Executive summary
The coffee market keeps on having a rising number of companies desiring to make an entrance to the market. Pioneer Coffee Stores must be aware on all levels of competition and maintain its performance on operations if it is to make retention on its status as the city’s leading retailer of coffee. The store’s focus on customer service, quality and taste is consistent with the segmentation of the market. The current mix of products is in line with the market forecast and the industry. Furthermore, the continuous review of the products, especially in non- food goods, for extra revenue sources is required to increase the sales. The present line of product would be improved on consumer demand and through a regional perspective. The current pricing is competitive with the other coffee stores in the neighborhoods. The coffee store has protected itself from the coffee prices that are volatile, and could apply pricing advantage should the coffee costs rise.
The customers view the products of Pioneer Coffee Stores from the perspective of value than the perspective of price; consequently coffee pricing could be increase. Due to the recent national and regional price increase adjustments will not be recommended until two years or later. Moreover, aggressive advertising would reduce the competition risk. Furthermore, additional marketing would enlarge awareness on the stores new programs, generate interests in the promotion efforts such as free deliveries and refills, and lead to boost sales of Pioneer Coffee Stores non food goods. Taking advantage of the store’s social contributions would increase its brand image in the city.
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Environmental aspects
The Demographics
The nation growth rate has been between 1.20% and 2% from 2005-2012 (McDonald et al, 1991p.34). The market demands are increasing constantly. The stores expansion approach goes beyond the traditional methods that were accepted. Pioneer Coffee Stores has set a new standard among the competitors. Pioneer Coffee Stores chooses primarily to make a focus on the customer’s life styles, psychographics and demographics. Pioneer Coffee Stores targets both females and males, ranging from the ages 18-30 years old, in addition to middle to upper middle economic and social class (Oldenburg, 1999p.45). Pioneer Coffee Stores provides to all needs; to non-coffee drinkers or children they offer the drinks that are non-caffeinated, sweets, sandwiches, and variety of pastries and juice.
The location of Pioneer Coffee Stores was carefully selected for the convenience, and Pioneer Coffee Stores targeted specifically a place that was heavy with street traffic pedestrian. By positioning their premises in convenient areas, they assured the customers of variety of choices of their products in convenient locations.
Community
Pioneer Coffee Stores is quickly becoming the best coffee store in the city. Overton (2003 p.113) pointed out that their expansion in their operations and setting of subsidiary branches within the city centre has made them the leading coffee store in the region. Their locations including their subsidiary branches include the Central Business District, airport terminal, major highways and streets, around the campus areas and retail centers.
Parker (2006 p.87) observed that Pioneer Coffee Stores differentiation is that the when the store changes its venues, it does not change its menu. Their products are the same from one store to the other subsidiary stores.
The table below shows a measure of the number of Pioneer Coffee Stores per 1000 population in their respective areas across the city as at march 2013. The analysis was limited to the areas and locations which has had a record of 1000 people from the Pioneer Coffee Stores sales statistics. This means that stores located in other retail centers were not included.
| COMMUNITY | PIONEER COFFEE STORES PER 1000 PEOPLE |
| Airport Terminal Store | 7.8 |
| CBD Store | 6.5 |
| Campus Store | 5.4 |
| High Way Store | 4.9 |
Culture
The ultimate goal of Pioneer Coffee Stores is to provide a third place outside home and work. By providing a venue where people can enjoy coffee and its related products of top quality and relax, while creating comfort and belonging atmosphere. The culture of Pioneer Coffee Stores can be compared to the old traditions of Japanese style of business where company members are considered as a family (Pegler, 1995p.135).
Pioneer Coffee Stores culture that is large is the main focus on environmental preservation and awareness. Pioneer Coffee Stores takes their societal role very seriously. The report on corporate social responsibility addresses many social issues and concerns important to Pioneer Coffee Store. The issues addressed include social programs investments, supporting education for the youth, building community ties, being responsible to the clients, understanding issues of the environment and sharing them with their customers, and fostering inclusion and diversity (Sutcliffe, 1995p.221).
Markets
The national market of hot drinks is large. However, the market has been badly performing for a number of years with the rate of growth negative consistently and hence the steady shrinking of the market.
According to Wilson (1993p.97), the hot drinks national market reached a value of $10.2 billion in 2012, having reduced with a compound annual growth rate (CAGR) of -2.2 in the 2005-2012 periods. This decline was against the global trend of the hot drinks market. This decline led to the decrease of the country’s global share by 3% between 2005 and 2012. The leading source of revenue for the national hot drinks in 2005 was the sector of coffee, which accounted for 83% of the market value (Oldenburg, 1999p.337). In terms of value the sector of factor was worth $10.2 billion in 2005, a decrease of 5% since 2005. The 5% decline in 2005 made this sector the worst performing in the market. The best performing was tea, but it also showed 0.5% decline between 2005 and 2012 (McDonald et al, 1991p.65).
Forecasting ahead, Overton (2003 p.182) observed that the market sector is predicted to experience a decreasing rate of growth that is consistent. By 2014, the forecast of the market is to reach $10.7 billion, which is equal to a compound annual growth rate (CAGR) of -0.6 in the 2007-2011 periods, below the global market. The analysis results indicated that the country’s share of the market in the globe will have reduced dramatically from 20.1% in 2002 to 18.3% in 2014
Market needs
The immediate goal of Pioneer Coffee Stores is to continue expanding and establishing new coffee stores in the city and the entire region. In 2003 and 2004 Pioneer Coffee Stores developed a two year geographic strategy of expansion that targeted places which had favorable profiles of demography and could be supported and serviced by the operations structure of the company. For every targeted location, Pioneer Coffee Stores selected the city to act as a hub; professional teams were identified to support the objective of opening more stores in the region. To oversee the processes of expansion, Pioneer Coffee Stores created supervisors to direct development and implant the culture of Pioneer Coffee Stores in the newly opened business.
Market trends
In 2012, the country’s market accounted for 17.1% of the global sales of hot drinks. Europe still remains the largest market worldwide, and accounts for 41.9% of the global sales of hot drinks. The Asia- pacific has 31.5% of the market of hot drinks (Parker, 2006p.221).
Most of the decline is responsible for the shift of the consumer away from coffee towards the soft drinks. However, evidence shows that manufacturers are trying to broaden their products range they sell, may be from the success Pioneer Coffee Stores enjoyed and their variety of flavored coffee items.
Market forecast
In 2014, Pegler (1995 p.312) pointed out that the country’s market of hot drinks is forecast to reach a value of $ 10,735.2 million, a decrease of 5%, since 2005. The market’s compound annual rate of change in the period 2007-2014 is predicted to a fall of 0.6%. Due to the high levels of consumption within the hot drinks market, there is minimal scope for volume sales increase.
Competition
The coffee market is a sector that is very competitive. The national coffee market is growing continuously, and many firms may enter the market. Pioneer Coffee Stores faces many competitors in the region in the coffee market. Oasis chain of restaurants leads the sector in the city with their coffee products. Hilton Foods comes in second in the sector with its variety of coffee products. Other big players in the market include Robert Coffee house and Hill Brothers coffee stores (Sutcliffe, 1995p.309).
Pioneer Coffee Stores closes competitor, Starbucks, an American franchisor with many stores in the city has most of its stores in Shopping malls and supermarkets.
SWOT Analysis
| Strengths | Weaknesses |
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| Opportunities | Threats |
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Marketing strategy
The mission statement of Pioneer Coffee Stores and the guiding principles are the foundation for the whole organization. The mission statement is “to establish Pioneer Coffee Stores as the leading outlet of the best coffee in the region while maintaining our principles.”
The guiding principles according to Wilson (1993p.86) include:
- Provision of the best environment of work and treat one another with dignity and respect.
- Embrace diversity in doing business
- Apply excellence of the highest standards to the fresh delivery and purchasing of the coffee
- Develop customers who are satisfied enthusiastically
- Positively contribute to the environment and communities
- Recognize profitability as essential component to the success future.
Marketing mix
The marketing mix of Pioneer Coffee Stores involves determination of product, pricing, distribution and promotions. The products include:
| BEVERAGES | FOODS | NON-FOODS |
| Brewed coffee | salads | Coffeemakers |
| beverages | sandwiches | Storage containers |
| Italian-style espresso | Ice creams | Coffee grinders |
| Cold blended beverages | pastries | Media bar |
| coffee | Pioneer Coffee Stores card | |
| Roasted whole bean | Travel tumblers | |
| Fruit juices | Mugs | |
| Coffee liqueur | Seasonal novelty items | |
| sodas | ||
| Tea products |
The product strategy of Pioneer Coffee Stores involves new products generation and enhancement of the products existing. This strategy achieves the benefits of product introduction and retention of the existing old products in the business. This has seen introduction of new items to the consumers in addition to coffee like the storage containers, coffee grinders, filters, pastries, ice creams and mugs (McDonald et al, 1991p.97).
The pricing strategy of Pioneer Coffee Stores is based on competition. The standard prices are maintained throughout the region across the retail subsidiary outlets of Pioneer Coffee Store.
According to Oldenburg (1999 p.192), Pioneer Coffee Stores utilizes numerous distribution channels of its products. It adopted the vertical channel integration for distribution of its wide range of services and products for effective distribution to the consumers. Furthermore, Pioneer Coffee Stores does not allow franchising hence giving the management full control of the business at the subsidiary stores.
The promotion strategy of Pioneer Coffee Stores primarily lies on conferences, stories and announcement of the public service. To gain publicity about its services and products, new products are promoted through conferences and press release, and often used when launching broadcast and print advertisement (Overton, 2003).
Print ads and television broadcasts are the main sources of media Pioneer Coffee Stores in its campaign adverts. The strategy of personal selling forms the central business operations in Pioneer Coffee Store. It is executed by offering and distributing the services of the company through the service of the office beverage and office delivery service
The sales promotion strategy of Pioneer Coffee Stores is always introduced in short terms to increases sales. The Pioneer Coffee Stores card is a special program of sales promotion that helps consumers to buy products at the outlets and online (Parker, 2006p.98).
Conclusions and Recommendations
The marketing information of Pioneer Coffee Stores has been accurate consistently. From the SWOT analysis and market research, the current marketing decisions of Pioneer Coffee Stores have been timely and effective. The mission statement and the strategic planning seem to be in good. The objective of revenue and sales has been achieved consistently. For the business to take advantage of its strengths, the following marketing strategies are recommended.
- Revamp the lines of products to satisfy specific consumer location demand regionally.
- Apply aggressive advertising to minimize the risk of growing competition and risk mitigate from the hot drinks market in the region
- Leverage the focus of the company on corporate social responsibility in brand image marketing
- Focus on expansion on unexplored markets
- Increase the prices if the coffee prices increase
- Continue expansion in the city market to mitigate competitor’s threats
- Continue adding non food and beverage products and services to improve sales and satisfy the higher consumer’s needs.
References
McDonald, M., & Leppard, J. (1991). The marketing audit. Butterworth-Heinemann.
Oldenburg, R. (1999). The great good place: Cafés, coffee shops, community centers, beauty parlors, general stores, bars, hangouts, and how they get you through the day. New York: Paragon House.
Overton, R. (2003). A marketing audit. Sydney: Martin Books.
Parker, P. M. (2006). 2007-2012 world outlook for specialty coffee stores, the. ICON Group.
Pegler, M. M. (1995). Cafes & coffee shops. New York: Retail Reporting Corp.
Sutcliffe, . (1995). The marketing audit. Richmond, Vic: Hutchinson of Australia.
Wilson, A., & Wilson, A. (1993). Marketing audit checklists: A guide to effective marketing resource realization. London: McGraw-Hill.
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