Marketing Plan for a New Fair Trade Coffee Company - Coursework Example

? Marketing Plan for a New Fair Trade Coffee Company Table of Contents I. Executive Summary 3 II. Situation Analysis 4 A. External Analysis- PESTLE 4A.1. Political 4 A.2. Economic 4 A.3. Social 5 A.4. Technological 5 A.5. Legal 5 A.6. Environmental 5 B. Internal Analysis- SWOT 6 B.1. Strengths 6 B.2. Weaknesses 6 B.3. Opportunities 6 B.4. Threats 6 III. Segment Targeting and Positioning 7 A. Segmenting 7 B. Positioning 8 IV. Objectives (Financial, Marketing, Societal) 8 A. Financial Objectives 8 B. Marketing Objectives 9 C. Societal Objectives 9 V. Marketing Strategy 10 A. Product 10 B. Price 10 C. Place 10 D. Promotion 11 E. Process 11 F. People 11 VI. Marketing Programs 11 VII. Metrics and Implementation Controls 12 References 13 I. Executive Summary This paper presents a marketing plan for a fair trade product and its introduction into the UK market. The literature details a fair trade product as reverses normal market dynamics by introducing aspects of production and marketing that does away with a pure focus on profit, in preference towards alleviating and improving the economics of employing the poor, and doing away with labor exploitation, the destruction of the ecology, and the wanton disregard of the long-term consequences of trade and manufacturing practices on humanity and the environment in general. The focus is in engaging all of the stakeholders in trade in continuous and fruitful dialogue, with an eye towards replacing short-sighted emphases on profits with a longer-term sustainability-focused emphasis when it comes to doing trade and conducting business. The hope is that by enforcing fair trade standards through labeling and certification, that fair trade itself can become a powerful marketing tag that can enable fair trade marketers and producers to reach that segment of the market that is sensitive to the issues that fair trade represents. There is a heavy emphasis, moreover on the social aspects of the trade, and the impact of trading practices on the societies that are affected by trade (Global Exchange 2011; Fair Trade USA 2010). There is an emphasis too on the direction of trade from the developing world to the developed world, with the traditional emphasis being on food, agricultural produce, and fiber products, extending to other product areas over time. The price fixing mechanisms in fair trade, meanwhile, involve setting up floor prices to be market prices, with buyers agreeing not to purchase products lower than those market prices, in the name of providing fair prices to the producers of agricultural produce and derivatives from the developing world (Fair Trade Foundation 2011). The name of the company is Freeflowing Coffee Inc, and the fair trade product for this marketing plan is coffee. This marketing plan takes note that in the UK, there is a wide range of product choices available to the UK customer that all fall within the category of fair trade coffee, and this paper presents a marketing plan to introduce a fair trade coffee brand, FreeFlowing Coffee, into the UK market (Fair Trade Foundation 2011; Global Exchange 2011). II. Situation Analysis A. External Analysis- PESTLE A.1. Political The level of political integration with the rest of Europe is high. That said, the UK has remained separate from the EU's monetary policy and union, choosing instead to engage the EU nations in trade. The UK engages the world politically as a major western power, and its stature is confirmed by its being part of the UN Security Council. Politically, therefore, the country has clout and some stability that allows its citizens to engage the world in trade on positive terms (Central Intelligence Agency 2013; CIPD 2013). A.2. Economic The UK economy is strong and resilient, one of the biggest in Europe. Recent financial crises have spun government measures to tighten its spending. The previous year was also marked by a contraction of the economy, as the UK continues to reel from the economic crisis of the past several years. That said, the economy remains relatively large and resilient compared to other countries (Central Intelligence Agency 2013; CIPD 2013). A.3. Social British society is open and to a large extent democratic in its ideals, even though it is strictly a monarchy. Recent social developments have augured well for the continued rise in consumption of fair trade goods. Fair trade itself is well-entrenched as a concept and as a business mechanism in UK society. This means that the UK society is open and receptive to the introduction of fair trade coffee products such as FreeFlowing Coffee. This is evident in the way Fair Trade products are well-accepted and are proliferating in the UK (Central Intelligence Agency 2013; CIPD 2013). A.4. Technological The Internet proliferates and many businesses are mature enough to have sophisticated presences online. Business transactions are enabled online and are widely adopted as a standard way of doing business. The social media platforms are thriving in the UK too. The high level of technological advancement in the UK lends itself to the successful marketing of the new fair trade coffee product (Central Intelligence Agency 2013; CIPD 2013). A.5. Legal The UK has a very strong and stable regime of the rule of law. It is enshrined in the common law practices of the country. The country too keeps its legal covenants with the rest of the world. The legal aspects of the introduction of a fair trade coffee products are straightforward and pose no problems for this marketing plan (Central Intelligence Agency 2013; CIPD 2013).. A.6. Environmental A high level of ecological awareness has translated into the wide adoption of fair trade products. This bodes well for the introduction of the FreeFlowing Coffee fair trade product (Central Intelligence Agency 2013; CIPD 2013).. B. Internal Analysis- SWOT B.1. Strengths The new company is entering the UK market with a coffee product that has wide acceptance in UK society. The company too, being new, has the hindsight of research and the experience of other successful companies to benefit its own marketing strategies and plans (Mind Tools 2013; Fair Trade Foundation 2011; Global Exchange 2011). B.2. Weaknesses Being a company that has no presence in the UK at present, there is a lack of knowledge on the part of the company with regard to actually operating in the country. This is a big weakness especially because some fair trade coffee products are well-entrenched (Mind Tools 2013; Fair Trade Foundation 2011; Global Exchange 2011) B.3. Opportunities The wide acceptance and popularity of fair trade products in the UK translates to big opportunities for the new fair trade coffee brand, regardless of the level of competition among existing players (Mind Tools 2013; Fair Trade Foundation 2011; Global Exchange 2011) B.4. Threats Existing fair trade coffee brands and companies are a big threat to the viability of the new fair trade coffee brand (Mind Tools 2013; Fair Trade Foundation 2011; Global Exchange 2011). III. Segment Targeting and Positioning The market for fair trade coffee in the UK is sophisticated and mature, with the target market consisting of educated coffee consumers well-versed in the language of fair trade and certifications. This market is also particular about the ethical practices of companies peddling fair trade coffee not just in the UK but in the US and other places (Welch 2011; FairTrade Foundation 2012). A. Segmenting Looking at the literature, there are many ways to segment the market for fair trade coffee consumers in the UK, the most obvious of which relates to certain demographic characteristics relating to level of education and level of income. Income levels are implicit in the way fair trade coffee discussions center on providing fair prices plus a premium to existing players in the space. This means that the income demographic for the potential target market is also those who have middle class income levels. In terms of educational attainment, it is clear from the level of sophistication of existing customers of fair trade coffee that the level of education of the target market is tertiary or higher (Welch 2011; FairTrade Foundation 2012). Taking a step back to look at the relevant data in those two segmentation variables, income level and educational level, we see that the demographics of discussion are well-represented in the population, and can constitute the target market for FreeFlowing Coffee as well, in the same league as the target market for other providers of fair trade coffee, such as Starbucks (Welch 2011; FairTrade Foundation 2012). B. Positioning Looking at the existing players for fair trade coffee in the UK market, one sees that with the exception of Starbucks, which as a high price and high quality positioning the rest of the market is impliedly located in the high price and low quality as well as low price and high quality quadrants. Decidedly, the positioning for FreeFlowing Coffee is high price, to position it as a premium brand. The choice therefore is narrowed down between low quality and high quality. In this scenario, FreeFlowing Coffee can either go with Starbucks in the ultra-premium segment of the market, or with the rest of the industry that provides high quality coffee at reasonable fair trade prices already reflecting the premium pricing. The decision is to position the product as a competitor to Starbucks (Welch 2011; FairTrade Foundation 2010). In so doing the company chooses to part ways with a large number of existing fair trade coffee brands in the UK market that re mainly distributed through the value chains such as Tesco, or else through specialist chains such as Nisa, Percol, Equal Exchange, Suma, Fair Deal and Asda. The challenge with the premium high price and high quality positioning is that FreeFlowing Coffee chooses to compete with an entrenched player in Starbucks, which already has the physical infrastructure and the marketing prowess, as well as the brand awareness, to be able to take on any comers in its space (Welch 2011; FairTrade Foundation 2010) IV. Objectives (Financial, Marketing, Societal) A. Financial Objectives The financial objectives of this marketing plan is straightforward, and revolve around achieving profitability for the fair trade coffee brand within one year from its planned introduction into the UK market. This means achieving the profit margins associated with its premium price and high quality product positioning. The sourcing part of these financial objectives are in line with the mandates for ethical, fair trade coffee, and that means sourcing coffee at premium to market price levels. The challenge is in coming up with pricing that will reflect the premium positioning, as well as guarantee that the financial objective of end of year profitability is achieved (Welch 2011; FairTrade Foundation 2010).. B. Marketing Objectives The marketing objectives revolve around making sure that FreeFlowing Coffee achieves traction in its chosen positioning as a high quality high price product in competition directly with Starbucks and in indirect competition with the rest of the field, and in particular the high quality low price segment of the market. Tied to such marketing objectives is to the necessity of differentiating in order to offset the large advantages of the existing large players to source at barely fair trade values and pass on the savings to customers (Welch 2011; FairTrade Foundation 2010). C. Societal Objectives In line with the social mandates of fair trade and ethical trading, the societal objectives of this marketing plan is to make sure that FreeFlowing Coffee is associated with the highest standards for fair trade labeling. Labeling implies walking the talk, so to speak, and making sure that ordinary farmers from source locations are able to make decent livings on the trade of coffee with the company, which is acting on behalf of its future stores and bases of operation in the UK (Welch 2011; FairTrade Foundation 2010). V. Marketing Strategy The marketing strategy is embodied in the chosen positioning for the fair trade coffee product for the UK market. This is that FreeFlowing Coffee is to be a premium product competing directly with Starbucks in the high price and high quality quadrant. The following details the different elements of the marketing mix for this chosen marketing strategy, which is also the entry strategy for the fair trade coffee brand (Welch 2011; FairTrade Foundation 2010). A. Product The product is FreeFlowing Coffee as a fair trade coffee product to compete directly with Starbucks free trade coffee offerings (Welch 2011; FairTrade Foundation 2010; Ng 2010). B. Price Since the positioning is premium, pricing shall be at parity with the Starbucks pricing for its fair trade coffee in the UK (Welch 2011; FairTrade Foundation 2010; Ng 2010) C. Place The goal is to achieve parity with competition in terms of distribution channels. Consistent with the goal too, to compete head on in the ultra-premium segment of the fair trade coffee market, FreeFlowing Coffee shall put up competing stores where customers can enjoy the coffee and purchase them in packs for brewing at home. This premium channel strategy is the counterpart to the physical Starbucks stores which are the key competitors in this space (Welch 2011; FairTrade Foundation 2010; Ng 2010) D. Promotion For advertising and related strategies, the allocation of the budget shall be heavily tilted towards social media, with mainstream media also getting a fair but smaller share of the budget. The total budget for all promotions tied to this marketing strategy shall be two percent of gross sales (Welch 2011; FairTrade Foundation 2010; Ng 2010). E. Process Reaching the target market where they are, customers will be able to gain access to the fair trade coffee products via in-store purchases for consumption in the stores as well, and for the purchase of coffee packs for preparation and consumption at the homes (Welch 2011; FairTrade Foundation 2010; Ng 2010). F. People Key aspects of the people portion of the marketing mix entails attracting and employing top talent in the UK market for fair trade coffee. This means an active recruitment process to get highly qualified people with many years of experience in the chosen markets (Welch 2011; FairTrade Foundation 2010; Ng 2010).. VI. Marketing Programs The heart of the marketing programs is the constant effort from the time of the introduction of the brand in the UK market onwards to continuously build the brand and to increase awareness and trial buy of the products among the target market. The equal focus on distribution/place means that the initial goal shall be to launch six stores in the first half of the first year, and another six stores by the end of the first year. The locations of the physical stores shall be determined prior to the finalization of the marketing programs and budget allocations for activities tied to the marketing programs (Welch 2011; FairTrade Foundation 2010; Ng 2010).. VII. Metrics and Implementation Controls The key metrics are financial in nature, relating to sales achieved, profitability achieved, and costs incurred. Deviations from targets shall be flagged along the way to ensure that profit goals are met for the first full year of operations. (Welch 2011; FairTrade Foundation 2010; Ng 2010) . References Central Intelligence Agency 2013. United Kingdom. The World Factbook. [Online]. Available at: https://www.cia.gov/library/publications/the-world-factbook/geos/uk.html [Accessed 15 September 2013] CIPD 2013. PESTLE Analysis. CIPD.co.uk. [Online] Available at: http://www.cipd.co.uk/hr-resources/factsheets/pestle-analysis.aspx [Accessed 15 September 2013] Fair Trade Foundation 2011. FAQs: Fair Trade in General. FairTrade.org.uk. [Online]. Available at: http://www.fairtrade.org.uk/what_is_fairtrade/faqs.aspx [Accessed 15 September 2013] Fair Trade Foundation 2012. FairTrade and Coffee: Commodity Report. FairTrade.org.uk. [Online]. Available at: http://www.fairtrade.org.uk/includes/documents/cm_docs/2012/F/FT_Coffee_Report_May2012.pdf [Accessed 15 September 2013] Fair Trade USA 2010. What is Fair Trade? Impact. FairTradeUSA.org. [Online]. Available at: http://fairtradeusa.org/what-is-fair-trade/impact [Accessed 15 September 2013] Global Exchange 2011. What is Fair Trade? Fair Trade FAQs. Global Exchange. [Online]. Available at: http://www.globalexchange.org/fairtrade/faq [Accessed 15 September 2013] Mind Tools 2013. SWOT Analysis. MindTools.com. [Online]. Available at: http://www.mindtools.com/pages/article/newTMC_05.htm [Accessed 15 September 2013] Ng, Timothy. The 6 P's of Marketing. Resource Nation [Online] Available at: http://www.resourcenation.com/blog/the-6-ps-of-marketing/3964/ [Accessed 15 September 2013] Welch, Dan 2011. Fairtrade beans do not mean a cup of coffee is entirely ethical. The Guardian. [Online] Available at: http://www.theguardian.com/environment/green-living-blog/2011/feb/28/coffee-chains-ethical [Accessed 15 September 2013] Read More