Strategic marketing

The marketing campaign that is going to be discussed in the paper is designed for such a product as instant coffee. It is a consumer good product with small cycle of consumption, which means that consumers have to buy coffee constantly (at least once per two weeks). The coffee market still remains an attractive segment for producers both in ground and instant coffee areas. Generally, the researches have shown that over the past two years the market has experienced some growth both in volume and value. Innovation and a trend towards quality have been particularly important drivers. The competition on the market is quite intense. The main leaders of instant coffee segments are Nestle and Kraft. However, the main competition is experienced not among producers, but among brands. Thus, if Nestle has one famous instant coffee brand Nescafe, Kraft has several, most popular among which are Jacobs, Maxwell House, and Kenco. As for distribution, the main emphasis is put nowadays on availability. Therefore, the distribution network includes big stores, minimarkets, specialized stores etc. The wider is the range of point of sales, the better. In such a way, the new product that is about to be launched will have to face serious competition from well-known brands and will have to be widely distributed to reach the target audience.

SWOT

The main strength of the new product is that it is produced using the newest technology of coffee seeds processing. This technology allows preserving the natural taste of instant coffee (similarly to ground coffee), however, it is far easier and quicker to prepare, what saves much time. Moreover, this special taste doesn’t lose its uniqueness wether the coffee is cold or hot.

As for the weak sides of the product is the costly technology mentioned above. This innovation puts substantial pressure upon the pricing policy. Simply saying, the cost of technology will partially lay upon the price of the product, which is not desirable given that this product is new to the market.

However, if we consider the opportunities that the new product has, it is possible to forecast that in a short period the volume of sales of this new coffee will allow to make the price reasonable, at least where it is necessary. The foremost opportunity is the globalization process, which enters the borders of foreign markets opening new possibilities before producers and exporters. The second opportunity is the growing popularity of coffee as the main “cheering” drink. The intense competition on the market led to the fact that more and more articles appear in mass media describing the best qualities and the usefulness of coffee. This, certainly, contributes to the overall acceptance of coffee as the main tasty, cheerful and useful drink.

Yet, even despite the growing popularity of coffee the main threat that still remains is the appearance of new hot drinks such as tea, hot chocolate etc. Those products try to get a substantial share of market winning the coffee producers’ customers. Another threat is the growing loyalty to establish brands. It was already mentioned that the coffee market is signified with brands’ competition. Thus, it will be quite hard for a new product to prove its worthiness and win the competitive fight with reputable brands.

In such a way, considering the SWOT analysis, it is important to say that the new coffee brand has to affordable, has to have good quality, be available, expand national boundaries entering foreign markets, continue proving usefulness of coffee as such to target audience.

Objectives

The main objectives that are to be accomplished after the launch of the new product are to reach the volume of sales up to $10 mill. The geographic area of sales should encompass domestic market on the first place. Yet, the preparation for expansion on the foreign markets is desirable. The next important goal is to achieve the market share up to 10% on the domestic market. This share is quite ambitious. Yet, considering the key competitive advantage of the product – unique taste based on advanced technology – it is quite justifiable. Finally, the last very important objective is to achieve 15% profit, namely $1.5 mill. This figure shows the realistic estimations. Yet, it could be enhanced.

Marketing strategy

Premium segment

Before analyzing the promotion campaign, it is important to determine the target audience of the new product. In the major part coffee is usually preferred by both male and female at the age of  17 to 45 approximately. Children are usually not allowed to drink much coffee, since caffeine is believed to provoke special hyper reaction. Older people, in turn, are trying to avoid coffee because at this age they are taking special care for their health. Thus, the target audience is male and female from 17-45 who have average and above average income.

Product. The main requirement to the product policy is that the product should be packaged into the glass bottle of different size. The glass bottle testifies the status of the product (average and premium segments). Thus, the product is perceived as the one that enhances the status and creates appropriate image. Different sizes of the coffee bottles allow the company to create separate offer for each segment. For example, smaller size will have lower price, which makes the product more available for the wide audience and thus increase the market share of the product.

Price. It was already mentioned that the target audience of the brand (the new coffee brand) is premium segment in this case. It presupposes that the price for the product is above the average level. Moreover, it was also mentioned that the expensive technology makes it necessary to transfer the cost of this technology on the final product. Yet, given the large volume of sales, this overhead can be reduced. The price policy also presupposes that the price of the product depends on the size of the bottle. The general price policy guideline is to keep price quite high in order to support the status of the product as the elite one. Affordability in this case will be achieved using different kinds of marketing tools such as enhanced value (slightly bigger bottle for the same price) or price-off for the next purchase.

Placement. The new product should be widely available. It was written above that nowadays the major brands put emphasis on the availability. In order to win this competitive fight, it is necessary to have wide distribution network. Moreover, this distribution network should concern the end users in the first place. It is also important to keep the number of intermediate channels low. It will allow to keep reasonable price for the product and compete on equal terms with famous brands. The points of sales should include different kinds of stores, specialized shops, and cafes.

Promotion. Promotion is probably one of the most responsible stages of marketing campaign. For promotion campaign it is crucial to outline the positioning of the brand and then develop the key messages that are going to be delivered via different sources. Since our target audience is premium segment, the most important values those people share are status, independence, self-confidence. Consequently, the key messages will include:

“Our brand of coffee has excellent taste that suits the chosen”
“Our brand of coffee emphasizes your excellent taste”
“Our brand of coffee makes you fly and feel free” etc.
The foremost tool of communication is advertising, as it allows informing the potential customers about the new product. TV advertising is preferred, since TV encompasses the largest audience and thus is able to deliver desired messages to as many people, as possible. Besides TV, it is useful to advertise the product in top-class general journals, which are read by the target audience.

The second effective and necessary tool of promotion campaign is PR activity. It must include different articles describing the usefulness of coffee and its favorable impact on health in general. In such a way, it is possible to neutralize all the prejudices in society concerning coffee. The second wave of articles should describe the new technology used by the company to produce this special brand of coffee. Those articles will provoke interest in the brand and the desire to taste. Moreover, the company has to give a press-conference or press-lunch introducing the new product. It is important to convince mass media that this new brand is worthy and it really enhances the value on the market. PR activity is necessary to establish favorable reputation of the brand and ultimately ensure customers’ loyalty.

Finally, the last tool of promotion campaign is sales promotion. Since coffee has small cycle of consumption, it is important to stimulate constant purchase of the product, which can be mostly effectively achieved using sales promotion. Sales promotion should include:

Sampling to stimulate initial try;
Price-offs;
Enhanced value (bigger size for the same price, for instance);
Coupons;
Merchandising (the favorable space on the shelf).
Middle income segment

The marketing campaign for people with middle income will be slightly different. This segment is more sensitive to price, therefore it is important to make good value offer for a smaller price on one hand; on the other hand the channels of communications will also be a little different.

Thus, concerning the product policy, the change that is necessary to make is to produce cheaper packaging. It can be good plastic bag (similarly to Nescafe classic), which is cheaper than the glass bottle and thus allows to decrease the price of the final product. For this segment the differentiation of packaging (different sizes plays crucial role).

As for pricing, the policy as for the premium segment: price depends on the size of the package and the quality of package.  Thus, if a customer cannot afford the big can, it can buy a smaller one for the lower price. The placement policy also remains the same. The main emphasis should be put on the availability of the product. However, if for the premium segment it is more preferable to distribute product at different specialized shops and cafes, for the middle income segment, it is better to make sure that supermarkets contain this product, since supermarkets are the most popular place to make purchases among people of the given segment.

Finally, promotion strategy should be based on advertising and sales promotion. Since this segment is more sensitive to price, it is important to stimulate the purchases using sales promotion. The tools can be the same as for the premium segment. Greater emphasis should be put at price-offs and merchandising. As for advertising, it is aimed to inform about the existing product. It should include TV commercials and daily newspapers, which are read by the major part of middle income people. It is not reasonable to place much advertising in expensive magazines, since they will not encompass target audience. PR activity must include articles describing not so much the usefulness of coffee as the new technology. It will justify the price of the product for the target customers.

Thus, we can see that the main difference between two campaigns is the fact that for premium segment it is more important to establish reputation, image to emphasize the status of those people. For middle income segment, it is more important to create valuable offer to justify the price of the product.

Conclusion

Instant coffee market experiences substantial competition. Thus, the launch of a new brand will be not an easy thing. However, in order to win the competition fight, it is important to develop appropriate marketing campaign based upon enhanced value of the offer. The main emphasis should be put upon unique taste, premium status of the brand, availability and large-scale information campaign in order to tell about the product and its features, as well as to establish the desirable reputation of the brand.

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