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To position Dunkin' Donuts as more than just a doughnut chain, Eddie Binder, VP-marketing, had the delicate task of retiring one of the best-known characters in advertising: Fred the Baker.

Rather than do it quietly, Mr. Binder, 38, helped orchestrate a celebrity-studded sendoff for Fred last fall that included a TV campaign featuring famous retirees such as Sen. Bob Dole and gymnast Mary Lou Retton, a parade and a free doughnut giveaway.

Dunkin' Donuts handed out 6 million doughnuts that day. Mr. Binder notes the offer lured in new and lapsed customers to see how the chain, with 3,300 U.S. outlets, has started evolving from its doughnut roots to a place for bagels, danish pastry and specialty coffee drinks such as Coffee Coolatta.

"We are repositioning our business to a coffee-based business," Mr. Binder says.

To tout the new positioning, in April the Allied Domecq unit hired a new advertising agency for its $40 million account, Hill, Holliday, Connors, Cosmopulos, Boston. The first major work breaks in September.

Mr. Binder credits good relations with the franchisees who must carry out the new programs for the company's recent success. Same-store sales are up some 11% in the current fiscal year, on top of an impressive 10% rise in fiscal 1997.

Fred, while a successful pitchman for years, Mr. Binder notes, simply doesn't represent the new age of Dunkin'. "Fred the Baker is the epitome of a manufacturer's view of the world. We were not getting through to enough new people to say, `Wow, there's something new at Dunkin'.' "

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