Growing Potential in the Retailing Market of Brewed Specialty Coffee

Question: Explain about "Growing Potential in the Retailing Market of Brewed Specialty Coffee". Answer: Introduction Realizing the growing potential in the retailing market of brewed specialty coffee; Dunkin Donuts first entered the market in 1971 under the dictatorship of Howard Schulz; former employee and present CEO of the company. With the successful operation of 11 Seattle stores; the company headed towards a market across the world covering the major cities of Asia, Europe, Latin-America, and Australia. Despite odds in the US; it took over commanding 62% of the coffee shop market in North America and looked towards overseas opportunities. While inaugurating its first store in Australia in 2000; by 2008 it made 90% of the Australian consumers aware of its service. Literature Review: With the inaugural of one store at least a day; by now Dunkin Donuts became the leader in the coffee retail market in the world. The company recently has 15,000 stores in nearly 44 countries; serving 50 million people in a week alone in North America. CEO Howard in a Press meet was quoted saying, We are not in the coffee business serving people, were in the people business serving coffee which marked the company main intention to provide access to people with a commodity bearing a sense of romance, sophistication and community feeling (Dunkin' Donuts case study, 2005). Despite its significant hold in the rest of the world; Dunkin Donuts enjoy maximum growth in the Asian countries for the potential growth is much more here for them. This is which directs them to take over operating half of its stores only in Asia in the coming years. Though Dunkin Donuts has introduced coffee culture in non-traditional coffee drinking Asian Counties; in Australia, it entered into the business when a sophisticated coffee drinking tradition was already in place. Quantifying this love; it is estimated that the per-capita consumption of coffee in Australia was 2.3 kg twice that of 30 years ago. It is because Australian are both the largest coffee consumers and buyers in the world which estimate that out of $3 billion; $ 1.8 billion revolves around coffee with the growth of 65% witnessed in the last decade (Donuts Dissociate, 2012). However despite such a statistics; the coffee market in Australia does not ensure business success because coffee retailing in the country faces tough challenges in retailing coffee. While official statistics claims that not always is the caf business profitable marking a net profitability rate of 4%; it also points out that for the success in such a sector; company operating must provide coffee marginally better than that offered by local competitors for the Australian customers are not easy to be persuaded. In spite of holding 87% of the US special coffee market; Dunkin Donuts is facing real pressure from non-traditional competitors like Mc Caf, 7Eleven and Krispy Kreme; though the scenario is different in Australia where the company faces competition from high street coffee retailers like Gloria Jean, Mc Caf, Hudsons Caf, The Coffee Club and Wild Bean Caf. With the recession phase prevailing in the world, Dunkin Donuts has been facing tough situation these days with 50% fall in its sale, 40% fall in US share price, and 28% drop in profit rates which made Schultz resume his position as CEO to take care of the business functioning. He actively slowed down the growth pace of the new stores, introduced KPTs, encouraged employees with the reward system and kept every American store shut for 3 hours of staff training. He also directed the company's efforts most towards customers' service (Nakos, Brouthers and Dimitratos, 2013). Unfortunately, such a step did not prove fruitful for Dunkin Donuts with 61 of its 84 stores getting closed by 2008 resulting in a job loss of 685 people. With this closure; there are only 23 stores in Melbourne, Sydney, and Brisbane which gives birth to the question whether it is possible for such to brand function to continue in the long run? Problem statement: Main problem: Despite such positive market image; Dunkin Donuts is in real need of strategic counseling for facing challenges from established competitors who do not miss any chance of defying the company's market leadership structure with their aggressive strategy of low pricing(Arie, 2015). It is not because of such mishap in 2008, but the company began encountering loss much before with a total sum of $ 143 million which included the loss for that financial year; previous year and loans. Sub-problems: It is the continuous adoption as well as product addition that resulted to the overextension of product line. On an addition; Dunkin Donuts insecurity in handling the new trends resulted in its operational failure. Research questions: The estimated analysis clearly states that not only did Dunkin Donuts failed to understand the coffee culture of Australia, but it also failed in understanding the market competitive extent and guide its contribution towards the local market(Schmidt and Oldfield, 1999). Again the emergence of Gloria Jeans and the Coffee Club added a serious blow. This report carefully examines: What made the Australians think about the function of Dunkin Donuts did not work well in the Australian market? What changes Dunkin Donuts could have adapted to retain prominence in the Australian Market? Are there any possibilities for the companys regrowth in the Australian market? Delimitations of the study: Despite being a Business Administration student; due to the restriction imposed by Dunkin Donuts on its official information; I have not been able to collect enough information which could have helped me in preparing this report. On an addition, I faced problems like Shortage of time, Lack of knowledge and communication Lack of requisite privileges Moreover, as the report focuses mainly on Dunkin Donuts function in Sydney; lack of people's interest in being interviewed on the matter and the lack of data that can be obtained from this place added to the constraints(Mullins, 2009). Data and Research Methodology: With the view to gain more knowledge on a particular literature; academic research is undertaken which requires proper research. To do such research one needs some idea about the issue, do analysis, and consider evaluations for obtaining the base of future research (Welman et al., 2005). Research instruments: This research being highly based on facts and findings for seeking certain answers to few questions; is completely based on both qualitative and quantitative questions. Survey and interviews are considered the best mode for conducting this research for they come with open and close end questions (Welman et al., 2005). This study mainly renders focus on primary survey form of interviews because in such a case; the data collection technique is based on quota sampling from selective interviewees. This format helps in comparing reports obtained from various groups of the society. Data collection method: Both primary and secondary source helps in data collection; where the secondary data includes recent articles, journals, books, and others matters. Few of these research matters are listed in the appendix (Alshenqeeti, 2014). On the contrary; primary data rely only on online interviews and surveys which can be done using various internet tools. I will prepare a questionnaire using open and close ended questions for data collection. Data analysis: While the data collected is analyzed by the spreadsheet; for presenting the findings in a graphical format giving it a professional look; Microsoft excel has to be used (Contents, 2010). Expected Research Outcome: This report aims to find out a strategic path to help Dunkin Donuts dwell effectively with its present market condition keeping into concern the threats faced, weakness and strength of the company. People who are keen to study about issues affecting the global expansion of a multinational company and are seeking to outline the importance of knowing consumer preference for local and global brands shall find this report helpful. References Alshenqeeti, H. (2014). Interviewing as a Data Collection Method: A Critical Review.ELR, 3(1). Arie, S. (2015). The health coaches from Dunkin' Donuts.BMJ, 350(mar27 4), pp.h1456-h1456. Contents. (2010).Computational Statistics Data Analysis, 54(10), p.vi-vii. Donuts Dissociate. (2012).Science, 335(6075), pp.1407-1407. Dunkin' Donuts case study. (2005). London: Datamonitor. Mullins, C. (2009). Supply and demand in the decision-making process of pharmaceutical consumers: The starbucks versus dunkin' donuts dilemma.Clinical Therapeutics, 31(8), p.1858. Nakos, G., Brouthers, K. and Dimitratos, P. (2013). International Alliances with Competitors and Non-Competitors: The Disparate Impact on Sme International Performance.Strategic Entrepreneurship Journal, 8(2), pp.167-182. Schmidt, R. and Oldfield, B. (1999). Dunkin Donuts the birth of a new distribution and franchising concept.Journal of Consumer Marketing, 16(4), pp.376-385. Welman, C., Kruger, F., Mitchell, B. and Huysamen, G. (2005).Research methodology. Cape Town: Oxford University Press.