Just Us! Cafe: Business Analysis

Just Us! Cafe: Business Analysis Just Us! Cafes is the company specialise in food and service industry consist of wholesaler and retailer in Nova Scotia, Canada, and United States. Just Us cafes vision is to be a leading Fair Trade business that builds on quality, professionalism and innovation for the benefit of all their stakeholders. Their core product is certified Fair trade, organic products and local products which is high quality and social and environmental responsibility. Just Us! Coffees focus on nique market of promoting fair trade. The Moores have maintained a strong commitment to educating consumers while building strong brand identity and upholding constant growth. The main distribution channel of Just Us are in grocery stores, four cafà ©s (two each in Wolfville and Halifax) and distributed products on university campuses. In current situation, the prevailing economic climate and increasing competition has been issues to the founders. In addition, Just Us! Coffee goal to expand their business, consequently, the new challenges arise from having compete with several big brands for example Starbuck, Mcdonald, Kraft who also introduce the FairTrade certified coffees, or Rainforest Alliances certified coffees and small coffee shops and new entrants to retain its brand recognition of its customers. There are several possible answer to those problem such as: Increase power of branding to make it difficult for new entrants and create the different with existing rivals. Using Joint venture, franchising as an option to expand into new market Using new media to increase marketing and customer service. 4 Current Situation Analysis Positioning is the art of designing the companys offering and image to occupy a distinctive place in the mind of the target market. (Kotler, 2003, pg 308). 4.1 External Analysis: In order to develop effective strategies Just Us Cafà ©s are required to examine the external environment in which they operate. I have carried out the following analyses: Pest Analysis Porters 5 Forces Competitor Analysis 4.1.1 PEST analysis Political As highlighted throughout the case, a huge political factor involved in the industry was the certified recognition of actual fair trade and the whole process. Economic The economic environment is constantly changing and as we can see from the case, some competitors are providing partially organic ranges as well as mainstream organic coffees. JU pricing is at a slight premium and in the current environment; disposable income of consumers can play a large role in choosing a product. JU must be aware that a consumers feeling toward one product may be influenced by their income, regardless of how strong they feel about fair trade. Social As mentioned in the case, the overall coffee experience seems to be a large part of the attractiveness of JU and competitors. Any future strategy must be designed with this experience in mind rather than expanding rapidly and diminishing the experience factor. Technology Technology is constantly evolving and JU can seize a significant advantage by utilizing technology more. JU needs to examine the improvements technology can make in the manufacturing process and in their advertising. Environment The issues of carbon footprint means there are more incentives to buy from local supply rather than international import. Legislation There is no specific legal requirement for fairtrade or coffee in general. 4.1.2 PORTERS FIVE FORCES Threat of New Entrants: Threat of New Entrants is high within the market as there are very few barriers to entry and fair trade coffee trends are extremely popular so it is an attractive industry. Buyer Power: Buyers threaten an industry by forcing down prices, bargaining for higher quality or more services, and playing competitors against each other (Dess et al 2004:53). As mentioned in Appendix B-PEST, the customers income plays a huge role in selecting a product therefore if they decide to bypass fair trade products because of the premium price they can hold allot of buyer power, thus making buyer power in the industry high. Threat of Substitutes: There are various substitutes for fair trade coffee in the industry such as regular coffee, tea etc but not only coffees but in the general beverages market e.g. Coca Cola, Water etc. As a result of this there is a very high threat of substitutes. Supplier Power: Supplier power is relatively low as the industry is fair trade coffee. From previous knowledge, coffee suppliers were being exploited and continued to produce. It is simply because of the willingness to partake in fair trade that they have gained power. However I still believe that due to the underdevelopment of the producing countries allot of the power still lies with the buyers. Competitive Rivalry: Competitive rivalry is relatively high as seen in previous competitor analysis. There are many competitors in the local market and on the shelf within the mainstream markets. 4.1.3 Competitor Analysis Competitor Channels Locations No. Shops Kicking Horse Coffee Shops, Gourmet West Coast, Canada N/A Stores, Restaurants Quebec Ontario Kraft Foods Stores, Universities United States Mainstream PG Millstone Mainstream Canada United States Mainstream Nestle Mainstream Canada United States Mainstream Lowblaws Private Label Lowblaws Stores Canada Mainstream Just Us! Coffee Shops, Universities, Gourmet Stores, Nova Scotia, Quebec 4 Coffee Shops On The Supermarkets Ontario Shelf Trident Bookseller Cafe Coffee Shop Halifax, Nova Scotia 1 coffe shop Java Factory Coffee Shop Nova Scotia-Halifax, 3 Coffee Shops Darthmouth, Upper Tantallon Tim Hortens Restaurant Nova Scotia General-Wolfville(2), Halifax(21) 170 Second Cup Coffee Shop Retailer Canada General, Nova 360 Scotia(6)-Halifax(5) 4.2 Internal Analysis 4.2.1 Core Competence The Value Chain is a method that can be used to analyze JUs internal environment. Porter (1980) created a generic value chain model which listed activities that could be found in most firms. These activities can be divided into primary and support activities, which aim to create value for customers, whilst exceeding the cost of such activities. 4.2.2 Financial Analysis 4.2.3 Value chain 4.2.4 Geography focus 4.3 Evaluation SWOT ANALYSIS Strength Just Us! Coffee Roasters brand equity is what drives the company forward. Customers base their decision to purchase coffee from Just Us! Coffee Roasters are a symbol of their own personal beliefs, demanding ethical business practices and quality of product. Just Us! Coffee Roasters image also attracts a passionate following. Weakness Just Us! Coffee Roasters operates as a co-operative. Not only must they operate to fulfill shareholders expectations, but they also must operate in a manner that is expected of the values that the company had initial0ly set out with. Jeff and Debra Moore, are bound to creating a profit while maintaining the appropriate image and practiced that they initially based their company on. Upon entering the next phase of the companys life cycle, Jeff and Debra must maintain operations under strict control of their original company values as they compete against competition that does not share the same values. Opportunity New Fair trade products: With more and more fair trade products becoming readily available a huge opportunity to increase the product portfolio is on the horizon for JU Social Media/Online: The online environment presents JU with a huge opportunity to increase brand awareness, engagement and utilize its loyal customers feedback at a very low cost. Threat Clarity on Fair Trade: An issue highlighted in the case was that of clarity and regulation on fair trade. It is to be seen that the fair trade term is been thrown around too commonly and applied to every product, thus potentially reducing effect of one of JUs key USPs. Clouded Focus: At the moment JU are using multiple channels of distribution, however with various challenges on the horizon a decision needs to be made on a strategy. Operating and managing two separate strategies can create a clouded vision within the company and a decision needs to be made on prioritization. 4.4 Ethical issues Ethics are the moral principles or values that govern the actions and decisions of an individual or group (Gresham 1985)  [1]  . Ethical principle has been used as guidelines of business activities and justification of action. The table below 2 The part JU focus on in this diagram is ethical and legal which make them more expensive than others. The reason for that is they promoting Fairtrade to pay more for suppliers, therefore, the cost of it will be higher than competitors who are currently not in fairtrade segment. Secondly, as the case study mention, they couldnt use licensing method since they dont trust the agency who selling JU product would comply with JU ethical principle. It may damage their reputation as well as losing customers. 5 Memo to juliet 5.1 BCG Matrix As JU provide various organic products it is important to examine the more profitable ones and not so profitable in order to either focus marketing effort on weaker products or discontinue them. The revenue from coffee and drink has the highest percentage in the trade figures of Just Us! Cafe while in the Fairtrade market there is significant growth rates in volume in both coffee and tea over a four year period. Perhaps JU should look at the profitability of the market for others (vouchers) and consider placing less emphasis on it. Since it contributed lowest proportion to the total revenue and even loss in one store. However, the gift cards, gift basket and event tickets in this category may promote all Just Us products. Benefits of BCG Matrix The BCG matrix help managers in resource allocation among various units. The managers can compare several business units which company offer. This method simplified the analysis of the product and market by using the market share and growth rate of products. BCG has been well known world wide and used for quick respond to the industry. The BCG allows for the making of comparisons so as to measure the growth and development rate of a company against the average growth rate in that specific industry. In addition, this particular matrix is also enjoyable to use, encouraging better decision making. Large organizations that are normally in need of effective decision making can benefit a lot from using BCG matrix, especially those seeking better resource management. Limitations of BCG Matrix High market share does not always leads to high profits. There are high costs also involved with high market share. Growth rate and relative market share are not the only indicators of profitability. This model ignores and overlooks other indicators of profitability. At times, dogs may help other businesses in gaining competitive advantage. They can earn even more than cash cows sometimes. To sum up, it can be seen that even though BCG matrix has many benefits, it may not applied to JU since they offer Fairtrade products, therefore, the cost is relatively high as well. In other words, high market share and high growth rate may not give them high profit. Moreover, the dog products seem to have lower revenue may due to high profit margin and has been used to promote others products. 5.2 Product Life Cycle Using product life cycle to find the stage of products could help to understand the profit of the products offered. Rather than compare the market share and growth rate, JU can use product life cycle to understand their products. Coffee and drinks still on the growing trend, it shows that these products is on the growth stage which need to increase differentiation, improve the products and services while gaining the market shares. The JU products and Bodum, Lunches, Bakery has been put in maturity stage since the revenue of those are expected to increase slighty compare with Coffee and Drinks. The other products of JU complied of gift card, event tickets has low profit and even loss due to introduction stage. Therefore, it should not be removed from the products range. 5.3 Financial Analysis Appendix 5.4 Geography Concentrated Appendix 6 Retail Customer loyalty strategy INTEGRATED MARKETING COMMUNICATION The concept of IMC has been defined in three ways: a one-voice view in which there is one theme and one image, a perspective which suggests that product, image and consumer behaviour should be considered simultaneously and a perspective which focuses on the integration of communications disciplines.(Nowak, et al, 1994) CONSISTENCY IMC planners, focus their attention in two types of consistency, one voice one look and strategic consistency. For instance one voice one look, delivers a campaign in which all advertising, sales promotion, sponsorship, publicity and direct response and package for the two different products have the same appearance and feel. All the media messages reinforce one and the other. (Duncan, 2003) Renovation of coffee shops into uniformed unit could show customer the consistency of the business. Increase the customer service performance JU cafe can improve the customer service such as the expert suggestion or customer related services. The good customer service could improve the performance and increase turnover. Improve customer awareness Events and exhibitions to keep the customer aware and informed about fair trade and Just Us products. By provide the chance for customer to understand JU nature as well as fairtrade, customer can feel more comfortable to come to the coffee shop. Loyal customer base Promotions such as giving free cup of coffee for return customers. Loyalty cards for existing customer to collect points to exchange for gifts or products. Customer relationships such as email of new products or service or simply the news on Fairtrade. 7 STP analysis and the marketing mix Market MARKET SEGMENTATION AND TARGETING Segmentation and targeting seek to determine who companies want to reach in order to build brand relationship. Marketing today is in the name of efficiency and effectiveness, becoming more focused on smaller but more profitable segments of the market. (Duncan, 2003) Just us cafe currently focus on the young people 18-30 who concern about the ethical issues and interested in Fairtrade. However, that is only the niche market where the number of customer is small compare to JU competitors. In order to increase sales, JU need to expand it own segmentation. In other words, JU need to enter new segment in order to get more customers. For example, JU offer to fashion industry such as giving coffee for catwalk show or JU coffee could offer delivery to office for white collar people. JU coffee would increase the target since more and more people outside their age focus interested in drink coffee and ethical issues. POSITIONING The positioning of the JU coffee need to be uniformed. At the moment, there are 4 different location which offer different products and service which make JU too diversified. If new customer come to the coffee bar they may expected the same service, therefore, JU coffee should be made as uniform service. Strategic Marketing Options: Ansoffs Matrix In the market JU has their existing menu as the existing products which other competitor also provide the same kind of products and services. The market is existing. Therefore, JU cafe have 3 option they could adopted. Market penetration: JU can improve their customer service, renovate the current location and training employees to increase and improve the customer experience. Moreover, they can use new media to promote the brand. Product development: JU can come up with new products which may benefits their current customers such as new formular for coffee, additional art on coffee cream or the new food in their menu. Market development: JU can use Joint Venture to expand their market and sharing the risk of investment. Evaluation of Options: SAF Option 1: Market penetration Suitable In the current situation, Just Us cafe can use this to improve their market share Yes Acceptable This method is acceptable since JU has the experience in premium service. Yes Feasible The fund required is lower than the other methods The experience available Yes Option 2: Product development Suitable In the current situation, Just Us cafe can use this to improve their customers experience. Yes Acceptable The new products cannot be launched immediately since they need to research and development. No Feasible The fund required is high and there is need for expertise. May be Option 3: Market development Suitable In the current situation, Just Us cafe can use this to improve their market share Yes Acceptable This method make JU lose part of their control in new shops. May be Feasible The fund required is medium since it can be share with other venture and the risk is shared as well Yes 8 Implementation a. Strategic and Marketing Objectives b. Marketing Strategy and Marketing Mix Advertising POP materials Direct Marketing Web Site Personal Selling Exhibitions and Events Packaging Sales Promotion Trade Promotion Product Placement Field Marketing c. Responsibilitiesà ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦ d. Time Period for Implementationà ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦ e. Monitoring and Controlà ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦ f. Return on Investmentà ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦ 9 Conclusion Just us cafe can offer the option 3 or option 1 since all of the option require sufficient fund to launched. The option 3 seem to be more suitable since JU want to expand the market. Using Joint Venture, they can create the alliance with other rival to protect themselves as well as increase the power over new entrant and stronger competitors. However, they can increase their channel for supply and B2B market as well as B2C. Besides, JU can also use new media such as online business or online network to promote their brand with low cost of maintainance since WWW become more and more wellknown.