Developing Marketing Strategies For A Cafe In Melbourne, Australia

Opportunity Analyses

The aim of this study is to address a problem faced by a small café regarding the reduction in the number of customers. The café opened two years ago in Melbourne Australia following which it had a decent footfall. In the last 12 months, the café underwent an expansion, and the price of food and beverages were increased following which the inflow of customers started dwindling (Adams et al. 2016). This severely affected the profits of the business and has jeopardized the long term sustainability of the café. Additionally, competition from other café’s have also taken away many of the regular customers who used to visit the shop (Pedini et al., 2017).

The objective is to develop an effective plan for marketing of the business, in order to increase the flow of customers and improve the profits. The idea is to attract more customers to the business through effective marketing strategies and overcome competition from other businesses in the region (Chang and Chen 2015). Thus the business problem being addressed in this study is a reduction in the number of customers and a reduced flow of cash for the business, as well as the threat from other competitors in the sector and region in Australia (Saito 2018).

The potential ideas that can be implemented to improve the inflow of customers to the business can include the following:

• Implementing happy hours scheme from 12pm to 4pm to attract students during this off peak hours. During this time all food and beverages would have flat discounts.
• Reserving tables for social and personal events by guests. This can allow guests to reserve a section of the shop to host personal or celebratory events.
• Providing flat discounts on deserts and bakery products after 8pm to clear the day’s stock. This can allow the daily stock for bakery products and deserts to be cleared every day, and ensure fresh products are procured every morning. Additionally, it wil, help to attract more customers.
• Implementing limited time offers on food and beverages in the form of introductory offers on newly added food and beverage items, which can help the customers to try the new food and beverage at a lower cost.
• Providing guest receipts for free on appetizers or deserts, which they can use on their next visit to the store. These receipts can given to the guests while they are paying the bill, informing that on the next visit they can show the receipt for a free appetizer or desert.
• Implementing loyalty programs using email marketing strategy where discount coupons will be emailed to regular customers which they can redeem for a discount.
• Adding a jukebox to the café where the guests can choose what music can be played
• Free WiFi internet availability for all guests
• Open Mic weekends from 7pm to 10pm where live bands can play and can attract music lovers to the store.
• Using social media advertising on platforms such as FaceBook to promote the business, the discount offers as well as the weekend events being hosted in the shop.
• Using word of mouth advertising strategies where satisfied customers can spread the good word about the business to their friends and acquaintances.
• Engaging with major events such as the upcoming Super Show Down pay per view event by WWE in Melbourne on October 6^th.

(Birt 2016; Fuentes 2017; Wolf and Floyd 2017)

The sector of industry being addressed in this context is of food and hospitality. The café is in a busy metropolitan area of Melbourne, Australia. The shop offers both quality beverages such as coffee, milkshakes and various other coffee based drinks for the guests. Food options include savories, snacks, deserts and bakery products as accompaniments for the beverages. The shop also provides the guests the opportunity to relax and unwind in the shop, listen to music, read books or magazines and talk to people. Thus the business offers both foods as well as hospitality services for the guests (Huang et al. 2017; Ridoutt et al. 2016).

The café is located strategically to ensure good flow of customers from the urban metropolitan areas, schools, colleges and local offices. The café is also close to several tourist destinations which can attract several tourists who would like to spend some time, relaxing and planning their travel itineraries through the city. The market for cafes in the region is very high, and there is a significant market demand for this sector due to which there are several other competitors in the business. Studies show that the market for coffee shops and café have grown in the last 5 years because of the strong coffee culture in Australia. The market has an annual growth rate of 5.1% and the total revenue is expected to reach to about AUD 8.3 billion by the end of 2018 (Samoggia and Riedel 2018).

Opportunity Exploitation

Key trends in the market includes an increase in demand for cold drip coffee and Nitro Coffee whose market have increased over the last five years by 58%. The market for instant coffee is also expected to grow to AUD 1.6 billion by the end of 2018. Additionally, statistical records also shows that average per capita revenue for the coffee market is approximately AUD 79.79 (as of 2018) and is expected to rise to AUD 83.71 by 2021 (Topik 2015; Samoggia and Riedel 2018; Jayasinghe 2018).

Such statistical information clearly shows that the market for coffee shops and coffee products in Australia is very big and has a lot of potential for growth, due to the strong and vibrant coffee culture in Australia.

The target customers that can be focused on by the café include:

Students: Students from schools and colleges can be targeted by the business since they the age group is a significant consumer of coffee products across Australia. Studies show that students drink an average of 9.6 cups of coffee every week, showing that they represent a significant proportion of the coffee drinking population.

Office goers: They are major drinkers of coffee, drinking about 15-20 cups of coffee every week. These individuals prefer to start their day with a nice cup of coffee and snacks, and also like to spend their lunch times or break times in a café (preferably close to their office) where they can relax for sometime before getting back to work.

Businessmen: They are another major coffee drinking population in Australia, drinking equivalent amount of coffee as the office goers. Additionally, they also prefer a good ambience of the café, that can help them focus on their day to day business before they start for the day. The café can also provide them an optional venue for informal meetings with clients.

Coffee Lovers: Since Australia has a strong coffee culture, there are many coffee lovers, who prefer different types of specialty coffee drinkers. Such people prefer beverages such as espresso, latte, mocha, cappuccino, nitro coffee and cold drip coffee. Additionally, they also love coffee related or coffee flavored deserts.

Coffee Shop Lovers: These individuals visit the café and coffee shops as they love the ambience of the shops and prefer to spend extended time in the shops, enjoying the ambience while drinking coffee.

Music Lovers: Australia also has a very rich culture of art and music, and there are a lot of people who love music. They prefer to spend time in café’s that plays good music, which helps them to relax and enjot themselves while they drink their cup of coffee.

Tourists: They are also another potential source of customers as the tourists often would like to take a break from the travelling and spend some time in the cafés looking up places they can go on the internet while they enjoy their coffee and favorite snacks and savories.

(Aadinath et al. 2017)

Given below is the prices of the beverages and snacks that are available in the store:

Beverages:

Snacks:

The business can overcome the steep competition in the market through increase in the marketing activities to attract more customers and increasing the advertising the business in large events to increase the penetration rate of the brand in the market. In order to do so, the ideas that have been discussed earlier (such as social media advertising, involving in big events such as the upcoming WWE pay per view in Melbourne and word of mouth promotions) can be used to increase the advertisement coverage for the business. Attracting new customers and retaining existing customers can be made possible through strategies such as food discounts, happy hours, limited time offers, guest receipts and loyalty programs). Additionally, customers can also be attracted through certain added benefits or attractions such as free WiFi Internet connectivity, Open Mic events, Jukebox in the café, and options for reserving parts of the café for events (Phillips and Moutinho 2014).

Discussed below is the SWOT analysis that can help to understand the Strengths, Weaknesses, Opportunities and Threats faced by the business and identify strategies through with the opportunities can be best exploited through the implementation of the ideas discussed earlier (Bohari et al. 2017).

Strengths:

• Strategic positioning of the café in a busy metropolitan area of Melbourne
• Strong funding from the business owners which allows to cover for most of the expenses of the shop
• Good ambience of the café
• Rich assortment of coffee and coffee related products
• Procurement of high quality coffee beans from Brazil, Colombia, Vietnam, Ethiopia and India
• Procurement of high quality Darjelling Tea from India
• Highly skilled coffee brewers and coffee makers
• Assortment of high quality and delicious snacks as accompaniments

(Chang and Chen 2015)

Weaknesses:

• Not enough customer attraction strategies
• No discounts on the products
• No WiFi
• No Happy Hours
• Weak marketing strategies
• Social Media platforms not used adequately for advertising campaigns
• No Loyalty programs for regular customers

(Bohari et al. 2017)

Opportunities:

• Strong market demand for coffee products
• Strong growth rate in the market for café and coffee shops
• Increase in the number of coffee drinkers in the next four years
• Strong coffee culture in Australia
• Potentially large base for customers in the Melbourne region
• Preference of coffee drinkers for exotic coffee products
• Strong demand for instant coffee, nitro coffee
• Good potential for market penetration through strong marketing strategies
• Customers favor businesses that offer discounts and loyalty offers
• Large number of customers are active social media users
• Possibility of attracting more customers through involvement in big events
• Growing attraction for places that has open mic evenings
• Potential to attract more customers and retain existing ones through discounts, promotional offers, loyalty coupons and programs
• Stong influence of word of mouth advertising

(Bohari et al. 2017)

Threats

• High competition from other businesses such as: Starbucks, Dunkin Donut, Nestle, Kraft Heinz, Coffee Beanery, Luigi Lavazza and Coffee Repiblic.
• Fluctuations in the price of Coffee beans procured from other countries
• Change in the preference of the choice of beverage due to increase in coffee price as per the scarcity and demand theory.
• Potential of a shift in market demand for coffee
• Adverse health effects due to overconsumption of coffee such as headache or insomnia can also drive away customers
• Health awareness campaigns that warns customers of the adverse effects of drinking coffee.
• Maintenance of the upkeep costs of the business.
• Changes in the costs of the snacks and savouries

(Bohari et al. 2017)

In order for the ideas that has been discussed before to work, they need to be able to convert the weaknesses of the business into its strengths and the threats to opportunities.

The validation of the ideas can be done through the analysis of the flow of customers in the next 6 months. Additionally, strategies to analyze the profitability of the business can also help to understand if the selected ideas are able to address the business problems faced by the café. These strategies include:

• Break Even Analysis (such as break even analysis for on fixed expense, variable expense and sales)
• Profitability Ratio (such as gross profit margin ratio, operating profit margin ratio and net profit margin ratio)
• Return on investment analysis (such as return on assets and return on investments)
• Using DuPont Model so summarize all the financial ratios

(Chang and Chen 2015)

Also, the inflow of customers, their preferences of drinks can be analysed using the customer flow analysis framework that can help to understand the patterns of customer traffic, characteristics of the customer, preferences of the customer, how much time customers spend in the store and the buying behavior of the customer (Bohari et al. 2017).

To understand whether the customer are pleased with the service, pricing and products as well as the ambience of the café, and whether they would like to visit the store again, feedbacks can be taken from the customers through feedback forms that can be given to them along with the bill, and deposited in the feedback and suggestions box placed in the front counter. Overall, an increase in the number of customers, retention of existing customers and an increase in the time spent by the customers in the store can be taken as positive indices for the efficacy of the ideas along with the index of profit increase in the business (Feili et al. 2017).

The project manager can play important role in the exploitation of the potential opportunities of the business to ensure a better implementation and execution of the ideas and thus ensure success of the plan to increase the number of customers in the café. The roles or activities the project manager can play include:

Analyzing the market demand for different coffee products: The project manager can analyze the demand for different products and understand which products have the highest demand in the market and are preferred by the customers. This can help to decide upon the beverage menu offered by the store (Papke-Shields et al. 2017).

Fixing the price of the beverages based on the market analysis: The project manager can also fix the price of the different beverages based on the cost of the raw materials, logistics and costs of preparation of the products and also informed by the market analysis on the price of similar products by the competitors to develop a competitive price for the products (Vukomanovi? 2016).

Fixing the price of the food and snacks: Prices for food and snacks can also be developed by the project manager, in consultation with the chefs.

Deciding upon the discount options for food and beverages: This is an important aspect that can be determined by the the project manager. Here the manager can decide upon the amount of discounts that can be offered to the customers of various foods and beverages and also the discount given during the happy hours to attract the maximum number of customers but also keeping in mind the costs of production (Andersson and Chapman 2017).

Deciding upon the loyalty programs: The project manager can decide upon the loyalty programs and loyalty bonuses that can be offered for regular customers and the types of benefits (free deserts or beverages) that can be offered to them on their return visit (Papke-Shields et al. 2017).

Managing the marketing and advertising activities: This is another important aspect that needs to be managed by the project manager. Marketing strategies such as promotional campaigns and event organization can be managed by the project manager.

Contacting with the hosts of big events such as the WWE Pay per view in Melbourne: The manager can contact the hosts of big events for event tie ups whether the business can be promoted in the event.

Managing Open Mic Events: The manager can organize the open mic events, arranging for the equipments and performances.

Procurement of materials: The manager can also determine the procurement strategies for importing coffee beans and tea from abroad.

Managing the accounts: The manager also have to overlook the accounts management, monitor the inflow and outflow of cash from the business accounts.

Performing Profit analysis and customer flow analysis: The pr0ject manager can analyze the growth and profitability of the business through these strategies and understand whether the proposed plan is able to achieve its objectives and address the business problems faced by the café (Andersson and Chapman 2017).

The project management approach that can be used to meet the challenges and deliver the opportunities for the business can be Agile Project Management Approach. This approach can help to implement the plan in small phases. This allows flexibility to the project implementation and different ideas can be implemented in small and incremental phases thus providing a dynamic approach in the implementation of the plan. The project manager can decide upon the milestones of the project, with each milestone representing specific phases in the project implementation and also incorporate the real time outcomes to make changes in the implementation based on how it influences the customer flow and profit of the business (Layton and Ostermiller 2017; Franková et al. 2016). Thus using this strategy, all the ideas does not have to be implemented simultaneously, but grouped together in categories such as: marketing and advertisement, procurement, customer retention and customer attraction.

References:

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