Opportunity Analysis final final PDF

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Opportunity Analysis for Nescafe Instant Coffee

MKT103 – Introduction to Marketing Study Period 2, 2019 Author: Joshua Bartels SID: s5195113

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TABLE OF CONTENTS

Table of Contents......................................................................................................................................................2 Introduction and Company Background..................................................................................................................3 Introduction..........................................................................................................................................................3 Company Background..........................................................................................................................................3 Situation Analysis.....................................................................................................................................................3 Market Analysis....................................................................................................................................................3 Macro Environment Analysis................................................................................................................................4 Economic Analysis............................................................................................................................................4 Social Analysis..................................................................................................................................................4 Technological Analysis......................................................................................................................................4 Legal Analysis....................................................................................................................................................5 Environmental Analysis....................................................................................................................................5 Micro Environment Analysis.................................................................................................................................6 Company Analysis.............................................................................................................................................6 Competitor Analysis.........................................................................................................................................7 Competitive Market Summary.........................................................................................................................8 Consumer Analysis...........................................................................................................................................9 SWOT Analysis................................................................................................................................................10 Objectives.......................................................................................................................................................10 Marketing Objectives.........................................................................................................................................10 Reference List.........................................................................................................................................................11

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INTRODUCTION AND COMPANY BACKGROUND

INTROD UCTION This Marketing plan has been devised to identify why there has been a recent decline in instant coffee sales within Australia, and how Nescafe can combat this. Research conducted over a five year span has given us insight into why instant coffee sales have declined as a result of Australia’s growing coffee culture and what Nescafe can do to counter this. COMPAN Y BACKGROUND Nestle was employed to utilise the excess of coffee beans adversely left behind from the Wall Street Crash of 1929. Between 1929 and 1938 the goal of Nestle was to conceive a never-before-seen rendition of instant coffee that would retain its robust flavour, this was achieved by coffee connoisseur Max Morgenthaler, marking the dawn of the Nescafe brand ("The NESCAFE Story", 2018). Succeeding the outbreak of World War 2 in 1939, a year after Nescafe was launched, the already popular blend of coffee became a popular staple within the United States forces. After the war concluded, Nescafe’s popularity increased drastically with the now popular brand of instant coffee being exported to a multitude of nations, being so popular that it is now relished in over 180 countries. As of 2019, Nescafe is still a crowd favourite, being listed as one of the top 10 instant coffee brand (Foster, 2019).

SITUATION ANALYSIS MARKE T ANALYSIS A study conducted over a five-year span has revealed that instant coffee sales have dropped by 10% with an average 49.4% of shoppers over the age of 14 purchasing it over a four-week span. The decline of instant coffee sales has an adverse correlation to the rising coffee culture in Australia with fresh coffee purchases rising by 2% to 30.2% over the same time span. With 49.7% of the market purchasing Nescafe Blend 43, Nescafe still has the largest market share. However, Nescafe purchases are in decline with their leading blend, Blend 43, being purchased 4% less than it was in 2012 with only 32.6% of instant coffee consumers purchasing the popular granulated coffee product.

("Not so full of beans: instant coffee sales down", 2019)

MACRO E NVIRONMEN T ANALYSIS

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ECONOMIC AN ALYSIS Australia consumer confidence

The economic outlook rose by 1% for the next five years ("Australia Consumer Confidence | 2019 | Data | Chart | Calendar | Forecast", 2019) meaning that people will be more inclined to spend money.

Australia consumer spending

Spending rose from $261885 Million AUD, in the last quarter of 2018, to $262566 Million AUD in the first quarter of 2019 meaning that consumers have been spending more money.

Household income has risen

The average household income has risen by 2% meaning that the average consumer has more money to spend ("The Distribution of Household Spending in Australia | Bulletin – March Quarter 2014", 2019)

SOCIAL AN ALYSIS Environmental benefits of buying instant coffee

Exceeding pressure for products to be ethically sourced

Growing health consciousness in consumers

Instant coffee emits 50% less greenhouse gas than fresh-brewed coffee meaning that for the 75% of Australian that drink coffee daily it is a more ethical option (Wortman, 2019). A survey conducted by Professor Timothy Devinney showed that 30% of Australians would be inclined to pay more money for ethically sourced coffee (Iredale, 2019). Instant coffee contains nutrients and antioxidants and slightly less caffeine making it arguably healthier than fresh-brewed coffee (Bjarnadottir, 2019).

TECHNOLOGICAL AN ALYSIS Foam booster technology

Nescafe has invented a way to make sachet cappuccinos foam whilst still being low in fat.

Online retailing

With online retailing, goods can be acquired whenever they’re needed.

Factories in Australia

With Australians consuming 3.6 billion cups per year, having a factory in Australia means that supply can always meet demand (O'Connell, 2019).

LEGAL ANALYSIS

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Meeting Corporate Social Responsibility (CSR)

With rising demand for goods do be ethically produced, with 30% of Australians being more inclined to pay more for ethically sourced coffee, Nescafe has met this demand after being endorsed by Fairtrade.

‘Australian Made’ logo

Although some Nescafe products are packed in Australia, Nescafe instant coffee is not made in Australia meaning that it can not exhibit the ‘Australian Made’ logo. This is an issue as 72% of Australians prefer to support locally produced goods (Murphy, 2019).

Product labelling

Product labels must declare all ingredients within the product and must adhere to the Competition and Consumer Act 2010 (CCA) ("Product labelling", 2019). As Nescafe instant coffee contains chemicals such as Trisodium citrate, which is linked to intestinal inflammation and kidney disease, mandatory product labelling could adversely push more consumers towards buying fresh-brewed coffee instead of instant coffee (Kubala, 2019).

ENVIRONMEN TAL ANALYSIS Reducing greenhouse gas emissions

Making coffee at home with instant coffee can add 50% to its environmental footprint (Eventer, 2019). With 95% of Australians believing in climate change, reducing greenhouse gas emissions is a viable selling point for instant coffee (Afshariyan, 2019).

Glass packaging

As instant coffee is traditionally packaged in a glass jar, which is highly recyclable, instant coffee has a more positive impact on the environment as once the contents of the jar is used, the packaging can be re-used.

Leaving behind zero waste

Fresh-brewed coffee can have long-lasting, negative effects on the environment as coffee grounds decompose to produce methane once deposited into landfill ("Coffee Grounds", 2019). As instant coffee leaves behind no waste it is objectively more beneficial for the environment than its fresh-brewed counterpart.

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MICRO EN VIRONME NT AN ALYSIS

COMPAN Y ANALYSIS

Positive Aspects of Nescafe Largest market share

Nescafe maintains the largest market share in the market for instant coffee with a share of 58% ("Australia Coffee Market | Size | Analysis | Forecast to 2022", 2019). Nescafe was started in 1929 and was utilised by the United States military during the second world war. Succeeding the war Nescafe was exported throughout Europe as a result, it is enjoyed in over 180 countries. Over 75% of Australians consume, on average, one coffee each day with 86% of coffee drinkers choosing to prepare the caffeinated beverage at home ("Australian attitudes towards coffee - McCrindle", 2019).

Established Brand

Coffee culture in Australia

("Meaning Nescafe logo and symbol | history and evolution", 2019)

Negative Aspects of Nescafe Does not meet rising consumer demand for fresh brewed coffee

Plastic containers

As Australia’s coffee culture is growing, with instant coffee sales down 10% and fresh coffee sales up by 2%, Nescafe needs to cater for the growing popularity of fresh-brewed coffee ("Not so full of beans: instant coffee sales down", 2019). A large selling point for instant coffee is the positive impacts it has on the environment as opposed to it’s fresh-brewed counterpart. As people are becoming increasingly aware of PAGE 6

climate change and the need to stop using plastic, Nescafe’s plastic packaging could be the reason why Nescafe sales have slightly dropped. As many people drink coffee for its health benefits such as its nutrients and high levels of antioxidants, Nescafe’s choice to put chemicals in their instant coffee, such as Trisodium Citrate which in high amounts can cause a multitude of health issues, could deter people from drinking Nescafe instant coffee.

Chemicals in instant coffee

COMPETITOR AN ALYSIS Competitor Moccona

POS

POD   

Robert Timms

   

Mount Hagen





Large range of products Established brand with years of history Sold in one-serve sachets as well as 100g containers Established brand with years of history One of Australia’s most popular coffee brands Sold online through third party websites Sold in one-serve sachets as well as 100g containers

One of Australia’s most popular brands of instant coffee Sold in single-serve packages as well as 100g containers





  

  

Still seen as a luxury brand of coffee due to its glass packaging and rich European history Unique blend of two beans, focuses on maintaining rich flavour Australian owned Espresso bags as well as instant coffee Distributed from online store

Limited range of products No online website, only sold through third parties First certified organic instant coffee

COMPETITIV E MAR KET SUMMARY Competitor

Target Market

Product

Price

Mount Hagen

Health enthusiasts, human rights activists.

Ethically sourced instant coffee.

$8.99 per 100g jar.

Promotional

Distribution

Online

Strength/ Weakness Main Strength  

Very popular amongst target market Lots of publicity from consumers

Main Weakness/s 

Moccona

Children, young adults, adults, seniors

Wide range of coffee products including decaffeinated beverages.

$13.00 per 200g jar

Televised advertisement s, ‘Wake up to something

Online, supermarkets, convenience stores.

Limited advertising

Main Strength  

Very advertised Well known slogan

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special’ slogan.

Young adults, adults,

Starbucks Ready Brew Coffee

human rights activists.

Vast range of coffee products.

$32.99 for 50 sachets

Online and instore.

Main Weakness/s 

In-store only.

Decline in instant coffee sales

Main Strength  

Capitalised on vast range of preferences Provides ethically sourced coffee beans

Main Weakness/s  

Campos

Young adults, adults, human rights activists

Wide range of coffee products, this includes decaffeinated options.

$15.50 per 200g bag

Online and instore.

Online and instore.

$16.50 $17.00 per 250g bag

Only available in-store Limited advertising

Main Strength  

Ethically sourced Wide range of grinds catering for all preferences

Main Weakness/s 

Robert Timms

Young adults, adults, seniors.

Roasted beans, coffee bags, granulated and freeze dried coffee.

$8.00 per 200g container

Online.

Online, supermarkets.

Limited advertising

Main Strength 



Sold in supermarkets and online making it easy to acquire and well known Coffee sold in different states i.e. roasted, ground and granulated

Main Weakness/s 

Very limited range of instant coffee

CONSU MER AN ALYSIS

Nescafe Instant Coffee Who buys Nescafe? What do consumers purchase? When do consumers purchase Nescafe?

Where can Nescafe products be attained?

People of all ages however, predominantly adults. The most popular blend is Blend 43 which is preferred by 32.6% of consumers. Nescafe is normally purchased instore once every four weeks. Instant coffee is an easy-to-make caffeinated beverage which is seen as a necessity to some, hence it is purchased regularly. Nescafe products can be purchased at supermarkets, through online retailers and at most convenient stores.

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How is the product purchased?

Why do consumers purchase Nescafe?

With 75% of Australians enjoying at least one cup a day ("Australian attitudes towards coffee McCrindle", 2019), instant coffee is a necessity for many consumers meaning that it is consciously purchased by most people on routine shopping trips. Nescafe is purchased by most for the caffeine content and taste with Nescafe having the largest market share and most popular blend of instant coffee, Blend 43. 27% of people who consumer coffee stated that ‘they cannot survive the day without it’ ("Australian attitudes towards coffee - McCrindle", 2019).

With 75% of Australians consuming at least one cup daily, 88% of which stating they enjoy the flavour ("Australian attitudes towards coffee - McCrindle", 2019) it is no surprise that there has been a rise of 2% in fresh coffee purchases, with 30.2% of people buying fresh coffee instead of instant ("Not so full of beans: instant coffee sales down", 2019). However, with most Australians enjoying at least one cup a day it is understandable that there is still a tremendous market for instant coffee, with Nescafe having the largest market share and most popular blend of coffee, this being Nescafe Blend 43, which is preferred by 32.6% of instant coffee buyers.

(Kitchen, Coffee & 150g, 2019)

SWOT ANALYSIS

Strengths •

Established brand with lots of history

•

Largest market share, most popular instant coffee

•

Weaknesses •

Does not meet the needs of Australian consumers as instant coffee sales continue dropping

Large range of instant coffee

•

Nescafe only has instant coffee and coffee sachets

•

Instant coffee is affordable and easy to attain

•

Compared to other brands, Nescafe’s range is limited

•

Instant coffee is easier and faster to prepare than ground coffee

Opportunities

Threats

•

Cater for Australia's growing coffee culture and release ground of roasted coffee

•

Steady Decline in instant coffee sales

•

Utilise research of how buying instant coffee has a less negative impact on the environment

•

Growing coffee culture is leading people to purchase ground coffee instead of instant coffee

•

Intrduce coffee pods to keep up with

•

Competition from caffeine supplements PAGE 9

technological advances

and energy drinks •

Growing use of coffee machines means that people are purchasing coffee pods instead of instant coffee

OBJECTIVES MARKE TING OBJ ECTIVES

Objective

Why?

To increase Nescafe instant coffee market share by 5% by advertising the positive impacts purchasing instant coffee has on the environment.

Nescafe already has the largest market share of any instant coffee brands however, by increasing awareness on how purchasing instant coffee is more environmentally friendly than buying fresh coffee Nescafe could convince more coffee drinkers to make the switch to instant coffee.

To cut marketing costs by 5% in the next 12 months.

By selling Nescafe blends through Nescafe’s online website instead of/ as well as through third party sellers, Nescafe could drastically cut marketing costs.

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REFERENCE LIST About Us | Nescafe Australia. (2019). Retrieved from https://www.nescafe.com/au/about-us

Australia Consumer Confidence | 2019 | Data | Chart | Calendar | Forecast. (2019). Retrieved from https://tradingeconomics.com/australia/consumer-confidence

Afshariyan, N. (2019). After twenty years of study, do we really care about nature?. Retrieved from https://www.abc.net.au/triplej/programs/hack/australian-attitudes-to-nature/9801778

Bjarnadottir, A. (2019). Instant Coffee: Good or Bad?. Retrieved from https://www.healthline.com/nutrition/instant-coffee-good-or-bad#section3

Foster,J.(2019).Top10+InstantCoffeeBrands2019.Retrievedfromhttps://www.caffeineinformer.com...