Just Us! Cafe Case

Just Us!

Case study analysis on JUST US! CAFES

SUBMITTED TO: -

SUBMITTED BY:-

Dr. D.D Swain Professor (Marketing)

Ajay Pratap Singh PGDM 2012-2014

Just Us!

INTRODUCTION Just Us! (JU) Café is the leading Fair Trade (FT) coffee cooperative, wholesaler and retailer in Nova Scotia, Canada, and United States. JU vision is “to be a leading Fair Trade business that builds on quality, professionalism and innovation for the benefit of all their stakeholders”. JU core differentiation is selling FT and organic model which is social and environmental responsibility, premium quality. As FT market is growing, JU is looking for expanding its current business or developing a new product line to maintain current market share. Meantime, they facing challenges from having compete with several big brands (ie such as Starbuck, Mcdonald, Kraft who also introduce the FT certified coffees, or Rainforest Alliances certified coffees) and small coffee shops to retain its brand recognition of its customers who request an unique and appealing products. Following are the results from this paper: 1. Market for coffee and tea is in growing, which encourage Just Us! to invest more to expand their market share, compare to sugar and cocoa. 2. Our target segment is mostly those young and educated, say college students and age between 31-

44 years, who are base their purchase decisions on ethical behavior of companies.

3. Serving the interests of fair trade producers by developing personal and long term relationships.

Just Us!

External Analysis: PORTER’S FIVE FORCES Threat of New Entrants: Threat of New Entrants is high within the market as there are very few barriers to entry and fair trade coffee trends are extremely popular so it is an attractive industry. Buyer Power: “Buyers threaten an industry by forcing down prices, bargaining for higher quality or more services, and playing competitors against each other” (Dess et al 2004:53). As mentioned in Appendix BPEST, the customer’s income plays a huge role in selecting a product therefore if they decide to bypass fair trade products because of the premium price they can hold allot of buyer power, thus making buyer power in the industry high. Threat of Substitutes: There are various substitutes for fair trade coffee in the industry such as regular coffee, tea etc but not only coffees but in the general beverages market e.g. Coca Cola, Water etc. As a result of this there is a very high threat of substitutes. Supplier Power: Supplier power is relatively low as the industry is fair trade coffee. From previous knowledge, coffee suppliers were being exploited and continued to produce. It is simply because of the willingness to partake in fair trade that they have gained power. However I still believe that due to the underdevelopment of the producing countries allot of the power still lies with the buyers. Competitive Rivalry: Competitive rivalry is relatively high as seen in previous competitor analysis. There are many competitors in the local market and on the shelf within the mainstream markets.

SWOT ANALYSIS Strength Just Us! Coffee Roasters’ brand equity is what drives the company forward. Customers base their decision to purchase coffee from Just Us! Coffee Roasters are a symbol of their own personal beliefs, demanding ethical business practices and quality of product. Just Us! Coffee Roasters image also attracts a passionate following. Weakness Just Us! Coffee Roasters operates as a co-operative. Not only must they operate to fulfill shareholders expectations, but they also must operate in a manner that is expected of the values that the company

Just Us! had initial0ly set out with. Jeff and Debra Moore, are bound to creating a profit while maintaining the appropriate image and practiced that they initially based their company on. Upon entering the next phase of the company’s life cycle, Jeff and Debra must maintain operations under strict control of their original company values as they compete against competition that does not share the same values. Opportunity New Fair trade products: With more and more fair trade products becoming readily available a huge opportunity to increase the product portfolio is on the horizon for JU Social Media/Online: The online environment presents JU with a huge opportunity to increase brand awareness, engagement and utilize its loyal customer’s feedback at a very low cost. Threat Clarity on Fair Trade: An issue highlighted in the case was that of clarity and regulation on fair trade. It is to be seen that the fair trade term is been thrown around too commonly and applied to every product, thus potentially reducing effect of one of JU’s key USPs. Clouded Focus: At the moment JU are using multiple channels of distribution, however with various challenges on the horizon a decision needs to be made on a strategy. Operating and managing two separate strategies can create a clouded vision within the company and a decision needs to be made on prioritization.

Internal Analysis BCG Matrix As JU provide various organic products it is important to examine the more profitable ones and not so profitable in order to either focus marketing effort on weaker products or discontinue them.

Just Us!

Stars: Coffee & Tea Dogs: Sugar Cash Cows: Cocoa Coffee and Tea appear to be the largest growers in the trade figures with significant growth rates in volume averaging approximately 15% across both categories over a four year period. Perhaps JU should look at the profitability of the sugar market and consider placing less emphasis on it.

ISSUES



With the growth in the fair trade coffee market, what strategy should Just Us! Roaster implements to grow and maintain its competitive advantage in the market?



Strategic Issues Just Us! Coffee Roasters Co-operative has enjoyed growth over their start-up phase and is wishing to expand further. Just Us! Coffee Roasters operates in the niche market of Fair Trade Coffees. Just Us! Coffee Roasters is wishing to expand their company, thus profits, which mean that they face more competition from outside their niche market. As a result, Just Us! Coffee Roasters now must compete on a large scale against strong mainstream competition and well established local and international brands. Making the decision to go mainstream, competing against well established brands is highly important and critical to Just Us! Coffee Roasters’. If

Just Us! Just Us! Coffee Roasters prolongs their decision to act they risk reducing growth as a company, and reduce their strong brand image in the public’s current perception as a proactive advocate of fairness and equality for the coffee producer. 

Targeting new markets or new buyers?



Assess Retail Channels and feasibility of Long term



Product Line and profitability



Better MARCOMS (Marketing Communications) model required

ALTERNATIVES: Alternative (A): “Joint Venture/Strategic Alliance” The first strategic alternative I propose is to attempt a joint venture/ strategic alliance with a fellow competitor with similar values. This strategy could help JU with resources and in increasing market share in the local market as well as providing a platform for expansion outside the maritime states. Sherman (2003) states that one of the possible reasons for a joint venture or strategic alliance is to widen or integrate product lines. As we have seen from the SWOT analysis, new product lines would provide JU with new opportunities for revenue. However an important factor to consider when considering a joint venture or strategic alliance is to give careful thought to the type of partner you are looking for and what resources you and the partner will be contributing to the newly formed entity (Sherman 2003). From careful examination of competitors in the local market I believe that a joint venture with Kicking Horse would be most effective. The reasoning behind this is because they are located on the opposite coast of Canada and have the same core values as JU. There are mutual benefits for both parties by entering this agreement.

Alternative (B) : The second strategy is to remain in the Nova Scotia market and defend what JU already has, no expansion.

Just Us! The objective of this strategy is to continue maintain the 4 coffee shops and maintaining the relationships with retailers. The benefits of this are that the company can focus on its service offering and finding new product lines. However because of the competitive environment it is not recommended and therefore is not the selected strategy. However one solution to combating the intense competition in the market is to use a counter-offensive defense as suggested in Wilson and Gilligan, 2005. This strategy of defense is used in industry when a competitor launches an attack on the market. JU for example could Cut Costs either meet the attack head on or look for a gap or a weakness in its competitor’s strategy through promoting their own strengths and highlighting the competitor’s weaknesses.

ALTERNATIVE C: Long term expansion strategy in order to increase the market share This strategy is considered keeping in mind the long term expansion plans of the JU coffee centres. This would not only ensure that new market is tapped within the Nova-Scotia region but also take the JU brand to the mainland Canada. However for such a long term strategy to be fruitful the entire process has to produce Quality products to conquer new areas. The yardstick could be Quality to prevail over the competitors in the expanding market.

RECOMMENDATIONS  JU need to develop a clearer MARCOMS model. Marketing communications (MARCOMS) refer to four different types of communication channels – advertising, public relations, personal selling and sales promotion. MARCOMS give organizations the opportunity to establish, in this case strengthen, a strong position in the market and assert their distinctiveness and also ties into what the client wants to say as opposed to execution, which relates to how the message is received.  It is the need of the hour to have a strong online presence without which one cannot command a good market share. The JUST US! Management needs to put more emphasis on this area. An interesting feature I would feel would be online videos of the product process on the website from start to finish. Another simple low cost form of advertising and using technology could be a members club. By establishing this in the online environment they could then use Electronic newsletters to keep in touch with existing customers. The benefits of electronic newsletters to

Just Us! customers are simply that they can be issued in large quantities on a low-cost basis and can reach a large portion of their target market.  Opening more coffee retail outlet in dispersed location to increase the reach.  Finally, service differentiation is the most important criteria which sets you apart from your competitor. JUST US! Cafes need to develop an unmatched service standard and best ambience in the coffee stores.