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Roast plc, the UK coffee chain, is plagued with falling growth and profitability issues and that has worried the company management and its investors. Pete McCarthy, the newly appointed Managing Director, is now in the process of sorting out major issues that the company is…
planning to double the outlets mostly through franchisee partnerships in next five years and now in the process of identifying various issues in the functional areas such as marketing, operations, finance and, of course, in the field of human resource management.
Over time, due to lack of innovation in product offerings, Roast plc has lost its old sheen and image of serving premium coffee at its outlets and that can be easily noticed from the reduced customer ratings. The reduced customer rating is also due to poor services and venue as Pete points out. When customers start perceiving the company’s products as commodity offerings then the company tends to lose its market share impacting its profitability and sales. Currently, the company’s products are not distinguishable from competition and secondly, the products are not targeted on a specific class of customers. These two are the marketing issues that the company is now facing with in the current business environment.
As Pete, the new Managing Director, points out customers do not find even venue enticing anymore. Before shops are given a fresh look to make them more attractive, it is essential to decide which class of the customers, the company wants to target at – such as business class or young couples who want to pass leisure time or ‘as a local community store working closely with neighbourhood partners as Pete points out. Kotler (2001) describes ‘product positioning’ as an essential marketing tool to carve a suitable niche as the company cannot hope to serve all segments of the market simultaneously.
As Kotler (2001) emphasises that the company needs to shift its focus on buyer wants rather than its needs. Product differentiation is a key strategy that the Roast needs to adopt in its services, product offerings with numerous varieties in its menu so that customers have several options to choose from. Thus, distinguishing company’s product line from the competition is a key marketing ...