Significance of the Overall Segmentation Targeting Differentiation and Positioning Strategies - Case Study Example

Marketing Strategy UNE Life Name Class Unit Executive summary This marketing strategy report looks at UNE Life business offerings. The paper analyses, Café UNE Life marketing strategy. The café aims at expanding to the neighbouring community, provide social hub, and provide variety of meals and discounts. The strategies being used is increased marketing and discounts which targets the neighbouring community. The industry have high barriers to entry, low threat of substitutes, moderate bargaining powers of suppliers and moderate bargaining powers of buyers. Due to café location inside the university, the level of competition rivalry is low. The report recommends Café UNE Life to use the defender strategy based on the analysis. The report establishes café and coffee shop industry have been growing at a very fast rate over the past five years with growth rate expected to be above 7.4% in 2015-16. Café UNE Life has been expanding at a fast rate and based on SWOT analysis, there are high growth opportunity. The marketing research will be able to help in determining marketing mix and also in Café UNE expansion plans. The report has finished by determining the significance of the overall segmentation, targeting, differentiation and positioning strategies for the UNE Life. Lastly, the report establishes that the café is positioned as a relaxing and social hub for students and staff in the university Table of Contents Executive summary 2 Table of Contents 3 Introduction 4 SMART objectives and hierarchy of strategies for UNE Life 5 Objectives 5 Strategies 5 Industry in which Café UNE Life will compete (industry’s five competitive forces) 5 Threats of new entrants 6 Threat of substitutes 6 Bargaining powers of suppliers 6 Bargaining powers of the buyers 7 Intensity of rivalry 7 Strategies for Café UNE Life 7 Market and industry attractiveness 8 Macro level analysis 8 Micro level analysis 8 SWOT analysis for Café UNE Life 9 Relevance of the marketing research for the strategic decision-making of the Café UNE Life and the influence of product, pricing, distribution and promotion policies on marketing decisions 10 Significance of the overall segmentation, targeting, differentiation and positioning strategies for the UNE Life 11 Segmentation 11 Targeting 11 Differentiation 12 Market positioning 12 Conclusion 13 References 14 Introduction UNE Life is an online platform which shows different offerings by university of New England. The university offers different product and services through various business. the business on the website are; SportUNE, campus essentials, the Stro, the Booloominbah collection, Belgrave Cinema, Life functions & catering, Sleek, Café Life and Yarm Gwanga. The main aim of UNE Life is to ensure that the students are able to enjoy life on campus. This is through making the experience easier and more enjoyable. This report focuses on Café Life UNE (UNE Life, 2015). The report starts by looking at café mission, objectives and strategies. The report then focuses on the industry analysis and strategies. Through macro and micro analysis, the report looks at the industry attractiveness and relevance of marketing research for decision making at UNE Café Life. Lastly, the overall segmentation, targeting, differentiation and positioning strategies are analysed. SMART objectives and hierarchy of strategies for UNE Life The main aim of the café Life UNE is to enable the students and staff to relax and catch up as they enjoy great coffee and food. The café have been serving as a social hub for both the staff and students. The goals for Café UNE life are specific, measurable, attainable, realistic and timely (SMART). This makes it possible to attain them compared to general goals. Objectives Reach a wider market (targeting neighbouring community) Provide a social hub for the customers Provision of varieties of homemade and take away meals Provision of discounts for UNE students Strategies In order to achieve the set objectives, café UNE Life has to increase its marketing. This will make it possible to expand and achieve a large market share. The café have to target and acquire the neighbouring community. The university will continue offering discounts and extend them to the newly acquired market. Industry in which Café UNE Life will compete (industry’s five competitive forces) Café UNE life is in the cafes and coffee shop industry in Australia. Through use of porter five forces analysis, it is possible to determine the feasibility of the industry and the potential for profits. The five forces help in determining the profitability of the industry (Porter, 2008). Threats of new entrants The barriers to entry determine the threat of new entrants. This includes the economies of scale, differentiation, switching costs, differentiation, and scope of operations (Porter, 2008). The café and coffee shop industry have high capital costs, high fixed costs and total costs. The economies of scale in the industry are considerable. Due to high capital costs, the café business requires a management that is able to have a cost effective approaches on the usage of resources. The industry requires high level of management expertise. The university have the capability of hiring highly trained staff to handle the task. Access to a good location in the café and coffee shop industry is also a major barrier. The high entry barriers make it hard for new entrants to enter the industry. There are limited numbers of suitable locations. Threat of substitutes Substitutes are products which can perform the same duty as the existing products. Use of substitutes can help in reducing the costs and enhance performance (Porter, 2008). The café and coffee shop industry have been under low threat from substitutes. Apart from recession when the customers switch to substitutes and less costly cafes, the level of substitutes is low. The industry is highly price sensitive. The café can compete with hotels and cafes located around the university without being substituted. The location of Café UNE life makes it hard to be substituted. The substitutes are not a threat to the café as well as the industry. Bargaining powers of suppliers Suppliers become more powerful when they are more concentrated than their customers. The power is also high if the switching costs for the differentiated products and services are high. A customer will avoid switching the suppliers if a change will lead to higher expenditure (Porter, 2008). The supplier who has high power in the café and coffee shop industry is trained personnel. This is due to the demand for trained personnel worldwide which is high. Bargaining powers of the buyers Buyers of goods and services become more powerful if they are more concentrated than the industry players. This makes it possible for them to force down on prices. Buyers can lead to a challenge of backward integration if large group of buyers are able to acquire the supply store (Porter, 2008). The bargaining power of the students and staff is moderate. The café have been selling their products at a reduced price and offering discounts to meet the buyers’ expectations. There is minor threat of backward integration. It is important to note that the bargains power of the customers varies and depends on the target group. Intensity of rivalry The size and number of competitors determines the level of rivalry. Numerous and large competitors leads to intense competition. This is due to fact that they look for growth which is higher than the growth of the industry (Porter, 2008). The café is located inside the university which enhances its proximity to consumers. The level of rivalry in the industry is moderate due to fact that the café have a location advantage. Strategies for Café UNE Life Firms within a specific industry can be classified into four major groups. The groups are; defenders, analysers, reactors and prospectus. Café UNE Life is supposed to use the defender strategy based on the analysis. This is through drawing information from different sources which will give them strong foundation on the business. There is need to heavily invest in research and development which will make it possible to respond fast to trends. The method will enable café UNE Life to process knowledge effectively (Kotler & Armstrong, 2010). Market and industry attractiveness Macro level analysis The café and coffee shop industry have been growing at a very fast rate over the past five years. Most of the growth in Australia has been attributed to the vibrant coffee culture in the country. The industry growth is expected to be above 7.4% in 2015-16. This is due to the boost of the rising consumer incomes that was experienced in 2013-14. Despite this, the competitive pressure has made the profits to reduce slightly. The market share concentration is low. There are large numbers of single established café and coffee shops in Australia. Consumers have been choosing independent coffee shops and small operators over chain stores. This is due to high flexibility, uniqueness and great offerings. The Australian café and coffee shop industry is dominated by small independent operators. Despite this, large franchises still operates in the industry (IBISWorld, 2015). Micro level analysis Café UNE Life has been expanding at a very fast rate. The number of students and staff utilising Café UNE Life has been high. Due to time limitation of the students and staff, they find the café to be very convenient and affordable (UNE Life, 2015). The products and services offered by the café are what the students require. The university have been offering a diverse menu that caters for the student and staff needs. The proximity to the clients (students and staff) has been a major competitive advantage of Café UNE Life. SWOT analysis for Café UNE Life Strengths Café UNE Life has a large target market. This enables the business to have a greater expectance of revenue. The café has great exposure to both the students and staff The business has a diversified menu which expands the target market even further. The price set by the café shows that the products and services are of high quality and affordable. The revenue spent on advertising is kept minimum due to proximity of target audience The business have been able to create a strong brand image through customer satisfaction Opportunities The café can expand its offering to include the nearby community. This will increase the number of clientele hence market access. The café UNE Life have great opportunity for expansion on the near future. The main strategies that will aid this is increasing the customer base and enhance advertising. Threats There are café and coffee shops in the surrounding areas. This may make competition intense as the business expands. The business is affected by the level of purchasing power of both students and staff. This has a great effect on the profitability of the business. The industry is highly regulated and controlled. This leads to higher expenses which must be covered. There is also need for continuous renewal of license. Weakness There is high inventory turnover rate in the café and coffee shop business. This is due to fact that the raw materials that are used have a short expiry date. There is need for the supply to be maintained at the right levels. Failure to manage the inventory may lead to serious problems. The café and coffee shop requires high quality control. Adequate quality control is hard to achieve because the menu varies easily. The business depends on the students and staff only. If the business is not well received by the students and staff, it can suffer a major loss. Relevance of the marketing research for the strategic decision-making of the Café UNE Life and the influence of product, pricing, distribution and promotion policies on marketing decisions Marketing research is a vital tool in the industry for decision making. Through marketing, all relevant industry information is gathered (Kotler & Armstrong, 2010). The business is able to attain all the required knowledge and is made aware of all choices that are available. Marketing decisions are based on the existing level of research. Through marketing research, the marketing mix decisions are made. The industry is able to determine the price to charge for goods and products based on level of competition among other factors. The research also helps in determining the cheapest way to distribute its products. Marketing promotions are determined by the target market identified through research (Hair & Lukas, 2014). This market research will help café UNE Life in its expansion process. Significance of the overall segmentation, targeting, differentiation and positioning strategies for the UNE Life Segmentation Market segmentation involves breaking down the consumers into subdivision with the potential buyers. When segmenting, one has to look for group of buyers who are similar and can be appealed by the same product. Café UNE Life has been able to use target marketing focusing on the students and staff in the university. The café charges prices which are able to suit both students and staff and offers a 10% discount on the students (UNE Life, 2015). The café have been able to realise that acquiring new customers is hard than retaining current ones. This has made the café to work hard in retaining the target customers through offers that fit them. Café UNE Life have utilised bahavorial, geographic and psychographic segmentation. Through bahavorial segmentation, café UNE life have been able to look at what the customers want and their usage. Geographic segmentation is based on where the customers are located. In this case, the customers are located in the university. Psychographic segmentation used by café UNE life has focused on the customers’ view of value and way of life. Targeting Targeting makes the selected segment more useful. The segments are chosen based on their attractiveness to the market (Porter, 2008). Café UNE Life has targeted staff and students in the facility. This has been the most appropriate clients since the business is located inside the university. The business is expected to target the neighbouring community to increase their customer base. Differentiation This involves ensuring that the offer is very unique as compared to the competitors. Differentiation strategies help in attaining a competitive edge in the industry (Hair & Lukas, 2014). Café UNE Life has differentiated its products. This is through use of a custom menu which has unique characteristics. Market positioning Positioning acts as the final stage of market segmentation. The product is designed to occupy a distinct position in the mind of the consumer (Chen & Uysal, 2002). Café UNE Life has worked hard to ensure that they have been able to position themselves in consumers mind. This is through offering an environment which is relaxing and social. The café is positioned as a relaxing and social hub for students and staff in the university. This position can also be used for the community targeted. Conclusion Café UNE Life has been able to provide the students and staff a social hub in a relaxing environment. The café has great competitive advantage in the industry due to its location and competitive positioning. The café can increase their market share through targeting the nearby community. Using porter five forces analysis, the industry has great potential for growth and expansion. There is moderate competitive rivalry and high growth opportunities. The entrant barriers are high with low bargaining powers of suppliers and buyers. Marketing research is a vital tool in making strategic business decisions. Through marketing research, one is able to come up with the right market mix. Café UNE Life is well segmented, targeted and positioned. This acts as a support to the café competitive advantage. References Chen, J. S., & Uysal, M. (2002). Market positioning analysis: A hybrid approach. Annals of Tourism Research, 29(4), 987-1003. Hair Jr, J. F., & Lukas, B. (2014). Marketing research. McGraw-Hill Education Australia. IBISWorld (2015), Cafes and Coffee Shops in Australia: Market Research Report, Retrieved 15th August 2015 from, http://www.ibisworld.com.au/industry/default.aspx?indid=2015 Kotler, P., & Armstrong, G. (2010). Principles of marketing. Pearson Education. Porter, M. E. (2008). Competitive strategy: Techniques for analyzing industries and competitors. Simon and Schuster. UNE Life, (2015), Café Live UNE, Retrieved 15th August 2015 from, http://shop.unelife.com.au/ UNE Life, (2015),UNE Life, Retrieved 15th August 2015 from http://unelife.com.au/ Read More