MG 511 Strategic Marketing

Case Study: Marketing Planning at ‘Just Us! Cafes’

Lecturer: Ms. x Date: 20th Dec. 2010

Name: Seánpaul Walsh Student No: X

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Contents:

1.0 External Analysis 3

1.1 Competitor Analysis 3

1.2 Specific Competitor: Kicking Horse Strategy 4

1.3 PEST 4

1.4 Porter’s 5 Forces 4

2.0 Internal Analysis 5

2.1 Value Chain Analysis 5

2.2 BCG Matrix 5

2.3 Revenue Analysis 6

2.4 Geographic Concentration 6

3.0 SWOT Analysis 7

4.0 Key Issues 7

5.0 Strategic Alternative (A) 7

6.0 Strategic Alternative (B) 8

7.0 Strategic Alternative (C) 9

8.0 Bibliography -

9.0 Appendices -

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1.0 External Analysis

In order to develop effective strategies Just Us Café’s are required to examine the

external environment in which they operate. I have carried out the following analyses:

Competitor Analysis

Specific Competitor: Kicking

Horse

Pest Analysis

Porter’s 5 Forces

1.1 Competitor Analysis

Competitor Channels Locations No. Shops

Kicking Horse Coffee Shops, Gourmet Stores, Restaurants

West Coast, Canada Quebec & Ontario

N/A

Kraft Foods Stores, Universities United States Mainstream

P&G Millstone Mainstream Canada & United States Mainstream

Nestle Mainstream Canada & United States Mainstream

Lowblaws Private Label Loblaws Stores Canada Mainstream

Just Us! Coffee Shops, Universities, Gourmet Stores, Supermarkets

Nova Scotia, Quebec & Ontario

4 Coffee Shops & On The Shelf

Trident Bookseller & Cafe Coffee Shop Halifax, Nova Scotia 1

Java Factory Coffee Shop Nova Scotia-Halifax, Darthmouth, Upper Tantallon

3 Coffee Shops

Tim Hortens Restaurant Nova Scotia General-Wolfville(2), Halifax(21)

170

Second Cup Coffee Shop & Retailer Canada General, Nova Scotia(6)-Halifax(5)

360

As we can see from the above table, JU have several competitors across the line

in the local market, Nova Scotia, and the wider market, Canada and US. Bergen

and Peteraf (2002) suggest a two step competitor analysis framework when

comparing competitors. Within their framework they suggest that from the

outset a company must recognize and classify all competitors. By doing this JU

can actually identify both direct and future potential threats to their company.

See Appendix A. This in turn will alert them to the most immediate threats short

term and long term as well assist formulating a strategy. The second stage of the

framework model is concerned with the evaluation of the competition’s

resources and the prediction of rivalry. They discuss how by understanding your

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competitor’s resources you can predict the scale of future threats. Therefore for

JU, they need to understand who they are competing with within the local

market and big players entering that market, i.e. Trident only have one shop so

JU could in turn be a threat to them whereas Java factory could be a threat to JU.

Bergen and Peteraf (2002) also note that if two firms within the one market have

similar resources, which would appear to be the case for JU’s local market of

Nova Scotia, then this should in turn allow them to satisfy the same customer

needs, therefore making the need for strong branding and differentiation

essential.

1.2 Specific Competior: Kicking Horse

Another important form of analysis is to examine other company’s strategies to

see what has worked and what hasn’t and the risks/results involved. For JU, I

feel looking at Kicking Horse is a very good way to test out future strategies.

As stated within the case, Kicking Horse is a major competitor in the Canadian

market. They are based however on the West coast of Canada, British Columbia.

As a method of differentiation, the company leveraged the heritage and local

aspect of the product in order to expand i.e. using the local names and culture to

differentiate their product. They also used endorsements with NGO’s and an e-

commerce site to further promote their brand. Through these tactics, it provided

Kicking Horse an established platform within their local market and an

opportunity to expand globally into the US and Europe. This strategy proved

very effective and JU should examine it carefully.

1.3 PEST Analysis

See Appendix B

1.4 Porter’s 5 Forces

The most powerful and widely used tool for systematically diagnosing the

principal competitive pressures in a market, and assessing the strength and

importance of each, is the Five Forces Model (Porter 1979).

See Appendix C

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2.0 Internal Analysis

JU must not only understand the industry and market they are operating in but also

their own internal capabilities and strengths/weaknesses. Therefore we must conduct

an internal analysis of JU. I have carried out the following analyses:

Value Chain Analysis

BCG Matrix

Revenue Analysis

Concentration Examination

2.1 Value Chain Analysis

See Appendix D

2.2 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.

After careful examination of JU’s product offering and Appendix 1 of the case

study I believe that they have:

Stars: Coffee & Tea

Dogs: Sugar

Cash Cows: Cocoa

Coffee and Tea appear to be the largest growers

in the trade figures with significant growth rates

in volume averaging approximately 15% across

both categories over a four year period. Perhaps

JU should look at the profitability of the sugar market and consider placing less

emphasis on it.

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2.3 Revenue Analysis

Quarter Grand Pre Wolfville Barrington Spring garden

Q1 $134,625 $123,912 $90,562 $123,709

Q2 $175,217 $138,898 $104,877 $148,356

Q3 $215,909 $142,984 $112,504 $152,758

Q4 $213,673 $134,205 $111,142 $180,625

By examining the revenue streams we can identify the weakest and strongest

times of year and target our marketing activity directly at these in order to

strengthen sales. It is clear from the table that Q1 is the weakest time of year and

perhaps some new innovative strategies could help increase sales here. Q3 is the

strongest period of the year and I believe that this is accountable to the summer

tourists.

2.4 Geographical examination

Another analysis I conducted was to look at the concentration of the JU coffee

shops and the potential markets

available to them. The illustrations

below show the concentration of the

shop locations. It is obvious to locate

in the more densely populated

areas; however the company could

be missing out on further

opportunities. Both shops in

Wolfville are within a mile radius of

each other and in Halifax they are

within 10 minutes walking distance

of each other. JU must consider this

when planning growth or expansion as they are reaching a limited audience

when so clumped together.

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3.0 SWOT Analysis

See Appendix E

4.0 Key Issues

Increase Marketing Spend

Targeting new markets or new buyers?

How can JU build on the assets they have in place already

Product Line and profitability

Need for clear MARCOMS

Increase volumes purchased in existing channels

Maintain/defend market share or attempt to grow

Assess Retail Channels and feasibility of Long term

5.0 Strategic Alternative (A) “Joint Venture/Strategic Alliance”

The first strategic alternative I propose is to attempt a joint venture/ strategic alliance

with a fellow competitor with similar values. This strategy could help JU with resources

and in increasing market share in the local market as well as providing a platform for

expansion outside the maritime states.

Sherman (2003) states that one of the possible reasons for a joint venture or strategic

alliance is to widen or integrate product lines. As we have seen from the SWOT analysis,

new product lines would provide JU with new opportunities for revenue. However an

important factor to consider when considering a joint venture or strategic alliance is to

give careful thought to the type of partner you are looking for and what resources you

and the partner will be contributing to the newly formed entity (Sherman 2003). From

careful examination of competitors in the local market I believe that a joint venture with

Kicking Horse would be most effective. The reasoning behind this is because they are

located on the opposite coast of Canada and have the same core values as JU. There are

mutual benefits for both parties by entering this agreement.

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Just Us! Kicking Horse

+Access to Distribution

Channels

+Online & Marketing

Expertise

+Greater access to

Eastern Market

-Con’s outweigh Pro’s

+Expansion Nationally -Loss Of Control +Huge Publicity Opps e.g.

JUDES

-Upset Customers

+Positive Awareness of

Fair Trade to Nation

-May discontinue some

lines

+Innovative Products -Reduces Exclusivity of

upscale food retailers

In terms of feasibility of this strategy, I believe that it would be very beneficial for both

parties however I question the reality of it. In order for this strategy to be implemented

I believe that there would have to be more in the agreement for Kicking Horse to get on

board. I also acknowledge that this strategy may have knock on effects on JU. With a

joint venture, customers could perceive the company as ‘selling out’ e.g. similar to

Innocent smoothie Coca Cola purchase. This in turn could affect the loyal customer base

as many customers may be attracted to the idea of the company being a small company

from a local town. Another knock on effect could be from the employees also. As stated

in the article the employees are all happy to be part of something good and although the

values will remain the same, management may change through the deployment of this

strategy as well as the direction of the company which could upset employees and in

turn reduce the workforce or productivity levels.

Therefore I would not recommend this strategy.

6.0 Strategic Alternative (B)

The second strategy is to remain in the Nova Scotia market and defend what JU already

has, no expansion.

The objective of this strategy is to continue maintain the 4 coffee shops and maintaining

the relationships with retailers. The benefits of this are that the company can focus on

its service offering and finding new product lines. However because of the competitive

environment it is not recommended and therefore is not the selected strategy. However

one solution to combating the intense competition in the market is to use a counter-

offensive defense as suggested in Wilson and Gilligan, 2005. This strategy of defense is used

in industry when a competitor launches an attack on the market. JU for example could

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•12-18 Months

•Online

•MARCOMS Mix

Improve Brand Performance

•New Units

•Increase Reach

•Become NS Market Leader

•48-52 Months

Expand Nova Scotia •52-60 Months

•Continue To build Awareness

Maintain

•After 60 Months

•Closer Proximity First

•The Brand From Nova Scotia

Expand Mainland

Improving Brand

Performance

Raise Volume

Brand Revitalisation

Brand Repostioning

Improve Productivity

Raise Prices Cut Costs

either meet the attack head on or look for a gap or a weakness in its competitor’s strategy

through promoting their own strengths and highlighting the competitor’s weaknesses.

7.0 Strategic Alternative (C)

“Improve Brand Performance & Expand Long Term”

The chosen strategy that I have selected is a five year strategy. The concept behind

the strategy is to improve and build on the existing brand within the local market

with expansion plans 1) in Nova Scotia and 2) to mainland Canada.

As you can see from the above figure my strategy follows a four step process.

Improve Brand Performance:

At present as mentioned

earlier, JU are a relatively

recognizable brand in the

Nova Scotia market, Wolfville

& Halifax. I suggest that they

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aim to improve the brands performance. Doyle & Stern (2006) suggest the following

framework for improving brand performance.

For JU I suggest that they look to reposition the brand and leverage the story behind

the brand as their pull. As mentioned earlier I would also recommend that they aim

to cut costs through examining their value chain.

When repositioning it is crucial for JU to tell the story of the coffee fair-trade process

from start to finish and emphasize the fairness in the whole process thus leveraging

the brands personality. Brand personality can be defined as the “embodiment of

personality traits of the consumer in the brand itself” (West, Ford & Ibrahim, 2006;

P259). By leveraging this more as part of the offering JU will more be instantly

recognized by customers which is crucial. This story telling will also differentiate JU

from other fair trade competitors as well as educate the public, one of the

management team’s goals. By using Aeker’s 1996 model for brand identity JU can

understand how the customer perceives them and position themselves adequately.

See Appendix F.

According to Ries and Trout (2001), the biggest challenge to win customers over is

within the mind of the customer before they even decide they want coffee. JU should

again as mentioned play on telling the story to be instantly in the customer’s mind.

They should also adopt a catchy memorable slogan, again reflecting their brand

personality.

As mentioned above, JU need to develop a clearer MARCOMS model. Marketing

communications (MARCOMS) refer to four different types of communication

channels – advertising, public relations, personal selling and sales promotion.

MARCOMS give organizations the opportunity to establish, in this case strengthen, a

strong position in the market and assert their distinctiveness and also ties into what

the client wants to say as opposed to execution, which relates to how the message is

received. (West, Ford and Ibrahim 2006). There are many advantages of a successful

marketing communications strategy such as cost savings, which is crucial to JU’s

needs.

I recommend the following:

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Advertising - This marketing channel aims to inform or influence one or more

persons about the product or service sold. Advertising is a long-term marketing tool

that can increase the brand awareness through television, radio, internet and press.

Advertising used in these mediums can encourage peoples’ interests and also sales. I

believe JU currently relies on the PR channel too much and should realign their

efforts with more emphasis on advertising, with online particularly. Online is

particularly effective at strengthening brand equity which again assists the

strengthening strategy (Wakolbinger et al., 2009). I feel the opportunity that social

media provides cannot be underestimated and can tie into using their loyal

customer base as brand ambassadors on facebook and hopefully in turn creating a

brand community. I also recommend that JU examine the online community life-

cycle suggested by Iriberri and Leroy (2009). There are 4 stages in the life cycle of

an online community, inception, creation, growth and maturity. By understanding

the phases of this life-cycle JU can guarantee that the rate of growth of their online

community.

I believe that increase in advertising will generate more traffic to the website and

therefore they should make the site more interesting. An interesting feature I would

feel would be online videos of the product process on the website from start to

finish. Another simple low cost form of advertising and using technology could be a

members club. By establishing this in the online environment they could then use

Electronic newsletters to keep in touch with existing customers. The benefits of

electronic newsletters to customers are simply that they can be issued in large

quantities on a low-cost basis and can reach a large portion of their target market.

They could also provide JU with important feedback regarding innovating their

product i.e. new flavours or lines. Once they have built their online base up enough I

think that e-retail could become an option for JU.

Public Relations (PR) – This marketing communication channel can establish a

mutual understanding and reciprocal good will between itself and its stakeholders.

JU already as stated earlier have a huge emphasis on PR through cultural events in

their coffee shops and talks as well as receiving awards. I believe it is a successful

route to take but that for the current economic climate it is very expensive in terms

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of effectiveness on sales, ROI. Perhaps as above, money would be better spent in

advertising and more low cost events in –house e.g. book clubs.

Sales Promotion – Sales promotion can be used as a strategy to encourage customers

to make a quick purchase. Using this marketing channel only has short-term effects

on sales. Perhaps rewarding loyal customers could be a method of boosting sales in

Q1 the most difficult period for JU. I believe that by offering samples or coupons in

Q4 people may come to redeem them in Q1. Bawa and Shoemaker (2004) highlight

that ‘free samples’ also aid brand recognition and have a measureable long-term

effect on sales up to 12 months after the initial after the promotion.

This brand improvement phase I estimate will take approximately 18 months to

implement considering the scale.

The next step is to expand within Nova Scotia and dominate the market. As

mentioned earlier there is a highly concentrated location of shops. I suggest opening

new coffee shops but in more dispersed locations, thus increasing reach and aiding

domination of market. See below.

I suggest opening simple

stores that serve coffee and

not acquiring old cinema etc

as that is too costly. The

purple boxes indicate new

potential locations and the

green indicates a tourist

hotspot. I estimate that these

new stores will take the

strategy up to its 48th 52nd

months to be up and running

and profitable. It is also

important to note that this expansion method allows close relationship management

as they are relatively located to each other as opposed to in Toronto. By then the

brand should be the strongest in the Nova Scotia Market. Fan (2005), suggests that

strong widespread branding represents and promotes lifestyles and that brands

themselves become part of the customers’ culture, therefore I believe that by then

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people of Nova Scotia will associate JU as the coffee of Nova Scotia. This can also tie

into the retail branding as people will then be buying an experience of Nova Scotia.

The third part of my strategy is to maintain once these units are open and monitor

performances whilst building awareness. At this stage I believe that JU should be

equipped to enter the Canadian mainland market as the brand will be strong enough

to compete outside of Nova Scotia and awareness will be high enough to open stores

in larger cities thus the fourth step.

I feel that this strategy will be effective as it is long term and cost conscious in the

short term. As suggested in the article, there is a 20,000 budget however it could

potentially be 7%of the overall revenues thus being $161,276. The latter would be

sufficient to carry out this strategy with resulting increased revues funding the new

shops.

.

Product

Maintain and Expand

Focus on coffee/Tea For Expansion

Promotion

Loyalty Scheme

Price

Maintain Price

Place

Continue Retail Channels

More Coffee Shops

Just Us!

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7.0 Bibliography

Books:

Dess G.; Lumkin G. & Taylor L. 2004. Strategic Management, Text and Cases, McGraw-Hill.

Doyle & Stern, (2006), ‘Marketing Management and Strategy’, 4th Ed., Prentice Hall.

Keller, (2008), ‘Strategic Brand Management’, 3rd Ed., Pearson Education.

Murray & O’Driscoll, (1996), ‘Strategy and Process in Marketing’, Prentice Hall.

Ries,A. and Trout, J., (2001), The marketing classic positioning: the battle for your mind, McGraw

Hill.

West, Ford & Ibrahim, (2006). ‘Strategic Marketing’, Oxford Publishing.

Wilson, R. And Gilligan,C., (2005), Strategic Marketing Management (3rd Edition), England: Elsevier

Butterworth-Heinemann.

Journals:

Bawa, K., Shoemaker R., (2004) The Effects of Free Sample Promotions on Incremental Brand

Sales, Marketing Science, Vol. 23, No. 3, pp. 345-363.

Bergen, M., and Peteraf, M., (2002), Competitor Identification and Competitor Analysis: A Broad-

Based Managerial Approach, Managerial and Decision Economics, Vol. 23, No. 4/5,

Fan, Y. (2005) Ethical branding and corporate reputation, Corporate Communications: An

International Journal, Vol. 10.

Hanas, J., (2008) Going Green, Marketing News, 2/1/2008, Vol. 42 Issue 2

Hughes, G. and Fill, C., (2007), Redefining the nature and format of the marketing

communications mix, Marketing Review, Vol. 7, Issue 1, pp45-57.

Iriberri, A. and Leroy, G. (2009) ‘A life-cycle perspective on online community success. ACM Computer Survev.41, 2, Art. 11. Sherman, A. (2003), ‘Growth through Joint Ventures and Strategic Alliances’, Fast track Business

Growth, Chapter 21.

Wakolbinger,L., Denk, M. and Oberecker,K., (2009), The effectiveness of combining online and

print advertisements, Journal of Advertising Research, Vol. 49, Issue 3, pp360-372.

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8.0 Appendices

Appendix A: Bergen and Peteraf (2002) Mapping Competitors

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Appendix B: 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 competitor’s. 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.

Pest Analysis

Political -Fair Trade

Economic -Climate

Social-Experience

Technology-Evolving

Manufacturing Technology

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Appendix C: Porter’s 5 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 customer’s 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.

Competitive Rivalry HIGH

Threat Of New Entrants

HIGH

Buyer Power HIGH

Supplier Power LOW

Substitutes HIGH

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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.

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Appendix D: Value Chain Analysis

The Value Chain is a method that can be used to analyze JU’s 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.

The primary activities create value for customers. These activities consist of inbound

logistics, operations, outbound logistics, marketing and sales, and service. At JU, some

primary activities include importing the coffee beans, manufacturing process,

packaging, coffee shop service itself, customer service etc.. These primary activities are

supported by JU’s infrastructure e.g. Coffee Shop Manager Etc. Appendix 2 of Case Study.

The support activities are responsible for facilitating and enhancing the primary

activities. The profitability of JU depends on the relationship between these primary and

support activities. The value chain can help JU define their core competencies. It can

also be reconfigured in order to gain a competitive advantage. This reconfiguration

involves analysing the operating costs and assets that are required for each individual

activity in the value chain. By reviewing the costs associated with each activity, JU can

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Strengths

•Loyal Base

•Customer Engagement

•Multiple Channels

•Reasonably Strong Brand

Weaknesses

•Shops Too Concentrated

•Low Marketing Spend

Opportunities

•Potential for Nova Scotia dominance

•New Fair Trade Products

•Social Media/Online

Threats

•High Competition

•Starbucks

•Lack of clarity on FairTrade

•Clouded Focus

determine which activities are sources of cost advantage or disadvantage when

compared to competitors. An example for JU could be to outsource the packaging

element of their process to save on costs.

Appendix E: SWOT

Strengths:

Loyal Customer Base; JU have built up a loyal satisfied customer base and this is a

very important asset to the company

Customer Engagement: As their stores are quite quirky JU also partakes in a lot of

social initiatives and therefore that is one of the core

strengths of the brand

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Multiple Channels; as the company is a wholesaler also they are using multiple

channels which increases revenue streams. However this

can be a threat also.

Strong Brand: JU has reasonably strong brand recognition within the

maritime states and this again is a crucial asset to the

company’s future strategies.

Weaknesses:

Shops Concentrated: As mentioned in analysis, shops are very concentrated and

thus limits audience and reach.

Low Marketing Spend: At present there is a very low marketing budget spend and

this attitude will prove a weakness if it continues for JU.

Opportunities:

Nova Scotia Dominance: There is an opportunity for JU within the local market for

increased market share as they re one of the leading

recognizable brands and have a foothold already.

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 customer’s feedback at a very low cost.

Threats:

High Competition: As mentioned in earlier analysis, there is high competition

in the industry and also a high threat of substitutes.

Without significant value proposition and differentiation JU

could become a victim to substitutes or competitors.

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Starbucks: Starbucks introduction to Nova Scotia and their new

organic line poses a huge threat for JU as their resources

are far more than JU’s and so Starbucks could soon

dominate local market.

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 JU’s

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.

Appendix F: Aeker’s Model

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