Successful Coffee Shop Chain Expands to Europe With Strategic Market Research - Essay Sample

Introduction

Marvin and Smith came up with an idea of running their coffee shop after working together for many years in the catering industry. Since the inception of this idea, they have opened three coffee shops in London. The shops have been making profits which made them expand their business by through opening of another coffee shop in Europe. Therefore, it was essential to do market research to know the strategic place where they can set up another coffee shop. Through thorough research on market trends in various parts of Europe, the two business partners spotted Spain as the best place to start a coffee shop (Vicentini, et al., 2016). They choose Spain because it is the only country which borders with Africa in Morocco, thus making it easier to obtain coffee products from Uganda, which is their reliable source of coffee. It was worth noting that coffee is the second largest consumed beverage after alcohol.

Is your time best spent reading someone else’s essay? Get a 100% original essay FROM A CERTIFIED WRITER!

Order now

Additionally, drinking coffee is a lifestyle in Spain. Most people in Spain drinks coffee at least thrice per day; therefore, they will get frequent customers from this region. Again, Spanish people can quickly adopt new things and are ready to explore new products. Finally, Spain is considered as the best place for many tourists to spend their holidays.

Hank and Patty took into consideration various logistics which are necessary to start a new coffee shop. It is crucial to consider the space where to set up a coffee shop. The area includes the building and coffee shop occupancy, and the rent paid for that space. They also made sure that the rent is not more than 15 percent of the total profit. They also considered the costs which they will incur in setting up the coffee outlet. They also discussed the methods they will use to procure the equipment which is necessary for setting up a coffee shop.

Additionally, the two business partners took into consideration the supplies of the equipment, raw materials, and the tools which they will use at the shop. They also assessed the cost tax costs, advertising costs, and lastly the payroll costs. Finally, customers in Spain enjoy over 250 fair trade products, which means most customers can easily find the Ugandan coffee, which will be sold at the Marvin and Smith coffee shop.

It is also essential to stick to the ethical considerations in setting up and running a coffee shop. For instance, Hank and Patty ensured that they adhered to the cultural marketing considerations. In order to market their brand in Spain, they have to consider using country-specific marketing messages. The marketing messages they use in their first three shops will not be the same as the ones they will use in the European Union. They also took into consideration business ethics such as safe working conditions for their employees and customers, and various regulatory and environmental considerations.

Furthermore, they had to consider the structural challenges they will face as they open a new coffee shop in a foreign country. Starting a new structure is so challenging, especially in a foreign country where one is not conversant which the countries regulations which should be followed when setting up a new structure. Marvin and Smith took into consideration the amount of money they will use to change and vanish a structure to a coffee shop outlook. It is crucial to address the possible structural challenges which might arise in the future because it can reduce productivity and profits. Therefore, they would follow the European Union regulation, which is necessary for setting up a coffee shop.

Tailored Marketing Mix

The marketing mix is a standard tactical, operational, and strategic part of any successful business marketing plan. Alternatively, the marketing mix is a combination of marketing tools business owners use to implement their marketing strategies (Kotler & Armstrong, 2013). Marvin and Smith focused their marketing strategies on the marketing mix, such as product, price, place, and promotion.

Product

The main aim of Marvin and Smith is to sell their products to the possible maximum number of customers. It is important to have other products such as teas and pastries, which they will trade together with coffee. They also need to come up with various options on which their customers will consume their products. For an instant, customers should be allowed to drink coffee while relaxing in the coffee shop or opt for a take away. Importantly, they should serve the coffee on the customers' preference, such as serving coffee with milk, or ice. The coffee shop sells not only coffee but also other products like pastries and other snacks and the juices which are prepared as customers watch. The products are made by the shop employees who apply a high level of professionalism.

Promotion

It takes time to get customers, especially when you are starting a new business in a new country. Therefore, the promotion of the products will play a primary role in attracting more customers to consume your product. Marvin and Smith should promote the coffee shop and the products differently and professionally. The duo should pay little for advertisement but making sure that they promote the shop and the products they sell. It is worthwhile to promote and advertise their products through various mediums such as billboards and newspapers. Additionally, Marvin and Smith should use the internet to promote their products and offer customers loyalty cards and discounts. The duo will use these promotions because they will work well in the target market.

Price

At the initial stage, Marvin and Smith will raise the price of the coffee in their first coffee shops, and once the coffee shop in Spain has attracted consistent customers, they will increase the cost of their products. The two business partners should sell the coffee at a lower price to make profits and improve on the marketing strategies at the initial stage. Selling high-quality coffee at the lowest price in Spain will attract customers and adjust the price with time. Installing free Wi-Fi and free sockets will make customers happy because they will use free WI-FI and freely charge their phones and laptops.

Place

The place where the coffee shop is located is supposed to be strategic. The fact that Spain is bordering Africa; the coffee shop should be modernized and cozy, which offers an ambient environment to its customers. Additionally, decorating the coffee shop with African pictures will attract more customers. Although the shop is in the city center, the place should be customers' favorite for them to come and drink coffee with the accompaniment of any snacks or other products such as milk or whiskey.

The Implication of Covering the Wide Geographical Area

Information Systems

Every country has its ways of managing their information system in order to make sure customer data is private. There is a paradigm shift in the information system of different countries. If Marvin and Smith expand their business to other countries, they will need more time to understand the information system of each country concerning marketing. A lot of time will be wasted in studying and understanding the business information systems in these countries during the inception stage (Rainer, et al., 2013). Contrary, if the information system of the target country is not compromised, the business will grow faster because there are few barriers to access to business information systems. Using appropriate information systems will make the expansion of the coffee shop business faster because the information needed is shared quickly across the affected countries.

Supply Chain

Expanding coffee business to other countries has a direct impact on the supply chain. According to Christopher (2016), supply chain involves all the activities carried out in a business right from production to consumption. Marvin and Smith prefer using coffee from Uganda to coffee from other countries in the world. If the intent to expand their business to other countries apart from Spain, where the preference of Uganda coffee usage is high, they will be forced to look for other suppliers. Once they find other suppliers, they have to abide by trade tariffs of those countries where they will import coffees from, therefore, incurring more expenses. More expenses will reduce the profits made by this business. Supply chain involves the distribution of raw materials from the producer to the consumer. Thus, making orders from different parts of the world to satisfy the customer will cost more than when making orders from one supplier.

Evaluation of the Provided Financial Information

Considering the financial information provided, it is easier to find out the profitability of Marvin and Smith's business as calculated below:

net profit=gross incomenet sales=208,000360, 000=0.58100%

=58%

From the above calculations, it can be deduced that business product sales are at 58%. Since the business is not doing relatively well, the management should come up with more strategies which will increase product sales; therefore, increasing the returns.

net profit ratio=net profitnet sales=26,800360,000=0.074100%

=7.4%

Therefore, Marvin and Smith's profitability is 7.4%, which means that they are not ready for the economic situation like low demand and competition. Therefore, the expansion of their business depends on other economic factors apart from market demands. Additionally, from the information provided, the business does not have any liability, which translates to 100% liquidity. 100% liquidity means that the business has no loans and debts; therefore, the expansion of this business to Spain will lead to making more profits without any restrictions from the government.

Conclusion

The idea of expansion of the coffee shop to Spain will yield more profits with the appropriate marketing mix. From the financial information provided and the calculations made, it is deduced that the business product sale is at 58% which is above average, but the business management should come up with more strategies to increase product sale from 58% to a higher number. Additionally, the business profitability is at 7.4%, which indicated that the business is not ready for economic issues such as low demand, low prices, and competitions. It is crucial to note that the business is free from loans and debts, the chances of making profits are still high, but through the use of more market strategies, the chances will be higher.

Reference

Christopher, M., 2016. Logistics & supply chain management. Pearson UK.

Kotler, P. and Armstrong, G., 2013. Principles of Marketing (16th Global Edition).

Rainer, R.K., Cegielski, C.G., Splettstoesser-Hogeterp, I. and Sanchez-Rodriguez, C., 2013. Introduction to information systems: Supporting and transforming business. John Wiley & Sons.

Vicentini, A., Liberatore, L. and Mastrocola, D., 2016. FUNCTIONAL FOODS: TRENDS AND DEVELOPMENT OF THE GLOBAL MARKET. Italian Journal of Food Science, 28(2).