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Introduction
In this report it will be firstly analysed the Coffee-Mate brand and current position on
the market place in the UK based on the information from case of study the CoffeeMate (Kotler at al, 2008). Secondly, it will be given proposals for future strategic
development of the Coffee-mate brand in the UK.
Firstly, there should be asked the key questions in strategic marketing management
(Wilson and Gilligan, 2005).
I.
II.
III.
IV.
V.
The Nestle Coffee-Mate current position on the market is seen by managers of Nestle
as less growth potential than for example Nestle food products. In the result, the
budget for marketing campaigns was minimized, however the budget for ground
coffee increased '43 million campaign aimed at reminding people that instant coffee
is 100% real coffee made from pure and natural coffee beans and nothing else' (Nestle
press releases,2009).
The coffee creamer market has advantages and disadvantages. Coffee creamer
products have a better whitener use than dried or powdered milk, however consumers
sees coffee creamer as something for special occasions but not for their daily coffee.
The market for coffee creamer is complicated with different types of consumer's
behaviour. Firstly, there are consumers who will not use powdered milk or cream at
all. Secondly, there are users who will use powdered milk into their coffee but will not
use cream (the taste is changed). Thirdly, users will use Coffee-Mate only in case of
emergency (run out of milk or cream). Fourthly, there are users who are using coffee
cream daily however consider creamer as a treat. The use of Coffee-Mate correlates
with consumption of coffee in UK. The average consumption of coffee is about 3kg
per head in the UK, which is about 1.5 cups per day which is low compare to Italy,
France or Germany (5kg) and in the Scandinavian or Benelux region (11-13kg)(Kotler
at al, 2008). The national Food Survey suggests that there is correlation between
weekly income and consumption of coffee (the higher income the higher consumption
of coffee). The UK coffee market is up 19% from 2002 (720 million in 2007).
Instant coffee contributes 81% of market share however it can be seen shift from
instant coffee into premium non-instant coffee (Mintel, 2008). On the other hand,
Mintel researchers found that 'one in five consumers agree that it is too much effort to
make ground coffee at home' (Mintel, 2008).
furthermore not all the coffees are made with milk or cream. Thirdly, the Coffee-mate
is not independent product and can be consumed only with coffee.
Customer analysis
The customers of the Coffee-mate are consumers who are buying instant or ground
coffee and using powdered milk or coffee creamer. The survey was done by TGI and
divided consumers into five potential groups for Coffee-Mate. The key variables used
by TGI to segment the market are: income, age, social grade, concerning about health
and environment, shopping activity and budgeting, social places (pubs, restaurants),
brand versus own label, travelling, media (TV, radio, newspapers), number of children
at home, area where they live, level of consumption of Coffee-Mate and creamers and
occupation. TGI user survey divided consumers into five clusters.
Cluster 3: Sarah and Anna - Affluent, Young foodies (Sample proportion: 24.4
%)
Competitor analysis
The main competitors of the Coffee-Mate on the market place are fresh milk and
cream. For the coffee creamer market the main competitors are Compliment, Kenco,
Compleat, own label and others. Coffee-Mate has about 55% market share on the
coffee creamer market. To be successful and better than competitors Coffee-mate has
to concentrate on advantage for example a capacity to replace the milk which the
Coffee-Mate has. To be better than competition it has to be known how the
competition markets their products. The four main questions have to be asked: What
is each competitor's current strategy? How are competitors performing? What are
their strengths and weaknesses? What can we expect from each competitor in the
future? (Wilson and Gilligan, 2005).
marketer then decides which segments present the greatest opportunity - which are its
target markets' (McDonald at al, 2008). Not everyone likes the milk or cream into
their coffee. Therefore, the marketers will divide up the market into the segments by
exploring behavioural, demographic and psychographic differences within buyers
(McDonald at a, 2008). The Coffee-Mate developed strategic marketing to target the
market segment. The particular segment cannot be contented with only one product. If
the Coffee-Mate was targeting only one segment 41% of the 55% (McDonald at al,
2008) the current market share however it will lose 14.5% which is owned by CoffeeMate Lite. The Coffee-Mate has to use multiple segments and obtain a greater market
share of coffee cream market
How might we get there?? Strategic choice - which way is the best?
The American Marketing Association (AMA) in 1985 said "Marketing is the process
of planning and executing the conception, pricing, promotion and distribution of
ideas, goods and services to create exchanges that satisfy individual and
organizational objectives". To achieve the needs of the target segments the right
marketing mix must be developed. The product (Coffee-Mate) has to be accessible in
the right place (distribution), at the right price and in the right time (McCarthy, 1960).
Thomas (1987) also believed that 'the product or services offering of a company or
organization ultimately determines the nature of the business and the marketplace
perception of the business. In this sense it is the core of the marketing management
function'. The product Coffee-Mate will have to satisfy the target segment. In this
case, it will be difficult to satisfy many segments for this reason the preference
segments will be identified - clustered preferences (natural market segments). TGI
user Surveys identified five potential consumers for Coffee-Mate. Based on the
Appendix 3 it can be seen and argued who are potentially the most profitable group
and which should be targeted. It can be said that Dawn and Lisa (young families,
13.9% sample proportion) and Sharon and Tracy (experimentalist, 15.4% sample
proportion) will become Eileen and Mary (older and conservative, 23.6% sample
proportion) and Sarah and Hannah will lose attractiveness for this segment (Kotler,
2008).
Price
The price is one of the important factors of the marketing mix. If there is wrong
pricing decision the competitors will win and Nestle will lose their customers.
Managers have to know the pricing strategies of their competitors and how big are
their financial resources to cope with their competition. The Coffee-Mate should
concentrate on 'the maintenance and improvement of market position' (Wilson and
Gilligan, 2005). Advantage of this objective is the improvements of the market share
however it can be very costly and not often cost effective. Coffee-mate is already in
leading position (55% market share) but there is danger that they will lose it. One the
factors can be the lack of finance for campaign and promotion.
Promotion
Promotion is also important aspect of the marketing mix. It can be said that promotion
is 'the visible face' (Wilson and Gilligan, 2005) which symbolize the product and
communicate with customers. In 2002 Nestle spent 1m on the Coffee-Mate
campaign to change customers opinion on the coffee whitener from ''coffee whitener''
to ''coffee enhancers'' with main slogan 'Coffee-mate does it for coffee - so deliciously
creamy tasting it's almost improper' (http://www.campaignlive.co.uk, 2002). In 2007
there was marketing campaign which promoted the Coffee-Mate ''Even when there is
milk around''. It was previously discussed that young families, experimentalist, older
and conservatives are the market which should be targeted. The tools which can be
used to target the market can be: the TV, newspaper and a new medium Facebook and
Twiter. The new campaign should be more concentrated on the product
differentiation. There are not other competitors who are producing powder cream or
liquid with different taste and sticks pad which can be used on the go. The CoffeeMate should have distanced more from other in the market and create a major
competitive advantage. To create competitive advantage there have to be
understanding of particular segment, however the disadvantage of product
differentiation can be 'limited opportunities for the sector growth and creating
differences that customers do not value' (Wilson and Gilligan, 2005). Furthermore,
they have to convince the customer that the Coffee-mate is better than competitor's
products.
Place
The distribution plan is final and also important part of marketing mix. The right
choice of distributors and volume distributed can make huge impact on the volume of
products sold. To achieve the competitive advantage the right distribution channel has
to be recognized. The Coffee-mate is sold by retailers (Morrison, Tesco, Sainsbury,...),
Internet and through other channels however there should be considered other options
- workplace, universities and hospitals. There is a huge opportunity to be a successful.
Full-time working women agreed ''first thing in the morning I tend to have coffee with
semi-skimmed milk, but towards 11 o'clock I want something which is more relaxing,
more substantial, so I have coffee with Coffee-Mate. It seems to be comforting.''
(Kotler at al, 2008). The distribution of the Coffee-Mate into the coffee machine
which are in the workplace, universities or hospital will bring benefits, improve a
market share and bring a new customers. To select a right channel of distribution the
plan has to be considered (Wilson, 1983).
Conclusion
In this report the current marketing positions of the Coffee-Mate brand was analyzed
and after were given proposals for future strategic development of the Coffee-mate
brand in the UK. The Coffee-Mate is currently in the leading position, however the
managers do not see the potential growth in the future. Despite this believe, the
Coffee-Mate has a benefit of the length storage compare to fresh milk or cream,
however powder cream is still seen as the treat by users and as the emergency by nonusers. The market was divided by TGI into five clusters and the most profitable group
was chosen and will be targeted. The best way how to achieve the success such as
market growth and profitability can be done by better segmentation of the market and
better clustered preferences. The Coffee-Mate is not just cream powder and the
campaign has to say it to the potential costumers. The Coffee-Mate should create the
competitive advantage from the differentiation. The Coffee-Mate has to persuade the
consumers that they are better than their competitors. The crucial is the concentration
on the segments which are targeted and chose the right product for this segment.
References
http://www.campaignlive.co.uk/News/EmailThisArticle/161197/Nestle-puts1m-behind-relaunch-Coffee-mate
http://www.campaignlive.co.uk