Krispy Kreme

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Introduction

Over time, Krispy Kreme has been through a number of financial gain and loss stages. The companys regional growth was mainly seen in the 1930s, 1940s and the 1950s. It is at around this time that the company saw the commissioning of shops in twelve states across the United States. In this text, I concern myself with the case analysis of Krispy Kreme.


An analysis of the current scenario

Though its history can be traced to 1937, Krispy Kreme has in the recent past been entangled in a number of legal as well as financial problems. According to Lussier (2008), the marketing mix, referred to as the $ Ps of marketing include product, place, price as well as promotion. It is important to note that when it comes to Krispy Kreme, the emphasis is on the product. What invites clients in this case is the very concept of hot doughnut now.


A closer loom at the pricing of doughnuts at Krispy Kreme reveals that they are somewhat cheaper than those offered by competitors in the marketplace. They are bigger too. When it comes to place, as another marketing mix component, there has been some debate as regards the choice of locations chosen by the company. According to Ireland et al. (2008) some of the locations selected by Krispy Kreme are not appropriate for retail sales. This includes some older building locations. It is important to note that when it comes to promotion the company does not prefer personal selling. Here, customers already possess the doughnuts brand awareness. It is also important to note herein that when it comes to advertising, Krispy Kreme spends very little on the same.


As of 2005, some allegations on the part of Krispy Kreme informed a greater focus on its socio-cultural factors. It has been noted that the healthy living awareness campaigns by various interested groups go a long way to hurt the bottom line of the company, that is, profits. When it comes to the social responsibility undertakings of Krispy Kreme, the company recently came up wit an initiative where customers could purchase balloons for only $1 and the proceeds from these were directed towards a Childrens Miracle Network.


Last but not least, when it comes to economic factors, the company targeted a number of demographics including but not in any way limited to income and age. Though this has been seen to be an inherent weakness in some quarters other cracks have been established with regard to Krispy Kremes lack of a concise vision and mission statement.


An analysis of problem and their core elements

According to Ireland et al. (2008), Krispy Kreme fell as fast as it rose. Though there were a number of problems that dogged crispy crème from the word o, it is important to note that the health awareness campaigns, though far fetched, have had an impact on the bottom line of Krispy Kreme. However, most of the problems are rooted in the financial statements of the company and perhaps this can be brought out by 2004 stock trading value of Krispy Kreme. This was at the same time various analysts were questioning the strategy of Krispy Kreme with regard to its growth projections and many were of the opinion that the same could not support the upward stock projectile. In the second half of 2004, the expectations of management were not met and with that came a decrease in the value of sales.


While earlier projections were that sales would increase by more than 25%, a substantial deviation from this projection in the 2005 saw sales increase by only 15%. It was also at around this time that the company had to shut down a number of factory stores that in its own opinion were underperforming. For the first quarter of 2005, there was a shocker when the company claimed that its stock had been on a downward trajectory, shaving about 20% of its earlier value with the first loss the company made standing at a record $24 million. As I have stated above, the company in this case attributed the loss to the trendy living style where people were embracing a diet that was essentially low in Carb. It was only a short while after this that the SEC started its investigations with regard to Krispy Kremes accounting practices on suspicion that the company as engaged in some creative accounting practices.


Alternative causes of action

It is important to note that with regard to Krispy Kreme, there exists a number of alternatives that can be or could have been undertaken to solve the various problems the company had. To begin with, on the claim that health awareness campaigns were impacting negatively on the bottom line of the firm, Krispy Kreme could have looked into diversifying its operations so as to accommodate the changing trends. This could include diversification to new markets or seeking other unexploited niches that existed in the marketplace. However, this could end up backfiring on the company without proper management as well as market research.


Further, it is important t note that Krispy Kreme concerned itself with nearly all the demographics including but not in any way limited to income and age. This soon came to be a formidable impendent for the firm. In my opinion, the company should have identified its customers and this would have enabled it to tailor its products to address the various needs of the targeted customers.


Chosen strategies and implementation details

It may be noted that to implement the alternative, there are a number of prerequisites that must be met. First and foremost is identifying the need for change and making everybody aware of what had to be one to achieve desired outcome. In this regard, a need to involve every member of the organization from the management all the way down to the employees is necessary so as to ensure that the formulated plans are not sabotaged. This also helps in enhancing the chances of success ate the implementation stage. There is also an existing need of the company to embrace continuous improvement or what is variously known as kaizen. This shall ensure that the company responds to the various changes in the marketplace appropriately.


Conclusion

In conclusion, it is important to note that the problems of Krispy Kreme are not limited I any way to what is listed it the text above. It can be noted that small chain donut shops were also big contributors towards the problems dogging Krispy Kreme as they also had regional impact.


 References

Lussier, R.N. (2008). Management Fundamentals: Concepts, Applications, Skill Development. Cengage Learning

Ireland, R.D. & Hitt, M.A. (2008). Understanding Business Strategy: Concepts and Cases. Cengage Learning, 2008

 

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