Krispy Kreme Business Case Study
Research Paper (undergraduate) from the year 2006 in the subject Business economics - Marketing, Corporate Communication, CRM, Market Research, Social Media, grade: 1.0, Western Carolina University, course: Marketing Management & Mature Consumers, 6 entries in the bibliography, language: English, abstract: Krispy Kreme Doughnuts (KKD) projects an image as “the Stradivarius of doughnuts,” creating a unique enriching experience that increasingly gains customer enthusiasm and loyalty. Krispy Kreme’s melt-in-your-mouth, hot, sugar-glazed doughnuts, the “doughnut theater,” and the “HOT DOUGHNUTS NOW” feature are clearly a few of the differentiating factors it attempts to make itself identified with. Fortunately, this appeals to a broad base of buyers; demographically, buyers come from all walks of life: all genders and ages, from skilled to blue-collar, high-income to low-income workers. KKD’s strategy provides the company three sources of revenue: (1) Sales at companyowned stores; (2) Royalties from franchised stores and franchise fees from new stores; and (3) Sales of doughnut mixes, customized doughnut-making equipment, and coffees to franchised stores. KKD shifted in focus from a wholesale bakery to a specialty retail bakery to promote and increase sales at the company’s own retail outlets. The company emphasized the “HOT DOUGHNUTS NOW” feature as a response to customer feedback as well as a form of local advertising. The company was able to boost its store sales-volume by combining on-premise sales at its stores to capture customer base and then to secure off-premise sales at supermarket and convenience stores for packaged sales. Futhermore, KKD gave reliance on franchising “associate” stores and opened a few new company-owned stores as a means of expanding nationally and internationally. However, franchise licenses were granted only to candidates who have experience in multi-unit food establishments and who possess adequate capital to finance the opening of new stores in their assigned territory. It is remarkable how the company built a vertically-integrated value chain that supplies both company-owned and franchised stores proprietary doughnutmaking equipment as well as doughnut mixes. Additionally, another important strategic step was the acquisition of Digital Coffee as another vertical integration step that not only provides additional source of revenue, but also improves the caliber and appeal of the company’s onpremise coffee and beverage product.
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$26 million 2006 Santa Cruz Annual Report Fiscal appeal asset turnover ratio attract CAGR Company Profile company store company-owned company’s competitive strategy competitor consumer customer base Datamonitor declining revenues Donnelly Donuts doughnut mixes earnings failed acquisition Flannery franchise buyback franchised stores GRIN HOT DOUGHNUTS income increased volume integrated value chain investigation of Krispy Kaufmann KKD’s strategies KKD’s total revenue KNOWLEDGE HAS VALUE Kreme Case Study Kreme’s Competitive Strengths Krispy Kreme Doughnuts Krispy Kreme’s Competitive Krispy Kreme’s Financial Krispy Kreme’s Strategy Livengood Marketing Management menu Mills Bread Company Montana Mills Bread net income net profit margin Nihat Canak Number of Stores º º º ºº operating expenses operating leverage outlets profit margin Recommendations for Krispy regarding franchise Report Fiscal 2006 retail sales-volume source of revenue Starbucks Coffee store and franchise strong brand name sustainable competitive advantage SWOT Analysis vertically integrated value weaknesses www.GRIN.com