The grid above is the 10 factors that affect the Spread of Innovations. Starbucks’ target market is young people, highly educated, and trend group. The life-style in China also evolves….
I. Introduction/Executive Summary and Product Description Yuban coffee is a brand of coffee you can find in your local grocery store that you probably did not know existed. It was founded by John Arbuckle, a famous coffee roaster, who has invented the original Yuban coffee in 1986. Yuban coffee only uses the best Arabica beans. In addition, Yuban is certificated by the Rainforest Alliance, which declares that at least 30% of Yuban coffee is organic.
Chemical fertilizers and pesticides are not used on the organically grown beans and the rainforest alliance also works to sustain agriculture, forestry and tourism in the regions of the forest that the coffee beans are grown.
More recently, Yuban coffee has been slowly grown, if grown at all, and has not been reaching its full potential. The main problem of Yuban is the lack of brand awareness and an unsuccessful marketing strategy. When the marketing strategy changes to solve these problems, it will make the Yuban brand more competitive and successful in the coffee market.
Our marketing plan will be discussed in detail in the pages to come, but our general objective is to build brand awareness by defining and marketing towards a more specific target market. Also, with the implementation in of our recommendations, Yuban coffee will be able to reach this objective.
Ultimately our marketing plan will consist of the following: 1. Increase Yuban’s brand image by: a. increasing brand awareness from business-to customers / Business-to-Business markets by penetrating the online and social media sectors b. creation and implementation of the vending machine/coffee brewing machine c.using recent acquisitions to push the Yuban name d. redesigning product packaging to reflect environmentally conscious brand II.
Target Customer Analysis People in the United State love coffee, just like how people in China love tea. Research suggests that 50% of the population of United States drinks coffee and those coffee drinkers in the United State drinking more than 3 cups of coffee each day! Aside from the United States there are so many other people in the world who love coffee (E-imports, 2012). This makes coffee become the second valuable trading product after oil.
For the people who love coffee, most of them have a favorite brand, even a specific taste. So for Yuban, they have a big market and great opportunity to develop. Yuban coffee is certified by the Rainforest Alliance Certification, which means Yuban coffee is healthier and environment friendly. “Made from 100% premium Arabica beans, YUBAN mountain-grown coffees offer uncompromising, robust flavor and seductive aroma” (Kraft. com). Also, because of this reason, Yuban coffee is more expensive than some other instant coffee, especially its caffeine-free organic coffee.
Therefore, the target customer of Yuban coffee should be those people who are environmentally and health conscious, and willing to pay more money on coffee. In figure 2. 1 of the Appendix, the two charts show the difference purchasing power on different generations. We can see in the first chart that people in age 25-34, 35-44, and 45-54 have the strongest purchasing power. And people now in those ages fall into 3 generations different generations, the Baby boomer (1946-1965), Generation X (1966-1976) and the Millennial Generation (1977-1992).
We feel the older generation being the baby boomers may not care too much about being health conscious, but if we had the time and money we would want to research this to find out if they are a part of our target market. The younger generation, being the millennial generation is anyone currently age 21-34. Then you finally have the last generation, which is Generation X, who includes anyone currently 37-47 years old. So, out of these 3 generations it will be in our best interest to go with the millennial generation. They have good economic condition, and they have good education background.
It means they can afford higher price of coffee, and the Millennial generation will be the most environmentally conscious, which we will discuss in another part of the paper. III. Competitor Analysis Yuban competes in the premium coffee bean and ground coffee market. While there are numerous coffee brands competing in the North American marketplace, most of these compete on a cost leadership strategy.
Only a few competitors such as Green Mountain Coffee, J. M. Smucker’s Folgers are brands which have small premium distributors such as Fair Winds Coffee and Organic Coffee Co., and all compete in the premium coffee category within the environmentally friendly and fair trade category (Agas, 2006; Statistics, 2013).
These brands specifically differentiate on quality rather than cost. Market Share of Main Competitors: The coffee bean and grind industry is highly fractured in terms of market share. While Yuban only has some 1. 93% of the marketplace, companies such as Folgers and Maxwell House have 21. 6% and 14. 62% respectively but with down market products (Statistics, 2013). Thus, it is quite clear that there is extensive room for further growth of the Yuban brand.
Market Structure: The coffee industry is an extremely competitive one. However, the market structure of the coffee industry and specifically the coffee bean industry that provides the raw materials for Yuban could be described as an oligopoly. The specific characteristics of this oligopoly are, however, more reminiscent of a cartel because a relatively small number of suppliers control the supply and distribution of coffee beans globally (Igami, 2011). Consequently, Yuban, which is a brand within the Kraft Foods umbrella, has limited choice in selecting its supplies.
The coffee bean industry was controlled officially through a cartel structure until 1989 under the International Coffee Agreement or ICA but thereafter market competition with new entrants such as Vietnam eroded the control of this official cartel organization (Igami, 2011). Yet, because coffee bean production is largely limited to certain geographic regions, these countries’ governments express a great deal of control over which entities control production and distribution. Competitive Barriers: There are a number of significant competitive barriers within the coffee bean and coffee grind industry.
While virtually any firm can purchase the raw materials or even the finished product in the form of ground coffee, the packaging and distribution of the product is a much more sophisticated endeavor. The most significant competitive barrier is the establishment of a retail distribution channel which requires negotiated shelf space in retail outlets, distribution channels including warehousing and transportation services and product packaging and design facilities (Amato & Amato, 2009). All of these factors require both material resources as well as managerial competencies that must be established prior to actually entering into the industry.
Sources of Competitive Advantage: Yuban’s coffee retail coffee industry has several sources of competitive advantage. The primary source of competitive advantage for Yuban is its parent corporation’s size, scale and revenues. Kraft as a corporation that earned more than $18. 3 million during 2012 and its coffee products which include Yuban contributed an estimated 8% of these revenues to Kraft’s earnings for that period (Annual, 2012). Consequently, Yuban has access to Kraft’s considerable financial resources as well as its developed competencies in the selling and marketing competencies of major food product brands.
IV. External environment analysis Economic environment: The main emerging markets in coffee consumption especially in Asia and South America market under the background of rising, global demand for coffee during fiscal year 2011 to 2012 rose 2%. During the fiscal year 2012 to 2013, global coffee production stabilized at about 146 million bales (60 kg per bag). Coffee is one of the most widely consumed beverages worldwide and in the United States. There are 183 million coffee drinkers in US and a 7% increase over 2011 in coffee consumption.
Technological environment: Modern technology can improve the production process and achieve economies of scale. Ultimately sophisticated technology can help coffee production in many factors, the product brand, and the coffee beans. Ultimetly, the process of producing good quality coffee beans is relatively the same with some secrets of the drying process that differ. In our recommendations, we suggest the introduction of coffee vending machines, which will be an area that Yuban will differentiate itself from the rest of the coffee market.
Political and legal environment: Low production of coffee beans, causing unstable climate could lead to a protectionist producers. So higher import prices to offset the damage caused by the low production. Yuban coffee is already rainforest certified, and thus the political environment is in its favor and will only cause it to grow more to become a more active leader in this political and legal area. Cultural and social environment: More than 50% of Americans drink coffee every day.
This represents more than 150 million daily drinkers. 30 million U. S.adults have professional coffee drinks daily, which includes drinks such as mocha lattes, coffee, mocha coffees, cappuccino, and etc. 65% of coffee consumption in the breakfast time, between meals, with the remaining 5% and other foods. At the same time, 35% of coffee drinkers prefer black coffee.
V. Company Analysis Yuban is an inexpensive brand of South American coffee. Comparing the same kind of coffee, Yuban provides lower price coffee than other brand in the market. Though Yuban coffee offers a lower price, it also emphasizes the quality of the product. Strength: Yuban provides 100% Arabica beans which are the finest coffee beans.
To support the high quality coffee beans, the company gets the Arabica beans from some of the best coffee growing regions in the world, and the highest quality coffee beans are sourced from some of the finest beans grown in Central and South America. Thus, Yuban will continue to be made with 100 percent Arabica beans but not 100 percent from Colombia, and some of them from Brazil, Peru and Nicaragua and so on. In addition, to avoid ruining the coffee’s flavor, Yuban used a sugar and egg glaze on the beans in a roasting process, ensuring to keep the flavor of the beans a rich taste.
Currently, Yuban is owned by Kraft Foods which is the world’s biggest buyer of Rainforest Alliance-certified coffee. And Yuban has been granted certification with the Rainforest Alliance in 2006. It means that there are at least 30% of its beans are organic. According to the certification, Yuban not only uses environmentally friendly farming methods, it is also required to provide a fair system to worker and efficient farm management. It is to keep the product quality in a high level while still supporting the team who is responsible for growing and protecting Yuban coffee beans. Weakness:
Yuban does not have its own official website. If people want to buy Yuban coffee, they can only purchase it off of websites like Amazon and of course super markets. In a shopping website like Amazon, there are many different kinds of coffee brand, not just Yuban coffee. In fact, if people buy an instant coffee or coffee beans, most of them have a particular brand they buy and will not search another brand’s product. Consumers just focus on what they need and in this situation Yuban is not targeting its target customer because it is sharing the arena with many other coffee options available too.
Yuban also does not have a renowned brand of coffee name or customer loyalty. An official website is useful to let customers focus on your brand’s product, and support more detail information about your company. It is an image that you are selling the customers. Thus, this is a weakness for Yuban coffee. Opportunity: People lifestyles are changing because more and more people enjoy drinking coffee, especially when humans reach a certain age in their life that is acceptable to drink coffee. Yuban can use the change of lifestyle trend to promote its coffee.
After all, Yuban coffee is historic brand in coffee market, and it will give consumer confidence to taste its coffee. Thus, it is a good chance to increase the market share. Moreover, Yuban is owned by Kraft Foods which is one of the top 500 companies in the world. It can use Kraft Foods’ awareness and resources to attract more customers, because people may know what Kraft Foods is, but they may not know what Yuban is. Thus, Kraft Foods can support the confidence for the consumer, when the consumer consider whether to buy Yuban coffee or no. Yuban coffee also does not own different kind of coffee products.
It keeps the style of traditional instant coffee, and launches several different types of coffee to suit customer preferences. So far, there are no other products other than instant coffee or whole coffee beans. Regardless of the season Yuban coffee products do not change where as some other coffee brands may offer different roasts or blends. There is an opportunity here because it can develop some new products which are based on 4 seasons a year. This can help attract more potential customers if we offer something different from time to time but still maintain our original product.
Yuban coffee is also not packaged with much innovation to differentiate itself and sell. Yuban can increase market share through diversifying the products and also focusing on the packaging to offer a design that matches the purpose of it. Threat: Yuban coffee is certified through the Rainforest Alliance, but that only guarantees 30 percent of the beans in any package of Yuban coffee are organically grown. It means that there are 70 percent of Yuban coffee product that do not probably come from ecologically-sensitive farms.
Customer may focus on the 70 percent of Yuban coffee product and worry about the quality of them. Yuban strives to support lower price and high quality product, but the organically grown coffee beans are more expensive than coffee beans that are not organically grown. If more and more customers pay more attention to this, Yuban coffee will lose some customers. Thus, this is one of the threats for Yuban coffee. What’s more, in the external environment, the economic recession will reduce customers’ demand of coffee, and there are many competitors in the coffee market, such as Folgers, Maxwell House, and Nescafe.
However, Yuban coffee does not focus on the promotions or advertisements. It will affect the company’s business. It probably reduces its sales and profits, even market share. Thus, Yuban must confront these problems, and how to solve them. VI. Marketing Information Requirements In our research, we learned that Kraft Foods has a wide portfolio of recognized roast and ground coffee brands that is unique to every type of coffee customer. Their portfolio includes Maxwell House, Gevalia Kaffe, Yuban, and Cafe Collection.
Yuban coffee is made from 100% premium Arabica beans, is mountain grown coffee which offers uncompromising, robust flavor and seductive aroma. According to the Kraft food website, Yuban coffee is made to appeal to those consumers who demand environmentally conscious products. Thus, Yuban coffee is perfect choice for customers who want to make a difference in the world. This strategy of marketing Yuban coffee to the environmentally conscious is part of our objective, however, Kraft foods has not differentiated who the environmentally conscious really are.
We discussed earlier who our target market included, but let us take a closer look and understand them and their habits better. In a study conducted by Generate Insight (2009) “69% of millennial’s surveyed expressed genuine interest in the environment, but they also admitted to a lack of personal involvement in green-related activities. In short, this group understands the why but is unsure of the how” (Gaudelli, 1). Thus it will be our job to tap into how they can be a part of the green movement.
If we had the time and money, which Kraft does have, we would recommend doing marketing research on the three generations which include gen x, baby boomers and the millenials to understand their buying habits especially when it comes to choosing an environmental conscious product over one that is not. VII. Marketing Mix Product: The package of Yuban coffee suggests that its drinkers can have great tasting cup of java and feel that they are participating in doing something great for coffee farmers as well as the environment. Yuban is grown according to Rain forest Alliance Certified standards and also applies organic coffee beans.
Therefore, the product has two benefits, being better for the rain forest and world, and is also organic, which means you can feel really good when you drink Yuban. The package description also comprises information of there being a minimum of 30% Rain Forest Alliance Certified Coffee in each bag which is supposed to help in conservation of the environment as well as support coffee farmers (Cliath, 2007). Yuban coffee has a very distinctive smell than any other coffee. It has a fresh and pleasant smell, loaded with a fresh ground coffee bean fragrance.
It is mild and has no bitter after taste (Cliath, 2007). The introduction stage is the first stage in the life cycle where the coffee was introduced to the market. At this stage there were low sales with high retail prices. Then there is the growth stage that is characterized by rapid increase in sales. This happened when the Yuban coffee was just introduced to the market. It is believed by some industries that Yuban coffee is still in the growth stage, signs indicate that it is in the maturity stage. In the maturity stage, there is high brand awareness, high distribution, and lower prices.
Yuban coffee is believed to be in this stage (Cliath, 2007) however, we feel differently about this. We feel that Yuban can be reintroduced into the market with our recommendation and back track to the introduction and growth stage once more. The coffee is packaged in what seems to be a 12 ounce bags. Today it is packaged in the traditional preserved coffee containers, or in coffee cases. Coffee cases are individually sealed cups of premeasured grounds, designed for use in one cup coffee makers. They are packaged in reasonable pouches for convenience and freshness and the label also contains a K for Kosher on the outside.
There is no indication through whether the bag is made of recyclable material or is (Cliath, 2007). Thus Yuban is not differentiating its packaging in relation to its purpose either. Customer service is required for the coffee brand so as to get the feedback from the customers on what they need improved. The product also does come with a warranty from the company. Customers are assured of the quality in the product. Place: Some products need much less market exposure than others. An ideal market exposure degree makes the coffee available widely enough to reach the target customer’s needs.
This however, should not be exceeded. The ideal exposure degree involves intensive distribution, selective distribution, as well as exclusive distribution (Cliath, 2007). Yuban coffee is distributed both at the wholesale and the retail level. It distributed all across nations of the world. One is likely to get Yuban coffee at the supermarkets, retail shops, and coffee shops. It is also distributed directly by the company to the wholesalers. The product is aimed at individuals who feel that they are participating in the preservation of the environment and minimize or stop further destruction to the rain forest (Cliath, 2007).
With our recommendation of introducing the Yuban vending machine, placing these machines in call centers across the nation, colleges and universities will be another way to introduce our environmentally conscious product to our target market. Promotion: The promotion objectives are to get customers to remain committed to buying environmentally conscious products and our customers will feel like they are doing their part in sustaining the world and environment through their purchase of Yuban coffee. Promotion Blend:
The advertising plan will focus mainly launching a website for Yuban as well as its own Facebook, YouTube and other media site promotions. Though print advertising can be very beneficial we will try not to dive too deep in this area as we are promoting an environmentally conscious product and want to track our carbon footprint. Our copy thrust will be more psychological to ensure that customers are aware that they are doing the right thing by choosing to buy Yuban coffee. Personal selling can be used especially if we show customers who and where the original Yuban coffee beans are grown and cared for.
This can be demonstrated through videos on YouTube and also shared on our Facebook page and website, similar to what Kashi does with their cereal products. Yuban can initiate a reward system that if their coffee packaging is recycled to certain grocery stores they can get a discount on the next Yuban coffee product they buy. Again here, customers can feel good about this buying process. Publicity will be used when we introduce Yuban coffee in the coffee shop recommendation through Tom n Toms and Urth Cafe. It will become recognized as the coffee used in these shops and slowly grow to the coffee used in customer homes and so on and so forth.
Price: The demand for an entirely organic coffee is price sensitive because the cultivation of organic coffee is difficult. Thus, if we can figure out what the minimum requirements are to be certified as organic in FDA standards and such, then maybe 30% is good enough and we do not have to promote that our product is only 30% organic, and we can call it entirely organic if the requirements are not demanding. The pricing strategy for Yuban would be price slightly higher than competitors such as Folgers but only because of the environmental work that goes into sustaining what Yuban believes in.
Also, by pricing our coffee slightly higher we can including something in our promotion that a part of the revenue from sales is pumped back into the environment to fix what matters most in the world environmentally. Yuban can offer discounts if their packaging is recyclable or reusable. We may be able to start an imitation to return Yuban coffee cans or jars to grocery stores to get a discount on their next Yuban purchase. This goes in line with what Yuban is all about and is also a discount to the customer which will get them to continually buy our brand of coffee. VIII.
Recommendations and Implementation Brand recognition is very important and closely connected to the implementation of our recommendations. We recommend that Kraft first redesign and assign Yuban its own website so customers are aware of the different product offering and what this brand of coffee is all about. In the Internet age, people have always enjoyed looking on the different websites for the information they can find on each individual product, however, there is no independent or well put together website for Yuban coffee, which will make it difficult for investors to learn more.
For example, Folgers which is another brand of coffee that everyone knows quite well due to the Folgers jingle actually has its own website despite the fact that it is a part of the Smuckers Company. Kraft food also has a portfolio of coffee that is targeted to different customers, however, Yuban has not been given that independence or leadership to stand alone or gain reputation. Maxwell House Coffee, the second of the 4 coffee brands/products of Kraft Foods has its own website, Facebook, and YouTube. Though Yuban is a product of Kraft Foods, Yuban has a poorly designed website with little information on it at all.
Also, the Yuban page in Kraft Company official site is very simple. Yuban is a coffee made under the Kraft Food line, and it appears they are unwilling to pour in the proper funds needed to fund a separate Yuban Coffee Website. Customers are considered as the backbone of any businesses. Hence, Yuban need to be well aware of their customers’ satisfaction for their products or services, especially in their efforts to track the ‘environmentally conscious’ customer base. Also, Yuban should conclude problems reported by customers and try to fix the problems, which benefit the company’s further development.
In addition, another recommendation for Yuban is that the brand can also develop vending machines that will provide hot coffee and specialty drinks with the touch of a button or two. Yuban is well known as a ground coffee product. However, making a coffee run to the nearest Starbucks or local coffee shop is not an option during the day. Hence, our recommendation of vending machines is also a very convenient to those customers. Especially if the machines are placed in locations such as college hallways and buildings where students are only allowed enough time to grab a quick beverage or snack during their short break.
Placing the vending machines in call centers where hours of operations usually start early in the morning and are located in large multi-level buildings that grind and brew a cup of fresh coffee is would be a strategy which would allow Kraft foods to tap into the coffee machine business because not only would Kraft supply the coffee, which is Yuban in our case, but it would also sell the machine that brews the coffee to these business, or collect some sort of rent or lease for having it.
Our third and final recommendation would be to become the coffee supplier of coffee shops such as Tom n Tom’s and Urth Cafe. Tom n Tom’s has an interesting location base in Los Angeles, Australia, Singapore and Thailand. They do not however carry or brew good quality coffee. Thus, by becoming the sole coffee provider for Tom n Tom’s will be a win-win situation. Urth Cafe is a cafe which offers exclusively organic coffee and tea, Yuban would fall into this category and could provide lower prices than other organically grown coffee.
Though Urth Cafe currently only has location here in Los Angeles, it is only an example of the position that Yuban coffee can take in the market. Appendix Figure 2. 1 Figure 8. 1 Research and make improvement Time Event Cost Note One month Redesign a new website $30,000 Two months Shot video on You Tube $50,000 Three months Research and make improvement Included in customer service Long time Customer service department 200,000 per year Work Cited Agas, G. (2006).
Conscious choice: Yuban coffee. Natural Health, 36(10), pp. 20-24. Amato, L.
H. , & Amato, C. H. (2009). Changing retail power and performance in distribution channels. International Journal of Retail & Distribution Management, 37(12), pp. 1057-1076. Annual form 10-K. (2012). Kraft Foods, Investor Relations (online).
Retrieved from: http://ir. kraftfoodsgroup. com /sec. cfm Igami, M. (2011). Oligopoly in International Commodity Markets: The Case of Coffee Beans. Available at SSRN 1531401. Statistics and facts on the coffee market in the U. S. (2013). Statista Research Publications, 01(05), pp. 1-72. E-imports.
Retrieved from http://www. e-importz. com/Support/specialty_coffee. htm Kraft. (n. d. ). Your customers care. about the planet. about people.. Retrieved from Oches, S. (2012, November). Meet your customer. Retrieved from http://www. qsrmagazine. com/consumer-trends/meet-your-consumer Cliath, A. (January 01, 2007). Seeing Shades. Organization & Environment, 20, 4, 413-439. Gaudelli, Janis. The Greenest Generation (April 29, 2009).