Strategic Marketing Planning for Java Sumatra - Research Paper Example

Table of Contents Page Executive Summary 2 Situation Analysis 3 SWOT Analysis 3 Competitive Analysis 4 Mission 5 Marketing Objectives 5 Financial Objectives 6 Target Market 6 Positioning 6 Marketing Research 6 Advertising & Communication Plan 7 Financials 7 Implementation & Evaluation 8 Appendixes 1. Coffee Exports By Exporting Countries To All Destinations 9 (January 2009) 2. Annual Sales Forecast 11 3. Annual Expense Forecast 12 4. Milestones for Key Marketing Programs 2009 13 Executive Summary Java Sumatra sources and exports premium grade Arabica beans from Sumatra, Indonesia to specialty roasters in the United States. The company currently has a production capacity of 36,000 metric tons per year, and its business objective is to increase its production capacity to 80,000 metric tons per year by 2011. While most Sumatra roasts offered in the market today consist of blends, Java Sumatra offers a unique service that provides custom roasts with pure Sumatra Arabica coffee beans. Since the company's inception in 2003, Java Sumatra has been exporting to specialty roasters only. With the new production capacity, the company will extend its reach to include wholesalers in the United States who offer premium coffee variants and are looking to include an additional coffee roast in their product selection. This marketing plan examines the current market environment, internal SWOT analysis, competitive universe, company mission, marketing and financial objectives, target market, positioning and market research to determine the best layout for the marketing plan. In order to achieve the sales forecast from 2009 to 2011, a comprehensive advertising and communication plan has been developed, with the internet and print advertising used at the forefront of the marketing plan. Lastly, an implementation and evaluation process is proposed to manage and control the marketing plan. Situation Analysis In the last six years, Java Sumatra has been focused on providing a differentiated product, which is premium grade Arabica beans or roasts from Sumatra, Indonesia. By keeping to this mission, the company has developed a circle of loyal customers who trust the quality of the product and who are satisfied with its customer service promise of prompt and timely product delivery. With the spread of coffee culture in the United States, most specialty roasters and wholesalers are constantly looking to include new and innovative coffee selections to their customers and Java Sumatra understands the need to work with these roasters in order to survive in this very fragmented market where quality control is lax. As a result, Java Sumatra has gained valuable insight into attributes that are important to specialty roasters when making a purchase, the first of which is a consistent supply of quality beans. In order to meet the demands of specialty roasters and wholesalers, Java Sumatra has planned to increase its production capacity to 80,000 metric tons by 2011. SWOT Analysis The following SWOT analysis captures the key strengths and weaknesses within Java Sumatra, and presents the opportunities and threats facing the company. Strengths Strong relationship with plantation owners in Sumatra. Strong relationship with specialty roasters as a reliable source of supply and consistent customer service levels. Efficient production process that keeps costs down while maintaining the quality of coffee beans. Weaknesses Dependence on a number of plantation owners restricts the supply of coffee beans and inhibits expansion plan. A limited marketing budget. Opportunities Greater awareness of this type of coffee selection provides for increase in demand for quality coffee beans. The increase in production capacity will reduce costs and allow for a competitive cost structure that rivals the bigger players in the market. Threats Coffee is a commodities market and the volatility of the business is more pronounces, especially in a downturn economy. There is potential competition from larger companies who are moving towards vertical distribution channels. Competitive Analysis According to the International Coffee Organization (ICO), Indonesia contributes only 4.4% of the world's total coffee exports in January 2009 (Appendix 1) but there are over thirty suppliers in the United States that provide coffee beans from Indonesia. While most competitors offer coffee selections from Sumatra, they are coffee blends that use Robusta or a blend of coffee beans. The following are the top three competitors in the United States: Establishment Type Coffee Bean Selection Starbucks Sumatra Mandheling Arabica & Robusta Blend Nuanze Coffee Sumatra Arabica & Robusta Blend Green Mountain Coffee Sumatra Mandheling Arabica Blend Besides specialty suppliers, wholesalers in the United States have also started introducing Sumatra Coffee beans, but the quality of the beans are not consistent with every shipment. As a result, although these wholesalers offer the coffee beans at lower prices due to unreliable sources, the lack of quality control results in customers moving from one wholesaler to another in order to find good quality beans. Mission Java Sumatra's mission is to provide premium quality Arabica coffee beans from Sumatra, Indonesia, in addition to a consistent level of customer service which emphasizes working with customers to meet their goals. Marketing Objectives To create company awareness among the leading wholesalers in the United States and to build the reputation of Java Sumatra as the company that provides quality coffee beans with consistent level of customer service. Financial Objectives The objective is to increase the profit margin by 1% every six months, and to maintain spending (at a certain level) as a percentage of sales. Target Market The potential customer groups include Brazilian green coffee wholesalers as they have the biggest network potential and the existing Java Sumatra specialty roasters customers. Positioning Java Sumatra will position itself as the distributor of premium Sumatra coffee beans with unparalleled customer service standards. The competitive edge of the company will be its reputation for quality products due to Java Sumatra's good relationships with plantation owners and specialty roasters. Marketing Research During the development of the marketing plan, Java Sumatra commissioned AC Nielsen Corp. to develop and implement a survey on the most effective advertising and communication channels for this business model. Three hundred responses were collected and the findings revealed that current customer testimonials, industry credibility, and internet sourcing to be the three top avenues that need to be incorporated in the marketing plan. As a result, Java Sumatra will use current customers, industry journals and magazines, and the internet in its advertising and communication plan. Advertising and Communication Plan The principal plan is to position Java Sumatra as the premium Sumatra coffee bean distributor with a good reputation for quality and customer service and to communicate its plan to expand its production capacity. In order to communicate this message to the company's current network of specialty roasters, the sales team will make regular visits to the top fifty specialty roasters with printed sales material to introduce its selection of custom roasts. To reach wholesalers, which is a new sales channel for the company, Java Sumatra will develop advertising advertisements for industry journals and magazines to increase company awareness. Lastly, the company believes that the internet is a powerful tool to communicate additional information on the credibility of the company, for instance, its operations in Indonesia, how the company rates its coffee beans, and testimonials from current customers. Java Sumatra will also utilize search engine optimization to attract potential customers to its company website. Financials Please see annual sales and expense forecasts in Appendix 2 and 3 respectively. Implementation and Evaluation Please see Appendix 4 for the milestones for the key marketing programs in 2009. Appendix 1 Coffee Exports By Exporting Countries To All Destinations (January 2009) Bolivia 8,000 Brazil 2,285,290 Burundi 35,000 Cameroon 15,000 Central African Republic 2,000 Colombia 849,000 Congo 15,000 Costa Rica 119,340 Cote d'lvoire 92,553 Dominican Republic 2,356 Ecuador 70,000 El Salvador 118,727 Ethiopia 47,573 Ghana 1,000 Guatemala 263,713 Guinea 26,000 Haiti 1,000 Honduras 299,167 India 146,536 Indonesia 340,000 Jamaica 1,000 Kenya 40,000 Madagascar 10,000 Malawi 1,000 Mexico 230,585 Nicaragua 81,050 Panama 8,000 Papua New Guinea 52,800 Peru 200,000 Philippines 500 Rwanda 20,000 Tanzania 140,000 Thailand 30,000 Togo 4,000 Uganda 3,32,211 Venezuela 10,000 Vietnam 1,870,158 Zambia 5,000 Zimbabwe 1,000 Others 18,000 Total 7,792,106 Source: International Coffee Organization. 6 March. 2009. Appendix 2 Annual Sales Forecast Sales (US$) 2009 2010 2011 Specialty Roasters 660,000 949,500 1,117,000 Wholesalers 526,000 672,000 838,500 Total Sales 1,186,500 1,621,500 1,955,500 Cost of Sales 2009 2010 2011 Specialty Roasters 396,000 569,500 670,000 Wholesalers 315,500 403,000 503,000 Total Cost of Sales 711,500 972,500 1,173,000 Appendix 3 Annual Expense Forecast Budget (US$) 2009 2010 2011 Printed Sales Material 1,000 0 0 Advertisements 90,000 100,000 100,000 Internet Search Engine Optimization 8,000 6,000 6,000 Total Expenses 99,000 106,000 106,000 Percentage of Sales 8.34% 6.54% 5.42% Contribution Margin 376,000 543,000 676,500 Contribution Margin / Sales 31.69% 33.49% 34.59% Appendix 4 Milestones for Key Marketing Programs 2009 Milestone Description Start Date End Date Evaluation Date Budget Manager Responsible Website Development Develop website and search engine optimization April 1 May 30 Once a month starting July 1 90,000 Mark Ruffalo Advertising Campaign 1 Distribution of printed sales materials April 1 April 30 June 1 1,000 Bernice Wong Advertising Campaign 2 Develop and placement of advertisements in industry journals and magazines May 1 June 15 Aug 1 8,000 Tim Webb Read More