Strategic Marketing Plan for Hot Coffee Cyber Cafe - Assignment Example

Strategic Marketing Plan For a Business "Hot Coffee Cyber Caf Executive Summary This report highlights the strategic marketing plan for a Coffee Cyber Caf. In the initially section of this report, the background information has been provided, with particular focus on the nature of industry and organization, the target market catered by the organization, along with the fundamentals of the organization such as mission and corporate objectives. For formulation of strategy, strategic management and marketing frameworks such as SWOT, PEST, and Porter 5 Forces have been applied, whose outcome is evaluated and compared to the present strategies of the firm to develop future course of action. The developed strategies are then evaluated, and further strengthened using Ansoff Growth Vector Matrix, and finally presented along with a budgetary implication and implementation plan. 2. Background Information This marketing plan highlights the market research and the marketing strategies for the purpose of developing a "Hot coffee Cyber Caf". About the Industry The nature of the industry in which the business operates is highly competitive, and there are a lot of Internet cafes in the market, which are offering their services to the public. There exists cut throat competition and rivalry with nearly all cafes coming up with certain packages, promotions, and offers to attract clients, as the service being offered is highly homogenous. About the Organization Our firm wants to operate in such a competitive environment and wants to get the major chunk of the market share, attract customers, and develop loyalty towards our services. Our organization aims at developing a cyber caf that provides the teenagers and the office and retired people a complete new experience of the internet as well as entertainment. The cyber caf will have a coffee shop in addition to the usual internet access that the ordinary cyber cafes offer. Thus the people visiting our cyber caf will get addicted to come again due to the relaxation and a complete new experience offered here. Target Market Our target market is mainly the students and the teenagers but we also focus the office going people and the retired old persons that can spend a new life here and enjoy the coffee and experience and search a massive amount of interesting and informative information on the internet. Mission statement To provide our customers with a complete new experience of internet access and relaxation and to provide employee satisfaction to our employees Corporate objectives To become a market leader in the industry of internet cafes by providing the best services to the customers The corporate objectives of the business are to achieve at least 5 percent of the market share of the current industry in the forthcoming year. These are the least set objectives but the company aims to achieve more than that. The company aims to achieve sales of roughly $275,000 in the first year and then this figure increasing at least 10% annually. 3. Application of Strategic Management Tools & Techniques SWOT Analysis SWOT Analysis is a double impact tool that analyses both internal and external factors influencing an organization on the whole; Strengths and Weaknesses are internal, while Opportunities and Threats are external factors. As understandable by the name, internal factors are within the spam of control of the organization while the external ones are not. The application of SWOT to an environment ensures that resource allocation can be analyzed and the strengths can be appropriately capitalized, while minimizing the weaknesses' impact for assuring maximum from the opportunities and minimizing the threats. Following is the application of SWOT analysis to Hot Coffee Cyber Caf: S Strengths -The entertainment offered by the caf which is not available at other cafes -The awesome internet speed and the equipment offered to the customers -Quality of services provided to the customers -Quality of the coffee and other beverages provided -Qualified Staff that can help the new users of internet and guide the existing users about tips and techniques that they don't know -Best Environment offered to the customers not present in any other caf W Weaknesses -Premium pricing policy i.e. charging more than the existing market rates -Due to financial purposes Hot Coffee Cyber Cafe will be initially having a single branch which may not result in capturing the whole of our target audience -Emergence of new technology every now and then can pose a threat O Opportunities -The increasing trend of the teenagers to go out for hang outs -Providing a entertainment spot for the teenagers where they can socialize -Since it is the only caf providing such services, therefore there is an opportunity to get the first come advantage in the market and gain market share T Threats -Other new entrants coming up with the same idea and same offerings -Other ordinary cafes providing lower prices Although Hot Coffee Cyber Caf offers its customers the best environment, services and experience but still there are some weaknesses of the caf. It can combat with the price and technology issues as the caf has a uniqueness competency and also it can keep its technologies updated (i.e. the computers, and other equipments) which will again result in strength of the caf. The threat offers by other new and low priced competitors can be countered by the strength of the caf that it provides those services to its users, which are not offered by other cafes, and also the quality of our caf is not comparable to the ordinary cafes. The high need for the teenagers to socialize and hang out with friends in a peaceful place has given the teenagers to find their way to the "Hot Coffee Cyber Caf", which is an opportunity that the company has availed and will benefit from it in the future as this unique competency will lead to a high market share of Hot Coffee Cyber Caf in the market. PEST Analysis PEST Analyses mainly deal with analyzing the macro economic environment of a business; these factors are external to an organization, and mostly beyond the control of a business. The nature of these can turn them into a threat or an opportunity for an organization. Following is the PEST analyses for the Hot Coffee Cyber Caf: P Political Political scenario is not a huge threat for a cyber caf, except for the fact that the enhancing criminal activities including cyber crime may enforce some regulations on the cyber cafes. E Economic Economic advancements in the world are posing some threat for cyber cafes, as the real income is increasing; people prefer buying handhelds and laptops, rather than roaming about finding cyber cafes. S Social Social norms are pushing cyber cafes towards starting a service known as gaming zones, encouraging more revenues by this means and attracting more teenagers. In the current arena, many of the cyber cafes have turned into gaming zones. T Technological Technological advancement is a certain threat for cyber cafes as it witnesses a decline in pricing of technology, thus, people become more tilted towards the purchase of personal laptops and handhelds, using technologies such as WiFi and GPRS for ease of connectivity anywhere, and anytime. Thus, it can be concluded that a big threat to the business of cyber cafes is the advancement in economics and technology that would give customers better options for using internet at their ease of wherever they are rather than moving to a cyber caf for the same. Porter 5 Forces Analysis Michael Porter worked out a five forces model that assists in determining the nature of an industry. These five forces are: 1. Bargaining Power of Suppliers 2. Bargaining Power of Customers 3. Threat of New Entrants 4. Threat of Substitutes 5. Internal Rivalry in the Industry An analysis of these 5 forces determines the position of an industry, depicting its true state of competitiveness. Following is the application of Porter 5 Forces on the Hot Coffee Cyber Caf: Bargaining Power of Suppliers The suppliers here imply the internet service providers, who are in a good bargaining position with a variety of options that they have in terms of customers or users of their services. So there always remains a good bargaining power at the hands of the suppliers in this scenario. Bargaining Power of Customers The customers here are the caf internet service users, who have a wide variety of options to choose from. Therefore, the customers also remain in a good bargaining position. Threat of New Entrants Cyber Caf business is not a very expensive one to set up, doesn't require huge initial outlay of cash, particularly with the advancement of SME loans and installment schemes for getting the needed hardware. Consequently, the threat of a new entrant is also on a high alert. Threat of Substitutes Technological advancements have been a great threat of substitution for cyber cafes, thus, with the advancements such as wifi and GPRS systems, the utility of cyber cafes, as mentioned previously as well, has declined to a better extent. With more technological advancements growing at a rapid pace, it again is posing a huge threat for this industry. Internal Rivalry in the Industry As mentioned previously as well, it is not a difficult to set up business and cyber cafes are becoming a routine business these days; with the existence of so many rivals, the competition is as high as it can be in any small or medium size industry. The industry is extremely competitive, with the firms themselves having a lesser say in setting up rules and regulations. Thus it can be well concluded that the cyber caf industry is a very competitive one with tremendous rivalry existing. In such a scenario, on a general note, the most successful strategy for implementation is differentiation because the products are fairly generic i.e. internet usage; some differentiating factor can truly make one caf stand out over its competition. 4. Evaluation of the Present Strategies Present Strategy The present strategy that is deployed by the Hot Coffee Cyber Caf is the "Differentiating Strategy". No other cyber caf offers such services that are offered by our caf i.e. by offering a cup of hot coffee and other snacks with the internet usage packages. However, this strategy does not seem truly successful. Evaluation of the Present Strategy The fact that makes the customer loyalties twist in this business is pricing, primarily due to the homogenous nature of the service being offered. A customer sees the differential edge later and the pricing first. As mentioned, the strategy used is premium pricing, which takes away many of the customers who just want to use the caf for a while, and not interested in any beverage or meal. Analyzing the Current Market Scenario The market analysis shows the following figures: Market Analysis 2003 2004 2005 2006 2007 Potential Customers Growth CAGR Office Workers 4% 10,000 10,400 10,816 11,249 11,699 4.00% Teenagers & Students 3% 20,000 20,600 21,218 21,855 22,511 3.00% Retired Senior Persons 6% 3,000 3,180 3,371 3,573 3,787 6.00% Total 3.59% 33,000 34,180 35,405 36,677 37,997 3.59% Buying Patterns of Coffee & Internet Usage Presently, the customers are in a large quantity that are office workers who usually come in their lunch times and spend their time in the caf doing their work, enjoying coffee, chatting with friends etc. Retired persons and teenagers are also coming at the caf who usually come for internet usage with relaxation. Thus the internet usage is a lot and customers usually drink a single or more cups of coffee. Local Competitors The threat that was predicted that there can be an emergence of competitors with the same offering is seemingly taking a practical implication and local competitors are expected to arise soon with their offerings. There needs to be some action taken against this threat which is analyzed in the next section. Service Offerings The services offered by the caf presently are the internet and the coffee plus other refreshments are offered. No packages are offered by the caf that gives the customers much more convenience and a sense of ownership. The services that are offered although are differentiated from all the others but much more is needed for improvement in order to counter the threat from the upcoming competitors. Customer Feedback In order to know about the customer satisfaction that is being offered by the caf, surveys are conducted now and then so that the customers' needs and requirements can be fulfilled. The customers' feedback is satisfactory but in order to cater all the needs and requirements of the customers there is a need to create new offerings for the customer satisfaction purposes. Future Effects The future outcomes that are predicted for the Hot Coffee Cyber Caf are that there are cunning competitors on the rise and therefore there is a need for the business that they need to offer much more in order to avoid losing their customers and give the customers a sense of ownership that cannot be offered by the other emerging cafes that will come with the present offerings as provided by the Hot Coffee Cyber Caf. 5. Developing and Evaluation of Alternative Strategies Thus, there is a need to develop new strategies that should be evaluated in the future in order to achieve maximum customer satisfaction. Market Forecast According to the market analysis the future projections, we forecast for the market to attain the following picture: Ansoff Growth Vector Matrix In order to achieve these forecasts, there is a need to analyze and develop new strategies. For this purpose, we will make use of the Ansoff Growth Vector matrix in developing and evaluating strategies. This matrix provides with developing efficient strategies that are likely to be helpful to adopt in the future. The pictorial representation of the Ansoff Matrix is as follows: Products Present New Market Present Market Penetration Product Development New Market Development Diversification Starting from the first option, Market Penetration can well be adopted because the products and markets both are existing/present ones, and such strategy is generally successful in homogenous products/services scenario. Product or Market Development are two more option but having spend some money for developing either, the returns might not be as encouraging because it is a competitive market where customers are price conscious. Diversification is the fourth option proposed by the matrix, and it sounds well feasible as it would give the firm a differential edge over its competition in the business. However, entering a new market right now might now be a very feasible solution, at present; it is much more viable to save the existing ship and then building another one as revenue margins allow. Conclusively, from this matrix, it can be said that the strategy to be adopted is Market Penetration. For taking up this strategy, there are two conditions that need to be met: 1. Penetration Pricing 2. Differentiation Market Penetration requires reducing the prices below the competitor's pricing scheme, and alongside, if differentiation can be adopted, it can well take the business beyond the competitor's thoughts. Alternative Future Strategies In order to penetrate into the market and gain customer satisfaction and retain the old and capture new customers, Hot Coffee Cyber Caf should follow the following strategies in future: Customer Loyalty cards should be provided to the members of Hot Coffee Cyber Caf. The members of Hot Coffee Cyber Caf will be able to have some free internet hours monthly. The members will also get their first cup of coffee free during their work. They will pay for the further coffee and other refreshment stuff. The members will also get the advantage of having access to some paid online libraries free of cost and they can access those libraries and gain a lot of valuable information not available to many others in a short span of time. The users who are not members will be offered with getting membership at installments so that they can also enjoy the benefits offered by Hot Coffee Cyber Caf. The company needs to create a brand name of the product that is recognized in the market and accepted by the market. The offerings for the ordinary customers the benefit of coming to the caf will be the brand name that will be created of "Hot Coffee Cyber Caf". This will attract most of the new customers. These offerings will help retain the old customers to a large extent and give them a sense of ownership in the caf and that will enhance their satisfaction. The company will eventually be able to make loyal customers. Thus it will result in an increased market share and a competitive advantage for the caf. The new customers will also be attracted by the new offerings. They will be enthusiastic to get the membership of Hot Coffee Cyber Caf and make use of the advantages offered by the membership of the caf. Also those not intending for the membership will get attracted due to the brand name of Hot Coffee Cyber Caf in the market. 6. Recommendations Thus, in order to employ the best strategies which are defined in the previous section, the Hot Coffee Cyber Caf needs to take some important steps. These recommended steps are as follows: The Hot Coffee Cyber Caf fore mostly needs to lower its costs in the first place It should establish more cafes in other localities rather than a single in the town in the future The strategies proposed should be implemented in order to gain the highest market share in the industry The company should now work to achieve a competitive advantage over the other competitors expected in the future Hot Coffee Cyber Caf should expand its way of doing business and provide more facilities to its customers 7. Budgetary implications The budgetary implications of the employment of new strategies are as follows: As there will be providence of a first free cup of coffee for the members, that can result in increasing the costs. To counter this Hot Coffee Cyber Caf will import coffee from Kenya in bulk which will be good in quality as well as it will result in lowered costs The free membership of the online libraries also is a factor in which the budget will be a problem. But for this purpose, the Hot Coffee Cyber Caf will have contracts with some online libraries and get memberships in a large amount and at lowered costs than the ordinary ones. The membership fees will also cover a lot of the costs that the business will generate and will in fact be greater than the costs that are being incurred. Thus there is will be a solution provided for all the budgetary problems faced by our loyal employees that are employed. The branding will require advertising of our caf which can be done through the cheapest means and it is discussed in the implementations section. 8. Implementations The implementation of the strategy is a step by step process and requires serious monitoring and supervision in order to achieve the implementation of the strategies successfully. Therefore, our supervisors who are the head of marketing and the IT department, Mr. Sean and Ms. Linda will be responsible for the supervision of the whole plan. The memberships for the existing customers that come to the caf will be displayed on the notice board of Hot Coffee Cyber Caf. The visitors read this whenever they enter in the caf therefore, the most appropriate way to let the existing customers know about the new offerings is through the notice board. The implementation of the strategies that are suggested will carry out in the way it is given in the table below. The membership ads and ads for ordinary public will be given and they will be able to access to Hot Coffee Cyber Caf through the ads. The success or failure of the plan can be easily matched with this plan and can be achieved. The marketing and the IT team should meet these implementation milestones, preferably before the date but it should not be later than the deadline. The different people are assigned different tasks according to their roles in the company and it is important that they meet the deadline. The implementation plan to be followed and the milestones to be achieved according to the plan are as follows: Milestones Advertising Starting Date Ending Date Budget Manager Department Television Ad 7-25-2007 8-10-2007 $600 Samuels Marketing Radio Spot 1 7-25-2007 8-10-2007 $350 Peter Marketing Radio Spot 2 8-10-1999 8-20-1999 $350 Peter Marketing Newspaper Ad 1-1-1999 1-5-1999 $100 Samuels Marketing Others - - - - - Total Advertising Budget $1,300 Public Relations Start Date End Date Budget Manager Department Customer satisfaction Surveys 7-25-2007 8-10-2007 $1000 Carry IT Other - - - - - Total Public Relations Budget $1000 Web Development Starting Date Ending Date Budget Manager Department Introduction to the Internet Class 1 7-25-2007 7-30-2007 $350 Carry IT Other - - - - - Total Web Development Budget $350 Totals $5,650 These figures have been attained after extensive market research conducted under the supervision of the hired specialized marketing research firm. Thus, if this plan is achieved successfully, Hot Coffee Cyber Caf will be able to build its brand in the market, attain customer loyalty, gain a competitive advantage and thus achieve the highest market share in the industry. References 1. Phillip Kotler & Gary Armstrong. (2007). Principles of Marketing. 12th edition. Prentice Hall. Read More