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Marketing Plan and Evaluation
The marketing plan should revolve around the marketing mix. The mix encompasses the four Ps of marketing, each of which will be addressed in turn in this business plan. The four Ps are product, price, place and promotion (NetMBA, 2010). With respect to product, the coffee shop will be a premium example of a coffee shop. Australia has an exceptional coffee culture, so good that it is the envy of the world, and exported to foreign nations like Singapore, Hong Kong and the United Kingdom. The quintessential Australian coffee shop experience and the products related to that experience is what we are selling. The experience itself will be familiar to anybody who has patronized a high quality coffee shop -- relaxed atmosphere, well-trained staff, good music, free Wifi and other service elements. The product will consist of high quality espresso primarily, and the drinks that go along with that. Drip coffee will also be very high quality, using beans from the best local Queensland roasters. The company is also going to supplement the menu with food items from local artisan producers, for example high end coffees, artisan ice creams and other gourmet snack products.
Some of these product elements have been described in further detail in the operations section of this business section. It is important to know, however, that the different elements all come together to deliver a premium experience. The experience is important to combatting competitors, of which there are many. There are chain coffee shops and independent shops. Among the chain shops, Starbucks features the so-called "Starbucks experience" as one of its main competitive advantages (Michelli, 2007). Our shop will also feature our experience as a major part of the service offering. The positioning will be as a differentiated producer, with an offering that is superior to the offering of our major chain competitors in particular. We will offer a product/service mix and value proposition that is on par with the offering of the best independent coffeehouses in Australia.
The price element of the marketing mix must be designed in accordance with the broader strategic mission, and in accordance with accepted pricing strategy. For premium product/service offerings, there are a number of choices of pricing strategy. These include profit maximization, profit margin, quality leadership and skimming (NetMBA, 2010, 2). The distribution plan will be outlined shortly, but the first shop will be situated in one of the most fashionable neighbourhoods in Brisbane and Gold Coast, with subsequent shops in equally desirable areas around town, with the first expansion slated for Surfer's Paradise within six months. The pricing will need to reflect the costs associated with the rents in such areas, and with the price point that the local clientele can tolerate. In these areas, the customers are more sensitive to quality than they are to price. This implies that pricing strategy can be fairly aggressive.
The implied strategy therefore is to have quality leadership as the basis of the pricing strategy. Pricing slightly above the market has two effects. The first is that it sends a signal to the market that we have the best coffee in Queensland, and that we understand Queenslanders are sophisticated enough to know the difference between our coffee and the naff stuff they serve at the chains. This pricing strategy will also provide the company with a healthy contribution margin that is required to meet the high fixed costs associated with the cost of real estate in the most prestigious districts in the state.
With respect to place, the key to any coffeeshop is a good location. We bring the coffee to the customer, but the customer has to be able to access it readily. The most important factor is to situate the shop(s) in the location(s) where the target market already lives. This means choosing good locations with high traffic in locations that are halfway fashionable and have above average incomes. These criteria are crucial, and if the location is at a reasonable price all the better. It is important that such locations have some character, as charmless buildings make the task of creating an exciting yet relaxing environment all the more difficult. Boxy, boring locations are for American chains, not our shop.
The initial distribution will be one shop, but the objective of the firm is to have multiple shops opening in the first couple of years, perhaps one every six months, depending on the cash flow. The ultimate objective is to create a chain that can extend beyond Queensland and into other parts of Australia. The chain's optimal potential probably lies at around twenty or thirty units, so as to maintain a certain degree of exclusivity, before international markets are considered. In keeping with the shop's image, there are going to be certain locations that are absolutely taboo, such as shopping malls and generally anything in the suburbs.
The promotion plan will focus largely on understated promotion and social media initially, for a couple of reasons. The first is that as a startup, we do not have that much money to put into promotion. The company is only going to have a few hundred dollars for promotion initially, so much of this needs to be focused. Social media will build up some word of mouth promotion of the shop, and certainly once it opens and people taste the coffee we expect word of mouth to spread quickly, with a gentle push from our marketing department.
The other reason we want to push social media and public relations as our primary means of promotion is, ironically, that it promotes an air of exclusivity. We are not going to be too exclusive -- we are more interested in converting all people of good taste to our coffee regardless of their income, but we do want people to understand that we are clearly differentiated from the Gloria Jeans of the world. Our coffee costs more because it is better, and the experience in the store is also superior. Thus, no mass market advertising because that is something the big chains and their ilk do, while smaller shops like ours focus on the types of promotions that our customers expect from small shops.
There will also be a concerted public relations campaign. We will basically bribe as many local media types and the food/coffee bloggers for free publicity (bribed with coffee, we mean). By gaining write-ups in all the important news outlets and influential local blogs, the brand name can be better established, quickly, and at low cost among the cognoscenti of the Brisbane and Gold Coast culinary scenes, and just civilized people in general.
The marketing plan will need measures (Murphy, 2012). Obviously, sales is a good measure because we are starting at zero so the ability of the shop to meet benchmarks is important. The shop will have its benchmarks set on the achievements from past shops that our staff worked earlier in their careers. Another good measure of the success of the marketing efforts lies with the brand's exposure. It always helps, when starting a chain, if potential customers outside of the shop's immediate vicinity have heard of the place. Also, we want people who have heard of the shop to have positive impressions of it, so these two elements will be tested using surveys of both customers and the general public.
Competitor Analysis and Strategy
There are a number of competitors for our coffee shop. The independent shops that will be the unfortunate victims of our arrival to their neighbourhoods are not known until the location is selected, but there are chain shops everywhere against whom we shall compete. The first of these is Starbucks. The Seattle-based chain has built a global empire, but has generally struggled to capture the hearts, minds and wallets of Australians, having once closed a lot of its stores in the country (No author, 2010).
Starbucks entered the Australian market and assumed that it could import its idea of coffee culture to Australia, not realizing that we have our own long-established cafe culture. It basically entered the market without doing its homework (Ibid). The company had no idea that it was basically attempting to flog an inferior public on the Australian public at premium prices. Suffice to say, this strategy failed and the company all but exited the market. It has, however, begun to open more stores again, having gained a somewhat better understanding of the needs and desires of the Australian coffee market, or at least some funding from head office (Speedy, 2010).
That said, Starbucks has not improved the quality of its offering much; it sells the same silliness here as it does in the U.S., or China or Abu Dhabi. The result is that Starbucks is still utilizing a differentiated strategy where is probably is not warranted. Misgivings about the company's ability to compete in Australia aside, Starbucks could be a formidable competitor if it figures out the market. The company has deep pockets, as…[continue]
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