We begin our report by touching on the history of Krispy Kreme. Vernon Rudolph started Krispy Kreme in 1933 when he bought a doughnut shop from Joe LeBeau. He later established the first Krispy Kreme in Salem, North Carolina. After Scott Livengood became CEO, the company repositioned itself and focused on being a specialty retailer, rather than a wholesale bakery. They soon began expanding rapidly throughout the United States. This particular case took place in 2004 Krispy Kreme was beginning to run into some serious problems. Next we discuss the situation analysis beginning with the market summary. Here we explain the demographics, psychographics, and behavioral attributes along with the market needs, trends, and growth. Second, we conducted an SWOT analysis finding the company’s strengths, weaknesses, opportunities, and threats. After analyzing the SWOT, we configured some important critical issues. The last part of the situation analysis discusses the industry of Krispy Kreme, including the competition and macro environment. We then discuss Krispy Kreme’s marketing strategy, starting with their mission to become part of the American culture. We also touch on their marketing objectives, financial objectives, target market, as well as their current position in the market. Ending the marketing strategy, we identify Krispy Kreme’s marketing mix, including their product, which is their one-of-a-kind doughnut, price, promotion, and place, as well as come current and potential marketing research. Fourth, we have developed a brief overview of Krispy Kreme’s financials, which explain the decline in Krispy Kreme revenues in 2004 related to the previous growth they experienced. We explain their declining net income, financials related to overexpansion, and how this has affected Krispy Kreme in the stock market. We then identified four alternative strategies ranked by order of preference that could potentially help Krispy Kreme overcome their critical issues. These include slowing store expansion in the United States, international expansion into the Asian market, diversifying their product offering for health conscious customers, and developing a new product line for super markets. Lastly, we will provide a current update on Krispy Kreme detailing what the company has done since 2004.
TABLE OF CONTENTS
Vernon Rudolph started Krispy Kreme in 1933 when he bought a doughnut shop from Joe LeBeau. With this, came the name of Krispy Kreme, the goodwill, company assets, and the secret doughnut recipe. Following this, Rudolph’s family took part in the business and opened up other small shops in places such as West Virginia and Georgia. In 1937 Rudolph decided to venture out on his own, taking the secret recipe with him after being very upset with some things happening in the business (Peter & Donnelly, 2011). He then established the first Krispy Kreme doughnut shop in Salem, North Carolina, where he felt like the economy was booming. The first deliveries of Krispy Kreme doughnuts were made to local grocers. Soon after, he began getting many requests for hot doughnuts from people off the streets. In response to this, he cut a hole in the wall of his shop so people walking by could stop and get a doughnut. Krispy Kreme wanted to keep their well-known homemade recipe consistent throughout all the chains, so a plant was built where the doughnut mix was made and distributed to each store. Krispy Kreme continued to expand and grow, reaching into the southeast in the 1960s (krispykreme.com, 2011). In 1973, after the death of Rudolph, the company slowed and was rearranged for sale to Beatrice Foods Company. Not too long after, in 1982, Krispy Kreme was bought back from Beatrice Foods and they began to focus primarily on the hot doughnut experience offered to consumers. Krispy Kreme decided to mainly focus on opening a...
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