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Marketing 7.2 Continued put the espresso machines to how much of its signature pink and orange color scheme to retain to where to display its fresh baked goods. Out went the square laminate tables, to be replaced by round Imitation-granite tabletops and sleek chairs. Dunkin' covered store walls in espresso brown and dialed down the pink and orange tones. Executives considered but held off on installing wireless Internet access because customers "just don't feel it's Dunkin' Donuts." Executives continue to discuss dropping the word "donuts" from its signs to convey that its menu is now broader.

To grab a bigger share of customer, Dunkin' is expanding its menu beyond breakfast with hearty sweet and savory snacks that can substitute for meals, such as smoothies and personal pizzas. The new Euclid store is doing three times the sales of other stores in its area, partly because more customers are coming after 11 a.m. for new gourmet cookies and flatbread sandwiches. However, whereas customers liked the flatbread sandwiches and smoothies, they balked at tiny pinwheels of dough stuffed with various fillings. Customers said "they felt like something at a fancy cocktail hour," says Lewis, and they weren't substantial enough.

Stacey Stevens, a 34-year-old who recently visited the new Dunkin' prototype store, said she noticed it felt different than other Dunkin' locations. "I don't remember there being lots of music," she said, while picking up a dozen doughnuts. "I like it in here." She said it felt "more upbeat" than Starbucks. One store manager even persuaded Richard Wandersleben to upgrade from a regular coffee to a $2.39 latte during a recent visit. The 73-year-old retired tool-and-die maker, who drinks about three cups of coffee a day, says the Dunkin' Donuts latte suited him fine. "It's a little creamier" than regular coffee, he said.

Dunkin' knows that it'll take some time to refresh its positioning. And whatever else happens, it plans to stay true to the needs and preferences of the Dunkin' tribe. Dunkin is "not going after the Starbucks coffee snob," says one analyst. So far, so good. For two years running, Dunkin' Donuts has ranked number one in the coffee category in a leading customer loyalty survey, ahead of number-two Starbucks. According to the survey, Dunkin' Donuts was the top brand for consistently meeting or exceeding customer expectations.

Dunkin's positioning and value proposition are pretty well summed up in its ad slogan "America Runs on Dunkin'." The company's ads show ordinary people relying on the chain to get them through their day. Says one ad, "It's where everyday people get things done everyday."

Sources: Adapted from portions of Janet Adamy, "Battle Brewing: Dunkin' Donuts Tries to Go Upscale, but Not Too Far," Wall Street Journal, April 8, 2006, p. A1; with quotes and other information from Julie Bosman, "This Joe's for You," New York Times, June 8, 2006, p. C1; Chris Reidy, "The New Face of Dunkin' Donuts," Boston Globe, March 9, 2007; Scott Olson, "Dunkin' Donuts' Expansion May Create Coffee Clash," Indianapolis Business Journal, October 22, 2007, p. 22; "Dunkin' Donuts Invites Coffee Lovers to Enjoy Lattes for Less," PR Newswire, February 25, 2008; and, September 2008.

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