50 Cent or $5 Donuts: The positioning of donuts

I wanted to dive into positioning a business and products a little more from a post a few weeks ago. What better way than to illustrate by using donuts?

Here’s the first donut that you may be familiar with. Product #1 is a simple donut from the local grocery store, i.e. Kroger:. It costs about 50 cents to $1 each, displayed in the bakery section behind a self-serve glass case.

The second donut is a special flavor donut, maple bacon with creme filling. It is now available at a small business in Middle Tennessee, Five Daughters Bakery. They have about 3-5 store fronts where customers can only buy donuts, snacks, and drinks.

Here are the 7 P’s for these two products:

Product #1 Product #2
Product 50 cent to $1 donut $4-$5 donut with specialty flavors, is maple bacon donut
Place Local grocery store bakery case, i.e. Kroger, available in all stores in bakery case Five Daughters Bakery, own retail store fronts, about 5 locations in Middle Tennessee
Price 50 cents $4-$5
Promotion None, display case, Promotion on facebook, local media
Profit High profit Higher profit
People General retail worker-part of chain Specialized skills- specific for small business
Position Premium product

If you can walk into a Kroger and grab a plain donut at any time of the day, as long as they are on display for $1, would you? Or would you save your money and purchase a new flavor, maple bacon donut with creme filling for $5? These are freshly made with premium ingredients and obviously a one-of-a kind flavor. You have to go to a specific location and enter a specialty retail store that only offers this as its main products.

Do you see how the integration of all 7P’s allows product #1 to be low quality, but functional product?

Do you see how the integration of all 7 P’s allows product #2 to be a premium product, with customers willing to pay $4? Of course Kroger can always add premium donuts to its shelves and display cases but probably would not, at least not for a long period of time. Premium donuts would not fit with most of their customers across all of the locations.

As a small business owner entering a market, look for a niche, where you can create a unique product that customers deem valuable enough to pay premium prices. This will help ensure long-term financial sustainability.

Now, grab a glass of milk and try one of those delicious donuts!



Note: I have no affiliation with Five Daughters Bakery or Kroger, just simply a customer who enjoyed their donuts a few times. 

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