I’m not an frequent coffee drinker, but I do find myself going to Dunkin’ Donuts for the occasional hot drink. What I do find particularly interesting about the franchise, is that almost every time I go, there seems to be little to no line. So what is it that keep’s its operations running smoothly and efficiently? Dunkin’ Donuts takes a disciplined approach that is able to balance consumer demand with operational execution. Its strategy of offering limited time offer deals has been among the best to work in the restaurant industry. Their strategy allows them to offer a differentiated menu to its wide array of customers. Through this method, Dunkin’ Donuts is able to introduce new products bringing in new customers. Setting themselves apart from its competitors is a key factor that has helped keep Dunkin’ Donuts a thriving business. Limited time offers allows Dunkin’ Donuts to explore new options, to get a feel for what customers want. Many times they find that customers really like a particular item, and they end up integrating it into their core menu.
Dunkin’ Donuts’ success comes from a vast and diverse pipeline that allows them to offer similar but different products engaging its customers to try new things, leading to increased sales. Customization is Dunkin’ Donuts’ core competency, not only does product quality matter, but its service as well.
Dunkin’ Donuts has a very low capital requirement relative to the rest of the coffee retail industry. This is due in part to its business model, centered around establishing franchises across the world. So what are some ways in which it keeps driving profits? One factor to consider is the flow of customers, something very important to managers at Dunkin’ Donuts. Being able to stay on top of demand, especially during peak hours, is an essential factor for their success. Dunkin’ Donuts usually offers little to no in-house dining space. Allowing them to reduce expense and continue to increase their contribution. They focus on giving the customer the convenience of getting an on the run breakfast and or coffee.
What is your opinion about Dunkin’ Donuts?
Do you believe their success is due to their diverse menu or more closely related to coffee demand?
Do you think that by offering quick service, Dunkin’ Donuts is neglecting product value?
Any good or bad experiences?
Costco’s Wholesale’s Mission Statement is to, continually provide their members with quality goods and services at the lowest possible prices. Costco’s has implemented a strategy for a competitive advantage by having a mix of low-cost providers and differentiation. Costco differentiates itself by providing consumers with products in bulk at a low per unit cost, giving rise to a competitive advantage. Costco delivers exceptional value in the products and customer service offer, giving customers the satisfaction that they are getting more for their money.
What keeps customers coming back to Costco, and what is it that makes it so successful? To answer the first question, Costco offers two types of memberships—the regular and executive membership. With an executive membership, Costco gives a 2% reward on annual Costco purchases. A holder of the executive membership receives incentives for shopping there, which leads to more sales and higher customer visits. Costco has made itself a highly successful company by offering quality products and excellent customer service. Not only do they treat their customer’s well but offer their employees a competitive salary, making on average $20 an hour. They receive great benefits and are part of a safe and healthy working environment as well. At Costco they are committed to providing its employees with opportunities for personal and career growth. A satisfied and happy employee translates into a productive working environment. By giving its customers competitive wages, Costco is creating valuable and productive employees, which in turn increases their output per employee, they save money on hiring many merely good employees, and offer quality service.
My family holds a membership, and we primarily go there for most of our groceries, and what I have learned is that, the shopping experience forms part of Costco’s competitive advantage. They offer free samples throughout their store, have a food court, and gasoline station with reduced prices. Their competitive prices and savings keep us coming back. Saving on gas while on a trip to buy groceries is an added benefit that has contributed to Costco’s competitive advantage and differentiation. Costco has competition with companies such as Sam’s Club and Wal-Mart, but so far it has proved to be dominating the wholesale business, being listed at #12 on Fortune’s 2014 most admired companies. I believe that as long as they keep doing what they are doing, and going a step further to satisfy its customers, they will continue to dominate the wholesale business.
Do you or any family members hold a membership at Costco? If so, how satisfied are you with the products and services they offer?
Do you think Costco’s competitive advantage would strengthen or weaken by expanding to continents such as Europe or Asia?
Are there still any areas for improvement at Costco?