Krispy Kreme

Better Essays
Marketing Audit

MKT 551/Marketing Management

Jason Lamar Floyd

Professor Tonya Boddie

January 30, 2006

Krispy Kreme 's recent success has left many individuals in awe. This study attempts to de-mystify how Krispy Kreme has come to dominate the doughnut world and what problems lie ahead in the future. The tools used in this examination will begin with the history of Krispy Kreme. Then an external and internal analysis will dissect Krispy Kreme 's current market and what steps Krispy Kreme is taking to compete in that market, including a look into competitors. Krispy Kreme provides equipment, services, and supplies to franchisees and doughnuts to consumers in a fashion similar to those of
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Customers do not pose a significant threat to Krispy Kreme because they are numerous and widely dispersed. Krispy Kreme franchises must buy from the franchising corporation, which guarantees some level of sales. As purchasers, franchisees still have only limited bargaining power because they are locked in through a large investment. Another significant factor is the value of the product to the customer. While food is essential for living, the products offered by Krispy Kreme are dispensable, and for leisure consumption only. However, increased profitability in the industry suggests that people are becoming more dependent on fast food and specialty restaurants than they have ever been.

Large and small companies compete fiercely for market share in the industry. Therefore, the prices and perceived value of products are crucial to company performance. There are no significant exit barriers for firms in the industry. However, exiting the primary arena of competition is not feasible for most companies because of the large franchising base and the futility of abandoning core competencies derived from years of experience.
The US economy is currently recovering from a recession. Despite the poor economic conditions, Krispy Kreme managed to grow 15% in 2001 with $394 million in revenues ending the fiscal year (2/3/02). 10 Krispy Kreme however is in a low cost industry therefore the rise and
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