DUNKIN DONUTS.pdf

Marketing Plan for Dunkin’ Donuts Entry to Bosnia and Herzegovina

Kanita Avdić

71728

Ajla Šehić

72286

Zahra Dizdarević

72283

Amina Meholjić Čorbo

71724

Zakira Bugari

71248

UNIVERSITY OF SARAJEVO SCHOOL OF ECONOMICS AND BUSINESS IN SARAJEVO

MARKETING PLAN FOR DUNKIN’ DONUTS ENTRY TO BOSNIA AND HERZEGOVINA

INTERNATIONAL PROJECT Mentor: Vesna Babić-Hodović Maja Arslanagić-Kalajdžić

Kanita Avdić Ajla Šehić Zahra Dizdarević Amina Meholjić Čorbo Zakira Bugari

71724 72286 72283 71724 71248

EXECUTIVE SUMMARY Situational Analysis Dunkin’ Donuts is a very successful international company with nearly 11,300 locations in countries all over the world. Our aim is to introduce this brand into the Bosnian market, more specifically in Sarajevo. In this section, we have provided an overview of the overall situation in Bosnia and Herzegovina and how different factors could affect the business of Dunkin’ Donuts. Furthermore, we have identified several strengths, weakness, opportunities and threats to the brand, both internal and external. Most notably, they are: strong brand name, worldwide experience and contacts, competition from other companies present on the market already, and limited growth opportunity. Segmenting the market was one of the most important decisions, and so after much thought, the conclusion was that there should be three major groups: students, working class members, and “soccer moms”. The first two groups are our primary target groups while the last one is our secondary target group.

Marketing Objectives This is a very well established brand around the world, but this is the first time that it is being introduced in Bosnia and Herzegovina and even in the region. This means that our objectives include raising brand awareness, increased market share, and to create a positive brand image among our customers.

Marketing Strategies The main tools that will be used are: billboards, social media advertising, mobile application advertising, relationship marketing, and public relations. These methods will be elaborated on and explained thoroughly in the text.

Budget and Control Since this will be done on a franchise basis, there are some costs that are already set. This information will be provided, as well as an outline of the budgeting for marketing activities that we have deemed necessary. Projected revenue is also included. Furthermore, control of these activities will be crucial if we are to expect and long-term success. The plan for control is laid out as well and includes pre and post-testing activities with respect to all actions that will be undertaken.

Table of Contents INTRODUCTION..................................................................................................................1 1.

2.

SITUATIONAL ANALYSIS..........................................................................................2 1.1.

Industry Analysis .....................................................................................................2

1.2.

Company Analysis ...................................................................................................2

1.3.

Environmental Analysis ...........................................................................................3

1.3.1.

Political Environment........................................................................................3

1.3.2.

Economic Environment .....................................................................................3

1.3.3.

Social Environment ...........................................................................................3

1.3.4.

Technological Environment...............................................................................4

1.4.

Competition Analysis ...............................................................................................4

1.5.

SWOT Analysis .......................................................................................................5

1.6.

Company Projections in Bosnia and Herzegovina.....................................................7

STRATEGY CREATION...............................................................................................8 2.1.

Vision and Objectives...............................................................................................8

2.1.1.

Vision ...............................................................................................................8

2.1.2.

Objectives .........................................................................................................8

2.2.

Segmentation............................................................................................................9

2.3.

Targeting................................................................................................................10

2.3.1.

Primary Target Market ....................................................................................10

2.3.2.

Secondary target market ..................................................................................11

2.4.

Positioning .............................................................................................................11

2.5.

Entry Strategy ........................................................................................................12

2.6.

Resource Strategy...................................................................................................12

3.

INITIAL MARKET RESEARCH.................................................................................13

4.

MARKETING MIX ANALYSIS..................................................................................14 4.1.

Product...................................................................................................................14

5.

4.2.

Place ......................................................................................................................16

4.3.

Price.......................................................................................................................17

4.4.

Promotion ..............................................................................................................19

4.4.1.

Digital media...................................................................................................20

4.4.2.

Welcome Kits..................................................................................................20

4.4.3.

Advertising......................................................................................................20

4.4.4.

Public relations................................................................................................21

4.4.5.

Direct marketing..............................................................................................22

4.4.6.

Personal Selling...............................................................................................22

4.5.

People ....................................................................................................................22

4.6.

Process ...................................................................................................................23

4.7.

Physical Evidence ..................................................................................................23

IMPLEMENTATION AND CONTROL ......................................................................23 5.1.

Goals aimed at Sales...............................................................................................23

5.2.

Financial Plan.........................................................................................................25

5.2.1.

Start-up and Franchising Costs ........................................................................25

5.2.2.

Final Budget....................................................................................................26

5.2.3.

Marketing Activities Budget............................................................................27

5.3.

Implementation Plan...............................................................................................27

5.3.1.

Pre-Introduction Phase ....................................................................................27

5.3.2.

Introduction Phase...........................................................................................28

5.3.3.

Post-Introduction/Growth Phase ......................................................................28

5.4.

Control ...................................................................................................................28

CONCLUSION ....................................................................................................................30 REFERENCES.....................................................................................................................31

TABLE OF FIGURES Figure 1: Dunkin’ Donuts Locations Worldwide.....................................................................2 Figure 2 SWOT Analysis of Dunkin' Donuts ..........................................................................7 Figure 3: First Exposure to Dunkin’ Donuts Brand ...............................................................14 Figure 4: Dunkin’ Donuts Product Offers .............................................................................16 Figure 5: Location ................................................................................................................17 Figure 6: Geographical Representation of Competition.........................................................17 Figure 7: Dunkin’ Donuts Menu with Prices (in U.S. dollars) ...............................................19 Figure 8: Pre-Introduction Billboard .....................................................................................21 Figure 9: Estimated costs for startup .....................................................................................25

TABLE OF TABLES Table 1: Age Structure in Bosnia and Herzegovina .................................................................3 Table 2: Revenue Projection for the First Year .....................................................................24 Table 3: Cost Calculation .....................................................................................................26 Table 4: Profit Calculation....................................................................................................26 Table 5: Marketing Activities Budget ...................................................................................27

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INTRODUCTION

Dunkin’ Donuts is one of the most famous brands in the world, and this is certainly true when it comes to quick snacking and coffee. With such a well-established brand name it is not hard to envision its success in almost any location that it opens. The market of Bosnia and Herzegovina, and its capital city, Sarajevo, is missing such a place. There is an opportunity for success here that could, and should, be taken advantage of. With the right business plan and tactics, this could be one of the most successful endeavors undertaken on this market. The main interest to us is the busy lifestyle as we believe there is nothing present on the market that caters specifically to their needs. It is our hope that with the right strategies put in place, and with an effective marketing campaign that we will be able to reach a large amount of people that will put us at the top of the market and ensure the long-lasting success of this brand in Bosnia. Further in the text we will analyze the general situation in Bosnia and Herzegovina as well as the company itself. We will give some major threats and opportunities that have been determined as well as give the outlook for the company on the new market. Next, we will analyze the customers and segment the market according to the lifestyle of our customers. Furthermore, we will present some initial market research results that we have obtained. We will also talk about the marketing plan and identify the most important tools that will be used in order to promote the brand in the best way possible. Finally, we will present the expected revenues, financial plan, budget and the plan of how we expect to control and improve activities.

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1. SITUATIONAL ANALYSIS 1.1. Industry Analysis The restaurant industry that Dunkin’ Donuts is a part of is ever-changing. There are constantly new trends and fads coming up. Customers are looking for new ways to satisfy their cravings, while keeping their health and standards high. Recently, the trends have shifted to more healthy snacks, and raw food diets have become very popular. This has put immense pressure on quick snack joints such as Dunkin’ Donuts. People are becoming hesitant of fast food in general and this is posing a threat to all companies present in the industry. Internationally, these fast food restaurants have been performing very well, with McDonalds constantly among the top brands in the world. There is a lot of potential for business since the costs and prices of these restaurants are usually very low, and people can go in and grab a quick bite to eat for a low price. In Bosnia and Herzegovina, people generally do not have a habit of buying food and coffee to take on the go. The culture here is different, and people prefer to sit down and eat and drink coffee. However, this being said, it should be noted that the atmosphere is shifting and more and more people are adopting the western, quick lifestyle and are forced to adopt some of their habits, such as consuming fast food. Due to this, we have seen many more shops opening up that are offering these options. Recently, McDonalds and McCafe have opened some stores in Bosnia and Herzegovina, and while not all of them were successful, the ones in Sarajevo have been doing well.

1.2. Company Analysis Dunkin’ Donuts is headed by the Dunkin’ Brands Group Inc.

The

company

was

acquired by Allied Domecq. Dunkin’

Donuts

franchises

were available starting from 1955. The Dunkin’ Donuts brand that we see today has changed owners and has been

Figure 1: Dunkin’ Donuts Locations Worldwide

acquired and sold many times throughout its history. Today, it is one of the top companies in the world, and has been able to

Page |3 make a name for itself internationally, so much so that people usually know about the brand even in countries where Dunkin’ Donuts is not present. Dunkin’ Donuts is currently present in 36 countries, with nearly 11,300 stores. This fact alone speaks to the immense success of Dunkin’ Donuts as a brand. It is most popular in the United States of America, where it was founded, and its slogan boasts that “America runs on Dunkin’”.

1.3. Environmental Analysis 1.3.1. Political Environment In Bosnia and Herzegovina, the political situation is considerably unstable and this is the main reason that many investors are hesitant to put money into our economy. Generally speaking, almost all Balkan countries have problems with foreign investors. The biggest reason is high tax levels and corruption. These factors deter the investors as they are not certain that they will be getting money back from their investments. There is also the fact that the organization of the government is complicated, to say the least, and foreigners do not know how to approach the market and which laws would apply to them in which part of the country. 1.3.2. Economic Environment For economic influences, we should mainly focus on the microeconomic situation. Namely, the employment rates are dangerously low, particularly for younger members of society, which, as we will see later, make up the major portion of our target consumers. Because of this, consumers will be hesitant to spend their money, especially for products that they think are unnecessary or that they do not perceive to be essential for them. 1.3.3. Social Environment The age structure in Bosnia and Herzegovina is as follows1: Table 1: Age Structure in Bosnia and Herzegovina

AGE

PERCENTAGE

0 to 14 years

13.7%

15 to 24 years

12.7%

25 to 54 years

46.7%

55 to 64 years

13.7%

65 years and over

13.3%

1

http://www.indexmundi.com/bosnia_and_herzegovina/age_structure.html

Page |4 From this, we can tell that the most abundant market would be within the range from 15 to 54 years. This needs to be taken into account, as we know that these people will also probably be employed, and therefore will be more likely to spend money in our store. Furthermore, we can also say that social influence on the members of these groups is high and they often seek the opinions and value the judgements of their peers, friends, and colleagues. Bosnian people also have a strong liking towards coffee and use it as a social opportunity to meet with friends and family. 1.3.4. Technological Environment Technology is becoming a more and more important part of any company and its efforts. Its uses have not all been explored and in Bosnia and Herzegovina, specifically it has not been used to its full potential. Most companies do not pay as much attention as they should to the benefits that technology could bring and so there is an opportunity for introducing new methods of business and marketing strategies if technology were to be explored.

1.4. Competition Analysis The problem with bringing Dunkin’ Donuts to Bosnia and Herzegovina is that there are many competitors already present on the market. McDonalds opened a few franchises in recent years and has seen success mostly in Sarajevo. Besides this, there are many local bakeries and stores that are competing for a position on the market as well. These are usually bakeries from which we can distinguish Pekara Imaret, Aspek, Kaiser, and a sweets shop that was just recently introduced to the market, Mrvica. Most of these small bakeries are well established and have loyal customers that purchase products on a regular basis. Competition to Dunkin’ Donuts on the Bosnian market is very prominent and care needs to be taken in order to position ourselves correctly so that customers have a very clear image of the brand. The competition relies mostly on word of mouth marketing and makes sure that they have a positive brand image. McDonalds was successful in Sarajevo because people recognized a global brand that everyone knew about and was talking about, so their opening was a major event. In this way they created news and created interest in their brand and products. It is important to note that there is no offer exactly like the one that Dunkin’ Donuts has present on the market currently which lends an opportunity for the brand. Most of the competition offers very similar products to each other and most are traditional Bosnian foods or pastries, with the exception of McCafe, which would be the most important and most

Page |5 similar competitor. Both brands are recognized worldwide and the products are similar. However McCafe is an extension of McDonalds and so does not stand for itself. It was already stated that we consider McCafe to be the most important competitor and so techniques to deal with that competition will be focused on making a difference between the two brands and specifying that Dunkin’ Donuts has more of a variety and a long-standing tradition of offering baked goods and coffee. Furthermore, we will stress that Dunkin’ Donuts is the leading brand in the world for this product category. Also because, as we have already stated, Dunkin’ Donuts will stress more on the social aspect of the company and the customers.

1.5. SWOT Analysis Dunkin’ Donuts was founded in 1950 and until today, it has expanded its operations worldwide. According to conducted surveys, the company sells more than four million donuts and about 2.7 million coffee cups every day. The results of the survey are proof that it has a strong brand image. Dunkin’ Donuts is known for a wide variety of donuts, flavors and other products including donut whole treats, bagels, muffins, munchkins etc. They can be proud to say that they offer over one thousand varieties of doughnuts. Moreover, they serve nearly one billion cups of brewed coffee each year. Not to mention that they use 100% Arabica coffee beans and have their own coffee specifications recognized by the industry as a superior grade of coffee. This is why they can say that they have built brand loyalty amongst customers. Another strength of Dunkin' Donuts is that they issue coupons and discounts so that customers can have a better deal. After all, it has a worldwide chain of franchises. In total, they are present at 10,000 locations across 32 countries. Due to the amount of time that they have spent on the market, they also have the benefit of reduced costs and a great system of business. They are able to provide their products at low prices because they know what they need to do to keep their costs low, and this also makes it harder for competitors to enter the market subsequently. Dunkin’ Donuts has limited market share growth due to competition from other international and local snacking joints. Moreover, they have very weak advertising and marketing strategies compared to their competitors. Lastly, they have many conflicts with franchise owners. It is known that in order to grow a franchised business, the franchisor must be able to attract new ownership to manage its locations. The franchisor should be able to offer a proven business plan and he or she should support the needs of those that operate its storefronts. This

Page |6 being said, Dunkin’ Donuts has a history of lawsuits with the franchisees. In 2010 alone, they experienced legal battles with 15 different owners. This history of bad relationships could be enough to deter potential investors from entering the Dunkin’ Donuts family. Since they have bad advertising and marketing strategy, one can say that a great opportunity for them is to better their marketing and specifically online marketing. Nowadays, everything is coming to be based on the internet and social media, so online marketing is very important. Since they offer coupons and discounts, they might offer them online. Furthermore, in today’s world, health consciousness is becoming more and more important, so they may try and offer more healthy options for health conscious consumers. Regarding menu diversification, they may also introduce low calorie snacks. They may also increase their presence around the world in the countries they already have shops in, but also in some new countries and regions of the world where they have not been until now. The idea of people moving to healthier ways of eating is already mentioned as on opportunity, but on the other side it can also be a threat because they may not be able to meet the needs of this group of people. All around the world, but especially in The United States, competition is a great threat. Almost every day new companies are opening their doors to customers willing to have breakfast at their shops. This may be a major threat in developing countries around the world where Dunkin’ Donuts have their shops because of the prices which are probably higher than in some local breakfast shops. Moreover, it may be difficult to change snacking habits of people in certain countries such as India and China. Another threat is an increase in the cost of raw materials. Since coffee and other commodities used as raw materials are subject to substantial price fluctuations and potential shortages, it would not be a surprise if the price of them went up. Finally, as already mentioned, Dunkin’ Donuts had some problems with their franchisees. This may be a threat because people might be repelled from buying Dunkin’ Donuts products and other companies could take advantage of this fact as well.

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STRENGTHS - Strong brand name

WEAKNESSES

- Brand loyalty among customers

- competition from other international snacking joints

- Vast variety of products - Ideal place for having breakfast and coffee - Issues coupons and discounts - Worldwide chain of franchises totalling to 10,000 locations across 32 countries

- limited market share growth - still hasn't penetrated into the emerging economies - weak advertising strategies - conflict with franchise owners

THREATS OPPORTUNITIES - Online marketing - introduce more health conscious options - increase its presence in new countries and regions of the world - introduce low-calorie snacks

- people moving to healthier ways of eating - competition - increase in the cost of raw materials - difficult to change the snacking habits of people in certain countries - recent litigation with franchises

Figure 2 SWOT Analysis of Dunkin' Donuts

1.6. Company Projections in Bosnia and Herzegovina From the above situation analysis that has been provided, it is evident that Dunkin’ Donuts has the potential to be successful in Bosnia and Herzegovina. Although there are some weaknesses that are present, the strengths and opportunities of the brand greatly outweigh them. The main factor here is that it is a global and well-recognized brand that has been successful internationally for a long period of time already. This could be projected to the Bosnian market since we have shown that the population values such brands. There is no concrete competition as there are no restaurants that offer the same or even a very similar menu or product. This means that we will be able to position the brand uniquely and there will be a specific place for it in the mind of the consumers. However, the competition that we have listed has been established possesses very many loyal customers. The main risk is the traditional aspect of the consumers and the possibility for them to reject the company from the

Page |8 beginning and not even give it a chance. Recently there has been a movement from traditional high-calorie snacks to more health conscious foods. In the geographic sense, we can say that the company has been very successful around the world, however there has never been an attempt to test the brand in the region. Therefore, this is a risky move because we cannot be sure of the success of the company in Sarajevo. Furthermore, Dunkin’ Donuts has not identified Bosnia and Herzegovina as a potential target market, and this is most likely due to the fact that it is very hard to start up a business in Bosnia. However, as will be shown further in the report, the projected revenues are encouraging. When it comes to the products, the novelty items such as donuts will most probably be successful, but the more common items such as coffee will have a harder time to prosper since the traditional coffee here is widely demanded and this is not something people are going to immediately adapt to.

2. STRATEGY CREATION 2.1. Vision and Objectives 2.1.1. Vision The main vision for our company is to offer “the freshest coffee with the sweetest donuts, for the best moments on the go with family, friends, and colleagues, in an excellent environment with friendly services.” The main idea here is to make sure that the customers are always satisfied with the products and the staff. In the future we wish to expand the business of the firm so that more people can enjoy in our products. The ultimate goal is to expand further in the region if there proves to be a sufficient amount of success in the primary market. 2.1.2. Objectives The main objective that we have put in place is to create awareness about Dunkin’ Donuts during the first year in business on the market in Bosnia and Herzegovina. Furthermore, we aim to inform customers that the offer consists of more than just Donuts. This is going to be achieved through continuous advertising and publicity efforts. The ultimate goal is to attract customers and convince them to try Dunkin’ Donuts products and for at least 20% of the customers to turn into repeat customers (not necessarily loyal customers at this time) by the end of the first year of business.

Page |9 The main long-term goal is to become the number one seller of donuts and pastries by the end of the second year in business in the Bosnian market. This can be achieved primarily due to the fact that Dunkin’ Donuts does not have any competitors that offer the same products and it is one of the only internationally known brands that are offering similar products on our market. At the same time, the goal is to remain among the top choices of target customers that are looking for a place to visit in order to get a snack and/or a cup of coffee. 

Gain control of 15% (45,000) of the market by the end of the first year of business



Achieve 9,000,000 KM in revenue in the first year of business



Retain 20% of customers (loyal) by the end of the first year



Increase to 40% of market share by the end of the 5th year of business

2.2. Segmentation It is of vital importance for any firm to segment the market into subgroups that are similar in aspects that are of interest to the firm. Depending on the firm, and what its marketing goals are, markets can be segmented by demographic characteristics, consumer personalities, geographic characteristics, behavioral characteristics, psychographic characteristics, etc. In the case of Dunkin’ Donuts, the most important criteria for segmentation are psychographic characteristics. Psychographic segmentation allows us to divide the market into groups by social class, lifestyle, and personality characteristics, among others. The most relevant for us is lifestyle characteristics. There are a number of ways that we can further separate the subgroups here. We will focus on the occupational lifestyle of potential customers. Namely, we are interested in segmenting the market based on what people do with their time and how busy they are. We propose to segment the market into the following groups: 

Students- This entire group is made up of teenagers, students, and young workers or recent graduates, and the most important thing to note for them is that they are on a limited budget



Working class members- this group is characterized by the fact that they are usually on the go and therefore look for more take out and quick food, however, they also like to take some time off so that they are not always under stress of the jobs that they are doing. They have relatively high incomes and are more flexible in their budgets.

P a g e | 10 

“Soccer moms” refers to the group of suburban stay-at-home moms that are almost always on the go, taking their kids to school, sports practice, and other activities while also trying to keep a social life for themselves as well as a clean and ready house.

As we already know, Dunkin’ Donuts is a company that is based on fast service and providing customers with coffee and pastries “on the go” as well as offering people with a little bit of down time a nice and comfortable setting where they can enjoy a snack before they have to return to their daily duties. This is the reason that people in a rush tend to turn to Dunkin’ Donuts. It is important to mention that Dunkin’ Donuts’ catch phrase “America runs on Dunkin’” makes it known that these people are our target customers. The busy lifestyle is attractive to this company and really allows it to succeed. The reason that these customers are willing to purchase our products has much to do with the fact that Dunkin’ Donuts is able to cater to their needs. They offer customers ease of use, personal relationships, appropriate payment systems, an effective complaints process, and after-sales services. The process begins with educating customers so that they know how to get the best from the service or product and design services that are easy to use. Then the focus is on building personal relationships with them and attempting to understand their needs and make them feel valued, so that they may develop an attachment to the services and products that the company offers. Furthermore, the customers are allowed to pay in ways that are convenient for them so that they can get in and out of the stores quickly and efficiently and remain satisfied. Any problems or complaints are dealt with as quickly and efficiently as possible so that it is possible to make the consumers feel like their concerns are taken seriously and that their opinions are taken seriously by the company. Lastly, the main focus is to make sure the customers are always satisfied with their purchases and experiences in the stores.

2.3. Targeting 2.3.1. Primary Target Market We have decided to classify working class members and students as the primary target market. Information was obtained through a survey that these segments would be the most interested in trying the products. 65.00% of the respondents were aged 18 to 25, which are the ages of students, 25.00% of respondents were aged 25 to 40, and 10% were over the age of 40. 87.50% of the respondents stated that they would like it if a Dunkin’ Donuts were to open in Sarajevo, and would consider going there to try the products.

P a g e | 11 We can describe working class members as those that do not have a lot of time on their hands due to work and constant obligations. They are almost always on the go and sometimes they would need to grab a cup of coffee and a snack for “on the go” snacking. Their needs need to be met quickly and efficiently. It should also be noted that these people might need a place that is convenient for them to meet with a friend or colleague and socialize, but they might not have time to go to a coffee shop. Students are also members of our primary target market. These are people that have to go to classes and do not have a lot of down time to get food or coffee. This group consists of young people that like to socialize and relax with their friends. They like to go to new and interesting places and think that the opinions of their friends are very important. A classic student will be very busy with exams and projects and this location will be a very important meeting point for them and might even give them a place to study or finish projects. 2.3.2. Secondary target market In the secondary target market we will put the so-called soccer moms. Within this group we put moms with their children that will visit during the day for a quick snack perhaps after school or before sports practice, etc. This is not our primary target market because we do not think that they will make frequent purchases, but they will still visit the store sometimes, so it is important for us to communicate with them as well. The members of this group are mostly female and they will be extremely family oriented, but they will also be modern and want to visit the most popular places. Since they will mostly be coming with their children, we will need to take their experience into consideration as well, as they will influence future choices on whether or not to visit the store.

2.4. Positioning Our ultimate goal is to position our brand as the number one place for a quick coffee and donut or other pastry to compliment it, perhaps with business colleagues or friends, family, kids, etc. We want to be acknowledged as an international brand with high success rates. However, in order to do this it is our belief that we need to make a few changes such as adapting the menu to meet local tastes, and perhaps adjust prices slightly for local income levels. This is all going to work toward satisfying the need of local buyers, but at the same time bringing something international and fresh to the domestic market.

P a g e | 12 The ideal positioning statement for this is “the freshest coffee with the sweetest donuts, for the best moments on the go with family, friends, and colleagues, in an excellent environment with friendly services.” Obviously, the main goal would be to fulfil the expectations of our customers with respect to the quick coffee and pastry industry. Ideally, we would like to base our differentiated advantages on our position in the market. The main difference between us and our competitors is that we are a combination of a bakery and a coffee shop. This is something that is not necessarily present on our market and could prove to be very profitable for us. This allows us to give the customers a one-stop shop and save time and money. It is very important that we take advantage of this opportunity. One of the main risks that we are facing with our positioning in the market is that the customers could not perceive our positioning correctly and mistake it with other food brands that are already present on the market, and are cheaper and have lower quality products than our brand offers. To counter this, we hope that our products and offer design will help our customers correctly perceive the brand.

2.5. Entry Strategy The entry strategy that will be used is the service-firm-sponsored retailer franchise system2, which is used in almost all fast-food service businesses. This allows the brand to reach as many interested customers as possible. We have already stated that the ultimate goal will be to expand further into the region and to reach as many customers as possible. It will also include integral franchising or “second generation” franchising 3 which means that there will be intense communication and cooperation with the parent company and that most of their tactics and resources will be implemented in the business of our franchise.

2.6. Resource Strategy Production will be carried out in store, where all the products will be made. This will be done because the costs will then be lower and fresh, domestic ingredients will be used so that customers can be ensured of the quality of the products. Some ingredients that will be needed, such as the coffee beans for the specific coffee that Dunkin’ Donuts promotes and uses will be imported from the suppliers that the company has an agreement with.

2 3

Kotler P., Marketing Management, Prentice Hall, Inc., New Jersey, 1994, str. 545 Jović M., Međunarodni Marketing, Trim Soft Trade, Beograd, 1997, str. 384

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3. INITIAL MARKET RESEARCH Before planning marketing activities, it was decided that some research needed to be done on the market to see whether or not the members of our target market were in any way familiar with the brand. A survey was conducted amongst students and working class members, which, as we have mentioned are our main focus. What was found was that 72.5% of the respondents knew about Dunkin’ Donuts already. From those respondents, 34.48% of them had previously visited a Dunkin’ Donuts and tried some of the products. 90.91% of the respondents that tried a Dunkin; Donuts product said that they liked it. This was encouraging for us as we could tell that a high majority of them liked the products and were more likely to make a purchase or help build a positive image of the brand. Only 6.67% of respondents that did not try the products said that they were not interested in trying them in the future. The most important question that was asked, and the one that provided us with the most important data, was whether or not respondents would like a Dunkin’ Donuts to open in Bosnia and Herzegovina. Overwhelmingly the response was yes, with 87.50% of the respondents replying affirmatively. With regards to marketing activities that were undertaken by the company, most respondents (42.50%) said that they heard about the brand from the internet. This was followed by TV and friends (word of mouth).

P a g e | 14 45.00%

42.50%

40.00% 35.00%

32.50%

30.00% 25.00%

25.00%

27.50%

20.00% 15.00% 10.00% 5.00%

2.50%

0.00% newspapers

TV

internet

Friends

I did not hear about the company

Figure 3: First Exposure to Dunkin’ Donuts Brand

4. MARKETING MIX ANALYSIS In order to operate the business in the best way possible, we have decided to conduct an extended marketing mix analysis of the Dunkin’ Donuts company.

4.1. Product Dunkin’ Donuts is one of the largest coffee and baked goods chain in the world. They use high quality coffee and have many choices from which customers can choose. The brand name suggests that Donuts are the main food product of the company, but in reality they compose only eight percent of the total sales. Twenty five percent of the products are other food items including the specialized baked pastries and savory snacks. The most profitable products for the company are the drinks that they offer, specifically the coffee that is “Double Brewed to retain” its original flavor. The estimated sale of the special coffee at Dunkin’ Donuts is nearly one million annually. The menu of this international chain of restaurants includes approximately one thousand food items. The healthy snacks are a hit with every age group of people because of the freshness and uniqueness they offer. The various sandwiches offered include the all-time favorite Wraps, Glazed Donut sandwiches and the Oven toasted sandwiches. The fifty-two varieties of baked goods include cookies, bagels, doughnuts, munchkins and muffins. Beverages are served to the customers in

P a g e | 15 both hot and cold forms. The iced drinks include iced coffee, lattes and teas, whereas the frozen drinks are available as coolants and coffee. Hot drinks are also very popular in these restaurants and include various types of coffee, tea, lattes and hot chocolates. The company has given special attention to its younger customers, as they are capable of influencing the eating habits of the parents. Food items that are fresh as well as tasty and healthy are popular with both the children and their parents. Nutty Donuts is one such popular item made with walnut, raisins and almonds that is available in both sugar and sugar-free varieties.

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Figure 4: Dunkin’ Donuts Product Offers

4

4.2. Place Special attention has been given to the opening of Dunkin’ Donut outlets at strategically important locations to generate the maximum number of customers. It is a given fact that easy accessibility of the outlets will help in attracting a healthy customer base. Therefore, all the outlets are located at places where a person can quickly avail himself to a bite. Dunkin’ Donuts have opened nearly eleven thousand outlets in various parts of the world. It is spread globally through an estimated thirty-three countries. In the United States only, the company has nearly seven thousand six hundred outlets. Franchisee system of ownership and operation is prevalent in all the outlets. These outlets are opened in popular locations like gas stations, food courts in and around airports, Supermarkets, malls and Walmart Stores. At present South Korea is one of the largest markets of Dunkin’ Donut food items contributing towards forty percent of the international sales. A coffee roasting international plant has been set up in this country along with nearly nine hundred outlets. The company has also opened its outlets in countries like India, China, Japan and Brazil. In order to get a franchise opportunity, we also should be cautious in choosing a place for opening Dunkin’ Donuts in Sarajevo. It is important for it to be located in the center of the city where you can find a lot of people walking around. The ideal location for this restaurant, in our opinion, would be in somewhere close to BBI Center, as this is a very popular area that our target customers frequently visit. Of course, this would only be possible if there were an open spot for sale and if the prices were reasonable for such a location to be purchased or leased.

4

http://www.dunkindonuts.com.my/?page_id=501

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Figure 5: Location

5

Figure 6: Geographical Representation of Competition

6

4.3. Price In order to create a loyal and strong customer base the company has tried to maintain a fair pricing policy for all its products. To provide its customers with the ultimate satisfaction the company has kept the pricing reasonable so that an average person can easily buy from a 5

http://www.sa-c.net/forum/28-Finished/20-Sarajevo--BBI-Centar---2009.html https://www.google.ba/maps/place/bbi+centar+sarajevo+bosnia+%26+herzegovina/@43.8585376,18.4165527, 15z/data=!4m2!3m1!1s0x0:0xf7fc906f8e2fc83e?sa=X&ved=0ahUKEwj89tX3oKXKAhUDVywKHWl4DDEQ_ BIIiQEwDw 6

P a g e | 18 Dunkin’ Donut outlet without thinking about the expenses. This will be true for our location as well. The clean environment, fresh products and realistic prices have helped in generating maximum revenues. The pricing of every food item is variable so that every customer can find something that might suit his budget. In order to maintain the volume of sales the prices are kept realistic and coupons and discounts on selected items are periodically provided. These keep the customers interested and lead to increased profits. The motto of the company is to provide high quality products and services that are much cheaper than those of their competitors. Dunkin’ Donuts has proven that this is possible, as they have been able to diversify their fixed costs to number of units. The company has a policy of bulk buying that automatically reduces their costs. The bidding on contracts is also a very systematic and thorough process that reduces the product price. A close and vigilant contact with the vendors helps in keeping control over the supply chain and this has proved to be a vital method in maintaining low costs. We should keep all strategies that they have been using, because people here also need products with low prices because the customer base is going to be composed middle class people, so we need to make sure that most of people can consume it. Furthermore, it seems that they have proved this strategy through years of experience and work, and it has been successful thus far.

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Figure 7: Dunkin’ Donuts Menu with Prices (in U.S. dollars)

4.4. Promotion The promotional strategy of the Dunkin’ Donuts includes advertisements through digital media and social networks as well as various forms of traditional advertising. The colors pink and orange in the logo of the company along with a coffee cup have made it a memorable one. In order to stay noticeable and keep with the brand image, we will use same colors and the same logo. However, as their catchphrases are more locally oriented, we will create catchy slogans relevant to the target market and to the culture of the customers, which will be aired on the television and on various radio stations. The success of its promotional strategy is due to its fan base that is a part of most advertisements through various activities. The company should keep in touch with its loyal

P a g e | 20 fans through Twitter and Facebook, as well as through various other promotional activities. More about the promotional strategy will be discussed in the communication strategy section. 4.4.1. Digital media Digital media advertising would include any type of promotion that we plan to implement using mobile devices and the internet. This will include games and mobile apps such as “Donut Blast” which is similar to the popular game “Candy Crush”. Another application that we plan to use is the “Mobile Challenge” app which uses a check-in feature to award customers who check-in to our restaurants. Every achievement brings them a certain number of points, which can be exchanged for coupons or free products. There is also the possibility to organize various online contests. The Goal is to not only make customers participate, but to attract new ones, as well. One of the examples, which also happens to be one of the most popular is “The Next Donut”. In these contests participants have to overcome various tasks to win prizes such as coupons and cash. In the contest that was mentioned before, participants had to create the next (new) donuts. There is a period where the public votes for the best design and the best design would be introduced in their offer at stores and the creator wins a prize (cash, or free products) as well. This contest is important because customers feel like they are included in the process and the company is able to show them that they care about their opinions. This would generate a lot of interest in the brand as people would get their families and friends involved in the voting. 4.4.2. Welcome Kits This campaign is targeted to first-graders, and freshman students. Where every customer who belongs to one of those two groups will receive a kit with “promotional material” which are actually functional items that are used on day to day basis. Kits for kids would contain school supplies such as notebooks, time tables, color pencils etc. Kits for students would contain planners, pens etc. Both kits will contain coupons and loyalty cards. Every item that they receive in the kit is a reminder that Dunkin’ Donuts will be there for their new beginnings, and the products will remind them of that every time they use them. 4.4.3. Advertising 4.4.3.1. Billboards

P a g e | 21 We think that a main part of our promotion activities would be the use of billboards. The billboards should be simple but creative. People should pay attention to them, but they should not distract them from the road.

We

would

use

billboards from the very beginning of our marketing campaign. First, we would use billboards to inform people that we are opening store of Dunkin’ Donuts in Sarajevo and later on we would try to attract as many customers as possible. We would put our billboards Figure 8: Pre-Introduction Billboard

throughout the whole city

and also in the airport so that tourists would also know that there is Dunkin’ Donuts store in Sarajevo. 4.4.3.2. Tram Advertising Before opening our store, it would be a good idea to ‘rent’ a tram and decorate the inside of it to look like a Dunkin’ Donuts Cafe Tram. The walls would be full of pictures of our products and sitting places would be colored like the real chairs that would be used in our restaurant. People would have an impression that they entered into a Dunkin’ Donuts restaurant and all they would want to do is order something. Also, on the doors we would write the opening date and our location so that people can find us. 4.4.4. Public relations Of course our public relations will start before opening the store. We will try to be constantly present in media before opening the store. For the beginning we think that we will give some presents to our first customers on a day of the opening. Later on we will try to have some special offer every week. In long-run we are thinking of giving scholarships to some talented students and some of them even a chance of working for Dunkin’ Donuts.

P a g e | 22 As we have already mentioned, the welcome kits could be a source of positive media for the company since they show that Dunkin’ Donuts cares about its customers and gives them the tools that they need to succeed in school. 4.4.5. Direct marketing 4.4.5.1. Social Network Marketing Dunkin’ Donuts worldwide is already very present on social media platforms. Media platforms that they are currently using are Facebook, Twitter, Google+, YouTube, Pinterest and Instagram. So we would also use all 6 of them. We will use Facebook and Twitter mostly for promotion of some new products or some special offers, while on Pinterest and Instagram, we would create and share content based on how Dunkin’ Donuts fans are already engaging with the brand on these channels as our way of celebrating what makes them special and keeps them running. They would also be able to find unique photographs of one-of-kind donuts and also of some of our special products. 4.4.6. Personal Selling Our personal selling would include delivery. People would be able to just take their phones and order what they want to eat from our store. Of course the delivery would be from a certain minimum price like 10 KM which is the case with most Sarajevo restaurants and fast foods.

4.5. People Dunkin’ Donuts employees play a major part in the efforts of the company to become a wellstanding brand and in bringing satisfaction to the customers. All employees are required to wear a uniform and of course, they are required to be professional and kind. Internal marketing efforts will be aimed at internalizing the ideals of Dunkin’ Donuts and making sure that employees understand what is expected of them. Constant communication will be carried out to ensure that the employees are always satisfied with their positions and that any and all conflicts can be taken care of on time. Dunkin’ Donuts, as a company, offers training opportunities for its franchisees and employees and allows them to meet with other business owners and create lasting friends as well as to trade ideas and strategies. Training will also be offered locally so that the possibility of mistakes and errors is minimized. This will also guarantee that customers are receiving the highest level of service that could be provided, and therefore the ultimate goal of increasing perceived customer value will be more easily obtainable.

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4.6. Process Dunkin’ Donuts has spent a long time perfecting the processes that go into production and service provision. It prides itself on delivering high quality and quick service to its customers. These tested methods will also be used in our location. Learning from the already established methods and processes will help to decrease waiting time for customers, as well as frustration that could be accompanied with it. Obviously, there is no method that will work for everyone and we will continue to make improvements to these established methods until processes can be perfected for our specific location.

4.7. Physical Evidence The facilities of this company are always welcoming and interesting. The aim is to provide our target market with comfort and ease. The layout allows customers to either grab a quick coffee or snack and leave immediately, or to purchase those snacks and take a seat in the store, but away from the cash register so that there are no loud interruptions no matter what the purpose of the visit is. This is also accompanied by the drive through that will present customers that are on the go in their car with the convenience of not having to leave the car. The interior will also be clean since this is primarily a restaurant and a place where people will eat, and customers expect these locations to be pristine. Moreover, the ambient of the location will need to feel homey, so that customers feel welcomed and relaxed in the restaurant.

5. IMPLEMENTATION AND CONTROL 5.1. Goals aimed at Sales Revenue will be gained through the sale of products and costs will be deducted from this in order to reach the final profit. We expect sales to be lower in the beginning, until we are able to raise enough awareness and attract an adequate amount of customers. By the end of the first year, we expect have a market share of about 15%, which will in turn increase our revenues. The approximate total population in Kanton Sarajevo is around 450,000 people. From this we can separate 300,000 that are members of our target market (15-64)7. If we are able to reach

7

http://www.fzs.ba/podaci/09.pdf

P a g e | 24 15% of the market, it will mean that we have reached 45,000 people. We expect the average weekly spending per customer to be from 3 to 5 KM. This includes any purchase they make (donut, coffee, combination, special offers, etc.). The final calculated revenue for the first year is then between 7,000,000 and 12,000,000 KM. These statistics are presented in the table below. Table 2: Revenue Projection for the First Year

Total Population

450,000

Target Market Population

300,000

Market share (15%)

45,000

Average Spending (weekly)

3-5 KM

Average Spending (yearly)

7,020,000 – 11,700,000 KM

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5.2. Financial Plan 5.2.1. Start-up and Franchising Costs We plan on having a freestanding unit (location) and the associated costs are as follows8:

Figure 9: Estimated costs for startup

Dunkin’ Donuts, as a company, does not offer financing. However, the benefit is that they have agreements with various investors and lenders who provide franchisees with opportunities to take advantage of this. These lenders offer financial services and many different types of loans, refinancing, and other finance options in order to make the task of the franchisee easier. There will also be contact with investors on our part and we will make sure to find as many investors as possible. In return, they will receive benefits from their investments and money will eventually flow back to them. As can be seen from the table, there needs to be a large initial investment for the restaurant to be opened. It is also important to note that these costs do not include real estate. From talking to some business owners in Sarajevo, we have learned that the cost could potentially be 8

http://www.franchisedirect.com/foodfranchises/dunkin-donuts-franchise-07676/ufoc/

P a g e | 26 around 5,000 KM for a space large enough to meet all the needs. To this, we need to add costs of remodeling since there is no business space that is laid out in the way that would be convenient for us, and even if there was, it is highly unlikely that it would be for sale. Since this would need to be done on the basis of a franchise, the royalty fees that would need to be paid are 6.0% of the revenues9, on an ongoing basis. It is hard to predict the exact level of sales, and from that, revenue, since there is not much information about it and there are hardly any similar shops on the Sarajevo market to use for references. We predict that it would do well enough to be able to cover the expenses of the initial investment (once we take out the other, ongoing, costs) in a period of up to 3 years. This will, however, depend on the success of the shop and the interest that is generated in the brand. 5.2.2. Final Budget Table 3: Cost Calculation

Expenses Units

Salary (KM)

Total (KM)

Manager10

2

1,300.00

31,200.00

Location Staff

6

900.00

64,800.00

Administrative Staff

2

1,100.00

26,400.00

Salaries

Total Salaries

122,400.00 KM

Total Promotion Costs

51,500.00 KM

Franchise Costs

1,500,000.00 KM

Rental (Location) Costs

60,000.00 KM

TOTAL EXPENSES

1,733,900.00 KM

Table 4: Profit Calculation

Expected Total Revenue

9,000,000.00 KM

Expected Total Costs

1,733,900.00 KM

Projected Profit Before Taxes

7,266,100.00 KM

9

https://www.franchisehelp.com/franchises/dunkin-donuts/ Manager and supervisor

10

P a g e | 27 5.2.3. Marketing Activities Budget Table 5: Marketing Activities Budget

DESCRIPTION Dunkin’ Donuts commercials on mobile phone Welcome Kits

COST (BAM) 10,000.00 500.00

Tram advertising

26,000.0011

Bus advertising

10,000.0012

Web portals

1,000.0013

Billboards

25,000.0014

TOTAL

51,500.00

5.3. Implementation Plan 5.3.1. Pre-Introduction Phase In the pre-introduction phase, the main goal will be to increase awareness of the brand. This will include intensive mass media advertising for us to be able to reach as many potential customers as possible. Furthermore, this period will be characterized by suspense building. This is where the promises of what is to come will be delivered and customers’ interest will be heightened. It is important to not go overboard here and make promises that cannot be carried out. So, the ideal solution will be to increase the interest of the customers through specific messages that promise the level of service and quality that are provided in over 10,000 locations all over the world, which is what Dunkin’ Donuts expects of its franchisees in any case. The main media used for this will be billboards, as this is a cost-effective way to reach a large audience in a short period of time.

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http://mmustorg.ipage.com/bs/attachments/article/120/Cjenovnik%20reklamnih%20usluga%20na%20i%20u%2 0vozilima%20GRAS-a.pdf 12 http://www.centrotrans.com/ukatalozi/Katalog_reklamnih_prostora_Centrotrans.pdf 13 http://www.siadizajn.ba/usluge.php?str=13 14 http://europlakatbh.ba/europlakatbh/wp-content/uploads/2015/04/cjenovnik-OGLASAVANJA.pdf

P a g e | 28 5.3.2. Introduction Phase In the introduction phase, we will need to fulfill the promises that we have given to the customers. Here, the main goal will be to provide customers with a positive experience with the brand and perhaps convince them to make future purchases. In order to do this, we will use social-media marketing, especially in the early stages of introduction so that customers can share their experiences. We know that consumers rely heavily on the opinions and recommendations of their peers, so this will be the most effect method. If our potential customers see that others are happy with the brand, they will be more inclined to make a purchase themselves. 5.3.3. Post-Introduction/Growth Phase In this phase, relationship marketing will play the biggest role. This will be the period of time when most of our target consumers will have heard of the brand, and many might have tried it. The goal at this point will be to retain our customers and to increase market share. Loyalty programs such as the ones that we mentioned above will be used for these purposes. This is also when public relations will be used. Customers need to know that the brand cares for them and for their society. Public relations efforts will help to build brand meaning and a more positive brand image among the target consumers.

5.4. Control The success of the marketing efforts and the overall success of Dunkin’ Donuts will need to be tracked thoroughly and changes to implementation and strategies will need to be made accordingly. For the beginning, it will be important to determine the level of brand awareness in Sarajevo, with an extensive survey that will be conducted. After set intervals, the survey will be repeated and we will gain information on whether or not our efforts were successful in this survey, it would also be wise to include questions about the general attitude of customers towards the brand and whether or not the respondents have made a purchase, since even if they are highly aware of the brand, that does not mean much to us in the short-term if they are not making purchases at all. Before each activity is implemented a control test will be carried out so that we may get some information about the situation prior to the activity, and so it will be easy to compare to the situation after the activity is carried out. In this way, we will be able to isolate the most effective activities and use them in future campaigns. This will also tell us which activities

P a g e | 29 need to be financed with a larger portion of the budget and if we are spending too much money on other activities. We believe that control will be the most important element of our marketing activities since our plan will mean nothing if there is nothing to be learned from it and if there is not any positive outcomes resulting from it. Therefore, control will be carried out as often as will be deemed necessary and budget will be allocated to it accordingly.

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CONCLUSION

After the conducted research and analysis of the potential market and customers, we have decided that it would be a good investment to attempt to open a Dunkin’ Donuts in Sarajevo. This conclusion was derived from the idea that there is nothing of this sort present on the market and that there is great potential for success. We have determined through research that there is a large enough population that would be interested in the opening of this restaurant in Sarajevo, and so we have decided that it would be beneficial to try and offer it to the market. From the calculated costs and revenue we have determined that there is a potential for a profit of 7,266,100.00 KM in the first year before taxes, which is a great indicator and should prove to be an incentive for investors to take interest in our project and to eventually provide financing. We also predict that there will be an increase in revenue and from that, profit, in the following years once there is time to establish ourselves as a top contender on the market. When it comes to promotion, there needs to be an intensive effort to get the general public familiar with the brand and to build trust and a positive brand image. It helps that it is so well established internationally and there are a lot of references that people could turn to for more information about the brand. The ongoing success of this brand will be heightened by the constant efforts to reach the customers and to build a long-lasting relationship with them which they will transfer to their peers, colleagues, family, and friends. Based on all of the above information that has been provided it can be said that it is a good venture based on the market and economic indicators/analysis.

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REFERENCES Alvin C. Burns, Ronald F. Bush: Marketing Research – online research applications, 4th edition, Prentice Hall, 2003. Babić-Hodović, Vesna. Marketing Services: Concept, Strategy, and Implementation. Sarajevo: School of Economics and Business in Sarajevo, 2012. Centrotrans. Katalog Oglasnih Prostora. Centrotrans, Web. 14 Jan. 2016. http://www.indexmundi.com/bosnia_and_herzegovina/age_structure.html "CMS Izrađen Za Potrebe Agencija Za Promet Nekretninama." SiA Dizajn Sarajevo. N.p., n.d. Web. 14 Jan. 2016. . De Pelsmacker, Patrick, Maggie Geuens, and Joeri Van Den Bergh. Marketing Communications: A European Perspective. Fifth ed. Harlow: Pearson Education Limited, 2013. Print. Domazet, Anto, Mile Jović, Branko Rakita, and Mustafa Sinanagić. Međunarodni Marketing. I ed. Sarajevo: ROLL COMERCE, 2001. Print. Dunkin’ Donuts Press Kit. 06 October 2012. Web. 14 Jan. 2016. https://www.scribd.com/doc/109206162/Dunkin-Donuts https://dunkindonuts.com/. Web. 14 Jan. 2016. Europlakat BH. Cjenovnik Oglasavanja Za 2015. N.p.: Europlakat BH, n.d. Web. 14 Jan. 2016. . http://www.fzs.ba/podaci/09.pdf GRAS. Cjenovnik Marketing Usluga. N.p.: GRAS, n.d. KJKP GRAS Sarajevo. Web. 14 Jan. 2016. . Jessica. "Business Objectives." Web log post. DunkinDonutsNews. N.p., 24 Jan. 2014. Web. 14 Jan. 2016. . Jović M., Međunarodni Marketing, Trim Soft Trade, Beograd, 1997, str. 384

P a g e | 32 Kotler, P., Keller, Kevin L., Brady, M., Goodman M., and Hansen T., (2009), Marketing Management; Pearson Education Limited Kotler P., Marketing Management, Prentice Hall, Inc., New Jersey, 1994, str. 545 Schour, Stella Dacuma. Dunkin' Donuts Marketing Campaign Strategy. 31 May 2013. Web. 14 Jan. 2016. https://www.scribd.com/doc/144832665/Dunkin-Donuts-MarketingCampaign-Strategy