Final answer:
Shifting focus from donuts to coffee can lead Dunkin' Donuts to face risks like brand dilution and loss of traditional customers, but adopting strategies such as de-McDonaldization, specialization, and strong brand reputation can help mitigate these risks and ensure successful market repositioning.
Step-by-step explanation:
When a company like Dunkin' Donuts chooses to shift its focus from its signature product to another—like emphasizing coffee over donuts—there are inherent risks including alienating traditional customers, diluting the brand, or failing to stand out in the new market. However, this strategy can also lead to expansion in a new product segment and attract a new customer base.
To mitigate these risks, a company can employ marketing strategies such as rebranding, expanding product offerings to include a wide range of tastes, and emphasizing the quality of the new product. Using the concept of de-McDonaldization, which suggests movement towards individuality and uniqueness, they can differentiate their coffee as a specialty rather than a generic beverage.
Another key strategy is to maintain the quality and uniqueness of the product to withstand competition from monopolistic competitors. Specialization can also play a pivotal role, enabling the company to excel in the production of their new focus product, creating a comparative advantage. To ensure success in this strategic shift, fostering a consistent and strong brand reputation is essential, as is engaging in effective communication with the customer base to reposition the brand without losing trust.