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History and Company Overview

Discuss about the Marketing strategy of Coffee Bean & Tea leaf Company.

The coffee bean & Tea leaf is an American coffee chain incorporated in 1963. The company is operated and managed by international Coffee & Tea, LLC. The company’s headquarter is located in Los Angeles, California. The organization has around 1000 own stores in the United States and 31 stores in other countries. There are approx 12,000 employees employed in the firm. Tea, coffee and food are included in the main product list of the company (Coffee Bean & Tea Leaf, 2018).

There are two main objectives that are maximizing its market value and maintaining its operational activities. The main objective of the company is to be global and modern leader by delivering a contemporary customer experience in the marketplace. Furthermore, the company aims to seek and find new opportunities in coffee and tea industry. The other objectives of the company include the following.

  • To be global and modern leader by delivering a contemporary customer experience in the marketplace.
  • To satisfy the needs, demands and requirements of the customers all over the world.
  • To maximize the profitability of the firm by minimizing the cost of tea, coffee and food products (Paharia, Avery & Keinan, 2013).
  • To attain long term mission and vision of the firm.
  • To increase the sale and revenue of the firm by providing delicious products to the consumers across the world.
  • To make a good image in the minds of the consumers by fulfilling the requirements and needs.
  • To overcome and beat the competitors by analyzing and identifying the plans, policies and strategies of the competitors (Coffee Bean & Tea Leaf, 2018).


The annual report and the forecasting process before applying the blue ocean strategy, it has been found that the total revenue of the company would be increased from $ 253 in 2018 to $ 306.13 in 2020. On the other hand, the profit of the company has been enhanced by 10% per year from $ 112 to $ 135.52 in 2018. It explains about the better performance of the company in near future. However, on the basis of the annual report and the forecasting process after applying the blue ocean strategy, it has been found that the total revenue of the company would be increased from $ 275 in 2018 to $ 332.75 In 2020. It explains that the total revenue of the company would be enhanced by 5% per year. On the other hand, the profit of the company has been enhanced by 10% per year from 2018 to 2020. It explains about the better performance of the company in near future.

The table below indicates the financial objectives from 2018 to 2020 before applying blue ocean strategy.

Coffee Bean and Tea Leaf Company ( All amount shown in $ Million)

Forecast 2018

Forecast 2019

Forecast 2020

Revenue

 $          253.00

 $           278.30 (+5%)

 $         306.13

(+5%)

Profit

 $          112.00

 $           123.20(+10% )

 $         135.52 (+10%)

Market Share

25%

30%

34%

     

The below indicates the financial objectives from 2018 to 2020 after applying blue ocean strategy.

Coffee Bean and Tea Leaf Company

Forecast 2018

Forecast 2019

Forecast 2020

Revenue

 $          275.00

 $           302.50 (+5%)

 $         332.75 (+5%)

Profit

 $          115.00

 $           126.50 (+10%)

 $         139.15( +10%)

Market Share

28%

35%

39%

On the basis of the evaluation, it has been recognized that the blue ocean strategy is better for the company. The company should accept the strategy to manage and enhance the performance of the company. These are included in the marketing objectives of Coffee Bean and Tea Leaf Company. The company wants to achieve all these marketing objectives to become a global leader in the international market.

Competitive strategies are used by the company to beat the competitors and to make a dynamic position in the global market (Jang, Kim & Lee, 2015). There are various competitive strategies include SWOT analysis and porter five forces analysis. The competitive strategies are discussed in detail below.

                              Strengths

                            Weaknesses

·         The company uses strong and unique management to produce new coffee, tea and food products in all over the world.

·         The organization has the regional office in Singapore. It is one of the significant strengths of Coffee Bean & Tea Leaf Company. This strength can provide recruitment and training programs to the regional countries that have the retail café.

·         The organization uses significant marketing strategy to attract and retain the customers in the global market.

·         Franchise communication and strategy is also strength for the firm. This strategy helps to find and get right information about the products and services.

·         By providing unique and attractive products, the organization has been able to build and enhance the loyalty and trust of the consumers.

·         Effective supply chain management is used by Coffee Bean and Tea lean company.

·         The higher standards and policies are kept in mind by the company to provide good quality of products.

·         The company is more focused to working adults, and youth as their target market. This may leads to some lose of the potential market.

·         Furthermore, the, market share of the organization is very limited.

·         Weak acquisition and brand name that could affect the profitability and sustainability of the firm adversely.

                             Opportunities

                               Threats

·         Coffee Bean and Tea Leaf Company can introduce new and innovative products in the international market to maximize the number of the consumers.

·         New and latest technology can be initiated by the firm.

·         Intense and high competition in the marketplace.

·         The government regulation is one of the significant threats for the organization.

·         Bad economy also affects the success and growth of the firm.

·         Political risk and volatile cost are also included in the business operations and activities.

·         Substitute’s products can be a threat for the company.

 

Objectives of the Company

One of the competitive strategies is porter five forces analysis that used by Coffee Bean & Tea leaf company in global market (Harith, Ting & Zakaria, 2014). This model analysis helps to overcome the competitors worldwide. Furthermore, it has been noted that porter five forces analysis helps to make a strong goodwill in the international market. The porter five forces analysis of Coffee Bean & Tea Leaf Company is elaborated in the list shown below.

Threats of substitutes: One of the significant forces of porter five forces analysis is threats of substitutes that could affect the business activities and operations of the firm. It is one of the significant challenges for the company. The threats of substitute’s products include tea, soft drinks, smoothies and juices. These products are also being produced by rivalries such as Peet’s coffee & Tea, Caribou Coffee and Farmers brothers are main competitors of the firm. Therefore, the similar products are also offered by the competitors in the international market. The firm needs to focus on the threats of substitutes to differentiate its coffee and tea products from the competitors (Rothaermel, 2015).

Threats of new entry: This is a very minor threat for the firm as it is very much difficult to pose threats by the new rivalries of the industry for such as well established firm like Coffee Bean & Tea leaf. If the rivalry poses threats to this firm, it must be a company having a strong and unique financial background. High economies of scale and brand awareness also affect the sustainability and effectiveness of the firm. There are various new entrants that have entered in the marketplace including Peet’s coffee & Tea and Caribou Coffee.  The company should focus on the threats of new entrants to overcome the rivalries in the global market (Läderach, Oberthür, Cook, Iza, Pohlan, Fisher & Lechuga, 2011).

Competitive rivalry: The major and primary rivalry posed by the rivalries of the industry that includes Caribou Coffee and Peet’s coffee & tea. These competitors are producing the similar coffee and tea products in the rivalry market. It has noted that the company should focus on the strategies, plans and policies of the rivalries to differentiate its products and services from the competitors (Igami, 2012).

The bargaining power of suppliers: The bargaining power of suppliers is low in coffee bean & Tea Leaf Company. The suppliers did not have the bargaining power because of the business strategies and tactics adopted by the company. Due to these tactics and strategies, the company is able to impress various types of consumers, which made the suppliers not to bargain with the firm. The major portion of the sales of the coffee and tea is accounted by the company Coffee bean & Tea leaf. The company maintains a contract with the suppliers to provide products and services to the customers (Vining, 2011).

Financial Projections

The bargaining power of buyers: Generally, buyers did not maintain bargaining if they had one option of the products and services of Coffee Bean & Tea leaf Company. The whole businesses of the company were in such way that it really reduced and minimized the bargaining power of the consumers approaching the company. Once the target market is determined and evaluated, it is essential of the company to know and understand the position on which its needs to be positioned in the target market segmentation (E. Dobbs, 2014). 

It has been analyzed and measured that porter five forces analysis is most significant competitive strategy of the company that is used to stay in the rivalries market. It will also help to maximize the outcomes and returns globally.

Coffee Bean & Tea leaf Company’s marketing strategy supports the company’s positions as the leading and growing coffee house chain in the world. The marketing mix strategies are used by the company to identify and analyze the main component of marketing plan. With the strongest brand in the industry, the company has been able to develop and build an effective brand image in the marketplace. The marketing mix strategies of Coffee Bean & Tea Leaf have been stated below.

Product strategy: This strategy plays a fundamental role make a strong position in the international market. The company produces unique quality of products for the consumers. Coffee bean and & Tea Leaf is well known for their quality of coffee bean. The company also has a very huge commitment to the coffee bean and Tea leaves that they produce and sell. By using product strategy, the organization gets to know quality of competitor’s products in the international market. The main products of the company include coffee, tea, and food products. The main objective of this strategy is to provide unique and attractive products to the consumers. Coffee Bean & Tea Leaf Company is not only making coffee and tea products for the consumers; it also contributes in the welfare of the society. The organization should use product strategy to earn maximum profit in the marketplace. Fairprice must be used by the organization to maintain high quality and low prices in terms of product strategy.

Price strategy: The main objective of the fairprice to maximize its market value and share. One of the significant strategies of marketing is pricing strategy. This strategy helps to differentiate the prices of the company from the competitor’s products and services. Pricing strategy provides competitive advantages to the organization by offering good quality of products at appropriate prices in the marketplace. The organization’s coffee and tea products are more expensive as compared to competing products. Through this effective and dynamic pricing strategy, Coffee bean &Tea lead maintains its high end specialist image in the global world. The company should set the suitable prices of the coffee and tea products after considering the prices of the competitors (van Wijngaarden, Scholten & van Wijk, 2012). For this purpose, professional and special experts shall be hired by the firm to negotiate the cost of the products. Along with this, discounts and special offers must be given by the company to increase sales and boost profits.

Competitive Strategies

Place strategy: The organization offers most of the products through its cafes. This element of marketing mix determines and evaluates the venues at which consumers can access and sell the products in the global market. The organization uses cafes, online stores and retailers to sell the products. With the help of internet, the company has been able to offer products through the online. The firm also uses various types of App to allow the consumers to place their order. Place strategy shows that how the company adapts to changing times, market conditions and technologies. It has been further noted firm should use effective supply chain management to determine the effective supply of the products. Under fairprice strategy, the organization should focus on the online stores to flourish the business globally. Along with this, blue ocean strategy shall be implemented by Coffee bean & Tea leaf Company to promote the sale and outcomes of the firm.

Promotion strategy: Coffee Bean & Tea Leaf Company promotes its coffee and tea products through advertising and promotion. This element of the marketing mix refers to the communication and collaboration strategies used to disseminate information about the company and its products. The company’s promotional mix includes advertising, sales promotions and public relations. It has been analyzed that advertisement campaigns shall be done by the company to encourage the products in the marketplace. This strategy helps the company to make attractive and unique its products in the rivalry market. In terms of sales promotion, the fairprice can consider maximizing the volume of advertising to encourage coffee and tea products as to attract and retain the target market. Digital advertising strategy, mobile phone App and facebook must be used by the organization to encourage the coffee and tea products in the international market.

People strategy: One of the effective strategies that help to increase and enhance the sale of the company is people strategy. The organization focuses on the managers and employees to produce innovative products in the marketplace. A team with unique skills shall be appointed by the firm to fulfill the demands and needs of the consumers. The employees of Coffee Bean & Tea Leaf should collect feedback and reviews from the customers to improve and enhance the quality of the coffee and tea products (Gao & Peng, 2011). Proper training and learning must be provided to the workers to improve and enhance the overall quality of the products. Along with this, rewards and incentives shall be provided to employees to increase and enhance the morale and job satisfaction of the workers.

Analysis of Strengths, Weaknesses, Opportunities, and Threats

Physical evidence strategy: It is an important strategy for the company to get information about the quality and features of the products. Physical evidence and facts shall be given to the firm to promote the products of the organization. This strategy helps to maintain a reciprocal relationship between consumers and employees (Igami, 2015). Physical evidence can monitor on two features that include in-store and fairprice. In store, the eye catching display will help to improve and enhance more effective buying. In the online store, the firm should create a comparison technique that can permit customers to distinguish two products price between fairprice and another market and display details of the coffee and tea products such as quality and ingredients in order to attain customer’s preferences. 

Process strategy: The process strategy is specially emphasis to enhance and improve the efficiency and effectiveness of fairprice. Thus, fairprice must increase the effectiveness of service and checkout. It has been stated that effective processes, procedures and technology shall be used by the when producing new and innovative products at the workplace. This will help to overcome the competitors in the international market (de Luca & Pegan, 2014). Effective payment machine should be used to improve and enhance the efficiency of the entire process.

References 

David, F. R. (2011). Strategic management: Concepts and cases. Peaeson/Prentice Hall.

de Luca, P., & Pegan, G. (2014). The Coffee Shop and Customer Experience: A Study of the US Market. Musso F. e Druica E., a cura di. Handbook of Research on Retailer-Consumer Relationship Development. IGI Global, 173-196.

Dobbs, M. (2014). Guidelines for applying Porter's five forces framework: a set of industry analysis templates. Competitiveness Review, 24(1), 32-45.

Gao, C. Y., & Peng, D. H. (2011). Consolidating SWOT analysis with nonhomogeneous uncertain preference information. Knowledge-Based Systems, 24(6), 796-808.

Harith, Z. T., Ting, C. H., & Zakaria, N. N. A. (2014). Coffee packaging: Consumer perception on appearance, branding and pricing. International Food Research Journal, 21(3).

Igami, M. (2012). Oligopoly in International Commodity Markets: the Case of Coffee Beans.

Igami, M. (2015). Market power in international commodity trade: The case of coffee. The Journal of Industrial Economics, 63(2), 225-248.

Jang, Y. J., Kim, W. G., & Lee, H. Y. (2015). Coffee shop consumers’ emotional attachment and loyalty to green stores: The moderating role of green consciousness. International Journal of Hospitality Management, 44, 146-156.

Läderach, P., Oberthür, T., Cook, S., Iza, M. E., Pohlan, J. A., Fisher, M., & Lechuga, R. R. (2011). Systematic agronomic farm management for improved coffee quality. Field Crops Research, 120(3), 321-329.

Paharia, N., Avery, J., & Keinan, A. (2013). Framing the Game: How Positioning Brands in Competition Can Be Strategically Used to Increase Brand Value. ACR North American Advances.

Porter, M. E. (2011). Competitive advantage of nations: creating and sustaining superior performance (Vol. 2). Simon and Schuster.

Rothaermel, F. T. (2015). Strategic management. McGraw-Hill Education.

The Coffee Bean & Tea Leaf., (2018). The Coffee Bean & Tea Leaf [Online], retrieved from https://www.coffeebean.com/ [Accessed as on 8th May 2018]

The Coffee Bean & Tea Leaf.,(2018).The Coffee Bean & Tea Leaf® - Singapore [Online].Retrieved from https://www.coffeebean.com.sg/ [Accessed as on 8th May 2018]

van Wijngaarden, J. D., Scholten, G. R., & van Wijk, K. P. (2012). Strategic analysis for health care organizations: the suitability of the SWOT?analysis. The International journal of health planning and management, 27(1), 34-49.

Vining, A. R. (2011). Public agency external analysis using a modified “five forces” framework. International Public Management Journal, 14(1), 63-105.

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