Marketing Strategy of Bean Bar Coffee Shop - Case Study Example

EXECUTIVE SUMMARY This report focuses on the marketing strategies and opportunities that Bean Bar, a coffee shop in Adelaide can look upon to enlarge its customer base and ensure market expansion. The report throws light on the current customer base of Bean Bar along with its current position in the market. An analysis of the changing pattern in Coffee and other beverage industry has been explained to provide in depth knowledge of the future growth. Further a SWOT analysis has been prepared to identify future opportunities and three future marketing opportunities most viable for Bean Bar with a limited budget of $25000 each has been evaluated in terms of cost, risks and returns which the company can look upon to expand its business and generate higher profits. Finally the report is concluded with the current changes that Bean Bar needs to implement to ensure successful implementation of the recommended strategies. A goal and objective statement has also been prepared to provide the company with a desired direction to ensure achievement of its marketing opportunities in a systematic and logical manner with higher return, better service, future growth and market expansion. TABLE OF CONTENTS Introduction 3 Basic Knowledge about Bean Bar 3 Current Customer Base of Bean Bar 4 Current Position 4 SWOT Analysis 5 Current Market Trends in Coffee and Beverage Industry 6 Marketing Opportunities for Bean Bar 7 Legal and Ethical Requirements 7 Goals and Objectives 8 Major Competitors and their Performance 8 Future Marketing Opportunities 9 Changes in Current Operations 11 Conclusion 12 References 13 INTRODUCTION This report focuses on complete marketing plan for Bean Bar, a coffee shop established in 2001 in Adelaide. The report highlights the marketing opportunities for Bean Bar along with its current customer base, its positioning in the market, A SWOT analysis to identify the potential threats and weaknesses and converting them into opportunities and strengths, current market trends of coffee and beverage industry along with legal and ethical requirements that Bean Bar needs to adhere to in order to ensure smooth running of the business. The report further makes a competitor analysis of Bean Bar along with three specific marketing opportunities which the business can look upon to ensure higher return and growth in the long run. Finally the report is concluded with an evaluation of the changes that Bean Bar requires in the current market scenario to ensure enlarging its customer base, reputation and market share along with higher growth, returns and sustainable development of the business. BRIEF KNOWLEDGE ABOUT BEAN BAR Bean Bar is a coffee shop which was established in 2001 in Adelaide and ever since its formation the company has been providing best coffee beverages to its loyal customers. The coffee shop specializes in selling coffee along with a variety of other products like iced beverages, sandwiches and snacks. The company has done well to expand its business and in totality today has 9 Bean Bars in different premium locations of Australia. The company has been able to draw a large pool of loyal customers owing to its fast service, better quality products and high customer satisfaction. Location of the outlets has also helped Bean Bar to expand its customer base. It is to be noted that the coffee shop faces tough competition from other giants like Barista, Café Coffee Day etc CURRENT CUSTOMER BASE OF BEAN BAR Bean Bar coffee shop’s success depends on the number of loyal customers it can attract to ensure higher sales and brand recognition. Currently the company targets a large number of corporate employees by opening its outlets in busy streets of the city. However, other segments of the customer pyramid are also not left unattended. Its iced beverages are specially designed for targeting customers with the age group of 6-35, whereas the company targets through its special coffee ranging from espresso to black coffee, cappuccino to herbal coffee within the age group of 18-55. The current customer base of Bean Bar thus, compromises of corporate employees, kids, youngsters, middle aged groups along with older group. Special products have been designed as per specific target of its customer base to ensure higher sales and maximum customer satisfaction. CURRENT POSITION The number of coffee outlets in Australia has grown by 25% during the last few years along with 29% increase in coffee lovers. Bean Bar faces tough competition from other renowned coffee outlets like Barista, Café Coffee Day etc who holds a major market share in the coffee shops. Bean Bar through its quality service and personal customer attention along with variety of coffees and other allied products holds a considerable share in Australia particularly Adelaide. The company with the tagline “Adelaide’s Favorite Coffee” attracts a large number of customers to visit its outlets and has been successful in building its own brand name which the customers trust, love and appreciate. However, it is to be noted that the company needs to develop new strategies and proactive planning to enlarge its customer base. SWOT ANALYSIS A SWOT analysis enables Bean Bar to identify its potential threats and weaknesses and convert the same into opportunities and strengths including both internal and external factors. A SWOT for the same has been prepared as under. Strengths Location of the coffee outlets in most busy streets of the city attracting more loyal customers towards it. Wide range of products ranging from coffee, iced beverages, sandwiches and snacks. Increase in the business with more coffee outlets being opened. Warm and cozy environment and ambience to deliver customer with best of services and highest level of customer satisfaction. Weaknesses Mainly concentrated in Adelaide and its adjoining areas. Difficulty in monitoring and controlling its different outlets through centralized organizational structure. High infrastructure cost making the services costly. Threats Tough competition from renowned brands like Barista, Café Coffee Day etc. Rising prices with low savings affecting daily sales of the coffee shops. Changing customer taste and preferences. New industrial and health policy making the business more complex. Opportunities Large increase in the number of coffee drinkers. Market expansion to cover all of Australia and go global. Adding more allied and varied products to attract larger pool of customers. Bean Bar should now look to go global and expand its market base by making tie-ups with other coffee giants to make its presence felt globally and boost up its sales and ensure higher returns and growth of the business. The company should look to target other segments of the customer pyramid as well and add new product lines to its existing products to enlarge its customer base. Opening of new outlets in Australia can be more successful to attract more customers. Further the company in order to fight with the larger giants should look for promotional tools and better quality services with higher customer satisfaction to draw more customers and ensure future growth and market expansion successfully. CURRENT MARKET TRENDS IN COFFEE AND BEVERAGE INDUSTRY There has been a sharp increase in the number of coffee outlets in Australia due to more demand of the same. There has been increase in the availability of barista/café- style coffee for the home. Coffee is anticipated to experience a 3% in CAGR over a few years thus increasing the number of coffee drinkers to over 21% from its present position. Tea on the other hand poses serious threat to coffee as number of people drinking tea is anticipated to increase over 40% in terms of increase in coffee lovers (Cateora, Mary & Graham, 2009). Tea shall emerge as the most suitable substitute of coffee as more people are inclined towards tea than coffee. However it is to be noted that there has been significant changes in coffee lovers dedicated or perhaps addicted to popular style of coffee including cappuccino, latte and local specialty which is well served and catered by Bean Bar thus giving it more opportunity to boost up sales and ensure higher returns in future years. MARKETING OPPORTUNITIES FOR BEAN BAR Bean Bar should learn from its competitors and rather than becoming a follower should look towards a leader or pioneer strategies. The company should look to strengthen its brand image and improve on in its customer base by delivering high quality services and products with optimal utilization of its available resources to attract a larger pool of loyal customers. The company should look towards promotional techniques like offers, discounts, happy hours etc to boost up its sales (Czinkota & Ronkainen, 2004). Expansion of market shall be greatly viable and risky with higher returns for the same. Bean Bar should look to expand its business in all of Australia and open more outlets in Australia and globally to emerge as a market leader with new features and added product lines as innovation tool to gain competitive advantage over its rivals. Cost reduction techniques should be critically deployed by the company with no compromise in quality of its products and services and the company should continuously aim to deliver highest customer satisfaction with optimal utilization of its resources to ensure future growth and larger customer base with better returns and sustainable development of its business. LEGAL AND ETHICAL REQUIREMENTS Legal issues are directly related to law and regulations whereas an ethical issue is linked to moral values and judgment of an organization and its employees. Since Bean Bar deals with consumables it has to strictly abide by laws related to food and hygiene. Environmental protection laws along with occupational health and safety are equally enforceable to Bean Bar. The company also has to strictly adhere to workers compensation acts and consumer protection and trade practices. Failing to do so can hamper the smooth running of the business along with a complete shutdown of the business (Chrisan, 2001). Further Bean Bar has to maintain ethics in its workplaces to avoid cultural clashes and ensure transparency and fair dealings in its activities with equal importance to moral and judgment. Ethics play an important role in the overall development of the business as an unethical business is more danger than asset to society and its environment. GOALS AND OBJECTIVES Bean Bar should focus on delivering excellence in terms of coffee preparation, its quality service and cozy atmosphere. The company should look to strive for excellence in coffee and food, service and value through proactive planning, thinking, managing and experience. Bean bar should look to achieve convenience, innovations, personal service and professional attitude. Aim should be to consistently treat customers, suppliers and employees with honesty, dignity, fairness and respect (Cook & Dave, 2004). Furthermore the company should towards setting both short term and long goals and objectives with equal synchronization of both organizational and individual objectives to create a win-win situation for all. Bean Bar should set up a perfect image of its own to get good reputation and build on its profits. Customer satisfaction should be the key to success with guaranteed quality service. Bean Bar should establish a market share of its own by establishing a famous trade mark name and look to open 50 outlets in Australia and 10 outlets in other parts of the globe within next 5-6 years. MAJOR COMPETITORS AND THEIR PERFORMANCE Bean bar faces tough competition from larger giants like Barista, Café Coffee Day, Starbucks, Café Roma etc along with equal competition from non recognized smaller coffee shops and other non-alcoholic beverages like Tea, soft drinks etc. Star Bucks, Barista and Café Coffee Day holds around 65% market share, with Café Roma catering to around 10% market share. All this coffee bars or outlets not just offer the best tasting coffee but also offers delicious pastries and other snacks and food with home-like, cozy and comfortable environment. Personal customer attention with superior quality service is the basic key to their success (Cook & Dave, 2004). They have identified that customers are the key base to their success and try to deliver highest customer satisfaction to its customers. It is to be noted that coffee consumption is uniform across different income level groups and Bean Bar in order to enlarge its customer base and market share should look towards competitive pricing with promotional tools to attract a larger pool of loyal customers and strengthen its brand image and ensure higher sale and returns. FUTURE MARKETING OPORTUNITIES Bean Bar should look towards market expansion in Australia by opening more outlets in almost every big city of Australia. It is impossible to open counters in every city of Australia with a limited budget of $25000, so the company should look to churn its resources in the best possible manner to open few outlets in major cities and then expand the same. Liquidity should be maintained to open outlets with working capital ease. Bean Bar already has 9 outlets in the country so the risk of failure is on the lower side with higher returns. The company can estimate a return of investment of about 20% by opening new outlets with larger market base and larger pool of loyal customers. A bifurcation of the cost and return is shown as under Rent of new outlet - $5000 Raw material- $4000 Electricity, maintenance cost etc- $3000 Advertisement- $2000 Working capital- $3000 General and miscellaneous cost - $1000 Employee and staff expenses- $4000 Assets-$ 3000 With an allocated budget of $25000 sales is anticipated to boost by $ 50000 and net profit by $5000 per month giving a ROI of 20% Secondly the company should look to allot funds towards promotional activities. Building on a brand image shall help the company towards future expansion with ease. Funds need to be allocated on advertising, promos, offers, discounts, schemes etc to boost up sales. Public relation should be strengthened to create brand equity of the Bean Bar. Market trends show that an allotment of $25000 on promotional activities can boost up sales by over 20% and deliver a return on investment of over 15%. Further promotional activities and advertisement involves higher risk as it involves targeting the correct customers and correct selection of media. Professionals can be hired for the same to ensure success and mitigate considerable amount of risk with higher returns. A bifurcation of the same is shown as under. Advertisements- $4000 Free samples- $4000 Schemes, offers and discounts- $ 6000 Promos-$3000 Public relations-$ 3000 Market research- $3000 Professional fees- $3000 It is to be noted that this fund shall be allocated in totality for all outlets of Bean Bar through which sales is anticipated to rise considerably with a rise in net profit of over $4000 per month giving a ROI of 16% Bean Bar can also look to enter into domestic tie-ups and then global tie-ups. Entering into tie-ups with smaller local coffee outlets shall help the company to widen its customer base and place its products with lesser efforts in an already running business. Risks shall be mitigated to a considerable extent with higher returns. Cost of entering into tie-ups through merger or acquisition of small coffee shops -$ 25000 Increase in net profit of $ 4000 per month Return on investment – 16% Thus we see that through a proactive planning Bean Bar can look upon the following three marketing opportunities and ensure higher success and growth. CHANGES IN CURRENT OPERATION Bean Bar in order to successfully implement the above marketing opportunities needs to ensure smooth flow of cash and liquidity. Efforts should be directed towards higher sales in its existing outlets by repositioning its existing product line and adding new innovations with new products. Customer service and customer satisfaction should be targeted with new promos and offers. Bean Bar should look to target other segments of the customer pyramid as well to enlarge its customer base and attract more customers. This new marketing opportunities shall ensure Bean Bar to target larger market with business expansion. Brand image shall be strengthen and customers shall be provided with personal attention with a homely ambience and generate higher sales with higher revenue and returns for the company. Bean bar through its proactive management and attractive offers should look towards supplier’s negotiation and new tie ups with smaller domestic coffee outlets to ensure guaranteed success in future years to come. CONCLUSION The report provides a complete understanding of the current market scenario of Bean Bar and throws light on its current customer base along with competitor’s performance. A SWOT analysis has been prepared to identify the marketing opportunities in a logical manner. A goal and objective statement has been provided to give the company a desired direction towards future growth. Further the report highlights three marketing opportunities with a budget of $25000 for each and its potential risks, costs and return on investments. The report is finally concluded with changes which the company needs to bring to successfully implement the recommended strategies to ensure larger market base and higher profit with brand recognition and quality service to its customers. References Cook, D. & Dave, D. 2004. Structural element of service quality product. International Journal of Business Performance Management, 6 (2), 189-207 Chrisan, P. 2001. Marketing: A Behavioral Analysis, McGraw – Hill. New York Czinkota, M.R. & Ronkainen, I. A. 2004. International Marketing, 7th edn. South-WesternPublishing:Australia. Cateora, P.R. & Mary, C. G. & Graham, J.L. 2009. International Marketing, 14th edn. Irwin: McGraw-Hill. Read More