The Gaining Popularity and Great Potential of Coffee in the Australian Market - Term Paper Example

Executive Summary The gaining popularity of coffee in the Australian market provides growth potential by launching different variants of coffee or near products which get acceptability from the consumer. The coffee industry intends to attract the under 18 generation by launching a beverage which is a variant of coffee but has a low caffeine content and more of fruit content like apple, peach, strawberry, raspberry and lemon. The report present the marketing strategy the coffee stores looking to market the new variant of coffee which are available in flavours like apple, strawberry, raspberry, peach and lemon. It highlights the marketing strategy that needs to be devised after finding the target market for the product. The report presents the different marketing mix by laying stress on the marketing strategies that will help to draw many takers. It then dwells on the promotional strategy and the creativity angle that will facilitate the growth of the new variant of coffee. The report then looks into the manner the operation issues are to be handled thereby helping to find the financial projection and the budgeted values. The report finally looks into the time frame which will help to achieve the marketing objectives and having a control mechanism so that necessary changes can be brought about. The above strategy will help the new variant of coffee to go well with the customer and will help to build a big market. Contents Introduction 3 Objective of the study 3 Target Market 3 Market Positioning 5 Marketing Mix 6 Marketing Strategies 9 Promotion Strategy 13 Creative Strategy to market 14 Distribution 15 Improvement in distribution network 16 Handling of operations 17 Financial Projections 18 Implementation Time Table 20 Control, Milestone and Corrective Action 21 Conclusion 21 References 23 Introduction The growing coffee provides an opportunity to launch different variants and flavors of coffee for the younger generation. Having a new variant of coffee in different flavors like apple, peach, raspberry, lemon and strawberry will help to bring a change in the coffee market and ensure that the younger generations are attracted towards it which has low caffeine content. The report intends to have a marketing plan where it launches a variant of coffee with low caffeine and different flavors so that the health is not compromised. It also looks into the marketing mechanism, the operation mechanism and the financial expectation along with the time frame to ensure successful implementation of the new product. Objective of the study Identify the potential the beverage market has especially the different variants of coffee like apple, raspberry, peach, lemon and strawberry Identifying the target group and the marketing methods which will help the new product have high acceptability Identifying the operational and financial issues so that a time frame can be designed to ensure successful growth of customers for the new variants of coffee. Target Market The target market for coffee with flavor of apple, peach, strawberry, raspberry and lemon are people in the age bracket from 15 to 45. The new coffee flavour to be marketed has defined a target market for itself by concentrating on age groups consumes coffee and spends time at coffee junctions. The target market for coffee with different flavours has further being divided into two where the core target customers are students in the age bracket 15 to 24 as their strength is growing due to increase in universities and the other category is the working segment constituting of 24+ age group. The coffee store is looking to locate its stores near colleges, universities and hostels so that it can attract maximum customers. Targeted Segment Age Group Class of Customer Customer Needs Rural 5 - 45 years Premium Middle Class Growing coffee market with customers looking towards new variants and flavours which has something extra compared to the normal coffee Semi-Urban 5 - 45 years Middle Class Increased consumption of coffee as it has become a fashion statement Demographic: The population of Australia is around 22.4 million people. This presents a huge opportunity as it can cater to 49.4% of the entire population 11.07 million. (Statistics, 2010) This thus helps to identify the target market better as it will look towards people in the working age group giving a huge market to cater to. This thereby presents a bright future and prospects for the coffee store with different flavours to grow in the future. Psychographic: This will help to identify the target market based on attitude and personality formation. This will be achieved by eyeing the people in age group 15 to 45 as they have the potential to repeat their purchase. Also this will help to ensure a better strategy for this group in regard to promotion. Geographic: The geographic factor makes Australia an important hub due to growing population. The coffee stores selling coffee in different flavours thus will concentrate to eye major cities like Sydney, Melbourne, Perth, and Brisbane and so on presenting a huge market to cater to. Based on the target market the market strategy will be as follows Year 1: Coffee stores will look to increase their market size through penetration. The company will look to target their primary customers in the age group 5 to 45 as they have good potential which is seen by their percentage share in population. Year 2: Coffee stores will look towards growth by targeting new development. For this the company will target their urban customers in the age group 5 to 45 as it is a growing segment and has huge potential Year 3: Coffee stores will look here to consolidate their market share by increased market penetration. The company will target both section of customer and look to instigate repeat purchase at the same time get new customers. Market Positioning The new variants of coffee available in different flavours with are looking to position its product “in between the customers who drink coffee and the customers who prefer fruit drinks”. (Treacher & Pollard, 2004) The new variant of coffee has been developed it in such a way that it has both the group of customer who drink beverages. This will help the coffee stores position itself better and will help to improve its image. Marketing Mix The coffee stores while launching a beverage for the younger generation which has less caffeine and different varieties of coffee like apple, peach, lemon, strawberry and raspberry should have the following marketing mix Product The beverage sector is divided into different sectors depending on the income level. This has made the provider differentiate their product. It is a seen phenomenon that “Australian has service providers who are cost efficient and other who are regular providers thus differentiating themselves on the basis of product offered”. (Justin, 2008) The service plays a huge role but “the socio-cultural factor affects the number of people consuming coffee and this gets altered due different factors”. (Pobari, 2009) Thus, Australia has a mix of services and providers differentiate themselves on some basis. The beverage the coffee store desires to launches should have less caffeine and more fruits considering the harmful effects caffeine have. At the same time the taste should not be compromised considering the brand image. The company can also look forward to launch a beverage which is nutritional and helps the younger generation to stay fit by having some health drink. Price The beverage industry is Australia has multiple price mechanism working according to the living standard. The beverage industry in Australia offers “a mix of different pricing giving the service provider to tap the market in different cities as per the living standard”. (Justin, 2008) By providing such a variation it also ensures that organisations offers different service provider to choose their competencies. A study conducted shows that “brands create an halo affect around the product as consumer have a perception that the product is better compared to its competitor in terms of quality, price and usage” (Lance, Katrin & Chiranjeev, 1995) The coffee store should ensure that the product is not priced heavily and should suit all pockets. This will help to attract younger people especially the students who have a fixed budget thereby ensuring that all the segment of the younger generation is tapped. Place The beverage industry to ensure proper distribution needs to ensure that the product and service is delivered to the customer at the door step. For this in the beverage industry the customer has to be present at the place. It is important that the manner in which the services are rendered makes the customer feel a part of the organisation. The type of distribution to be used in the restaurant industry is direct selling. The sales person has to come in contact with the customer to ensure satisfactory delivery of services. A special thing to note here is that the services are consumed at the same time. It is not possible to store it. The coffee store should ensure that the beverage is launched across all its stores slowly where as in the beginning the company can launch it at a few stores thereby testing the feasibility of launching it. The coffee store need to ensure that while launching it special care is taken to ensure that it is launched at places where the students and the younger generation is in abundance. Promotion The beverage sector in Australia provides an integrated marketing communication to make the customer aware of the services and ensure that they remain loyal. The beverage sector offers “advertising on television, radio, billboards, newspaper, hoardings, and public relations, personal selling, direct mail and internet”. (Justin, 2008) The technological advancement has allowed companies to use the marketing communication according to their requirements. Thus, Australia presents a wide avenue to choose to sell the services and also have loyalty programs to retain customers. “The coffee store will advertise the product through in stores promotion”. (Bristow and Frankwick, 1994) Starbucks should also ensure that marketing takes place through “advertisement in news paper, hoardings and distribution of pamphlets”. (Bristow and Frankwick, 1994) This will help them get awareness and will help them sell their products easily. People People in the service sector comprises of employees, customer and the company itself. Companies need to ensure that all this are under control so that proper management is possible. The buyer behaviour in Australia “plays a huge role due to the socio-cultural influence so companies need to ensure that segmentation and targeting is sound”. (Kalyani & Babu, 2006) This makes it important that airlines identify it properly. The services offered should also be good to retain those. The beverage sector in Australia also ensures that the “employees are well trained and versed according to the culture and also given continuous motivation talks to keep their high spirits”. (Kalyani & Babu, 2006) This makes it possible for the service provider to ensure that they are able to provide continuous service without disruptions. Physical Evidence Since, services can’t be seen but only realized by those who have been a part of it so the coffee industry in Australia ensures that the services offered are as per the cultural requirements. (Chawla, 2003) The provider so ensure that “services offered are differentiated by offering something else from the others so that satisfaction is high”. (Chawla, 2003) Thus the coffee industry has a lot of offer and based on the different cities the provider mould their services. Marketing Strategies Marketing of new flavour of coffee holds an important aspect and will help to meet its objectives. Coffee chains which offer coffee are criticized for offering high caffeine which affects the health of the customer. Also the tactics and promotional campaign of the coffee chains are eyed towards the younger age group. This makes it important that the new variant of coffee markets itself to be able to gather a bigger market. To market coffee stores will look forward to create brand awareness. In the beginning “the new flavours of coffee will be advertised through in stores promotion”. (Bristow and Frankwick, 1994) We plan to have “television commercial in the beginning as the viewership is high for it” (Helm, 2005). It should be ensured that marketing takes place through “advertisement in news paper, hoardings and distribution of pamphlets”. (Bristow and Frankwick, 1994) The main aim here is to make people know about the new generation beverage launched which has different flavours like lemon, peach, apple, strawberry and raspberry. In stores promos and special road shows will help to attract customer. The coffee stores should use this strategy as “there is stiff competition and the huge cost involved will put extra pressure which will hamper the growth path”. (Helm, 2005) This strategy will give us a path and help to move ahead. The marketing strategy will thus include the following STRATEGY Product Price Promotion Place Increase Market Penetration The new flavour of coffee needs to concentrate and improve its presence as it is a new product and pursuing a strategy which helps to go well will increase the consumer confidence and build the product for a long period of time Market the product in the rural region The new flavour of coffee needs to ensure that it is able to market its product using different mechanism like advertisement, banners, hoardings and news print to attract maximum viewership. Using Price and quality as a factor The new flavour of coffee needs to market and gain importance for the product by using the price and differentiating it from the other products so that the middle and above income group buy it Increase television advertisements The new flavour of coffee should looks towards television as an advertisement mode given the wide popularity and coverage area that it has Distribution of refrigerators The new flavour of coffee should distribute coffee makers as it will provide longevity to the product and save it in extreme conditions. Also this could help to lure the distributors and sellers as they get access to coffee maker Improving brand image The new flavour of coffee should endorse their product that it’s build their image. Having an icon in this direction could be beneficial. This would also shed the previous problems encountered while promoting it and will justify the price of the coffee Improving distribution network The new flavour of coffee should look to improve the network so that the product reaches all areas and are easily accessed by all consumers. This will help to build trust and understand consumer confidence with the product thereby allowing to make the changes Retain and repeat purchase The new flavour of coffee should look towards repeat purchase. This holds an importance aspect in the coffee industry and price here plays a role. If the product confronts to the quality then the customer is willing to spend extra on the product. Laying importance to remove expired goods The new flavour of coffee should regularly visit the market and remove the undesired coffee so that image doesn’t get hampered. This will also lead towards promoting and build consumer confidence The above strategy will be beneficial for the new flavour of coffee. It will help to improve their penetration level and will make the company achieve its stated objective. This will help the coffee flavours to go well with the public and build a platform through which the brand can grow and increase its market share. Promotion Strategy The coffee stores to market its new variant of coffee need to use various strategies and developed new ways which will help them work on the new business model and capture a chunk of the business at the same time enter new markets. The strategies which will help the coffee stores are New reward format by introducing the “coffee fruit lover privilege customer which is aimed at customers who love both a mix of fruit and coffee so that they get additional benefit when they consume the new variant of coffee”. (George, 2006) This is a good way and will help to attract more people who look towards consuming coffee. Loyalty programs like “velocity for frequent consumer who get a free life membership card where the points collected can be redeemed for a coffee all the year round”. (Gunter, 2007) This will help the coffee store to promote its service as price conscious people who are frequent consumer can use it and get some advantage. This will help to increase loyalty. Entering into “partnership with coffee retailers so that consumers have more easy access to the different variants of coffee which can be made at home” (Kelly, 2005) will help them to promote their product. This will ensure that coffee stores instead of “relying on the traditional methods has taken advantage of technology” (Kelly, 2005) to promote itself. Creative Strategy to market The creative strategy that will be used to market the new flavours of coffee is as follows Tone & Style: The coffee stores are targeting people who are young and fall in the age group 15 to 45 year because coffee is thought of as a fun thing, which is gaining popularity and having an upbeat and positive approach will help to be creative and design a mechanism which ensures maximum growth. The advertisement will draw and demonstrate humor and actual lifestyle being lived. This will help the consumers to associate with the product easily. For example, advertisement will be developed where real life examples are used like people refreshing themselves by having coffee after playing sports or shopping. This will make the consumer understand the product better and will help to create a style for the product. Central Theme (USP): The theme to market will towards using the actual lifestyle and developing the distribution network around it. (The product will be distributed in a variety of bars/clubs and stores.) Appeal Techniques(S): As the target market are people in the age bracket 15 to 45 it is identified that the generation (y)ers are the one who will be eyed. This makes it important that the advertisement developed has a positive message along with being humorous. This will help in easy association as the people are straightforward. Image: The image that the advertisement will cater towards is built on the daily life situations. Special care will be taken to ensure that incidents from daily life are picked to create an image. This will help the consumers to see themselves in the advertisements. This will thus focus on the demographics and help to target the customer by creating an upbeat about the product through the marketing strategy. Creative Execution: Media will hold center stage to ensure that the real life scenarios are displayed. The use of outdoor advertising which included colored billboards will be used along the road sides especially at highways by having special placement at transit stations. Magazine advertisements will include a full page advertisement by using a mix of colors to be 6 that will be used. This will help to instigate repeat purchase and will also lure customers to consume the beverage the first time. This will help to build awareness and create interest in the beverage which will help to target the customers easily. Television advertisement will be a key to ensure that the consumers are attracted towards the new variant. They will be 25-30 seconds in length. Thus the above mechanism will help to ensure that a creative mechanism is drafted which will help in creative execution and enable to target the customers. Distribution In the beginning we intend to “create a strong distribution network in 20-30 states and ensuring that the flavour of coffee is available on time”. (Kelly, 2005) We intend to move forward slowly. This will ensure that we are able to create a good network. This will also result in “having good relation with the wholesaler and ensure that we don’t run out of stock”. (Kelly, 2005) The coffee stores need to have the following operation mechanism which will ensure that the product is delivered timely. This can be even seen from the above diagram. We see here that customization due to individual wants of the customer has led to a more concentrated effort. Logistics so has gained valve. “Effective logistics help to manage the effectiveness of the supply chain and deliver the correct product at the right time”. (Krishna, 2007) This will help to ensure properly delivery and ensure that the distribution network is strong. Improvement in distribution network The coffee stores needs to look for better management. The coffee stores need to improve the logistics. This will ensure timely delivery. It is seen that “product-market and resource-based strategy will help to improve the logistics and give them cost advantage, positive impact in the performance and improve the overall growth”. (Photis, 2004) This will make marketing better. The coffee store needs to ensure that by drawing a mechanism which ensures timely delivery of coffee variants at all the stores the customers are able to get coffee. This will help to build reputation and will ensure that there is easy availability of the different flavours of coffee everywhere. The distribution and logistics system needs to be strong. The present distribution channel “has its roots to all customers and also to business units”. (Photis, 2004) Having competition and varied field to provide services like hotels, stores, lodges “the bargaining power is low there by affecting the margins in spite of strong logistics with proper IT integration”. (Photis, 2004) The coffee store needs to build on it so that it is able to ensure that the different flavours of coffee are available easily. Handling of operations The coffee stores looking towards ensuring a continuous and regular supply of the different flavours of coffee need to ensure that the operations are carried out by the different department effectively. The operation model is bound to be like the following The above model will ensure that the new variant of coffee is distributed evenly throughout every store location. This will help to ensure that the customers get a regular supply of coffee and are able to associate with the product. Along with it the coffee stores need to ensure that the different departments work in tandem with each other. For example, the marketing department, the sales department, the production department and the finance department work together so that the combined efforts help to develop a market for the new variant of coffee. This will also ensure that timely actions are taken and will help to ensure that the coffee flavours are accepted by the consumers. Financial Projections The coffee stores while looking to market the product will look towards having a budget defined for all medium of marketing which will help them to gauge the manner in which the return for the new flavour of coffee is able to provide. The different financial projection on an estimated basis for the new variants of coffee will be as follows Budget expenditure on promotion: The coffee store will look towards promoting the new variant of coffee by having a budgeted table and look towards spending an allocated sum on different modes of advertising. The estimated budget allocation by different medium of advertising are as follows Budget Allocation By Medium – Summary Amount $ Amount % of Total Television $224 576 46.4 Outdoor $127 292 26.3 Transit $85 184 17.6 Magazine $46 948 9.7 Total $484 000 100.0 Having the above financial projections will ensure that the new variant of coffee is advertised properly using the different mediums available so that a strong customer base can be developed. Budget allocation on television: The coffee stores is looking towards having a proper budget allocation on the different network and channels so that it provides maximum viewership. The budgeted allocation is as follows Budget Allocation - Television $ Amount CTV Network Prime Time: 3 ads per week Fringe time: 4 ads per week (9 week seasonal schedule) $67 372 Much Music Fringe time: 4 ads per week (32 week skip schedule) $53 898 TSN Fringe time: 4 ads per week (18 week pulse schedule) $35 932 Spike Fringe time: 4 ads per week (8 week pulse schedule) $22 457 WTN Fringe time: 4 ads per week (24 week seasonal schedule) $44 915 Total Television $224 576 The above budget allocation will help to ensure that the financials are kept within limit and will help the coffee stores to make necessary changes in the manner which will help to provide long run profits due to the different flavours of coffee that will lure customers. Implementation Time Table The coffee store will look towards the following time table strategy to market itself. This strategy will help them to ensure that they are able to capture a good chunk of the coffee market by providing the requisite time to market the product. This will help the new coffee flavours to be able to build a strong base of loyal customers and make the necessary changes time and again to ensure that marketing objectives are achieved. Control, Milestone and Corrective Action The coffee stores needs to use control measures. It needs to evaluate the growth at regular 2 months interval. It needs to compare it with other similar products in the market. This will help to understand the performance. It will also bring about areas which need to be worked on. This will help to build strategy at short time interval. It will facilitate the process. This has been created on the assumption that the economy will revive.   2 Month 2 Month 2 Month 2 Month 2 Month 2 Month Penetration Brand Market Share Thus, we see that working on the above will help the coffee stores to achieve growth as shown above. This has been prepared on the basis of acceptance of the product. The above chart will act as a measure to evaluate the performance on a regular basis so that steps can be taken to make the necessary changes in the marketing plan. This will help the new variant of coffee to enter the market and gain steady growth among the customers. Conclusion The new variant of coffee in different flavours like apple, strawberry, raspberry, lemon and peach can be successful by having a marketing policy which looks into the different areas of operations. This will help to ensure that the reach is wide and enable the consumer to be loyal to the new variant. Even the operation and financial aspect highlights the manner in which the coffee variants will be successfully launched in the market and will help to create an environment where growth permits. The time frame and the corrective measures will act as a check thereby enabling to make changes to the plan so that the coffee goes well down with the public. Thus creating a proper marketing plan will help and ensure that the new flavour of coffee gains acceptability and is able to capture a chunk of the coffee market in the near future. 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