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The Coffee Consultants: Needs Presentation. Alessandro Galeone Lindsey MacLaughlin Mark Muller Matthew Osborne Tanyaradzwa Mtetwa. Agenda. Introduction Objectives Methods Findings & Recommendations Rebranding Location Analysis Advertising & Promotion Pricing, Margins & Wastage
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The Coffee Consultants: Needs Presentation Alessandro Galeone Lindsey MacLaughlin Mark Muller Matthew Osborne Tanyaradzwa Mtetwa
Agenda • Introduction • Objectives • Methods • Findings & Recommendations • Rebranding • Location Analysis • Advertising & Promotion • Pricing, Margins & Wastage • Conclusion
Introduction • Our Goal: To help Needs Convenience develop strategies to help increase awareness and perception of their premium coffee and to help boost coffee sales • Key Factors: Promotional tools, pricing strategies and advertising techniques were the focus of much of our research
Objectives • Increase Awareness & Perception • 36.5% of survey respondents aware of Need’s coffee but many did not associate with the Java Station • General negative perception of convenience store coffee (old, inconsistent taste, poor quality, etc.) • Increase Coffee Sales • Negative correlation between proximity of competition and Needs coffee sales • Positive correlation between coffee sales and adjoining Fast Fuel locations
Objectives • Improve Advertising Effectiveness • In store coffee advertisements blend into other advertised products causing customers to miss them • Opportunity for Needs to differentiate from other convenience stores; currently advertising like other convenience stores • Optimize Pricing Strategy • Needs currently has competitive pricing at second lowest in the Antigonish market
Methods • Coffee Observations • Observed competitors in Antigonish and New Glasgow, counted the number of consumers that bought coffee in peak hours (7-9 a.m.) • General Coffee & Needs Surveys • Interview locations at Sobeys and Needs in Antigonish, and at Sobeys in Stellarton
Methods • Taste Test • Consumers rated Needs coffee on a scale of 1-10 to determine actual opinion of quality • Consumers were chosen throughout the Antigonish population • Store Location Analysis • Used Google Maps to find factors that contributed to individual stores’ high and low coffee sales such as proximity of competition, attachment to a Fast Fuel and geographic location
Rebranding: Findings • Important to Customers • Importance to buying decision rating- 3.8/5 • 43% of survey respondents rated branding 5/5 • Another 24% rated branding 4/5 • Strong Brands lead to Strong Sales • Tim Horton’s 60% of surveyed industry sales • McDonalds 34% of surveyed industry sales • Increased brand image/awareness leads to higher sales + market share • Low Brand Awareness • 40% of surveyed respondents aware of mother parkers coffee • 25% of surveyed respondents aware of the Java Station • 36% of surveyed respondents aware Needs sells premium coffee
Rebranding: Recommendations • Re-name Java Station • Low correlation to Needs • Low brand awareness/image • “Need’s Coffee” • Build Customer Loyalty • Loyalty program to increase consumer re-purchase • Can lead to larger customer base and higher brand image/awareness • New Brand Focused Marketing Efforts • Current efforts too spread out • Increase brand awareness through reinforcement • Premium image, premium quality differentiation • Focus on brand, not distributor
Store Location & Coffee Sales • Top locations have little or no nearby competition • Locations with a neighboring secondary competitor will have low coffee sales • Needs is forced to compete with secondary competitors such as Tim Hortons
Advertising & Promotion • Expanding Interior Store Signage • Promote upcoming events • Adds aesthetic quality in store • Examples include banners, window graphics and LED displays • Expanding Exterior Store Signage • Increases store traffic • 24/7 advertising with one-time cost • Boosts store sales • Flexible messaging • Creates impulse sales
Advertising & Promotion • For a wider reach initiate advertising strategy in partnership with Sobeys • Increased brand awareness • Larger advertising platform • Examples include special events, samples, coupons at Sobeys locations
Pricing, Margins & Wastage • Competitively priced • 23% below average medium, 3% below average large & 8% above average for extra-large • A&Ws $0.75 coffee of any size leads the way • The rest of the competition have roughly the same prices • High Margins • The coffee industry in general has some of the highest margins out there • Needs’ average margin is about 78% • Not much opportunity to increase margins
Pricing, Margins & Wastage • Overall Performance • According to internal data annual coffee revenues are $1 432 500 • With 78% margin that gives a COGS of $310 300 • Residual income is then $1 122 200 • Wastage at $1500 per day saps $547 500 from this total annually; that’s 38.2% of residual income
Pricing, Margins & Wastage • Wastage • Represents a key opportunity to increase coffee program profitability • Approximately 100 locations average under 10 cups sold per day • Introduce single brew Tassimo or Keurig machine in these locations • Effectively reduce wastage costs • Use Sobeys relationship to acquire machines and pods at lower cost • No major change to margins • Many brands make these “pods”
Conclusion • Rebranding • Advertising: Exterior Signage • Promotion: Free Coffee Giveaways • Partnership with Sobeys • Single Brew Coffee System