Dunkin Donuts has more than 12,000 restaurants worldwide and sells more coffee than some other large fast-food companies such as Starbucks and McDonalds. Yet, in 2018, Dunkin’ Donuts had to close more than 200 stores in India. The question that many asked was why is one of the most profitable coffeehouses and donut companies in the world having to close more than 50% of its stores in India?
The answer to that is that it failed on implementing the correct brand positioning in this country.
As we know, when identifying the brand positioning one needs to understand its segment, value, evidence and competition in order to be successful. As part of segmentation, a company needs to understand their target market. They also need to understand the value that they could provide the customer and Dunkin’ Donuts did not have the supporting evidence that would lead them to believe their brand positioning could be successful in this country.
One of the main factors that the company failed to understand is that their target market contained people who did not consume donuts or anything sweet for breakfast. Additionally, in the US, Dunkin Donuts’ highest selling beverages are coffee, iced tea and expressos yet Indians prefer to drink tea, named chai, rather than coffee. The way in which they prefer their tea prepared also varied dramatically from other countries as the ingredients changed and instead of having “almond milk, maple syrup or cinnamon” as some of the major add-ons, Indians like to include “milk, sugar, dried tea leaves and sometimes ginger and cardamom” as Leo Saini explained in his article.
Also, India is a very diverse country with people that speak many languages, that have a variety of cultures and with varying cuisine preferences across its different regions. This meant that in the majority of places, indians actually preferred to eat breakfast at home and if they decided to eat out they would eat at local restaurants. Dunkin’ Donuts had to compete against family owned businesses (called Mithaiwalas) who understood their market and had a well-known reputation with their community. The donuts that Dunkin’ Donuts offered did not provide anything special or different that would give them a competitive advantage over small bakeries as India is known for its wide variety of local sweet snacks/pastries.
Dunkin’ Donuts did not properly adapt to the needs of Indian culture therefore Dunkin’ Donuts value proposition as a breakfast-focused fast-food restaurant was not successful. Additionally, it expanded too fast, locations were too large and operations costs were too high as well. It is important to highlight this company’s failure as we can learn how to better position brands strategically by conducting market research, a competitive analysis and understanding how the firm’s capabilities can adapt to the targeted market.
Here is a video link for more information.
SOURCES:
Saini, Leo. “Why Dunkin’ Donuts Failed in India.” Medium: Better Marketing. 27 June. 2019. Site URL https://medium.com/better-marketing/why-dunkin-donuts-failed-in-india-62bbbabc0227
Sigalos, MacKenzie and Turner, Ashley. “Where Dunkin’ went wrong in India.” CNBC. 26 October 2018. Site URL https://www.cnbc.com/video/2018/10/25/dunkin-donuts-india-coffee-restaurants-krispy-kreme-mad-over-donuts.html
Business Insights: Global. “Dunkin’ Donuts & More Failure Case Study 2019: Misaligned Positioning Kept the Brand from Forging a Deeper Connection with Consumers.” 27 June 2019. Site URL http://bi.gale.com.libproxy.temple.edu/global/article/GALE%7CA575560937?u=temple_main
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