Lesson 1: Competition Can Be Good

That is the first of four lessons from this article about Dunkin Donuts.

In 1994, when Will Kussell arrived as Dunkin' Donuts' senior VP of marketing, he found a vastly different atmosphere from his previous employer. "At Reebok, there wasn't a minute you weren't face-to-face, eyeball-to-eyeball with Nike," he says. At Dunkin', by contrast, there was no obvious rival, which he says had led to complacency. The average franchisee considered his prime competition to be the next Dunkin' location just down the road. Stores were dingy. The menu hadn't changed in years. Dunkin' Donuts, Kussell says, "was a great brand that had lost its way." But during the 1990s, driven partly by an influx of new managers and partly by the expansion of Starbucks, Dunkin' Donuts transformed itself.
This cycle routinely plays out in other industries. That's not to say an established company enjoys facing new competition, but doing so can be a spark. Consider General Motors circa 1980: bloated, bureaucratic and building lousy cars. After Toyota's and Honda's arrival, it took years for GM to regain its competitive footing. But there's little doubt it's a better company today.

There is some very interesting stuff in the article. It appears that Dunkin Donuts has decided to differentiate themselves from Krispy Kreme, rather than compete for the same market niche. But, by pushing their coffee in addition to donuts, they are also fighting Starbucks in that product market. That competition seems to boil down to speed over comfort.

How do Dunkin's prospects look? Koehn, the Harvard professor-who admits to her own heavy Starbucks habit-argues the Seattle chain is still the better bet. The reason: in a stressed-out world, it's selling a luxurious escape. "Life is moving too fast for consumers… [and] a lot of people I know are trying to pause," says Koehn, who studied Starbucks extensively while writing the book "Brand New." Koehn says Starbucks sells that ideal.
Maybe. But for many people, those leisurely moments are harder to come by. Consider how many book-club meetings fold because no one had time to read the book. Or how many people sign up for spinning classes but are too busy to attend. Amid layoffs and long commutes, Dunkin' Donuts is a bet on convenience-and a bet against Americans' finding time for a time out. In a 24/7 to-go world, that's a strategy that's bound to eventually find a place in the spotlight.

Sounds like a good move to me. Starbucks and Krispy Kreme get more attention from the business media, but it looks like Dunkin Donuts has some sharp business execs of their own.

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