Client: Cartems Donuts
Skills Used: Marketing
Project Date: Oct-Dec 2015
Driven by a business belief in the importance of “smiles, conversation, and donuts”, Cartems Donuts has become a Vancouver staple for its stunning variety of donuts. The company prides itself on its fresh ingredients, which are sourced locally, sustainably, and ethically.
Upon speaking with the Cartems team, we learned they wanted to better understand their market positioning. Motivated by feedback from existing customers that their donuts were actually too big, the team wanted to know if buyers perceived their donuts as premium or standard goods (based on their price, size, ingredients and other factors). Answering this question would help Cartems better pinpoint an optimal size for their donuts with regards to buyer perception.
Our team surveyed 53 people of various ages and demographics to better understand the way people thought about Cartems, as well as donuts in general.
Of our respondents:
We found most of our respondents actually preferred a smaller 8cm size when compared to Cartems’ current 11cm donuts. More interestingly, we saw that willingness to pay actually remained relatively constant between sizes, suggesting a smaller size would actually increase margins.
Based on our research, our team came up with two primary recommendations to boost profits while improving product perception:
Fascinatingly, we found willingness to pay remained constant when comparing donut sizes. Based on these findings, we suggested Cartems reduce the size of their donuts. Assuming our research was accurate, this would keep revenue constant while decreasing variable costs, increasing overall profit.
We recommended Cartems gradually decrease the size of their donuts over three periods to take advantage of “just-noticeable difference”–this would ensure existing customers would not be immediately shocked by the stark contrast in size of the donuts before and after the change.
Because the Cartems team faced some difficulties in informing customers about the quality and sourcing of their ingredients, we proposed they add a “source map” as both an artistic and informative fixture in their cafés. This map would highlight the ingredients that go into Cartems donuts, with a visualization of where each of these ingredients come from.
This map would help draw attention to Cartems’ focus on using high-quality, locally-sourced ingredients, helping to establish Cartems as a premium pastry in consumers’ minds and justifying the company’s higher pricing compared to donuts from other businesses.
We presented Cartems with a full market research report that covered:
