Krispy Kreme Case Analysis

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Krispy Kreme Case Analysis

Krispy Kreme Doughnuts, Inc.: A Case Analysis

Presented to

October 09, 2009

Table of Contents

II. Table of Contents 2
III. Executive Summary 3
IV. Situational Analysis 5
A. Environment 5
B. Industry Analysis 5
C. The Organization 7
D. The Marketing Strategy 9

V. Problems Found in Situational Analysis 10
A. Statement of primary problem. 10
B. Statement of secondary problem 12
C. Statement of tertiary problem. 13

VI. Formulate, evaluate, and record alternative course(s) of action 14 A. Strategic Alternative 1 14
1. Benefits 14
2. Costs 15
B. Strategic Alternative 2 16
1. Benefits 16
2. Costs 19
C. Strategic Alternative 3 19
1. Benefits 19
2. Costs 21

VII. Selection of Strategic Alternative and Implementation 22 A. Statement of Selected Strategy 22
B. Justification of Selected Strategy 23
C. Description of the implementation of strategy. 23

VIII. Summary 28
IX. Appendices 29
A. Financial Analysis and Selected Tables 29
B. Reference List 32

Executive Summary

Krispy Kreme Doughnuts, Inc., began as a family-owned business back in 1937, as an expansion of a pre-existing business, when Vernon Rudolph purchased a doughnut shop along with the now-famous secret recipe for making yeast-raised doughnuts. His doughnuts, which he delivered to grocery stores in the Winston-Salem, North Carolina area, quickly became immensely popular with customers. So popular in fact, that he cut a hole in the wall of his shop so that he could sell hot doughnuts to potential customers passing by on the street. (Peter and Donnelly, 2009, Page 690). Who knows, but this may have been one of the first “drive-thru/walk-up” windows in the restaurant business! And that is just one example of Mr. Rudolph’s and his early partner, Mike Harding’s, forward-thinking marketing ideas for that era. The idea of making all of the shops look the same, so that they would be recognized by patrons wherever they traveled, as well as the viewing windows for watching the doughnuts being made, were good examples of marketing promotional strategies. These strategies are still considered by Krispy Kreme to be “Brand Elements” as reported in current, annual financial reports. By keeping control of the recipe and the doughnut-making process, they also maintained product standards and reduced, while not completely eliminating, the competition through the uniqueness of their product. In fact, attempts to change the recipe, or even the look of the shops, in later years met with negative reactions from customers and the company quickly returned to the original taste and feel of the “original” Krispy Kreme. The company and its doughnut became synonymous with a particular look, taste and feeling. This emotion that became associated with Krispy Kreme, described as “a feel-good business” and one that “created an experience” as opposed to just selling doughnuts (Peter and Donnelly, 2007), became the core of the company’s marketing strategy, and just maybe, one of the prime reasons for its subsequent struggles in the early 2000’s. Selling a “feeling” or “experience” can be a successful marketing tool. But that’s just one of the tools that a successful marketing plan must encompass. The company must also be prepared to grow with the times and change with that growth. That is, the marketing strategy of one time and place may not necessarily translate and/or work in another. Financial systems of one era will not suffice for another and in this age of advanced access to information, inaccuracies can be extremely damaging to investor confidence.

This analysis of the Krispy Kreme Doughnut, Inc. case study will attempt to uncover some of the reasons for the company’s challenges, suggest some potential strategies and possible solutions as well the steps for implementing those strategies.

Situational Analysis

1 Environment

Krispy Kreme Doughnuts,...
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