Marketing Plan for Coffee Shop - Report Example

Marketing Plan for Coffee Shop Executive Summary Cafe Tungu is a unique coffee shop to be located at Trafford Centre, Manchester, which will provide a relaxing, friendly place where young families and singles can meet or relax. The reason for setting up this business is that coffee consumption in the UK has seen gradual and steady growth over the last twenty years. Today, the coffee shop market is achieving a rate of growth between 7% and 8% compared to the overall British economy. This marketing plan presents a marketing audit of the coffee business in the UK by conducting an industry analysis and competitor analysis to understand the external environment, as well as a SWOT analysis to understand the internal environment of the business. Moreover, the marketing plan will also provide the marketing objectives for the coffee shop, while also elucidating the marketing strategies to be used. These include the target market, positioning of the business, and the marketing mix for the business. Finally, the marketing plan will also discuss how the marketing strategies and objectives will be measured, as well as risk factors and contingency plans for the business. Table of Contents 1.0 Nature of the Business..............................................................................4 2.0 Marketing Audit........................................................................................4 2.1 Industry Analysis..........................................................................5 2.2 SWOT Analysis............................................................................6 2.3 Competitor Analysis.....................................................................8 3.0 Marketing Objectives...............................................................................9 4.0 Marketing Strategies...............................................................................10 4.1 Mission.......................................................................................10 4.2 Target Market.............................................................................10 4.3 Positioning..................................................................................11 4.4 Strategies....................................................................................12 4.5 Marketing Mix...........................................................................13 5.0 Measurement Plans and Reviewing.......................................................15 6.0 Contingency/Risk Factors......................................................................16 7.0 References..............................................................................................18 Nature of the Business The subject of this marketing plan is a coffee shop named Cafe Tungu, which will serve coffee, both on-premise and takeaway, particularly fine coffee, as well as quality light meals at a moderate price. Some of the light meals include an assortment of pastries and breakfast muffins (Lyon, 2010: p33). These products will be aimed at the casual consumer market, which supports the decision to locate it within a shopping centre in Trafford, Manchester. The coffee shop will mainly rely on commuters and high foot traffic around the shopping centre, especially with regards to the steady traffic flow in the morning during rush hour. To attract more customers during the day, there is a need to attract students, as well as people who may be shopping in adjacent businesses (Arduser & Godsmark, 2014: p21). Marketing Audit Coffee consumption in the UK has seen gradual and steady growth over the last twenty years, specifically in relation to gourmet coffee, which has the highest rate of growth (Eversham, 2014: p1). Coffee drinkers in the Manchester area are especially known to be among the most demanding customers, favouring gourmet coffee drinks that are well brewed and coffee shops that provide great service. With an outgoing and liberal populace, along with a rainy winter, Manchester provides a great opportunity for coffee establishments. Cafe Tungu is seeking to build a loyal base of customers by providing a relaxing environment, in which customers can enjoy great tasting coffee in its coffee shop, which will be located close to the bustling Trafford College campus. Industry Analysis After more than ten years of rapid expansion and growth, the branded coffee shop market in the UK has continued to defy all expectations as British consumers continue to turn to coffee, with no end in sight for the coffee trend culture. Today, the coffee shop market is achieving a rate of growth between 7% and 8% compared to the overall British economy (Thomas, 2014: p1). In 2013, the coffee shop market in the UK grew by 7.5% to achieve a turnover of £5 billion with branded coffee chains, including non-specialist operators, independent coffee shops, and branded coffee chains, growing to 15,723 outlets in the same year. Moreover, the number of total coffee shops in the UK over 2013 grew by 4%, presenting the largest year-on-year growth in the last ten years (statista.com, 2014: p1). Consumers have shown increased gravitation towards independent coffee shops and good artisan independents. Statista.com (2013: p1) notes that 49% of coffee drinkers in the UK now consume coffee out of their homes, maintaining more coffee shop visits than was seen in 2012, while also finding that one in every five consumers of coffee visit coffee shops daily in comparison to one in nine coffee consumers in 2009. Keynote.co.uk (2012: p1) predicts that the overall coffee shop market in the UK will exceed £8 billion in turnover by the year 2017, as well as more than 20,000 outlets, with majority of this growth being attributed to independent, non-specialist coffee shops. Specifically, independent coffee shops in the UK have grown by 15% over the past two years with regards to new businesses, while coffee drinkers who only visit independent coffee shops grew by 14% between 2012 and 2013 (Foottit, 2014: p1). In this case, there is a growing preference for independent coffee shops over branded, big chains with these consumers preferring independent coffee shops for several reasons. For example, some of these consumers prefer independent coffee shops because they want to support the British economy, because they want to help their local communities, and because they feel that they are treated more individually by independent shops. Finally, the Manchester area is ranked third among UK cities with regards to the consumption of coffee, coming only after London and Liverpool (Satin, 2011: p41). SWOT Analysis The following SWOT analysis seeks to identify the critical strengths and weaknesses of Cafe Tungu, while also describing the threats and opportunities that the coffee shop will face. Strengths Because independent coffee shops are generally smaller compared to franchise coffee shops that populate the Manchester area (intu.co.uk, 2015: p1), Cafe Tungu will be a unique coffee shop concept, which will be unlike majority of coffee shops in the area. The current owners of the coffee shop have first-hand experience in relation to starting and opening new restaurants. The ability to handpick baristas will enable the coffee shop to bring enthusiasm and professionalism to the coffee shop (intu.co.uk, 2015: p1). The coffee shop has already identified excellent staff who are customer attentive and highly attentive, thus assuring high levels of customer service. Weaknesses Cafe Tungu coffee shop has limited brand equity because it does not have a well-known brand name. The easiest and often safest way to open coffee shops in the UK is through franchising (Moyo, 2014: p1), which means that Cafe Tungu will not possess the backing of an established coffee retailing entity. Cafe Tungu has a smaller budget than most of its more established, larger coffee shop competitors. The limited marketing budget also means that it will be difficult to develop consumer brand awareness for the coffee shop (Moyo, 2014: p1). Opportunities The independent coffee shop market is growing exponentially with majority of the UK market turning towards independent, home-grown retailers. The demographics in the Trafford area of Manchester with four major schools, sports clubs, and a high working and middle class population support the need for a coffee shop (Investinmanchester.com, 2014: p1). Population growth and increased living standards in the area also provide opportunities for further growth. Improved public infrastructure and transport with the Manchester Metro-link and the Liverpool to Manchester line will provide high commuter and foot traffic for the coffee shop (Investinmanchester.com, 2014: p1). Threats The coffee shop will face stiff competition from taverns, restaurants, supermarkets, and pubs. Health trends by consumers may force some of the UK’s coffee drinkers to shift away from highly caffeinated drinks (Nützenadel & Trentmann, 2013: p29). The fragile state of coffee production around the world may lead to an increase in coffee prices, which may harm Cafe Tungu that will not initially buy in bulk. A slump in the UK economy may lead to a decrease in discretionary spending (Nützenadel & Trentmann, 2013: p29). Competitor Analysis Research findings from euromonitor (2014: p1) shows that while the boom in coffee consumption and coffee shops in the UK continues to grow, saturation of coffee shops in London has prompted key coffee brand chains to expand to other cities like Manchester and Liverpool, increasing downward sales pressures and competition. The biggest competitor for independent coffee shops is coffee shop brands like Cafe Nero, Costa, and Starbucks, which are picking off high traffic sites in prime locations, while also leveraging their powerful brand equity to compete with independent coffee shops and alternative formats. Moreover, regional chains like Chocolatesoup have also emerged as a major competitor for independent coffee shops. Currently, Costa, Starbucks, and Cafe Nero are the dominant players in the coffee shop market, especially when the Coffee Republic exited after the market consolidation (plimsoll.co.uk, 2015: p1). Starbucks, which is an iconic global brand, has more than 400 outlets in the UK and is a leader in the coffee shop market. However, in spite of this enviable position, Starbucks has had to contend with slower expansion in the UK, especially with its recent poor showing in the German market. Cafe Nero is the second largest coffee shop operator in the UK with food offerings being its core integral concept, which has contributed immensely to its rapid growth in the coffee market (bitzer.co.uk, 2014: p1). Starbucks and Cafe Nero both have strong brand equity and awareness, while their products are recognized for high quality and their processes well-documented, which are the result of their franchising strategy. However, as franchised coffee shops, they have to operate within the franchisor’s boundaries, meaning that their menus are not flexible enough. This lack of flexibility is something that independent coffee shops have taken advantage of, providing individualised products and customer service, especially where they can develop new items in the menu to satisfy the changing consumer preferences (bitzer.co.uk, 2014: p1). Marketing Objectives To develop awareness for the Cafe Tungu brand via a steady increase of customers on a month-by-month basis. To develop increased sales, as well as a decrease in marketing expenses over the next two years. The coffee shop will also seek to make the business stand out by offering a different value proposition to the Trafford area competitors, which will be communicated to the consumer. The coffee shop will set out to attract and maintain a loyal customer base by providing quality coffee, light meals, and service, while rewards will also be used in the future to maintain customers. To ensure that there is constant communication with the customers to incentivize them by offering customers contacts to the business, as well as asking them to follow the coffee shop on social media, which will be used to them to come back. To use metrics in tracking the achievement of these objectives by benchmarking the data for these objectives against a comparable time period. Marketing Strategies Mission Cafe Tungu coffee shop’s mission is to satisfy the needs and wants of the customers for coffee of high quality, nutritious light meals like pastries and muffins, and excellent service. The coffee shop’s mission is also to provide a meeting place for single people, as well as to retain customers by exceeding their service and product expectations. Target Market The Trafford area has seen a substantial growth in population over the past ten years, especially as the working class population is replaced by a middle class population. This has been driven by commencement in development of commercial and residential buildings in the area, which has attracted a higher socio-economic population demographic, which has a higher than average employment level and per capita income (Hiebing et al, 2012: p31). Cafe Tungu customers will be staff at the shopping centre and passing shoppers who enjoy take away or on-premise fine coffee, as well as a value-for-money, healthy meal. The business should also make it easier for younger families to enjoy time out by providing various activities and light meals for their children. Take away coffee beverages should also appeal to this target audience, which is expected to largely consist of singles aged between eighteen and forty years (Hiebing et al, 2012: p31). This audience works or shops around the precincts of the shopping centre, while they also have high discretionary spending and moderate incomes (Westwood, 2011: p20). Most of the customers expected to buy coffee from Cafe Tungu can be identified as social drinkers, while a second, smaller group consists of customers who are seeking a daily fix of coffee. Both target groups are seeking a relaxing, friendly, and convenient environment that allows them to socialise as they drink coffee, or even ‘recharge their batteries’. They are also more likely to seek out healthy, fresh, quality, and light beverages and meals, which they view as a viable alternative to fast foods. The coffee shop will satisfy market needs related to value, quality, and convenience for the coffee consumer, as well as consumers who are health conscious and are concerned about the foods and beverages they consume (Westwood, 2011: p20). Positioning Product positioning refers to the place occupied by the product in the mind of the consumer in relation to other competing products (Solomon, 2013: p27). Cafe Tungu seeks to position itself as a moderately priced coffee shop with an effective, innovative system that enables people to meet each other over a cup of coffee. The coffee shop would be differentiated relative to competitors in the locality in that the business will offer high quality products at a lower cost than its main branded competitors, while also providing higher quality coffee at a price similar to that offered by other independent coffee shops. Cafe Tungu will also be positioned as a place to feel energized, informed, special, and welcome for young families and singles seeking a place to relax, have fun, and enjoy quality coffee. By having a purpose and character, Cafe Tungu will seek to be different from other coffee shops in the locality in the consumer’s mind (Solomon, 2013: p27). For the Trafford area, Cafe Tungu will present a community centred focus where everyone will be welcomed with hot coffee and warm greetings. The coffee shop’s feel and look will also ensure that customers feel at home, while the customers will also learn about coffee and its different qualities first hand. Therefore, the coffee shop will implement a positioning strategy that offers comparable coffee quality for lower prices, using the slogan “same for less”. Strategies The most important objective for Cafe Tungu is to position the coffee shop as a premier location for young families to hang out, as well as for young professional singles to meet individuals who are like-minded. The strategy for marketing will set out to first create awareness among the customers in relation to the offered services, development of this customer base, and actions towards creating customer referrals and loyalty (Solomon, 2013: p34). The message that Cafe Tungu will communicate is that the coffee shop is the place to relax with the family, as well as to meet intelligent, professional singles. Various methods will be used to communicate this message, including advertisements with bulk of these advertisements in weekly entertainment magazines with readership for the desired target audience. Another strategy will involve creating partnerships and strategic relationships with companies that serve similar demographics. By establishing mutually beneficial relationships will enable the businesses to create visibility for one another (Solomon, 2013: p34). Grassroots methods will also be used as a form of advertising, where the customers will be provided with coupons that will incentivize them to bring friends to try Cafe Tungu for the first time.   Marketing Mix Product Healthy, light meals are identified as the main differentiation point for Café Tungu because the coffee shop has the flexibility and capability to change up and develop new menu items, specifically as it will allow the business to satisfy the dynamic tastes and needs of the consumer (Luther, 2011: p22). This will differentiate café Tungu’s product offerings from the franchise businesses within the locality, which are forced to conform to the franchisor’s requirements. Although coffee products, especially fine coffee, do not offer a unique selling point for Café Tungu because the other coffee shops in the locality also sell coffee, they do provide value for money. This will fill the price points identified between the low and high ends of cafés and coffee shops within the locality. Café Tungu will also seek to provide a friendly and relaxed environment, which most of the identified target audience seek out when looking for on-premise beverages and light meals like pastries and muffins offering value for money. However, it is recognized that this is not a unique offering and, therefore, it has to be better than the competitor (Luther, 2011: p22). Price Café Tungu will offer high quality coffee beverages, light meals, and service at a comparable price to major competitors in the locality. This means that the business may have to meet the market in relation to price so as to retain customers and the market share after one year, but only if there is a need to do this (Luther, 2011: p24). The target audience for Café Tungu has a high to medium disposable income, while they also seek quality service and products. Thus, pricing will have to reflect the value attached to the business’ services and products. Already, the shopping centre where Café Tungu will be located possesses what Luther (2011: p24) calls a ‘captive market’ and because there are limited coffee shops in this locality, the market is yet to discount prices. Therefore, there are plans to discount prices for the business’ products, especially for return customers. Place Customers at Café Tungu will access and buy the business’ products via the shop front, which they can either consume in the premises or as a take-away. The café’s location will be to the eastern end of the Trafford shopping centre, which is a large regional shopping centre that attracts customers from over ten kilometers away, while also serving a surrounding market of roughly 200,000 people. Situated close to the main mall, Café Tungu will be located close to national supermarkets and retail fashion outlets, which will provide heavy foot traffic. Moreover, the shopping centre is located close to the Manchester Metro-link, as well as the M60, which will provide additional traffic through the shopping centre. Promotion Several promotional strategies will be used for Café Tungu, one of which will be the provision of cheaper refills for the customers after buying coffee. Ranchhod (2014: p19) notes that clients are regularly drawn by catchy phrases like “free refills” and that, if any business is to use such a strategy, it must deliver on its promise. In this case, the business will offer cheaper refills after the customer has taken two cups of coffee. Since the coffee to be offered is of high quality, it will not be difficult to convince customers to stay on longer for discounted refills. Café Tungu will also use loyalty cards and, according to Milligan (2012: p30), rewarding loyal customers enables the business to reap profitable benefits over the long term. Thus, loyalty cards will be handed out to loyal customers and patrons, followed by loyalty rewards, such as a free coffee drink or a decorative mug after they make repeated purchases over a month. Moreover, gift card promotions are identified by Palley (2013: p41) as a useful promotional tool that can be used by customers as a gift to their friends, in turn gaining new customers. In collaboration with a promotions company, getting the customers’ email addresses will enable the promotions company to provide customers with redemption codes, allowing them to redeem rewards at a time of their convenience. Website promotions and announcements will also be used to post updates about the business, especially in relation to upcoming promotions and changes to the menu (Palley, 2013: p41). Word of mouth advertising will also be used, especially involving customers who are attracted to the relaxing atmosphere and service quality of the coffee shop. Finally, advertisements in weekly entertainment magazines, along with posters and fliers will be used to target young professionals within the Trafford area. Measurement Plans and Reviewing According to Wood (2013: p29), putting a measurement program for the achievement of marketing objectives and promotional strategies is an important aspect of the marketing plan, especially deciding on the frequency of data collection, while also noting that measurement of marketing effectiveness is best done on a monthly basis. To measure whether the marketing plan has increased the business’ brand awareness among consumers, the business will track traffic on its website, as well as the number of referrals made by customers using the gift coupons (Bly, 2011: p26). In relation to the development of increased sales in the coffee shop, the business will use premise sales records to identify shifts in the number of sales on a month-by-month basis. A feedback system will also be used to measure effectiveness of the marketing strategies using a suggestion card system, which includes several statements that customers will rate using a scale of one to ten (Knight, 2014: p33). Several open-ended questions will allow the customers to offer praise or constructive criticism freely. Reasonable suggestion will then be implemented with the aim of improving the service offerings. Contingency/Risk Factors Description of Risk Likelihood of Risk Impact of Risk Priority Preventative Action Contingency Plans Fire, which could lead to loss of life and property Medium High High The business will install smoke alarms, fire extinguishers, and sprinkler systems, which will be checked regularly. Staff will also receive training in emergency procedures in case of a fire, including evacuation plans. The business will also ensure that fire, business interruption, and public liability insurance is sufficient and in place. The business will have access to personal resources, which will be used to rebuild as insurance is processed. Changes in terms with the suppliers Medium Medium Medium The business will maintain a good relationship with its suppliers. Increase working capital drawn from personal reserves or use alternative suppliers. Food Poisoning Very Low Very High High The business will use quality, certified products, while also training staff in hygienic food handling and correct foodstuff storage. The latter two precautions will be part of the business’ quality control processes. The business will develop a process for handling complaints. The business will also investigate sources of poisoning, while also remediating it. Inability of the suppliers to supply required products Low Medium Medium The business will arrange for alternative suppliers, while also assessing substitute products The business will use suitable alternative products or buy from alternative suppliers. Dispute with the owners of the shopping centre Low Medium High The business must ensure that there is a formal agreement on the lease period in place. Moreover, a sound working relationship will be developed and maintained with the shopping centre manager. The business will engage a solicitor for advice. Loss of important personnel Very Low Medium Medium Ensure that skills and knowledge are transferred to other personnel Take out insurance for key personnel The business will use short term contracts to employ suitable replacement until the remaining staff is able to do the work.   References Arduser, L., & Godsmark, E. (2014). How to Open a Financially Successful Coffee, Espresso & Tea Shop. Ocala: Atlantic Publishing Group. bizter.co.uk. (2014). Competitor Analysis of Coffee Shops. Retrieved March 19, 2015, from Coffee Business Essentials: http://www.bizter.co.uk/competitor-analysis-of-coffee-shops/ Bly, R. W. (2011). 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