The new product is decaffeinated Nescafe that is launched to address current issues of the customers. the new product is launched to attract young customers having decent income. A differentiated strategy is chosen to promote this product. the communication strategy is an integrated marketing communication strategy. The decaffeinated coffee of Nescafe can be good product to foster sustainable and healthy image of the company.
II. The Business challenge
The offer is to enhance sale of the Nescafe homemade coffee with zero caffeine for the company Nestle because the coffee sold by the company faces a challenge of health consciousness of people who prefer healthy products over coffee. The business goals of the plan include improving the sale of Nescafe Homemade coffee by 20 percent in the global market. The other goals are widening customer base by ten percent and extending suppliers base by 10 percent.
III. The market
The customers are those who prefer coffee to tea and other beverages. The potential customers are also those who currently consume homemade coffee alternatives such as tea and other beverages. These customers are mostly young and in the age group of 20 to 35. These customers are from different cultural backgrounds as Nescafe is sold worldwide. These people are educated and their income level is moderately high. Such customers also prefer to use high quality. These customers are the target customers for Nescafe coffee with zero caffeine.
The strengths of the company reveal that Nescafe is recognized as the strong brand in the global market. Thus the brand equity is being enjoyed by the brand Nescafe. The brand value of the Nescafe reveals a worth of 17.4 billion dollars and it is the largest brand of the company Nestle. The next strength is quality of Nescafe brand because the Nestle Company manages the quality of coffee strictly. The next strength is diversity that includes providing various tastes to the customers and finest coffee beans to the customers. Another strength is excellent promotional campaign the promotional campaigns of the company are popular and therefore, visibility of Nescafe brand is enhanced. The next strength of the Nescafe brand is economies of scale as the Nestle Company has vast resources and it can easily provide the product in cost efficient ways to the customers [ CITATION Bha191 l 16393 ].
Weakness reveals people getting health conscious that creates a challenge for the organization. People who prefer healthy beverages options may be allured to purchase zero caffeine coffee but the image of the Nescafe selling caffeinated coffee may work as hindrance. Indirect competition from substitutes such as carbonated drinks, tea and other beverages may also reduce the potential of this offering. In many countries, tea is preferred to coffee and this can be a challenge for the company.
Opportunities for the Nescafe are building tie ups with the institutions, public organizations and educational companies to drive the sale of the coffee. The next opportunity for the organization is to tap the growing income of people as such people may choose the premium coffee taste. Nescafe can be sold by accompanying with cookies and biscuits and these opportunities need to be tapped by the Nestle Company.
Opportunities for Nescafe are to penetrate into the rural market by offering cheaper priced products as well as offering healthy coffee to the customers. Nescafe has opportunities to tie up with the companies to grow its new business. The single cup brewing coffee is another opportunity for the Nescafe brand. Nescafe can sell cookies and biscuits that can go well with coffee.
Threats include growing awareness among customers to consume healthy products and an image of the Nescafe selling coffee with caffeine content. Another threat is from speciality coffee that people opt for. Child labour issue and stigma associated with Nescafe is another weakness. Cocoa farmers also face several issues in cultivating produce and this problem may also cause threat to the business. The direct competition from Bru and also growing brand such as TATA can also pose threat to this new business.
The collaboration with the distributors and suppliers needs to be strengthened to promote the business. Penetration of the new Nescafe coffee must be done by offering training and education to the suppliers and retailers as well as to the product should be pushed into the market by offering POPs and promotional materials to the retailers.
The competitors activities reveal that they provide a stiff competition to Nescafe. The competitors such as Mondelez, Danone, Hershey, Unilever, TATA, Davidoff, and Lavazza compete well against the company.
Changing needs of customers pose a threat to the Nescafe business. Regulators and societal expectations from the organization also force the company to introduce a healthy product to the customers.
IV. The Strategy
There are various strategies to choose such as differentiation, focus and cost-leadership strategies as proposed by Porter [ CITATION Yam99 l 16393 ]. Cost leadership strategy is oriented towards minimizing the costs of the products and gaining a leadership position. But such cost leadership is not appropriate to pursue because the company provides premium coffee to its customers and maintain the quality high. Thus, providing a Nescafe coffee in low price is not possible. The second strategy is cost focus strategy that can be used for a niche segment. As the Nescafe is sold in many countries and it is consumed by masses, therefore, the option to pursue cost-focus strategy is not appropriate. The next strategy is differentiation-focus strategy that is pursued to provide a differentiated product to a niche segment. This strategy is also not feasible because it does not cater needs of global customers base of Nescafe. Finally, the differentiated strategy that provides a unique product with a different feature that cannot be copied and provides a competitive advantage is found suitable. This strategy is pursued because it can target the global customers as well as it can provide a competitive advantage to the Nescafe. The company can also charge a high price of this coffee from the customers.
The feature of new Nescafe coffee is offering a coffee that is free from caffeine yet healthy and tasty for the customers. The benefits obtained from the coffee are maintaining health and offering other general benefits of coffee.
The launch of the coffee product should include the purpose of launch such as introducing a caffeine free coffee product to the customers who are young and in the age group of 20-35 as well as earn decent income. The positioning statement includes this statement
Positioning statement: A decaffeinated coffee Nescafe with immense health benefits and great tastes
The communication strategy includes conveying the benefits of decaffeinated Nescafe coffee. To convey the coffee benefits, multi-channels are selected. These multi-channels include PR, and advertising. For PR, the benefits of Nescafe decaffeinated coffee will be communicated. Also for the advertising, benefits of decaffeinated coffee will be communicated. An integrated communication strategy is suggested to follow where the content of message for Nescafe promotion must be same.
Collaboration with advertising agency is required to promote a uniform message. The content, images, or models used in the advertisement must corroborate with the target audience characteristics. All the models must be in the age group of 20-35 and they should be shown as seeking coffee with great tastes and health benefits.
The product will be sold through retailers and distributors. Retailers must be provided training regarding the product features and product must be placed on the front row of the shelf in the retail outlets.
The investment required is 100000 dollars. The marketing plan includes the costs of advertising, PR, fee of advertising agency, training cost to retailers and distributors and other expenses.
b. return: short term and long term financial goals, projected sales, cost and net income
The short term financial goals are to gain a 10 percent market share in decaffeinated coffee market. Long term goals are to foster a sustainable as well as healthy product image of Nescafe. Projected sale achieved can be 100000 units in each month. The projected net income is 150000 dollars.
The marketing plan for decaffeinated coffee of Nescafe can be a good product to address the health concerns associated with consuming the coffee product. It can also widen the customer base and retain the existing customer base. in future, the product can provide a very good financial return.