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Krispy Creme Doughnuts Essay



Financial stability is one of the key issues that determine future growth of any business organization. Krispy Kreme Doughnuts (KKD) is on the verge of becoming bankrupt due to financial woes. Most of the profit obtained came from the company-owned stores and not the franchised stores.

From the start the Company commanded good number of customers attracted by its southern-style doughnuts; it also operated very many stores in America, Australia, South Korea and other parts of the world. Despite all these, KKD experienced financial losses in the year 2004 which saw the stock price selling below expected marked price.

All the Kripsy Kreme Franchise stores closed in Arizona due to financial problems, other investors owning Franchise license for KKD also closed due to bankruptcy reasons. Consumers stopped purchasing KKD doughnuts due to high carbohydrate contents which is considered harmful to health. The closing down of majority of the stores led to negative impact on the profitability of the company (Burbridge & Rich 276-283).

Strategic Actions and Decision Elements

The company depends on retail shops established alongside doughnut-making production line. These factory stores offers good support to other external stores by providing good revenue. Also the use of commissaries acts as a way of ensuring constant supply of doughnuts to other external stores worldwide. The use of satellite stores on the other hand helps in serving consumers with hot doughnuts and beverages; these stores operate at the same level as kiosks (Burbridge & Rich 278).

Main Findings

The company experiences poor management of finances and general stores. It faces very strong competition from other competitors within the market but is unable to device appropriate strategies due to lack of serious management team.

Possible Solutions

The general solutions that could best suit Krispy Kreme is either opening up the fallen Franchisee or merging with another related company. There are also other ways through which KKD products can be modified to suit the current customer tastes. The company has to change the nature of its management by recruiting professionals who have the ability of reading the market tastes and preferences.

Recommendations, Resolutions and Timing factors

There is need to analyze other competitors intentions and strategies in order to find the best counteractive approach. The need for good management team will enhance the provision of good brand and articulation of all the elements that comprise marketing mix. The products, pricing and the way of marketing must change for growth and improvement to be realised (David).

Identification and evaluation of the existing mission, objectives and strategies

The mission of the Company is to strive to be the best international business centre on the supply of doughnuts. Their products are geared towards uniqueness, whereby they plan to make doughnuts having very distinctive taste.

The company has the objective of being the leader in production of doughnuts and other related products. For the stated mission and objectives to work out, the management of KKD should device marketing strategies that focus on reviving the Company’s global brand within the countries that it had experienced closure of stores.

The frequent checking and testing done on main ingredients received should be done using modern equipments. Application of computerized technology can be well utilized to ensure high efficiency.

The company should also review its marketing and advertising methods in various countries, the advertising strategies should be designed to fit people’s culture within specified regions. Careful evaluation should be done on the size of market, buyer behaviour and marketing practices, these are important since market segments vary internationally.

There are many sources of revenues that the Company can rely upon. Revenue can be generated through on-premises sales and also through coordination with community organizations. The other source of revenue is known as off-premise sales, which include the use of supermarkets where the products are displayed on shelves for purchase. Revenues also come from charges made on the Franchise stores.

The supply chains also contribute towards revenue of the company and helps in the process of raw material procurement in various commodity markets.

Problem Statement

KKD’s popularity was due to its excellent services and products; it was also attributed to monopolization within the market place. It received no strong competition at first hence was able to supply customers at will. After the year 2004, KKD suffered from higher expenditure.

There was no laid down marketing strategies that could boost the sales, they did not make use of the modern technology hence ignored the use of the media and internet for advertisement purposes. At the same time the company did not change the quality of their products, they still offered products with high carbohydrate content unlike their competitors (David).

There is lack of proper management of resources within KKD stores; this has led to tremendous drop in sales over the years. Most of the stores in other countries have closed due to economic woes. At the same time consumers are shifting their tastes and preferences from doughnuts to other types of food.

This has contributed to low sales since the number of people visiting the stores decreased over the years. The number of prospective franchisees has also decreased attributing their exit to poor customer turnout owing to cheap brand that KKD has exposed itself to. The firm is also experiencing poor quality services which are due to laxity by the top management making them not to inspect the franchises (Burbridge & Rich 276-283).

Causes of the problem

The major problem is coping up with modernity; the company has not quickly adapted to the current tastes within the market and the technology that goes with it. There is the need to recruit knowledgeable employees that are able to embrace quick change instead of relying on inexperienced management team. These can form a very strong management force focused for a better future.

The company experiences stiff competition from other doughnut companies like Dunkin Donut and Tim Hortons. Majority of their sales comes from beverages made from original coffee and other related baked goods. The competitors specifically Dunkin’ have the working class as their core customers who are already loyal to their brand.

There is strong rise in other coffeehouses that are also involved in the sale of baked products; these include Starbucks which also uses products containing their brand names. In addition to their marketing tactics, Starbucks rewards all their loyal customers (Burbridge & Rich 280).

The Company should focus on providing the customers with reliable and high degree of service. They should measure the quality of products by their impact on global satisfaction and also value cleanliness in all their stores. To motivate the population towards their products, hygiene factors which might result in customers’ dissatisfaction must be closely observed. Consumers on the other hand consider variety and inexpensiveness of products as one of the motivating factors.

Alternative Solutions

There is the problem of high expenditure on overheads and less use of modern technology in marketing. Most of the clients can now easily access internet hence makes most of their orders through the internet. There is also change in taste of the consumers whereby they prefer products with less fat and sugar content due to health reasons.

The company need to work out on their business models through appropriate segmentation to enable them work comfortably with the changing market economy. Professional training of the employees on the marketing and sales strategies needs to be resumed. The firm at the same time need to diversify its sales in order to catch up with the consumers changing trends on tastes.

These other food products must be accompanied by quality services including reasonable prices. Krispy Kreme should also improve on the quality of their products by inventing new and unique recipe which can only be achieved by utilizing the most creative franchisees having high skilled employees (David).

There is need to recruit managers who are capable of implementing the firms marketing programs and at the same time have the ability of building internal cohesion (Johlke and Duhan 265-267). The manager must have the ability to motivate and unite employees from the franchises to the head office.

The managers must possess the ability to control and cope with major changes and challenges within the market. The managers need to acquire valuable information on the current market trends without relying so much on their past performances. They need to improve on their level of interaction and communication with their franchisee.

Training of management team can be used to enhance marketing effectiveness as well as the level of performance. Recruiting experienced managers will ensure that proper tactics are implemented to regain the control of each market segment. This will also ensure that the human resource department have right people for right duties (Cravens and Piercy).

Works Cited

Burbridge, John & Coleman, Rich. Krispy Kreme Doughnuts (KKD). 2010 Web.

Cravens, David & Piercy, Nigel. “Strategic Marketing”. 9th edition. McGraw Hill. 2009. Print

David, Fred .Strategic Management: Concepts and cases. International version, Prentice Hall, USA. 2009. Print

Johlke, Mark & Dale, Duhan. “Testing Competing Models of Sales Force Communication”. Journal of Personal Selling & Sales Management, 21 (2000): 265-277.

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