Krispy Kreme

Krispy Kreme

Krispy Kreme is a company that despite its history dating back to 1937, has only just in the past 10 years had rapidly increasing sales and expansion. Recently, however, the company has gotten itself into financial and legal trouble. Because of this and several marketing factors, the Krispy Kreme phenomenon is struggling to stay alive. Sales are decreasing and stores are being forced to be closed. The company has gone through ups and downs in its history, but the current situation is something that needs to be improved drastically. In order to correct these problems Krispy Kreme needs to re-think their distribution strategy in terms of wholesales, consider adding ways of promoting the product besides just word-of-mouth, and think about adding more choices to their product line to please more customers, more often.

Problem Overview:

Since going public, Krispy Kreme had been a standout on Wall Street, where its stock price climbed and they experienced soaring profits. That changed when shares fell nearly 30 percent after Krispy Kreme warned that profits were expected to fall 10 percent. Executives of the company blamed the popularity of low-carb diets and trends towards more healthy eating for driving down sales of its deep-fried, high-carb treats. The food industry in general has also been affected by a recent trend toward healthier eating habits. Krispy Kreme’s competition and financial and legal trouble have also led to loss of profit and credibility within the company. The initial huge success of the company may not have led to responsible decisions about the future of sales. In addition to these problems, the product offering is very limited, and the company has had a difficult time adding any additional successful items to the product line.

SWOT Analysis:

Strengths

• Strong Brand Name- People know the Krispy Kreme name and associate with quality.

• Good Reputation Among Customers

• Product Costs

• Years of experience in the market

• The best doughnut “experience”

Weaknesses

• Limited menu items

• Weak product innovation

• Problems between top ranking executives: direction comes from the top

• Lacks a clear mission and vision statement

Opportunities

• Diversification of product offerings

• Advertising in addition to word of mouth

• Web-based sales of Krispy Kreme merchandise

• Special Events: A Krispy Kreme truck

• Co-branding

• Healthier products

Threats

• Competition from companies. Most of Krispy Kreme’s competitors offer customers a wider range of products.

• Healthier products are available from other retailers.

• Market growth is slowing.

• Fad for carbohydrate diets

• Product may become boring

Target Market Assessment/Viability:

Size of Market Large, appeal extended across all major demographic groups including age and incomes. Offices. Clubs. Families.

Trend of Demand StableпÑ" Decreasing

Going down (temporarily?) due to low-carb fad diets

Competition Several large companies that are also well-known such as Dunkin Donuts that offer much more variety. Research shows that each time Krispy Kreme enters a new market, the company increases sales for other doughnut shops.

Overall Assessment The target market is extremely large and viable, but also take into consideration the competition in the market and that doughnuts to some are thought of as a novelty. Even with this long-standing relationship between consumers and sweet, tempting goods, producers still need to continually find new ways to promote their products and offer new options to keep consumers interested.

Present Strategies:

Product Strategy

Krispy Kreme’s marketing mix concentrates on its product. The “Hot Doughnut Now” concept intrigues customers. All the doughnut mix and equipment used in Krispy Kreme stores was manufactured and supplied by the company in order to ensure consistent quality and doughnut making throughout the chain. These doughnuts were sweeter, bigger then competitors.

Price Strategy

Slightly lower price than most of its competitors, depending on the doughnut.

Distribution Strategy

The Distribution Strategy is a main part of the overall strategy of Krispy Kreme. They expanded very rapidly. They have their own retail stores that were going up all over the world. Also, they have wholesalers making their product available in grocery and convenient stores. Additionally, the company franchises out their name. Traditionally, Krispy Kreme was a novelty to most people. They would drive from far away and wait in lines for days to go to an opening of one of the retail stores.

Promotion Strategy

Personal Selling, Public Relations, Sales Promotion: No mass advertising.

There is not much personal selling with Krispy Kreme. Instead, customers come in with the brand awareness of the doughnuts. The store emphasizes its original glazed doughnuts but other than that not much personal selling goes on. Product giveaways are held at grand openings to improve knowledge of Krispy Kreme products. On certain occasions