Coffee mate study case

Coffee Mate is made up of dried glucose and vegetable fat and it is thought about as non-dairy although it contains milk derivatives. Some of them are liquid, others are reduced-fat and others are sugar free. There are also seasonal products that will keep you warm throughout the season, tastes only readily available from September through December.

The brand name is made up by 33 different products each of them focused on different consumers depending upon their choices, this is discussed with what is called Product Line Filling: a product can be used with various qualities, it first creates an item (when it comes to Coffee Mate, its very first item, the Coffee Mate The Original, was the beginning point).

Then, the business includes more features to that item, and that method it can be more separated from its competitors' products.

There are numerous reasons that a business may want to add more items to today series of the line. It may want to increase earnings, use the excess capability it has, pleasing brand-new consumers and that method, to increase the variety of purchasers .

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.. Customers are progressively getting concerned about what they are eating and what business provide them. The trend over the previous few years is consuming items comprised of natural components. That is why Coffee Mate has developed Natural Happiness, which is made up with just four easy ingredients: milk, cream, sugar and natural taste. When a business increases the number of items in the brand, often it can discover itself in a circumstance of cannibalization (it happens if one part of a business grows by taking sales from another).

Real customers can change from a range to the new one so there is no advantage drawn from brand-new consumers. The business must concentrate on potential consumers, try to response to the question, why some people do not buy our item? And produce a brand-new flavor that can draw in brand-new purchasers. However when Coffee Mate Lite was introduced, the volume of cannibalization was minimal. The brand name experienced a development of 10% throughout the first 3 years of the Lite version appearance.

Another key point to add customer value to the product is throughout the design, the pack, the wrap of the product. At first, the package of the product had only one mission, to hold and protect the product inside, but nowadays packaging has become an important tool in marketing. Coffee Mate has different formats: 170 g, 311 g, 450 g, 750g, or 1.4kg. All the flavors can be found in both powder or liquid. Negatives about dried milk (powder) are that it may be bought only for emergency when consumers run out of milk and is considered to be inconvenient to prepare. On the other side, coffee creamers have a better image across non-users as they see it as almost a treat and make coffee taste so much better.

SWOT ANALYSIS
In order to make a good marketing analysis of the company, we have performed an analysis of advantages and limitations, selected a targeting strategy, performed segmentation and positioning, and analyzed the convenience of the proposed ad. +STRENGTHS:

Consumers claim that Coffee Mate gives better taste to coffee Coffee Mate is said to relax and comfort consumers, it gives a good perception of the product. Coffee Mate belongs to Nestle, which is well-known and prestigious brand -WEAKNESSES:

Sometimes seen as an emergency option
It contains added sugar in it in some of its versions, which is seen as a bad habit for those who care about health +OPPORTUNITIES
Lite version (has increased sales lately)
-THREATS:
Sales of creamers and dried milk are directly proportional to coffee sales, so in these times the reduction on coffee consumption may result on lower sales. It is considered to be an artificial product, and this goes against the increasing concern for natural and healthy food and drinks

TARGETING, SEGMENTATION and POSITIONING
To optimize marketing budget is key to target the market segments that better fit Coffee Mate’s strengths. The company must decide which and how many segments it will target. Market targeting can be taken at different levels: very broadly (mass marketing), very narrowly (micro marketing) or somewhere in between (differentiated or concentrated marketing). We have decided that Coffee Mate should be aimed at multiple segments and use concentrated marketing.

Mass marketing: market strategy in which a firm decides to ignore market segment differences and go after the whole market with one offer. In this case this strategy will not fit with coffee mate fore several reasons: 1. It is difficult to develop a product that will satisfy all segments 2. Coffee Mate will have trouble competing with more product-focused firms Micro marketing: target marketing in which companies tailor their marketing programs to the needs and wants of narrowly defined segments. Given the recently squeezed advertising budget, choosing only one segment will result in less profitability.

Concentrated marketing (or niche marketing): market strategy in which a firm goes after a large share of few submarkets. By doing this Coffee Mate could achieve a stronger market position that its actual 55% market share. It can market more effectively targeting each product toward those consumers’ segments that it can serve best. Having decided that Coffee Mate products should be aimed at multiple segments we need now to evaluate the attractiveness of each segment and their fit to Coffee Mate´s strengths. TGI Users Surveys covering coffee and creamer’s markets came up with five potential groups of consumers for Coffee Mate: 1. Experimentalists (15.4%):

Like to try new things
Enjoy spending money
Heavy users of instant coffee
Below-average users of creamers BUT average users of Coffee Mate. 15-44 years
Middle income
Heavy users of media
Keep up with the fashion, are stylish and will try anything new. Socialize often and holiday abroad
Like to treat themselves
Not really using Coffee Mate, as one would have expected.

2. Cost constrained, older, conservative (23.6%):
Budget when shopping, price aware, look for lowest prices
Very traditional
Worry about food
Light users of instant coffee
Never use cream
Average users of dried milk BUT not really users of Coffee Mate 55+ years
Not working or retired
Low household income
Very conservative, like routine
Socialize rarely

3. Affluent, young foodies (24.4%):
Light users of media
Heavy users of coffee and ground coffee
Above-average users of creamers and most often buy Coffee Mate and Marvel Users of cream
35-54 years
Above-average income and work full-time
High expenditure on groceries store.
Enjoy cooking and trying out new food
Like socializing
Health conscious
Can afford to treat themselves

4. Cost constrained, young families (13.9%):
Low incomes
Not concerned about health or environment
Heavy users of instant coffee but do not use ground coffee
Below-average users of creamers and never use cream
15-34 years
Heavy users of media
Low expenditure on grocery store
Rarely go out (can’t afford to)

5. Affluent (22.7%):
Not price conscious, well off
Old (55+)
Not health conscious
Not media aware
The people most likely to be buying Coffee-Mate
Do not want to try new things.
After evaluating the different segments, we have concluded that the segment most likely to buy our product will be the EXPERIMENTALISTS and AFFLUENT YOUNG FOODIES. EXPERIMENTALISTS fit into Coffee Mate’s strengths (specially for Original Coffee Mate) in various ways: a) Social class (lower)

b) Household type (2-3 people with children)
Besides this, they are heavy users of media and are likely to consume instant coffee and cream. AFFLUENT YOUNG FOODIES fit into Coffee Mate’s average consumer for Coffee Mate Lite because of several reasons: a) Age segment

b) Income level
c) Working time

The ad clearly pictures affluent young foodies with their After Eights and tea with another couple of the same group. It tries to compare both cream and CoffeeMate while stating that the latter is so much better when Jane runs out of cream and the guests praise her for their second cup of coffe more than the first one.

The ad makes two clear statements: The first one, that the consumer always has a backup plan for when milk/cream runs out, since CoffeeMate is easy to store and lasts long enough. After being served the second cup, the guests show their enthusiasm for it because of the taste. This implies that while being a backup plan for cream lovers, it also turns out to be a much better substitute good for cream or even milk. Whether this ad is effective or not depends on the segment that we focus on.

The biggest segment, the affluent young foodies -24.4% market share according to the study- can only grow with this ad. Even if they’ve never tried it before, the ad will make the product appealing to them by insisting on the great flavor and the convenience of it, which is what most of this group looks for. Furthermore, it seems that the experimentalists are affluent young foodie wannabes. They are the same age group, they are really materialistic but they have a much smaller income than the former segment. This is why it looks like the ad could have this group as potential customers.

They watch the ad, they want to act like those affluent people and they buy the product so they can reach that status at least in one aspect. They just follow suit in everything that has to do with the rich and hip. This is where we see the biggest increase in share due to their consumerism and pretentiousness.

Lastly, we could squeeze another segment that this ad could reach; the affluent. The affluent segment has also got a big market share, although they are older than the two studied groups. CoffeeMate is trying to show in this ad that it is reliable and that it’s always a good backup plan, and older people can be interested in the product since they have people home for meals, and they would not want to run out of anything and not make their guests fully happy.

The only downside for this segment is that they don’t usually watch TV or listen to the radio, so the ad would have to be in the newspapers or find a way to sneak into their radar.

Alternatively, if the focus on experimentalists is desired we would recommend, instead of making a conventional ad, promoting the product and the brand via Twitter or Facebook. These are such powerful tools for targeting this segment since they are young and they are really influenced by what they see in others that social media could really boost up sales. This could be done by creating a page of Coffee Mate and uploading “cool” things, making the brand interact with their potential customers. See figure 1.

ANNEX
FIGURE 1

Coffee Mate is part of a growing number of businesses that use social media marketing in their efforts to gain exposure…but also to build relationships with their customers and get permission to market to them directly…as long as they do it in a soft, acceptable fashion.

The promotion would need to be shaped so that they would focus on the core benefits that the Coffee-Mate offers. This has to be at least as good as the targeted competitor. They also have to be aware of how the competitor currently markets his product. By knowing how he operates they could either copy and improve the existing one or then completely change and try a more radical approach. If the Coffee-Mate would want to succeed they would need to convince the consumer how he can benefit from our product better in contrast to the competitor.

As we have seen before, for example in the ad, Coffee-Mate has a range of benefits which are focused on different necessities of coffee drinkers such as being a great backup plan for when milk/cream runs out, since Coffee-Mate is easy to store and lasts long enough or having a myriad of different flavors which can in many occasions be a better substitute for milk or cream, which are the immediate competitors of Coffee-Mate.

When having to advertise (twitter, TV ads, newspaper, etc) the product focusing on the benefits and the competition targeted, the promotion of Coffee-Mate should include (as the ad pictures perfectly) the disadvantages the other competitors have, such as running out of cream or milk more often or being a dull boring flavor and on the other hand state the great range of flavors Coffee-Mate offers coffee lovers which will certainly attract experimentalists as they look forward to try new experiences and insist that it is a great substitute when cream or milk run out, which for affluent young foodies as they are more likely to socialize and serve coffee to their guests, will be a much more suitable and comfortable option.

Experimentalists
Marketing means persuading, getting people aware of our product by advertisements. A company banks on the idea that a celebrity will drive fans to try a product or service, simply because Celebrity X has it. To persuade our customers (experimentalists), we have chosen for our ad of Coffee Mate Blake Lively drinking a cup of coffee.

We have chosen this celebrity to attract the experimentalists due to the fact that is a Hollywood personality known by almost all the young people, we can considerate her as a fashion icon, she started to get famous with Gossip Girl and nowadays people around 15 to 24 consider her as an prototype, This ad goes directly directed to the experimentalist, as their name suggest, experimentalists are easy targeting as they would like to try out new products. They also have high media awareness and are status conscious and fashionable.

Affluent, young foodies
Light users of media
Heavy users of coffee and ground coffee
Above-average users of creamers and most often buy Coffee Mate and Marvel Users of cream
35-54 years
Above-average income and work full-time
High expenditure on groceries store.
Enjoy cooking and trying out new food
Like socializing
Health conscious, can afford to treat themselves
Richard Gere

Richard Gere is a well-known actor, even though he is now in his early sixties he is an icon for many men as the prototype of an attractive, handsome man which may enter in the ideal standard of living of anyone, taking into account his films and social apparitions.

Many women also know him for the same reasons and may see him as the “perfect” man. As the target market here are affluent young foodies, whose characteristics are stated above, a middle-high standard of living, the possibility of affording to treat themselves and the age group make it perfect for him to help position Coffee-Mate in this segment, as many of these people would like to copy his lifestyle. Noticing Richard Gere prefers Coffee-Mate might make this group want to drink coffee as he does.

Bibliography

Coffee Mate Offical website: http://www.coffee-mate.com

Non Dairy Creamers Info: http://en.wikipedia.org/wiki/Non-dairy_creamer

Coffee Mate twitter: https://twitter.com/Coffee_mate

Principles of Marketing, Fifth European Edition