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Krispy Kreme, a maker of doughnuts, has dropped by 5 percent in the financial market. This was reported on Wednesday 10 September 2014. The company did not meet its expectations in its quarterly earnings, and its overall market share has dropped by 13 percent this year. Although its profits did not meet the estimation made by the Wall Street, its net income stood at 23 percent, and its revenue made a seven percent increase. This indicated a good performance in sales in restaurants and retailers.
According to the CEO, Tony Thompson, the company is looking forward to an expansion in the beverage section and coming up with doughnuts for different occasions (Carlock, 2014). Thompson feels that competition is a challenge to Krispy Kreme. Other players such as Dunkin and Tim Horton in the beverage section have taken a large market share as well as Starbucks and Mcdonald in serving breakfast. Most of the top competitors offer quick services, and they specialize in coffee shops. Krispy Kreme believes that its clients will choose its products based on service, product service, convenience, and price (Carlock, 2014). As business tries to improve its position in the market, there is an intense increase in competition. For a company to retain and attract customers, it may be forced to reduce prices of its products, introduce substitutes and improve its marketing strategy.
Thompson expects that beverages will boost the company earnings, and it will take a competitive advantage. The beverage offering is targeting customers who purchase drinks inside the company stores as well as in other retail shops. Thompson’s strategy was to spearhead Krispy Kreme in a direction that would increase its revenue. The company has already started testing spice lattes. In addition, it offers packaged ground coffee as well as ready-to drink coffee.
Krispy Kreme is also looking forward to opening other branches in the few coming days. For instance, on September 23, 2014, a new branch will be opened in Hialeah (Doss, 2014). Free doughnuts will be offered to the first customers. The company also offers promotional flavors such as Lotta Latte Doughnut promotion for a period of five weeks. Increased competition and demand for doughnuts have made the company make this move. The company increased its earnings following the birthday party of its CEO. However, after that, its sales volume dropped for the previous five consecutive days.
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Doughnuts have increased the demand for Krispy Kreme products especially for people of this age who are more concerned about their health. However, the demand of the products is determined by the price due to stiff competition among other players. The price of a product affects the quantity demanded. Again, the supply of the products is affected by the amount of the products that the company is willing to produce. This is also affected by the price of the product. However, buyers can influence the price of the product. The demand of the product becomes high when the customers are willing to spend on eateries. Lack of demand of the product will force the company to either lower its prices or change its line of production. Bargaining power can also affect the prices since the more controlled and concentrated the supply is, the stronger it influences the market (La Monica, 2014).
Shift in prices of confectionaries is determined by restaurant ambience, customer choices and preferences. This is because pricing depends on the competitor and the menu on offer. For instance, Starbuck, a giant threat to Krispy Kreme has higher prices though the company’s objective is fast service while Kreme Krispy focuses on coffee houses with an ambience of a relaxed pace (La Monica, 2014).
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