Kripsy Kreme Strategic Options
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Strategic Options
i) Attract non-users
Krispy Kreme has to date been very casual about taking a push approach to consumers. The majority of publicity and promotion the company undertakes utilizes word-of-mouth marketing and other free publicity such as free giveaways at public events. Krispy Kreme may wish to take a more aggressive approach, with a new media campaign that is specifically aimed at attracting new users. Whilst it has been noted that the doughnut industry is generally in decline, Krispy Kreme may wish to try and grow the category again, or at least stem the decline and gain greater market share of the smaller market. With other chains such as Dunkin Doughnuts, Winchells and LaMars focusing on coffee and other baked products, Krispy Kreme may be able to steal a large amount of market share from them.
This is, however, an expensive option in that mass media campaigns cost money. Further, it would potentially mean having to undertake wider retail placement which the company cannot afford in the wake of its multitude of law cases from disenchanted franchisees.
ii) Increase Purchase Levels Amongst Existing Customers
This is harder to achieve since the companys current clientele have been observed to be consuming doughnuts in smaller quantities. It would be hard for the company to reverse what is becoming an important nationwide trend of healthy eating through marketing strategy. A more appropriate option would be to try and gain greater consumption from existing customers through new products.
iii) Increase Premium Charged / Further Quality Leadership
Krispy Kreme has been noted for the fierce brand loyalty customers exhibit, and their staunch belief that Krispy Kreme is the very best doughnut one can buy. Krispy Kreme may wish to build on that by adjusting its prices accordingly. For example, purchasing a dozen KK doughnuts is only 99 cents more expensive than purchasing a half dozen. Such pricing strategies may be re-considered to reflect quality. Assuming doughnut sales remain the way they are at present, higher price per doughnut means higher revenue.
This has a few small limitations. Firstly, junk food industries have been largely supported by middle to lower economic status consumers (see Appendix E). This may mean that they are price sensitive, and as such, there is no guarantee that sales will continue, since there are a large number of substitute products in the market. Further,