 |
|
Dear Colleagues: When do brands become iconic? How can a company transform a regional brand into a global powerhouse? Jon Luther, Executive Chairman of Dunkin' Brands, presented his company's branding story at the International Restaurant Show in New York and the audience was mesmerized. In just a little over 6 years, he led Dunkin' Donuts from a regional donut chain into a restaurant and coffee leader in the United States and in numerous markets around the world. What is the take away? Pay attention to how intensively his marketing strategy focused on understanding the Dunkin' Donuts customer, differentiating the brand and products, and creating products and communications that resonate with a distinct and rapidly expanding audience. Enjoy! Ivy |
|
Brand Transformation: Dunkin' Donuts |
|
 |
|
When Jon Luther took the helm at Dunkin' Brands in 2003, the company that held Dunkin' Donuts and Baskin Robbins divisions was under the umbrella of Allied Domecq QSR headquartered in England. His charge was to provide transformational leadership to create iconic global brands. At once he set out to change the perception of the "quick food" segment of the restaurant category to one of quick quality. In order to develop and implement an effective marketing strategy he had to revamp the corporate culture. He reorganized the company around its brands, changed the corporate name from Allied to Dunkin' Brands, moved facility locations from six to 1 and developed a set of values that would become the core of his team. Luther set out to find the brand's "strategic heartbeat," his term to capture the context of current market preferences and purchasing influencers. He directed the company's marketing approach to focus on identifying what was 1) most relevant to consumers, and 2) most relevant to the competitive set. He led the company through "soul searching" for its brand(s). Luther explained that he established the company's reason for existence "as a franchisor that leads and builds brands" and articulated "a major vision, which is to be best-in-class and passionate about brands and the people who build them - both employees and franchisees." In terms of his notion of a "strategic heartbeat," Luther's vision for the company's flagship brands involved taking Dunkin' Donuts (DD) national over time with enduring profitable international growth. "I found the company to be a coffee leader disguised as a donut maker." |
|
|
|
Through DD's market research the company got to the brand's essence, which was found to be "all about rituals that revive." Luther explained that people go for coffee multiple times a day and DD wanted to become part of its customers' daily routines. To get the company ready to be a coffee player long term, they brought in a consumer insight team in 2004-05 and created a new and distinct list of attributes for the DD brand and its customers:
Based on customer feedback and market differentiation, "this brand was not blue collar, but had a blue collar soul," said Luther. "The brand positioning and advertising that expressed the transformation was all about getting the people in this country running day after day. Whatever quick, delicious, pick-me-up they need, whenever they need it." From a brand identity perspective, over the past several years, DD has created a new logo, redesigned its restaurants for a more contemporary feel, and implemented green initiatives. The transformation was crowned with the tagline "America Runs on Dunkin'." Menu innovation was integral to the brand transformation with a focus on breakfast baked goods and beverages. In the past few years, new items have been created to be flavorful, well-priced and popular. Food innovations have included the steak and cheese breakfast sandwich, supreme omelet sandwich, waffle breakfast sandwich, and a line of flatbread sandwiches. In the beverage category the menu expansion began with a hot espresso platform, extending to iced lattes, smoothies, and iced and hot coffee in numerous flavors. The DDSmart menu is Dunkin's entry into the health and wellness space. They have 12 items under 300 calories. While Luther doesn't expect those items to be big sellers in the short run, he feels it is a segment that can't be ignored and has promise for the future. Luther has pursued a green agenda, but can't shake their styrofoam cups. Luther has heard from commuter customers that the alternatives do not have the stability or ability to hold heat as the real thing. He hopes and expects to find a substitute eventually. While DD restaurants have opened at a rate of 500-600 per year since 2003, strategic partnerships have helped establish the brand in markets without stores. DD is JetBlue's in-flight coffee of choice. The P&G Folgers distribution operation, now owned by Smucker's, distributes DD coffee nationwide, resulting in DD becoming the #1 coffee SKU in grocery stores in just 18 months. It is hard to believe that DD's top coffee market is California -- where they don't have a single store! DD has dabbled with social media and according to Luther, found that while it isn't having an impact on sales, it is proving to be a valuable contributor to increasing brand awareness, especially in markets without stores. |
|
|
|
The DD customer experience is focused on research indicating that speed and accuracy are what DD customers expect with each order; so, Luther's team has worked with its franchises to provide training, and in the tough economy has focused more intensively on operations excellence. With stores and product distribution worldwide, DD has made its entry into the global "quick quality" restaurant and coffee sales arenas in a big way. Luther says that their brand identity is generally consistent globally and that their innovation is how they adapt their bakery and beverage products to the local market. In Asia bakery goods are adapted to local tastes and ingredients, with mochi in Japan and more green tea in China and Singapore. The coffee blend is stronger in markets such as Turkey, Chile and Spain. They are taking their time to enter each market with an innovative and long term strategy; it took one and one-half years to get into China, now with 30 DD stores. With the sluggish economy, DD's advertising has endeavored to boost consumer morale with their "You 'Kin Do It" campaign. That coupled with reallocating funding to product development and promotions, such as the addition of new, better-priced (e.g. 99 cent) bakery items without discounting, "help consumers know we understand what they are going through," says Luther. Throughout all this, Luther and his company are constantly monitoring the competition in the U.S. and around the world. They are cautious as Canada's Tim Horton's restaurants are coming to northern border states and putting up a new competitive fight. And, as for the folks in green, Luther says that DD's overall strategy is to get out in front with what they feel their customers want and have others chase them. |
|
 |
|
|
|
|
|