Coffee Shops Essay

~Learning Issues~ 1. To describe consumers’ decision making in different market segments when they choose retailers of coffee using CDP. 2. To identify additional research that should be conducted to validate assumption about consumer decisions at each stage of the CDP model. 3. To learn how to organize marketing program should be provide for our customers after recognize their decision making process. 4. To see the impact of brand positioning to the consumers decision making. 5. To recommend marketing strategy after learn about consumers decision making process. 1. 0 Summary 2. 0Problem Identification Figure 1: Crimson Cup market segments As a wholesaler of coffee and tea and a provider of marketing programs to independent coffee shops and retailers, CrimsonCup has experienced growth over the past decade and is within range of becoming the nation’s second- or third-largest alternative to Starbucks. Figure 1 show about the segmentation of the Crimson Customers which divided into primary customers and ultimate customers. Primary customers are the independent coffee shops, grocery and restaurant. However the ultimate customers are divided into two groups; first is the consumers that buy the coffee from the primary customers and brewing at home; second is the consumers go to the coffee shops to drink coffee. The important of understanding of the ultimate customers are very important because the demand of the primary customers comes from the demand of ultimate customers as consumers. This company branding mission has focused on creating the independent retailer as the brand, rather than the product supplier. The CrimsonCup brand is featured on packaged coffee sold by retailers for office or home consumption, on mugs and cups provided to retailers and in some other promotional materials, and the firm is now considering the issue of weather it should be more aggressive in its promotion of the CrimsonCup or Coffee for Independent Thinkers brands as well as how best to develop its strategy of helping the independent coffee shops it serves. In understanding of the consumers’ wants and need, they search for many information and from the case, there is one consumer research already give some result about coffee consumption that made the university students or people that closely related to the university environment as focus group. The information get from this research need some additional approval from others finding to made their assumption about the behavior of the consumers to the Crimson Cup product or information related to the coffee consumption will be more meaningful to understand the attitudes of the consumers. By using the consumer decision making model, we are trying to analyze the consumer behavior in consuming coffee and make our recommendations about what strategy should be focus by this company and to suggest some alternatives to solve their problems and to get more opportunities in this industry. 3. 0Analysis We are using the consumers’ decision making model to analyze the consumer behavior of this company. 3. 1Market Segmentation Evaluation The differences of consumers in making decision will make them divided into difference segments in the market. Before we continue to discuss about the consumer decision making process that shows in figure 2, we underline first the environmental influences and individual differences because this two elements in the CDP’s model will be important to most of part in the consumer decision making process. Environmental Influences We found that the environmental influences for this product are culture, family and situation: 1. Culture: The customer segments in this case change over the past year. The American coffee culture brought on by an insurgence of gourmet coffee retailers and than evolved to a point where â€Å"getting a coffee, going out for coffee, is our little space in the workday to call our own†. The evolution of the culture show that how important of coffee in the American culture and they consume it anytime that more than just take the coffee in their breakfast early in the morning. 2. Family: From the research, one of important factors that influence purchasing decision is recommendation from family or friends. 3. Situation: The consumption of coffee in this market segments can also influence by occasion factor means when the whether at that time in winter, they will take more coffee rather than during summer. Figure 2: Consumer Decision Process Model Individual Differences 1. Consumer resources will make individual influences because the consumers in this case have different resources especially time, students or people that working in the university will have limited time to spend for searching location for the coffee shops. They will choose the nearer shops to take a little break to make them fresh. For the money resources, they are not constraint of it because from the research price is at sixth factor that encourage them to buy the coffee and seventh factors that discouraged them to not take it. We can predict that, the consumers in this coffee drink market are not price sensitive because of enough money resources. 2. Attitudes: The beliefs and feeling that more on quality and convenience place when they consume the coffee will make differences to their individual factors. Percent Beliefs and feeling 1. 58 Regularly buy coffee at coffee shop said coffee shops offer better-quality coffee. 2. 33 They think coffee shops sell better coffee than those of their competitors 3. 37 Purchase their coffee at coffee shops instead brewing it at home normally goes to the closest one. 4. Personality: person that need more energy and have busy lifestyle will take more coffee rather than people that consume it because of social activities like to spend time with their friends with coffee. 3. 2Need Recognition Consumers in the coffee market will start recognize that they need to take a cup of coffee at least when there is environmental influences occurs, when their mind set that they must take coffee as the term as ‘consumption norms’ in their culture, they will need to take it anytime. That is the reason why the American will take coffee not only in the morning like Malaysian in their breakfast but anytime when it crosses to their mind. They also will take coffee more in the winter season because their need to make themselves hot and tasty, as well as the routine and tradition of sharing a drink with friends as a social event. For individual differences, the need of the student and people in the university will be differences each of them depends on their psychological affect that when they want to have energy or avoid sleepy when they doing their work, they have to take a coffee. The need recognition for this group will be high when they have many assignments that must be done every time and have to stay up at night. 3. 3Search When the consumers had need recognition process in their mind, they will start with making internal search. In their memory will have some information when they are exposing and have retention to some coffee brand before in their mind. Marketer must stimuli the consumer memory with their activity and non-marketer also give some conformation in this process that consider as external search. Even from the research said that brand is not factors that really encourage or discourage them to choose the coffee but how the marketers positioning their brand still are important. In this case, the marketers generally make TV commercials, store displays, give free samples in the mall and fliers and newspaper coupons to influence the consumers but approach that use by the Crimson Cup to position their product using: 1. Their position statement is â€Å"coffee for Independent Thinkers† as approval to consumers that they will get quality drinks in a clean and friendly environment. From the report said, â€Å"People see ‘coffee for independent Thinkers’ and come in to the coffee house. They like the message. † 2. The Crimsoncup believe that quality can make consumers perceive more better to their product and because of that, they offer quality coffee bean that: Have Fair Trade Certified Organic coffee are certified by USDA (Quality Certification Services) Signature blends. Flavored coffees in light, medium, and dark roasts with Class I Specialty Grade Coffee. Non-marketer also will stimuli them because in this case, word-of-mouth from other people experience will influence them to get information about a new coffee house. Recommendation from family and friends also will influence them to choose the coffee shops. The more effective stimuli expose to the consumer the more intention the brand will be keep it the memory of the consumers. 3. 4Pre-Purchase Evaluation of Alternatives Again this process will influence by environmental influences and individual differences. If they have and experience before with satisfaction after consume the coffee drink, positive reinforcement will be happened to encourage them to use this information in the pre-purchase evaluation alternatives process. But the most important element here is the influence or recommendation from the family and friends to choose the coffee shops or to buy the coffee brands. Here, factor that encourage and discourage will be play in the consumer mind while making evaluation. Research finding is like table 1 and table 2 that mention about factors encourage and discouraged consumers to return to the coffee shops. Table 1: Factors encourage consumers to return to the store Factor Description Score 1. Location Highest score show that the consumers prefer to choose the closest store/shops. 6. 6 2. Taste – 6. 43 3. Atmosphere When going for social reason, atmosphere is important, but less when going alone. 6. 04 4. Price Ranked fifth 5. 19 5. Brand For a favored brand was a reason to purchase coffee for office or home use. 4. 95 Table 2: Factors discourage consumers to return to the store Factor Description Score 1. Taste Highest score 6. 90 2. Price Ranked fourth 6. 00 3. Brand. Brand ranked low as a reason for choosing a store or determining frequency of visits to the store. 4. 56 Even the locations the first choice but the reason of consumers will return to the store are combination of taste, price and location. Speed of service was also mentioned as a factor when deciding to go. 3. 5Purchase When they purchase the coffee, the factors that will attract them to come to the shop are the location and the quality that they will receive from the shop like the taste of coffee as the second encourage factors and also clean and friendly environment. From the report of the Crimson Cup Independent retailers said ‘People see ‘Coffee for Independent Thinkers’ and come in to the coffee house. They like the message’. This shows the success of the retailers to attract the consumers using the brand slogan and the services that will provide clean and friendly environment. 3. 6Consumption From the research found that the most positive items sometimes bought at a coffee shop were breakfast food such as list in table below: Table 3: others items buy in coffee shop. Food Percentage 1. 2. 3. 4. Bagel and muffins Sweets (cookies and cakes) Chai tea Not ever purchase other items 55 14 8 13 Because of the culture of American like coffee, so there is no special time for them to get a cup of coffee but for the students, the probability is drinking coffee early in the morning to boost energy before start work or at night to retain and maintain energy to stay up doing assignment until early in the morning. 3. 7Post-consumption Evaluation. From the case, if they have a bad experiences to the coffee they will make punishment with tell others consumer to not take the coffee at that shop but when they have positive experience they will came again. The research finding tell us that taste of the coffee will be the second important factors why they choose the coffee drinks and the first factor they not return to the coffee shops. So, even location will be the first factor to encourage them to come again to the shops but the taste still be most important as the first things that should be focus by the Crimsoncup to maintain the product quality. Quality is more refer to the taste and the convenience is more refer to the location. The level of satisfaction is encourage by this both factors that make the consumers perceive they receive a good quality product at the right location plus with quality extra services in clean and friendly environment. 3. 8Divestment They did not mention about anything for this process. We will suggest them to make research to identify some information like what the customers do with the bean if they brew it at home, the packaging and maybe the cup to serve the coffee. This information can be use by Crimson Cup to complete building an effective marketing strategy. 4. 0SWOT analysis of Crimson Cup coffee From the case, we analysis their company using SWOT analysis like figure below: Strength Weaknesses Statistics shows that small prepared coffee retailers are growing faster than the mighty Starbucks. Crimson Cup is has specialize in this industry by served independent coffee houses, teaching independent coffee shop owners the skills needed to operate a viable and competitive business. Greg Ubert as a founder of this company is the author of ‘The Seven Steps to Success: A Common Sense Guide to Succeed In Specialty Coffee’. We see this directly to share skills and information with the independent coffee shops retailers but indirectly influence the consumers that they will get quality services from the coffee shops. They have their own website that can search from website address www. forindependenthinkers. com or www. crimsoncup. com . Its expert baristas have opened well over hundred coffee shops around the country. Its starts-up program includes every things needed to operate independently without the constraints of franchise agreements. The coffees that they serve have quality certification like we discuss at the previous chapter. The slogan ‘Coffee for Independent perceive positively by the consumers. The Crimson Cup just focus limit their activities on the coffee and not serving bagels and muffins or sweets even there is demand of the item that found from the research. Opportunity Threat Coffee consumption is very important in American cultures There is winter season every year in that country. There is demand for items purchase with coffee in the shops (i. e. : muffins or cookies) . Recommendation from family or friends is one of the five most important factors for influencing purchase. 58% of respondents who regularly buy coffee at a coffee shop said coffee shops offer better-quality coffee and 33% perceive that the coffee quality of this shops better than competitors There are many competitors in coffee industry that serve with multi-style of marketing strategy such as Starbucks. The negative impression of the consumers to the coffee shops will make them distribute the information using word-of-mouth as a punishment or negative reinforcement for them our others consumers. 5. 0Alternatives There are many problems we identify before so the alternatives we provide here will give suggestion to the entire problem that we will use the make effective recommendation in the next chapter. The alternative will be dividing into: Additional research that should be done to make assumption. Brand focus Marketing strategy Marketing program (IMC) 5. 1Additional Research for More Understanding of the Consumer Behavior. After we make analysis, we put the research that had been done and come with the additional research that possible to be done to make more effective assumption for this company target market like table 4 below: Table 4: Consumer Research Stage Process Done Additional 1 Need recognition Environmental influences Culture Family Situation Individual differences Knowledge Attitudes lifestyle Environmental influences Social Class Individual differences Consumer resources Value 2 Search Stimuli (to general finding) Marketer (TV commercial, etc) Non-marketer (word-of-mouth). The research should be done more focus on the Crimson Cup. 3 Pre-purchase evaluation of alternative Factor encourage and discouraged to return to the coffee shops What make consumers satisfied and come again to the coffee shops. 4 Purchase Location Price Nature/quality of assortment Store clientele can be good research because it will be influence by the social culture. 5 Consumption How they consumer When they consume Where they consume How much they consumer? 6 Post-purchase evaluation Dissatisfaction ? (punishment) Satisfaction? Reaction? 7 Divestment There is no research state in this case. How customer’s divest packaging /cups? 5. 2Brand Focus Here is the evaluation of the alternatives for the brand focus; ‘Coffee for Independent Thinkers’ Advantages: 1. Consumers like the statement, ‘Coffee for Independent Thinkers ’. Once they see this slogan shows in the window of the coffee house, they will go in the coffee house. Besides that, those coffee houses which display this slogan on the window of the coffee houses are promise to offer quality drinks in a clean and friendly environment. 2. University students are the group of people that public perceives them as independent thinkers. So, by emphasis on ‘Coffee for Independent Thinkers’ brand, drinking CrimsonCup coffee can be a trend or lifestyle for the students. 3. When consumers see the seal, they know this coffee house is offer good quality coffee and nice environment for them to enjoy the coffee. As a result, ‘Coffee for Independent Thinkers’ slowly becomes the seal of guarantee for quality coffee. This action also fulfills the need of the consumers that the taste of the coffee is the most important reason that makes consumer to come back again. So, when the consumers see the seal ‘Coffee for Independent Thinkers’, 4. Crimson Cup primary customers is the independent coffee shops, other than attracting the consumers, they also can influence the independent coffee shops retailers to perceive positively this brand slogan. 5. The impact of the slogan show from the research that 58% of respondents who regularly buy coffee at a coffee shop said coffee shops offer better-quality coffee and 33% perceive that the coffee quality of this shops better than competitors. Disadvantages 1. Another disadvantages of promoting ‘Coffee for Independent Thinkers’ brand is CrimsonCup brand has exist for a long time. Most of the people know about CrimsonCup brand because anything about the coffee will makes consumers think of CrimsonCup. For example, when we mention about CrimsonCup, consumers will start thinking of a company who sells good quality coffee bean; a company that provide training for those who would like to open a coffee house; a company offer good quality coffee and etcetra. 2. If suddenly the company changes CrimsonCup to ‘Coffee for Independent Thinkers’ brand, consumers will get confused whether this is a new brand or another company cooperate with CrimsonCup. ‘Crimson Cup’ Advantages: 1. It already establish from 1991 and use by the company. Disadvantages: 1. Consumers are not really care about the brand of the coffee when they just simply want to drink coffee. Only those consumers who purchase the coffee mainly for office or home use will care about the brand of the coffee. So, with only focusing on the CrimsonCup, the impact of promotion or advertising activities not give high impact the consumers intention. Under this kind of situation, they will just choose which coffee house is nearer and convenient for them. 2. Consumers has possibility to ranked this brand quality is same like competitors. 5. 3Marketing Strategy To overcome with the marketing strategy, we divide the alternatives with 4 P’s. For these alternatives, we are using push strategy to encourage the demand from the consumers and pull strategy to encourage the primary customers to run their own activities that can encourage the increasing of sales. 5. 3. 1Price strategy Pricing strategy for the primary customers: Alternative 1: Allowance Alternative 2: Discount Here are the alternatives for the consumers (ultimate customers) Alternative 1: Membership price. Membership price usually entitle for primary customer who purchase constantly and loyal customers. Most of them are independent coffee shop or restaurant. Here customers need to fill in the membership form. This membership duration can last for one year. Crimson Cup provide them special price and keep their purchasing track record. For ultimate customers, every time they purchase at our coffee shop they have to present the membership card and membership number, so they are entitle for 8% discount for each cup of coffee. Each time they purchase by using the membership card they can collect the points and redeem it at our coffee shop. Other than that the advantage being a membership of CC is; based from the track record and base from the personal details we have, we will appreciate our customer during their birthday by giving them birthday coupon and they can redeem it at our coffee shop. Alternative two: Quantity discount Crimson Cup chooses by giving an ‘extra amount’ is one of the good idea to encourage customer to buy in large amount especially independent coffee shop. Every 2kg customers will enjoy 200grms extra. Customer pays for 2kgs price but enjoy 2200grms coffee. From 200grms coffee can cover at least 10 cups of coffee and coffee shop can gain an extra profit from it. For our coffee shop, customers who order five items in a single receipt worth $70 and above entitle for a regular cup of cappuccino for free. This idea is to encourage customer to come in a big group. 5. 3. 2Product strategy A product is define as anything that can be offered to the market for attention, use or consumption and that might satisfy a want or need ( Armstrong and Kotler 278). Alternative 1: Crimson Coffee CrimsonCup is a specialty coffee roaster. Their coffee beans are a special blend that Armando created, which is called Armando’s Blend. It’s smooth, no aftertaste, and smells delightfully good and full fill the coffee drinker’s need. Alternative 2: Coffee Cup Coffee can use disposable cup to serve their coffee with Crimson Coffee name and tagline ‘Coffee for Independent Thinkers’. This is because we want customers to drink with passion. The brown color paper with Crimson Coffee name is actually one different layer of paper. The main function of it is actually to absorb hit and cold; meaning that if customers buy some hot drink they can easily hold the brown layer to avoid them from hot especially kids. It is also same if they buy cold drink, the brown layer is use to absorb the water so that customer no need to ask for tissue paper. Alternative 3: Paper Bags. Fair Trade is an innovative, market-based approach to sustainable development. Crimson Cup is certified organic and shade grown. This means that the products you buy maintain biodiversity, provide shelter for migratory birds and help reduce global warming. Crimson Cup Coffee use paper bag and the material can easily recycle. At the paper bag stated clearly the Crimson Coffee Brand and tagline ‘Coffee For Independent Thinkers’ . Behind the paper bag consumers can search the map for the nearest Quality Certified stores on the CrimsonCup website. Alternative 4 : Product labeling They should show the Crimson Cup Logo at the packaging of the coffee bean that sell in the grocery or coffee shops. All off the certification they get also should be publish at the packaging or cups and mugs use to serve the coffee. Alternative 5: sell muffins, bagels, cookies and cake. They should sell items like bagels, muffins; cookies and cake because of there are demands of the products that consume together with the coffee. 5. 3. 3Promotion Strategy Making joint venture Making joint venture can be one of the methods for its marketing recommendations. For an example making joint venture with famous fast food companies such as MacDonald in order to put coffee in its menu. Now a day’s making joint venture is one of the ways for companies in order to make themselves more popular like PepsiCo which joint venture with KFC or Lipton. 5. 3. 4Place strategy. Clean, friendly environment because consumers more perceive on quality and convenience. Service delivery if the place is too far. Make a target for the range of shops in one town. 5. 4Integrated Marketing Communication program (IMC) Before we suggest alternatives for the IMC, actually the goals of the marketing program are: 1. To increase more awareness about the Independents coffee shops, grocery, and restaurant those serves the coffee from Crimson Cup or sell the coffee beans from this company. 2. To increase the knowledge of the consumers about the coffee and this activities will stimulate them to come to coffee shops or brewing at home. Alternatives 1:Barista4aDay Contest One of the programs which are launched is Barista4aDay which is a program for coffee lovers as customers (ultimate customers) or even independent coffee shop owners (primary customers). The program is simple. One coffee lover gets to spend a day learning the art of Barista. A Barista is a professional who is highly skilled in coffee preparation, with a comprehensive understanding of coffee, espresso, roast degree and espresso equipment. Point of purchase Try the coffee in front of the coffee shops. Crimson Cup travel to the focus group. Go to university or potential place by lorries. Leader’s opinion 6. 0Recommendation of Strategy After we list the all alternatives for all the problems that we underline in second chapters, we come with the recommendations below in the combination of strategy that will be run to influence the consumers’ decision making process. 4 P’s Price: Alternative 1: Allowance Alternative two: Quantity discount Product: Alternative 1: Crimson Coffee Alternative 2: Coffee Cup Alternative 4: Product labeling Alternative 5: sell muffins, bagels, cookies and cake. Promotion: Making joint venture. Package to make them try the muffin as new product Place: Clean and friendly environment. IMC (annual program) Baristas4aDay with personality Research Store clientele 7. 0Plan of action Program Responsible Duration Description 1. 2. 3. 4. 5. 6. 8. 0Contingency Plan 4 P’s Price: Alternative 1: Discount during winter season Alternative two: Quantity discount Product: Alternative 1: Crimson Coffee Alternative 2: Coffee Cup Alternative 4: Product labeling Promotion: Place: Clean and friendly environment. IMC (annual program) Point of purchase at the store Word of mouth by a leader 9. 0Conclusion. Consumer decision making model is very useful to analyze the behavior of consumers start from need recognition process until the divestment process. But, to get information for the every step or process in the model, some research should be run because research will supply more reliable and valid information to make our assumption more accurate. The assumption will be use to make prediction to the consumers decision making and this information are useful when the marketer trying to strategize their marketing programme or marketing activities to supply the products that can really transfer value the consumers. Reference: Blackwell, Miniard and Engel (2006), Consumer Behavior, 10th Ed. , Thompson, Southwestern Kotler, P. (2006) Marketing Management 12th edn. , Upper Saddle River, New Jersey; Perentice Hall. Kotler, P and Gary Armstrong (2006). Principles of Marketing 11th edn. Upper Saddle River, New Jersey, USA: Prentice-Hall Inc http://www. wikipedia. com http://www. mplans. com http://www. forindipendentthinkers. com.