Marketing Strategy Presentation July 14, 2009 Stuart GSB | MBA 583 Professor Goldhar Judd Morgenstern Amanda Wirth
Executive Summary
Crop to Cup is positioned within a competitive and growing industry of socially responsible, niche coffee offerings. In order to gain a sustainable advantage they must focus their differentiation strategy to stand out from competitors. A marketing strategy that reinforces the brand and leverages new opportunities for growth will support this differentiation.
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Industry Trends Some key trends relevant to the coee industry
Consumer Trends Energy, Sustainability, Transparency, Single Origin, Gourmet, Exotic Origins, Fair Trade, Antioxidants Private Label Purchasing private label is a brand-driven decision based on emotional connection Store-brand purchases up 12% ($80B)* Increased likelihood of private label purchases (60% of all shoppers)* Supply Chain Management Increased awareness of Fair Trade Better use of technology to track products from source to sale Social Business Practices Conscientious consumers demanding corporate responsibility Socially conscious branding as a competitive advantage 3
*Source: IRI 2009 Private Label Report
Relative Market Size Markets are converging as premium and gourmet coffees find more growth and channels Generic
Expected Augmented
Potential
Mass Coffee Maxwell House Folgers Green Mountain
Premium Grocer Starbucks Millstone
--Shrinking
--Growing
Gourmet Intelligentsia ($12M sales) Peet’s ($290M sales) --Growing 4
Niche Crop to Cup Just Coffee
--Beginning
Coffee Industry Overview Specialty coffee in the US has grown large and is approaching a “tipping point”
US Coffee Industry $28B
US Grocery Coffee $3.1B
$0.92B
$12B
$26B
Traditional
$2.19B
Specialty
All Other 5
Specialty *Source: IRI for 52 week ending 12/28/08
Product Offerings Companies continue to enhance offerings, so attributes that once differentiated are now becoming expected
Potential (differentiators)
Augmented
Expected
• Source
• Custom blend
Transparency • Anti-oxidants • Bio-diversity
• Financial
• Environmental
• Tracing
welfare • Sustainability
• Service
• Fair Trade
• Exotic
• Social
• Gourmet
responsibility • Organic
• Single origin
• Quality • Price
Generic
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Transparency
Business Opportunities Various options exists, but strengthening the brand will create opportunities in retail and co-branding Roaster/Broker
Private Label / Co-Brand
Retail
Capabilities / IT Supply chain management Resources
Supply chain management Strategic partnerships Brand equity (co-brand)
Strategic partnerships Brand equity Meaningful differentiation
Customers
Small: various websites Medium: Buyer’s Club, Professional Communities, WOM Large: Referral
Organizations needing to garner corporate responsibility
Socially responsible retailers Niche / boutique
Competition
Cafe Imports Royal Coffee Sweet Maria’s Sustainable Harvest
Coffee Holding Company, Inc Stonewall Kitchen Allcoffee Private Label Roasters Allegro Coffee Company Others
Many small, relatively unknown players
Pro (+)
High-service business Leverages supply chain skills May scale quickly
Faster scaling Dedicated and immediate channel access
Brand equity resonates with customers Leverage Crop to Cup brand Greater ability to set prices on fragmented buyers
Con (-)
Subject to high supplier and buyer influence Margins get squeezed Not as defensible / more imitable
Lower margins Heavy buyer power and influence Lower brand differentiation / identity
Hard to get traction Fragmented buyer base requires management Harder to scale Highly competitive
Relationships
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Company Practices Previous dierentiation tactics are now becoming standard practice
Sustainability
Fair Trade / Direct Trade
Community Support
Source Transparency
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Financial Transparency
Tracing
Insights from Analogous Models Meaningful attributes of successful social programs
• • • •
• • •
• • •
Communicates obvious benefits Employs intuitive model (1 for 1) Provides tangible support symbol Captured viral, grassroots movement
Intuitive Tangible Social
Engages consumer in production Humanizes the producer (Grandma) Offers feedback / direct connection
Personal Customized Fun
Plays into existing consumer habits Appeals to altruism, and altruism alone Employs intuitive messaging
Easy Simple
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Insights from Retail Visits Insights from visits to Mercury Cafe, Swim Cafe, and Green Grocer
• Service goes a long way; personal relationships
matter • Retailers need education • Consumers value (the perception of) Fair Trade • Exotic location, flavor, quality, not as important • “Local” can mean Chicago business • Opportunity to align with psychographics of
campus stores and college students
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Marketing Strategy: Overview
Goal Establish position as leading socially responsible coffee provider
Strategies Strengthen the Crop to Cup brand and build awareness
Tactics • • •
Drive significant sales growth and customer acquisition
Increase sales and loyalty from retail customers
• • •
•
Enhance online offering & promotion / engagement
• • • • •
Expand distribution through co-branding opportunities
• •
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Examples
Distinguish Crop to Cup through social program Strengthen message consistency Promotional pop-up locations
• • •
20/5/10 program reframes Slogan, package redesign, branding mockup Blue Bottle kiosk
Strengthen in-store merchandising Educate retailers Highlight customer values (FT, organic, social commitment) on packaging and materials Target (Big 10) campus stores
•
Collateral; bags
Promote online sales through gifts and subscriptions Launch Crop to Cup Co-Op Develop Word-bank concept Offer custom blends Target corporation HR staff
•
Diagram of co-op coffee subscription
Target potential partners that need to invest in social equity through Crop to Cup program Clearly communicate value proposition through proposal packet
• •
List Proposal packet mockup (new branding, examples of successful tactics including label, customer testimony, vale of brand offering, information on PL market, purchase obligations)
Reframing 20/5/10 Example messaging for a new social program
Crop To Cup To Farmer
• • • • •
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Communicates obvious benefits Employs intuitive model Provides tangible support symbol Captures viral, grassroots movement Engages consumer in production Humanizes the producer Offers feedback / direct connection Plays into existing consumer habits Appeals to altruism, and altruism alone
Reframing 20/5/10 Example messaging for a new social program
Micro-loans to Micro-lots
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• • • • •
Communicates obvious benefits Employs intuitive model Provides tangible support symbol Captures viral, grassroots movement Engages consumer in production Humanizes the producer Offers feedback / direct connection Plays into existing consumer habits Appeals to altruism, and altruism alone
Reframing 20/5/10 Example messaging for a new social program
Every time you purchase a cup...
a farmer gets his wings
• • •
Wings are investments that go back into coffee supplier communities to help them rise up
• •
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Communicates obvious benefits Employs intuitive model Provides tangible support symbol Captures viral, grassroots movement Engages consumer in production Humanizes the producer Offers feedback / direct connection Plays into existing consumer habits Appeals to altruism, and altruism alone
Introducing the Kiosk Store A cost-eective trial store to promote brand awareness
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Rebranding the Package Principals and ideas to leverage branding and package
Principals: Embed story of farmer on package Employ message consistency Portray hand-made quality Ideas: Burlap sack packaging Blend profile card Personal family stamp Farmer name blends
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Enhancing the Online Offering Integrating the Crop to Cup Co-Up with viral gifting
Crop to Cup Co-Op Gifting Start a Crop to Cup Co-Op
Invite some friends
Grow your Co-Op and earn discounted coffee and prizes
croptocup. com
Gift Crop to Cup subscriptions
Interact online to tailor subscription to taste 17
Thank You.