuts target market is the blue collar workers (18-60) of America who likes the quick service that Dunkin Donuts provides. Also within its target market are kids, highly due to its name. Recently Dunkin Donuts has been targeting the market of affluent women and professionals

Krispy Kreme Strengths

1. Company brand image and reputation.
2. Proprietary doughnut-making equipment, and capability to supply to franchises at profitable prices.

Krispy Kreme Weakness

1. Competitors are larger and well established in their markets, tougher to compete head to head once newness is over. 2. Core product does not incorporate health/weight conscious consumers.

Krispy Kreme Opportunities

1. Add more stores in current target markets to make it convenient for all areas. 2. Attract a broader range of customers and sell more products to existing customers by enhancing present menu offerings, esp in coffee and coffee drinks.

Krispy Kreme Threats

1. Competitors concerned about KK rapid growth and market share gains and erosion of their own market positions, may well be compelled to rejuvenate their product menus, this would be costly battle for KK. 2. Consumer habits changing

• One strategy alternative in each cell matrix would be
• One strategy in strengths/ Opportunity would be to increase marketing, incorporating social networks
• One strategy in Weakness/Opportunity would be growing new markets or increase the product line to incorporate healthier choices.
• One strategy in Strength/Threats promoting healthier product line
• One strategy in Weaknesses/Threats would be to avoid developing existing markets by existing products

Strategic issues with supporting data:

1. Krispy Kreme management should meet with franchisees and explore again the plans for opening new stores, it would seem to make sense to accelerate the pace of new stores openings at least in those areas where the enthusiasm for the products has been so great.
2. Adapt to consumer desires. Increase product development, i.e., healthier choices.
3. Lack of corporate governance.

Matching the Strengths of franchise opportunities, Krispy Kreme is highly favorable. Its resource strengths and competitive assets easily outweigh its resource weaknesses and competitive liabilities. The company has plenty of opportunities it can pursue to continue to grow more rapidly, the company should have little difficulty opening several hundred more stores, Dunkin Donuts has 3,600 in the US alone versus just over 180 for KK. Their strategy is a solid one, with competitive advantages in product quality, product appeal, brand reputation, and ability to attract high caliber franchises because of vertical integration into doughnut making equipment, doughnut mixes and coffee. The threats are still in the foreground, the product excitement being created by Krispy Kreme could end up helping grow the market for doughnuts and help over come the relatively flat demand for doughnuts that has prevailed. A costly battle for market share can be avoided.

#4 Three of Krispy Kreme’s strategic issues using SMART format: According to Return on Assets, there has been an increase from 1998, with a slight decrease due to further investment of assets in 2002. The company is converting money into net income, therefore, quickly enough to add more stores in the mix.

Return on Equity offers a profit generating efficiency for investors. The decrease in 2002 is because of improvements in company’s operations. Intangible assets are also excluded like the brand name.

SMART goal:

• Specific: To create shareholder wealth through an ambitious growth strategy meanwhile, using a thorough marketing strategy
• Measurement: increasing brand awareness through strong positioning and optimizing distribution channels, therefore, creating brand loyalty
• Aggressive: maintain a healthy increase in net sales, 10-20%, while optimizing efficiency.
• Realistic: Increase the number of franchise stores to bring brand awareness and loyalty
• Time-bound: capitalizing on the growth of the market, increase store franchises over the next three years