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750 Strategic Marketing

Individual Assignment

Caffeinated

Date of Submission: June 6, 2017

Prepared by:

Name Student ID Email

Challa Shridhara, Ranjan 20160378 ranju41@gmail.com


Contents

Executive Summary:...................................................................................................................................... 2

Organization:................................................................................................................................................. 2

Porters Five Forces:....................................................................................................................................... 3

Threat of New Entry: ................................................................................................................................. 3

Bargaining Power of Caffeinated Suppliers: ............................................................................................. 4

Threat of Substitution or Substitutes: ...................................................................................................... 4

Bargaining Power of Consumers: .............................................................................................................. 5

Competitive Rivalry: .................................................................................................................................. 5

Positioning Mapping: .................................................................................................................................... 8

Strategic Marketing Grid:.............................................................................................................................. 9

Conclusion: .................................................................................................................................................. 12

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Executive Summary:

Caffeinated is start up coffee importer from the worlds best coffee producing country. Companys

corporate office is located in Auckland, New Zealand.

Company is introducing the different varieties of coffee brands in New Zealand market. Company

started to be expanding their business in Auckland, New Zealand. Caffeinated strengths are investors

and good exporters contact. Company is not planning to open any stores in the New Zealand market due

to their business expansion concentration towards southern Island.

Organization:

Caffeinated is New Zealand based coffee importer from worlds leading coffee producing countries.

Caffeinated imports the high-quality coffee from different countries and supplies the cafes in New

Zealand. Currently, company is operated from the Auckland, New Zealand. Company major import from

Brazil, Indonesia, Vietnam, Ethiopia and India. Where the product price varies from upper low price to

high price and upper low quality to high quality. Business solutions to domestic coffee cafes in the New

Zealand region. The organization started in January 2016. Where company do have 30 employee size

with the annual revenue of NZ$200,000 for the last financial year.

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Porters Five Forces:

In the last decade, New Zealand has grown to be a coffee loving country. Stats show that coffee import

has grown from $32million dollars to $50millions from the year 2000 to 2008 (Lewis, 2009). This has led

to a high increase in the number of cafes in cities.

(Mindtool, 2017)

Threat of New Entry:

Caffeinated faces the lesser threat forces or new entry. In the Porters five forces, this force refers to the

negative effect of new players in the industry. Due to the following factors company has lesser threat of

new entrants.

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High Investment for initial set up (weak force)

Import and Export License (moderate force)

Storage system and supply chain (weak force)

Company can rank 7/10 in this particular force. Due to these major facts company Caffeinated has weak

threat of new entry in the market. New Entrants cant compete with the Caffeinated due to the huge

investment, stocks and supply chain. However, new entrants can get the import and export license from

the government. Thus, Threat of New Entrants will be the major factor in the import of coffee business.

Bargaining Power of Caffeinated Suppliers:

Caffeinated faces the weak force or bargaining power of suppliers. In this five forces analysis model,

suppliers have strong hold than the Caffeinated company. The following factors makes the company

weaker force or bargaining power of suppliers.

Many exporters in the market (weak force).

Bulk Purchase (moderate force).

Company can rank 3/10 in this particular force. Due to these two major facts Caffeinated has weaker

bargaining power. Due to the large exporters in the market makes company cant hold the price value to

them. Whereas supplier will be the decision maker of the price.

Threat of Substitution or Substitutes:

Company has strong threat of substitutes in this industry. In the five forces analysis model, this force

makes a substitute goods or services. IN this scenario, following factors plays a important role

Availability of substitutes (strong force)

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Low switching cost (strong power)

Low cost of substitutes (strong power)

Company can rank 3/10 in this force. Due to the above factors company Caffeinated has strong power

on negative impact on the company. Consumers can easily shift to the prepacked coffee product like

beverages which can be easily available in the super markets and restaurants. The cost of moving from

coffee to their substitute is easy and cheaper.

Bargaining Power of Consumers:

Company has a strong bargaining power of consumers. Due to the different various types of coffee

brands in one umbrella. This force is based on the effect of the customers in the market. In caffeinated

company following factors plays important role.

Large Supply Chain (strong force)

Bulk amount of goods supply (strong force)

Quality (Strong force)

In this force company can 7/10 in this force. Caffeinated sell their products only to business companies

like coffee shops, restaurants and super markets. Consumers need to maintain their quality of product

to their consumers due to this reason it is very difficult to switch from one supplier to another. This will

be the added advantage for the organization.

Competitive Rivalry:

As per the porters five forces, this force will find out the competitors in the market. Due to the following

factors contribute to the weaker force

Lower number of suppliers in the market (weaker force).

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Verities of brand (weaker force)

Low switching cost (strong force)

As per the above factors porters five forces will explain the very less number of coffee suppliers in the

market with variety of brands (low price range to high price range). This will be the added advantage for

the company. Due to the one more factor company face the moderate force i.e. low switching cost.

Coffee shops can easily switch to other vendors easily.

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Positioning Mapping:

Caffeinated uses the positioning mapping because it is the easiest tool to analyze where it stands in the

market when it compared with its industry competitors. This graph shows where our company stands in

the market. How we can fill the other gaps and which areas company can develop?

Due to the positioning mapping company can be added the new product/service from their company to

fill the gaps or can release same type of products/service to compete against their competitor

High Quality

Harrisons
Coffee

John
Burton
Limited

Caffeinated

Low Price High Price

Havana
Cuba and
Coffee

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Low Quality

Figure: Positioning Map for Coffee Importing to NZ

Further to the diagram, positioning mapping there are 2-axis i.e. x-axis starts from left side to right side.

whereas y-axis starts from bottom to top. Where X-axis explains the price value in the market where as

y-axis comes up with the quality of the product.

From analyzing this graph company can come out with the different product or services where it can fill

the gaps. Caffeinated company lies in the high price and high-quality area because imports coffee from

the worlds best countries like Brazil, Vietnam, Indonesia, Ethiopia and India. Where it chooses the low

price with high quality. When it compared with the Harrisons Coffee they have high quality and high

price range products. Where Havana Cuba Coffee was in leading high-quality coffee importers in 10

years back but at the present scenario company coffee is not good quality and the price is also low.

John Burton limited has high quality product with the less price range this will our main competitor in

the market. Even this company is established their market in New Zealand. This will be the minus factors

for Caffeinated company.

Positioning mapping are based on the buyers perception which is challenging. Company need to do

survey and collect the information. If the customers information is accurate then it is easy to do

mapping and can get the better result. If the customer data is not accurate then positioning will end up

in different place.

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Strategic Marketing Grid:

y-axis

10

10 15

x-axis

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Caffeinated is applying the cost leadership strategic marketing grid. Where company need to minimize

the cost of production and logistics cost to overcome from their competitor. due to the climatic

condition in the New Zealand, coffee cannot be grown. due to this particular purpose, New Zealand

need to import the coffee beans from different parts of the world where the countries well known for

the production. Where the Caffeinated supplys the domestic coffee shops, restaurants and super

markets in New Zealand. Best coffee producing countries in the world are South America countries like

Brazil, Peru, and Columbia (Go Coffee Go, n.d.). New Zealand will be the strategic location between the

South America and Asia. Where Caffeinated is also trying to export the product to Asian countries where

there is less production.

Company need to source the lesser price coffee beans with high quality. Where companys market

research team need to find the less price high quality coffee beans and lesser logistic expenses. At the

same time company can buy the coffee beans directly from farmers where it will increase the

profitability high to the organization. Even company need to tie up with the best logistic companies. At

the same time company, Maersk Line Shipping Company has been contacted and got into the contract

from the coffee growing countries to New Zealand and few other Asian countries.

In New Zealand importers coffee rate will be $34.79 per kilogram excluding the GST (Havana Coffee

Works, n.d.). As a new entrant to this industry it is little difficult to overcome from the present supplier

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in the market. Company came up with the two different strategies. If the suppliers purchasing the goods

more than 5 kilogram then Caffeinated will offer additional one kilogram for the free of cost.

Second strategy, most of the companies will deliver the product and payment need to settle down

immediately or the following week. Caffeinated will provide the credits to buy the products and

payments can be settle down in quarterly basis or once in 2 years. This will be the major impact on the

industry.

Company at the present scenario it is in the range of 10. Where once the company applies these

strategic grid, it can move up and increase to 15.

Conclusion:

caffeinated need to be change according to the taste of the consumers. Company need to be update in

the market. A complete study of that particular product or any decisions making by the company.

Company need to build the loyal customers base by providing the annual packages and quality products.

Company need to start doing research work on the New Zealand climate. Where can the coffee can be

grown and how artificial intelligence will work in this weather condition.

Company need to focus on diversifying the product range and need to focus on substitute products too.

By looking at the strategic marketing grid and positioning mapping company is well positioned and

competitors are not in the same phase which is the added advantage.

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References

ALS Logistical Solutions. (n.d.). About Als. Retrieved from ALS Logistics: http://www.als-

logistic.com/about-als

Coffee Cloud. (n.d.). Machines. Retrieved from Coffee Cloud:

http://www.coffeecloud.co.nz/machines/wmf-a-truly-global-brand/?gclid=COOoj4rQltQCFQl-

vQodIqcCvw

Euromonitor International. (2017, January). Coffee in New Zealand. Retrieved from Euromonitor

International: http://www.euromonitor.com/coffee-in-new-zealand/report

Flo, L. (2012, February 18). Starbucks First Mover Advantage: Attacking the Mobile Payment Option.

Retrieved from Socials Cloud: https://socialscloud.wordpress.com/2012/02/18/starbucks-first-

mover-advantage-attacking-the-mobile-payment-option/

Go Coffee Go . (n.d.). Regions. Retrieved from Go Coffee Go: https://www.gocoffeego.com/professor-

peaberry/regions/south-america

Havana Coffee works. (n.d.). Online Store. Retrieved from Havana: http://www.havana.co.nz/product

Hershberger, M. (2014, April 16). 6 environmental challenges facing Southeast Asia (and what you can

do to help). Retrieved from Matodor Network: https://matadornetwork.com/change/6-

environmental-challenges-facing-southeast/

Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2012). Strategic management cases: competitiveness and

globalization. Cengage Learning.

Imhof, M. (n.d.). Cross-border Mergers and Acqusitions in Germany. A Transaction Guide for foriegn

Investors. Dusseldorf, Germany: HEUKING KHN LER WOJTEK. Retrieved from Heuking:

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https://www.heuking.de/fileadmin/DATEN/Dokumente/Internationales/Transaction_Guide_201

5.pdf

International Coffee Council. (2014, February 27). Coffee consumption in East and. Retrieved from ICO:

http://www.ico.org/news/icc-112-4e-consumption-asia.pdf

Investopedia. (n.d.). First Mover. Retrieved from Investopedia:

http://www.investopedia.com/terms/f/firstmover.asp

Martin, M. (2017, May 12). What Is a BCG Matrix? Retrieved from Business News Daily:

http://www.businessnewsdaily.com/5693-bcg-matrix.html2333

New Zealand Foreign Affairs and Trade. (n.d.). ASEAN (Association of Southeast Asian Nations) is one of

the fastest-growing markets in the world, with enormous business and investment potential for

New Zealand. Retrieved from New Zealand Foreign Affairs and Trade:

https://www.mfat.govt.nz/en/countries-and-regions/south-east-asia/

Red Herring. (2014, August 25). Southeast Asia technology sector sees boost from emerging countries.

Retrieved from Red Herring: http://www.redherring.com/startups/southeast-asia-technology-

sector-sees-boost-from-emerging-countries/

Rodyk & Davidson LLP. (2012, October 9). Competition laws in ASEAN: A South-East Asian perspective.

Retrieved from Lexology: http://www.lexology.com/library/detail.aspx?g=6c532563-816b-4507-

ade6-bfbd13a3f4ab

White, X. (2013, June 27). A shot at coffee growing. Retrieved from Noted:

http://www.noted.co.nz/archive/listener-nz-2013/a-shot-at-coffee-growing/

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Supplier Power: As Caffeinated company has suppliers from major coffee producing countries

like Brazil, Vietnam, Indonesia, Ethiopia and India. Where the company do have different type of

coffees from low to high price range. Company is tied up with the large exporter in the market.

Where company can get the best price from different countries. Due to this supplier power is

stronger.

1. Competitive

2.

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