Marketing Problem/Executive Summary
This presentation will analyze the current market situation, identify possible opportunities and threats and recommend strategic actions for Krispy Kreme Australia. Methods of analysis include SWOT analysis, product life cycle curve, porters five forces and environmental, competitor and consumer analysis. For these we have used information from text books, websites and online news websites. From our analysis we have found Krispy Kreme Australia to be in a late maturity/ declining stage of product life cycle with the company going into Voluntary administration in 2010 due to declining sales and profits. We have concluded that these declining sales and profits are effects of Krispy Kreme Australia’s attempts to expand too rapidly and a failure to understand, define and communicate to an appropriate target market. Krispy Kreme will need to reevaluate their marketing strategy in order to combat changing trends and current threats. The recommendations we made for Krispy Kreme are as follows:
Increase in advertising and promotions
Product development and diversification into healthier options Focus on a low cost strategy
Focus and on build more profitable locations in Australia INTRODUCTION/ BACKGROUND
Krispy Kreme is an American company that provides customers with freshly cooked doughnuts, baked goods and a selection of beverages. Vernon Rudolph founded Krispy Kreme in Winston – Salem, North Carolina in 1937. Australia became the first destination outside of North America to produce the iconic Original Glazed doughnuts with Krispy Kreme expanding onto Australian shores in June 2003. The First Store was opened in Penrith, Sydney to great success and today there are 50 retail stores across the country. Krispy Kreme’s product range consists of their signature Original Glazed Doughnut, an assortment of flavoured and filled doughnuts, hot and cold beverages such as coffee and milkshakes as well as 9 flavours of ice cream and a variety of baked goods.
Despite the initial success, in 2010 Krispy Kreme Australia went into Voluntary Administration, as there was a concern regarding the company’s ability to meet its financial obligations. John McGuigan, the CEO of Krispy Kreme Australia has stated that “several factors, including location, sales declines, high rents and high distribution costs, have meant that a number of stores are losing money” (Zappone, 2010). Krispy Kreme is now in the “late maturity/decline’ stage with as little as 23 stores remaining open. Krispy Kreme now faces the challenge creating and implementing new strategies in order to explore new growth opportunities. Strategies the organisation follows
Krispy Kreme wants to establish themselves as a reputable brand capitalising on brand conscious consumer's demand for a consistent, high quality specialty food product.
They see themselves as a marketing company, and although have no formal advertising budget, they promote its brand very effectively through its two main strategies of its product/product sampling and innovative publicity. Their main focus is their product rather than promotion.
Krispy Kreme’s lack of formal advertising did not hamper the growth of Krispy Kreme’s brand popularity. Rather, it seemed to make the brand more popular. The company has unique ways of ensuring that its products get media coverage. The doughnut itself gets plenty of free publicity from newspapers in whatever market is rumoured to be next on its list. They rely on word-of mouth spread with existing customers bring in new customers. A key to this marketing strategy was fundraising with local community groups and charities to raise the profile of the brand and create an “emotional connection” with the product.
The company adopted a unique way of generating impulse purchases in the market. All the Krispy Kreme stores, which make and sell doughnuts,...