Marketing Channels 8th Edition by Bert Rosenbloom

Exercise 1

Dunkin Donuts first entered the Russian market in 1996 using Russian franchisees. But after three years of sustaining heavy losses, Dunkin Donuts left Russia in 1999. One of the main problems was Dunkin Donuts' inability to control its franchisees. One franchise, for example, sold meat pies and liquor along with donuts and coffee! But by the spring of 2010, Dunkin Donuts embarked on another attempt to crack the Russian market by again using franchise channels. Twenty franchise stores were opened in Moscow. After its failed attempt to exercise control of its Russian franchisees in its previous attempt to penetrate the Russian market, Dunkin Donuts believes it has learned an important lesson: pay attention to the franchisees who know what Russians want. American style donuts are not high on their list. In fact, most Russians hardly know what a donut is. They prefer products such as scalded cream raspberry jam pastries and other special baked goods. So, to succeed in the Russian market, even though Dunkin Donuts needs to control the franchisees in terms of assuring quality and consistency, when it comes to product development, Dunkin Donuts needs to listen closely to what the franchisees have to say.
Do you think it is possible for Dunkin Donuts to "walk this fine line" of exercising strong control of its Russian franchisees while deferring to them when it comes to product development?