Marketing decaffeinated coffee in the competitive UK market

Decaffeinated coffee is popular in the United Kingdom. The market is growing and has no signs of abating. However, the market is competitive and filled with consumer choice. It is a diverse market with diverse tastes for everything from gourmet third world coffee with the Oxfam seal of approval to GM grown decaffeinated beans imported from Japan. In this market with so many choices, it will critical for us to cleverly enter and define ourselves in this otherwise potentially bewildering market. Without carefully targeted marketing, millions can lost instead of made.

The aim and objectives of the research is to see how to market more of the companies products in the crowded U.K. Market. While the market has a lot of potential, there is a necessity to market the product correctly. Consumers have a lot of choice. The company is trying to tap into a specific group of customers and then keep them in a state of brand loyalty. To justify this brand loyalty, our marketing program must be targeted cleverly to play upon environmental concerns, consumer vanity and demand for quality.

Problem statement

In Britain, there is stiff competition in between the coffee and tea markets. Further, there is stiff competition in the coffee market in general and the decaffeinated coffee market more particularly. Given the tightness of the market, there is a need to employ smart marketing techniques to carve niches out of this market.

Coffee Market in the UK

What is the state of the coffee market in the UK? Demand is very good. For 2011, the projection for total value of the UK coffee market £4.998 billion and will be 5.395 and 5.719 for 2012 and 2014 respectively. The demand for branded coffee is so good that Costa coffee shop's owner Whitbread plans to spend £59.5m on a vending machine business to satisfy the market for caffeine addicts in a hurry. The Telegraph article feels that Britain's love affair with the coffee will not end soon (The Telegraph 2011)

Decaffeinated Coffee Marketing

Everyone now has to be politically correct, even those who engage in the unhealthy habit of drinking coffee. A unique marketing angle that might contribute very well brand definition and loyalty might be what this author would like to call the "Oxfam" solution or what is also know in the market as "fair trade" coffee. Such coffee is produced by third world farmers who receive a fair price for their labors. A Belgian study found that consumers' buying behavior is not always consistent with their positive attitude toward ethical products. However, a survey of 808 Belgian respondents measured the actual willingness to pay for third world produced coffee was measured.

The study found that consumers were willing to pay up to 10% as a premium for a fair-trade label coffee. Ten percent of this sample was prepared to pay apremium of 27%. Further, the study found that fair-trade adherents (11%) were more idealistic, aged 31 to 44 tears if age and were less "conventional." Fair -trade lovers (40%) were 44 years and less "conventional." In addition, they were less idealistic but socio-demographically not significantly really different from the average consumer. (De Pelsmacker, Driesen, Rayp 2005, 363).

It is a logical postulation that the U.K. Market is similar to the Belgian Market. Indeed, organizations such as Fair-Trade.org in the UK rate companies, including coffee shops and companies by the amount of fair-trade merchandise that they carry in their stores (Fair Trade Foundation, 2011).

Such a unique marketing approach combines the political correctness of a more wealthy demographic with classical hedonic economic analysis. What we will need is an application to the U.K. Market. A study found that the premium that U.K. Coffee drinkers would be willing to pay for fair-trade under classical hedonic conditions where value assumption is important was that drinkers would pay a price premium of

5-10% over commercial premium brands 1200).

Obviously, this is a nice return percentage under any case.

On the other hand, the hedonic and politically correct factor can hurt as well. For instance, it will be necessary to go slow on introducing GM grown specialized coffee beans that produce beans that are already low in caffeine. The beans are cheap to produce but are feared to have negative health consequences due to their genetically modified origins (Pilcher 2003).

To review, the market is growing and has no signs of abating. However, the market is highly competitive. It is a diverse market with diverse tastes for everything from gourmet third world coffee with the Oxfam seal of approval to GM grown decaffeinated beans imported from Japan. In this market with so many choices, it will critical for us to cleverly enter and define ourselves in this otherwise potentially bewildering market. Without carefully targeted marketing, millions can lost instead of made. It appears that the gourmet decaffeinated coffee market will pan out well for the company so long as they cater to the young people who have disposable income and want to feel guilt free about their choices.