During then, coffee was actually consumed in raw shape until the 11th AD when coffee was revolutionized due to the Arab accidental discovery of roasted coffee producing a surprising taste and flavour to become of what we known as, Roasted Coffee Beans (The Roast & Post Coffee Company, 2011). During the 17th Century, coffee began spreading across Europe so much so that they replaced the importance of alcohol beverage in some countries and Venice (Italy) opened the first coffee shop across Europe.
Coffee firmly established in Central and South America between the 18th and 19th Century (The Roast & Post Coffee Company, 2011) (Another Coffee Ltd, 2010). Since then, coffee never stopped spreading throughout the globe and now runs through the Asian culture as well. Today’s coffee is grown in five continents and is consumed worldwide as one of the most consumed commodities traded in the trade market. Greg Ubert, a Harvard graduate founded Crimson Cup Coffee & Tea (Appendix 1) in 1991 (ColumbusUnderground. com, 2010). Since then, they had been supplying, roasting, and supporting independent coffeehouse with their brand of coffee.
According to Crimson Cup Coffee & Tea (2011), “it joins a network of over 400 independent coffeehouse, grocers, colleges and universities, and food service operation across 28 states who proudly sell Crimson Cup Product” and opened their very first owned coffeehouse in 2007. What makes Crimson cup different from others is their unique vision of providing coffee and espresso based drinks while leaving people feeling better and they maintain a standard in order to ensure that each customer gets the best experience possible.
Coffee culture was brought to Malaysia by the British colonist in the late 18th century that has gained much popularity over the years; an attractive market to enter given the growing coffee culture (Tea and Coffee Asia, 2011). The local market is currently dominated by Starbucks, OldTown White Coffee, Illy, Lavazza etc. The trend of coffee drinking has already become part and parcel of Malaysia consumer lifestyle which provides clear cut opportunity for Crimson Cup to introduce their coffee brand into the market while uniquely positioning against its competitors. Question A I. Target Market As coffee has played an integral part of the Malaysian multi-dimensional ethic culture, the target market for coffee consumption has since changed through the years. DemographicTarget Market Customer Age Group9-14 years old Kids, 18-24 years old Young Adults, and Adults Customer Ethnicity Chinese, Indians, Malays, European, etc Customer OccupationUniversity Students, Working Class, and Retiree
As seen from the above table, the target market for coffee market can be based on customer age group, ethnicity, and occupation. In the past, coffee consumption were only for adults as it was drunk for its ability to stimulate the central nervous system of our brain caused by the effect of caffeine found in coffee and tea (Botanical-online SL, 2011). However, as time passes, caffeine has been sidelined as the main purpose of consumption as fragrance and flavour of coffee beans and also different coffee drinks has taken over.
Unlike tea which comes in a variety such as green tea, chinese tea and western tea; coffee has a range of flavour as well as preparation methods thus the existence of coffee drinks like Latte, Cappuccino, Mocha, Macchiato, and so on that brings out coffees true aroma and texture (Appendix 2) (TalkAboutCoffee, 2011). For example, Cappuccino is prepared 1/3 espresso, 1/3 steamed milk and 1/3 frothed milk whereas Latte is prepared with 1/3 espresso and 2/3 steamed milk (mycoffee-guide. om, 2011). Therefore, coffee nowadays doesn’t just cater for adults but children also in the form of ice blended Mocha which is a mix of coffee with chocolate syrup, a favourite for children and also young adults (TalkAboutCoffee, 2011). Young adults between 18-24 enjoy all ranges of coffee drinks depending on different individual preference as coffee drinking that has become a culture for younger generation to hangout and socialize rather than staying inactive (Larkin, 2011).
However, in Malaysia, it also provides a soothing environment with a peace of mind for coffee drinkers not just to enjoy their coffee, but a peaceful place for them to work or study at. Besides that, Malaysia coffee market caters for the three major ethnic groups in the country and also tourists, overseas students and permanent residents. Coffee is a drink that can be drank by all ethnic groups of Malaysia but the reason is because the 3 ethnic groups were the ones that are more accustomed to the coffee lifestyle brought down by British.
Whereby, minority ethnic group will be more familiar with the consumption of instant coffee. Customers sof coffee outlet are usually from the working class, students and retiree because they are the ones that have the financial ability to do so. Because drinking drip coffee is not a cheap lifestyle that everyone is able to afford like instant coffee and that they can only afford occasionally to either enjoy the true flavour of coffee with peace of mind or to utilize the environment provided to socialize.
Sometimes, occupational individuals just need a cup of good coffee to get them through their energy sapping days (Golfo, 2011) For retiree, frequenting a coffee shop is usually to enjoy both the environment and savouring the coffee provided in the market to enjoy their life as they see fit (Golfo, 2011). II. Market Analysis Market Analysis is an evaluation of the market for a company’s goods and services. The coffee market analyses the demand of coffee in Malaysia, how big is the coffee market is? , and also how well coffee has grow in Malaysia Market?. Demand Market YearDomestic Consumption 1000 Units)Unit of Measurechange 2008548(60 KG BAGS)12. 99 % 2009491(60 KG BAGS)-10. 40 % 2010464(60 KG BAGS)-5. 50 % 2011550(60 KG BAGS)18. 53 % According to Figure 1 and Table 2, demand for coffee has increased greatly in the past 4 years (indexmundi, 2009). From the graph, a drop of 10. 4% of domestic consumption and a drop of 5. 5% from 2009 and 2010 can be seen, this is due to economic crisis during the period of 2009 that greatly affected the purchasing power of Malaysian consumers to spend on leisure hobbies such as coffee drinking, that sees a sharp drop of demand (indexmundi, 2009). Whereby, an increase of 18. 3% (550 units) in the 4th respective years shows sign of economic recovery seen in customer purchasing power being restored (indexmundi, 2009). This shows that, coffee consumption is heavily dependent on the purchasing power of the market as weaker economy will resolve into a cheaper substitute such as instant coffee. Size of market According to Figure2a and 2b carried out by Malaysian Adult Nutrition Survey (MANS), it shows that there is a growing trend of coffee drinker increasing in the coming year with tea the only beverage drink other than water that has a higher statistical number (Norimah AK, et. l, 2008). This means that Malaysian consume an average 1-2 cup of coffee per days. It also shows that rural areas consume more coffee than urban area by 0. 03 in statistic as it include a variety of coffee beverage (Norimah AK, et. al, 2008). Growth of Market Units: Kilograms per person per year Years200720062005 Malaysia0. 90. 50. 0 Indonesia0. 50. 50. 5 Vietnam0. 70. 60. 4 According to earthtrends (2008), South East Asian country and Malaysia coffee consumption from 0. 0kg from year 2005 to 0. 5kg in year 2006 and finally 0. 9kg in year 2007 (earthtrends, 2008). The show of 0. kg in year 2005 does not reflect its true amount as it just shows the lack of proper research done during that year as coffee drinking culture has not reached an infectious rate. Among the countries mentioned, Malaysian consume as much as 0. 9kg in year 2007 and still growing rapidly compared to Indonesia and Vietnam, the third and fifth largest coffee producer in South East Asia (teacoffeeasia, 2011); With Indonesia being famously known in the coffee world for producing the most expensive and exotic coffee bean, “Coffee Luwak”. III. Market Behaviour & Lifestyle of Market
Personality & Lifestyle Personality The trait theory approach towards personality classifies individuals according to the dominant characteristics and traits. A trait is defined as “any characteristic in which one person differs from another in a relatively permanent and consistent way. ” (Mowen & Minor, 1998). One can observe how different types of coffee beverages can differentiate an individual’s personal character and a person personality. Coffee DrinkerPersonality Espresso DrinkerIt has been described as “the unfiltered cigarette of the coffee drinking world”.
Espresso drinkers tend to be moody, hard-bitten and hard working. They are into leadership and fast goals. Black Coffee DrinkerThey are all about minimalism and take a no-frills, direct approach to life. They can be quiet and moody but prone to brief bursts of extroversion. Latte DrinkerPleasers with an overwhelming compulsion to be liked. By taking a dark and dangerous drink and turning it into a comforting milky bedtime beverage, latte drinkers may want to come across as hot shot contenders, but they have an immature side.
Cappuccino DrinkerLike their drink, cappuccino drinkers are all froth and bubble, bored by detail and liking – but not obsessed with material objects. It has got to do with all the physicality of the experience rather than the basic consumption of the beverage. ” Instant Coffee DrinkerThese are cheerful, straight forward types, who like a laugh but can be unadventurous in their careers and need to let others see the hidden depths in their personality. The no-nonsense instant coffee drinker is allergic to pretentious behaviour Frappucino DrinkerThey are the inconsistent and hallow type as they will try anything once They fancy themselves trend setters but send out the message that they are someone who favours style over substance. According to Table 4, types of coffee drinks can express different personality traits because of different individual unique learning life process that forms their personality. Thuss, coffee no longer is all about coffee bean standard and aroma but it involves the preparation methods as well as the use of the surrounding atmosphere in order to attract consumers.
As stress level and self esteem of oneself is part and parcel of an individual’s personality which plays a huge factor on their choice of coffee drinks. As mentioned aboves, a person who likes style and trend would not go for black coffee but instead will go for Frappucino (Appendix 3) in a coffeehouse (Fairfax Digital, 2008). So it is vital for coffee shops to understand the personality of different coffee drinker in order to cater for their target markets coffee choices. As the lack of consumer choice in coffee drinks would result in consumers turning away from coffeehouse that do not offer the choice they want.
Lifestyle The lifestyle of coffee drinking is highly adopted by the younger generation, as it serves as a gathering place for friends in coffeehouses to socialize, study, internet browsing, etc. Older adults also incorporate this lifestyle and enjoy having a cup of coffee and snack at a moderate price as opposed to visiting a bar or a restaurant where meals usually cost more and not a place for long staying customer. Young adults in fact make much of the target market and would be important to attract and sustain in the future.
Coffee drinking lifestyle can be considered as a more slow paced enjoyment culture whereby they do not drink it at one go. Instead, it is being sip through to enjoy the flavour and fragrance of the coffee. Nowadays, even young adults follow the trend as a sign of appreciating life by spending money and time at Starbucks and San Francisco to proceed with a lot of their daily activities. This is because it provides them a place perfect to utilize their time for both enjoyment and jobs assignment which other coffee shop or cafe could not. Such lavish lifestyle is also influenced partly by western culture, movies and celebrities.
Coffee drinking is often associated with western culture and celebrities under the spotlight as they had developed the habits from their roots. Individuals constantly try to mimic their lifestyle and adopt the western culture into theirs. This then results in a coffee lifestyle that is a norm for western nation to be fused into the norm of Malaysia consumer as well. Sipping a cup of coffee with a strange reputable foreign name on a relaxing afternoon represents a higher standard of life here in Malaysia. Perception Perception is a consumer’s impression in give meaning to their relevant environment.
The consumer consists of Business-to-Business (B2B) and Business-to-Customer (B2C). Descriptions Selection 1st StageThe consumers will select the stimuli to which we attend (Wisc-Online, 2011). Besides, the consumers also select the stimuli through their senses such as sight, sound, smell, taste and touch (Mary, 2001). It means that the stimuli come from external environment such as advertisement, conversation and so on. For example: An advertisement on Colgate new product provides customer a stimulator whereby information is sensed through sight and sound. Organisation 2nd StageStimuli (information) are arrange in accordance by customer to rovide an overall understanding on the information (Wisc-Online, 2011). In which the attention level of consumer toward information and how they understand an idea differ from respective individual. For example: low attention provided toward the Colgate advertisement will lead to misunderstanding on product details such as ingredients, functions and etc. Interpretation 3rd StageMeaning is then attached to the stimuli for further interpretations subjected to individual values, needs, beliefs, experiences, expectations, involvement, self-concept and other personal factors (Wisc-Online, 2011).
It means that after the consumers understand or misunderstand about the products or services, they will give meaning to the products or services respectively. For example: If the consumer misunderstood about the functions of the Colgate Toothpaste advertisement, consumer might perceive toothpaste is used to rinse mouth instead of brushing. The perception model will be formed by consumers through the three stages. Consumer’s perception is major influential factors that existed in Malaysia coffee market that Crimson Cup Coffee & Tea is trying to penetrate into.
A survey was shown in the following table by Maznah et. al (2008) about coffee drinkers’ behaviour in Malaysia. StatementsN(respondent number)Mean 1. When buying expensive items such as a car, TV or refrigerator, I always seek to find out what country the product was made in. 2003. 79 2. I feel that it is important to look for a country of origin information when deciding which product to buy. 2003. 70 3. To make sure that I buy the highest quality product or brand, I look to see what country the product was made in. 2003. 59 4.
If I have a little experience with a product, I search for country of origin information about the product to help me make a more informed decision. 2003. 43 5. I refuse to purchase a product without knowing its country of origin. 2003. 18 6. When purchasing a product, I believe country of origin will determine the technological sophistication of the product. 2003. 69 7. When I am buying a new product, the country of origin is the first piece of information that I consider. 2003. 08 8. A product’s country of origin does not determine the quality of the product. 2003. 21 9.
When buying a product that has a high risk of malfunction, for example a digital camera, a person should always look for the country of origin. 2003. 51 10. It is less important to look for country of origin when buying a product that is expensive such as a shirt. 2003. 76 11. Seeking country of origin information is less important for inexpensive goods than for expensive goods. 2003. 57 12. I find out a product’s country of origin to determine the quality of a product. 2003. 31 13. To purchase a product that is acceptable to my family and my friends, I look for the product’s country of origin. 003. 28 14. I look for country of origin information to choose the best product available in a product class. 2003. 37 Overall Means Score3. 462 In Table 6, there are 3 major perception factors existing in Malaysia B2B and B2C consumer. There are Brand, Price and Quality. An additional perception can be found in the B2C market that involves physical environment and location that makes it a total of four perceptions being discussed below. Brands When consumers think of famous coffee outlets in the country, coffee brands like Starbucks, and Coffee Bean always came to mind (CBS Interactive, 2010).
Take Starbucks for instance, it can be found everywhere around the world and people think that Starbucks is the best coffee shop in Malaysia when there are clearly other better choices. Starbucks Coffee green logo is also one of the most representative and recognizable image by customers. Branding is also very important to coffee shops such as OldTown as it creates a visual assumption by consumers that perceive white coffee were supposed to be white in colour whereas the name came to with the adding of some form of sugar and margarine into the roasting process (Chan, 2008). According to the table, the mean of Statement 2 of 3. 0 suggest that Malaysia coffee consumers are selective about the product’s country of origin (Maznah et. al, 2008). For example: Consumers judge a country’s product, whereby they have this perception that American coffee bean is the best without knowing that Brazil and Colombia is the biggest coffee producer in the world whereas America is only a major consumer of their coffee beans. Price Statement 1, 10 and 11 in Table 6 suggest that Malaysian consumers prefer lower and affordable prices for foreign product (Maznah et. al, 2008). They will show complex buying behaviour and high involvement in the purchase process.
The product’s country of origin may create a ”halo effect” whereby consumers’ attention and evaluation of other product dimensions are affected (Han, 1989). Halo effect is when we consider a person good or bad in one category; we are likely to make a similar evaluation in other categories. It may also be connected with dissonance avoidance, as making them good at one thing and bad at another would make an overall evaluation difficult (Changing Minds, 2011). Malaysia coffee consumers have a perception thought that product’s from foreign countries are higher priced than local products.
Customers that drinks coffee in the morning, they have this subliminal perception of going to McDonald unconsciously to buy their breakfast as it provides them with a breakfast meal on top of a “bearable” coffee to go through their day at only RM4. 99 instead of visiting Starbucks Coffee where prices are higher. Subliminal Perception is a subliminal message, a message embedded in another object, designed to pass below the normal limits of perception; “these messages are indiscernible by the conscious mind, but allegedly affect the subconscious or deeper mind” (Debbie, 2010). Quality
From Table 6, Statement 3, 8 and 12 suggest that Malaysia consumers emphasize much on quality (Ghazaili, 2008). This means Malaysia coffee drinkers are more savvy and particular about their coffee today than they were five years ago. This is “because of the media and with more globe-trotting Malaysian, we have acquired a taste of coffees” (CBS Interactive, 2010). Quality is something that is easily defines based on individual perspective of idea, but as growth in Malaysia economy steadily increasing, the standard for quality follow suit as a society determines the level of quality.
However, actual perceived quality could be different from the real quality of a product in the case of coffee culture in Malaysia. Although Coffee Bean and Starbucks are the most recognizable coffeehouse brands in Malaysia, in terms of coffee quality, they are considered as normal around Europe continent. Just like McDonalds which does not even produce “real” burger, they are able to market themselves into a position of top coffeehouse brand which provide the necessary positive perception to gain a psychological advantage towards their competitors.
Physical Environment & Location Physical environment refers to the external, tangible surroundings in which an organism exists that can influence its behaviour and development. It includes landforms, soil types and climate (DEECD, 2006). In Malaysia, coffee culture does not just involve in the satisfaction of a cup of coffee, instead the surrounding atmosphere plays an integral part in customer attraction. For example: Starbucks, OldTown White Coffee, and other cafes have adopted dark brown surroundings with the use of yellow bulb light instead of white light.
The use of darker colour and dimmer light bulb sufficient for reading helps provide a serene atmosphere compared to bright colours that symbolize activation. This helps elevate the surrounding mood to help customer ease off tension and enjoy their favourite drinks. As such, comfortable seating and a serene surrounding is the ideal place for truly vivid coffee lover to enjoy their coffee. Learning In the learning process, there are 4 elements such as motivation, cues, response and reinforcement. The table below shows that the 4 elements in the learning process.
TermsDescriptions MotivationThe degree of relevance or involvement (Hussain, 2009). A strong internal stimulus that calls for action. A drive becomes a motivation when it is directed toward a particular stimulus object (Kotler, 2010). For example: a person has an urge of satisfaction for her esteem needs that motivate her to buy a car. CuesCues are the stimuli that give direction to specified motives, it is the opportunity to try or use the product (Hussain, 2009). Cues are also minor stimuli that determine when, where, and how the person respond (Kotler, 2010).
For example: a person may identify few cars option but a browse on promotion, sale price, and discussion of selected car provides the direction of choosing a specific car which is BMW. ResponseHow individual react to a drive or cue ”how they behave”, it might not result in sale now but it could provide opportunity in the future (Hussain, 2009). The above example provides an influential direction on which an action is taken for the future, either the purchase of a BMW car or a future goal of buying on.
ReinforcementIt is increases the likelihood that a specified response will occur in the future as the result of particular cues or stimuli (Hussain, 2009). For example: After purchasing BMW 525i and her experience is rewarding, it generate a learning experience that support her responsive action of repurchasing the same brand in the future. As she is able to justify her own correct response which leads to repetition of the respond in the future when there is no bitter experience from it.
The significance of the learning theory help marketer build up demand for a product by associating it with strong drives, using motivating cues and providing positive reinforcement. Therefore, consumer learning behaviour is vital in establishing a successful business as positive experience will encourage repetitive respond whereas negative experience will discourage it. Worse still, negative experience has worse outcome for a business as it could make or break a business through bad-word-of-mouth.
This is because bad things spread faster than good things to the consumers in which first impression plays a major part of customer purchase behaviour (Kotler, 2010). In Malaysia, consumers have their own product expectation by judging coffee quality such as taste, aroma, surrounding atmosphere, product services and so on. For example, consumer do not just go for the coffee at Starbucks but they went for the quality of coffee and customer service provided by them as coffee experience is being brought into a whole new level by adding value for their customer.
Whereas, people seldom go to normal cafes to enjoy a sip of Illy coffee because the extra criteria cannot be compare to those offered by Starbucks although coffee drink wise, both cough up quality coffee. All these indications point to an overall total customer value are being prioritized by customer instead of just concern on the product. Besides that, consumers also learn based on their knowledge such as in the consumer decision making process—the search for information process helps consumers to gain knowledge about the relevant product and choose the more suitable option to purchase.
According to Table 6 Statement 4, it mentioned that when Malaysians have very little experiences with a product, they will search for more information regarding it (Maznah et. al, 2008). However, in the coffee market, consumers do not look into the more detail information such as beans type, coffee drinks concoctions and the difference of different coffee beans. Only vivid drinker will be more enthusiastic about the detail and seek further understanding about it. Motivations Maslow Hierarchy StageDescription Physiological NeedsThe first level of Maslow Hierarchy is psychological needs.
The basic needs which consist of waters, air, shelter, clothes, and foods. (NetMBA, 2010) People need basic necessity in order to survive means that comes down to the most basic requirement of individual that does not involve wants. For example, the need of food to fill their hunger can be any food that comes along. Safety NeedsIn this level, people need to feel more secure in their life in present and future. They want security in life, jobs, shelter and so on. (NetMBA, 2010) As safety comes into concern for them to continuously stay motivated.
For the example in job security, people need to work in pleasant and secure working environments so that they will work more efficient. Affiliation NeedsIn this level, people need to social in life, making friends or giving out and receiving love from others. (Envision Software, 2007) They wanted to form a bond or expand their social networks to make their life more colourful with social relationship. For example, building relationship network and active social life helps brighten up individual lifestyle. Esteem NeedsThis level can be dividing into two which are internal and external. (NetMBA, 2010) Internal will be self respect and achievement while external will be social status recognition. They want to get respect from the others and by having good relationship and have a good achievement in their life. Self-Actualization NeedsIt is about the quest of reaching one’s full potential as a person which is never fully satisfied; as one grows psychologically there are always new opportunities to continue to grow (Envision Software, 2007). According to Maslow, only a small percentage of the population reaches the level of self-actualization (Envision Software, 2007).
Why people like coffee Coffee can be divided into few part in which people like to choose between quality or brand of coffee products that can be normally sweet, sour, salty and bitter (Timothy, 2009). Some of the coffee drinkers prefer to drink black coffee that contains only sugar with milk. There are several reasons why people like to have coffee. Coffee is good for health as it consists of caffeine and antioxidants that are good for health and anti-aging benefits (Timothy, 2009). Antioxidants help to repair damage cells in your body and also help in digestions so normally people will take it after.
Coffee also will make them feel alert, concentrate or awake. It also active the cells in human body. Furthermore, coffee help in tasting during meal, as you will have different taste (Coffee Articles, 2011). Coffee can help clear up our taste bud after consuming heavy flavour food like onions and garlic has the strong smell after having it. While having breakfast or teatime, the cakes and biscuits are sweet but add with coffee which taste bitter will equal the tasting sensation. Coffee Motivation The reason coffee drinkers have coffee daily is due to the influence of their daily activities that motivates them.
Some individual will have coffee at least once per day as they are addicted to it even when they are in a rush. They will choose a normal, easy-to-make instant coffee instead like OldTown White Coffee or Nescafe 3 in 1 to fulfil their needs as it has become a necessity to start their day. This in turn becomes an important physiological need of individual who makes coffee drinking a necessity in their life make do with instant coffee. The other motivation factors can be due to influence by social status.
Normally, people will go to cafe to have coffee while hanging out with friends or meeting their customers to build up relationship. These are where they expand their social network and also a place to build closer bond with society matter that is in the need of affiliation by individual. Coffee drinkers can be loyal to certain brand for a reason. For example, customers like to have coffee in Starbucks because of the environment, brand and the quality of the coffee as they provide customers the perfect soothing environment and comfort perceived as a high class place to hang out.
So, instead of going to local “mamak” stalls for a drink, individual will hang around Starbucks as it helps increase their esteem status while dining there. People in need of a good reputation and satisfying feeling visit coffeehouse for their class instead of their good coffee which is accordance to the self esteem needs of individual. Attitudes Attitudes can be defined as how a person behaves. It can determine likes or dislikes to certain things. It also can be divided into three parts which are beliefs, behaviour and feeling (Perner, 2010b). Attitudes affect people towards coffee
People have different attitude towards coffee. In beliefs, people think that black coffee will taste bitter without sugar, milk or creamer and it is black in colour. On the other hand, coffee can be sweet by adding sugar, milk or creamer to make it smoother to our taste. Coffee also can be cold or hot, a heart warming coffee is best serve in cold whether while cold coffee is a great thirst quencher during a hot summer. Different attitudes affect different individual to take different variety of coffee in different situations. Besides that, knowledge wise, they will think that coffee is not suitable for ids because of the caffeine effects and are more suitable for workers to get them through the day. In different attitudes, some of the consumers will prefer to adopt to a more health conscious lifestyle by having de-caffeinated coffee but habitual coffee drinker are subjected to at least one cup of coffee a day. In different attitudes of consumers, people will think that the price, quality, and brand of the product will affect their mindset towards coffee. People like the coffee from Starbucks because of its exclusivity and brand popularity on top of coffee quality.
People will think that normal coffeehouse is in no comparison with brand such as Starbucks and Coffee Beans as there are being labeled as low quality and cheap in social status. ? Question B As a coffee drinking culture has been developing for some time, there is lots of competition within the industry with the likes of Coffee Beans, Starbucks, San Francisco Coffee, Gloria Jeans, and a lot more of other competition around. However, four competitors will be focused on as part of the direct competitors toward the success of Crimson Cup Coffee in Malaysia market. DetailsBrandStarbucksOldTown White CoffeeLavazzaIlly
Established Year1971195818951933 Place of OriginUnited States, SeattleMalaysia, IpohItaly, TurinItaly, Trieste Business TypeB2CB2B, B2CB2C, B2BB2C, B2B Business LocationOwn Coffee HouseOwn Coffee House, CafesCafes, RestaurantOwn Coffee House, Cafes, Restaurant Brand PopularityHighly KnownHighly KnownRelatively UnknownKnown In Table 9, the competitive environment faced by Crimson Cup Coffee in the Malaysia coffee market is assessed with Starbucks, clearly the biggest coffee brand in the Malaysia coffee market right now that offers quality value to customer and also OldTown White Coffee whose instant white coffee is also a hit in Malaysia.
However, the fairly known coffee brand of Illy and Lavazza is one of the closest competitions to Crimson Cup Coffee as they venture into very similar business concept. Starbucks and OldTown In terms of competing, Starbucks offers true coffee experience from its use of coffee bean for coffee are prepared in accordance to individual liking such as latte and espresso; whereas OldTown provides unique instant coffee flavour that outshone the rest to their customer.
Yes, quality comes with a price as what Starbucks has been providing to their customers, a first class experience with their product and environment while OldTown is a cheaper alternative that provide more of a dining experience to their customer. Starbucks is a threat because of their image popularity in market that makes it hard for newcomers like Crimson Cup to have a foothold, as consumers will prefer to go for a more familiar brand that has quality assured. Furthermore, in a saturated market for coffee industry that sees so many similar coffeehouse concepts makes it even harder to penetrate.
As for OldTown, they are cheaper when comparing brewed coffee product against instant coffee but their unique flavour has given them extra attention that still attracts lots of customer. Furthermore, besides having their own “kopitiam” for dining experience, they are also supplying to the ever increasing rise of “kopitiam” in the local market for business purpose and made available for consumer purchase. Running a diversified business plan that have a major part in the coffee market shares. Lavazza and Illy
Lavazza and Illy on the other hand are a more direct threat to Crimson Cup because both runs their business with a B2B strategy their brand of coffee beans to restaurant and cafe for business purpose and they also had their own establish coffeehouse made available to customer. This makes them in the same line of business as how Crimson Cup manages their business. Illy coffee surprisingly has an even greater advantage in the market comparedes to Starbucks as the Illy blend of coffee is “destined for the Ho. Re. Ca. (Hotel, estaurant and catering) sector, household and office consumption” that can be found in 140 country worldwide, covering more than 50,000 restaurants and coffee bar across the world (illycaffe S. p. A, 2008). In Malaysia, they had their very own university of coffee expertise established in January 2010 named Universita del caffe that offers expertise knowledge on everything about coffee (UDC Malaysia, 2011). Besides that, Illy has their very own coffee outlet named Espressamente Illy, at Pavilion KL and Bangsar Village 1 (espressamente illy, 2010).
Besides having their own cafe, Illy is supplying coffee beans to other businesses as well. One such restaurant using Illy coffee beans can be found at Empire Shopping Gallery within Jaya Grocery named El Fresco Italian Restaurant that provide a very unique “grocerant” concept that involve shopping and dining at one place the Italian way (Ahmad, 2010). Furthermore, a cup of Illy coffee is priced average and cheaper than Starbucks or Coffee Bean. This just show how widespread Illy are in the coffee market competing with other coffee brands.
As for Lavazza, the oldest coffee brand established in the 1980s, they are relatively unknown as they only started to penetrate into the Malaysia market not long ago under Eciatto Group Sdn Bhd that handle all Lavazza product in Malaysia (Eciatto, 2011). Same as Illy, Lavazza worldwide provide the same B2B strategy but they are currently focusing on the role of B2B supplier to restaurant and coffee shop as their core business for now (Luigi Lavazza S. p. A, 2011).
According to Facebook (2011), Lavazza coffee can be found at Weissbrau (Pavilion), Italian on Sixth (Pavilion), Fish and Chippery (Solaris), Citrus Cafe (Bangsar Village 2), Happy OL’ Days (USJ Taipan), Allegro Cafe (SS15, Subang Jaya) and so on. This provides a more dining oriented customer to visit to dine and order a cup of after-meal Lavazza coffee. Moreover, their coffee products are priced the same as those of Illy. Crimson Cup Coffee Based on the analysis on Crimson Cup Coffee competitors, it appears that Malaysia coffee market is already highly saturated with many coffee brands competing for a slice of the coffee market shares.
Therefore, any new entry into the market will be having difficulties to excel from the existing brand which in itself is already a handicap. However, with proper planning and research conducted, the way Crimson Cup runs their business in America and the business concept they adopt will be able to excel within Malaysia. Which is why Crimson Cup Coffee is recommended to penetrate into the Malaysia market as it is viable for them with some innovative planning in the face of stiff competition from its direct competitors.
Instead of setting up their very own coffeehouse, they could focus on B2B oriented business strategy by supplying coffee beans. What makes them outshone other coffee brand supplier is the practice of teaching individual coffeehouse owner how to serve and prepare quality coffee drinks. By doing so, they can guarantee freshly roasted coffee beans delivered with the use of Just-In-Time (JIT) system to maintain freshness, and also maintain the professionalism of coffee preparation by each different coffeehouse owner (Crimson Cup Coffee & Tea, 2011).
This brings in a perfect blend of wonderful coffee with professional barista. Brands like Illy and Lavazza only provide the necessary coffee beans and equipment needed for business without proper understanding and training in the art of coffee making. Therefore, Crimson Cup has an advantage on maintaining the quality of their product by monitoring the whole process from supplier to final consumer. Other than that, partnership is the best strategies when entering a new environment.
In this case, Crimson Cup, an American company could tie up with McDonald (Appendix 5) or other food chain as their coffee supplier. Like Coca-Cola, instead of having McDonald selling unknown coffee brand, they can be selling to customer a true American coffee, using Crimson Cup coffee beans. That way, Crimson Cup coffee can be made available in all McDonald outlets in Malaysia, a better way of spreading their coffee to the consumer market.
Even if the price of a cup of Crimson Cup coffee in McDonald were raised to RM8 with free refills, it will be worth the money for getting unlimited amount of great coffee. Furthermore, partnership can be formed with Subway, to Burger King, KFC, and Secret Recipe besides McDonald; emulating Coca-Cola success in the carbonated drink industry to the coffee market. Conclusion In conclusion, Crimson Cup has quite a good chance of succeeding in Malaysia coffee markets through the application of proper strategic planning and research on customer’s lifestyle and behaviour.
As it stands, Crimson Cup may have to consider expanding their business in their local market before reaching to foreign market, as if they are able to get a foothold on America coffee market by a huge margin, it would help develop a better brand awareness when they do penetrate into the Malaysia market. By then, they would have an easier time with the recommended strategy to penetrate into the market. (4659 Words) ? Reference Book Anderson, W. T. and Golden, L. , 1984, Lifestyle and Psychographics: A Critical Review and Recommendation, in Kinnear, T. ed), Advances in Consumer Research, 11th ed, Association for Customer Research, Ann Arbor Kotler, P, and G, Armstrong, 2010, Principles of Marketing, 13th ed, Pearson, United States, America Mowen J. C. , & Minor M. , 1998, Consumer Behavior 5th ed. , Prentice-Hall Sheth, J. , B. Mittal, & B. Newman, 1999, Consumer Behavior and Beyond, NY, Harcourt Brace Journal Han, M. C. 1989, ”Country Image: Halo or Summary Construct? ”, Journal of Marketing Research, 26(2), pp 222-229 Maznah Ghazali, M. Said Othman, Ahmad Zahiruddin Yahya, M.
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