BSBMKG609 Develop a Marketing Plan

Assessment Task 2
Part A: Develop Marketing Strategies

1. Select an appropriate organization/company for context and reference

T & T Cafe Corporation operates throughout various industries, but is best known for their
coffee house retail stores. These retail stores sell a variety of beverages and have recently
ventured into a breakfast and lunch style food selection. Because of the cross industry
operations, T & T Group can be compared and contrasted to many types of companies. For this
report we will only focus on T & T Cafe as a competitor in the Specialty Eateries industry. In the
situational analysis, we found that T & T Cafe has grown to nearly 10 stores by its popularity and
aggressive expansion strategy. Its rapid expansion however, came with a price tag, which T & T
Cafe realized when customer traffic decreased for the first time and its price share plummeted
by 54 percent in 2019. Coupled with a recession, cannibalization of T & T Cafe stores is said to
be the cause of the decline in same-store sales. Fruitier has been scheduled to be launched in
January 2020. T & T Cafe anticipates bringing the product awareness to our target market
through its promotional mix scheduled to start in the beginning of 2020. As the market for the
health-consciousness grows, our new product is expected to increase T & T Cafe’s revenue and
market share.

2. Conceive a new product or service and determine its features, characteristics and benefits

T & T Cafe offers a selection of highest quality Arabica coffee beans and continues to raise the
bar of coffee standards. While the core product of T & T Cafe is coffee beans, it offers a variety
of coffee drinks, snacks and coffee-related accessories and equipment. Below are the product
mix offered through its retail stores:

 Fresh brewed coffees

 Cold blended beverages

 A selection of premium teas

 Fresh pasties and other food items

 Smoothies

3. Identify and select an appropriate target market

 Students

 Officers

 Citizens
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  Through its aggressive expansion since 2015, T & T Cafe now serves and targets all
demographics. This is apparent based on a wide range of selections of drinks, pastries and
other goods that it offers. The store offers organic chocolate milk for toddlers, non-coffee
ice blended beverages for those who don’t care for coffee and fruit salad for those who are
more health conscious. Anyone, in any age group, will find a drink or snack that meets his or
her palette.

 The decision process for young adults includes identifying or searching, for a place where
they can study, socialize, meet with other students or friends and drink high quality gourmet
coffee. Deciding on a place that can satisfy on as many of those want as possible, is
important and necessary to incorporate this “third place” into their lives. The high
involvement in where to meet, the space available at that particular coffeehouse, the quality
of the coffee’s taste and additions such as syrups and specific preparation provides a
concentrated decision making process.

4. Develop marketing objectives

The marketing objective is to bring awareness to the new product, specifically its value and
benefits to the selected target market, leading to a 5% increase in customer traffic and a 4%
increase in sales of beverage drinks in company-owned retail stores. A new product line will be
implemented. Increase within two years of introducing the new product. By the second year of
introducing the new product, the number of transactions in each store will measure the targeted
increase in customer traffic, and the increase in the revenue of beverage drinks will be measured
by the total sales in each store over the period of two year.

5. Conduct a SWOT analysis to analyze company’s strengths, weaknesses, opportunities and

threats

Strengths

As a strong global brand, T & T Cafe was built upon a reputation for fine products and
services. It definitely met its long range goal of becoming the most recognized brand of coffee in
the world and as of today, T & T Cafe Corporation still remains a fine coffee industry and a very
profitable organization with its strong performance. T & T Cafe is widely spread around the
Australia. In recent years they expanded rapidly by opening stores in many cities. T & T Cafe’s
management gives priority to a diverse workforce that represents its community. According to T
& T Cafe Corporation Fiscal year 2015 Corporate Social Responsibility Annual Report, T & T Cafe
has a very diverse workforce, with more than 170 partners (employees) worldwide. In the
diversity there are men and women of different ages, races, religion, national origin, gender,
disability, and differing levels of education, skills and experiences.

Weaknesses

Along with so many strengths, T & T Cafe has some weaknesses. Due to high price of their
premium coffee beans, T & T Cafe increased prices of some of their coffee drinks. Therefore, T &
T Cafe lost many of its customers, 20% of coffee-drinkers either have stopped drinking coffee, or
they make it at home by using less expensive brewed coffee. Then T & T Cafe ended up lowering
2
 the prices of some of their brewed coffee, and are offering promotions on iced drink in order to
either regain those customers, or not lose others (Pricing for Profit: T & T Cafe’ New Pricing
Strategy: the Beginning of the End). However, it is hard for T & T Cafe to maintain low prices,
since premium coffee beans are always expensive, and it is the number one expense for T & T
Cafe.

Opportunities

Since a high percentage of revenue comes from their retail operations, T & T Cafe is planning to
open new stores throughout the Australia to accomplish the goal of operating more stores.
Despite the closure of many under-performing retail stores, T & T Cafe plans to open another 10
retail stores in markets where its stores already exist. By next year in the Australia alone, T & T
Cafe is planning to open 20 new stores. One of the challenges for T & T Cafe will be to convince
people to drink instant coffee and that coffee drinks aren’t so expensive after all. The best
expansion opportunity for T & T Cafe would be getting a license to open T & T Cafe coffee shops
on University campuses.

Threats

The current economy is a huge and major threat to the coffee industry, since during an
economic downturn luxury products become secondary. During a recession people skip T & T
Cafe more than ever because coffee is seen as an extravagant drink, and anything of
extravagance is usually the first thing to go, during recession. In its first quarter of fiscal year
2015, T & T Cafe suffered a 3% decrease in transactions for the first time. For the first time in T
& T Cafe history, T & T Cafe announced it would close its under-performing stores and lay of
almost 50 employees. Economic crises and recession will always remain major threat for T & T
Cafe and any other consumer based industry.

6. Identify gaps, if any, that exist between marketing objectives and company’s capabilities

Many people want to be within a certain type of status quo and be part of a lifestyle that is
above their current position in life. T & T Cafe has taken this into account and has noted the
“aspirational gap that exists between the lifestyle most consumers aspire to live and the actual
lifestyle they do live”. Young adults and college students ages 18 – 24 are usually looking for a
place to study, have group meetings, socialize, and have coffee readily available; as this seems to
be an ideal placed in society as the place to be.

7. Conduct a PESTLE (or PEST) analysis to analyze company’s external macro environment

Political Economic Social Technological

Pressure to Hangover from Coffee drinking is New inventions,

strengthen recession still limits enduring as a popular including advanced
environmental discretionary spending. ‘fashion’ roasting techniques
regulation. can provide
Interest rates will Lifestyle changes,
advantage.
increase soon. including longer

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 working hours are
making a coffee ‘pick-
Legislation Uncertainty and me-up’ a regular part New product
unemployment is development,
New/extra of the working day.
commonplace. including flavored
legislation around High caffeine intake coffees and
sustainable coffee Inflation rates are on raises pulse rate and improved
production will the up. hence is not decaffeinated coffee
impact. Consumers
in the Australia are Consumer confidence recommended for for those concerned
is improving slowly. certain groups e.g. about the caffeine
conscious of the
those with content.
ethical implications, Environments hypertension, but
with increasing doesn’t increase risk of Energy use and costs
consumption of Biodegradable are the keys with
death.
Fair-trade coffee. packaging is the key to ethically sourced
reducing waste. But coffee does coffee beans adding
Tax evasion scandal contain high levels of to raw material
– this has legal Organic production of
anti-oxidants which are costs.
implications for the coffee is also on the
beneficial and may
company and rise due to consumer
protect against
damages the demand for naturally
diabetes, Parkinson’s
corporate produced goods.
and liver disease.
reputation.

8. Identify if factors in external environment impact upon company’s marketing objectives

 Social and Cultural

Coffee is a culture or “the art of enjoying coffee in a relaxing atmosphere”. Coffee culture
and coffeehouses have been around since the 16th century, all over Europe, originally as a
place for social gatherings and the arts. The AUSTRALIA is conforming to this Europe
tradition of “slowing down and socializing over coffee at a local coffee shop”. Not only is
coffee a social drink but also for some it is a way of life. According to the National Coffee
Association’s 2000 Coffee Drinking Trends Survey, 54% of Australian adults drink coffee daily,
and 25% drink coffee occasionally (Coffee Research Institute).

 Demographics

Present demographics in the coffee industry within the Australia, according to the National
Coffee Drinking Trends 2012 market research survey, expresses 82 percent of Australian
adults drink coffee, a rise from 80 percent in 2010. Most coffee drinkers range from the age
25-39, which adds up to 47 percent, up from 41 percent in 2010, followed by 18-24 year olds
who comprise 31 percent of all coffee drinkers which rose from 26 percent the previous year.
Seniors daily coffee consumption rose from 70 percent to 73 percent. As coffee and
specialty coffee drinks are becoming more and more popular and for some consumers, a
4
 daily ritual, we see significant increases in future demographics within the younger
generations, ages 18-24 and even 25- 39.

 Economics

Coffee is known to be one of the largest traded commodities “second only to oil. The coffee
industry has long considered itself recession proof”). The demand for coffee or caffeine is
considered to be inelastic by the industry. Meaning that even with a rise in prices or
decrease in income, coffee consumers are hesitant to replace it with another product.
Coffee retailers, suppliers and manufactures have survived other “significant economic
downturns” in the last 30 to 40 years and have even flourished.

 Technological

Although the way coffee is produced has not changed much through the years, technology
in preparing coffee for the customer has made it easier to provide the best cup every time.
New brewing systems and espresso machines like the new “revolutionary in-store Clover
brewing system that delivers the best cup of coffee available anywhere”. The $11,000
automated brewing system was made to customize every cup of coffee by maximizing the
extraction. Now most coffee shops offer Internet access at little to no cost, allowing
customers the opportunity to surf the web while enjoying their coffee beverages.

 Politic, Legal, Regulatory and Ethical

The consumption of caffeinated products like coffee and soda are a major health concern for
children and adolescents. So, regulations were placed on coffee within public schools.
“Regulations for the National School Lunch Program and School Breakfast Program) prohibit
the sale of Foods of Minimal Nutritional Value during meal periods”. Coffee falls into this
category of FMNV.

9. Devise appropriate marketing strategies that align with company’s overall goals and objectives

To bring awareness about our new product to the target market, we will start an ad campaign
two weeks before launching the new product, providing “awareness cards” to people. Our goal
is to achieve at least a 5% increase in customer traffic and a 4% increase in sales of beverage
drinks in through the second year after launching the new product. We also want to gain new
customers from all competitors, especially Boost juice. The new product ties in with our
marketing objectives, because we brought awareness on the product’s value and benefits to the
selective target market (through promotion, advertisements, sending email blasts, brochures,
and “creating awareness cards”). The blended fruit juice ties in with our target market and
satisfies the wants and needs better than competitors because we will offer unique and super
healthy blended drink with remarkable benefits and lower price.

5
Part B: Project: Develop and Present a Marketing Plan

 Research and Planning

o Environmental audit

According to a recent poll conducted by our marketing team, the consumers are planning to
purchase more coffee from T & T Cafe over the current quarter, while expecting to reduce
coffee purchase from McDonalds. While McDonalds remains a solid investment, T & T Cafe
is a different value proposition and has a greater potential based on its underlying
fundamentals Cafe offers. The company has proved the pliability of its business over the past
12 months, while maintaining a strong position to take advantage during the economic
recovery.

o Current business position

Mission: To provide healthy ready to drink coffee for today busy and trend following lifestyle

Vision: To be the best drink choice and quality icon in coffee market

Company Profile

T & T Cafe Corporation operates throughout various industries, but is best known for their
coffee house retail stores. These retail stores sell a variety of beverages and have recently
ventured into a breakfast and lunch style food selection. Because of the cross industry
operations, T & T Group can be compared and contrasted to many types of companies. For
this report we will only focus on T & T Cafe as a competitor in the Specialty Eateries industry.
In the situational analysis, we found that T & T Cafe has grown to nearly 10 stores by its
popularity and aggressive expansion strategy. Its rapid expansion however, came with a
price tag, which T & T Cafe realized when customer traffic decreased for the first time and its
price share plummeted by 54 percent in 2019. Coupled with a recession, cannibalization of T
& T Cafe stores is said to be the cause of the decline in same-store sales. Fruitier has been
scheduled to be launched in January 2020. T & T Cafe anticipates bringing the product
awareness to our target market through its promotional mix scheduled to start in the
beginning of 2020. As the market for the health-consciousness grows, our new product is
expected to increase T & T Cafe’s revenue and market share.

Brand

T & T Cafe has literally shaped the culture of Melbourne by altering what we’ll pay for coffee,
what we eat, where we meet and how people spend their time. Since T & T Cafe went
public in 2015, it became part of the popular culture that extends “beyond the espresso
machine. It definitely met its long-range goal of becoming the most recognized brand of
coffee in the world. In recent years however, its endeavor of expansion has been coming to
a screeching halt due to the economic downturn. It faces with a rather difficult operating
environment. It’s a part of initiatives that T & T Cafe has been taking to “enhance long-term
fundamentals by slowing growth, controlling costs and investing in traffic driving.

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o External environment (PEST/PESTL)

Social and Cultural

Coffee is a culture or “the art of enjoying coffee in a relaxing atmosphere”. Coffee culture
and coffeehouses have been around since the 16th century, all over Europe, originally as a
place for social gatherings and the arts. The AUSTRALIA is conforming to this Europe
tradition of “slowing down and socializing over coffee at a local coffee shop”. Not only is
coffee a social drink but also for some it is a way of life. According to the National Coffee
Association’s 2000 Coffee Drinking Trends Survey, 54% of Australian adults drink coffee daily,
and 25% drink coffee occasionally (Coffee Research Institute).

Demographics

Present demographics in the coffee industry within the Australia, according to the National
Coffee Drinking Trends 2012 market research survey, expresses 82 percent of Australian
adults drink coffee, a rise from 80 percent in 2010. Most coffee drinkers range from the age
25-39, which adds up to 47 percent, up from 41 percent in 2010, followed by 18-24 year olds
who comprise 31 percent of all coffee drinkers which rose from 26 percent the previous year.
Seniors daily coffee consumption rose from 70 percent to 73 percent. As coffee and
specialty coffee drinks are becoming more and more popular and for some consumers, a
daily ritual, we see significant increases in future demographics within the younger
generations, ages 18-24 and even 25- 39.

Economics

Coffee is known to be one of the largest traded commodities “second only to oil. The coffee
industry has long considered itself recession proof”). The demand for coffee or caffeine is
considered to be inelastic by the industry. Meaning that even with a rise in prices or
decrease in income, coffee consumers are hesitant to replace it with another product.
Coffee retailers, suppliers and manufactures have survived other “significant economic
downturns” in the last 30 to 40 years and have even flourished.

Technological

Although the way coffee is produced has not changed much through the years, technology
in preparing coffee for the customer has made it easier to provide the best cup every time.
New brewing systems and espresso machines like the new “revolutionary in-store Clover
brewing system that delivers the best cup of coffee available anywhere”. The $11,000
automated brewing system was made to customize every cup of coffee by maximizing the
extraction. Now most coffee shops offer Internet access at little to no cost, allowing
customers the opportunity to surf the web while enjoying their coffee beverages.

Politic, Legal, Regulatory and Ethical

The consumption of caffeinated products like coffee and soda are a major health concern for
children and adolescents. So, regulations were placed on coffee within public schools.

7
 “Regulations for the National School Lunch Program and School Breakfast Program) prohibit
the sale of Foods of Minimal Nutritional Value during meal periods”. Coffee falls into this
category of FMNV.

o Internal environment (SWOT)

Strengths

As a strong global brand, T & T Cafe was built upon a reputation for fine products and
services. It definitely met its long range goal of becoming the most recognized brand of
coffee in the world and as of today, T & T Cafe Corporation still remains a fine coffee
industry and a very profitable organization with its strong performance. T & T Cafe is widely
spread around the Australia. In recent years they expanded rapidly by opening stores in
many cities. T & T Cafe’s management gives priority to a diverse workforce that represents
its community. According to T & T Cafe Corporation Fiscal year 2015 Corporate Social
Responsibility Annual Report, T & T Cafe has a very diverse workforce, with more than 170
partners (employees) worldwide. In the diversity there are men and women of different
ages, races, religion, national origin, gender, disability, and differing levels of education, skills
and experiences.

Weaknesses

Along with so many strengths, T & T Cafe has some weaknesses. Due to high price of their
premium coffee beans, T & T Cafe increased prices of some of their coffee drinks. Therefore,
T & T Cafe lost many of its customers, 20% of coffee-drinkers either have stopped drinking
coffee, or they make it at home by using less expensive brewed coffee. Then T & T Cafe
ended up lowering the prices of some of their brewed coffee, and are offering promotions
on iced drink in order to either regain those customers, or not lose others (Pricing for
Profit: T & T Cafe’ New Pricing Strategy: the Beginning of the End). However, it is hard for T
& T Cafe to maintain low prices, since premium coffee beans are always expensive, and it is
the number one expense for T & T Cafe.

Opportunities

Since a high percentage of revenue comes from their retail operations, T & T Cafe is planning
to open new stores throughout the Australia to accomplish the goal of operating more
stores. Despite the closure of many under-performing retail stores, T & T Cafe plans to open
another 10 retail stores in markets where its stores already exist. By next year in the
Australia alone, T & T Cafe is planning to open 20 new stores. One of the challenges for T & T
Cafe will be to convince people to drink instant coffee and that coffee drinks aren’t so
expensive after all. The best expansion opportunity for T & T Cafe would be getting a license
to open T & T Cafe coffee shops on University campuses.

Threats

The current economy is a huge and major threat to the coffee industry, since during an
economic downturn luxury products become secondary. During a recession people skip T &

8
 T Cafe more than ever because coffee is seen as an extravagant drink, and anything of
extravagance is usually the first thing to go, during recession. In its first quarter of fiscal year
2015, T & T Cafe suffered a 3% decrease in transactions for the first time. For the first time
in T & T Cafe history, T & T Cafe announced it would close its under-performing stores and
lay of almost 50 employees. Economic crises and recession will always remain major threat
for T & T Cafe and any other consumer based industry.

o Competitor analysis

Target markets

SEGMENTATION FOCUSED GROUPS REASONS & BENEFITS

Income

Low class, middle Middle
class, high class class
class, high They focused on the elite class, since they do
not avoid the cost to produce a high quality
product. As a result although price of ABC-
coffee is high, they hope this strategy
provides high-earnings ratio for each
product.

Gender

Male, female Both

Used based

(According to work People who works in People, who work in the intensive tempo,
area) the intensive tempo in needs to little breaks and refresh their
the office energy, so ABC-coffee can be useful and
People who works in environment like quick product for them.
the intensive tempo in
white collar workers
the office
environment, others

Geographic

Town, out of town Town People, living in rural areas, are not
(rural areas) interested in products like cold coffee, since
generally they are not affected
advertisements and also they use their own
needs.

Lifestyle

Actualizes, fulfillers, Achievers Attracted to premium products.

believers, achievers,

9
strivers, experiencers Prime target for variety of products.

Average TV watchers.

Read business, news, and self-help

publications.

Product

M.C. Cafe product line consists of cappuccinos, lattes and iced lattes, mochas as well as iced
mochas, premium roast coffee, iced coffee, and hot chocolate. While T & T Cafe has dozens
of drink varieties, McDonald’s has still been able to exceed expectations of the M.C. Cafe line
and seeks to expand its menu pending the results of market analysis. A reason for the
popularity of the McDonald’s coffee bar is the convenience of being able to get breakfast
and a premium roast coffee at the same place.

Pricing

McDonald’s is aware that T & T Cafe’ target market is affluent consumers who are willing to
pay in excess of $4 for a cup of coffee, so they have adapted their marketing strategy to
capture the share of consumers who may want a premium roast coffee at a more
economical price. McDonald’s positions its McCafe line as that exact picture, a premium
gourmet experience comparable or even better then T & T Cafe, at a much more economical
price. McDonald’s McCafe line seems like it may have enough strength to take on T & T Cafe
and any other competitors in the market.

Promotion

McDonald’s major goal is consumer satisfaction and creating awareness, desire of potential
consumers. To achieve our goal, they developed 360-degree communication. Since they are
at high level, they focused repetitive ads, sample giving, and PR activities. Therefore they
need to use much promotion strategy. Although they use traditional promotion methods,
they also need to use new promotion techniques to create Womb effects. McDonald’s
McCafe line seems like it may have enough strength to take on T & T Cafe and any other
competitors in the market. With McDonald’s advertising budget soaring over $100 million,
McDonald’s has the resources and capabilities to strongly compete against anyone.

10
Distribution

Services Offered

McDonald’s is aware that T & T Cafe’ target market is affluent consumers who are willing to
pay in excess of $4 for a cup of coffee, so they have adapted their marketing strategy to
capture the share of consumers who may want a premium roast coffee at a more
economical price. McDonald’s positions its McCafe line as that exact picture, a premium
gourmet experience comparable or even better then T & T Cafe, at a much more economical
price.

Strengths and Weakness

Strong global brand (Most recognized coffee brand), Widespread and consistent, Established
logo, developed brand, copyrights, trademarks, website and patents, Strong and efficient
management led by Howard Shultz, Strong financial foundation, High quality and diversified
products, Passionate, loyal employees (a diverse workforce).

Competitive trends

The coffee industry can overall be positively affected by the environmental trends because
even if companies are lacking in an area it gives them opportunities to improve their
strategies in order to effectively compete. Coffee will always be in high demand it is just a
matter of creating value to the customer with completive pricing and the best quality for
that price, while meeting all customer’s needs.

11
 Marketing Strategy

o Marketing Objectives

The marketing objective is to bring awareness to the new product, specifically its value and
benefits to the selected target market, leading to a 5% increase in customer traffic and a 4%
increase in sales of beverage drinks in company-owned retail stores. A new product line will
be implemented. Increase within two years of introducing the new product. By the second
year of introducing the new product, the number of transactions in each store will measure
the targeted increase in customer traffic, and the increase in the revenue of beverage drinks
will be measured by the total sales in each store over the period of two year.

o Marketing Strategies

The decision process for young adults includes identifying or searching, for a place where
they can study, socialize, meet with other students or friends and drink high quality gourmet
coffee. Deciding on a place that can satisfy on as many of those want as possible, is
important and necessary to incorporate this “third place” into their lives. The high
involvement in where to meet, the space available at that particular coffeehouse, the quality
of the coffee’s taste and additions such as syrups and specific preparation provides a
concentrated decision making process. College students meeting at T & T Cafe to work on a
project, do research; or just to socialize has become so common place within the Australian
society, that new young adults and college students are practicing this type of meetings at T
& T Cafe merely because other people are doing it and advising them to participate. Word of
mouth has assisted this type of meeting arrangements and provided added consumer
benefits for T & T Cafe; where people are going merely as followers and then continuing to
go out of satisfaction.

Business professionals are looking for a place that serves gourmet coffee with quality taste,
ambiance and customer service on their way to work and after-work. The decision in
choosing which place to purchase their coffee, requires them to purchase coffee from many
different local coffeehouses and get a taste for the quality, ambiance, customer service and
especially the taste. T & T Cafe offers a variety of flavors, syrups and coffee preparation
methods that can satisfy the needs of all customers. The kids that are interested in T & T
Cafe coffee are searching for the social status that can show their peers that they are grown-
up and also want their peers to also engage and socialize as if they were adults. These kids
hear of and observe college students, business professionals and more likely their parents at
T & T Cafe, and want to participate in these activities.

o Marketing Mix (4 Ps or 4S)

Product

T & T Cafe offers a selection of highest quality Arabica coffee beans and continues to raise
the bar of coffee standards. While the core product of T & T Cafe is coffee beans, it offers a
variety of coffee drinks, snacks and coffee-related accessories and equipment. Below is the
product mix offered through its retail stores:
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 → Fresh brewed coffees

→ Cold blended beverages

→ A selection of premium teas

→ Fresh pasties and other food items

→ Smoothies

Pricing

For the first time in its history, T & T Cafe announced a modified pricing structure in July
2017. Impacted by the recession, T & T Cafe has suffered a loss of customer traffic to its
stores and decided to lower its prices on some popular products; such as brewed coffees
and lattes. Ironically, T & T Cafe is also raising prices of its more complex beverages such as
cold coffees and caramel drinks, by eight percent. Based on the third quarter ending June 28,
2017 earning release. In other words, T & T Cafe’ loyal customers are continuing to spend
the same amount on each visit; it’s a decrease in customer traffic that’s causing a lower sales

Distribution

T & T Cafe purchases and roasts high-quality coffee beans and sells them, along with the
other products mentioned above through its company-operated retail stores. In order to
build closer relationships with its suppliers, T & T Cafe opened a field center in Geelong. By
doing so, T & T Cafe aim to work directly with existing and potential producers.

Promotion

T & T Cafe launched several promotions in its retail stores across the country since July of
2017. The promotion varies by region and timing, but all the stores in the Melbourne have
participated in the promotions since July 2017. Below is the list of different promotions:
Receive a 50% discount on a cold blended drink in PM if you present a receipt for coffee
purchased in the morning on the same date.

 Implementation of the Strategy

o Marketing tactics

High standards and high quality is the actual level T & T Cafe.

Branding: white and black are the color of T & T Cafe. Logo is written as modern font with
shadows.

Brand personality: easy, healthy, cool, energy, environmental, socially responsible

Brand equity: T & T Cafe provides quality, consistent and healthy cold drink.

The brand name, T & T Cafe, is come from the cooperation. Our brand name is chosen to
easy recognition and remembers. Also the pronunciation of the brand name is easy to
13
 remember. We want to emphasize on to create image as coffee always with you. In addition,
the brand name is suitable to extend our product line and to emerge in international market.
We do not want to confuse our consumers. The new product will create self-cannibalization
within the fruitier smoothie portfolio. We believe that this new product is high in quality and
high in health benefits, which is more advantageous to the brand equity. Therefore, our new
Fruitier product line will help to build even stronger brand equity. In the long run Fruitier will
replace the fruitier line, which is not currently profitable for T & T Cafe.

Product

The price of the product will be $3.50 for small and $4.80 for large.

Segment

The costs associated with introducing the Fruitier include the fixed cost as well as the
variable cost for producing the products. The fixed cost includes the cost of new equipment,
research & development and marketing.

Channel

The variable cost is relatively minimal considering the high quality of ingredients that have
been selected. T & T Cafe was able to use its purchasing power to find the suppliers who can
offer discounted pricing for the raw materials. The majority of the toppings, (shredded
coconut, dried cranberries, granola, etc.), will be delivered from Bulkfoods.com, a major
online food distributor.

Geography

At this point in our promotion mix our target market has been made aware and informed of
our new product, the next stride will be to persuade them to purchase our new Fruitier.

Discount

Loyal customer of T & T Cafe will get loyalty discount on each purchase and after purchasing
7 drinks they will get a free drink.

Payment Terms

We will be using eftpos and cash payment method at our retailer stores.

o Expected costs

The budget for our new product was developed using the cost structure described in the
price section of this report. Our new product has a relatively low production cost, which
includes the cost of raw materials, which adds up to $2.49 per unit. The ingredients are sold
by different measures of units based on the types of ingredients and the wholesale suppliers
that have been selected. Based on the recipe and the projected sale of 200 Blenders per
month, the Research and Development team developed the quantities of each ingredient

14
 required to yield 200 units of 16 ounce Blenders. As stated in the below table, the material
cost or the variable cost per one unit of Blenders is $2.49.

Raw Quantity Unit of Quantity Used Cost per Cost to Cost to

Materials Measure per 16 oz. Unit Yield 200 Yield 1
Blenders Units Unit

Naked Juice 7 Gallon 1/2 cup 12.00 84.00 0.42

Sorbet 7 Gallon 1/2 cup 9.00 63.00 0.32

Bananas 65 Pound 1 banana 0.42 27.30 0.14

Strawberries 25 Quart 1/2 cup 2.50 62.50 0.31

Granola 20 Pound 1/4 cup 1.17 23.40 0.12

Peanut 15 Pound 1/4 cup 2.08 31.20 0.16

Butter Chips

Chocolate 15 Pound 1/4 cup 4.00 60.00 0.30

Chips

Shredded 5 Pound 1/4 cup 9.20 46.00 0.23

Coconut

Dried 10 Pound 1/4 cup 6.00 60.00 0.30

Cranberries

Cups & 200 Each 1 0.20 40.00 0.20

straws

Total 497.40 2.49

Variable Cost

o Coordination and monitoring mechanisms

T & T Cafe has revamped its menu, adding a healthier selection of food. Fruit and yogurt
parfaits and warm breakfast sandwiches are now part of its regular selection. T & T Cafe is
constantly looking for innovative ideas, products and experiences that can be offered to its
customers. However, T & T Cafe faces challenges in diversifying into other sectors, as it is
dependent on the retail of coffee. Recently, T & T Cafe had to change out the cheese on its
breakfast sandwiches due to the smell of cheese overwhelming the smell of coffee. In
addition to sales through its retail stores, T & T Cafe sells coffee and tea products directly to
business units.

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 In order to build closer relationships with its suppliers, T & T Cafe opened a field center in
Geelong. By doing so, T & T Cafe aim to work directly with existing and potential producers.
The revenue from its company operated stores accounts for 84% of its total revenue. A high
percentage of revenue in company retail operation explains T & T Cafe’ strategy to increase
its market share in existing market and opening new company-operated stores where the
opportunity exists. Specialty retail operations include licensed stores, packaged tea and
coffee, branded products, foodservice operations and generated 16% of T & T Cafe total
revenue in 2017. T & T Cafe also sells whole bean and ground coffees to foodservice
operators like restaurants, offices, hotels and cafes, which accounts for 25% of company’s
specialty revenue.

o Legal and ethical requirements

Effective marketing starts with a considered, well-informed marketing strategy. A good

marketing strategy helps the company define its vision, mission and business goals, and
outlines the steps they need to take to achieve these goals.

 Actions and Control

o Action Plan

T & T Cafe major goal is consumer satisfaction and creating awareness, desire of potential
consumers. To achieve our goal, we developed 360-degree communication. Since we are at
new product’s introduction level, we focused repetitive ads, sample giving, and PR activities.
Therefore we need to use much promotion strategy. Although we use traditional promotion
methods, we also need to use new promotion techniques to create Womb effects. Based on
our marketing research, family and friends are the most important source of information on
brands of teas & cold drinks, followed by television and print media. We will also do
advertising, sales promotion, direct marketing, buzz marketing, and viral marketing. We will
use much promotion therefore our promotion budget will be very high. Our budgeting
strategy is objective and task. Our objective is consumer satisfaction and high rate of sales
therefore we need to make many promotions. Also we start new business and we will be the
introduction level. Therefore we make many PR events, speech and contests.

Target Market

The target market for our new product will be a non-coffee drinker, soccer moms, tweens
and teenagers. Unlike the current target market described in the situational analysis we
plan to target these new segments in order to increase the customer traffic, the revenue and
ultimately the overall market share. Our customer base is classified into the following
demographic and behavior distinct segments for the purpose of developing the marketing
strategy for our new product:

 Non-coffee drinkers

 Yuppies whose eat organic food

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 Soccer mom

 Tweens and teenagers, regular coffee drinkers

Product Positioning

Our new product will be positioned as a superior blended fruit drink packed with vitamins
and antioxidants that are healthy, tasty and fun. In addition to superior quality, our new
product allows customers to pick and mix the ingredients of blended fruit drinks; choice of a
super fruit juice, sorbet, banana, strawberries and the choice of a fun dry ingredient; such as
gummy bears, dried cranberries, chocolate chips and more. Consistent with Happy Café’s
philosophy our new drinks will be made to our individual customer’s taste and wants. T & T
Cafe Fruitier is diversifiable within its line to fit our customers’ different lifestyles and
preferences without compromising the quality and the taste.

Sales forecast for each product

Our new product, T & T Cafe Fruitier, is a tangible good served in a T & T Cafe cup, Grande
size (16 Oz) and Kids size (12 Oz). We have chosen this T & T Cafe’s cup because it is similar
to the existing Frappuccino cups. The cup has a T & T Cafe logo in the middle, which
represents the brand. The following picture corresponds to our new product and the way it
will be served in house. The actual blended fruit drink is perishable, because it contains fresh
fruits. Therefore, it needs refrigeration.

Advertising

During our launch, in-store posters will be used to promote our new Fruitier. The posters will
depict a blended fruit drink in our clear T & T Cafe cup; fresh fruit will surround the cup. Each
of our stores has chalkboards that can be updated to any new product or event we are
currently promoting. Our chalkboards can be changed weekly to focus on one of our super
fruits and provide added information to our customers regarding taste, health benefits, and
the many mixers that can be added to customize their drink.

Sales Program

Our promotion mix will be integrated throughout the production of our new product. All
elements have been created to complement each other with consistent information
regarding the health benefits associated with the super fruits being used in our blended fruit
drinks. From our press release to posters, pamphlets, teaser cards and even the information
given directly by our partners (employees) will have a steady theme and will reinforce the
product we are trying to sell and its benefits.

Public Relations

Once our target market has been made aware of the benefits associated with super fruits
the next step will be to inform consumers to like our product and prefer our product over
our competitors. At this point in our promotion efforts, we will focus on informing our target
market and providing a rational appeal, where we can distinguish our product and its
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 benefits. Society places a great focus on health, living a healthy lifestyle and maintaining a
healthy weight. Since our new product has several health benefits ranging from large
amounts of vitamins to antioxidants, our promotion of these benefits will target the rational
appeal of our consumers as well as the emotional appeal.

Personal Selling

Once our product is available in stores (one week before launch) for sampling, our partners
(in-store employees) will be able to push our product to customers through personal selling.
Our partners can provide sample cup size Fruitier and introduce the many benefits each
super fruit can offer. We will provide informational pamphlets for our partners and have
training sessions of what we are trying to accomplish with our new product. The training
sessions will also provide the necessary information for our partners to relay the health
benefits and provide personal communication channels directly to our customers and all
potential new customers to our Fruitier. Samples will offer a word-of-mouth flow of
promotion that will optimistically gain the attention of more non-T & T Cafe consumers.
Since we are using our sales force to push the product through the channels to our end
consumer, we will be using a Push Strategy in our promotion mix.

o Measurements and analysis

Through its aggressive expansion since 2015, T & T Cafe now serves and targets all
demographics. This is apparent based on a wide range of selections of drinks, pastries and
other goods that it offers. The store offers organic chocolate milk for toddlers, non-coffee
ice blended beverages for those who don’t care for coffee and fruit salad for those who are
more health conscious. Anyone, in any age group, will find a drink or snack that meets his or
her palette.

Many people want to be within a certain type of status quo and be part of a lifestyle that is
above their current position in life. T & T Cafe has taken this into account and has noted the
“aspirational gap that exists between the lifestyle most consumers aspire to live and the
actual lifestyle they do live”. Young adults and college students ages 18 – 24 are usually
looking for a place to study, have group meetings, socialize, and have coffee readily available;
as this seems to be an ideal placed in society as the place to be.

To bring awareness about our new product to the target market, we will start an ad
campaign two weeks before launching the new product, providing “awareness cards” to
people. Our goal is to achieve at least a 5% increase in customer traffic and a 4% increase in
sales of beverage drinks in through the second year after launching the new product. We
also want to gain new customers from all competitors, especially Boost juice. The new
product ties in with our marketing objectives, because we brought awareness on the
product’s value and benefits to the selective target market (through promotion,
advertisements, sending email blasts, brochures, and “creating awareness cards”). The
blended fruit juice ties in with our target market and satisfies the wants and needs better
than competitors because we will offer unique and super healthy blended drink with
remarkable benefits and lower price.
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o Performance evaluation

Our new product fits the positioning within the existing products, because it is a gourmet
tasty drink with high quality and is healthy, fun for kids and teenagers, and unique. Our new
products decisions are supported and justified with primary and secondary data, and are
consistent with marketing principles. The primary data is the survey results that backed up
our decision-making. According to our survey many non-coffee drinkers are willing to start
going to T & T Cafe if they can find healthier non-caffeine drink. That means that T & T Cafe
will gain customers in their target market. Many teenagers are very excited about the news
of this new drink, because they are fun for T & T Cafe, but before they couldn’t find a
healthier drink.

In order to capture a target market that is new to the T & T Cafe experience, the various
Fruitier will be priced using the more-for-the same pricing strategy. This strategy entails
pricing our Blenders at the same rate as our most direct competition.

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