Steve Bumgarner. - field marketing coordinator, Krispy Kreme Doughnut Corp. marketing strategy - Brief Article - Statistical Data Included

Brandweek, March 26, 2001 by Emily Fromm

From soup to doughnuts, this marketer gives a small-town franchise big-city appeal.

The fact that many New Yorkers consider Krispy Kreme a local business (OK, with a few stores in New Jersey amuses Steve Bumgarner to no end. After all, while the misconception may be a sign of big-city hubris, it's also evidence that the Winston-Salem, N.C., donut company's marketing strategy is paying off.

"That's our goal," laughs Bumgarner. "To get people to think it's the local hometown chain. That's how we try to build a long-term relationship with the customer." Bumgarner, 28, knows something about long-term relationships, having joined Krispy Kreme in 1995 right out of college with a business degree. As field marketing coordinator, he organized store openings and started the Krispy Kreme collectibles line of T-shirts, mugs and other items.

The company meanwhile, has grown substantially in both earnings and national presence. In 1995, Krispy Kreme had fewer than 100 stores in 13 states; today it boasts 178 outlets (a combination of wholly-owned stores and franchises) in 28 states, 21 of which were opened last year. Shares jumped 78% from the initial offering price when the company went public in April 2000. Meanwhile, sales shot up 41% last year to $448 million.

Bumgarner insists he was not the mastermind behind the marketing strategy but rather in the right place at the right time. "There's a lot of shared responsibility," he said. "Our department has evolved, and I'm one of the few folks who's been involved the whole time. I've helped shape our strategy as we've added franchisees, but there are other folks who deserve a lot of credit."

His boss, svp-marketing Stan Parker, sees it a bit differently "Steve just has a terrific understanding of the brand," Parker said. "We work with a lot of pr firms on the local level, so it's critical that he's done a great job educating them about our strategy and the tactics that work for the brand."

Krispy Kreme awards franchises to area developers, who build and manage clusters of stores in selected markets. Rather than hiring a national ad agency the company encourages area developers to use local shops as a way of introducing the brand to communities. "It's a great, great model, and I think it's going to be a textbook case of how to do local marketing said Lisa Mullins, associate partner at Brickell & Partners in Virginia Beach, Va. "As an agency you have the autonomy to do what's right in your market, and Steve is willing to try new things and be creative and flexible."

But, the structure does pose its own set of challenges. "You have lots of different people touching the brand, so you have to make sure they all really understand it," Bumgarner said. "There might be five agencies working for me [at a given time], and chances are there's one that's not getting the attention it needs. I'm not sure where the threshold is of how many is too many."

One thing he is sure of is Krispy Kreme's greatest strength: its warm, gooey product. The company celebrates each new-store opening by delivering thousands of hot original glazed doughnuts by the dozens to local businesses and media. "Once someone's had a hot Krispy Kreme," Bumgarner said, "it's done the job for us."

Krispy Kreme sharpens brand awareness through fundraising. The company raised close to $20 million for local charities last year. Retailers also offer customers an open view of their doughnut-making machines (which produce more than 200 dozen doughnuts per hour), a tradition that dates back to 1937, when founder Vernon Rudolph cut a hole in his bakery wall to create a makeshift shop.

Bumgarner wants to reinforce the small-town experience as the company continues to roll out nationally Unlike Dunkin' Donuts, he said, Krispy Kreme will never be on every corner (although it did acquire Chicago-based Digital Java in February which will help it compete with its competitor's booming coffee business). But that will just let New Yorkers keep thinking it's their local doughnut shop.

How did I get this job? I was waiting tables at a restaurant next door to Krispy Kreme headquarters and started up a conversation with president and CEO Scott Livengood.

The best part about my job is...Everyone associates Krispy Kreme with happy memories. It's a fun product, and my job is very rewarding from a people perspective.

Favorite brand: Broughton Foods. It was the local dairy in my hometown, Marietta, Ohio.