Market Share of Competition
This chart of the market share shows that Kraft Foods was the world leader in coffee sales with 15% of the global market. In Canada Kraft’s/Nabob and Maxwell had a combined share of 35%, where Nestle had 19%, Private labels accounted for 25%, and smaller companies summed 21%. With grocery markets carrying a selection of coffee brands and flavors along with major retailers such as Starbucks and Tim Horton’s selling their coffee beans in grocery outlets, competition in the Canadian coffee market remains very aggressive. There are four major coffee pod competitors in Canada and they are One-to-one, Home Café, Senseo, and Bunn My Café.
One-to-one brews coffee pods in two different sizes and has a bar quality. This machine has advantage that it can also change its spout in order to make iced tea or regular tea. They also use the biggest coffee pods at 9.7 grams vs. the other 7 gram pods used in regular machines. One-to-one also has three different varieties to choose from; You can purchase a 16 pack of pods for $4.99. These coffee pod machines are available at the Bay, Canadian Tire, Zellers, and Home Outfitters.
Home Café has pressure brewing coffee pods while getting the full flavor of the bean. This machine has a removable platform to avoid spilling and can brew three different cup sizes. This type of coffee pod has 4 different flavors to choose from and a 16 pack of single coffee pods cost $4.99.
Senseo has a specialized machine that creates a rich froth on each coffee brewed. Each blend is brewed in 30 seconds and has an automatic shutoff after one hour of no use. Senseo uses premium beans and offers four flavors that come in packages of 18 for $4.99.
Bunn My Café
Bunn My Café use special spray head and delivers maximum flavor in each cup. This machine can also brew a cup in 30 seconds and has 9 brewing settings to change the strength of the coffee.
Out of all the machines listed above Bunn My café machines sell in retail for $150 per machine, the highest price out of the four. The cheapest machine is the One-To-One selling in retail from $60 – $75. The best deal for retail selling price of pods is Senseo at $4.99 per 18 packs of pods
Canada compering to other countries work with faster technology and faster workforce. Before Canadians, coffee drinkers were taking them longer to get their coffee. Today the Canadian coffee drinker can get their coffee in one minute. These advanced technologies reflect to overall Canadian technology and the fast-paced environment that Canadians live in.
Even though coffee pods may cost a little bit more per cup of coffee, it has its benefits. Whit use of the prepackaging for the single serving coffee the SSP machines can deliver coffee in less than 1 min. The SSP machine measure the water tank or the amount of ground coffee for your cup, just place pod and press a button. You no longer have to throw away the nasty wet filter with used coffee you just have to recycle the little plastic pod. Pods also do not use an actual coffee pot, so you do not need to clean the pot of coffee every day. This is perfect for people that usually make only one coffee, instead of making a batch, only a single cup is processed. Different kinds are also available in terms of taste.
Kraft has taken some significant actions to keep the environment safe and clean. One aspect relating to environmental factors is that, the SSP machines are much easier to clean than the other pods on the market. It allows you to have cluttered ground coffee that is unable to be used, no leftover coffee to pour away and no pot to clean. When finished, users would simply dispose of the pod in the garbage or compost bins, whereas regular disposable coffee cups and filters must be thrown away in the garbage.
The 4 P’s
Price $0.50 per cup
Product Single-Serve Coffee Pods (SSP)
Promotion – Consumer shows, demo program booth, television sponsorship campaign, giveaways, print ad buy one get one free coupons Place – Consumer shows and big retail outlets across Canada. Three different merchandising tools: Shelf-strips with coupon AdPad that holds 12 bags and coupon holder, On-Shelf Racking that holds 14 bags, Branded Off-Shelf Bins that holds 48 bags.
“Helping people around the world to eat and live better.”
Kraft Foods Inc., Consolidated Income Statement
USD $ in millions
Herzog’s goal was to obtain 45% market share at the end of 2006 He also expected 6% from a 12.5 million household in 2004 and 8% in 2006. For advertising, Kraft wants to use TV sponsorship using all television programs for 3.5 launching. Production for a 30-second English-language contest spot would cost $10000; airtime to run English language spot for one week would cost $15000, giveaways would cost $5400. Promotional execution would cost $5000. Herzog also wanted to use direct marketing through an email campaign. This is where customers would be sent an email inviting them to visit a website and register to win a fee year’s supply of coffee pods. Merchandising objectives for Kraft’s coffee pods includes shelf-strips with coupon AdPad, on-shelf racking, as well as branded off-shelf bins. The cost for the total campaign is $961400 and there would be $38600 left from the $1000000 budget.
Proposed Marketing Strategy
To create better value for our customers we decided that price of $4.99 for 16 pods is perfect. Our competitors have the same price but we have better value. This price of $4.99 will target Melitta in direct competition since they offer the same value. Maybe a slight increase (18 pods instead of 16 pods). This will ensure that Kraft would win in the competition. The wholesale price for the coffee pods should be $49.99 for 200 coffee pods. And for market share, we recommend Mr. Herzog to start at 20% with an increase of 5% per year that will lead him to those desired 35%; 20% is very possible for Kraft and its very profitable Product:
Our Branding strategy focuses on the packaging. The branding strategy for Kraft’s Maxwell House and Nabob Brand should reflect the consistent branding strategy already being implemented by the company. However, Kraft should use upscale packaging and back up the upscale high quality product that they have. An example of an upscale packaging concept by current market entrant is Melitta. The reason for my branding strategy focus on the packaging is due to the principle of first impression and mental association that a potential consumer will have especially Kraft’s target market. The target market for single serving pods is high-income individuals and families ($91,000) and well-educated individuals.
Most Canadians have their cup of coffee at home or at the nearest available store. Kraft should make coffee so good it enhances the time we spend with friends and family while enjoying a cup of it. A good way to go about it would be dividing the Country in regions and market the product targeted right at their consumer profiles. Furthermore delivery straight to retail stores would make the supply chain shorter hence costs will be less. Even better would be to encourage most buyers to buy it on the Website, with free delivery or a more effective promotion tactic. If the Consumer buys the product straight from the manufacturer the dividend will scale up rather then selling them in bulk to wholesalers and retailers.
Promotion is the most important element of the proposed marketing strategy; all medium must be evaluated then used to acquire as many consumers as possible. One of the things that can be used is print advertising; billboards, magazines, newspapers etc. Another option is also TV sponsorship, using almost all television programs for 3.5 months launching. Direct Marketing can also be suggested for example email invite consumers to visit the Website then put an offer like click to win a free supply of coffee pods for a year. Merchandising has its own promotional options too like on shelf racking, shelf-strips with coupon AdPad or branded off shelf bins.
Stephanie Larkin (2007) Current Trends Of Coffee Consumption. Retrieved from: http://www.streetdirectory.com/food_editorials/beverages/coffee/current_trends_of_coffee_consumption.html Ben Berry (Oct.2011) Coffee and Tea Industry Trends from the Canadian Coffee and Tea Show. Retrieved from: http://www.ats-sea.agr.gc.ca/eve/6060-eng.htm
NPD Group(July 2012)More Canadians opting to brew their favourite drinks at home Retrieved from: https://www.npdgroup.ca/wps/portal/npd/ca/news/prca_120720/
Stock Analysis on net(2012)Kraft Foods Inc. (KFT) | Income Statement. Retrieved from: http://www.stock-analysis-on.net/NYSE/Company/Kraft-Foods-Inc/Financial-Statement/Income-Statement Dolcera Public (August 2009)Premium Coffee Market Segmentation. Retrieved from: http://www.dolcera.com/wiki/index.php?title=Premium_Coffee_Consumers_Market_Segmentation