Business Strategies of Express Coffee - Example

Business name) Business Plan Contents Contents 1 Executive Summary 2 Business details 3 Industry & Market Analysis 4 Customers and value proposition 5 Marketing strategy 7 Operations plan 11 Management team and company structure 13 Resources 14 Financing 16 Financial projections 18 Risks and strategic options 19 Key milestones 20 Appendices 21 Executive Summary The paper presents a business report for Express Coffee and highlights the manner in which aspect of marketing has been undertaken and the different areas that Express Coffee needs to work on. The new venture will be “Express Coffee” and as the name suggest will look towards having a coffee shop near universities so that students are able to quench their need for coffee. The coffee shop will function on the premise that it will look towards providing instant coffee to the students who are usually in hurry so that the product can be delivered to the students on time and they can carry the same to their class and drink. The business model is slightly different as apart from coffee it will provide other products like bourn vita, juices and other juices so that the different needs are easily met. Apart from it the business will also look to be different as the customers visiting the coffee shop will be noted by the staff and will write down the number of times the person drinks coffee or other products in a week. This will help the students to plan their financials and will also provide an opportunity through which better planning regarding the finance will be ensured and the intake of different products can be identified. This will thereby help to plan accordingly and determine the mechanism through which different needs of the customer will be met. This thereby looks at evaluating the different marketing and other activities like financials, operational and other areas which they need to work for improving their performance. Business details Description about the product/service The new venture will be “Express Coffee” and as the name suggest will look towards having a coffee shop near universities so that students are able to quench their need for coffee. The coffee shop will function on the premise that it will look towards providing instant coffee to the students who are usually in hurry so that the product can be delivered to the students on time and they can carry the same to their class and drink. The business model is slightly different as apart from coffee it will provide other products like bourn vita, juices and other juices so that the different needs are easily met. Apart from it the business will also look to be different as the customers visiting the coffee shop will be noted by the staff and will write down the number of times the person drinks coffee or other products in a week. This will help the students to plan their financials and will also provide an opportunity through which better planning regarding the finance will be ensured and the intake of different products can be identified. This will thereby help to plan accordingly and determine the mechanism through which different needs of the customer will be met. Mission: To create awareness about the different products and offerings so that more and more students and others look towards consuming the same products Vision: To become the most desired coffee chain where customers prefer to drink coffee due to better taste, freshness and pricing which offers students and others something especially new. Aims & Objectives: The aims and objectives of the business is as Short Term: To attract students to the new coffee shop and highlight them the different benefits and servings which will be offered Long Term: To create awareness about the different variety of coffee and other products which the coffee store looks to provide and attracting and retaining students for a longer period of time through the different offerings Industry & Market Analysis The market for coffee products is continuously increasing as people from all ages and generations are looking towards consuming coffee constantly. This has resulted in bringing the required changes in the industry and is growing at a rapid pace. The manner in which lifestyle of people are changing has further resulted in making more and more people consume coffee. Since, the business looks to have coffee stores near universities and colleges and aims to provide coffee at the quickest time possible so it will provide an opportunity to ensure better satisfaction. On the whole the Oman economy is witnessing continuous growth which has made people look towards different leisure activities. The overall demand for different products as a result has increased as customers are looking towards new ways to be happy and innovative. This has increased the avenue for coffee store and will provide an opportunity where the overall demand for coffee and other products will continue to grow. Customers and value proposition Target Customer Express Coffee after identifying their positioning strategy and pricing mechanism has indirectly highlighted the target customer they want to attract. Identification of the correct market is imperative for Express Coffee as all the other strategies will be developed around it and it will help Express Coffee in ensuring that the products are aimed towards the correct section of the society. This will help proper strategies to be formulated/ Express Coffee looks at attracting students, staff working in universities and colleges and local area consumers as the coffee store is being established near universities and looks to provide students readymade coffee and other products instantly. The main focus is students and providing services at the quickest time possible so that students can carry the same in their class. This thereby presents the primary target customers to be students who are studying in universities and residing in the college campus. The secondary market consists of other staff members who are part of the universities and work there and other local people who reside nearby. Thus, the focus of the coffee is store is to attract all people who drink coffee but the focus is primarily on students. The target market has thereby been further identified as Customers Aimed at Age Group Classification of purchaser Purchaser Requirements Students 15-25 Students Offer coffee at competitive rate Staff 15-45 Employees Offer coffee at competitive rate Local Area 25-45 Married & Singles Offer coffee at competitive rate The identification of the target market will thereby provide an opportunity through which Express Coffee will be able to develop different strategies and attract people based on the different offerings which are made. People who have been targeted would look to purchase from Express Coffee in comparison to other players in the market as the there are few coffee stores which are located near universities and colleges. The primary focus of other coffee stores is busy streets and shopping malls so that different type of customers can be provided. Since, Express Coffee is looking towards a different section of the society and is aiming mainly students and positioning their stores near universities and colleges so it will be able to attract a niche section of the society. This will make people drink coffee from Express Coffee in comparison to other players. In addition to it the different offerings which Express Coffee is looking to provide will help them to satisfy the different needs of the targeted market. Since, Express Coffee is looking to provide other parts apart from coffee like chocolate milk, tea, milk tea and more, some snacks will also be provide inside the shop like chocolate muffins, cheese cake. This will thereby provide students with a lot of option to choose from and will provide an opportunity through which they will be able to attract a large section of the society. Having different products under the same roof will thereby attract customers towards it and will provide an opportunity where business will improve. The target market will also be able to garner different benefits which will make them lure to the coffee stores. On the fore front it will be different concept as there are hardly coffee stores before universities which are totally aimed towards them so it will help to satisfy the different needs of the customers. In addition to it having a wide range of products at competitive pricing and looking towards ensuring that the different needs are easily met will help to attract people as the benefits which they get will outweigh the cost associated with it. Marketing strategy Market Research The determination of the marketing strategies and the business opportunity which the market provides has been researched out and the different dimensions have been looked at by Express Coffee. Express Coffee based on the research has identified that there is an increasing demand for coffee and its products in universities and colleges and setting up stores at close proximity to the colleges and universities will be successful as the different needs of the people will be met. In addition to it the research also shows that students have proximity of time and require services to be quick. Therefore having different services which are aimed towards providing students with ready to drink coffee and other items at the quickest possible time will be successful. It will help students to carry the same to the universities and drink it thereby saving valuable time for the customers. The market research thereby provides a lot of opportunity for Express Coffee as the niche market is empty and moving ahead will provide a first mover advantage and will create an opportunity through which the overall development of the business would become possible. This will help to reduce the level of risk and will provide an opportunity through which the overall business dimension will improve and future opportunities will be identified. Positioning Strategy Express Coffee has looked towards positioning its products and services for the niche market. The coffee provider looks to provide coffee and other related products to students, staff within the universities and college and nearby residents as there is a widespread need and demand for ready to eat products. This will help Express Coffee to direct their efforts towards a niche market which is different from others in the market and provides an opportunity for positioning itself differently from others. This will help the business as the degree of risk will be limited due to reduced competition and will thereby help to ensure that the different steps are taken towards developing the market and carrying out the different business activities in a proper and coordinated manner. In addition to it Express Coffee has also identified a unique selling proposition based on which it looks to differentiate itself from other players in the market. On this front Express Coffee has looked towards marking down how many times does the consumer has been drinking the coffee into their cup, for example, a customers come in and want to get a cup of latte, the staff will make a coffee and after that the staff will write down a number like 3 or 4 times on the cup, so it will show that to customers how many times did they drink the coffee per day or per week. This will help to monitor the drinking habits of students and make the students understand the different mechanism and manner which has made more and more students consume coffee and the steps which can be undertaken so that students are not impacted adversely and they can control their drinking habits. This will thereby help to position the product differently and will provide an opportunity to ensure better penetration in the market. Pricing Strategy Express Coffee aims towards pricing its products in such a manner that it fits every pocket. Since, the target customers is student, staff and local area consumers so Express Coffee looks at pricing its product in such a manner that people can comfortably pay it. Further, since the primary target is students, who don’t have huge money to pay out and usually carry out their expenses on fixed budgets so Express Coffee has looked to price the product moderately so that it doesn’t impact their pockets and they are willing to spend the required sum. This has been matched by the fact that the cost on marketing and other activities are low which has provided the opportunity for Express Coffee to price their products accordingly. The pricing strategy has thereby been developed and identified based on different fundamentals and aims towards ensuring that the overall process looks towards attracting different people and provide an opportunity where students even within their fixed budgets are able to enjoy. This will help to ensure that their pricing strategy looks towards penetrating the market and attracting people based on quality, offerings and price. Distribution Strategy Express Coffee has adopted a simple distribution model where they look to provide coffee and different products to its target customers directly from its store. To ensure effective distribution Express Coffee has hired the required workforce which will help in quick delivery of products and services so that different needs are easily met. This has also helped them to work on the different propaganda which has been identified and looks towards ensuring that the distribution strategy has been developed based on the business core strength. Express Coffee has also looked towards ensuring that the distribution strategy from suppliers to their stores is developed in sound grounds. Express Coffee has identified the potential suppliers who will supply different variants of products and have entered into an agreement with them so that there is continuous supply of products at the stores. This distribution strategy has given priority on freshness and timing so that the products are delivered from the suppliers in time. This will help to ensure that having a strong backward distribution network will help to provide different products at the appropriate time and ensure that the customers will be provided with the product at the correct time. Promotional Strategy The promotion strategy which Express Coffee looks to adopt is one where they are looking to create awareness among students but using ways which are cheaper and will catch the attention of people. To promote about the different offerings Express Coffee looks towards having posters that tag into university notice board, so that when students or staff walk pass they could see that Express Coffee has been open and it right next to the university corner. The color which has been used has been chosen wisely so that it catches the attention of passerby as using bright color has helped to attract more and more people. Express Coffee in addition to it is aiming towards distributing pamphlets within the university and adjoining areas so that people become aware about the store and look to visit the stores so that the different needs of the customers can be satisfied. Express Coffee is of the belief that using the promotional strategy along with word of mouth popularity which Express Coffee expects to get in the near future will definitely help them to develop a niche market and will be able to promote their different products and services among the targeted customers. Launch Tactics Express Coffee has identified the strategy where they look towards launching the products. The coffee shop will look to launch the products on the day when the university and colleges open for the academic year. This will help the old as well as the new comers to witness a change and find something new being added. This will cause excitement and make people to visit the store. Further, during the launch special discounts and privilege will be provided to the customers so that it catches the attention of many. The process will be matched by developing strategies where the launch will be carried out in the most effective manner and using mechanism which ensures maximum attention seeking chances. Sales Strategy Express Coffee aims towards ensuring that students drink at least one cup of coffee in a week as it will help them to breakeven and ensure that the cost are met. The sales strategy which Express Coffee looks to incorporate is direct selling. Express Coffee looks to sell its offerings directly from their stores where the workforce will look to provide the required services to the customers. The workforce will look towards providing quick services so that the precious time of students in not wasted. This will be matched by quality offerings in service and ensuring low price so that penetration increases. The sales strategy is thereby aimed towards attracting people directly based on their product offering and looking towards providing customers with an opportunity to have special products at lower and competitive pricing. Brand Development Express Coffee will look towards establishing their product in such a manner that it is able to develop a brand through which future options will multiply. The brand development process will be aimed by providing quality products to customers. This will be matched by ensuring that the cups which are used for serving coffee has the name “Express Coffee” embedded on it. Similarly other products which will be used will have the name printed on it. Special care will be taken to ensure that the process of brand development is aimed towards working on quality offerings and retaining customers by making them satisfied. This will help Express Coffee to ensure that people spread name of the coffee store through word of mouth which will further act as a measure through which brand development process would become possible. Competitive Reaction The degree of competition which Express Coffee has to deal is limited because there is hardly any presence of coffee store or chains near universities and colleges which is working on a business model like Express Coffee. There are a few players who are providing coffee but are traditional based and don’t work on the same model of ensuring that coffee is served instantly and every customer who drinks coffee are noted down so that the weekly consumption pattern can be identified. Express Coffee will be thereby hardly impacted but still the presence of other players providing coffee will have some impact which Express Coffee has to deal with and develop the mechanism through which better business prospects can be identified. Product & Market Development Express Coffee will look towards continuous development of product and market by identifying different strategies which will improve their yield. One of the steps which Express Coffee will take is to add freshly brewed coffee to their list where students who want to spend time for leisure and has time can drink freshly brewed coffee. Further coffee will be procured from different regions of the world and people based on their need and requirements can look towards purchasing the product which they find most suitable for them. In addition to it Express Coffee will look to penetrate other markets and develop their business so that the overall potential of the business maximizes and the business is able to identify the different dimensions through which better development in the future becomes possible. Growth Potential There is a huge potential that the coffee market presents as there is a continuous increase in the demand for coffee as coffee lovers are growing. This is more in case of students as they look to consume coffee to keep themselves fresh and carry out their daily activities in a better way. Further, Express Coffee has an opportunity of moving into other territories and universities which multiplies the options and increases the opportunity of establishing a coffee chain. In addition to it Express Coffee can be established in other regions of the city to give a better presence. Overall the market presents huge opportunities which if used wisely will maximize the overall growth opportunity and ensure that the business will be carried out in a more effective manner. Operations plan Production process The major production will be brewing of coffee beans so that it can be converted into powder and can be used for consumption. Since, Express Coffee will not produce the products it will look to purchase it from the primary sources and then convert them so that they can be used directly for consumption. Suppliers The coffee will be procured directly from different suppliers from different regions of the world. To ensure constant supply Express Coffee has directly contacted the suppliers and has aimed towards building long term relationship which will ensure easy availability of the products. Apart from it other consumable will be purchased locally by tying with different suppliers to ensure that the products supplied are fresh. Plant & equipment Equipment Purchase date Purchase price Running cost Phone 1st April $120 $25 Computer 1st April $720 $35 Fax 1st April $350 $15 Inventory Inventory item Unit price Quantity in stock Total cost Coffee bean Varies Deserts Varies Technology (Software): Using it to produce bills which the customers can easily understand as it will have the name and cost printed on it Trading hours: The store open at 6 in the morning and will be open until midnight Communication channels: Different form of technology like phone, mails and others Payment types accepted: Both cash and card Credit policy: No credit will be provided to its customers Warranties & refunds: In case of any issue the money will be refunded but it is very unlikely that such a situation might arise Quality control: Ensure consistency in quality by procuring same quality beans and other products Memberships & affiliations: No Management team and company structure Business Structure The structure of the business will be as Management & ownership Names of owners: It is a sole trade ownership business which is owned by Charles Hick Details of management & ownership: The main role will be carried out by the store manager who will be assisted from other employees and the job will be to provide quality service, procuring the goods, and dealing with all the different issue which the coffee chain might experience. Experience: The owner of the business is new in the service industry and to deliver quality service has thereby aimed towards hiring people who are experienced and have the required knowledge. This will ensure that the level of service quality is improved and will provide an opportunity to meet the different needs of the business. Skill Gap and Filling the Skill Gap Express Coffee will look towards providing training to its employees so that they are able to handle the different situation in a better way. Providing training will help the employees to understand the manner they need to interact with the customers, help to understand the customer needs and taking steps to fill those. Training will done on a yearly basis and will look towards identifying the skill gap and filling those gaps so that employees are better placed to carry out the different roles and responsibilities. Skill retention strategies Express Coffee will look at motivating the employees so that they remain loyal to the organization. Having proper salary and incentives will help to motivate the employees and bring the best out of them. This will be matched by creating an environment which helps the employees and others to carry out their different roles and responsibilities in the best possible manner. Resources Premise & Facilities Coffee Express will be located at the college premise or just outside the college premise as per the space which is available. This will assist them to ensure better services is provided as close proximity to universities will help to provide better services. The store will also look to provide different facilities to its customers like free wi-fi, seating space, air conditioner and similar other facilities. This will help to satisfy the different needs of the customers and will maximize the overall opportunity of carrying out business. Machinery & Equipment The different machinery and equipment will consist of Equipment Purchase date Purchase price Running cost Phone 1st April $120 $25 Computer 1st April $720 $35 Fax 1st April $350 $15 Inventory item Unit price Quantity in stock Total cost Coffee bean Varies Deserts Varies Key personnel Current staff Job Title Name Expected staff turnover Skills or strengths Store Manager Mr. Chris Stevens 24 months Experience of 10 years and good soft speaking skills Accounts Manager Ms. lawrence 18 – 24 months Knowledge about different software, experience for 8 years and knowledge about different government regulations Sales Person Ms Reid & Mr Stevens 12 – 18 months 3 years experience and ability to understand the different needs and requirements of the customers Event Coordinator Mr Cheng 12 – 18 months Experience over 5 years and is innovative which will help to attract new customers while retaining the old ones Required staff Job Title Quantity Expected staff turnover Skills necessary Date required Sales Person 2 18 – 24 months Having an experience of 2 years 6 months later Purchase Manager 1 36-48 months Knowledge about quality and experienced in the field of purchase 6 months later Financing Express Coffee has identified the different sources and areas through which the business will be financed and has identified the different options which will help them to carry out the business process. The overall mechanism of financing has looked towards contribution from different sources and also having options for the future so that easy finance can be available in the near future. Start-up Capital Express Coffee has identified the different sources which will help them to finance their business and has identified the different parameters through which business effectiveness will multiply. Express Coffee has looked towards ensuring that the source of fund for the start of the business will be available from bank loans, venture capital and individual contribution for a balance in its risk mitigation techniques. The manner in which the different sources will look to contribute and the percentage contribution which will be done by different sources is as Assessment of Financial Viability of Proposed Business Express Coffee has also identified the time frame and dimensions which if required an exit route and withdrawing money from the business can be ascertained. This has been matched by finding out the different areas which will help them to achieve breakeven and will provide the manner in which business will grow. It is quite evident that the business will require a period of 24 before it starts to return money and people will have to invest money for a period of minimum of 24 months as shown below Financial projections The break even analysis is as Break Even Analysis Cost Description Fixed Cost Variable Cost (%) of fixed cost Variable Cost     Employees & Chef   10% Other Services   3% Fixed Cost     Development of Coffee shop 35,235   Capital Expenditure 28,000   Promotion 5,000   Recruitment 12,000   Other Expenses 8,700   Taxes 2,907   Total Fixed Cost 91,842   Total Variable Cost   13% Breakeven Sales Analysis 103,782   The profit and loss is as Sales Forecast (3 years)   Year 1 (in OMR) Year 2 (in OMR) Year 3 (in OMR) Revenue from Coffee Business 118,000     Revenue from Coffee Business   148,000   Revenue from Coffee Business     203,000 Other:       Revenue from other products   12,000 27,000 Total Revenues 118,000 160,000 230,000 Expenses       Development of Restaurant 35,235 21,000 18,000 Capital Expenditure 28,000 24,000 21,500 Promotion 5,000 13,000 19,000 Recruitment 12,000 23,000 29,000 Other Expenses 8,700 10,500 12,200 Total Expenses 88,935 91,500 99,700 Profit Before Tax 29,065 68,500 130,300 Income tax (10%) 2,906.50 6,850.00 13,030.00 Profit after tax 26,158.50 61,650.00 117,270.00 Risks and strategic options Identified Risks The business has to deal with different risk and needs to identify strategies so that they can combat those. Some of the risk which have been identified are as Firstly, the risk that the product doesn’t becomes accepted by the people which could lead towards a huge financial loss and could have a negative impact on the long term prospect of the business Secondly, the continuous evolving business environment raises new areas and avenues which needs to be worked on and looked at so that the different dimensions are better identified and dealt with Thirdly, the risk associated with the supply of human resource which needs to be fixed and worked on so that the business is able to work on the required fundamentals and have a continuous supply of employees. Risk Monitoring & Mitigation The business will have to develop ways and process which looks towards dealing with the different business risk. This will require identifying the risk and opening one store after another. The process should be to test one store and understand the future outcome so that the process gets reflected in other stores as well. This will have a positive impact on the manner in which risk is undertaken and will help to develop strategies through which the overall potential of the business will be looked at Critical Success Factor The key success factors are Change in the perception of people coffee has created a large market to cater The availability of different type and variants of coffee has further expanded the market The pricing strategy which has been undertaken in competitive pricing and low pricing method so that students can easily pay and consume the same. Key milestones The key milestones which the business has identified are as To help students and other people by providing them more and more amenities to enjoy and to create a culture where people are able to enjoy different facilities at the quickest possible time Have a customer base which covers most universities and colleges Appendices References Bangs, D. 2002. The market planning guide: creating a plan to successfully market your business, product, or service, Sixth Illustrated edition, Kaplan Publishing Coughlan, A., Stern, W. & Adl Ansary, E. 2006. Marketing Channels, 7e, ISBN 9780131913462 ISBN 10:0131913468 , Pearson Education Chew, M.M.M., Cheng, J.S.L. & S. Petrovic-Lazarevic, 2006. Managers’ Role in Implementing Organizational Change, Journal of Global Business and Technology, Vol. 2, No. 1 Czinkota, M.R. & Ronkainen, I. A. 2004. International Marketing, 7th edn. South-WesternPublishing:Australia. Cateora, P.R. & Mary, C. G. & Graham, J.L. 2009. 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