Deconstructing the Dunkin’ Donuts 3-3-12 Promo: How Much Did I Save and Why Dunkin Benefits More From the Deal

In this post, I am not just going to calculate the discount from a run-of-the-mill Dunkin’ Donuts food promo (because that would be too easy), but also try to connect it to the concept of self-interest and the invisible hand. By the way, this is NOT an advertorial. This is a legitimate post y’all.   I love donuts and I love promos more. Upon entering a neighborhood Dunkin’ Donuts (DNKN:US see latest stock quote), I planned to take out one – or maybe two – donuts home. However, I saw this poster.

Dunkin Donuts 3-3-12 promo
Is this really a great deal? Poster of Dunkin’ donuts 3-3-12 promo. Image from official Dunkin’ Donuts Philippines twitter account

The franchise owner for Dunkin’ Donuts in the Philippines is Golden Donuts Incorporated. The promo price for this box of donuts is PHP 199 (USD 4.51). If I buy the donuts separately, this is what I’ll have to pay:

  • 3 premium donuts – PHP 35 each – total of  PHP 105
  • 3 regular donuts –     PHP 20 each – total of PHP 60
  • 12 munchkins –          PHP 4 each  –  total of PHP 48

Separately, the donuts cost a total of PHP 213, so there’s a savings of PHP 14 (USD 29 cents) or 6.6% with the promo. In my opinion, that small a discount is not really a good deal. Yes I saved money but I spent for something I didn’t plan to buy in the first place. If I planned to buy two donuts (PHP 40 – 70 total) and I ended up paying 199, I overspent mutliples of my original budget. Of course, the poster and the lure of a discount enticed me to buy. Had I done my calculations first and realized that all I’ll end up saving is a measly 6.6%, I wouldn’t have proceeded with the purchase. By giving a discount, what did Dunkin’ get from the deal? I won’t be able to put a number, but the store that will certainly get the better end of the deal. Why is this so?

  • Increase in revenues – from the 40-70 that I originally wanted to spend, to 199
  • Decrease in per unit selling cost, as it is more costly per unit to sell one donut than a boxful
  • Less cost from unsold inventory – unsold donuts take up space and will need to be disposed of (and documented) at the end of the day
  • In relation to the above, Dunkin’ was able to push its less popular donuts – I needed variety in the box so I chose whatever flavors were there, even flavors that I probably will not buy individually
  • Additional marketing – as the donut box is an advertisement in itself when I carry it around
Dunkin' Donuts Philippines 3-3-12 Promo
Hmmm Donuts. I may have saved a little money, but I’ll gain a lot of pounds. Image by thefinancemd.com

This brings us to the concept of self-interest. The discount that I got, no matter how little, was not due to the benevolence of Dunkin’ Donuts. The company was looking out for its own interests. From that, I benefited as well. I was also looking out for my own interest. In my desire to save, I bought into the promo and in doing so, I gave benefits to Dunkin’. This pattern of self-interest and benefits is repeated many times over in business transactions everywhere. This is what actually moves the economy, sort of an invisible hand that guides it forward. Since I bought too much donuts, I will probably give some of them away. The recipient will benefit of course, but then again that gift is due to my self interest. I hinted in one post about physical fitness that I want to get back in shape, so the donuts will have to go. Want some donuts? Raise your invisible hands if you want one.   – Finance MD thefinancemd.com

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Finance, M.D.

Finance, M.D. is a practicing physician who dabbles in finance and investment. He has passed all three levels of the Chartered Financial Analyst (CFA) exams, all in his first attempts. thefinancemd.com

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