STUDENT NAME: PHAMGIA HUY TRAN
1. 1 Threat of Substitutes: High
- Current:
- Although espresso market is an evergrowing rapidly, tea is still the leader of the hot beverage products. You will discover other beverages which are used, savored and reinforced by many people rather than caffeine such as: fruit juices, water, soda, energy beverages etc.
- Consumers don't need to pay any cost when they change from coffee to substitutes, which may increase the risk.
- Future:
- Since caffeine and beans are the only products of Halo, their aim for customer market is actually limited. Nowadays people have more choices of their beverage, especially the hot one like tea or dairy, which are more healthy than coffee. In the research of the share of hot beverages consumed frequently by individuals in the United Kingdom (UK) in 2015, information has demonstrated that 44 percent drink tea frequently, followed by 21 percent who drink instant coffee (Statista, 2015).
1. 2 Intensity of Competitive Rivalry: High
- Current:
- The industry has a monopolistic competition and Nestl Group is dominating the most significant market share especially by their two brands Nespresso and Nescaf. Other competition also have a remarkable marketplaces share.
- Consumers don't need to pay any cost for turning to other brands, which creates high rate in rivalry.
- Because the industry is mature with low development rate, you have the predictable retaliation from well companies against each others for brand equity, resources, important locations and price competition anticipated to all of them looking for increasing their market share from established companies.
- Future:
- Since B2B is the maily target market of Halo, their market is too narrow and it is possible to lost their market talk about easily to others brands that are more popular. Nespresso and Nescaf have been widening the marketplace share to B2B market. Regarding to Nestl Nespresso S. A (2016), Nespresso has produced partnerships with renowned culinary organizations and chefs surrounding the world to interact and share viewpoints with key players in the industry such as: Offered by over 780 star-rated chefs or similar, served by 15 major airlines including: Cathay Pacific Airways, Qatar Airways and Emirates Airlines, Swiss International Air Lines, Etihad Airways. Halo is currently facing the threat of losing their business partners to bigger brands like Nespresso.
1. 3 Difficulty in supplying
- Current:
- Purchasing coffee is not a straight forward process and frequently purchasing direct from a grower can create problems further down the source chain. This can be a serious problem because Halo cannot have a stable coffee resource with high requirements from the local famers and growers.
- Future:
- Climate change- Less appropriate land for caffeine: Droughts in an extended period of time, increased heat and heavy rains are the key factors that produce harvest seasons all of the sudden change without any reason and therefore unable to be predicted. It's estimated that the areas ideal for coffee cultivation will lower considerably by 2020 (CBI, 2016). The root drastic changes in the suitability of land for caffeine production are having undesireable effects (Coffee Barometer, 2014). This can benefit highly and right to the resources of Halo using their suppliers.
2. 1 Assumptions and assumption reversal
- Assumptions about Halo:
- Halo provides only espresso and caffeine beans
- Halo has 2 amounts of products available only online: Halo Signature and Halo Speciality and goal customers: B2B, home-coffee drinkers.
- Halo's suppliers are from South America
- Reverse each assumptions:
- Halo has other products
- Halo caffeine products are various and bought from coffee shops or vendors, customers are diversified
- Halo resources itself
- How to accomplish those reversals:
- Halo has other products
- According to the recognized issues mentioned above, people will have a wide array of choices for their beverage. It really is significant for Halo to create and develop other kind of drinks than coffee such as carbonated drinks or energy beverages, especially tea due to the flavour of consumers. Nespresso and Nescaf are just two of different brands from Nestle beside others drink brands like Milo, Nestea and Nesquik. With this strategy, Halo can get advantages from the non-coffee drinkers, which really is a very vast and profitable market. However, this is also an adult market with big brands dominating like Pepsi, Coca-cola, Monster, Red bull. If Halo determines to be always a new entrant into a new market with different products than caffeine, Halo need to get started on once more from the market research as well as marketing research. That is not recommendable for Halo to invest their reference into a mature market like soft drinks because Halo is still facing troubles in remaining and increasing their own caffeine market talk about.
- Halo caffeine products are various and sold in coffee outlets or retailers
- Currently, Halo has offered only their espresso with 2 ranges of products available only online: Halo Personal and Halo Speciality. This might creates a limit of preference for customers who wish to enjoy a new flavour or their personal one. Rather than providing only 2 runs of products which are Halo Signature and Halo Speciality, Halo should create more different tastes of caffeine, or especially let the customers choose and blend the ingredients to generate their own personal preference. This special service can make Halo unique and can satisfy a number of customers who do not like the 2 old runs of products before. To make this service possible, Halo should open their coffee retailers chains or stores because this can make Halo more accessible to every person than the online business way. Customers will see it more convenient and interested to build and have a cup of coffee with their personal taste as opposed to the old online way. About the old online way, Halo should develop their website to make it more attractive and home-coffee drinkers can also choose and mix the ingredients to generate and order espresso as well. This option is highly suggested because it not only solves the limit of goal customers, but also makes Halo become well-known for the special service. To check out this way, Halo needs to perform more research and test to create new coffee products or new materials so that customers will have a number of choices.
- Halo items itself
- Although the bargaining electricity of the suppliers has been limited, Halo cannot control the negative effect from weather changes on the crops as well as the tool. It really is predictable that the areas suited to coffee cultivation will lower greatly by 2020 (CBI, 2016). In order to have a stable resources, Halo can supply itself by creating a location in the united kingdom that contain a same condition to SOUTH USA to grow coffees. By modern technology, it is possible to build a technological plantation with modern equipments can make the same weather conditions and transfer the earth from South America. In addition, Halo can apply some strategy skills in growing coffee beans to be sure they can harvest coffees all around the years. This option avoids Halo from the potential risks of materials from South America, which is too far and cannot be control well, offers a stable source of information for Halo to market 12 months a year. However, it will cost big money to set up a modern plantation like this and it'll usually take 4-5 years for a espresso tree to begin producing coffee which is a long time. This option is not recommendable since it costs a lot of time and money which is not suitable for a little company like Halo for now.
2. 2 SCAMPER
- Substitute
- o To compete with other beverage brands, Halo can develop more different types of products like tea, soft drinks, mineral water, which are all substitutes. However, these products are in adult markets so that it will be hard for a new entrant like Halo to own market share. Halo can make and take coffees from suppliers in closer areas instead of South America to reduce the shipping cost, but the quality of coffees may be reduced as well because the earth and the elements in better areas aren't the better to grow coffee. You'll be able to build a modern farm in the UK with the same local climate and ground condition to SOUTH USA to expand, harvest and supply for itself, but you will be charged Halo a wide array of time and money to handle this course of action.
- Combine
o Halo should run the business both online and offline as the same time. Opening coffee outlets chains to present product directly can help Halo become more recognizable and increase image of the business. Doing just-in-time system service, especially online to lessen circulation times within creation system as well as response times from suppliers also to customers. Making more ranges of coffee to provide more alternatives to the customers, or providing them a particular service that let customers create their personal coffee taste. This may increase Halo's brand and the business could be more popular to everyone. It will require money and time to handle studies for new coffee or materials.
- Adapt
o To reduce the dangers from substitutes and rivalry, Halo needs to diversify their coffee products to appeal to more customers and key partnerships. This will help Halo to gain market share and compete with other challengers. When this trend nowadays is taking care of the environment, Halo should take benefit of their biodegradable pills, which is one of these strength to increase the company's image.
- Modify
o Halo should broaden the ranges of coffee products to be more accessible because customer will have significantly more choices than the 2 2 old runs. Halo should raise the use of the biodegradable tablets to get good impression from the world.
- Put to another use
o Halo can take advantage of the used coffee beans by offering the coffee grounds to some organizations that take care about beauty to create plastic or sell caffeine grounds to farmers because it is good for the soil. This may save a lot of money for Halo as well as recycle the caffeine grounds to safeguard the environment.
- Eliminate
o Halo is lack of goal customers as well as diversification of product runs, so they have to improve more things, not eliminate.
- Reverse
o Presently, Halo has 2 ranges of products available only online: Halo Personal and Halo Speciality and focus on customers: B2B, home-coffee drinkers. This may creates a limit of choice for customers who wish to enjoy a new preference or their personal one. Rather than providing only 2 runs of products that happen to be Halo Signature and Halo Speciality, Halo should create more different preferences of espresso, or especially allow customers choose and merge the ingredients to generate their own personal flavour. This special service will make Halo unique and will satisfy a number of customers who do not like the 2 old runs of products in the past. To create this service possible, Halo should start their coffee shops chains or stores because this can make Halo more accessible to every person than the online business way. Customers will find it more convenient and interested to make and have a cup of coffee using their personal taste as opposed to the old online way.
In bottom line, the most sensible and effective technique for Halo to solve their issues and have more market share is to provide more options of coffee products and provide coffee shops and vendors with special service.
What is the company selling?
Coffee and coffee bean
What is the advantage of utilizing it?
Coffee with your personal taste
Who is the target customer because of this product or service?
People who wish to have a best cup of coffee with their own favorite taste
REFERENCE
Statista. (2015) Hot beverage consumption by type in the United Kingdom (UK) 2015
https://www. statista. com/statistics/466550/hot-beverage-consumption-by-type-in-the-united-kingdom-uk/
Nestl Nespresso S. A. , Corporate Marketing communications. (May 2016) Nespresso business to business
https://www. nestle-nespresso. com/asset-library/documents/nespresso%20-%20b2b%20backgrounder. pdf
Nestle. (2016)
http://www. nestle. com/brands/drinks
Equal exchange. (2016) From bean to cup
http://equalexchange. house/products/coffee/steps
CBI- Ministry Of Foreign Affairs. (2016). Which fashion offer opportunities on the Western european caffeine market?
Retrieved from:
https://www. cbi. eu/market-information/coffee/trends/
CBI- Ministry Of Foreign Affairs. (2016). How to do business with European espresso buyers
Retrieved from:
https://www. cbi. eu/market-information/coffee/doing-business/
