Marketing Strategies for CaféPod: Navigating Challenges and Achieving Growth

Module Code:	BMA5100
Module Title:	The Marketing Business
Assignment:	S2. Group Marketing Report (60%)
Word Count:	4000 words (equivalent)
Referencing Convention:	Harvard Referencing
Submit via:	Turnitin
Deadline	7th October 2024, at 23:59 pm
Module Leader:

Student name:

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Executive Summary

The report found that CaféPod has to navigate through challenges like trade restrictions, inflation, and low consumer confidence. It also included a survey of 20 consumers, which sheds light on the consumer behaviour associated with coffee products. The report underscores the importance of key strategies like competitive pricing, enhancing online sales channels, and eco-friendly practices. Besides, certain social marketing opportunities were identified to develop the internal infrastructure of CafePod and attain competitive growth in future aspects. Lastly, some suggestions were also discussed to raise funding from external resources and bring innovative changes in the long run.

Introduction

From a business perspective, marketing plays a crucial role in driving operational growth and creating market values to build strong coordination to achieve long-term goals (Ferrell, Hartline and Hochstein, 2022). Besides, marketing also refers to the activities for buying or selling products and services to draw the attention of local communities. The report will include brief market research to analyse the current state of the business using various frameworks such as PESTLE, Porter’s Five Forces, STP Analysis, SWOT Analysis and many more to align with a practical example of CaféPod. It is considered as one of the leading coffee production companies in the UK which was first established in 2010 to provide delicious coffee with great taste with 14 types of blends for coffee lovers (CafePod, 2024). Besides, the overall revenue stream of the company is recorded at about $7.1 Million as of 2024 with 19 employees (Rocket Reach, 2024). This shows a positive impact on the business performance to run its internal operations globally and deliver quality approaches to promote social awareness.

Market Research (Situational Analysis)

PESTLE analysis

Elements	Description
Political	In July 2024, the UK's trade deficit widened to £7.51 billion, up from £5.32 billion in the previous month of June (Trading Economics, 2024). This indicates the potential for future trade restrictions which could disrupt the coffee bean imports of Café Pod and raise costs.
Economic	The UK's annual inflation rate rose slightly to 2.2% in July 2024, compared to 2% in June (Trading Economics, 2024). This Inflation could increase the operational costs of CafePod and thereby force them to increase the price for consumers.
Social	The GfK Consumer Confidence Index for the UK held steady at -13 in August 2024, the same as in July, contrary to predictions of a minor increase to -12. (Trading Economics, 2024). This could reduce the overall spending of the consumers which ultimately impacts the sales of Cafepod.
Technological	As per the European Innovation Scoreboard, the UK’s innovation rating in 2023 surpassed the EU average, achieving a score of 114 (Statista, 2024). This could open doors for CafePod to utilize new technologies like online ordering or automated brewing systems.
Legal	The Food Safety Act of 1990 is one of the most important legislation that sets the tone for Food safety in the UK, by ensuring that the food is safe to eat and not dangerous to health (legilslation.gov.uk, 2024). The presence of stringent food safety regulations ensures a safe product for CafePod’s customers.
Environmental	As of 2024, around 91% of adults in the UK had at least some awareness of the concept of net zero (Statista, 2024). High public awareness of net-zero allows CafePod to emphasize eco-friendly practices and attract environmentally conscious customers.

Table 1: PESTLE analysis

(Source: Created by the learner)

Competitor Analysis

Porter’s Five Forces

Internal rivalries [High]

It can be stated that there are various popular fresh coffee production brands in Great Britain including Nescafe Dolce Gusto, Cafedirect, Layazza, Taylor of Harrogate and many more (Statista, 2024). Besides, there are nearly 122 active entrepreneurs in the field of the coffee processing industry as of 2021 which is quite challenging for the business to compete with the rising rivalries (Statista, 2023).

Figure 1: Number of active enterprises in the coffee industry

(Source: Statista, 2024)

Bargaining power of customers [High]

In UK households, it was recorded that about 27 grams of coffee beans have been consumed per person in a week as of 2022 (Statista, 2024). However, the rising competitors in the coffee production sector might influence the purchasing power of customers and insist them to change their preferences which leads to brand switching.

Bargaining power of suppliers [Moderate]

CafepPod is an independent coffee beans supplier and manufacturer that offers espresso-compatible coffee capsules to provide quality drinking experiences. Thus, it would not affect the supply chain distribution of the company if one of the suppliers refuses to provide raw materials to CafePod which leads to a moderate impact on the business environment.

Threat of new entrants [Low]

It requires a huge capital investment to establish a start-up business and run its operations further to survive in the competitive advantages. Therefore, the overall threat of new entrants in the existing marketplace is quite low to compete with CafePod and create its brand image in society.

Threat of substitutes [Moderate]

There are various substitutes for coffee including lemonade, tea, juice, mineral and coconut water, chilled smoothies and many more. Therefore, it shows a moderate impact on the manufacturing level of CafePod to support its financial conditions and bring technological changes.

SWOT analysis

Strengths CafePod provides high-quality products including Brunch Blend, Espresso, intense Roast, Daily Grind and so on to reach a wider range of local communities to define competitive edges (CafePod, 2024). It also offers dedicated customer care services with exclusive discounts, free discounts and additional benefits for subscribers as well (CafePod, 2024).

Weaknesses Some of the past workers of CafePod said that they faced obstructions while working in the workplace due to poor management quality and a lack of job security to support their basic human needs (Glassdoor, 2024). Besides, it has been negatively reviewed by customers due to poor customer service and a lack of coordination from senior managers to build trust and loyalty among regular customers (Trustpilot, 2024).

Opportunities The UK government has signed an International Coffee Agreement in 2022 to strengthen the coffee production industry which ultimately contributes Billions of pounds to the economic condition (British Coffee Association, 2022). CafePod could raise funding options from various sources such as bank loans and crowdfunding to support economic downstream.

Threats It was stated that the high cost of living pressure might be quite challenging for small businesses to survive in the ongoing scenarios in 2022 (Evans, 2024). The rising cost of living crisis and higher price inflation rate could have a huge impact on CafepPod to run its supply chain distributions further and insist people to purchase its products in future aspects.

Table 1: SWOT Analysis

(Source: Created by the learner)

STP analysis

Segmentation

Market segmentation can be defined as a strategic approach that helps to identify the target customers based on certain products or services. In the context of the geographical segment, CafePod is operating its business in the UK primarily as it has expanded its coffee production market to acquire about US $397.00 Million in 2024 which is expected to reach up to US $570.30 Million by the end of 2029 (Statista, 2024). Under the demographic segmentation, it was stated that 46% of Generation Z never drinks coffee at home or the workplace, whereas, Generation X and Baby Boomers drink multiple times a day (Statista, 2024). In the behavioural segment, Generation X is considered as the largest number of people to participate in the investment market in the year 2023 (Statista, 2023). Under the psychographic segmentation, it was depicted that 86% of Generation X and 74% of Baby Boomers used social media as of 2023 (Statista, 2023).

Target

It has been stated that CafePod can target UK households and older consumers as 80% of households and old-aged people consume coffee which would help to increase sales growth. Besides, the average daily spending of coffee lovers to buy coffee was about 6 British pounds whereas, old-aged consumers spent about 5 British pounds in 2021 (Statista, 2024).

Figure 2: Average daily spending of coffee lovers

(Source: Statista, 2024)

Positioning

CafePod is a coffee production and manufacturing brand in the UK that provides quality products and services at affordable prices with positive customer reviews (Trustpilot. 2024). In contrast, Nescafe is also a popular brand that offers different products at reasonable prices, however, it fails to meet customer demands due to poor customer care services (Trustpilot, 2024). Besides, Nespresso is a luxurious coffee brand that provides effective products and resources to draw the attention of customers and enhance revenue streams. Lastly, Taylors of Harrogate is also a premium brand, though it has been negatively reviewed by its customers due to poor product quality and unhealthy packaging systems (Trustpilot, 2024).

Figure 3: Positioning map

(Source: Created by the learner)

Buying Behaviour

Q1) Kindly state your gender.

Figure 1: Gender of the Participants

Analysis: This indicates that 55% of the participants identified as male, while 45% identified as female.

Q2) How often do you purchase coffee products (beans, ground coffee, instant coffee, pods)?

Figure 2: Frequency of purchasing coffee products

Analysis: It reveals that 65% of the participants purchase coffee products weekly, while 30% purchase them daily, which indicates a significant demand for coffee products in the target market.

Q3) Where do you primarily purchase your coffee products?

Figure 3: Channel from which coffee is purchased by the consumers

Analysis: The fact that 75% of the participants primarily purchase coffee products from online retailers, highlights the importance of these channels for CafePod’s distribution strategy.

Q4) Which brands of coffee do you most frequently purchase?

Figure 4: Most preferred brands of Coffee

Analysis: The survey revealed that Volcano Coffee Works and CafePod is the most preferred brand among the participants, with 40% and 30% people choosing them. This indicates that CafePod has strong brand recognition and preference in the target market.

Q5) How important is price when making a coffee purchase?

Figure 5: Role of price in influencing the purchasing options

Analysis: The survey shed light on the fact that 95% of the participants considered price to be an important factor in coffee purchases.

The above survey results have shed light on various consumer buying behaviour in the coffee market. The high demand for coffee has been indicated from the fact that there are high number of pants who purchase coffee products weekly or daily. The importance of digital platforms has been underscored by the emergence of online retailers which have been the primary purchase channels for customers. Further, the primary data indicates that Volcano Coffee Works and CafePod despite leading as brands in terms of preference for consumers, will have to adapt its pricing strategies accordingly due to the prince sensitive behaviours of the customers. Overall, the survey highlighted the growing importance of online channels, brand recognition, and price competitiveness in the coffee market.

Societal marketing Opportunities identified

From a business perspective, societal marketing can be termed as a strategic process to influence the internal activities or actions of society and gain a positive impact to build strong relationships in future aspects. Thus, CafePod should align its business values with social issues and develop internal infrastructure to collaborate with local communities to drive technological advancements. Assessing the current business state of CafePod, it can be stated that the company can collaborate with other renowned organisations and the government to develop its managerial functions. The UK government has recently signed a new International Coffee Agreement in the year 2022 which is quite beneficial for the business to raise funding and deal with economic downstream (British Coffee Association, 2022). Apart from these, the company can also hire skilled labourers with sufficient knowledge and skills in order to increase its work efficiency levels and evaluate further growth initiatives to acquire sufficient resources.

Besides, the Ansoff Matrix is considered as a fundamental concept or framework that helps to evaluate the overall market initiatives and conceptualise stakeholder engagement to deal with external risks for growth opportunities (Peterdy, 2024). It includes major components such as market penetration and development, diversification and product development. Analysing each segment, CafePod could implement a market penetration strategy to focus on the existing products and run its operations into the current marketplace for profit maximisation. CafePod might seek new opportunities to sell more existing products into markets to identify the basic human needs of customers and streamline its distribution process to attain competitive success. On the other hand, the British Coffee Association (BCA) is the major representative organisation for the UK coffee industry to foster a favourable business environment (British Coffee Association, 2024). Besides, implementing new regulatory policies would also help CafePod to abide by ethical considerations and secure the future of the business and industry to mitigate upcoming challenges in the long run.

Implementation of the strategies

Marketing Objectives

• To increase online sales of existing coffee pods by 25% within the next six months

• To improve online customer satisfaction ratings by 10% within three months.

• To acquire 5,000 new online customers within the next year.

• To reduce the average online order processing time by 20% within two months.

Creative strategy

Campaign Theme: ‘Brewing a Better Online Experience’

Campaign Elements:

1. Social Media Contest

• Theme: Share Your Coffee Story

• Mechanics: Participants would be encouraged to share their favourite coffee moments or photos on social media using a specific hashtag.

• Call to Action: Share your coffee story using #CafepodCoffeeContest and win!

2. Email Marketing Campaign:

• Subject Line: ‘Exclusive Offer: Enjoy 20% Off Your Next Online Order

• Content: The benefits of purchasing CafePod coffee pods online will be highlighted here including convenience, exclusive deals, and fast shipping.

• Call to Action: Shop now and use code 'ONLINE20' for 20% off!

3. Influencer Partnerships:

• Call to Action: Try CafePod coffee pods and experience the difference! Use our link to get a special discount.

4. Online Community Engagement:

• Call to Action: Join our online coffee community and connect with fellow coffee lovers!

5. Limited-Time Offers and Bundles:

• Call to Action: Don't miss out on our limited-time offers! Shop now!

Marketing Mix

Element	Strategy
Product	The product life cycle is a theoretical framework which describes the different stages the products of the company are in, starting from introduction to decline within the marketplace.
	Introduction Stage	The company can cater to evolving consumer preferences and maintain a competitive edge by continuously researching and developing new CafePod flavours, blends, and features. With innovation, the company can develop new solutions and induce improvements (McAgy, 2024).
	Growth Stage Products	CafePod is expected to invest in marketing and promotion to maintain momentum and increase market share by focusing on strategies like quality improvement. In specific, the company can enhance the packaging design to make it more sustainable to cater to the needs of 80% of the Brits who have demonstrated their preference for such packaging (Statista, 2024).
	Maturity Stage Products	CafePod can rejuvenate the product line through the introduction of new features, packaging changes, or targeting different market segments. This may also influence the company to new features, packaging changes, or targeting different market segments.
	Decline Stage Products	It can phase out or discontinue the products that are no longer profitable. However, it can explore niche market opportunities or focus on cost reduction to maintain profitability if there is still a loyal customer base. Some specific tactics include reduced promotion efforts on these products, upcycling and streamlining of production process.
Price	Cafepod can consider the implementation of numerous pricing strategies to garner the interest of the targeted audience.
	Competitive Pricing	CafePod can maintain market share and avoid losing customers to competitors by maintaining prices in relation to competitors' prices. According to Ali and Anwar (2021) consumers are more receptive towards the purchasing of a product that has been priced competitively.
	Dynamic Pricing	Cafepod can optimise revenue and maximise profits by adjusting the prices in real-time based on factors such as demand, competition, and time of day. This will require the company to use pricing algorithms to analyse market data and adjust prices accordingly.
	Psychological Pricing	This type of strategy includes the determination of the cost of a product or service based on the psychological effect it has on consumers (Aggarwal, 2021). This may require the company to follow techniques like psychological pricing techniques, such as odd pricing (£9.99 instead of £10) or premium pricing.
	Value-Based Pricing	CafePod can charge a premium for products perceived as high-quality, sustainable, or ethically sourced by setting prices based on the perceived value of the product in the eyes of the customer.
Place	This refers to the distribution strategy or the selection of the channels through which the product would be made available to the customers.
	Direct Channels	Online Store: CafePod needs to maintain a robust and user-friendly online store to cater to customers who prefer online shopping. This is in alignment with the results derived from the survey. Subscription Services: Subscription services can also be offered by CafePod to provide regular deliveries of coffee pods to loyal customers. Mobile App: A mobile app would also be developed for easy ordering and personalised recommendations.
	Indirect Channels	Retail Partnerships: CafePod can expand distribution reach and increase brand visibility by partnering with grocery stores, supermarkets, and speciality coffee shops. Convenience Stores: It can also target convenience stores for impulse purchases and reach a wider customer base. Office Supply Stores: CafePod can cater to businesses and workplaces by partnering with office supply stores.
	Omnichannel Strategy	Integrated Channels: CafePod can provide a consistent customer experience by ensuring seamless integration between online and offline channels. Click-and-Collect: The company will offer click-and-collect options for customers to order online and pick up their products at designated locations. In-Store Pickup: Allow customers to order online and pick up their products directly from Cafepod's own stores or partner locations.
Promotion	Promotion is the exchange of information between a company and its surroundings, specifically targeting the intended market (Darmawan and Grenier, 2021). A promotional mix is a model representing a collection of marketing and sales strategies to reach their target audience.
	Advertising	CafePod can focus on: 1) Digital Advertising: Social Media: The firm needs to continue to utilise social media platforms like Instagram, Facebook, and TikTok for targeted advertising, and engaging content. This would help Cafepod to target the 56.2 million people of the UK who are active on various social media platforms (Statista, 2024). Search Engine Marketing (SEM): CafePod can improve search engine rankings for relevant keywords by optimising website content and investing in SEM. This will help the firm to get involved in precise targeting where customers would only watch advertisements based on their interests and needs (Haan, 2024). Display Advertising: The company can also reach a wider audience by using display ads on relevant websites and platforms to 2) Content Marketing: Blog: CafePod can attract and educate potential customers by creating informative and engaging blog posts about coffee, brewing techniques, and sustainability. Influencer marketing: The firm also needs to partner with influencers with similar values and interests to resonate with the targeted audience and build an authentic relationship. In a 2023 survey conducted in the UK, 69% of retail marketers reported that with the help of influencer marketing companies can enhance their brand recognition (Statista, 2024). Video Content: CafePod can showcase the brand and engage the audience by producing high-quality video content like product demonstrations, coffee tutorials, or behind-the-scenes footage.
	Public Relations	Media Relations: It would be important for the brand to build relationships with relevant media outlets and pitch stories about Cafepod's products, sustainability initiatives, or company news. This helps the companies to establish and benefit from the two-way communication channel with the target audience (Starman, 2023). Community Involvement: The company can enhance its brand reputation and build goodwill by participating in local events, charities, or community initiatives to Crisis Management: CafePod can address potential negative publicity or issues effectively by developing a crisis communication plan.
	Personal Selling	Sales Force: To effectively communicate the value of Cafepod's products to potential customers, both online and offline, the sales representative of the form would be trained accordingly. This is because providing training on sales methodology forms a crucial part of corporate knowledge which is essential to cultivating a customer-focused culture (Thomas, 2020) Customer Service: CafePod will build loyalty and encourage repeat purchases by providing customers with excellent customer service.
	Direct marketing	Email Marketing: CafePod will nurture leads, promote new products, and offer exclusive deals by sending targeted email campaigns. The company can also automate the process by integrating it with Artificial intelligence. Globally 51% of marketers have found that AI-supported emails for marketing purposes yield more results than traditional approaches. Direct Mail: The company will introduce new products by considering direct mail campaigns for targeted audiences. SMS Marketing: CafePod will provide time-sensitive promotions or order updates through the utilisation of SMS marketing.
	Sales Promotion	Discounts and Coupons: Cafepod can attract new customers and encourage repeat purchases by offering limited-time discounts, coupons, or bundle deals. This can help the company to attract the price-sensitive customer segment revealed from the survey. Loyalty Programs: The company can also incentivise customer loyalty by implementing a loyalty program with rewards and benefits. Arslan (2020) stated that companies can achieve sustainable competitive advantage with a loyal customer base. Contests and Giveaways: The firm can generate excitement, increase brand awareness, and collect customer data by running contests and giveaways.

Table 2: Development and implementation of marketing strategies

(Source: Created by the learner)

Timing Considerations

	Time	Week 1	Week 2	Week 3	Week 4
Monday	10AM-12PM	Launch social media contest with a catchy graphic and video announcement
	12PM-3PM				Share a behind-the-scenes look at the CafePod team and production process
	3PM-6PM			Offer a free shipping code to all online customers
Tuesday	10AM-12PM
	12PM-3PM		Host an Instagram Live Q&A session with a coffee expert.
	3PM-6PM
Wednesday	10AM-12PM			Introduce a loyalty program with exclusive benefits for repeat customers
	12PM-3PM				Organise a virtual coffee-tasting event for your online community
	3PM-6PM	Collaborate with influencers to share their coffee stories and promote the contest
Thursday	10AM-12PM		Collaborate with another influencer to create a coffee recipe tutorial
	12PM-3PM
	3PM-6PM				Share a curated playlist of coffee-themed music on your social media.
Friday	10AM-12PM			Offer a flash sale on select coffee pod flavours
	12PM-3PM	Introduce a limited-time offer or bundle on your website and social media
	3PM-6PM		Announce the winner of the social media contest

Table 3: Content Calendar

(Source: Created by the learner)

How success will be measured – some suggestions

Specific Objective	Measurable KPIs	Attainable	Realistic	Time-Bound
Objective 1	Total online coffee pod sales Average order value Repeat purchase rate	Set a realistic target based on historical sales data and market trends.	This is in alignment with the overall goal of increasing revenue and market share	Six months.
Objective 2	Customer satisfaction survey results Net Promoter Score (NPS): Customer support ticket response time	A realistic target based on current ratings and feedback from customers would be established	This is aligned with the goal of building customer loyalty and increasing repeat purchases.	Three months.
Objective 3	Number of new customer registrations Customer acquisition cost (CAC) Customer lifetime value (CLTV)	Set a realistic target based on historical acquisition rates and market potential.	This can be aligned with the goal of expanding the customer base and increasing market share.	One year.
Objective 4	Average order processing time Order fulfilment rate Customer complaints related to order processing	A realistic target based on current processing times would be set.	This is aligned with the goal of improving customer experience and reducing cart abandonment.	Two months

Table 4: Ways to measure the success of the campaign using a SMART framework

(Source: Created by the learner)

Conclusion

In conclusion it can be stated that PESTLE analysis has shed light on several challenges and opportunities that CaféPod faces within the UK. For example, the company may suffer due to potential trade restrictions due to the UK’s high trade deficit. On the other hand, CafePod has the opportunity to integrate automation due to sound technological foundation of the nation. The high demand for coffee products within the UK landscape has also been highlighted from the customer survey. The company therefore has the objective to improve its sales and customer satisfaction ratings with the help of a creative marketing campaign.

Assessing the overall business environment, it can be depicted that CafePod might target Generation X and Baby Boomers as well to draw the attention of local communities and promote brand awareness. Besides, certain theoretical frameworks such as STP, SWOT Analysis, Porter’s Five Forces and many more to align with practical examples and identify key market opportunities or threats. Furthermore, the company is also facing possible challenges of limited resource availability and poor management functions to run its operations and support local communities. Lastly, the concept of Ansoff Matrix was discussed briefly to follow the market penetration strategy and increase its sales growth to survive in the existing marketplace.

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Reference List

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Appendix

Contribution	Person 1	Person 2	Person 3
Research and Analysis	Conducted market research and analysed competitor data.	Developed customer personas and identified target market segments.	Analysed customer feedback and identified pain points.
Objective Setting and Strategy Development	Defined marketing objectives and developed the overall marketing strategy.	Created the creative strategy and campaign elements.	Developed the marketing mix and outlined tactics for each element.
Data Analysis and Reporting	Analysed campaign data and tracked KPIs.	Prepared reports on campaign performance and provided recommendations.	Presented findings and insights to the team.