Marketing Plan for a new Fair Trade Company - Coursework Example

Executive summary The United Kingdom is a developed nation and has a growing market for coffee. There are different renowned players in coffee market in UK, which compete with one another for market share. There are both multinationally functioning retail chains as well as local coffee shops that enjoy demand of the local customers. In this environment, a new fair trade company, named Coffee Bar, is about to introduce its products to the UK market. It would offer a new type of product to the customers. The coffee beans used by this company would be sourced specially from suppliers of the equatorial countries such as, Ghana, Guatemala and Brazil. This coffee would be known as ‘organic coffee’. Since the raw material used for the production of this coffee is handpicked and checked for quality, the flavour and taste of the product would be different from the conventional coffee offered Coffee Bar’s competitors. In this paper, the marketing plan for the introduction of this new fair trade company has been illustrated. Analysis of situation at the firm level and industry level shows that the firm has wide opportunity to capture the market for coffee in the UK, since it is still growing. However, the new firm would face strong rivalry from its competitors and also from the chief substitute of coffee, i.e., tea. If the company can adhere to its objectives and implement its marketing plans, it would be also to become successful in the long run. Table of Contents Table of Contents 2 Introduction 4 Situation analysis 5 PESTEL analysis 5 Political 5 Economic 5 Social 6 Technological 6 Ecological 6 Legal 7 SWOT analysis 7 Strengths 7 Weaknesses 7 Opportunities 8 Threats 8 Market Segment-targeting and positioning 9 Targeting 9 Geographic segmentation 9 Positioning 9 Objectives 10 Financial 10 Marketing 10 Societal 11 Marketing strategy 11 Product 11 Price 11 Place 11 Promotion 12 Marketing programs 12 Metrics & Implementation controls 12 Financial perspective 13 Customer perspective 13 Internal business process perspective 13 Learning and growth 13 Reference List 15 Introduction The modern business world is a highly competitive platform in which the strongest competitor gains at the cost of the weaker counterparts. Although this policy satisfies the economic rationale for trade, it hurts the social and ecological balance in the society. Since the market is a part of the society and the market agents are social beings, preservation of right of the producers is considered a basic necessity in the contemporary business world, irrespective of their location or economic strength. From this concern, the concept of fair trade has evolved during the 1940s (Kaye, 2012). A fair trade company is such a company that aims at providing appropriate wages to the producers, particularly the ones belonging to the developing countries. These goods would then be distributed to buyers in the international market. Several international bodies work in cooperation with one another to ensure that producers that are situated at less advantageous positions in the developing countries receive the rightful wage against their toil. Many companies (such as companies manufacturing coffee or coffee beans, toys, clothing and various other items) operating internationally are now recognized as fair trade companies; they follow certain unique principles and the activities of all these companies are monitored according to these principles. The purpose of these companies to operate under the guidance of a uniform principle is to ensure that poor workers around the world are not taken advantage of. Fair trade coffee has gained importance since the 1990s. Situation analysis Coffee Bar is a privately owned organization that would newly enter the UK coffee industry. The company is determined to gain reputation in the industry for its products and its service to customers. Coffee Bar would be a fair trade company. It would follow the established principles of fair trade in procuring coffee beans from the producers, preparing the coffee and offering it to its value customers. The company acknowledges the necessity of the Fair trade Foundation. Every bean that the company would use would be handpicked from the agricultural workers that passionately grow the coffee beans. This would be the primary reason why customers would value the products offered by Coffee Bar. PESTEL analysis Political The government of the UK has developed laws to promote fair trade by the traders in UK. The UK government is offering fund as well as investing in infrastructure development. This assures that Coffee bar would receive government support for its business. The government has also offered subsidies to the firms in the coffee industry, which would reduce costs incurred by the firms. Economic The UK is a developed nation with a per capita income of $37,500 (according to 2012 estimates). According to per capita income, the country holds the 34th position in world ranking (CIA, 2013). Since the raw materials used by the company are all organic the cost of procuring them is more than the cost incurred by the other companies that do not use organic raw material. Therefore, it is evident that the cost of coffee offered by Coffee Bar would be more than the products offered by its competitors. However, given per capita income of the country, it is can be ensured that there would be takers for organic coffee in the UK market. Thus, economic condition is favourable for the growth of Coffee Bar. Social Coffee is one of the favourite drinks of the British population (Travel, 2013). Thus, the UK market poses an encouraging condition for the introduction of Coffee Bar. Customers are getting aware about environmental protection and are therefore, expected to welcome the products offered by the new company. It would be capable of generating high value among the customers. Technological Rapid technological developments are taking place around the world. The UK is a country that remains the forerunner in the race to adopt modern technological processes in the manufacturing units within the country. Although implementation of technologically advanced devices requires lump sum investment in the beginning, in the long run the cost of production falls. Besides, internet facilities would allow the company to advertise and sell its products online, thereby capturing a wide customer base. Ecological The UK population is environmentally conscious and they are becoming increasingly choosy about the products they purchase. Companies that trade following fair trade policies would attract their attention and thus brand value of the company in the mind of its customers would rise. Legal The government of UK is making efforts to promote fair trade. There are stringent regulations that any fair trade company needs to follow and satisfy the conditions mentioned in the law. There are laws to prevent aggressive commercial practices and protect the producers as well as consumers from unfair trading practices. Therefore, the company has to operate cautiously in UK market to avoid penalties (Legislation, 2008). SWOT analysis Strengths One of the major strengths of the company is that it is introducing a certain product to the UK market, which is the first of its kind. Coffee Bar would sell preparations of ‘organic coffee’. This is expected to be the biggest attraction to the target customer. Studies show that the target population is fond of quality coffee. The beans used for producing the coffee are grown without the use of chemical fertilizers and are grown in the moist natural conditions in the equatorial rain forests of Brazil, Ghana and Guatemala (Singh, 2011). Weaknesses In the UK market there are many small coffee shops that are the favourite hangouts of the local people. There are several other renowned coffee shops and retail chains, such as Starbucks and Costa Coffee that attract bulk of the customers (Smyth, 2013). The company is introducing a product for which it would charge premium price. With respect to the price charged, Coffee Bar would face strong competition from the other less expensive coffee joints (Telegraph, 2013). Opportunities The market for coffee is increasing significantly in the UK. This poses a huge scope for growth for the new company. Although there are existing brands in the market, the new company has the opportunity to attract new target customers. The company might receive subsidies from the government for its production process that would reduce the cost of production by a certain degree. Therefore, the company would be able to price down its products after operating for a few years. Threats The most visible threat for Coffee Bar is the strong competition faced by the company from giant coffee shop chains like AMT Coffee, Starbucks, Aroma Café and Costa Coffee. These shops offer quality product at reasonable price. Coffee market in the UK is facing threat from the traditional beverage of UK, tea. British people are known for their love of tea and a large proportion of the population still hold preference for this beverage (Williamson, 2007). Market Segment-targeting and positioning Targeting Coffee Bar might target its market on the basis of the demographic characteristics of the population and the geographic conditions in which customers are located. It should target the customers belonging to two age groups; 12 years to 40 years and 40 years to 65 years. The young generation would hang-out with friends and family at the bar. The elderly population would be interested to spend their leisure hours at the cafe (Smith, 2003). Market Segmentation refers to the process of segregating the target customer base into groups depending on common needs of the customers. Market segmentation would help Coffee Bar to design its products according to the preferences of the customers of each of these markets, so as to meet the expectations of the customers (Weinstein, 2004; McDonald, 2012). Demographic segmentation Geographic segmentation Coffee Bar would choose the public places, like college and university areas or locality near airports or road junction for setting up the first shop. Later it should spread to other areas to attract more customers (Shanker, 2002). Positioning According to fair trading rule, the company is obliged to serve its customers with the best quality product at the most reasonable price. In order to improve its market positioning, Coffee Bar would strive to offer its products at the lowest possible price. Figure: Market positioning (Source: Berger, 2008) Objectives The company is going to enter the UK market for coffee. It would offer a product that is not same as the conventional products consumed by the customers. Therefore, the company should try to abide by its objectives at each level of functioning. Financial Maintain low cost for setting up the first shop and thereafter allocate a stipulated amount of resource for expanding business. To achieve increase in sales by 7% to 10% at the end of the first year. Maintain a profit margin of 15% in the first year. Marketing To capture the target market of the local area in which the shop is located. To increase market share by 5% in consecutive years. Societal To follow corporate social responsibilities since the beginning of business and increase awareness among customers about the benefits of organic coffee. To ensure that fair trade prices are paid to agricultural producers of coffee beans from whom the beans are bought. Marketing strategy There are various strategies that Coffee Bar might apply for marketing activities of its products. 4Ps of Marketing describes the most efficient marketing strategy. Product The company is about to introduce a new product to the existing UK market. Organic coffee would attract customers since it is going to have a unique flavour and also satisfy the concern for environmental protection. Price Price for the product would be higher than the products offered by rivals. However, the company would establish the notion among customers that it offers value for price. Place The place for establishing the shop would be strategically chosen so that it faces the highest traffic in London. Such a place would facilitate higher customer inflow. Promotion Coffee Bar might adopt different promotional strategies. The most effective strategies are advertising through billboards at roadsides and in malls, offering free samples through ‘on-the-wheel’ promotions and by posting advertisements on the internet in social networking sites (Gummesson, 2012). Marketing programs The company has to formulate specific marketing programs to implement its marketing strategies. In order to make the brand familiar with the target customers, before opening the shop, Coffee Bar should make promotional events at malls and road junctions and offer free sample to the people that visit these places (Hoffmann, 2008). Although this might be expensive for the company in the beginning, it would transform into customer loyalty in course of time. The company might offer flat discounts to the customers that would visit its outlet in the first fortnight after opening of the company. Later on, Coffee Bar might conduct social welfare programs like setting up education facilities for the under-privileged children in the suburbs of London. A certain proportion of its profit might be donated for the health check up of orphan elderly population. Metrics & Implementation controls The purpose of the marketing plan is to develop ways to control the product from the beginning of the business. Financial perspective The financial perspective of control is captured through the following means: Increase in sales in each quarter. Increase in yearly profits. Growth in yearly cash flow. Customer perspective Customer inflow is benchmark for measuring company performance. Number of customers that visit repeatedly. Reduction in customer grievances and increase in positive feedback. Increase in visit of new customers. Internal business process perspective Internal business process is improved by: Reducing time span of each production cycle. Completion of operations within budget. Increasing efficiency and reducing wastes. Learning and growth Learning and growth aims of the company is accomplished through the following ways Investments made for research and development. Opening of new franchisee. Employee training and development. Reference List Berger, C., 2008. The 4 types of market competitive positioning and its key strategies. Munich: GRIN Verlag. Gummesson, E., 2012. Total relationship marketing. London: Routledge. Hoffmann, S., 2008. Are the 4 P's of international marketing of equal importance to all firms? Munich: GRIN Verlag. Kaye, L., 2012. How Fair Trade Supports Children's Rights To A Safer Environment. [online] Available at: < http://www.theguardian.com/sustainable-business/fair-trade-childrens-rights-safer-environment > [Accessed 18 September 2013]. Legislation, 2008. The Consumer Protection from Unfair Trading Regulations 2008. [online] Available at: < http://www.legislation.gov.uk/ukdsi/2008/9780110811574/contents > [Accessed 18 September 2013]. McDonald, M., 2012. Market segmentation: How to do it and how to profit from it. New Jersey: John Wiley & Sons. Shanker, R., 2002. Services marketing. New Delhi: Excel Books India. Singh, S., 2011. Geography. New Delhi: Tata McGraw-Hill Education. Smith, P. R., 2003. Great answers to tough marketing questions. London: Kogan Page Publishers, Smyth, K., 2013. The 50 Best Coffee Shops. [online] Available at: < http://www.independent.co.uk/extras/indybest/food-drink/the-50-best-coffee-shops-8435980.html > [Accessed 18 September 2013]. Travel, 2013. London's best cafés. The Telegraph. [online] Available at: < http://www.telegraph.co.uk/travel/destinations/europe/uk/london/10020732/Londons-best-cafes.html > [Accessed 18 September 2013]. Weinstein, A., 2004. Handbook of market segmentation: Strategic targeting for business and technology firms. New Jersey: Haworth Press. Williamson, C., 2007. 101 things to buy before you die. London: New Holland Publishers. Read More