Marketing Planning Helps Dunkin Donuts Score Big in Coffee Customer Loyalty

A key goal for a marketing manager is to make sure that the companys brand stays

relevant. Successfully realizing this goal requires a marketing planning process that is both

thorough and grounded in best practices, and also flexible enough to allow the firm to react

to (and hopefully stay ahead of) changing customer preferences and shifts in values. Over

its 67 years in business, Dunkin Donuts has shown that it can stick to its core mission while

also regularly updating its marketing strategy, and thus remain relevant within the highly

competitive out-of-home coffee category.1

In 1950, Dunkin Donuts was a single restaurant in Quincy, Massachusetts, with a

simple mission: serve high-quality donuts and coffee at affordable prices with fast and

friendly service. Today, with over 12,000 restaurants in 45 countries, the chains mission is

still basically the same, but many aspects of its marketing strategy have changed to keep

the brand fresh and relevant against fierce competition.2

In the first five decades of its history, Dunkin was mostly about the donuts. In the early

2000s, it decided to shift the focus more to the drink into which the donut was about to be

dunkedthe coffee. It squarely took on market leader Starbucks by offering a less

expensive (yet really tasty) alternative, one that was faster and more user-friendlythe

average Joes average joe. In 2006, Dunkin got even more serious about coffee with its

famous and highly successful America Runs on Dunkin campaign. Today, although it

certainly still sells plenty of donuts, Dunkin sells an incredible 1.9 billion cups of coffee per

yearthats 60 cups per second! 3

In recent years, a major focus of Dunkin Donuts marketing planning has been its digital

strategy, especially by enabling engagement with customers through social media.

Examples include the create Dunkins next donut contest a few years back, and the more

recent integrated #mydunkin campaign on Twitter. In the latter, fans were encouraged to

share their experiences via Facebook and Twitter with how Dunkin keeps them running,

with the most enthusiastic fans appearing in Dunkin TV ads. Using these tools has helped

the company hear the stories of its customers, retell the stories, and interact with these loyal

fans on a regular basis.4

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Although Dunkin scores lower than Starbucks in the number of social media

interactions, experts importantly give Dunkin higher marks in terms of the quality of those

interactions. According to Dunkins ad agency executives, More than ever, Dunkin is a

brand that listens to its guests, through multiple channels, at all levels of the organization.

Dunkin puts its fans at the center of its social media strategytheyre an active and

passionate tribe thats fueled by interactions with the brand. And Dunkin also manages to

take a jab at the competition now and then. Recently, its top Facebook post was a photo of

a Dunkin T-shirt emblazoned with the message Friends dont let friends drink Starbucks.5

Marketing (Big M) and marketing (little m) combine strategic and programmatic/tactical

approaches to provide a comprehensive focus on a companys most important stakeholder:

the customer and his or her experience with the brand. Witness Dunkins highly successful

loyalty program, DD Perks Rewards, which is a key competitive differentiator for the

company. With over 5 million members, this program is one of the fastest-growing loyalty

programs in the quick service restaurant (QSR) industry. As a member of DD perks,

customers earn points for every dollar spent and receive a free drink when they accrue 200

points. On becoming a DD Perks Rewards member, the customer receives a personalized

welcoming e-mail message explaining the benefits of the program. Additional e-mails are

also sent, and customers receive special offers on their device through Dunkins mobile app

(which has been downloaded over 16 million times since its launch). The app is also the

platform for Dunkins On-the-Go-Ordering, with which customers can place their order in

advance and pick it up on arrival.6

The superior customer experience that Dunkin Donuts provides has earned them

industry accolades. No doubt to the ultimate chagrin of Starbucks, in the Brand Keys

Customer Loyalty Engagement Index

, Dunkin Donuts has been number 1 in coffee

customer loyalty for the past 11 years in the out-of-home coffee category and the number 1

brand for packaged coffee category for the last five years. This index recognizes brands

that surpass competitors in delighting customers and meeting their expectations for taste,

quality, and service, as well as brand value.7

Because of superior marketing planning and marketing strategy execution, Dunkin

Donuts has successfully made the shift in focus from donuts to coffee, but it does operate in

the shadow of Starbucks, which has 36 percent of the U.S. market to Dunkins 24 percent.

And make no mistake about it, Starbucks is also very committed to digital and social media

marketing and also has a loyalty program and a mobile app.8 As each company engages_____________________________________________________________________________________

with its customers, Dunkins marketing managers will have to stay at the top of their game

and continue to deploy a strong market planning process, monitor and adapt to customer

trends, and respond with strategies designed to keep the Dunkin Donuts brand relevant

and strategically differentiated against the competition.

Case Questions:

1. Dunkin Donuts made a strategic decision to make its business about the coffee, not

just the donuts. What are the risks when a company that is so closely identified with

one product decides to change its focus to a different product? What marketing

strategies can help reduce the risks and increase the probability of success?

2. What are the key differences between the marketing strategy of Dunkin Donuts and

its chief competitor, Starbucks? What else could the company do from a marketing

managers standpoint to successfully compete with and clearly differentiate Dunkin

from Starbucks?

3. Loyalty programs like DD Perks can get customers engaged with the brand and

incentivize them to stay loyal. But loyalty programs alone are relatively easy for

competitors to match and top, and thus they often arent sufficient to retain

customers and thwart switching. In addition to reward programs, what other factors

drive loyalty to a brand, and which of these do you presently see in play at Dunkin

Donuts? Is there more that Dunkin could do to increase customer loyalty?