Competitive strategies for coffee brands

Competitive strategies for coffee brands

Maria KharitonenkoAnna Gulyaeva, 2014

IntroductionIn our presentation we analyzed

Russian coffee market and its main producers and identified their competitive strategies

While eating

42

15

12

8

8

55 4 2 Wake up

Relax

Calm down

Have a break

Treat oneself

Improve state of health When thirsty

Needs for coffee

Get prepared

Has low Coffee

education: In most cases choice is made based on the

awareness of the Brand.

Use several Brands

simultaneously

for themselves and for the

guests

Wising Up: Smart shopping

for value for money solutions:

discounts, doy packs, cheap FD, economy packs.

Are not Coffee lovers: Functional

consumption with key need to wake up, keep

going, energetic…

Main Peculiarities of Coffee Consumption in Russia

Source: Coffee Culture U&A Study , IPSOS, 2012

Coffee Market in RussiaSoluble coffee 2013

-2%

Spray-dried(22%)-13% Mixed(29%)

-4%

AC Nielsen, Sales volume dynamics vs YTD 2012

Premium (27%)+11%

Super premium (2%)-3%

Economy(19%)-2%

Freeze-dried (49%)+5%

Sales of coffee brands

AC Nielsen Market value share

Generic Strategies matrix

Overall Cost Leadership

Differentiation

Cost Focus

Differentiation Focus

‘Stuck in the middle'

Competitive advantage

Low Cost High Cost

Com

petit

ive

Scop

e

Narro

w Br

oad

Coffee Market in Russia

AC Nielsen, Sales volume dynamics vs YTD 2012

We consider instant coffee brands on Russian market and place them onto the Generic Strategies matrix :1. jacobs monarch2. nescafe3. tchibo4. carte noire5. jokey6. jardin7. chernaya karta8. maxwell house9. ambassador10.moskovskaya kofeinya na payakh 11.milagro12.moccona

Porter’s model

JockeyCafé Pele

Maxwell House

Nescafe GoldJacobsTchiboJardin

Red Price

Carte NoireDavidoff

Ambassador

Chernaya Karta

Competitive advantage

Low Cost High Cost

Com

petit

ive

Scop

e

Narro

w Br

oad

Possible Market Structure

Market Leader40%

Market Challenger 30%

Market Follower 20%

Market Nicher 10%

Possible Market Structure

market leader 40% Nescafe

market challenger 21% Jacobs

market challenger 19% Tchibo

market nicher 10% Carte Noire Davidoff

market followers all other brands <10%

Brand NescafeMost famous on the market, With largest history!Quality, proved with timeRemarkable und unchangeable designMemorable advertising

But Nescafe Classic used to be the historical leader but it started losing its leadership in 2013 because of aggressive competition.

Market Leader

Expanding Total

MarketDefensive Strategy

A market leader can provide different strategies

NESCAFE Classic Relaunch

Giraffe project implementationRevolution! New NESCAFE Classic!

• Delicious taste

• highest quality coffee beans

• Win in blind consumer test

60/40 against Jacobs Monarch!

Renewed recipe

• Form positive image

• New modern design for which customers are ready to pay little bit more

Ultramodern design

• New TV commercial

• Internet

• Degustation

Promotional activities

STRATEGIC RELAUNCH OF THE BRAND – PRIORITY OF 2014 YEAR

start of sales: April 2014 года

THE NEW VISUAL IDENTITY SYSTEM

16

THE NESCAFÉ ACCENT IS OUR

SPARK OF INSPIRATION

17

A STRONG, VERSATILE

GRAPHICDEVICE

18

MAKES EVERYDAY IMAGES AND PHRASES PROPRIETARY

19

VISUALAND PROVIDES

TO ALL OUR BRANDED MATERIALS

INTEREST

20

21

22

REMAINS

NESCAFÉ MUGTHE

TIMELESSICON

OUR

23

24

A RECOGNISABLE SIGNATURE

BRINGSPLAYFULNESSANDUNEXPECTEDNESSTO THE BRAND’S PERSONALITY

25

26

27

FOCAL

THE

HUB IS A

POINTFOR

COFFEE

NESCAFÉ

28

ANDHUMANCONNECTIONS

FROM

PRODUCTGREATINTRINSICS

29

TO

PRODUCTGREATEXPERIENCE

30

TO

BRANDGREATEXPERIENCE

31

32 32

3333

34

35

THE RESULT IS A FLEXIBLE BUT CONSISTENT BRAND STYLE

3636

IT ALL STARTS WITH A

Mission Build an association around Nescafe Classic with the ideal morning coffee and underline the high taste characteristics of the product. Solution On a dark winter’s morning, when a new day was dawning, consumers on their way to work were greeted by a mobile Nescafe café with LED flames cosily lighting up the dark streets. Everyone was offered a cup of aromatic, hot Nescafe Classic to warm their walk to work with a ‘Good Morning’ wish. Happy end 13 cities, 6 weeks, 463 873 tastings on the streets and in trade centres

Nescafe Classic “hot tastings”

The Five Competitive Forces

Competitive

advantagePower of buyers

Power of supplier

s

Threat of substitutes Threat

of new entrant

s

Rivalry

In order to resist to five competitive factors a company need to build strong long-term relationship with its stakeholder

keep price competitivebrand loyalty to keep customers

from rivals

The Five Competitive Forces

key emotional benchmarks

•family warmth and friendship

Jacobs

•professionalism, aromaTchibo

•fashion, premium level, luxuryCarte Noire

Warmth of communication with jacobs monarch

from 8 January to 27 february 2011, russiacreative BTL activity realized on ice rink

goal:create strong emotional link between consumers and core ideas of brand, jacobs monarch, “family warmth and friendship”

9 cities, ice rinks

next to ice rink there was green branded tent where people could get warm and enjoy drinking coffee jacobs monarch with their family and friends, and even sing karaoke!

for karaoke singing everyone could get one of the following prizes: knitted gloves, scarf or sample of coffee 47,5g and chance to win tickets on ice showentertainment team played with people on ice rink also there was a big installation of steaming coffeecup.

results:121 000 degustations22 573 people with gifts

tchibo support of the museum night in the biggest russian cities with the “poetic museum” activation

to communicate that tchibo is more than just coffee, but an art of creating it (careful beans choice, tasting and packaging), the brand decided to organize poetical readings by famous russian actors in big museums and during the popular night, gathering big audience. julia menshova, viktoria tolstoganova, alisa grebenjikova and other popular actors read their favourite poems in special tchibo zones.

samplingcoffee zones where baristas brewed coffee for visitors.

results over 500 000 participants at 5 towns approx. 7 000 000 RUR

tchibo: museum night2012, big russian cities

carte noire: ural fashion week sponsorship2008, ekaterinburg

carte noire sponsored big fashion even to promote thir brand and to reveal its core idea – fashion and luxery

26-30 november ekaterinburg hosts ural fashion week every year to show the season fashion for spirg/summer.

people could digustate coffee carte noire and to evaluate its taste.

it was successful tool for promotion and attaching the idea of luxury to brand among consumers

ConclusionTo create a competitive advantage

businesses should review their strengths and pick the most appropriate strategy cost leadership, differentiation or focus.

thank you for your attention!