Dunkin’ Donuts focused on digital strategy especially by enabling engagement with customers through social media.

a) Discuss the different types of social media that were used in the case and suggest other types of media that Dunkin Donuts could depend on to create value for customers.

b) Develop the sales promotion tools that can be used by Dunkin Donuts to promote its products.

Marketing Planning Helps Dunkin’ Donuts Score Big in Coffee Customer Loyalty A key goal for a marketing manager is to make sure that the company’s brand stays relevant. Successfully realizing this goal requires a marketing planning process that is both thorough and grounded in best practices, and also flexible enough to allow the firm to react to (and hopefully stay ahead of) changing customer preferences and shifts in values. Over its 67 years in business, Dunkin’ Donuts has shown that it can stick to its core mission while also regularly updating its marketing strategy, and thus remain relevant within the highly competitive “out-of-home coffee” category. In 1950, Dunkin’ Donuts was a single restaurant in Quincy, Massachusetts, with a simple mission: serve high-quality donuts and coffee at affordable prices with fast and friendly service. Today, with over 12,000 restaurants in 45 countries, the chain’s mission is still basically the same, but many aspects of its marketing strategy have changed to keep the brand fresh and relevant against fierce competition. In the first five decades of its history, Dunkin’ was mostly about the donuts. In the early 2000s, it decided to shift the focus more to the drink into which the donut was about to be dunked—the coffee. It squarely took on market leader Starbucks by offering a less expensive (yet really tasty) alternative, one that was faster and more user-friendly—the “average Joe’s average joe.” In 2006, Dunkin’ got even more serious about coffee with its famous and highly successful “America Runs on Dunkin’” campaign. Today, although it certainly still sells plenty of donuts, Dunkin’ sells an incredible 1.9 billion cups of coffee per year—that’s 60 cups per second! In recent years, a major focus of Dunkin’ Donuts’ marketing planning has been its digital strategy, especially by enabling engagement with customers through social media. Examples include the “create Dunkin’s next donut” contest a few years back, and the Page 1 of 4 more recent integrated #mydunkin campaign on Twitter. In the latter, fans were encouraged to share their experiences via Facebook and Twitter with how Dunkin’ keeps them running, with the most enthusiastic fans appearing in Dunkin’ TV ads. Using these tools has helped the company hear the stories of its customers, retell the stories, and interact with these loyal fans on a regular basis. Although Dunkin’ scores lower than Starbucks in the number of social media interactions, experts importantly give Dunkin higher marks in terms of the quality of those interactions. According to Dunkin’s ad agency executives, “More than ever, Dunkin’ is a brand that listens to its guests, through multiple channels, at all levels of the organization. Dunkin’ puts its fans at the center of its social media strategy—they’re an active and passionate tribe that’s fueled by interactions with the brand.” And Dunkin’ also manages to take a jab at the competition now and then. Recently, its top Facebook post was a photo of a Dunkin’ T-shirt emblazoned with the message “Friends don’t let friends drink Starbucks.” Marketing (Big M) and marketing (little m) combine strategic and programmatic/tactical approaches to provide a comprehensive focus on a company’s most important stakeholder: the customer and his or her experience with the brand. Witness Dunkin’s highly successful loyalty program, DD Perks Rewards, which is a key competitive differentiator for the company. With over 5 million members, this program is one of the fastest-growing loyalty programs in the quick service restaurant (QSR) industry. As a member of DD perks, customers earn points for every dollar spent and receive a free drink when they accrue 200 points. On becoming a DD Perks Rewards member, the customer receives a personalized welcoming e-mail message explaining the benefits of the program. Additional e-mails are also sent, and customers receive special offers on their device through Dunkin’s mobile app (which has been downloaded over 16 million times since its launch). The app is also the platform for Dunkin’s On-the-Go-Ordering, with which customers can place their order in advance and pick it up on arrival. Page 2 of 4 The superior customer experience that Dunkin’ Donuts provides has earned them industry accolades. No doubt to the ultimate chagrin of Starbucks, in the Brand Keys Customer Loyalty Engagement Index® , Dunkin’ Donuts has been number 1 in coffee customer loyalty for the past 11 years in the out-of-home coffee category and the number 1 brand for packaged coffee category for the last five years. This index recognizes brands that surpass competitors in delighting customers and meeting their expectations for taste, quality, and service, as well as brand value. Because of superior marketing planning and marketing strategy execution, Dunkin’ Donuts has successfully made the shift in focus from donuts to coffee, but it does operate in the shadow of Starbucks, which has 36 percent of the U.S. market to Dunkin’s 24 percent. And make no mistake about it, Starbucks is also very committed to digital and social media marketing and also has a loyalty program and a mobile app. As each company engages with its customers, Dunkin’s marketing managers will have to stay at the top of their game and continue to deploy a strong market planning process, monitor and adapt to customer trends, and respond with strategies designed to keep the Dunkin’ Donuts brand relevant and strategically differentiated against the competition. ---END OF CASE STUDY---

1. There are 50 parts that are checked using a GO-NOGO gauge. A GO reading would be considered a pass (or success) for the part. What is the probability that 37 parts will successfully pass?
2. Given the following table determine the mean and standard deviation

The volume of some air, assumed to be an ideal gas, in the cylinder of a car engine is 540cm^3 at a pressure of 1.1 x 10^5 Pa and a Temperature of 27 Degree celsius. The air is suddenly compressed, so that no thermal energy enters or leaves the gas, to a volume of 30cm^3. The pressure rises to 6.5 x 10^6 Pa.

Determine the Temperature of the gas after compression.

1) For the following data on Year-end Audit times (in days), 17, 20, 25, 27, 19, 19, 20, 32, 26, 23, 24, 23, 27, 38, 21, 23, 22, 28, 33, 18, 27, 20, 23, 27, 31 Prepare a table showing in columns Audit Time Intervals (days), Frequencies, Cumulative Frequencies, Relative Frequencies, Cumulative Relative Frequencies, Percent Frequencies, and Cumulative Percent Frequencies.

Dean & Deluca Ltd (D&D) is listed on Singapore Exchange and the following information was extracted from Thomson Reuters Eikon:

• Share price = $1.50 • Number of outstanding shares = 5 million • Beta = 0.8 • Last traded price of each 5% bond = $920 • Bonds pay coupons semi-annually and mature in 6 years • Face value of bond =$1,000 • Number of bonds issued = 5,000
Yield on government long-term bond = 3% Equity risk premium = 6% Singapore corporate tax rate = 20%

D&D has received a new order for its products. However, its machines are all working at full capacity. In order to accept the new order, the company needs to buy a new machine. The details relating to the order, the new machine and other costs are shown below: Year 1 2 3 Sales $160,000 $180,000 $200,000

Variable cost = 20% of sales The project requires an additional net working capital of $40,000, which is sufficient for the duration of the project.

Cost of new machine = $300,000 Life of machine = 3 years Salvage value of machine at end of 3 years = $60,000 Depreciation is straight line over 3 years. Maintenance cost of machine per year = $10,000
(a) Calculate to estimate D&D’s cost of equity, cost of debt and weighted average cost of capital (WACC).
(b) Calculate the operating cash flows relating to the new order.
(c) Calculate the free cash flows relating to the new order.
(d) Assess and advise D&D whether it should accept the new order. Justify the choice of the method you use to make the decision.

Question 2

Dean & Deluca Ltd (D&D) is listed on Singapore Exchange and the following information was extracted from Thomson Reuters Eikon:

• Share price = $1.50

• Number of outstanding shares = 5 million

• Beta = 0.8

• Last traded price of each 5% bond = $920

• Bonds pay coupons semi-annually and mature in 6 years

• Face value of bond =$1,000

• Number of bonds issued = 5,000

• Yield on government long-term bond = 3%

• Equity risk premium = 6%

• Singapore corporate tax rate = 20%
  
  D&D has received a new order for its products. However, its machines are all working at full capacity. In order to accept the new order, the company needs to buy a new machine. The details relating to the order, the new machine, and other costs are shown below:
  

  YEAR	1	2	3
  SALES	$160,000	$180,000	$200,000

  
  Variable cost = 20% of sales
  The project requires an additional net working capital of $40,000, which is sufficient for the duration of the project.
  
  Cost of new machine = $300,000
  Life of machine = 3 years
  Salvage value of machine at end of 3 years = $60,000 Depreciation is a straight line over 3 years. Maintenance cost of machine per year = $10,000

(a) Calculate to estimate D&D’s cost of equity, cost of debt and weighted average cost of capital (WACC).

(b) Calculate the operating cash flows relating to the new order.

(c) Calculate the free cash flows relating to the new order.

(d) Assess and advise D&D whether it should accept the new order. Justify the choice of the method you use to make the decision.

Company was started on January 1, 2017. The following accounts are on the Balance Sheet Accounts: Cash, Accounts Receivable, Equipment, Accumulated Depreciation, Prepaid Expenses, Supplies, Accounts Payable, Notes Payable, Interest Payable, Wages Payable, Unearned Revenue, Common Stock, Additional Paid in Capital, and Retained Earnings.

The company report results as of the fiscal year ending December 31, 2017.

Following are fiscal 2017 transactions:

a. January 1: The company sold 12,000 shares of $0.50 par common stock for $6 per share.

b. January 1: Borrowed $80,000 from the local bank. The loan carries a 6% annual interest rate. Interest and principal are due in full on January 1, 2026.

c. January 1: Purchased equipment with cash to be used in the business for $60,000. The estimated life of the equipment is 4 years, and the expected salvage value is $8,000.

d. January 1: Purchased an 18-month insurance policy for $9,000 with cash. The policy begins immediately.

e. During 2017: Paid $8,000 cash for advertising in the local paper, $6,500 of which was for 2017 papers and $1,500 of which is for 2018 papers.

f. During 2017: The firm pays each month’s rent for the building space on the first of the month (i.e., the firm pays rent on January 1 for rent in January). The monthly rent is $1,350. The firm began renting the building in January and rented it through December 31.

g. During 2017: Purchased supplies (e.g., cleaning solutions, sponges) for $40,000 on credit.

h. During 2017: Paid suppliers $25,000 in cash relating to items purchased in transaction

i. During 2017: Performed and billed customers for 9,500 car washes at $20 per car wash.

j. During 2017: Collected $125,000 in cash from customers billed in transaction

k. During 2017: The firm pays employees on the first of each month for work performed the previous month (i.e., the firm pays employees on February 1 for work performed in January). The total monthly wages are $3,100. Employees began work on January 1 and worked through December 31.

l. November: Started a membership program that allowed customers to pay in advance for 10 car washes at a discounted price of $15 per car wash. A total of 250 customers signed up for this membership program.

m. December: Voted the “Best Car Wash” by a people’s poll in the city. Due to this, the Bubble Blasters Auto Spa had a one-page article in the city’s magazine. 10 Bubbles estimates an increase of $20,000 in sales in 2018 as a result of this good press.

n. December: Bubble Blasters granted bonuses to three employees based on their exceptional performance in 2017. The bonus amount is $1,000 per employee and will be paid on January 15, 2018.

o. December 31: The firm declared and paid a dividend of $0.10 per share.

p. December 31: The cost of car wash supplies remaining at year end totaled $7,500. The market value of the supplies is $12,000.

q. December 31: Records show that 500 “member” car washes (from the prepaid membership program in part l) were provided during 2017.

Instructions: Record the transactions in the FSET. The beginning balances in all the accounts are 0 because the company began operations on January 1, 2017. In good form, prepare the balance sheet at December 31, 2017, and the income statement, the statement of stockholders’ equity, and the statement of cash flows (direct method) for the period ending December 31, 2017.

George, their family friend has informed the couple(Jacinda and Steven) during a family dinner that “although in Australia the individuals invest directly in the stock market, in recent years 31% of the adult population directly invest by holding shares, down from 44% in 2004”. Their question to you is:

If direct share market participation is a good or bad strategy for an investor? Discuss one reason why investors should or should not invest directly in the Australian shares.

A lightbulb manufacturer wants to estimate the total number of defective bulbs contained in all of the boxes shipped by the company during the past week. Production personnel at this company have recorded the number of defective bulbs found in each of 50 randomly selected boxes shipped during the past week. These data are provided down below. Calculate a 95% confidence interval for the total number of defective bulbs contained in the 1000 boxes shipped by this company during the past week. (Round your answers to a whole number.) Calculate the lower and upper limit.

A lightbulb manufacturer wants to estimate the total number of defective bulbs contained in all of the boxes shipped by the company during the past week. Production personnel at this company have recorded the number of defective bulbs found in each of 50 randomly selected boxes shipped during the past week. These data are provided in the file P08_12.xlsx. Calculate a 95% confidence interval for the total number of defective bulbs contained in the 1000 boxes shipped by this company during the past week. (Round your answers to a whole number.)