Primary Marketing Challenge for the Company - of Just US - Case Study Example

? Case Study - Just US! Table of Contents Table of Contents 2 ment of the Marketing Challenge 4 Evidences from Case Study 4 Analysis of the Current Situation 5 Competitors 5 PEST 5 Political 5 Economic 6 Social 6 Technology 6 Porter’s Five Forces 6 Threat of New Entrant 6 Power of Buyer 6 Threat from Substitutes 7 Supplier Power 7 Competitor Rivalry 7 SWOT 7 Strength 7 Weakness 8 Opportunity 8 Threat 8 Identification of Alternative Solutions 9 Specific Marketing Strategy 10 Brand Performance 10 Expansion 10 Price Strategy 10 Distribution 11 Works Cited 12 Statement of the Marketing Challenge Primary marketing challenge for the company is to decide a sustainable marketing plan in order to achieve both product line diversification and business expansion. Key challenges for marketing director can be summarized in the following manner. Increase marketing budget for next year Targeting new customers from existing market Increase product line and maintain profitability Design a sustainable marketing communication strategy Increase sales volume from existing distribution channel Defend market share from existing and new competitors Decrease dependency on retail channel for future years Evidences from Case Study It is evident from the case study that Just US is facing market competition both from existing players such as Kicking Horse and new entrants such as Starbucks. Kicking Horse has planned to open 100% fair trade cafes in Nova Scotia to create further challenge for Just US. The company is dependent on grocery stores to sell their product despite being a strategic business unit. Retailers decide how they want to present product line offered by the company to customers hence the company has limited control over retail channel sales volume. Juliet suggested that the company should invest 7% of annual sales revenue in marketing activities rather than pre decided $20,000 for 2009. The company is following age old advertising channel complemented with news paper, magazine, boards, seasonal point of purchase advertising, CEDIF meeting and website in comparison to integrated marketing communication (for example digital marketing synchronized with other four elements of IMC) followed by competitors (Kitchen 114). The company needs to revamp existing marketing communication program in order to sustain in the competition. The company is operating with four outlets whereas annual sales volume is growing at a rate of at not so attractive rate. The company needs to increase existing product line (all total eight types of offering) in order to attract more customers. Analysis of the Current Situation Competitors Main competitor for the company is Kicking Horse. Starbucks is also planning to enter fair trade coffee market while Loblaws (super market chain) is also challenging Just Us in fair trade coffee market. In accordance to the case study Kicking Horse is one of the major forces in Canadian coffee market. Kicking Horse is promoting coffee products with local name and they are also taking help of e-commerce to increase brand equity among customers. E-Commerce gave the opportunity to the company to expand business outside Canada while Just US is still operating in local market. PEST Political Government of the country influences the business in large extent in terms of providing certificate recognition for fair trade and other intervening in import process. Economic It is evident from the case that country is under threat of recession hence premium pricing policy might not work for Just US to sell products to low income group people. Social Majority of the coffee lovers in the country gives importance on overall experience rather than enjoying only taste of coffee. Technology Competitors for the company are already using digital marketing to promote their product and introduction of web 2.0 is the next big thing to promote coffee brand. Porter’s Five Forces Threat of New Entrant Market entry barrier to enter fair trade coffee business is low and the business is also very attractive to earn revenue for new entrants. Hence Just US has potential threat from new competitors. Power of Buyer Income level of customers decides the success or failure of particular time. Just US has priced their offering higher than competitors hence there is risk that customers might reject company’s offering due to low income level. Buyer power is high for the industry. Threat from Substitutes Substitutes for fair trade coffee such as tea, normal coffee, beverages and milk shake can be classified as high threat for the company. Supplier Power Supplier power is moderate for fair trade coffee industry. Fair trade coffee industry imports coffee from under developed country. Importers established strategic alliance with suppliers in order to decrease threat factor. Competitor Rivalry Competitor analysis shows that intra level competition is high in the industry. SWOT Strength Just US has built strong and loyal customer base among Nova Scotia and local surroundings. The company involves in various social events in order to increase brand visibility for local customers. The company maintains multifaceted distribution channel (40% grocery stores, 30% owned coffee shop and 30% other channel) in order to earn revenue. The company has strong brand presence in maritime states. Weakness The company operates in a concentrated (close proximity of all four shops) distribution network. Close proximity of shops decreases brand reach for the company. The following map can be used to understand concentrated nature of distribution channel for the company. The company does not allocate sufficient fund marketing and promotional activities. Opportunity The company has market dominance in Nova Scotia hence they have the opportunity to launch new product without spending huge amount of money to create brand awareness. The company can also increase product offering by introducing new item in the product line. The company can increase their expertise in web 2.0 and digital marketing in order to achieve online brand presence. Threat High threat from inter level competition in the industry and substitutes. Multinational players are coming into market with huge financial resources and that will definitely create stiff challenge for Just US. For example resource power for Nestle or Starbucks is far more in comparison to resource power of Just US. The company is operating with defensive strategy in terms sales and growth strategy. They don’t have any immediate plan for business expansion while their competitors are trying to expand business outside Canada (Agriculture and Agri-Food Canada, “Coffee and Tea Industry Trends from the Canadian Coffee and Tea Show”). Identification of Alternative Solutions 1. The company can do joint venture with their immediate rivals Kicking Horse in order to expand business and achieve digital marketing knowledge. Benefits and Disadvantages of JV for both the companies can be analyzed in the following manner. Just US! Kicking Horse Advantages Disadvantages Advantages Disadvantages Expansion of distribution channel People may think the company is ‘sold out’ to Kicking Horse Greater penetration in eastern market People may think the company is ‘sold out’ to Just US! Gaining online marketing expertise The company might not continue existing product line in future Gaining access to innovative products of Just US! Decrease in brand image (Source: Author’s Creation) 2. The company should adopt no expansion strategy for next three years and continue operating with four shops. This strategy will help them to increase product line in future for existing market while disadvantage with the strategy is the company might fail to achieve sufficient revenue from existing hypercompetitive market. 3. The company can create a long term (at least for 60 months) strategic plan to build up the brand performance by adopting 360 degree marketing strategy (Gunelius 165). Disadvantage with the strategy is that the company needs to wait for at least 5 years to achieve result. Specific Marketing Strategy The author of this report suggests third strategy for the company to achieve business growth in near future. Brand Performance The company needs to use digital marketing and other promotional tools to increase brand image within next 16 months. Expansion The company should open new units in the eastern part of the country and open at least three additional units within next 48 months. Price Strategy The company should find low cost supplier within next 24 months and after doing strategic alliance with low cost supplier they need to cut down price of product offering. Distribution The company should decrease retailer contribution in the distribution by increasing self owned shop. Retailer percentage should be decreased to 20% within 36 months and these steps will help them to achieve better control over retail channel. Works Cited Agriculture and Agri-Food Canada. “Coffee and Tea Industry Trends from the Canadian Coffee and Tea Show.” Agri-Food Trade Service, Oct. 2011. Web. 15 Oct 2012. Gunelius, Susan. Building Brand Value the Playboy Way. Basingstoke: Palgrave Macmillan, 2009. Print. Kitchen, Philip. Integrated Marketing Communication: A Primer. London: Routledge, 2004. Print. Read More