Background

Dark Roast Java is a coffee shop situated in Sydney. The founder of the business is Ned Powers- Sebastine. He has an experience in the field as an entrepreneur and marketing executive. Sebastine is also the founder of Powers- Sebastine Advertising & Public Relations and Pan National Motor Tours. The co-owner of the organization is Curt Yamaguchi who is an experienced professional in real estate market. He uses his experience to improve the capabilities of the organization. He suggests those locations that would be highly profitable for business (Ibisworld.com.au. 2017).

The mission of the coffee shop Dark Roast coffee house is for the people of Sydney community, down town business workers, tourists visiting the city and the students by offering high quality of experience than any other coffee house in the area.

• To make the coffee house one of the best destination for coffee in Sydney
• To make sales worth $ 600,000 plus the first fiscal year $750,000 plus the second fiscal year
• To achieve a net profit rate of 15 percent in the first year and 30 percent by the end of third fiscal year (Knox, 2016)

The business of the Java Dark Roast coffee house is growing at a steady rate in the market segment. The company specializes in coffee retail business. The recent economic slowdowns did not affect the business of the coffee shop and they are in a good position in the market. On the other hand more than hundreds of business in different categories are finding difficult to earn profit in the market (Knox, 2016). The businesses are fighting poor sales. They have negative balance sheets and some of the businesses have even declared themselves as bankruptcy. It proves that people of Australia love food and beverages even in bad times.

The customers of Dark Roast Java can be divided into five categories.

• Affluent local residents
• Tourists
• Local business people
• Students
• Travelers passing through

The customer segments are very strong. Having a mix customer base is beneficial for the business as it keeps the business consistent all year round. Tourism of Sydney is very beneficial for the coffee shop because tourism is strong all year long. During December and February, the tourism is in the peak. The population of student is also strong in Sydney because of the number of the colleges and universities in the Sydney. On the other hand, the population of the student during summer is pretty strong. Local residents, local business owners and passerby are the consistent customers of the coffee house throughout the year. The coffee house is not dependent on any particular business as the coffee house attracts the different customer segments. Many other local coffee houses that cater mainly the student customers have poor sales in the non schooling months (Keller & Kotler, 2016). They are required to promote their business every academic year.  Dark Roast is in advantageous position through their strategy where it avoids the peaks and valleys. Their strategy is smart and simple to target mix customer segments (Ibisworld.com.au. 2017).

One of the positive attributes of the coffee house is that it is an old company. It has been doing business in this industry since 1982.  After Howard Schultz bought the Starbucks name and started expanding the business in the modern Starbucks chain. Before their transition, Starbucks use to offer only whole bean coffee to its customers. Coffee houses in Sydney existed since 1600s and the concept of coffee is an old concept that came into existence around 400 years ago. Old Vienna Coffee house, Gumption by Coffee Alchemy and Grind Espresso are some of the most popular coffee houses in Sydney. The success of Starbucks has encouraged many other businesses to enter into the market (Jooste & Strydom, 2014).

Mission

The Coffee Shops industry has emerged strongly over the last five years. This is the result of the support from the people of Australia and their love for coffee. The vibrant coffee culture that is trending ever since the discovery of the coffee also contributes to the continuous growth.  Industry income has been estimated to increase at an annual rate of 4.8 percent over the five years through 2017-18. A large spike has boosted it. In 2013-14 as positive consumer sentiment and growing incomes acted as catalyst to increase consumers sales. Industry income is expected to increase by 0.8% in 2017-18, to total $8.2 billion (Parthanadee & Buddhakulsomsiri, 2014). Even after the industry has performed well in the past five years they have been facing competitive pressures that slowed the profitability rate over the this period (Bresler & Lubbe, 2014).

The marketing plan of the coffee shop is very effective. The business of the coffee shop is going pretty well because the location of the coffee shop is perfect providing it scope to profit as much from the advantageous position. Another factor that is that the customer segment of coffee house is a mix of all types of customers and it is not dependent on any particular business segment thus making the business consistent throughout the year.  This has been the reason even after the economic slowdown the business of the coffee house was good (Ellis, 2017). 

Political-

The way coffee houses produce coffee is a subject of high quality of standards. There is lot of pressure for trading in ethical way. The attitude of the Government towards the industry affects the business of the coffee houses. Government of Australia is promotes farmers to grow cash crops. Export regulations affect the business because coffee houses export coffee beans from countries like Brazil. Low yield of coffee beans in Australia would definitely affect the business of coffee house business in Australia (Ibisworld.com.au. 2017).

Economical

The recent recession did not affect the coffee house business much. People still visited the coffee house. Though the business of other coffee houses was affected because the purchasing power of people had reduced and so they focused on only those coffee houses that could provide them value for their money.

Social-

People of Australia love to have coffee. Factors like age and income does not affect the consumption of coffee or the business of the coffee house.

Technological

Technology has introduced many new methods for production of coffee beans and preparation of coffee. Changes in both these area have increased the business of the coffee houses. It has increased competition as well (Ho, 2014). New concepts like customized coffee do pose threat to regular coffee houses.

According to Mike Ferguson Marketing & Communications Director Specialty Coffee Association “Until everybody can walk to a coffeehouse and get a properly prepared espresso drink, we’re not even approaching market saturation.” 

Leaders in the Specialty coffee chain in Australia are

Starbucks has 6,300 stores all around the world. They started the business in Australia quoite late.

Objectives

The DaVinci Gourmet Australian Coffee Chain Championships have started their business with a new idea of offering Australia’s highly skilled coffee chain baristas with a chance to show their coffee making skills. Around 6700 coffee businesses are operating in Australia and there is no major such market leader having than 5 percent of the market share. The Coffee Club chain has a market share of 4 percent approximately. Gloria Jeans holds 3% and Michel’s Patisserie also holds around 3% of the market share (Hollensen, 2015).

According to IBISWorld senior industry analyst Ryan Lin who tells SmartCompany the large sales of Starbucks in beginning of the year was because of the poor performance of externally operated coffee chains in the Australian coffee environment. “The Australian coffee culture is very unique. It has been ever since early European settlement.”

It is very surprising that the leading coffeehouse chain, Starbucks, has only few stores in the city Sydney on three locations. The highest volume store of Starbucks 1,150 customers daily is at a very profitable location on ‘A’ Street which is the main thoroughfare in town.  However, the store is very unattractive and small. It does not have an outside seating arrangement. Heaven specialty coffee house is also in an excellent location that directly across the street from Starbucks on ‘A’ Street in CBD Sydney. This is a very busy coffeehouse and quite large as well. It consists of a counter inside and a large sitting space inside the coffee house that allows provides space for many coffee lovers (Parthanadee & Buddhakulsomsiri, 2014). They are planning to start business in one more location has been planned to open in Mount Hill is scheduled to open in summer 2018.

Other coffee houses that give competition to Dark Roast include 3 independently run coffeehouses. Artificer specialty located on Surry Hills that is also a good location. They provide good coffee but their menu does not include much variety. It has a very “funky” decor. It is a big hangout for the “Goth” and “punk” crowd. Another coffee house Handcraft specialty is located in New Town (Jooste & Strydom, 2014). New managers are putting their sincere efforts to make improvements in the store but have not succeeded as of now.

• Other coffee houses in the industry mostly depend of word of mouth advertising but Dark Roast carries out a number of activities for its advertising and promotions. The media included for advertising ranges from print media to modern day social media.
• Dark Roast provides salaries to its employees 10 percent more than the average salary in the industry.
• They have created a mobile kiosk to take Dark Roast Java into the community at special events like  farmer’s markets, art shows and others.
• They sell coffee, gift baskets and glass artwork on their website(Parthanadee & Buddhakulsomsiri, 2014).
• They have established coffee service at local businesses.

• Keeping in mind the objectives of the company few strategies are suggested
• Changing the ambience of the coffee house would attract more customers they can opt for theme based customer services. It will help in increase in sales
• Instead of buying coffee beans, the coffee house can take up the initiative to grow their coffee beans then they will not have to depend upon imports. This will reduce import cost and cost. If risks are reduced then operational efficiency will increase resulting in increase in profit.
• The coffee house should carry out their advertising and promotional activities that are effective enough to attract new customers. Providing offers, discount coupons and gifts to first time visitors would make customers that are more loyal. It can also help in gaining competitive advantage as many new players are entering the market.

Conclusion

The marketing plan of Dark Roast can be termed as a smart and profit oriented business plan. Some of the strategies of the coffee shop are excellent like having a mix of different customers segment so that the coffee house does not incur loss and the customer flow is consistent all year round. Yet some strategies are still needed to be undertaken. The advertising and promotional strategies of the company is not that much effective. There is a lot of competition in this industry and in order to increase sales promotion and advertisements are also important apart from providing good quality of coffee.

References

Armstrong, G., Kotler, P., Harker, M., & Brennan, R. (2015). Marketing: an introduction. Pearson Education.

Bresler, M. & Lubbe, I. (2014). Marketing management.

Ellis, M. (2017). Eighteenth-Century Coffee-House Culture, vol 1. Routledge.

Ho, J. K. K. (2014). Formulation of a systemic PEST analysis for strategic analysis. European academic research, 2(5), 6478-6492.

Hollensen, S. (2015). Marketing management: A relationship approach. Pearson Education.

Ibisworld.com.au. (2017). Cafes and Coffee Shops in Australia Market Research | IBISWorld. [online] Available at: https://www.ibisworld.com.au/industry-trends/market-research-reports/accommodation-food-services/cafes-coffee-shops.html [Accessed 15 Dec. 2017].

Jooste, C., & Strydom, J. W. (2014). Marketing management.

Keller, K. L., & Kotler, P. (2016). Marketing management. Pearson.

Knox, A. (2016). Coffee nation: an analysis of jobs in Australia’s café industry. Asia Pacific Journal of Human Resources, 54(3), 369-387.

Parthanadee, P., & Buddhakulsomsiri, J. (2014). Production efficiency improvement in batch production system using value stream mapping and simulation: a case study of the roasted and ground coffee industry. Production Planning & Control, 25(5), 425-446.