Instituto Tecnológico y de Estudios Superiores de Monterrey

Campus Estado de México

Evidence 2. Integrative exercise- Individual activity outside the classroom.

Competitive Market Definition

Anna Elena Francke Hubbard

Group 202

1. Context of the company

Problem situation
The Dunkin ’Donuts donut chain opened its first store in Mexico in 2015 (after having retired
from our country for a while), as part of its strategy to add 100 units together with the
Mexican subsidiary Sizzling Platter. However, her arrival was not easy, as she faced the 129
units that Krispy Kreme had in Mexico at that time.
The first Dunkin 'Donuts coffee and baked goods unit that operated in the country years ago
was located in Santa Fe, City of Mexico, a business and universities area. In January 2015,
the company announced that the franchise contract required the development of more than
100 restaurants in the coming years in the City of Mexico, as well as in Hidalgo, Morelos,
Jalisco, and Querétaro, according to information from Notimex.
Dunkin 'Donuts returned to the country to compete directly with Krispy Kreme, which had
establishments in 14 entities of the Mexican Republic, as well as with other firms specialized
in the commercialization of coffee in the country. In the coffee market, the Starbucks coffee
chain is the leader in the sector, with more than 40% of the market according to the
consultancy Euromonitor.
The arrival of Dunkin ’Donuts in Mexico came a couple of weeks after it announced the
closure of 100 stores in the United States for the remainder of 2015 and 2016.

Internal environment

- Product portfolio

After reading the information given in the case,

the products that exist in their portfolio are
mainly coffee, milkshakes and baked goods as
donuts of different flavors. Besides that Dunkin
Donuts also offer seasonal products for occasions
as Halloween, February 14th and Christmas.

- Capabilities

Brand promise: Dunkin Donuts is a very functional experience based on easy-to-drink coffee
and donuts, quick service and a low price.
 - Brand personality
❏ Authentic
❏ Friendly
❏ Optimistic
❏ Quality
❏ Extraordinary

- Resources

Tangible Intangible

❏ Equipment ❏ Brand reputation

❏ Stock ❏ Intellectual property
❏ Effective cash ❏ Customer experience
❏ Vehicles ❏ Customer relationship
❏ Human resources ❏ Quality of products
❏ Buildings and physical store
❏ Raw materials

- Culture

Being part of de Dunkin Donuts represents a unity among workers, since this company makes
sure that all its employees feel at home enjoying a coffee and a donut. Inside the company the
employees are passionate about the brand, they really enjoy the experience of working in such
a friendly work environment where everyone has the same goal. In the facilities there is a
cafeteria where it is a tradition to start the day socializing to work with more enthusiasm, it is
a perk to work in a place full of partnership creating a community.

For Dunkin Donuts it is very important that its employees are quality people, that is why they
have a whole team that is focused on sustainability and that make that the rest of the members
of the company easy to participate in the activities, also they have the opportunity to belong
to The joy childhood foundation that is in charge of bringing joy to sick and hungry childs, its
very importance how this brand makes their team to participate in activities like early release
fridays, free coffee and dress for your day that serve to create a community and enhance its
culture of union and innovation which are one of the things that differentiates them.

- Strategy

Mission

“To be the leading provider of the wide range delicious beverages & baked products around
the kingdom in a convenient, relaxed, friendly environment that ensures the highest level of
quality product and best value for money.”

Vision

“To be always the desired place for great coffee beverages and delicious complementary
doughnuts & bakery products to enjoy with family and friends.”

Values

1. Honesty
2. Transparency
3. Humility
4. Integrity

Market

According to the International Coffee Organization (ICO), Mexico is in the top 10 countries
in Latin America to consume Coffee. Mexicans average consumption is 1.6 kilograms of
Coffee per year, which turns to be beneficial for the coffee industry. According to PROFECO,
85% of Mexicans drink one to three cups a day and it is men who consume more: 3 cups
compared to two cups that women drink. And according to data from the Mexican
government, coffee consumption increases 2% each year.

Industry

Dunkin is a company that sells coffee and baked goods internationally, this brand is involved
in the coffee industry. The global coffee market is divided on the basis of its variety, form,
distribution channel and regional demand. Coffee is one of the most consumed beverages
across the world that is expected to reach the valuation of USD 102,279.2 million in 2021 and
in México this industry in 2020 generates 1.572,9 million pesos according to data from
Passport.

Competition

In Mexico The main competition within industry is Starbucks Coffee and Krispy Kreme.
Even though their products are similar, it is important to mention that Krispy Kreme doesn't
sell coffee but is considered one of the most similar brands to eat good bakers.

❏ Starbucks Coffee

This brand came to Mexico 19 years ago and is the leader in the coffee industry. Starbucks
generates over $ 26 billion a year in revenu, has a larger footprint, with over 30,000 locations
worldwide and leads with about 15,000 locations. In the menu we can find beverages like hot
coffees, hot teas, hot drinks, frappuccino blended, cold coffees, iced teas and cold drinks all
made with its own coffee brand. On the other hand, the true success of Starbucks is not based
on selling good coffee, what they really sell is the experience of being in their stores where
sensations, emotions and experiences are delivered to the customer, example of this

1. Pleasant atmosphere
2. Background music
3. Personalization of drinks
 4. Free Internet
5. Opportunity to relax or socialize
6. Premium experience

They also are very concerned about the customer care that's why one of the philosophies of
Starbucks is "Not having customers" if not, "Having fans of our brand" and it is so, through
those details of belonging, liking and comfort towards their establishment as they have been
achieving.

❏ Cielito Lindo

This Mexican brand was founded in 2010, being one of the main coffee shops to adapt
contemporary but updated Mexican flavors and designs that represent a modern and attractive
personality that will recover its origins to rebuild a friendly, welcoming and comfortable
atmosphere. Cielito Lindo offers consumers a traditional experience with delicious products
such as Mexican chocolate, horchata, café de olla and chamoyadas.

The goal of every workplace is to offer professional development and this company is no
exception, first they make sure to recruit people with a good attitude to grow up in an
innovative environment and give them a training program from which several generations of
people have graduated from professional barman.

Cielito Lindo is very concerned about fulfilling the brand promise "We want you to fall in
love with the flavor of Mexico and its traditions in each visit.” That's why the facilities are
wholesome and traditional, making sure that consumers feel comfortable because they are at
home.
 ❏ Krispy Kreme

Krispy Kreme is a multinational donut company. The group was founded in 1937, and in
addition to having restaurants in most of the country, it sells its products at gas stations,
shopping centers and supermarkets having annual sales of $ 2.32 billion. He arrived in
Mexico in 2004 to stay in the market. The main products are donuts, within the variety there
are more than 25 flavors and types having as its main the Original Glazed Donut.

This brand is recognized for its advertising strategy since every time a new store opens,
Krispy Kreme gives free donuts to consumers and then they can go viral, achieving a better
brand positioning.

Trends

❏ Ready-to-drink bagged coffees

Coffee is one of the most popular beverages that cannot be missed in most meals of the day,
more than 1,400 million cups of coffee are consumed daily around the world. The time when
this drink is most consumed is at breakfast time, it is what is taken to start the day with
something fast, cheap and delicious, people are opting for different infusions flavors and in
this case creating coffee bags together with other spices is a solution to setbacks.

❏ Recyclable packaging
This trend is about creating new packaging with different materials like plastic-free, recycled
cardboard, natural straws and packaging that can be reused for more than one use. Because
after decades of unparalleled consumption in all of our history, and with the doors open to
evident climate change, small initiatives from around the world have begun to get involved in
eco-friendly production and consumption (friendly to the environment), which implies that
the products are sustainable, obtained through production models that respect the planet.

❏ Low-calorie foods
Low calorie food is a major growing segment in the food market. The increasing health
concerns and changing lifestyle is pushing this market segment upwards. Low calorie food is
beneficial for many health issues and so people are demanding more of such food products
even if they are junk food. The major driving forces for the growth of this market are
increasing health awareness, changing lifestyle. The major limiting factor for the growth of
this market is the high cost of these products. The increasing awareness about healthy food
and a healthy market would provide growth opportunities in the market of baked goods.

❏ Conscious consumer
it's a movement whereby consumers opt for buying ethical products, avoiding unethical
companies. So, a socially or environmentally conscious consumer will think whether
consumption is necessary, then once they decide to buy, they look at who is providing the
product and how the product impacts each environment touched in its creation and delivery,
also they are concerned about the labor laws that workers go through. Consumer consumers
are opting to buy from companies that create a positive impact for the future generations and
for better-for-the-world business and products.
Consumer and segmentation

Men and women between the ages of 15 to 18 and adults of 18 to 45 with

AB or C+ socioeconomic status (NSC) that live in cities throughout the
Who? Mexican Republic.
They could be single, with a partner, engaged or married and are usually
social.
They are also professionals, who usually drink coffee or tea on their
work. They enjoy shopping, having time to relax and eat delicious food.

What? Dunkin has an ample variety of flavors and sizes of donuts and
beverages.

Why? They want to have a quick and delicious snack for breakfast, also they
want to have energy all day.

Dunkin donuts will be bought whenever the consumer needs a coffee and
 a sweet dessert either by the drive thru or to eat inside the cafeteria alone
When? or in company with friends or with a romantic date.

The buyers go to the facilities because they are looking for a hot or cold
beverage and baked goods. They can order it to be taken away or to eat
How? inside the place. After seeing the menu they have to choose what they are
gonna order. Once they select a product they can pay with cash or credit
card.

Depending on who they will give the gift to, who influences the purchase
decision is the significant other, friends, family (mother, children,
Who and what siblings) or whoever accompanied the buyer to the point of sale.
influences? The brand perception is also important, the buyer will feel attracted by a
recognized brand with a wide range of products, an attractive design and
the assurance that the chocolate will have a good taste and quality.

From Dunkin Donuts, the buyer can choose between the different flavors
Alternatives? and options they have in the menu.

How much? Depending on the product, the price may vary between $20 to $250
pesos.

Where? Malls, own franchise and online delivery food apps.

Not having time to find a place where they can have a fast breakfast
Pains when they are hurried, not finding eco-friendly packaging on the
takeaway food, not having time or money to enjoy a whim.

Sharing moments with loved ones, surprise with a special but not too
Gains expensive detail the office they work in, variety of product and flavors,
finding a place where they can relax and having quality time.

Value proposition

Dunkin’ Donuts value proposition promises to offer fresh food, fast and to offer more
choices, served quickly in a quality way. That means lots of innovative new products such as
iced coffee, breakfast sandwiches, smoothies, gourmet cookies and a very creative packaging
served fresher and faster than ever before. Dunkin’s customers include workers across all age,
race, and income demographics.

Sales

In the last year Dunkin Donuts second-quarter revenue fell 20% as fewer customers stopped
by its stores due to the coronavirus pandemic on their way to work. The net income fell to
$36.5 million, or 44 cents per share, from $59.6 million, or 71 cents per share. Excluding
non-recurring items, the company earned 49 cents per share. Revenue fell to $287.4 million
from $359.3 million last year, but outpaced estimates of $277 million.

Perception

Dunkin Donuts is perceived as a long term brand because customers' relationship is very
strong by sticking to the products. They have stuck to their values by providing the consumer
with a great customer service experience with ease of access and affordability. Dunkin’
Donuts puts quality control first by doing this; they are able to provide a consistent cup of
coffee at any location. Through the years Dunkin’ Donuts have expanded nationally and
globally. Dunkin’ Donuts also has added new flavors of coffee and innovative flavors for the
donuts. Dunkin’ Donuts was able to adapt to the new generation of coffee consumers but
have kept it simple while doing so. Although the chain now offers iced coffee, breakfast
sandwiches, smoothies, gourmet cookies and Dunkin Dawgs. They have continued to give
the customer the value that they were looking for.

Image

After the new rebranding from Dunkin Donuts to Dunkin the company is focused on serving
great coffee fast, while embracing Dunkin’s heritage by retaining its familiar pink and orange
colors and iconic font. The new branding will be printed on packaging, as well as the
company’s advertising, website and social channels. Dunkin is also working to keep the
brand relevant for the new generations to come, modernizing the experience, facilities, menu,
new values bringing fun, joy and delight to their customers each and every day.”
 2. Market diagnosis

SWOT

STRENGTHS WEAKNESSES

1. High quality in edibles 1. High sugar content

2. Rebranding 2. Unhealthy product
3. Eco-friendly policies 3. Low financial capabilities
4. Good flavor
5. Recognized brand

OPPORTUNITIES THREATS

1. Healthier products 1. Global pandemic

2. Expand menu 2. Rising costs
3. New food trends 3. New competitors
4. Expand market presence 4. People moving to healthier ways of
5. Digital technology for customer eating
service 5. Current competitors innovating their
strategies.
5 FORCES OF THE PORTER DIAMOND MODEL

3. Market segmentation
Insights
Some of the insights that were identified after the creation of the user persona and empathy
are:
● Dunkin donuts are a delicious and filling whim.
 ● Dunkin is considered an economic brand compared to the competition.
● Dunkin consumers buy coffee to get energy.
● Dunkin establishment is a place where the consumer can go and spend time with their
friends.
● Dunkin is perceived as an eco friendly and innovative brand .
● Consumers drink coffee 3 times a day.
● Consumers like the customer services and the speed of the service.

Dunkin consumers are motivated to buy their products because they consider that the
products are high quality, they can get a fast delicious beverage and a bakery product for a
competitive price and finally they can have social experiences inside the cafeteria with their
companies.

Segmentation Variables for Consumer Markets

Geographic: Country and city

Demographic: Gender, age, languages, socio-economic

level, education level/occupation,
relationship status

Psychographic: Motivations, frustrations, hobbies, brands

and social media, skills, goals, personality

Behavioral/Benefits sought: Reason of the buy

After the preparation and analysis of a user person and an empathy map to realize the target
market, therefore, different types of segmentation variables were identified that are very
helpful to help us determine consumer characteristics. By making these formats we were able
to reach important conclusions to know and understand who is the consumer and the
behaviors and preferences.

4. Target market or target. Targeting.

Target
It targets people who usually consume coffee, 15-18 year olds and adults 18-45 years old.
"Consumers of the franchise are looking for new products and are natural "triers" and spend
hours shopping for themselves.” (Shand,2016)

So the franchise introduced new flavors. It is aimed at consumers who usually buy coffee or
tea, especially in cold seasons such as autumn and winter. On the other hand, the franchise
following current trends has taken out a low calorie menu to keep the same target interested
in its products. Promoting health has become important, as this behavior prevails among
adolescents and young adults who fall within their target. They maintain loyalty programs
with their customers with gift cards where they can accumulate points for their purchases.

5. Differentiation, competitive advantage, and value proposition.

The competitive advantage it has over

other competitors is its prices, it has a
greater exposure to the revenue of the
franchise and the rent. It resembles fast
food, because providing instant service is
what you're looking for as a differentiator
as well as giving lower prices than your
Starbucks competition. It sells coffee, tea,
other drinks and snacks as doughnuts. So focusing on coffee lovers opens the door to selling
alternative products to these consumers.

At the same time Dunkin seeks to lower its costs of different operating structures, allowing
its prices to not be as affected and stay at low prices if there is any change in the cost of
production materials. By doing this, you manage to bring promise and price value to your
 consumers, strengthening the loyalty of those who are already customers. He seeks to locate
his franchise at competitive prices, focusing on the working middle class. Its strategy is to
provide at the lowest cost, keeping its quality above minimum acceptable. Because of the
low costs in its production, it has a lower capital burden than competition like Starbucks. On
the other hand, a franchise that adopts a similar strategy, wanting to keep prices low and
competitive is Cielito Lindo.

The value proposition of Dunkin and his

differentiator also lies in selling
hand-finished doughnuts, trying to convey
some connection with the customer with the
work of his collaborators. Providing a
product that is made with a hand finish
means the commitment they are giving to
this, as a craftsmanship, "something
dedicated to you".

6. Competitive position and positioning strategy that the company should apply.
Positioning.

Keep the pricing strategy and adapt it to the needs of the target. Understanding their and
consumption habits, such as how little time they have to buy an aperitif, or the need for a
drink that offers them energy during their working hours, it is proposed the "Dunkin Work
Packs", a new way to connect with their customers, attending to their needs and concerns.
The "Dunkin Work Packs" will consist of handling their best-selling products in different
packages, which includes snacks and drink, excellent for the customers who work, since the
time they have could be reduced from purchasing different packages, thus attending to the
speed of the service equally. This in order to customize the service through products that you
already have in your menu, giving way to generate a new experience. This experience will be
based on price, product and speed, maintaining its competitiveness in the market for prices,
highlighting current products and even allowing them to try new ones, and a pleasant
purchase according to the lifestyle of their customers. A new value proposition based on
experience with their current customer, knowing it will be key to generate the "Dunkin Work
Packs", they will have to adapt to the consumption of their products and the preferences that
consumers have. Larger sharing packages can be generated from having multiple purchases
by the same consumer in a single sale, basically adapting to the demand of the same
consumer.

7. Positioning map (2-4 variables).

For this first map to measure price we used the brands website as our reference point. On the
other hand, for the quality axis we went through Google to see the rating of the products and
the experience made by consumers. Even though the competition is well positioned there is
still a difference between the price and the quality. All the brands taken into consideration for
this comparison offer an acceptable price-quality in relation to the information that was
found. Talking specifically about Dunkin it clearly shows that it has a good differentiation as
its price is the lowest but in the quality variable the product is the lowest despite being in the
high scoring quadrant so it reflects that Dunkin has a good price-quality relationship for the
clients, but they have an area of opportunity in dealing better with customers or in the
preparation of food and beverages.
According to the website of these brands the variables of sales points and the variety of
flavors available can be positioned on this map.
Dunkin is one of the brands with the most variety on its menu both, flavors and type of
products. However, it is not so easy to find since there are not as many branches as its
competition has. Talking specifically about Dunkin it clearly shows that it has a good
differentiation only in the variable of flavors available but in the sales of point is one of
the lowest, so it reflects that Dunkin has a medium sales points-flavors relationship but
they have an area of opportunity in the creation of more establishment or the creation of
agreements with restaurants, cinema and malls to expand the points of sale.

References:
● SA. (2017). Mercado objetivo para dunkin donuts. 27/04/21, de ENSAYOS EN EL
REINO UNIDO Sitio web:
https://www.ukessays.com/essays/marketing/target-market-dunkin-donuts-4691.php#:
~:text=The%20target%20market%20of%20Dunkin%20donuts%20are%20people,drin
king%20tea%20or%20coffee%20especially%20during%20the%20winter.
● SHOSHANNA DELVENTHAL. (2020). Starbucks contra Dunkin': ¿Cuál es la
diferencia?. 27/04/21, de Investopedia Sitio web:
https://www.investopedia.com/articles/markets/120215/starbucks-vs-dunkin-donuts-c
omparing-business-models.asp
● SA. (2021). DILO CON DONUTS. 26/04/21, de Dunkin Sitio web:
https://www.dunkin.co.uk/donuts/
● Balanzino, M. (2021, 7 enero). Tendencias gastronómicas para 2021. The Gourmet
Journal:
● Periódico de Gastronomía.
https://www.thegourmetjournal.com/noticias/tendencias-gastronomicas-2021/
● UK Essays. (s. f.). The Case Study Of Dunkin Donuts Marketing Essay.
UKEssays.Com. Recuperado 28 de abril de 2021, de
https://www.ukessays.com/essays/marketing/the-case-study-of-dunkin-donuts-marketi
ng-essay.php#:%7E:text=Donuts’%20value%20proposition%3F-,Ans.,and%20faster
%20than%20ever%20before.
● Cardozo, S. (2021, 20 enero). Consumo del Café: Mayores Consumidores y Ranking
(2021). Cafemalist.
https://cafemalist.com/consumo-del-cafe/#Consumo_del_cafe_en_America_Latina
● Dunkin. (s. f.). Dunkin’. Dunkin’. Recuperado 28 de abril de 2021, de
https://dunkin.cl/
● Passport. (s. f.). COFFE INDUSTRY. Recuperado 28 de abril de 2021, de

https://0-www-portal-euromonitor-com.biblioteca-ils.tec.mx/portal/statisticsevolution/

index

● Dunkin. (s. f.-b). The Dunkin’ Culture. Dunkin’ Brands. Recuperado 28 de abril de

2021, de https://www.dunkinbrands.com/company/careers/the-dunkin-culture

● Consumidor, P. F. (s. f.). Café y cafeteras. gob.mx. Recuperado 28 de abril de 2021,

de https://www.gob.mx/profeco/documentos/cafe-y-cafeteras?state=published