or, Mochalicious could simply take its formula and open up more stores. One of the good things about being in a place like Melbourne with its massive coffee culture is that there is always room for another good coffee shop. Once Mochalicious is established as successful, the company is in a position to grow, and that means taking the name to other parts of town, other suburbs or even to other states. Such is the brand extension that is possible by expanding out the Mochalicious concept to other stores.

The key to being able to launch different extensions or expansions is that the brand must be known and have value. If nobody knows what Mochalicious is, or if people do not like Mochalicious, then there will be no possibility for brand extensions or expansions. Therefore, it is crucial that the company makes every effort to build positive vibes about the brand, and it can do this with great service, for example. If people respond well to the Mochalicious brand, then the company will be well positioned to make use of that brand in the future. A brand extension also needs to have good fit with the existing business, and that is why the brand is suggested to do other things that are related to coffee (Tauber, 2010). Nobody is interested in a Mochalicious car.

Changes in the Business Environment

There are a number of changes to the business environment that can cause problems for an established business. A good example of this would be if the demographics of the neighbourhood change. Now, we know that the coffee shop business is based on building a regular clientele and this is done by having an in-store atmosphere that fits with the character of the neighbourhood. So when the neighbourhood changes, the shop either needs to change with the neighbourhood or it needs to make a change in location, to a place more suited to the shop's style. This is a decision that would need to be made on the basis of what types of changes were being made and whether the new demographics are well-suited to the shop's offering.

The results of this would be declining profits. It is important that the coffee shop essentially build into its plans the ability to withstand financial shocks. There should also be an exit plan, especially if we get within a few months of a lease renewal. There are a lot of businesses forced to go out of business because of cost increases like higher rents.
There are not expected to be any changes to things like the love of coffee. This is ingrained in Australian culture, so much that even newcomers to Australia make a point to learn about the culture. Thus, such a change is not expected. It would be devastating to the business if it happened, but it won't. Demand is expected to remain strong. This is the same with other changes in the external environment as well, like in the political environment. It is not expected that there will be any changes.

Overall, Mochalicious expects to be well-positioned to adapt to changes in the market, because the company will have lots of money and a great brand, which are two things needed to weather any storm.

Works Cited:

Rose, D. (2010). Australia a nation of coffee drinkers. Sydney Morning Herald. Retrieved May 12, 2013 from http://news.smh.com.au/breaking-news-business/australia-a-nation-of-coffee-drinkers-20100305-pnbb.html

Tauber, E. (2010). Characteristics of successful brand extensions. Brand Extension.org. Retrieved May 12, 2013 from http://www.brandextension.org/success.html

Tuttle, B. (2013). Why some brand extensions are brilliant and others are just awkward. Time Magazine. Retrieved May 12, 2013 from http://business.time.com/2013/02/07/why-some-brand-extensions-are-brilliant-and-others-are-just-awkward/

Wheeler, D. (2010). Caffeination: Australia's (obsessive) coffee culture. Lonely Planet. Retrieved May 12, 2013 from http://www.lonelyplanet.com/australia/travel-tips-and-articles/69143