• Evaluate the key challenges in managing the brand’s marketing operations.
• Provide an analysis of the current marketing activities being undertaken by the organization/brand and the extent to which
they are achieving their objectives.
• Evaluate how the brand is embracing key trends in marketing management.
Coffee is one of the rapidly growing products in the global market that is getting great popularity among the consumers. Most of the countries are consuming coffee higher than the past therefore it has become important for the companies to meet the market demand. There are several companies in the coffee market in UK who are serving consumer to satisfy their taste. Kenco is one of those companies who are providing good coffees to their customer (Winchester, Arding and Nenycz-Thiel 2015). The objective of this report is to analyze the different marketing conditions of the company such as challenges that are Kenco facing during their marketing in the UK and in the global market. The report also analyzes the current marketing strategies of the company that are implemented and what are the areas Kenco is lacking to enhance their brand marketing. The report also emphasizes on the adaptability of the brand marketing by Kenco and how they are addressing the changing demand of the customers (Tollan 2013).
The coffee market in UK is rapidly growing for the last five years. The character of the market is also changing along with the growth because the consumer preference is changing. Considering different factors there are several challenges that the company is facing in the recent time of their business that are discussed here.
Running and growing the business is one of the most challenging tasks in the coffee market. The most challenging thing is the availability of the raw coffee. Most of the companies are facing the problem of coffee production because environmental condition of every area does not support the coffee farming (Grubnic et al. 2015). Kenco is farming their coffee mainly in Africa and Vietnam therefore distance of sending those coffees to the processing unit is one of the big challenges. Running the business is the other problem because of the competition. Many local brands that are providing coffee to the customers in low price are one of the big challenges to the growth of the business. Availability of the coffee should be good otherwise competitors will get the advantage. Another challenge is the distribution of the product in the market.
The coffee market is a growing segment in the business world therefore every big company is aiming to make their business in this segment. Giant brands like Nescafe, Georgia, Bru are selling variety of coffee products in the market therefore it is very difficult to establish more number of products. Kenco’s biggest challenge is Nescafe in the UK market because the maximum market share is captured by them (Fromm, Wyss and Garcia 2012). To overcome this problem Kenco has launched the ready mix coffee in the year of 1988. At that time ready mix coffee from Nescafe was already in the market. The problem with the competition with the giant brand is the perception of the consumer. The consumer market is with the perception that big brand will always deliver the best product. Therefore Kenco is facing the problem to change the perception of the consumer to convert them towards their brand. They are the company who believes in the ethical and quality product and aim of the organization is to establish the belief.
The macroeconomic factors in the market provide lot of resistance to the business. Unlike commodity market coffee market is also facing the price fluctuation that is hampering the business growth. The biggest problem is that due to regular price fluctuation companies are not able to book enough raw materials for the future. Therefore manufacturing of coffee is becoming slow and fail to meet the demand in the market (Otjen 2015). 3.5 million Bag of coffee shortage is expected in the year of 2015 to 2016. Therefore, this will be a big challenge to every company to overcome the shortage. In such situation the price of the product automatically rises. Price fluctuation of the raw materials also lead to the problem in pricing because Kenco is not able to charge high price because of the competitive nature of the market at the same time they are not flexible enough to change price every time to the customer (Yamoah et al. 2013).
Today’s coffee business is requiring lot of investment because to meet the demand in the market companies are establishing their won farming of coffee to control the production of the raw materials. Comparatively small companies are investing on the farmers rather to establish coffee farming. Investments in the farming to educate farmers are going huge for the companies that are increasing the price of the product (Luetchford 2012).
Infrastructure of the coffee business is also important because from the production of raw materials to the selling of the ready coffee everything is controlled by the company. Kenco is also facing the same problem in the market therefore to overcome this challenge they are also investing lot of money to produce the coffee bean. Kenco is providing education to the farmer so that they provide raw material according to the need of the company.
Unlike every market coffee market is also dependent on the consumer requirement. Preference of the ready mix coffee is becoming low in the UK market because consumers do not prefer that. For last two years the demand of the ready mix coffee has come down from 80% to 77% therefore there is a need to introduce the substitute products that consumers will prefer. Competition in the market needs to keep updated so that they provide the preferred product first in the market (McDonagh, Kilbourne and Prothero 2013). Coffee Arabica and Coffee Robusta are the two main variety of the coffee bean among them Arabica has the maximum popularity because of their sweet and smooth flavor. But in the recent time there is a change in the customer demand and the demand of Robusta coffee has increased. Therefore there is a need to change the production of the raw materials according to the market demand.
Objective of every business is to grow the market capitalization and Kenco is not an exception to that. Kenco has implemented lot of strategy to establish their brand in the market that are discussed below.
Kenco has implemented Coffee vs. Gangs program in such a way that will have double benefit. It is a project of the company that will help the local community where coffee farming is done. Most of the area where coffee farming is done are underdeveloped therefore local peoples are more involved with the illegal activities for their earnings. Kenco through the Coffee vs. Gangs program is educating the local community so that they do not get involved with the illegal activities (Grubnic et al. 2015). It will ensure more people from the community will be involved I the farming that will ensure the timely and increased production of raw materials. The company is promoting this program to their customers also that will establish a sense of ethical business to the customers mind. Doing business ethically will always ensure quality product to the customers.
Kenco’s heart of the supply chain is the supply of their raw materials to the processing unit. Therefore they have adopted a unique strategy to maintain sustainable supply chain. The farmers of the coffee beans are not educated and organized therefore they do not understand the importance of the timely and quality production for the consumer (Rimburg 2012). This was a problem for the company that was hampering the flow of the supply chain. Kenco has taken the initiative to educate the farmers so that they provide help to keep the flow of the supply chain by providing the raw material timely. This strategy has helped Kenco to establish a sustainable supply chain within their process.
Eco refill packaging is the unique strategy that is introduced first by Kenco. They have made their packaging in such a way that the pack can be recycled after usage. Each product of the Kenco is using the eco refill packaging. The objective of this packaging is to provide the facility to return the used packet to the manufacturer that will ensure the plastics are not thrown in the environment (Ifezue 2015). Customers need to send the packets after use but that will not take any additional cost from them because they are providing the details how send. It is a good initiative towards the ethical business. Promotion of such kind of strategy helps to build a good brand image within the customer base.
Kenco has segmented their market according to the geography and demography that is implementable with the character of their product. This two segmentation strategy is used with their product that matches with the customer preference and usage rate.
Geographical segmentation: Kenco is using the geographical segmentation strategy because consumption of coffee is dependent on the geographic character of the market. The two way of geographic segmentation is used here that is the rural and urban area within UK. According to the market research report it is found that the consumption of coffee is less in the countryside whereas in the urban areas where the population is dense have a greater rate of coffee consumption (Percy and Rosenbaum-Elliott 2012). Therefore Kenco has established more selling unit in the urban areas as compared to the country side. Kenco has segmented the UK market in four parts such as east, west, north and south. It is found that the southern segment of the country consumes more coffee with the preference of hard and roasted coffee whereas the northern region of the country consumes more instant coffee. Therefore the company is also emphasizing to sale the hard coffee in the southern region and instant coffee in the northern region.
Demographical segmentation: Kenco has tried to segment every age group, families, region, gender and different socio economic group. Kenco is targeting the young group who are between 20 to 40 years because they consume maximum coffee as compared to the other age group. The company has also segmented the market according to the family’s behavior. It is found that the families who have more working person consume more coffees (Kruschwitz 2012). Along with the family segmentation it is necessary to segment the market according to the socio economic group. The families who have more working persons are stronger economically. It is obvious that the families with the higher economic class will consume more coffee as compared to the other groups.
Since the younger age group and higher economy class is the highest consumer of coffee in UK therefore they are implementing Kenco reward club strategy to increase more number of loyal customers. Kenco reward club is one of best segmentation strategy implementation that helps the company to grow in the UK market (Akgün, Keskin and Ayar 2014).
Effective utilization of marketing mix by offering better products at competitive prices and usage of better promotional channels along with choosing the right place to promote is the key to success for any organization. Identification of the right marketing mix is considered as one of the most effective way of profit generation and retention of customers. However, Kenco have significantly failed to implement the right mix of marketing, which became the main reason behind Kenco’s present backward stride in the highly competitive market comprising giant companies like Georgia, Nescafe and Bru (Mackenzie 2013).
Despite of being placed in a rapidly growing sector of business, Kenco has failed to offer diversified products to the people of UK. Kenco’s products are quite similar to that of Nescafe and that is the main reason behind Kenco’s failure to attract people with its products. Even in case of powdered coffees or coffee beans, Kenco have tried to offer existing products without changing any traits of the newly introduced products (Taylor 2013). Kenco’s main strategic idea was to offer superior qualities of products but lack of market research regarding preference of people about the products boomerang Kenco’s product offerings to the public. Rather than offering similar products based on market availability, Kenco could have offered fat- free coffee with less percentage of caffeine, which could have attracted maximum number of health conscious people (Liang 2012).
Promotion plays a pivotal role for deriving success to any company or any upcoming brand or product. Kenco have been unable to use appropriate channel of promotion and relied on retail selling for promotion. Kenco’s strategy to distribute leaflets regarding launch of the upcoming products without using the advertisement channel through print or broadcast media like television or radio advertisement narrowed the competitive scenario of the company (Köhler 2014). Though it is a widely known fact that majority of the coffee users belong to the age group of 16-35 years, Kenco have not made any efforts to undertake social media marketing campaigns or promotional campaigns to target this particular segment of demography.
Kenco should have used direct marketing strategy comprising of door- to- door selling or complementary distribution of coffee to target the families living in UK. Publishing advertisement in magazines and daily journals would have been another significant promotional effort of Kenco (Levy, Reinecke and Manning 2015).
Faulty pricing strategy is another faulty strategic decision undertaken by Kenco that deteriorated brand and product establishment in the UK market. Kenco emphasized on providing superior quality products with better taste, which increased the price of the coffee as compared to the other available products. At the same time, people of UK denied to consume similar products that have already been offered by the market leaders like Nescafe, Georgia at economical values. As per basic law of economics, high priced products always narrow the demand and the same was applicable for Kenco (Formentini and Taticchi 2014). Kenco’s pricing strategy should have been to offer less quantity of product at lower prices so that people would have at least opted to verify the product’s taste and quality.
Kenco’s selection of the place of launching the product seems to be inappropriate, as Kenco have tried to capture the market that is already in control of Georgia, Bru and Nescafe. Apart from targeting the major cities of UK, Kenco could have targeted the smaller cities such as Ely, Lincoln, Ripon, City of London where population is significantly less and no prominent presence of the market leaders are observed (Pagell and Shevchenko 2014). This could have placed Kenco strongly in the UK market and helped the company to gain significant popularity. Kenco’s presence in most of the largest cities failed to create any positive effect on the company’s presence and hence failed to provide strong competition to the existing brands.
To grow in the market every company take the advantage of the brand or product extension to attract maximum set of customers. But in case of Kenco it is different because they are dealing with very few products with their marketing strategy. If we consider the competitors such as Nescafe then we will find that Nescafe have lot of variety in their product range therefore, the market share of Nescafe is also high. Competitors of Kenco are providing products like morning coffee, office coffee, coffee with different flavor, ready mix coffee and coffee with different taste which is helping them to grab the attention of more customers (Kolk 2013). Kenco is operating their business from long time in the coffee market but they have never tried to diversify their business where as their competitors have introduced product in the tea market. Nestea is one such brand from the house of Nestle that help them to enter into the tea market. Therefore it is also important for Kenco to take some initiative so that they could also grab the tea market because coffee and tea are selling inn an integrated market.
Kenco has established their business in the past and operating their business for long time. If we consider the global market then we will find that the existence of Kenco is very less as compared to Nescafe. Nescafe is operating their business almost in every country therefore the brand recognition is much better then Kenco (Ferrell and Hartline 2012). Kenco has never tried to make their product available in the global market which is the poor implementation of one of the 4P’s that is place. To make a good business globally it is very important to make available product everywhere so that customers cab built for the product.
The demand of the coffee in the global market is increasing every year. The rate of demand will increase more in the future. Comparing this demand Kenco is not able to increase their production of coffee bean therefore; they are unable to meet the market demand. Competitors are taking the advantage of this situation (Carvalho, Paiva and Vieira 2016). Kenco has taken many initiatives to overcome this problem and they are trying to organize the coffee farmers so that they understand the market and provide support to the organization.
Conclusion
From the above report it can be concluded that Kenco has established their business in the coffee market with lot of good reputation and belief in the customers mind. The company has always emphasized to provide quality product to their customer and they also emphasized on the ethical business. Their marketing strategies are also associated with the promotional activities that make the perception of ethical business as well as sensible business. Therefore they are one of the preferred coffee brands where they are operating their business. But they fail to make good growth in the global market because of their poor implementation of marketing mix other marketing strategy therefore they are not able to convert the customers of their customers.
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