Marketing

 “Marketing trends of Major players in Café Industry”.

Industrial Scenario:

Over the Past few years, Australians shifted towards a more affluent lifestyle brought about by the country’s good economic performance. The strong performance of the Australian economy supported the ever-popular cafe culture, which in turn drove demand for premium specialty products in the retail channel. One of the lifestyle changes was that a cafe culture became prevalent in Australia. Cafe culture in Australia had a positive effect on the retail performance of hot drinks, as demand for premium products for home consumption spurred volume and value sales in retail channels

As Australian consumers are avid visitors to cafes, their expectation of hot drinks rose over the review period. Not only do they expect quality coffee at cafes; they want value added services at single point. The Fast changing life style has erupted nearly 145 cafes in and around Australia, which offers a quantifiable and quality services. The emerging needs of the customers made the cafés to develop their market niche by increasing their product chain.

Scope of the study: To study the Marketing mix of Café in Australia, the case studies of major players like Starbucks and Gloria Jeans were considered.

About STAR BUCKS: “ Star bucks” is a premier retailer, roaster and brand of specialty coffee operating in North America, Latin America, Europe, the Middle East and the Pacific Rim through its 9,000 retail outlets. The StarBucks stands for an imperial services rather than hangout services. The quality and services are highly expensive to the middle-income population. But the ambience created by the outlets draws people to satisfy their inner urge, which is hidden in one of it’s customers words.  “It’s like there’s something deep inside that craves something familiar. That’s why we come here,” .

The company is committed to offer the world’s best coffee and the fine experiences in sipping coffee. The malls are built in such a way to create a social environment to the customers. The strong commitment adopted by the staff really pays to in the form its growing business. The quality commitment of the company is so prominent through its web layout and through its statement and statistics of  ‘tasting many among more than 150,000 cups a year’. The Product line through Beverage Line –up offers a range of choice of coffee and Tea to the customers in a required format.

The Marketing strategies like “Starbucks card” and “Wireless Internet cards” are the one good strategies aimed at the high returns of the customers to the malls, nearest to them. The Presentation of the web site also motivates the customers to think of the beverages offered and to try them.  The entertainment and social activities of the customers are met through the features like ‘Hear music’ and ‘Local Events’. The need of information on what they eat and drink is catered through  ‘Nutritional information’. The café also reached the market segment of Home based customers by offering the ‘At Home’ and ‘Brewing equipment’ and info on different blend. The option for ‘For Business’ gives a way to expand market.

ABOUT GLORIA JANES:

Gloria Janes is also a largest mall based retailer in Café market offering specialty market in North America. Started in 1979, it has expanded to more than 280 stores till today. Though it offers nearly relative product mix such as Starbucks, Gloria Janes is a pure Coffee outlet restricting its other activities.

The company’s commitment goes beyond providing best coffee services in the world, to offer best customer service. The company attributes its quality in sharing its commitment with its suppliers of beans. The Swiss water process adopted in decaffeinating is also one of its boasting, as chemical free products.

Partnered strategy:

Gloria Janes offer as the Internet services through Koc.net. The features offered by Koc .net offer wireless Internet connectivity to the visitors entering into the Gloria Janes café . This facilitates the customers to get connected to the www while sipping the coffee.

But there is not much information provided on the web site of the Gloria Janes about this Internet service provision.

Market Strategies:

The wide range of selection between Flavoured coffee, Origin & Blends, Decaffeinated, Teas, Cocoas offers good choice for the customers and keeps the customers to walk through the range of products.  The option ‘Accessories’ is made to target the home based customers to try the coffee mix at home with offered product range.  ‘Franchising’ is the option given for business opportunity. My account, Order tracking, Shipping info are the further features to register with the web site and to order products and to track them online for shipping details, as  a online marketing reaching the global customers.

Other players: The other players like Dome café and Hudson coffee shop has very less web presence, though they offer considerable services in the real market. Only coffee products were listed and offered for sale on Hudson web site.

SWOT ANALYSIS:

STRENGTHS

STARBUCKS

  • Starbucks Corporation is a leading organization in the café market.
  • IT is a profitable organization with earnings of more than $600 million in 2004.The company generated revenue of more than $5000 million in the same year.
  • It is a global coffee brand built upon a reputation for fine products and services. It has almost 9000 cafes in almost 40 countries.
  • Starbucks was one of the Fortune Top 100 Companies to Work For in 2005. The company is a respected employer that values its workforce.
  • The organization has strong ethical values and an ethical mission statement as follows, ‘Starbucks is committed to a role of environmental leadership in all facets of our business

GLORIA JEANS:

  • Gloria Janes is also a one of major profitable player in café market.
  • The brand is operating with 280 stores with exclusive coffee and tea products and services.
  • The organization is committed to quality and the same is shared with its suppliers of beans

WEAKNESSES

FOR STARBUCKS

  • The expensiveness of the products obstructs the products to reach the lower middle class population
  • Though Starbucks has a reputation for new product development and creativity, their strategies are vulnerable to the possibility that their innovation may falter over time.
  • The organization has a strong presence in the Australia with more than three quarters of their cafes located in the home market. It is often argued that they need to look for a portfolio of countries, in order to spread business risk.
  • The organization is dependant on a main competitive advantage, the retail of coffee. This could make them slow to diversify into other sectors should the need arise.

FOR GLORRIA JANES:

  • The organization has less diversified activities compared to STARBUCKS, which makes its survival weak in case of a shift to other sectors.
  • The less reach of geographical area is also limiting its activities
  • The price back offers for unsatisfied customers make its competitive to its quality commitment.

OPPORTUNITIES

FOR STARBUCKS

  • Starbucks are very good at taking advantage of opportunities.
  • In 2004 the company created a CD-burning service in cafes with Hewlett Packard, where customers create their own music CD.
  • New products and services that can be retailed in their cafes, such as Fair Trade products.
  • The company has the opportunity to expand its global operations. New markets for coffee such as India and the Pacific Rim nations are beginning to emerge.
  • Co-branding with other manufacturers of food and drink, and brand franchising to manufacturers of other goods and services both have potential.

FOR GLORIA JANES

  • The segments left out by Starbucks can be captured through low price offers.
  • The company has the opportunity to expand its global operations.
  • The product range can also be increased with different market strategies and potential co branding ideas.

THREATS:

FOR STARBUCKS

  • The unexpected Business cycles and market trends coffee may arise
  • New discoveries of customer needs and another type of beverage or leisure activity may replace coffee in the future
  • Starbucks are exposed to rises in the cost of coffee and dairy products.
  • Since Starbucks is the pioneer in café ideas, the success has lead to the market entry of many competitors and copycat brands that pose potential threats.

FOR GLORIA JANES:

  • Unless the company expands it s products and service range, there always lies a major threat of loosing the market
  • The unexpected and unseen threats from economy in Australia and new brand arrivals may capture the market.

SUMARY:

Thought the economic scenario of the Australia is not much exciting, the growth for café industry seems to be good with the rising income levels of the population and diversified life styles of the people. This is clearly observed from the growing profits of the above two cases, and their increasing market mix. The two competitors enjoy a good share of market with their breverage range of services and addititionally with their Internet services. And there is a lot of exploration of market trends to be followed by these cafes to capture the remaining markets through promotion.

References:

  1. http://www.starbucks.com
  2. http://www.gloriajeans.com
  3. http://www.newsvote.bbc.uk
  4. http://ibisworld.ecnext.com/coms2/summary_0239-115358_ITM
  5. http://www.hudsonfood.com/gourmetfoodshop/catalog/product_info.php?cPath=8&products_id=83
  6. http://friedchillies.com/revread.php?id=37&res=Dome+cafe

The INDUSTRIAL SWOT Analysis of CAFÉ in AUSTRALIA:

STRENGTHS

–          The changing patterns of life styles in Australian Population

–          Growing income levels

–          Increasing online shopping behavior

–          Support from government to set up kiosks

–          Increased online search for food & Breverage information

 

WEAKNESSES:

–          Very few players in branded café market

–          Non diversified services

–          Limited reach through web presence

–          High costs of set up

–          Poor marketing strategies

–          Poor Network services

–          Poor partner services in marketing mix

–          Low promotional activities

 

OPPORTUNITIES

–          There is a wide scope of market yet to be covered

–          Large number of internet cafes where conversion is possible to emerge as branded cafes

 

THREATS:

–          Unexpected losses after incurring high set up coasts

–          Ever changing customer interests

–          Competition from other drinks

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