Herbal Teas and Coffee Case Study - Entrepreneurship Assessment answer

• Subject Name : Entrepreneurship

Café House Report Writing Assessment Answer 

Executive Summary

The aim of this report is to identify a business plan that has immense opportunity and growth to earn a maximum profit by entering into a new market area. After analysing market it was identified that growth of herbal teas and coffee has increased as a result a new entrepreneurial idea was generated to open a café from the customers who are looking for a place where they can work and enjoy beverages simultaneously. The objective of establishing a café is to serve a place where people of all age can relax or conduct their important meetings. The core objective of this study is to identify and evaluate whether the business plan is feasible or viable to be introduced in the market or not. The idea of the business plan is analysed by industry analysis, competitor analysis, and market analysis and so on.

Contents

Background. 4

Mission. 4

Product Offering. 4

Success principle. 4

Market Analysis. 5

Industry analysis. 5

Competitor analysis. 6

Marketing Mix. 6

Product 6

Pricing. 7

Place. 7

Promotion. 7

Financial plan. 7

Critical risks. 8

Conclusion. 8

References. 10

Background

This report intends to discuss and describe an entrepreneurial idea to enter into anAustralian market.  There are many cafés in Australia that is always occupied with valuable customers in spite of this fact the customers are still not happy and satisfied. It is because consumers these days are becoming more health conscious. They prefer only those things which provide them health benefits thus there is a need for a café that provides customers with herbal tea and coffee in best quality and taste.  The idea behind herbal café is to create a place where people can relive out their stress and feel relaxed in the aroma of coffee beans and tea leaves. Tea and coffee have numerous health benefits that contribute to happiness and wellbeing of the customers(Grosso et al. 2017). This is the main reason behind the large consumption of these beverages in the country. It has been observed in the market that wherever people find coffee or tea they cannot keep themselves away from that café shop for a long period of time. They often end up drinking any of these beverages. This results that the market opportunity for opening a café house is very large but there are various significant challenges as well which can be overcome by adopting exceptional marketing strategies.  It has been observed that customers prefer only those places where the atmosphere is very appealing.

Mission

The mission of Hugs and Mugs is to serve the best herbal tea and coffee to its varied customers by providing them with an ambience where they can enjoy and have a pleasant feeling. The aim of the café is to become a daily necessity of the people. The café also stated in its strategies that it will keep bringing new things in the café so that people do not feel bored or tired of the place.

Product Offering

Café house has decided to make things simpler and thus only provide different kinds of tea and coffee to its customers. They have kept a wide range of tea and coffee for different customers in different brands.

Success principle

The café is planning to followsuccess principles. These include:

• Great products

The company is planning to provide exemplary products at market prices so that people can return back again and again in the shop.

• High Quality

The café is planning to bind its customers by ensuring that they use high-quality ingredients for the preparation of beverages.

• Conversion of customers to connoisseurs

The café house is also designing marketing strategies in such a way that the customer gets converted into connoisseurs(Bjerke andRenger 2017).  Since people in Australia are already coffee lovers, therefore, they will automatically visit the café house if they find a high-quality product.

Market Analysis

Industry analysis

It has been identified that the coffee business is growing at a fast pace in the last few years.  It has been identified from the Roy Morgan research in 2016 that Australians drink 9.5 cups of tea every week(Tea Vision n.d.). On the other hand, it has been recognized that annual domestic coffee consumption in 2017 reached 1.71 million 60 kilogram bags. On average Australian drinks 1.92 kilograms of coffee per person(Statistan.d.).  The cravings for coffee and tea in the Australian market are enough to indicate that a café with a herbal motive can attract potential tea and coffee lovers towards the place. It has also been observed from the findings that the profit of the café shops in Australia has increased and is still growing to enhance in the coming financial years. It has been observed that students, as well as youth, are more likely to go a coffee shop in comparison to others, as a result, the owner of the café shop must understand the potential customers and try to attract them towards the destination by advertising health benefits of tea and coffee. Moreover, it has also been observed that Australia is known for having the best coffee culture in the entire world. Some of thecoffees produced in the country are known in the entire world for its uniqueness and its special taste. It has also been identified from the research that professionals also visit the coffee place and sometimes works in the café house itself for hours. It helps in revealing the fact that Australian may have turned health conscious but the love for these beverages is not going toreduce at any case. There is a high entry barrier in the country because there are many existing café houses in the country that is already flourishing and earning a huge amount of profit. It has been also identified that collaboration, growth, product and service innovations are the main factors that change the structure of the entire organization.

Competitor analysis

It has been observed that there are many tea and coffee houses in the country. Some of the tea masters include a sensation tea house, zee tea, top tea house, willows tea room, teahouse camellia garden, the tea salon, tea journal, tea room and so on(Australian Tea Mastersn.d.). In addition to the tea house, there are hundreds and thousands of coffee houses in the country. The best thing about all of them is that they all are flourishing in the market just because of Australian love coffee more than any other beverages. It is very difficult from the competitor analysis perspective to create a brand image of the coffee shop in Australia.  The niche market of the herbal and ultimate marketing strategies can only help the café to attract customers towards the shop. The shop must, therefore, use high-quality coffee beans and tea leaves to produce the best tea and coffee for its various customers by using cutting edge equipment’s. The highly competitive market is the potential risk for the café house. It is even possible that the café could not generate a substantial amount of profit which is required for sustaining the café in the Australian market(Rashid et al. 2015).  There are different substitute products in the market such as soda, juice, water, beer and sports drinks and so on.  People are spending money on goods which tempt them the most. Starbucks, Mcdonalds, Dunkin doughnuts are some shops that can give threat to the café house in the region. The café house must thus bring a multi-branding concept in the organization.

Marketing Mix

Product

Coffee and tea are the main products of the café house. To enhance the quality the café house has decided to use aherbal tea and organic coffee beans. The café house is trying to attract and lure customers by giving them a wide range of coffees and teas. The customer can select any tea or coffee brand according to their choice and specifications(Kimmel 2018). Since it is a café house thus customer service of the shop also plays a very important role in attracting customers towards the shop. Appetizing taste of the beverages and quick customer service are the basis for customer attraction.  The café is trying toattract youth and professionals together for producing higher benefits for the organization. The café house can also increase its customers by sweeping the entire region with new trends and flavours.  It has also been identified from the market analysis that most of the customers in Australia prefer latte over the other coffee brews.

Pricing

The pricing strategy of the marketing mix is necessary to attract consumers. It is because the high price of the beverages will not be accepted by the low or average income groups while the low cost of the beverages will degrade the standard of the tea and coffee in the market(Nagle, and Müller 2017). Thus, it has been identified from the market that café house must keep a medium range of the tea and coffee produced by the makers so that both high and low salaried person can also come and enjoy tea and coffee produced for them. In addition to income criteria, it is also necessary for the café house to identify the competitive marketing strategies of other café houses and brands because

Place

The café house can target young people by creating a cultural segment by introducing herbal tea and coffee products in the market through sales and promotional activities. The café house has different coffee ranges for a different type of customers. For higher-income customers, café provides more exotic taste than the general blends used for the average income customers(Cheng et al. 2017). The best part of the café house is that it is planning to attract all kinds of people by aiming to provide the best quality at economic benefits at a reasonable price. 

Promotion

The company can use a variety of promotional activities and techniques to increase the popularity of coffee in the region. Large scale advertising can be the best technique to promote the brand in the Australian market. Broadcast and display media are a good source for advertising campaigns. The café can also introduce the products in the market through sales and promotion. The café must use point of sale promotion to increase the sales of the beverages among consumers(Hwang and Thomadsen2015). Cashback offers and giveaways will also help in increasing the number of customer visits.

Financial plan

The initial estimated cost of the café house is $ 10, 00,000. The cost of the project will further increase because there are many other cost overheads which will be included during the establishment of the café house. The cost estimated above will include both fixed and variable amount. The variable cost of the café house will be considered for the first one year of its operation(Batocchio et al. 2016). This cost will increase the cost of equipment’s, wages, ingredients, utensils, rent of the outlet, marketing exposure practices and so on. The cost of the café house will be divided into the following things. These include:

Rental cost: $150,000

Cost of equipment’s: $100,000

Wages and Salaries of the employees: $145,000

Marketing and Promotion Cost: $1, 00,000

Coffee beans and Tea leaves: $250, 000

Insurance: $50, 000

Maintenance Cost: $200,000

Critical risks

Coffee and tea market in Australia is subject to socio, economic, demographic, technological and environmental changes. All these forces operate in the macro environment of the country.  Each of these forces has the ability to change the marketing environment and create opportunities for the café houses in the market where it operates(Jurisch et al. 2016). The café house must, therefore, try to monitor the environment properly so that it can successfully operate in the competitive market. It has been identified that café can overcome critical risks by adopting good marketing mix strategies. This is why the café must try to capture market segments by serving the best quality drinks to its varied customer ranges.

Conclusion

It can be concluded from the above findings that business idea of cafe house in Australia is feasible. The planners of the organization must establish café house in such a way that it can overcome the existing challenges of the other competitors present in the market.  It has been observed that consumers these days are becoming more health conscious and are thus moving towards fresh, natural and healthy products. Since the café house is acclaiming to prepare herbal tea and best coffee thus the chances of people visiting the café house will increase manifolds.  This café house will also bring several attractive opportunities for its varied customers so that they can spend their tie relaxing, enjoying or by working in soothe and pleasant environment. Reasonable price and a wide variety of beverages by the café house is one of the biggest consumer attractions.  But it has also been identified that a small turn down in the economy of the café house can change the entire scenario of growth and profit in the organization. There are many competitors in the market which can pose threats to the café house. The decrease in the sale and an increase in the overhead expenses will have a negative impact on the growth and profitability of the café house. No doubt café shop is a very attractive market but without exclusive marketing strategies, the new café house would not be able to compete in the market.

References

Australian Tea Masters n.d.. Tea Businesses https//www.australianteamasters.com.au/tea-businesses/
Batocchio, A., Ghezzi, A., and Rangone, A. 2016. A method for evaluating business models implementation process.Business Process Management Journal,224, 712-735.
Bjerke, M. B., and Renger, R., 2017. Being smart about writing SMART objectives.Evaluation and program planning,61, 125-127.
Cheng, B., Furtado, A. and Henry, R.J., 2017. Long-read sequencing of the coffee bean transcriptome reveals the diversity of full-length transcripts.Gigascience,611, gix086.
Grosso, G., Godos, J., Galvano, F. and Giovannucci, E.L., 2017. Coffee, caffeine, and health outcomes an umbrella review.Annual review of nutrition,37, 131-156.
Hwang, M. and Thomadsen, R., 2015. How point-of-sale marketing mix impacts national-brand purchase shares.Management Science,622, 571-590.
Jurisch, M.C., Rosenberg, Z. and Krcmar, H., 2016. Emergent risks in business process change projects.Business Process Management Journal,224, 791-811.
Kimmel, A.J., 2018.Psychological foundations of marketing the keys to consumer behavior. London Routledge.
Nagle, T.T. and Mller, G., 2017.The strategy and tactics of pricing A guide to growing more profitably. London Routledge.
Rashid, S.M., Ghose, K. and Cohen, D.A., 2015. Brand identity Introducing renewed concept for coffee shops.PEOPLE International Journal of Social Sciences,11.
Statista n.d.. Australian coffee market - Statistics amp Facts https//www.statista.com/topics/4615/coffee-market-in-australia/
Tea Vision n.d.. Who is drinking tea in Australia https//www.teavision.com.au/blogs/teavision-blogs/five-australian-tea-trends