Coffee mate study case Essay

Coffee Mate is made up of dried glucose and vegetable fat and it is considered 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 during the season, flavors only available from September through December. The brand is composed by 33 different products each of them aimed at different consumers depending on their preferences, this is explained with what is called Product Line Filling: a product can be offered with different characteristics, it first creates a product (in the case of Coffee Mate, its first product, the Coffee Mate The Original, was the starting point). Then, the company adds more features to that product, and that way it can be more differentiated from its competitors’ products. There are several reasons why a company might want to add more items to the present range of the line. It may want to increase profits, use the excess capacity it has, satisfying new consumers and that way, to increase the number of buyers†¦ Consumers are increasingly getting concerned about what they are eating and what companies offer them. The trend over the past few years is consuming products made up of natural ingredients. That is why Coffee Mate has created Natural Bliss, which is made up with only four simple ingredients: milk, cream, sugar and natural flavor. When a company increases the number of products in the brand, sometimes it can find itself in a situation of cannibalization (it happens if one part of a company grows by taking sales from another). Actual consumers can change from a variety to the new one so there is no benefit taken from new consumers. The company must focus on potential consumers, try to answer to the question, why some people do not buy our product? And create a new flavor that can attract new buyers. However when Coffee Mate  Lite was introduced, the volume of cannibalization was minimal. The brand experienced a growth of 10% during 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 â€Å"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 â€Å"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