MARKETING PLAN

INSTANT COFFEE

Submitted to: Sir Nathaniel Lim

SAMANTHA CHRISTINE ALMEDA, KATRINA JEAN DIZON, ANNA ISABEL LOPEZ, KENNETH LOUIS RENON (EMC2)

I. Market Environment A. Market Background 1. Type of Business We were assigned with the instant coffee manufacturing business in the Philippines. 2. Market Segments The market for instant coffee is segmented into consumers who buy coffee for convenience or speed, those who belong to the labor force, those buy coffee for its health benefits, those who have developed loyalty to a certain product, those who wish to get away with our countrys hot climate, and lastly, for each individuals preference which is answered by coffee manufacturers through the flavor variants and the differed coffee blends that they offer. 3. Relevant Market Characteristics/ Factors The relevant characteristics of coffee is divided into two: product and geographic. Product-wise, one can be substituted with another in terms of pricing and type (3-in-1). In terms of pricing, Blend 45 can be easily substituted with Kopiko because both are cheap and their prices are not far apart from each other. In terms of type, since most coffee companies offer 3-in-1, a product offered by one key player can be replaced with another 3-in-1 offered by its competitor. Geographic-wise, Nescafe is the leading coffee company nationwide. It has the most significant penetration in the market. Other companies such as San Mig Coffee has tried competing with Nescafes popularity as well. 4. Possible Drivers of Market Change The market environment can be divided into microenvironment and macroenvironment. In its microenvironment, the market can change due to its suppliers when the supplies of other ingredients in the coffee mix fall short. It can also change due to the resellers of the coffee. If they do not push much of the product, then the reception of the consumers will also change. For the macroenvironment, the economic standing of the population can change the market because it will affect consumer spending, how much they are willing to shell out in order for them to drink coffee. The labor force population would also affect the market since bulk of the market of the coffee industry belongs to this category. Lastly, the technological environment influences the market as well because it increases the awareness of people to new products for consumers can easily access to these kinds of information.

5. Key players/ competitors The key player in this category is the multinational company, Nestl, with their product Nescaf. Other local manufacturers are the San Miguel Corporation with SanMig Coffee, Universal Robina Corporation with Great Taste and Blend 45, and Goldshine Pharmacueticals Inc. with Jimms Coffee Mix. Kopiko from Mayora, an Indonesian corporation is also one of the key players in the industry. 6. Key Success Factors First and foremost, the key success factor in the coffee industry is the product itself. It has garnered the loyalty of consumers because of its features and effects for the productivity of people. Consumers look after it for its addictive content, and the increased energy and the essence of adrenaline rush in people. Second, the different companies have been successful due to intensive marketing. They have marketed their products in the best way possible that paved way for people to be aware of their products. Third, the industry is successful in creating a need for consumers. Nowadays, it has become one of the household necessities in Filipino homes. Last is their differentiation. The coffee industry has chosen the niche. They have especially marketed to the labor force that is the one who shells out money in order for them to patronize in coffee. 7. Consumer Usage Habits Most of the consumers drink coffee on a daily basis usually in the morning to go along with their breakfast, in the afternoon as a complement for snacks (merienda), or in the times wherein they feel tired and they need a boost to wake them up a bit. 8. Consumer Attitudes/ Preference Usually, different consumers have already been loyal to certain brands. For employers, they purchase Kopiko and Blend 45 for their employees because these brands are cheapest. But then, since there are a lot of flavor variants, consumers buy coffee in accordance to their personal preference, whether they like it strong or mild. For people with health issues, they prefer decaffeinated, sugar-free, or dairy-free products. Nevertheless, Nescaf has been the most preferred brand of all because it has captured the loyalty of consumers for its quality.

B. Competition 1. Company/ Enterprise Product Review Nestl. It is known to be the worlds largest food and nutrition company based in Switzerland. Using the brand name Nescaf, it is the market leader in instant coffee manufacturing in the Philippines and the world. Its advertisements are extensive and its penetration in the market is the most efficient and effective. It even created a memorable tag line: one moment, one Nescaf. Their product lines available in our country are pure coffee, coffee mixes, and ready-to-drink in cans. San Miguel. It is known for its coffee mixes. The richness of the coffee varies to satisfy the wants of each consumers preference. It is the pioneer in styropore packaging. Its main purpose for its products is convenience and speed as well. URC. This corporation is headed by tycoon John Gokongwei. It has two coffee brands, Great Taste and Blend 45. Great Taste is its premium instant coffee. On the other hand, Blend 45 is known for its economically savvy products. Extenders are added to this product to maximize the flavor of the coffee. Goldshine Pharmaceutical. It goes by the brand name Jimms coffee mixes. It was awarded as the most promising health coffee brand in 2005. It contains antioxidants that give energy and relaxation to the drinkers. These extracts are from gingko biloba, agaricus mushroom, reishi, and spirulina. Indeed, it answers the wants of health conscious consumers. Mayora. This is an Indonesian company that goes by the brand, Kopiko. In the Philippines, its official distributor is TriDharma Marketing Corporation. Primarily, it manufactured coffeeflavored candy only. Soon after, they ventured into instant coffee mixes that targeted the lower classes first. True enough, by marketing to their chosen target market, they have been known for its economically savvy products. 2. Perceived Target Market In general, the perceived target market of the instant coffee industry is the working population who belong to the lower and middle classes. We have concluded this because in general, instant coffee is cheaper for it does not require freshly ground coffee beans a coffee maker brewing. Since the working population is always on the go, making instant coffee suits their schedule perfectly. 3. Estimated Sales and Share

Currently, Nescaf dominates the coffee industry with about 80% share of the volume trades and sales. It generates about P2 Billion annually. In the published financial statement of San Miguel Purefoods where San Miguel Coffee is a part of, they own 141, 243, 350 number of shares of common stock. Moreover, the sales of the branded consumer food group of URC in which Great Taste and Blend 45 are a part of is P31.5 billion. Unfortunately, TriDharma Marketing Corporation, the distributor of Kopiko Coffee and Goldshine Pharmecueticals of Jimms Coffee do not have specified financial statements. However, their instant coffee products have turned them into multimillion companies. 4. Awareness Level among Consumers Everyone is aware of coffee products and its attributes. In the Philippines, the leading coffee brands are Nescafe and San Mig. Nescafe is an international brand that is why it is a very prominent coffee brand. The top local competitor of Nescafe is San Mig coffee. Kopiko and Blend 45 are well known brands among the masses because of its low price range. The older population patronizes Great Taste because it has been in the coffee industry for a long period of time. Jimms, however, is popular among the health conscious because of its health benefits. 5. Product Attributes / Characteristics Nescafe has 8 different coffee blends and these are: Clasico, Classic, Classic Decaf, Decaf, Gold, Nescafe Latte/Mocha (ready-to-drink), Tasters Choice and 3-in-1. Nescafes 3-in-1 coffees have four different caffeine variations namely: original, sweet n mild, strong & rich and brown & creamy. The different packaging types that Nescafe uses are pouch, glass bottle, sachet, hangertype, stick and can. Its powdered coffees quantity ranges from 2 to 200 grams depending on the packaging, while its ready to drink coffee is available in 240 mL only. Instant and 3-in-1 are the different coffee blends of San Mig. It has fourteen 3-in-1 coffee mixes. San Mig has the following caffeine variations: original, mild, strong, extra strong, sugar-free, dairy-free, and decaffeinated. It has a pro-health line with four variants: pro-beauty, pro-slim, pro-fiber, and pro-power. Hanger-type, sachet, and plastic pack, are its different packaging types available in 7 to 80 grams depending on the packaging. The different coffee blends of Great Taste are concentrated, decaf, premium and 3-in-1. The 3in-1 blends of Great Taste come in white, brown and original caffeine variations. The concentrated blend is available in granules only. Great Taste coffees are available in hanger-type, sachet and pouch. Its quantity ranges from 12 to 100 grams depending on the packaging.

Blend 45 coffees two blends are 3-in-1 and soluble. The 3-in-1 is only available in its original blend. Blend 45 is available from 12 to 100 grams depending on the packaging. It is sold in hanger-types and pouches. Kopiko has 2 coffee blends, 3-in-1 and instant coffee. Its coffee variations are brown and black. Kopiko coffees are being sold in the market in sachets in quantities of 20 and 25 grams depending on the packaging. Jimms different coffee blends are as follows: 3-in-1, 4-in-1, 5-in-1 and 7-in-1. It is available in sachets of 20 and 21 grams depending on the packaging. 6. Purchase Rate / Consumer Buying Attitude Towards Products Offered When we were in the grocery, we observed a few buyers and asked some of them as they were buying coffee. These were our significant findings: Most buyers chose Nescaf for various reasons. Most of the answers that we got are that they chose this brand because of its richness in taste. For some, they havent even bothered trying other brands because Nescaf is the most known. Research even backed this up: According to Nescafs website about 4,600 cups of their coffee is consumed every second. Moreover, if this was unavailable, San Mig Coffee was their next choice. Other consumers chose Blend 45 for its price because it was cheap. Employers bought Kopiko for their employees because of its low cost as well. Lastly, some buyers bought Jimms Coffee because of the added health benefits that they can get from its ingredients. 7. Distribution / Penetration Coffee is meticulously distributed in the different areas around the metro and even in the provinces. Big packs are available in wholesale stores like S&R. Groceries, supermarkets, and hypermarkets have the widest range of available products. Ready to drink coffee products and small packets are available in convenience stores that include the ones in gasoline stations and chosen drug stores. Vendo machines are also available for convenience. In offices, coffee bars are available. Coffee is also sold in school cafeterias. Lastly, coffee that is packaged in sticks is sold in sari-sari stores, night markets, and bazaars. 8. Pricing For Nescafe, the price of their coffee products ranges from P19.95 to P242.50. These are the prices of the different Nescafe products: 3-in-1 prices vary from P5 to P181.50; Classic in glass containers differ from P58.50 to P269; Classic in packs price range is from P19.95 to P85.50; Classic in sticks (84 pieces) cost P169.50; Gold in glass container costs P242.50; Decaf in packs

price are P44.50 and P84.50; Decaf in a glass container costs P269; Decaf in sticks (20 pieces) cost P56.50; Classic Decaf in a glass container costs P389.50; Classicos price is P414.50; Tasters Choice costs P 539.50 and the RTD of Nescafe costs P27.50. San Migs 80-gram pack of instant coffee costs P61.50. All the rest are 3-in-1 and the prices vary from P12.95 to P131.50. The white, brown, and original 3-in-1 coffees of Great Taste are priced P54.50, P49.50, and P24.50, respectively. The soluble ones prices are from P17.50 to P156. Blend45 has only one 3-in-1 coffee and it is priced at P39.50. The soluble coffee prices are P16.75, P33.50, and P66.50, depending on the quantity in each pack. Kopikos 3-in-1 that has two grams in a sachet costs P5; brown coffee which costs P6 and 3-in-1 coffee that is being sold at P5. Jimms 3-in-1, 4-in-1, 5-in-1 and 7-in-1 coffees are priced P72, P86.59, P132 and P152, respectively. Given these prices, we had a few observations. Specialized items are more expensive. The higher the volume of a consumers purchase, the lower its price per gram would be. The better the packaging, the more expensive the product would be. 9. Promotions Conducted In this category, the promotions conducted included advertising such as TV commercials, billboards, radio announcements, newspapers, magazines, and transit ads found in buses. Currently what is stuck in the minds of the consumers is Necafs Sweet and Mild advertisement, a spin-off of Good Morning, Baltimore, the theme song of a famous musical show. Another famous advertisement is the one of SanMig coffee because of their celebrity endorsers. Coffee companies also hire promo girls for personal selling. The sales promotions done included free taste booths, vacation getaways, and product tie-ups. In public relations, they had product launches and have sponsored in fun runs. For online promotions, Internet sites and pages on Facebook are available.

II. Marketing Plan Details A. Target Market The target market of our proposed product is the age group that includes pre-teens and teens 10 to 16 years of age in the economic classes lower A, B and C. We chose this market because from personal experience, we wanted to drink coffee. We liked its taste. The answer that we got from our parents was that we were too young for coffee. To satisfy the wants of kids in this generation, we were able to come up with this product. B. Market Positioning We would position our product in such a way that the caffeine content of our product is safe for the kids and their parents would not have to worry about it. Our research yielded results that this would contain less than 50 mg of caffeine, way less than the 100 mg content to be induced as dependence on caffeine. Given that children consume chocolate and tea, that contain caffeine, they could also consume this product. C. Year 1 Gross Sales and Marketing Objectives We have a few marketing objectives for the first year of availability of our product. We want to make the product known amongst parents (buyers) and children (consumers). We would also want to capture the loyalty of our customers by maintaining the consistency of the quality of our product. Given that Nestl is the market leader in this industry, we aim for the gross sales of our product to reach at the very least P15 million pesos. D. Marketing Strategies Concentrated or niche marketing focuses in one of the segments of the market in which we have identified as the target market. Due to the fact that we have determined our target market, we will observe this type of marketing strategy. E. Marketing Mix 1. Product / Service a. Product / Formula Half of our product content would contain the concentrated 3-in-1 brown coffee mix of Nescaf. Furthermore, half of its ingredients would be the flavors and additives to prolong its shelf life. As much as possible, the ingredients would come from natural sources because we are concerned about the kids health. The cookies and cream would have real Oreo bits. The choco jell-o would have coffee jelly bits. The chocolate flavor would have chocolate bits. The caramel flavor would

be freshly made from cows milk. Lastly, the vanilla flavor would be made from real vanilla beans. The colors of the liquid products would be as follows: White for both cookies & cream and vanilla, brown for both choco jell-o and chocolate, and light brown for caramel. b. Packaging / Presentation: It will come in an aseptic carton with a colored bendable straw. Aseptic cartons are especially made for liquid food products. It has 6 layers comprised of a thick paperboard and an aluminum foil laminated between polyethylene layers. The colors of the cartons would be:

Cookies and Cream

Choco Jell-O c. Variants / Sizes

Chocolate

Caramel

Vanilla

It will have 5 flavors: cookies and cream, choco jell-o, chocolate, caramel, and vanilla. Each will come in a 250mL pack. d. Branding

Its brand name will be Nescaf Tweens and its logo would be as shown above. 2. Pricing a. Retail Pricing The estimated retail price of our product will be P25 per pack. b. Estimated Product Cost The estimated product cost of our product is P17.50 per pack. c. Gross Margins The estimated gross margin of our product is 30%. 3. Place / Distribution / Location a. Modes of Selling First of all, the mode of selling of our new proposed product would be wholesale through resellers. Meaning they would buy our products in bulk or in volume to pave way for our second

mode of selling. These resellers will be the ones to sell our product in retail so that the consumers can easily access our product. b. Target Outlets Our prioritized target outlets would be convenience stores including the ones in gasoline stations and school cafeterias. Moreover, we would want our product to be sold in groceries, hypermarkets and supermarkets. 4. Promotions / Action Programs a. Message In our promotions and action programs, we want our message to be delivered in a way that minors can now liberally drink coffee. It would have a tag line of Nescaf Tweens for the Young, Happy, and Free! On the other hand, their parents will not have to worry about the effects of caffeine. According to our research, our product formula would contain less than 50 milligrams of caffeine. This is safe for kids because dependence on caffeine is developed when about 100 mg of caffeine is taken in daily. Moreover, children consume products like iced tea and chocolate those also have caffeine content. b. Medium The different promotions and action programs that Nescafe Tweens will use are the following: TV commercials, newspapers, free taste promotions, roving trucks, school visits, website/Facebook page, and celebrity online blogging. Nescafe Tweens will use TV commercials because it will be a big product line by Nescafe. And by experience, Nescafe uses commercials to advertise and promote their products. Also, a lot of the kids who do not have their own computers watch TV, so they will see the Nescafe product suited for people their age. We will advertise through newspapers also because mothers often buy the products that they read about in the papers especially if the product will be from a well-known company such as Nestle. For free taste promotions, we chose this because we want the market to taste this new product firsthand, and so they will know that it is worth purchasing. Roving trucks will be used because they attract attention especially in traffic situations. Since our target market are the preteens and teens, school visits will be one of the most ideal action program that Nescafe could do. During these school visits, games will be present and not only free tastes of Nescafe Tweens will be given away but also other Nescafe freebies. Most of todays youth have a Facebook account; so coming up with a creative Facebook page for Nescafe Tweens will be really useful. Lastly,

online blogging is todays trend and a lot of todays celebrities have entered blogging. Online blogs run by celebrities get daily foot traffic of 30,000 people on average. Most of what these celebrity bloggers post on their website, the readers patronize. So if we have tie-ups with some bloggers, Nescafe Tweens will be a well-known product line in only a short period of time. F. Yr. 1 Marketing Grid Calendar 1. Monthly Sales Forecast (Gross Sales)

Monthly Sales: Year 1

8 7 6 5 4 3 2 1 0 in millions

2. Monthly Marketing Expense Budget Our proposed budget is P6 million a month. The cost of making one Nescafe Tweens carton is P17.50 We plan to buy a 30-second primetime slot on a major local channel which costs P180,000 per screening. Our commercial will be aired once a day and it will go on for two weeks. Next, we would have free tastes that would run on the first week of May. We will allot one hundred cartons of our Nescafe Tweens product for free tastes. This will be done only in groceries. The cost of one carton is P17.50 and since we will allot one hundred packs, the cost will be P1,750. Aside from the TV commercials and free tastes, we also plan to strategically put up a billboard along EDSA Ortigas, right outside the Poveda Compound between Shaw Boulevard and Ortigas Avenue. The monthly cost of this 40H x 90W billboard is P475,000. The monthly cost of a roving billboard is P12,000. We will get one full-color full-page ad in a major daily newspaper. This costs P250,000 on weekdays. For celebrity online blogging, the bloggers will not be paid,

but they will be given free coffee c/o Nescafe Tweens. We will have four bloggers and we will give them one dozen each of Nescafe Tweens. The overall cost for the celebrity online bloggers is P210. As for school visits, we will allot one hundred cartons of Nescafe Tweens every week. The overall monthly cost for school visits is P7,000. The website and Facebook page will incur no costs because Nescafe Tweens will only be incorporated to the already-existing website of Nescafe, and Facebook is free. 3. Monthly Marketing Activities Schedule May Wk 1 F, C, W Wk 2 C, W Wk 3 T, C, W Wk 4 T, W June T, S, B, R, W T, S, B, R, W T, S, B, R, W T, S, B, R, W July F, S, B, R, W F, S, B, R, W B, R, W B, R, W Aug B, W B, W B, W B, W Sept W W W W Oct W W W B, W Nov B, W T, B, W T, B, W T, B, W Dec B, W B, W B, W B, W Jan B, W B, W B, W B, W Feb B, W B, W B, W B, S, W Mar T, B, W, N T, B, W T, B, R, W T, B, C, R, W Apr T, B, R, W, N T, B, R, W T, B, R, W T, B, R, W

Legend: T TV commercial F Free taste S School visit B Billboard N Newspaper C Celebrity online blogging R Roving billboard W Website / Social Networking