A “Bean-to-Cup” coffee machine manufacturing company, that is planning its launch in a foreign market (Russian) should employ better marketing segmentation criteria. The criteria that a “Bean-to-Cup” coffee machine manufacturing company uses to classify its customers are measurable, responsive to the marketing mix and reasonable. Therefore, the segmentation criteria that a “Bean-to-Cup” coffee machine manufacturing company should apply include economic, geographic, demographic, behavioral, and psychographic. Under economic segmentation, the market can be categorized according to the levels of income.
International Expansion Strategies
Macro Environment issues
There are various factors that would affect the decision making processes. The PESTEL analysis technique has been used in an effort to analyze some of these factors. The PESTEL model usually covers the political, economic, social, technological, legal and environmental factors that are likely to influence the decision making process while planning for an event some of these factors might result in various changes being made in the planning process.
(Grewal and Levy 62).
This entails the analysis of the immediate external environment in which a “Bean-to-Cup” coffee machine manufacturing company operates. In this regard, the analysis focuses on the coffee products market, competitive environment and the costs involved. This can only be achieved by continuous surveys of the coffee product competitors’ actions in this market. Under a “Bean-to-Cup” coffee machine manufacturing company’s strategic marketing plan/approach, it will continuously monitor potential benefits/opportunities offered by the new line of products/coffee products to ascertain its financial viability.
In addition , competitive strategies, diversification, standardization/adaptation issues, the company faces some challenges in its segmentation strategies. Geographic segmentation acknowledges variable climate, population growth, region and population density. A “Bean-to-Cup” coffee machine manufacturing company invests more in regions with high population growth and density. Moreover, demographic segmentation relies on human variables including age, ethnicity, gender, occupation, education, and family status. These variables are different aspects and a “Bean-to-Cup” coffee machine manufacturing company applies then only in areas deemed essential, in the sense that those factors do not affect the consumer choices and preference.
As a short term strategic measure, behavioral segmentation enables a “Bean-to-Cup” coffee machine manufacturing company to use variables such as the price sensitivity rate of usage; benefit sought and brand loyalty. In this area, a “Bean-to-Cup” coffee machine manufacturing company uses such attributes to improve on the quality of its coffee products. In addition, psychographic segmentation (a medium term strategy) helps a “Bean-to-Cup” coffee machine manufacturing company determines the consumers’ lifestyle, attitude towards coffee products and values attached. It can be proposed in this plan that through the segmentation, a “Bean-to-Cup” coffee machine manufacturing company is able to understand the customers’ preference and desires, thus making informed choices during distribution of the its products.
The growth rate (a long term strategy) of a “Bean-to-Cup” coffee machine manufacturing company in Russia and Europe can be analysed through micro and macro-environment analysis. For instance, micro-environment entails analysis of the immediate external environment in which coffee products at “Bean-to-Cup” coffee machine manufacturing company operates. In this regard, the analysis focuses on a “Bean-to-Cup” coffee machine manufacturing company market, competitive environment and the costs involved. This can only be achieved by continuous surveys of a “Bean-to-Cup” coffee machine manufacturing company competitors’ actions in this market. Under beverage products, a “Bean-to-Cup” coffee machine manufacturing company ’s strategic marketing plan/approach, it would continuously monitor potential benefits/opportunities offered by the new line of coffee products to ascertain its financial viability.
Focusing on performance and management structure, the profitability a “Bean-to-Cup” coffee machine manufacturing company can be determined by matching the company’s expenses against its revenue earnings. In order to do this evaluation, it is better to use the earned value analysis technique. Earned value analysis is a method of performance measurement. It is a program management technique that uses “work in progress” to indicate what will happen to the marketing plan in the future. Earned value goes one step further and examines actual accomplishment of the marketing plan. This allows the marketing managers to have a greater insight into the potential risk areas. It is a set of guidelines that guide the firm’s management control system. Moreover, profitability and demand for coffee products acts as a motivating factor for market entry. In this regard, wholly owned subsidiaries and franchising would be more appropriate modes of market entry for this company.
Marketing Mix Strategies
The 7Ps of marketing that the company applies currently include, people, product, price, promotion, place, process, and physical evidence. They determine the success of the business if well articulated. In business, the 7ps are called the marketing mix and are available to the authority managing the company affairs. Primarily, the marketing mix combines the product and service aspects, thereby making the 7ps. For the case of a “Bean-to-Cup” coffee machine manufacturing company, the marketing mix is considered in the situation of coffee products marketing. The report outlines the various ways, in which the company has used the elements in improving the coffee products and marketing plan for the business operations.
In reality, the people are the most important aspect of the marketing mix, an issue that the company had recognized. For instance, the use of coffee product is capable of altering the dynamics, which surround those delivering the coffee products products.
Through improved coffee products technology, the company has provided a means of delivering new and unique products, which are intended to match many other available products. Besides, the purely new products are presumed to develop new business opportunities for the company. Some of the products they make are in line with the technological development
Pricing of the coffee products products that a “Bean-to-Cup” coffee machine manufacturing company intends to supply is very significant in determining the overall sales volume. In addition, the pricing of the coffee products that a “Bean-to-Cup” coffee machine manufacturing company intends to provide in the Russian market are very significant in determining the overall sales volume. This implies that the firm will need to offer better quality and affordable coffee products, which attract more customers. As a result of the pricing strategy, the firm will be in a good position to attract and retain many clients.
Carrying out promotion is one of the means through which a “Bean-to-Cup” coffee machine manufacturing company can create awareness on its new product line. For a “Bean-to-Cup” coffee machine manufacturing company, the coffee products provide them with many opportunities for doing promotion to sensitize the public on the products.
A “Bean-to-Cup” coffee machine manufacturing company can create a new interaction place for their consumers so that the communication between them could be cordial and with maximum efficiency, especially on its new product line/ coffee products.
The issues relating to the process involve the channel through which a “Bean-to-Cup” coffee machine manufacturing company follows in delivering its coffee products products to customers. It also outlines the various ways through which the customer should follow to receive the products. For the case of a “Bean-to-Cup” coffee machine manufacturing company, the management understands and outlines the other ways of making the customers have personalized knowledge about the coffee products products that the company offers.
In conclusion, evaluating the implications a good channel strategy is necessary in every firm. The channels are vital for creating different efficiencies and marketing strategies. However, development of new channels comes with new challenges, which decision makers are obliged to make. Channel conflict management calls for understanding of marketing channel equations, vital interacting variables and the interconnection of different webs in creation of profits and cost cuts.
A “Bean-to-Cup” coffee machine manufacturing company to be launched in the Russian market should use the appropriate channel strategy. With increasing intense competition witnessed in many organizations today, most firms are obliged to adopt multiple channel strategies for several reasons. As a result, head on channel strategy becomes inevitable in a multi - channel environment. The effect of this competition is a sharp increase or decrease in demand for one of the chosen channels. Multichannel has been adopted for cutting costs to meet varied consumer needs, covering of different marketing segments and increasing profits.
Decision makers are in a dilemma over the introduction of channels to meet market demands and managing channel strategy. As a result, decision makers are obliged to rationally and systematically analyse the situation and develop mechanisms of managing channel strategy to achieve channel structures that are optimally working. However, managing channel strategy is not simply due complex nature of channel variables. A channel equation can be applied in making decisions. The channel conflict/strategy equation is given by the following formula.
Strategy= ∑ Importance × Frequency × Intensity.
The major variables under consideration in management of channel strategy are coffee product price, profit and consumption. While making the decision on channel strategy management, a simulation model should be developed to manage these variables, which are based on the equation.
A decision maker needs to analyse and understand the interaction of supply, demand and price before making a decision on the appropriate channel to use. An increase in demand for a coffee products will cause a proportional price and profit increase at a constant cost. In such a market, many suppliers or a “Bean-to-Cup” coffee machine manufacturing company providers will try to increase coffee products in the market which in turn calls for more investors. Consequently, the price will go down due to increase in supply. This will also affect the demand in substitute coffee products. Adam Smith’s corner stone of four channels (hypermarkets, wholesalers, direct sales and e-commerce) is an example of useful channel strategy management decision model. One needs to create an understanding of interactions of the variables to develop a coffee product system similar to Smiths channel. It will be realized that it is either consumed or coffee products of a given channel that will be minimal in a given period.
Allocation of coffee products become a vital decisive tool for a decision maker who needs to reduce channel strategy conflicts. Coffee products coverage, which is the balance between supply and demand, is vital for channel management decisions. Channels with a high rate of consumption are given more priority than those in low consumption. High prices will automatically reduce coffee product's value to the consumers in comparison to competitive coffee products. In the case of coffee products suppliers, high prices make decision makers allocate more coffee products for maximum profit.
Plan of Action
The performance measurement evaluations and analysis of a “Bean-to-Cup” coffee machine manufacturing company will consist gathering feedback from its target customers from Russia. The feedback to be gathered from customers will be timely to facilitate evaluation of the collected market data and information. This will help the company to take a more effective decision to launch its products in the new foreign market. Finally, the impact of the new product line/coffee products provided by the company in the market will be inspected by questionnaire and survey.