Running Head: Marketing Plan – Coffee Vending Machines

Marketing Plan: Quick n’

Easy
Coffee Vending Machines

Alexandria Mesa
Allen Ganaden
Luis Ruiz

5/2/2013
Marketing Plan – Coffee Vending Machines

Table of Contents
List of Tables and Figures ................................................................................................................2
Executive Summary ........................................................................................................................3
Situation Analysis ...........................................................................................................................5
Market Summary ...........................................................................................................................5
Geographics ...................................................................................................................................6
Demographics: ...............................................................................................................................7
Behavior Factors/Psychographics:...................................................................................................7
Market Needs ................................................................................................................................8
Market Trends ...............................................................................................................................8
Market Growth ..............................................................................................................................9
SWOT Analysis ............................................................................................................................. 10
Competition ................................................................................................................................. 11
Product Offering .......................................................................................................................... 13
Keys to Success ............................................................................................................................ 14
Critical issues ............................................................................................................................... 15
Marketing Strategy ...................................................................................................................... 15
Value Positioning ......................................................................................................................... 15
Mission ........................................................................................................................................ 16
Marketing Objectives ................................................................................................................... 16
Financial Objectives...................................................................................................................... 16
Target Market .............................................................................................................................. 16
Positioning ................................................................................................................................... 17
Strategies..................................................................................................................................... 17
Marketing Mix ............................................................................................................................. 17
Marketing Research ..................................................................................................................... 18
Financials ..................................................................................................................................... 19
Break-Even Analysis ..................................................................................................................... 19
Sales Forecast .............................................................................................................................. 20
Expense Forecast.......................................................................................................................... 21
Controls ....................................................................................................................................... 22
Implementation ........................................................................................................................... 22
Marketing Organization................................................................................................................ 23
Contingency Planning ................................................................................................................... 23
References ................................................................................................................................... 26
Appendix 1: Hot Beverages Survey - March 6, 2013 ....................................................................... 28
Appendix 2: Financial Calculations ................................................................................................ 32

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Marketing Plan – Coffee Vending Machines

List of Tables and Figures

Figure 1: Mg of Caffeine per 12oz Beverage……………………………………………………10

Figure 2: Average Prize……..…………………………………………………………………...10
Figure 3: Quick n’ Easy Distribution Channel…………………………………..………………19
Table 1: Contribution Income Analysis………………………………………………………….20
Figure 4: Break-Even Analysis………………....………………………………..………………21
Table 2: Quick n’ Easy’s Sales Forecast…………………………………………………………22
Figure 5: Marketing Organization Chart……......………………………………..………………24

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Marketing Plan – Coffee Vending Machines

Executive Summary
The Quick n’ Easy Cafe will become well known and will be a popular alternative for coffee for
students, faculty, staff, and visitors of California State University Monterey Bay (CSUMB). The
Quick n’ Easy Café will do so by being strategically located in various locations on campus, will
offer a good variety of products, will have quality taste, and will be less expensive in price
compared to current market offerings. By offering 24/7 availability, The Quick n’ Easy café will
be more conveniently available compared to competitors.

The target market for The Quick n’ Easy Cafe will be the students of CSUMB, aged 18-24 years
old. These students currently fulfill their need for caffeinated beverages by going to Starbucks,
Peet’s Coffee, The Otter Bay Restaurant, or the University Dining Commons (DC). This product
represents the values of all target markets because it offers convenience to busy college students.
The consumer will have to weigh the options of purchasing a more customized product at a more
expensive price, with the possibility of longer wait times, or a cheaper product that one can
simply “grab and go.”

All primary data was obtained through an online survey conducted by theQuick n’ Easy
marketing team, and answered by the students of CSUMB. The survey was created on March 6,
2013 through March 12, 2013. The survey was available through surveymonkey.com. To
obtainrespondents, the survey link was also emailed to other students and faculty on campus.
There were a total of 36 respondents. The data was used to define the consumers’ needs and
wants when purchasing hot beverages on campus. It also helped determine the amount of
students who are willing to utilize coffee vending machines.

A main benefit of the product is the low price. Based on the cost of the producing an average cup
of coffee through the vending machines, Quick n’ Easy figured the price of coffee will be around
$2.25 per cup.

Another main benefit of the product is convenience.The product will be distributed directly to
consumers on the CSUMB campus. The students will be able to purchase a coffee without
having to travel to a coffee shop and potentially waiting in a long line. The machines will be
located in every building where there are classrooms and residential dorm rooms. Each machine
will communicate brand recognition with product labeling on the machines and cups. Since The

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Quick n’ Easy machines will be located in many buildings on campus, consumers will recognize
and acknowledge its products.

There are many difficulties and risks that a company may face when developing and
implementing a new product to a target market that already has well-established alternatives. The
marketing organization holds a strategy that prepares for the best and worst case scenarios.

If materials cannot be purchased at appropriate costs, the products may not be able to sell at a
competitive target price. This will forcethe companyto look at cheaper alternatives and brands
that are of lesser quality but still safe and easy to obtain. Another critical issue that will affect the
company is a study that the target market mightbe influenced by coffee and caffeinebeing
slightly unhealthy for consumers.In response to the study, The Quick n' Easy team will contract
an independent research group to do a study to find all of the positive impacts that coffee and
other caffeine related products can offer.

The worst case scenario would be if cost of maintenance and inventory outweighs cost of goods
sold that force Quick n' Easy to stop production. Output will have to be at the same rate as our
sales or higher. Also, the amount of machines in buildings that have less traffic and fewer sales
can be moved to areas where the demand for the coffee may be higher. If there is not enough
consumer interest in the market to sell more than the break-even profit, the company may need to
find new channels or distribute the product in a new location with different demographics.

Competition with larger and more established companies,that have similar products and bigger
budgets, will be the biggest obstacle. To compete with the larger companies on campus, the main
goal would be to not try to market the products as replacements, but to market as a faster
alternative. Most college students are usually in a hurry to get from one class to another and
always on the move to get where they need to be on time. As most college students being busy,
Quick n’ Easy will give consumers the option of purchasing a drink that is located in the vicinity
of their class.

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Situation Analysis
The product we are considering is a quicker, convenient coffee service for the California State
University, Monterey Bay (CSUMB) campus. According to the National Coffee Association,
total coffee consumption in the United States increased seven percent from 2011 to 2012 (NCA,
2012). The research shows that due to the expansion of local coffee shops in the area over the
past years, the demand for coffee and other beverages have increased substantially. This is
especially true in study areas as well as the workplace. We have found that most students, when
purchasing a cup of coffee, prefer convenience over anything else as they are rushing from class
to class. So even though students have access to many local coffee shops they are not always
quick and convenient enough.

That is why we have decided to develop a vending service called "Quick n’ Easy." Our vending
machines will provide coffee and other beverages to students, faculty, staff, and visitors who are
looking for a quick, easy, and very convenient way to get their coffee fix. The target location of
the vending machines will be where people are most often present as our main objective is to
provide consumers with what they want when they want it, 24/7.

Market Summary
The United States is the world’s leading consumer of coffee. The U.S. consumes an estimated
400 million cups of coffee per day (E-Imports, 2012). It imports over $4 billion worth of coffee
each year. Americans like their coffee. Over 50% of Americans ages 18 years and older drink
coffee or coffee related drinks on a daily basis (E-Imports, 2012). That accounts for more than
150 million people who consume an average of 3.1 cups of coffee per day (E-Imports, 2012).
Since 2002 coffee prices have risen 410%. The average price for an espresso-based drink is
$2.45 while the average price of brewed coffee is $1.38 (E-Imports, 2012). According to ABC
News,on a normal week the average worker in the U.S. spends around $14.40 on coffee. It was
also stated that the amount spent per week does not account for the cost of the coffee brewed at
home (ABC News, 2012). The National Coffee Association’s (NCA) most recent study found
that the daily coffee assumption has risen above soft drinks by about 10 percent (Sanford, 2012).

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The NCA’s 2012 National Coffee Drinking Trends study observed an increase in coffee
consumptions among all age groups. The biggest difference was seen in 18-24 year olds. Coffee
consumption in this age group increased from the previous year’s 40% to this year’s 50%
(Sanford, 2012). We can assume that this age group is made up of college students. This means
that college students are consuming coffee. There is a need for our product.

CSUMB students currently fill their need of coffee by going to Starbucks, Pete’s Coffee, Otter
Bay Restaurant, and the Dining Commons (DC). These are all locations located on campus. The
DC does not sell coffee by the cup so that is not a primary competitor.

Our current target markets include (from most important to least important, 1 being most
important):
1. CSUMB students who live on campus
a. Attend class, study, live, eat, and hang out on campus on a daily basis.
2. CSUMB students who do not live on campus
a. Attend class, study, and eat on campus for a large amount of time.
3. CSUMB staff/faculty
a. Lecture, grade, assist students, and work on campus.
4. CSUMB visitors
a. Come to campus for children, sporting events, and other events.

Geographics
Quick n’ Easy will be located in every building on CSUMB campus where classrooms or
residential dorms are. It is important to have the machines distributed heavily upon the CSUMB
campus only. Applying Quick n’ Easy to other campuses during our first release will cut the
efficiency of the product on CSUMB campus. Our product is meant to make coffee and other hot
beverages easily available to consumers. If the product is only in some of the buildings then the
consumer still has to travel an inconvenient length to obtain the hot beverage. It doesn't solve the
current problem. Having the product in each building on campus allows the consumer to have
hot beverages available just feet away. That includes the Otter Sports Center, Student Center, the
library, administrative buildings, dorms, campus apartments, and all lecture buildings. Buildings

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that have multiple floors might have a machine on each floor. For example, it is important that
the library have the product on each floor. The consumer should not have to walk multiple floors
to purchase a hot beverage and disrupt their studying. In the dorms the students can walk outside
their dorm to the common area for a hot beverage without having to travel multiple floors late at
night.

Demographics:
The demographic variables that are important to our product’s success are age, education, and
occupation. From the survey we conducted, 85% of respondents are undergraduate students. A
copy of the survey can be found on appendix 1. Ages 18-24 are the most common ages for
undergraduate students. That is our target market so that age group will be important to us.
Education depends on whether they are full time, part time, graduate, or undergraduate students.
This will allow us to target the population that will find the most utility from our product.
Occupation refers to the employment situation of the consumer. Employed individuals will have
more income to purchase hot beverages. Unemployed individuals will consume our product
more if we choose to make it less expensive than our competitors. The occupation variable also
allows for some distinction between students and faculty.

Behavior Factors/Psychographics:
The behaviors we will be observing in our market are health awareness, active lifestyle, and
study habits. Personality plays a huge role on an individual’s health awareness. Health awareness
refers to how healthy an individual chooses to be when deciding what they drink. We know that
some see coffee as unhealthy and for that reason we will offer substitute beverages like hot tea.
We want to see how active individuals are to market our product’s beverages as energizing so
they can do more in the day. For those with active lifestyles we will also market our product as
time efficient so they don’t waste valuable time. Another behavior we will observe is the
studious behavior of our market. Students spend time in the classroom, in the dorm room, and
the library studying. We want to market our product to them as a means for concentration. It will
be a means to stay awake and focused in class and while studying. Social class is not a factor we
are heavily researching. That is due to the fact that we are marketing our product as affordable
and will capture the low and middle class with that distinction.

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Market Needs
Today’s consumers are living in a fast paced society, which has created the need for convenient
everyday products. A majority of college students, ages 18-24 years old, use coffee an essential
everyday product to increase their mood and study productivity. The University of Houston’s
student newspaper interviewed an everyday coffee drinker, Angel Chan, who said, “If I don’t
drink coffee, I feel very unaware and sluggish. Coffee immediately perks me up and gives me the
energy to get through the day. It makes me a nicer person too(Tso, January 24, 2013).” After
conducting a survey answered by 36 students that attend CSUMB, it was found that 37% believe
convenience is the most important factor when purchasing their hot beverage, 38% have to drive
to the nearest coffee shop, and 65% of the students dislike the long lines when purchasing coffee.

Consumers are becoming more dependent on the product. According to a study from the
National Coffee Association, 40% of this college student age group drink at least one cup of
coffee every day. In 2010, it was 31% (NCA, 2012).The increase of demands and the student
dependency on the product is a clear indication of the consumers’ wants and needs for fast and
convenient coffee.

Market Trends
According to studies done by International Markets Bureau, Young consumers that seek caffeine
are trending to choose coffee and tea beverages over other beverages, such as soft drinks and
energy drinks. Today’s economy consists of a “pay less and get more” mentality. Coffees and
black teas contain more milligrams of caffeine than leading soft drinks. These hot beverages are
also is less expensive than energy drinks. According toMarket Indicator Report, theconsumer
trendsof soft drink products and energy drinks are trying to re-attract their consumers
(International Markets Bureau, 2011). The company that owns the energy drink, Monster, also
created the product Java Monster, which is a coffee flavor similar to the retail Starbucks
Frappuccino drink. As a coffee product, Java Monster attracted new customers and helped
sustain Monster’s sales (International Markets Bureau, 2011).

Both charts indicate the caffeine content and price of each popular beverage among college
students. The information was taken from the Nutrition Data website. Figure 1 shows the

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milligrams of caffeine in four different types of caffeinated beverages. Figure 2 shows the
average price of four different types of caffeinated beverages.

Figure 1: Mg of Caffiene Per 12oz

Beverage
180
160
140
120
100
80
Mg of Caffiene
60
40
20
0
Regular Coca Cola Monster Black Tea
Coffee Energy Drink

Source: (“Self Nutrition Data,” 2012)

Figure 2: Average Price

$3.50
$3.00
$2.50
$2.00
$1.50 Average Price
$1.00
$0.50
$-
Regular Coca Cola Monster Black Tea
Coffee Energy Drink

Source: (“Self Nutrition Data,” 2012)

Market Growth
With hot beverage sales rising and the increase in coffee and tea consumers, coffee vending
machines have the potential growth in the market. The Small Business Development Center
Network reported on the coffee industry and its growth. It reported that coffee consumption is

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expected to increase through 2015 at an average annual rate of 2.7%, and tea is expected to
increase as well at an average annual rate of 3.1% (SBD, 2012.). The trend of coffee and tea
becoming a primary choice over other caffeinated beverages will help the growth of the market
by reaching the younger generation. The National Coffee Drinking Study has given facts about
the coffee drinkers of different age groups. They state, “Most adult coffee drinkers said their
lifelong habit began during their teenage years”. The study also found that 76% of adult coffee
drinkers began drinking coffee regularly by the time they were 24(Sanford, T, 2012). Therefore,
targeting the young adults in colleges will only improve the coffee industry by starting life-long
loyalty by consumers at a younger age. Our product will be mainly focused on CSUMB and for
that reason we paid attention to the growth of the school. The school was established less than 20
years ago and has been growing rapidly every year (McDonald, 2013). The increase of student
enrollment leads to more faculty. This allows for our possible customer base to grow as well.

SWOT Analysis
Strengths

The biggest strength of hot beverage vending machines is the convenience, especially for
students on college campuses. It is easily accessible for every student if the machines are placed
sporadically around campus. Compared to coffee shops on campus, it is more accessible,
requires lower labor costs, and offers lower prices. Students and faculty at CSUMB, for example,
do not have the inconvenience of waiting in line at Peet’s Coffee in the library for a quick hot
beverage; instead they can go to any of the vending machines to obtain their coffee. The vending
machines are also open 24 hours, which makes coffee an accessible product for students and
faculty to purchase during the hours that the coffee shops are closed.

Weaknesses

The greatest weakness is the lack of brand recognition. Starbucks is the leading retailer in the
U.S. coffee industry, and has strong customer loyalty. Coffee shops such as this also offer a
specialty menu and customer service, which the vending machines lack. With the machines,
there are limited options for customization when choosing the hot beverage. The machines will
need to grow in its brand recognition to attract more of the non-everyday coffee drinker.

Opportunities

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The increase in coffee and tea consumption of the younger adults is an opportunity to expand.
Other universities may find coffee shops overwhelmed with students, and place the machines to
satisfy those demands of the product. The idea of placing the machines in every building, and on
every floor, will gain brand recognition. Consumers will be more aware of the product and it can
be a potential expectation of some students to have the option of purchasing hot coffee or hot tea
from an easily accessible vending machine on their campus

There is also an economic trend in technology of using self-service machines, instead of full-
service, which requires interacting with employees. Examples would be ATM machines, self-
service gas, and self-checkout at grocery stores.

Threats

Consumers may cut back on coffee related drinks due to the health risks of too much
consumption of the product. Though coffee has many positive side effects, the high amount of
caffeine causes negative symptoms if too much is consumed. According to WebMD, the side
effects include anxiety, insomnia, and addiction. (WebMD) Sales would decrease if people
wanted to cut back on caffeine for health benefits. If non-caffeinated products became a popular
trend, the coffee vending machine product would be hindered.

Another threat is the low budget that most college students have in today’s economy. Making tea
or brewing coffee at home is cheaper than purchasing a cup of tea or coffee at a retailer. The
brand Folgers, sells an 11- or 12-ounce package of ground coffee for around $5, and claims it
makes up to 90 six-ounce cups (Daily Finance, 2011). With the average price of $2.25 per cup,
purchasing a hot beverage from Quick n’ Easy every day can cost a consumer around $15.75
weekly. Quick n’ Easy might be hindered by those consumers that choose to brew coffee at
home to save money.

Competition
Our fiercest competition will likely be Starbucks and Peet's Coffee as both of these coffee
companies are located on campus and are well known for their quality products. Both of our
competitors are considered powerhouses in the coffee industry offering a large variety of drinks

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and flavors as well as providing fairly quick service. Although, Starbucks and Peet's may have
more selection, our vending service will be more cost effective and in convenient locations.

Starbucks is a worldwide coffee supplier who’s maintained their reputation by being reliable and
consistent. They have twenty-five locations within a twenty-five mile radius of CSUMB
(“Starbucks,”2011) and they continue to grow as they are always developing new products for
coffee or coffee-related beverage drinkers. Starbucks has an on-campus shop located in the
CSUMB Student Center (Building 12) which is known by students as the main “quad” area of
the school. This convenient location was strategically placed near classes and dorm rooms in that
area of the campus. However, one of the drawbacks of this location is that it is only open during
the Student Center hours. As a result, it is unable to accommodate those classrooms that may be
further away or students on campus who study late or early in the morning.

Peet’s Coffee & Tea is conveniently located in the library café and is open from Monday-
Thursday 7:30am-10pm, Friday 7:30am-4pm, and Sunday 4pm-10pm (“The library café.”2013).
This coffee venue is great for students who are studying in the library as well as those who attend
classes in the library. Since there is so much traffic, this may sometimes cause longer waiting
times when it gets very busy. Peet’s also offers a call-ahead service for purchase orders of three
or more items. Some of the items they provide include coffee, tea, pastries, sandwiches, and
wraps. Peet’s provides good quality beverages but tends to be a little on the “pricey” side
according to some students. In 2010, most full time college students from the ages of 18-24 years
old were not employed so budgeting and price consideration to the consumer is very important
(The National Center for Student Statistics. 2012). So with the more expensive prices in addition
to longer than anticipated lines and waiting periods, Peet’s still does not provide guaranteed and
convenient beverage access for CSUMB consumers.

There are two other on-campus facilities that provide coffee as well, the Otter Bay Restaurant
and the University Dining Commons. Then, of course, there is the probability that CSUMB
faculty and staff have a coffee maker located near their offices. Those options are likely the best
fit for those who work within those facilities, but not for students. These two facilities also do
not provide much convenience or variety of beverage choices for students, who make up the
majority of consumers on campus.

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Other than the on campus coffee venues, there are several off campus places that could be a
threat to the success ofQuick n’ Easy. The following is a list of possible competition:

 Ord Market (Closest location to student housing)

 AAFES Gas Station (Open to military personnel retired, active, or inactive)
 Starbucks in Target Store (Convenient while shopping before heading to class)
 Consumers who brew their own coffee at home

No matter what the market is, there is always going to be likelihood that there will be many
competitors. However, our vending machines will offer what most of these places offer such as
beverage diversity, multiple locations, and affordability. Compared to competitors, a coffee
vending machine is the best option when a student is in a rush.

Product Offering
The Quick n’ Easy is a vending machine company that hopes to be the leading provider of coffee
and non-coffee beverages such as tea on the CSUMB campus. We intend to offer eight products
that will be restocked on a daily basis to avoid any inconvenience for our consumers. Each Quick
n’ Easy machine will have the following beverages available:

 Regular caffeinated/decaffeinated coffee

 Espresso
 Café Mocha
 Cappuccino
 Black Tea
 Green Tea
 Hot Cocoa
 Macchiato

Each vending machine will have an easy to use interface that will provide cups, stirrers,
sweeteners, and milk. The steps to purchase a beverage via our Quick n’ Easy vending machine
are as follows.

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1. Select which beverage to be purchased.

2. Choose an optional beverage creamer and the quantity preferred. Selections include
milk, soymilk, or half & half.
3. Select an optional sweetener and the number of tablespoons.
4. Choose the payment method. (Cash, credit or debit.)
5. After the payment has been accepted, the drink will brew on its own.

Quick n’ Easy plans to provide fast service at a very reasonable price in many convenient
locations. The Quick n’ Easy vending machines will accept cash or credit/debit cards only. The
machines will be inventoried and restocked each morning prior to the start of the school day. If
the machines have any malfunctions there will be a maintenance employee that will monitor the
machines throughout the day. Our technician will be standing by monitoring the vending
machines in the event that repairs or maintenance may be needed.

Each machine will be able to produce 200 cups of coffee at an average of 8 ounces per cup. The
water supply will be delivered through a waterline in the building connected directly to the filter
in the machine. Each machine will need to be in all building where there are classrooms, faculty,
staff, or students present. Some buildings with multiple floors will have a machine on each floor.

Keys to Success
To be successful in the coffee industry, all focus needs to be put into the conveniences of having
the product quickly and easily available to the target market, CSUMB coffee drinkers, at all
times. The potential consumers need to be aware of the product and its locations. The planned
implementation involves having at least one machine in every building where classes and dorms
are held. Though the competitors on campus have already been established and have a regular
and faithful customer base, we believe that we have something better and more beneficial to
CSUMB students, faculty, staff, and visitors. We believe that once the awareness of Quick n’
Easy spreads around campus; the convenience and price of the product will outweigh what the
competition has to offer. The Quick n’ Easy will offer some of the same products, accept the
same payment methods, but will be strategically located in places where the competition cannot
be. A major factor in the success of the Quick n’ Easy is that it is self-contained and will be
available 24 hours a day, seven days a week, in many locations on campus. If a machine sells out

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of a particular type of beverage or any beverage enhancing contents, there will be many other
machines nearby to compensate until an on-call deliverer can restock the machine. We will have
daily refills of each machine to avoid such a situation.

Critical issues
The Quick n’ Easy will be faced with possible critical issues if the following happen:

1. A coffee study influences target market that coffee and caffeine are bad for consumers.

2. CSUMB does not allow product in all targeted buildings planned

3. Due to its effects, caffeine is looked at as a drug comparable to alcohol or tobacco

4. Cost of maintenance, inventory, and rent outweighs cost of goods sold

5. Customers feel that our selection of products is not enough and they prefer traditional
coffee rather than instant coffee.

6. Developing a new way of delivering a new product to replace something that has been
around for years.

7. Competing with larger and more established companies, which have similar products and
bigger budgets.

All of the above factors can be detrimental to the success and profitability of the company.

Marketing Strategy
The value that we will offer our target market is the value of convenience. We want to provide
an assortment of hot beverages with the most amount of availability to our consumers. The trend
in hot beverages will add more customer value to our product. We work hard to negotiate with
our suppliers in order to provide our consumers with high quality products at low prices. We will
value consumer inputs to improve the product to adapt to their taste.

Value Positioning
Our product caters to busy consumers that demand the convenience of tasteful and readily
available hot beverages. We will provide the products through vending machines. We will

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systematically place vending machines so that consumers experience the up-most convenience
when in need of our hot beverages. We will offer a wide selection of hot coffee beverages with a
combination of hot tea beverages. Also, there will be different sizes to choose from, which will
accommodate to consumer preferences.

Mission
Quick n’ Easy understands the need of a busy life and strives to provide assistance that allows
you to accomplish the most out your day.

Marketing Objectives
Out of the 35 students that were surveyed on CSUMB campus, 83% stated that they have drunk a
cup of either a coffee or tea beverage. During the same survey, we found that 21% of the
respondents would buy a hot beverage from a vending machine While 55% are indecisive, they
are willing to purchase a hot beverage from a vending machine. Per one cup of a hot beverage
sold at $3 to the consumers that would buy from the vending machine, we would accumulate
$21. If we managed to persuade the indecisive consumers to purchase our hot beverages, we
would sell 18 more cups at $3 to reach a total of $54. Therefore our sales would increase to a
total amount of $75. We must convince consumers that quality and taste can also be found in a
vending machine. The goal of our marketing plan will be to acquire a loyal consumer base that is
willing to satisfy hot beverage needs through the convenience of a self-service vending machine.

Financial Objectives
Quick n’ Easy has a financial objective to break even by the first quarter. To accomplish this, we
need to sell 1,552 cups per a month. The break even may also be reached by accumulating
$3,492 in sales each month. In order to pay off our debt, we need to accumulate a profit of
$359,700 or by selling a total of 276,693 cups. The debt should be paid off by the end of year
two.

Target Market
CSUMB students are the current target market for our product. The market consists of the
common undergraduate college student ages 18 to 24 years old. Students that live stressful lives

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due to schoolwork tend use caffeine or other hot beverages to help them accomplish daily tasks.
With students having multiple classes throughout the day, there is a short time period to stop by a
coffee shop to pick up a hot beverage. Students have small budgets to live on while in college.
Our product provides a quality hot beverage throughout convenient locations at low prices.

Positioning
Quick n’ Easy will be positioned in a “The same for less” product category. Although we have
several competitors around campus, all of which have certain hours of operation, they do not
offer 24-hour service. Peet’s and Starbucks, our main competitors, offer hot and cold beverages
as well as food items. We will focus on hot beverages only. The quality of our hot beverages will
equal that of our competitors while offering the products at a lower price.

Strategies
Quick n’ Easy coffee is targeting busy CSUMB students that drink coffee every day. The
machine offers the convenience of coffee being readily available near the consumer. Today’s
society is choosing coffee over soda for a beverage that provides the caffeinated benefits. The
pricing, distribution, and marketing communication of the product are factors that reach the
marketing objective of developing a loyal consumer base.

Marketing Mix
Pricing
The prices of the hot beverages were determined by evaluating cost and consumer need. It costs
Quick n’ Easy almost $1.00 to produce a hot beverage, the prices for the consumer will average
around $2.25 per a cup, depending on the size and type of beverage (WFTS Staff, 2011).
Distribution
Quick n’ Easy will distribute directly to consumers through the CSUMB campus. The machines
will be placed in every building where classrooms are held, and they will also be located in every
residential dorm building. Customers retrieve their hot beverage from the machines through self-
service. The distribution channel was determined through the efficiency and reliability of the
product.

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Marketing Plan – Coffee Vending Machines

Figure 3: Quick n’ Easy Distribution Channel

Coffee
Distributor Installation of
Machines on Consumers
VenCoa Vending Campus
Machines

Marketing Communication
Quick n’ Easy communicates its product through brand recognition. There will be product
labeling on the machines and cups. Students on campus will recognize the brand through
students who previously purchased the coffee and by seeing the machines that are placed near
their classrooms or residential dorm rooms.

Marketing Research
Primary market research was done through a survey answered by those categorized as our
prospecting target market, which were students that attend CSUMB. The survey was conducted
March 8th 2013 through March 12th 2013. The survey was available through social networking
sites and surveymonkey.com. There were a total of 36 respondents. The data was used to
determine the consumers’ needs and wants when it comes to purchasing hot beverages on
campus, which helped determine the amount of student who are willing to use Quick n’ Easy.

Secondary market research was collected through online resources to analyze the market. The
researched websites consisted of articles from journalist and surveys conducted by governmental
agencies. All sources can be found in the reference section.

Future market research will be conducted by analyzing the results of the product after it has been
offered to the public. The results are shown through the amount of hot beverages sold through
machines and through how often the machines are used. After researching the effectiveness of

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Marketing Plan – Coffee Vending Machines

future results, Quick n’ Easy may consider expanding to distributed the machines along other
college campuses where the product would be just as effective.

Financials
The Financial Analyses of Quick n’ Easy are represented the next few sections.

Break-Even Analysis
The Table Below illustrates the components used to perform the Break-Even Analysis.
Table 1: Contribution Income Analysis

Average Price per Cup of Hot Beverage $2.25

Number of Cups Sold 2,000
Total Sales $4,500.00 100%
Variable Costs
Less: Variable production Costs $(1,900.00) 42.2%
Less: Variable Selling Costs 0 0%
Total Variable Costs $(1,900.00) 42.2% $0.95 per cup
Contribution Margin $2,600.00 57.8%
Fixed Costs
Less: Fixed Production Costs $(1,600)
Less: Fixed Marketing Costs $(416.67)
Total Fixed Costs $(2,017) 44.8% $1.00 per cup
Income Before Taxes $583 13.0% $0.30 per cup
Source: (WFTS Staff, 2011)

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Marketing Plan – Coffee Vending Machines

Figure 4 illustrates the Break-Even Analysis.

Figure 4: Break-Even Analysis

16,000
14,000
12,000
TFC
Monthly Revenue

10,000
TVC
8,000
TC
6,000
Sales
4,000
Profit
2,000
0
0

1,000

2,000

3,000

4,000

5,000

6,000
(2,000)
(4,000)
Cups Sold per Month

According to our calculations we must sell 1,552 cups of a hot beverage per month to break even. We
can also break even by accumulating $3,492 in sales each month. We should break even within the first
quarter. We purchased 60 coffee vending machines from Vencoa Vending Machines at a price of
$599,500 each("Vencoa vending machines," 2013). To pay off our debt we need to sell 276,693 cups of a
hot beverage or accumulate $359,700 in profit. If we calculated and stick to our sales forecast we should
be able to pay off our debt by the end of year two.

Sales Forecast
California State University, Monterey Bay is made up of almost 6,000 students, staff and faculty
(McDonald, 2013). Based on the survey we conducted 21% of respondents stated they would purchase a
hot beverage from our vending machine. 55% of the respondents stated they might buy from our
machine. For the purpose of calculating our sales forecast we correlated the percentages from our
survey to the entire school. If we have 21% of the consumers and can capture an extra 14% from the
maybes then we have 35% of all consumers. That means that we have 2,100 potential initial customers.
Our goal is to have each of the 2,100 customers purchase a hot beverage from Quick n’ Easy 2-3 times a
week. We then multiplied the weekly sales forecast by the number of weeks in a quarter (13) to obtain

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Marketing Plan – Coffee Vending Machines

our quarterly sales forecast. This number represents the number of units sold each quarter or our
quarterly projected value.

The table below illustrates the projected sales, by revenue and units expected for the next three years.
The table shows that we expect our sales to drop during the third quarter. That is due to the fact that
two of the 3 months consist of summer break. We also expect our sales to be greater during the fourth
quarter because school is in session during the entire quarter. Winter also plays a key factor in our
fourth quarter sales increase. With an increasing enrollment rate at CSUMB and increased awareness of
our product we expect our sales to increase in year two and year three (McDonald, 2013).

Table 2: Quick n’ Easy’s Sales Forecast

Measurement Beginning on: Units Sold Total Units Sold Avg. Accumulated
of Time During Quarter Sales
st
1 Quarter January 1, 2014 50,000 50,000 $112,500
2nd Quarter April 1, 2014 50,000 100,000 $225,000
3rd Quarter July 1, 2014 30,000 130,000 $292,500
4th Quarter October 1, 2014 60,000 190,000 $427,500
nd
2 Year January 1, 2015 200,000 390,000 $877,50
3rd Year January 1, 2016 210,000 600,000 $1,350,000

Expense Forecast
Quick n’ Easy’s marketing expenses consists of many components. Most were already included in the
cost evaluation of our product. We already took account the cost of the ingredients to make each hot
beverage. We also took into account the cost of each machine and cost of advertising. Our advertising
consists of posters made before our products are installed and posters made once they are functional.
There are certain aspects of our business that we couldn’t account for that should be considered. Those
include the following:
 Financing
 Delivery
 Promotions

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Marketing Plan – Coffee Vending Machines

Financing refers to the interest and other expenses we will incur. To be able to purchase all the vending
machines at once we will have to do it through financing. With that come interest expenses.

Delivery refers simply to the cost of getting all 60 vending machines delivered and installed on the
CSUMB campus. We accounted for the cost of each machine but the delivery charge is one we will try to
negotiate to its lowest point.

Promotions refer to the loss of sales because of the promotions. We will try to increase our sales
through word of mouth. Because of that we will try to provide free samples as a promotion to have
consumers taste our hot beverages. That will lead to them getting the word out on Quick n’ Easy.

Controls
The measurement of the success for theQuick n’ Easy will be based on the units sold. Every week the
units sold will have to be calculated against the expenses. This will need to be checked and accounted
for. The frequency of restocking machines will be calculated to determine how fast products are sold,
which products are the most popular, and what machines are the most frequently visited. We will
develop a customer survey where customers can take surveys on how they feel about the company and
the product, which will also have a comment section where a customer can express their thoughts or
feelings with the company. The customer surveys will give the company a good way to get customer
feedback and possible recommendations. To encourage customers to participate in the surveys, we will
create a monthly sweepstakes where one survey will be selected to receive a free coffee. We can also
develop promotions where customers can use coupon codes to enter into the system, to receive
discounts on coffee.

Implementation
To begin the implementation of The Quick n’ Easy, the company must first find suppliers. The design and
machine must be created with those logos very visible on the machine. The company must then
convince CSUMB to put the product in the locations proposed. We will make samples for the decision
makers and the target market to promote and build interest in the product. We will have a small taste-
testing table for samples inside in the larger buildings for the first week of production that can create a
buzz. Finally, when the product is stood up, a plan will be developed to promote our product within the
university.

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Marketing Plan – Coffee Vending Machines

Marketing Organization
A technical support specialist will need to be hired and trained to learn the functionality of the system
and to learn how to provide great customer service politely. They will be involved in maintaining and
supporting the services of all the machines 24/7. They will need to be on call to get a machine back into
normal operation as fast as possible.

Figure 5: Marketing Organization Chart

Marketing
Buildings
Team: Us
Kinkos on CSUMB
(Alex, Luis,
campus
Allen)

The Quick n’ Easy marketing team will promote the product by handing out flyers to students onCSUMB
campus. The flyers will only be handed out soon before and soon after the machines are placed. The
flyers handed out before the product will provide awareness and excitement. Advertising is done
through the flyers after the product is placed. Studentspromote the use of the Quick n’ Easy by
spreading the word andalso carrying the branded cup after a purchase.A potential weakness is the
dependability Quick n’ Easy has on this promotion strategy.

Contingency Planning
There are many difficulties and risks that a company may face when developing and implementing a
new product to a target market that already has well-established alternatives. If the Quick n’ Easy
marketing plan does not work out as it supposed to, the organization will have be prepared for worst-
case scenarios or best-case scenarios. Possible scenarios that may arise are as follows:
 Materials cannot be purchased at appropriate costs; the products may not be able to
sell at a competitive target price.
o The company needs to look at cheaper alternatives and brands that are may be
of lesser quality but still safe and easy to obtain.

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Marketing Plan – Coffee Vending Machines

 Cost of maintenance, inventory, and rent outweighs cost of goods sold that force The
Quick n’ Easy to stop production.
o To counteract this, output will have to be at the same rate as our sales or higher.
Also, the amount of machines in buildings that have less traffic and less sales can
be moved to areas where the demand for the coffee may be higher.
 Not enough consumer interest in the market to sell more than the break-even profit.
o The company may need to find new channels or distribute the product in a new
location with different demographics.
 A coffee study influences target market that coffee and caffeine are bad for consumers.
o In response to the study, The Quick n’ Easy can contract an independent
research group to do a study to find all of the positive impacts that coffee and
other caffeine related products can offer to an individual.
 CSUMB does not allow product in all targeted buildings planned
o In this situation, the company will have to work with what is given to us, location
wise and maximize promotion to faculty, staff, and students in those designated
areas.
 Customers feel that our selection of products is not enough and they prefer traditional
coffee rather than instant coffee.
o A campaign that is focused on the convenience and the speed of the product
rather than the quality of our product will be devised to show that we are not
there to replace traditional coffee shops on campus, instead be there, when
need is based on time and a customer needs something faster and do not have
time to go out of their way to get a cup of coffee.
 Competing with larger and more established companies, which have similar products
and bigger budgets.
o To be able to compete with the larger companies on campus, the main goal
would be not to try to market the products as replacements, but just as a faster
alternative. From experience, most college students are usually in a hurry to get
from one class to another and always on the move to get where they need to be

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Marketing Plan – Coffee Vending Machines

on time. As most students have declared a major and most faculty have a
designated area where they are located, our company will give consumers that
option of purchasing a drink that is located in the vicinity of their class or office
space.

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Marketing Plan – Coffee Vending Machines

References

ABC News. (2012, August 6). How much does the average american spend at coffee shops each
week?. Retrieved from
http://abcnews.go.com/GMA/american-coffee-habits-spend-coffee/story?id=16923079

E-Imports.(2012). Coffee statistics. Retrieved from

http://www.e-importz.com/Support/specialty_coffee.htm

Harlin, K. (2009, May 21). Coffee maker brews up profits in starbucks' shadow. Investors
Business Daily, Retrieved from
http://news.investors.com/business-the-new-america/052109-477554-coffee-maker-
brews-up-profits-in-starbucks-shadow.htm?p=full

International Markets Bureau (2011, January).Consumer Trends: Non-Alcoholic Beverages in

the United States. Retrieved from
http://www.ats-sea.agr.gc.ca/amr/5697-eng.htm

Library café.(2013). Retrieved from http://csumb.org/dining/dining/peets.html

McDonald, E. (2013, April 16). Campus facts at a glance. Retrieved from

http://about.csumb.edu/

National Center for Student Statistics.(2012). College student employment. Retrieved

fromhttp://nces.ed.gov/programs/coe/indicator_csw.asp

NCA.(2012) 2012 National Coffee Drinking Trends.Retrieved from

(http://www.ncausa.org/files/Market%20Research/NCDT2012_free_download.pdf)

Sanford, Tim. (2012, August 8). NCA study finds coffee consumption outpacing soft drinks.
Retrieved from

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Marketing Plan – Coffee Vending Machines

http://www.vendingtimes.com/ME2/dirmod.asp?nm=Vending+Features&type=Publishin
g&mod=Publications%3A%3AArticle&mid=8F3A7027421841978F18BE895F87F791&
tier=4&id=A592A2D025C3453A9BC8ECD7E511372B

SBDC. (2012). Small Business Market Research Reports: Coffee Shop 2012.Retrieved from
http://www.sbdcnet.org/small-business-research-reports/coffee-shop-2012

Self nutrition data. (2012). Retrieved from http://nutritiondata.self.com/

Starbucks. (2011). Retrieved from http://www.starbucks.com/store-locator

Thau, B., (January 25, 2011). The Perks of Brewing Versus Buying Coffee: Retrieved
fromhttp://www.dailyfinance.com/2011/01/25/savings-experiment-the-perks-of-
brewing-versus-buying-coffee/

Tso, M. (2013, January 24). Students Dependency on the Buzz of Coffee increases. Retrieved
from
http://thedailycougar.com/2013/01/24/students-dependency-on-the-buzz-of-coffee-
increases/

Vencoa vending machines. (2013). Retrieved from

http://www.vencoavendingmachines.com/moreinfo4.html

WebMD.(2009). Coffee side effects & safety.Retrieved from

http://www.webmd.com/vitamins-supplements/ingredientmono-980-
COFFEE.aspx?activeIngredientId=980&activeIngredientName=COFFEE

WFTS Staff. (2011, February 11). What's the profit on a cup of coffee?. Retrieved from
http://www.abcactionnews.com/dpp/news/region_tampa/web:-coffee-costs-–-profit-
margins

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Marketing Plan – Coffee Vending Machines

Appendix 1: Hot Beverages Survey - March 6, 2013

This section of the questionnaire explores your habits and preferences, if any, with regard to the
consumption of coffee or other hot beverages.

1. Have you drunk at least one cup of coffee in the past month?

 Yes
 No

If you answered "No" to Question 1 please answer Question 2, otherwise skip to

Question 3.

2. Why did you choose to NOT drink coffee in the past month?

It is not easily available to me

 I don't like the taste of coffee

 I don't like the smell of coffee

 Coffee is expensive

 I don't drink coffee for health reasons

 I cannot sleep when drinking coffee

 I prefer drinking tea

 Other (please specify)

3. In a typical day, how many cups of the following hot beverages do you drink?
Not at all 1-2 cups 3-4 cups 5-6 cups 7-8 cups 9 or more
cups
Regular black coffee

Decaf coffee

Latte

Mocha

Caramel Macchiato

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Marketing Plan – Coffee Vending Machines

Cappuccino

Espresso

Hot Chocolate

Hot Tea

4. How often do you drink your choice of hot beverage on each of the following
occasions?
Never Rarely Often Always

First thing after waking up in the morning?

With breakfast?

With lunch?

With dinner?

In the evening after dinner?

At bedtime?

When you are stressed?

When studying?

Before going to class?

During class?
Other (please specify)

5. How important is each of the following to you when purchasing/ordering a hot

beverage?
Totally Unimportant Important Very
Unimportant Important
Low price

Smooth taste

Purchasing/Ordering a specific brand

The strength of the coffee

Purchasing/Ordering a local brand

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Marketing Plan – Coffee Vending Machines

Purchasing/Ordering an imported brand

Purchasing/Ordering from a specific

coffee shop (Example: Starbucks)
Convenience (the distance you have to
travel to obtain the coffee)

6. How long does it take you to walk to your closest coffee shop?

 Less than 1 minute

 2-4 minutes

 4-6 minutes

 7-8 minutes

 Longer than 9 minutes

 I have to drive to the closest coffee shop

7. What do you dislike about purchasing a hot beverage at a coffee shop? (Check all that
apply)

 The time it takes them to make my drink

 The price

 The taste of the drink

 I don't have any complaints

8. Would you purchase a hot beverage from a Coffee Vending Machine?

 No
 Maybe
 Yes
 I don't know
Other (please specify)

9. Which of the following would encourage you to buy a hot beverage from a Coffee
Vending Machine? (Check all that apply)

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Marketing Plan – Coffee Vending Machines

 Located in every building on campus

 Low pricing
 The taste of the hot beverages
 Contains a large variety of choices
 I prefer cold coffee/tea drinks

Other (please specify)

10. Which of the following best describes you?

 High School Student
 Undergraduate Student
 Graduate Student
 School Staff/Faculty
 Not in School

Other (please specify)

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Marketing Plan – Coffee Vending Machines

Appendix 2: Financial Calculations

Contribution Margin

Variable Costs Calculation

Fixed Costs Calculation

Data for B/E Analysis

32