Donuts can make people happy across many different cultures but did you know that donut cultural origins can be traced back to the middle east and Europe in the 1400s? They didn’t arrive in America until dutch settlers introduced them to Americans in the early 1800s. With this information it is clear that a multi national donut chain could take advantage of different market segments by familiarizing itself with the cross-cultural expectations of the perfect donut.
Dunkin Donuts is a chain that originated in America and became a multinational company. Today they operate over 11,700 locations in 43 different countries. The countries include the UK, Russia, Spain, Germany, Sweden, China and Austria. With the doughnut’s mixed cultural history, Dunkin Donuts needs to be careful what it delivers in each country.
Sometimes moving into a new country proves challenging and unsuccessful. One example of this was when Dunkin Donuts tried to move into Russia. They ended up losing money and pulling out. After an 11 year break from the area, they reentered with a new partner with an eye on the booming coffee business. The local partner was important because they would be helpful in adjusting product offerings to meet local cultures and help to improve profitability.
An example of local operators changing the product offerings to suit local cultures can be found in their Indonesia chains back in the 90s. Dunkin Donuts executives found that the stores in Indonesia were sprinkling cheese on top of the custard filled doughnuts. While this may seem gross to American doughnut eaters, it proved hugely successful and was adopted as an official product in the area.
In the late 1980s, Dunkin Donuts had merged with Baskin Robbins which proved to be successful to American culture but challenging elsewhere. In America, people tend to think of doughnuts as a breakfast item and ice cream as an afternoon dessert. This allowed them to continue sales all day in America, however this was not the same in other countries. In Russia and the asian markets people did not see doughnuts as breakfast foods. They were seen as more of an afternoon snack item like ice cream. Because of this, the strategy that worked well in the United states was not effective in other countries.
One important consideration when management is deciding to invest in a new flavor to satisfy a local culture is to assess the economic feasibility of the investment. If they make a new doughnut flavor for a specific market segment, will it be too limited to be able to sell to other markets? Some international markets, like Russia, are also almost completely unfamiliar with doughnuts. This requires Dunkin Donuts to customize the products for that area. With Russia having a large enough market, this type of product offering shift makes sense.