International Marketing Plan for Monmouth Coffee House - Essay Example

?Executive Summary Monmouth Coffee house is among the most popular coffee shops in the UK. The company is planning to extend its operations in the world market by opening a new branch in Sri Lanka. The marketing objectives of the company include developing product awareness, increasing sales by 10% and building a solid customer base within its first two years of operations. This marketing plan includes a general analysis of the Sri Lankan coffee market as well as the marketing strategies that the company will undertake when it launches its business. The target market for Monmouth’s products in Sri Lanka will be the upper to middle class urban dwellers. International Marketing Plan for Monmouth Coffee House Background Monmouth Coffee House was established in 1978 in London. The Coffee house opened its doors first in Covent Garden before it opened a branch in the Borough in 2001 and later in Bermondsey. The company is among the fastest growing coffee houses in and around London. Monmouth is looking to extend its operations in the international market by setting up business in the Asian market, particularly in Sri Lanka. Colombo has been selected as the place where the company will launch its international business. Marketing Objectives 1. Develop product awareness through monthly increase of customers 2. Increase total sales by 10% every six months 3. Build customer loyalty through intensive promotion in the next 12 months Assessment of the Market Environment Monmouth will open its first coffee house in Colombo, which is the capital city of Sri Lanka. This investment decision was made after considering the geographic, legal, political, economic, natural and cultural aspects as well as the competitiveness of the potential market. Geography Formally known as the Democratic Socialist Republic of Sri Lanka, Sri Lanka is located south of India, on an Island in the Indian Ocean. The Countries economic backbone is agriculture, but industry and services sectors also play a big role in the economy. Colombo, the city that has been selected as the starting point for Monmouth’s business, is largely a commercial capital, where several foreign based organizations have operations. The country’s scenic beaches, historical sites and tropical climate are quite popular with tourists. The booming tourism industry has prompted the development of infrastructure, and this invariably provides good business opportunity for a small organization such as Monmouth. Sri Lanka’s resources include gemstones, limestone, mica, graphite, quartz, slat and industrial clays. The country is also a key producer of extracted minerals and cash crops that include tobacco, tea, rubber and coconut. Coffee is also available in the country, but the supply is quite low (Reddy 2003). Hence it is important for Monmouth to consider the issue of finding a reliable local or foreign supplier in its logistics planning. The city of Colombo is relatively easy to reach and navigate through due to its efficient transportation network. Most residents of Colombo and Sri Lanka as a whole rely on radio as the main tool of mass communication. Television is also used by a large percentage of the country’s population. There are also three daily newspapers published in Sri Lanka (Cummings 2007). Hence, Monmouth will use the three media tools used in the country for advertising purposes. Culture Culture is one of the most important factors to consider when venturing into a new market. Individual cultures are constantly being shaped by different variables such as values, attitudes, religion, manners and attitudes, aesthetics, norms and customs, social institutions, technology and education. Official records indicate that there are roughly 20 million Sri Lankans who mainly come from the Tamil and Sinhalese ethnic groups. Both Sinhala and Tamil are used as the national and official languages of Sri Lanka. English is spoken mainly in urban areas including Colombo, as the second language. The city has a population of about 2 million people. Many of these people are aged between 15-64 years. The city also consists of well educated residents who have higher living standards (Reddy 2003). This group of people is Monmouth’s target customers. Sri Lanka was once ruled by the Dutch, Portuguese and the British and all of these powers used Colombo as their stronghold. Interaction with foreign cultures makes it easier for many of the residents of Colombo to learn and adopt some Western lifestyles. These lifestyles influence how they dress, what they eat and drink. As such, it is common to find that many Sri Lankans love drinking coffee (Cummings 2007). The high education level of Sri Lankans living in Colombo also makes it easy for them to combine their own cultures with western styles and still manage to leave in harmony. This kind of environment will enable Monmouth to establish its operations without many hurdles. Market Identification The most suitable market for Monmouth coffee products is the modern urban population. The population of Sri Lanka is estimated to be 19.8 million with the median age being 28.7 years. 23% of the entire population resides in the urban areas (Cummings, 2007). Colombo, Sri Lanka’s largest city and Monmouth’s target market area is considered to be comparatively more affluent than other areas in the country. The city also has a higher exposure to western culture and products due to its heavy presence of foreign investments and tourism. The target market segment for Monmouth’s products is the middle class to upper class. Young urban professionals, educated youths who do not mind experiencing western culture and expatriates and tourists from western countries are main target market segments for Monmouth’s coffee. Competition Analysis In Sri Lanka, coffee is not a major agricultural export crop like it was in the mid 19th century. The country nevertheless produces significant amounts of both Arabica and Robusta coffee. Each harvest cycle produces about 35,000 bags (Cummings 2007). However, there is no big coffee business in the country. Some international fast food companies such as McDonalds sell coffee products in their restaurants. Threat of New Entrants: the cost of importation of coffee beans to Sri Lanka is quite high so suppliers get their beans from local producers. Others get theirs from India. The threat of new entrants into the market is significant and quite realistic since the entry barrier is not that high. The potential for growth in this particular market is quite viable, which means that the threat of new entrants is quite high. Threat of Substitutes: Apart from coffee, the other beverage product that is produced in high quantities in Sri Lanka is tea. In fact, tea is considered to be the favorite beverage in the country, which is also the beverage’s third largest producer. Coconut beverages are also quite common in Sri Lanka. However, coffee is quite common especially among urban dwellers and those who are inclined towards the western culture. Overall, the threat of substitution is considerably high. Supplier Power: Production of Coffee in Sri Lanka is quite low, but it is in high supply in neighboring India. The demand for coffee is also not that high, therefore the bargaining power of suppliers is deemed to be medium. Buyer power: Sri Lankans are generally price sensitive; therefore, they are likely to consider the price of a cup of coffee before buying it. However, the core target market of Monmouth is likely to spend a little more for quality coffee. The bargaining power of coffee buyers in Colombo is considerably medium when compared to London. Marketing Strategies/Marketing Mix The best marketing strategy that Monmouth will make use of is licensing and joint ventures (Lamb, Hair and McDaniel 2009). Licensing will allow other similar businesses to use Monmouth’s brand name at a pre-determined cost. Licensing will allow Monmouth to effectively penetrate the Sri Lankan market with the added benefit of reduced risk. A joint venture with another organization will help Monmouth to run its business without worrying about customer contact and financial resources which the partnering business will offer (Muhlbacher, Leis and Dahringer 2006). Monmouth on its part will offer technological and management expertise. Marketing Mix Product: the core product of Monmouth is coffee. The company buys coffee from many different parts of the world which it roasts and supplies to outlets found all over the country. It also sells fresh and rich coffee to its customers in all its three outlets in London. The coffee house makes and sells different coffee beverages such as single cone filter espresso; the company also sells coffee accessories such as pastries, single origin chocolate as well as cream truffles. Monmouth is one of the most popular coffee houses in London for its high quality coffee which is selected with high level expertise and care. The coffeehouse experience can be termed as a tangible product since it offers a serene and comfortable environment for customers. The basic augmented product offered by Monmouth is coffee delivery service. The company normally delivers roasted coffee to customers around London and beyond. Place: In Sri Lanka, the company will use retailing as its main distribution channel (Doole and Lowe 2008). The company will open a major coffee shop in the city center from where ready made and roasted coffee will be made available to customers. If the coffee shop proves successful, the company can expand its operations to other parts of Colombo so as to reach as many customers as possible. Promotion: Public relations, advertising, direct marketing and sales promotions will be used to attract customers to Monmouth coffee (Malcolm and Wilson 2011). The company will send press releases detailing the unique Monmouth experience to local media. Adverts will be carried out in both the electronic and print media, which will increase brand awareness among the target market. Print advertising will be done in daily newspapers as well as regular magazines. In electronic media advertising, the adverts will be aired in the most popular TV and radio stations. In direct marketing, the company will make use of leaflets and sampling coupons which can be delivered directly to the target market. For sales promotion, there will be product discounts and other complimentary gifts which will be offered to customers. Price: Most Colombo residents equate high pricing with high quality (International Business Publications 2002). Our coffee will be priced moderately so as to take into account those customers who are not considered to belong to the upper level of society. The pricing will take into consideration the living standards of the target customers as well as the cost of production. The cost-plus pricing method will be used to estimate the price of the coffee products that Monmouth will sell to its customers. Action Plan Start Finish Budget (in $) Manager Department TV Ad 1 01/01/2011 31/05/2011 30,000 Steve Marketing Radio Ad 1 01/01/2011 31/05/2011 12,000 Steve Marketing Newspaper Ad 1 01/01/2011 31/05/2011 31,700 Steve Marketing TV Ad 2 01/06/2011 31/12/2011 31,000 Steve Marketing Radio Ad 2 01/06/2011 31/12/2011 12,000 Steve Marketing Newspaper Ad 2 01/06/2011 31/12/2011 35,000 Steve Marketing TOTAL 151,700 Public Relations 01/01/2011 01/02/2011 4,000 Nelson Public Relations TOTAL 4,000 Direct Marketing 02/01/2011 28/02/2011 8,000 Steve Marketing TOTAL 8,000 The Marketing Budget The marketing budget is set to be equal to about 25% of sales. The following is an explanation of some of the main marketing expenditures: TV adverts – During the first year of operations, the company will spend $19,000 on local TV advertisements. This will allow us to reach a large section of the population, which will effectively enable us to reach our target market. Print materials – customer novelties, coupons, flyers will all be used for promotional purposes and they will have to be included in the marketing budget. Newspaper adverts – we will use the daily newspapers as our vehicle to constantly get our message across to our target customers. Radio Adverts – this is a cheap way of letting as many people as possible know about the products that are on offer and how they can access them. Expense January – April (in $) May – August (in $) September – December (in $) TOTAL TV Advertising 19,000 20,000 22,000 61,000 Newspaper Advertising 11,000 12,000 13,700 36,700 Print materials 6,500 6,500 6,800 19,800 Radio Ad 8,000 8,000 8,000 24,000 other 4,000 4,000 4,000 12,000 TOTAL: 48, 500 50,500 58,500 157,500 Monitoring and Evaluation Monitoring and evaluation will be done using marketing information systems, customer surveys, cash flow statements, quality controls and sales analysis. The Market information systems will enable the company to gauge how well it is performing in the market when compared to its competitors (Pride and Ferrell 2008). Customer surveys and quality controls will be used to measure customer satisfaction with coffee products and services offered by Monmouth (Westwood 2004). The sales analyses and cash flow statements will be used to measure how profitable the business is in the new environment (Luther 2011). Critical Issues Monmouth has never ventured into the international business scene and Sri Lanka will be the company’s first foreign destination. Its critical issues include creating and maintaining a brand name in a completely new market in such a way that it will build a solid customer base within two years. References Cummings, J. 2007. Sri Lanka. London: Lonely Planet Doole, I. and Lowe, R. 2008. International marketing strategy: analysis, development and implementation,, New York: Cengage Learning International Business Publications. 2002. Sri Lanka Business and Investment Opportunities Yearbook. Washington, DC: International Business Publications Lamb, C.W., Hair, J.F. and McDaniel, C. 2009. Essentials of Marketing. Mason, OH: SouthWestern Cengage Learning Luther, W.M. 2011. The Marketing Plan: How to Prepare and Implement It. New York: AMACOM Books Malcolm, M. and Wilson, H. 2011. Marketing Plans: How to Prepare Them, How to Use Them. West Sussex: John Wiley & Sons. Muhlbacher, H., Leihs, H. and Dahringer, L. 2006. International marketing: a global perspective. London: Thomson Learning Pride, W.M and Ferrell, O. C. 2008. Marketing. Boston, MA: Houghton Mifflin Co. Reddy, L. R. 2003. Sri Lanka: past and present. New Delhi APH Publishing Corporation Westwood, J. 2004. The marketing plan: a step-by-step guide. London: Kogan Page. Read More