Dunkin' Donuts SWOT analysis and competitive positioning

Dunkin Donuts SWOT

SWOT Analysis for Dunkin' Donuts

Strengths

Strength: Dunkin' Donuts is a recognizable and trusted brand (Entrepreneur.com, 2007; Symonds, 2004). With more than fifty years in the business, customers know Dunkin' Donuts. This makes them more likely to try new offerings and return to franchises. It also makes advertising that uses the company name and logo more recognizable, particularly in mailings and in the newspaper. Finally, Dunkin's Donuts is also recognized by business owners as a good franchise to buy and run, making it further poised for growth with entrepreneurs and in areas where there is little current competition (Entrepreneur.com, 2007).

Strength: Dunkin' Donuts coffee is recognized as being extremely high quality (Crown, 2007; Symonds, 2004). In recent years, Dunkin' Donuts has successfully aimed to compete with other gourmet coffee lines, including Starbucks, based on the quality and desirability of their coffee (Symonds, 2004). Additionally, the high quality of their coffee makes it possible for the company to sell it directly in stores and to customers who would like to brew it at home. The quality of their coffee makes it easier to launch new products and lines, including their success in the in-store market (American Institute of Baking, 2007).

Strength: Dunkin' Donuts has been successfully marketed internationally and is expanding (American Institute of Baking, 2007; Entrepreneur.com, 2007; Symonds, 2004). The number of Dunkin' Donuts franchises in the United States has steadily grown, with 5,451 in 2007, up from 3,864 in 2003. Additionally, the Canadian market in particular is due to grow, with franchises going from 0 to 79 in 2007 (Entrepreneur.com). Entrepreneur.com (2007) listed Dunkin' Donuts as the #3 fastest-growing franchise in 2007.

Strength: Dunkin' Donuts' has made effective partnerships and choices (Entrepreneur.com, 2007; Symonds, 2007). First, its partnership with Baskin' Robbins in some markets has provided expansion opportunities for the company to compete in the non-breakfast arena. Second, the expansion of breakfast food offerings has been successful for the company; muffins, bagels, and breakfast sandwiches give many more offerings to customers and make it more likely that customers will return even if they are not "in the mood" for a donut.

Weaknesses

Weakness: Despite new offerings, Dunkin's Donuts still has a very limited number of offerings. Breakfast sales remain strong, but even the partnership with Baskin' Robbins does not offer customers much in the way of afternoon or evening meals. This puts a great deal of pressure on the sale of beverages and morning meals (Symonds, 2004).

Weakness: The age of the company and the age of many individual franchises can hurt the company. Symonds (2004) reports that a number of aging franchises "are downright dingy." Not only does the age of these stores lend to a poor company image, but it prevents Dunkin' Donuts from knowing whether poor sales are due to location, product, or an individual store. The age of the company also makes it more likely that individual consumers may have had a negative experience with the company at some point in its long history. Alternately, customers who have been in the store in the past may not know about new offerings due to misconceptions or stereotypes about what the store has to offer.

Weakness: In new markets, Dunkin' Donuts will have more aggressive competition since name recognition will no longer be as strong. Without name recognition in areas like the western United States, Dunkin; Donuts will have to work harder to become a trusted brand. Not only will it have to establish itself in these new markets, but it must do so at the same time that it is competing with other brands and addressing new market trends, like healthy eating (Ordonez, 2007).

Weakness: Dunkin' Donuts' biggest competitors are huge. To compete, Dunkin' Donuts must manage to beat out Starbucks with its coffee and Krispy Kreme with its donuts (American Institute of Baking, 2007; Symonds, 2004). While Krispy Kreme has struggled following massive expansion, its many newer stores make it hard for Dunkin' Donuts to compete in look and desirability. As far as coffee, even Dunkin' Donuts' coffee has difficulty competing with Starbucks, a company with wide national coverage and significant appeal.

Threats

Threat: Consumers are more health conscious, and may not be as interested in Dunkin' Donuts as they once were. Despite the American Institute of Baking's (2007) reports on high donut consumption, many consumers are calling for healthier options. Dunkin' Donuts will have to respond, and continue responding, to these calls without alienating the people who still want donuts as they were. Juggling these threats means maintaining a strong brand even while offering things that are very different to the brand's mainstay of good donuts (Ordonez, 2007).

Threat: Many companies, new and old, are improving and expanding into the gourmet coffee market. At the national level, McDonalds is now offering gourmet coffees (Symonds, 2004). In smaller, regional markets, small roasters are often able to offer competitive coffee products and a more specialized or "home" feel than Dunkin' Donuts. Most urban markets have many places that offer gourmet coffee, making the market much more competitive. As a large company, Dunkin' Donuts may have a difficult time keeping up with each individual area's companies and competition. This in turn threatens their sales in these markets.

Threat: Dunkin' Donuts has taken on many new products, partnerships, and expansion plans (Entrepreneur.com, 2007; Symonds, 2004). It is possible that the company is spreading itself too thin by expanding into so many new markets and regions with so many new products still not solidly accepted by consumers. One potential risk in this area is the inability of the company to gauge whether new products are doing poorly based on the product vs. A new location or region. While increased coffee sales and new offerings may increase sales in some areas, they may become a burden in others where regional differences may cause individual franchises to fail.