Nancy’s Coffee started as a small kiosk that would sell dried nuts and fruits back in 1973. Due to the shifting demand for the dried fruits at that time, Nancy, the kiosk owner, opted to carry out a study and then to shift with the needs of customers at that time. It is during this time that she had to start selling the coffee, following her meeting with the coffee roasters in 1978. By the late 1980s, the two children of Nancy had been incorporated into the business full time, while Beth was not fully into the business run by her family. Later, after the death of Nancy, Beth, her daughter, took over the upcoming business and it was at that time that there was a turn around in the business.
Before Beth could join the family business, she was a marketing officer of J & J Company, where they were working together with her husband. Her intention of being involved in the family business was with a view to later sell it, but only after the critical assessment of the business. Beth then decided to maintain it together with the other family members. Her experience in the business world, especially in marketing, saw that the business was growing to the point that she started opening branches. The most outstanding branch was the one, which she opened in a shopping mall. Beth could really see the way her sales improved. With this motivation, the café soon expanded to over thirty branches within the United States of America. The success only required being strategic, and Beth achieved this. She only concentrated on the areas that still had no such coffee shops, a strategy that enabled her to sell much in that process, hence improving product sales and profitability.
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The company has enjoyed a good image of its brand. This has enabled the company to achieve a significant increase in its sales; as well as improved performance and success. The company’s brands started to attract loyalty from the time Nancy took over the business. Nancy was open to compare notes with other firms, so that she would identify the areas that she needed to adjust. This strategy created value addition to the company. It also helped in revealing the strengths of the competitors, hence enabling Nancy to adjust her approaches to be able to compete favorably. At the same time, the brand image worked to create and sustain loyalty to her customers; hence, resulting in high profitability.
Another contributing factor to the success of the Nancy’s Coffee is the benchmarking approach taken by Beth, a continuation from what her mother used to do, while she was still operating the business before her death. Beth could learn from other operators in the same industry, like the Peet and Caribou, and this had influenced the means by which the enterprise would be managed. This was the case when Nancy Wood was just starting opening the coffee restaurants in the year 1978. This came after she had attended a business forum in which she had realized that dried fruits would not do well in such an environment. This business was, thus, anchored on the pillar of benchmarking and this was facilitated by the team.
The strategic positioning of the entity enhanced the process of business and loyalty. Specifically, the space leased in the mall availed much in terms of improved sales when it captured many employees of the mall, together with the shoppers who came to buy from the mall. This improved the sales and, hence, the profitability of the entity. At the same time, their use of the suburban model has enabled them to spread very fast into other areas that had not yet been reached by other competitors. For example, by the time Starbucks was coming into the mall, they were struggling and would not displace or compete favorably, as loyalty had been developed.
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Engaging in a lot of research work to establish what is happening in the environment in which they are operating in has really contributed to the development of Nancy’s Coffee. The approach helped to bring the market operations to the understanding of the entity and its management team. Through such, there has been a way out to provide quality and variety of the services and products and these include cookies, juices, like apple, and mango, and bagels, hence, presenting the customers with a variety of choices. They can now choose between products for adults or that for children, as they are very much distinct. Through this, the level of confidence among customers has improved.
The use of the new technology, like the swipe cards or the OneCard systems, has also helped to promote the repeated business. It is because the technologies influenced those who had purchased items to return upon presentation with the incentives when they use their cards. By use of such cards, discounts are given and some other offers which entice the customers and, hence, make them return. Such technological use is very important in the process of doing business.
Just like it is expected with any other business, Nancy’s Coffee also has its weaknesses. One of the weaknesses and limitations that are being experienced is high turnover rate within the retail company, especially for employees of the firm. In fact, this is what made Beth’s firm to experience losses for a long period of time. The company offered low wages and salaries to its employees, pushing most of the experienced employees to move to other companies in search of better pay.
On the one hand, one of the opportunities that are laid before the Nancy’s Coffee is opening up more stores in areas that are not yet reached by the other service providers in the same industry. In fact, this is the same model that Peet and Caribou are using to expand to other regions. They do not just move to areas, where there is demand, but to areas in which none of such stores exists. At the same time, it is this approach that Beth has been able to use to rejuvenate the fallen state of the firm.
On the other hand, it is possible that the variable costs will be lowered. The strategy can help to improve and increase the profitability level within the organization. Once the cost of operation has been cut down, then there is the likelihood of margins of profits improving, so that the overall Nancy’s Coffee can experience more benefits than losses.
Bad weather, at some point in time, would reduce the sales, as many people would not come out to buy anything during the rainy seasons. This normally affects the rate at which a customer gets into the restaurant. For example, when it is raining, it is possible that most customers will not come out for the coffee. These are the factors which are outside of the control of the management.
At the same time, the competitors, like Starbucks, Caribou and Peet are really offering stiff competition to Nancy’s Coffee. The implication is that if Beth and her team do not keep to the quality and standards, then they can be outdone in the market.
In order to maximize the strengths and opportunities available while eliminating threats and weaknesses, one of the things that Beth should consider is to start the process of grinding their own beans. This will give the company the opportunity to ensure that the beans they choose for grinding are those of the best quality. In fact, it is normally expected that the best beans are air-roasted to improve on the purity, taste and aroma that come when one finally takes the coffee. In most cases, it is the taste that will attract more customers to come back again if all other factors are not considered. Another aspect that is not addressed is that the type of water used in the coffee making process dictates what the outcome in terms of taste would be like. Therefore, there is a need for filters so that the water that is used is clean; hence, the flavor is improved. Again, though not stated, the company needs to avoid the pre-ground coffee, since some of the oil tends to evaporate and, hence, interference with the flavor and taste. However, the company acquiring a grinder of the beans can, thus, be a good point to start from. The equipment can be a good investment in that it may improve the sales and, hence, the profitability of the entity. If such adjustments are considered by Beth, the CEO of Nancy’s Coffee, it will help in improving the company to perform well and compete favorably with Starbucks and other similar business.
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Statement of the Problem
The high employee turnover within Nancy’s Coffee Retail Company is what greatly contributed to the decline in its sales. The youths, especially the employees who were under 18 years of age, kept on moving to join other companies and, hence, reduced the rates at which the company would sell some of the products.
Development of Alternatives
In most cases, it is important to note that coffee shops mostly depend on the rush hours during traffic, since that is the time of peak sales. For one, therefore, to sell all day long, there is a need for strategies to help source for customers through all means, as this is the only way through which sales can be improved, resulting in profitability. It means that the management of Nancy’s Coffee must come up with the appropriate marketing strategies for improved profitability. First, they can allow the introduction of incentive programs to the customers who frequently buy from restaurants. Once they have been identified, there is a need that loyal customers will be given a free drink as a motivation. To some extent, they can also be given loyalty cards that are stating the amount of offer that they have received. Such cards should be supplied to the employees around the operation centers, so that they too can invite more customers with them.
Another way in which the low sales can be improved without necessarily focusing on the employees and turnover is the provision of extras (Gulati, Mayo, & Nohria, 2014). These extras are what the coffee house can offer, apart from normal services of drinks to customers to help attract even more customers. These may include, and are not limited to space for operation and working, wireless internet, photocopiers and even computers, where people can work at, as they buy and drink coffee. This is a marketing strategy that would influence and entice people to buy more in the process. This should be in the mind plan of Beth, even as she thinks of how to improve sales. Such services would market the entity from within, hence, ensuring that even if there is not enough labor for the field work, its marketing needs will be achieved.
Alternatively, branding of the shops, which are used to sell coffee in the Nancy’s Coffee shop can help in the shop identification. The shops should be placed in open and visible positions and be decorated in the same way. The logo that Beth used in such posters or billboards should be eye-catching and be related to coffee. There should also be a message on why one should take coffee in the Nancy’s Coffee shop and not in others, like the Starbucks. Packaging the information in this manner can help to build on the brand and the brand image. Moreover, it is a form of advertisement that does not even require frequent investment, as would be in the case where human resources were used to do the same (Kessler, 2013). Other ways and means can be to add sticker with the logo to cups, so that whoever takes drinks from the coffee shop gets in touch with it and comes back again next time.
The company must also continue not being ignorant of the human needs resource empowerment, thus, trainings must be continued to ensure that both the employees of Beth are well equipped with the requirement in the market. This strategy will enable the employees to meet their customers’ needs. Trainings can target both the employees, as well as the community where the shops are located. In this process, Nancy’s Coffee can be displaying the expertise, so as to build the customers’ confidence. This same approach and strategy proved to be worthwhile for Methodical Coffee. It has the ability to make a difference in the lives of people and the potential customers concerning the shop and the staffs, in general. This training approach that Beth had started should continue beyond the human resource, but should include the community as well, so that they can also get to realize the potential of a coffee shop in terms of service provision.
At present, it is the store managers who are responsible for their actions and, thus, they tend to monitor what they do in the jurisdiction of operation. From the profits margins that were lowered greatly, Beth had to train the line manager on how to read the statements of both profits and losses and this is now the ground on which the company is making purchases. Initially, purchases would be made at higher costs, while the products are sold at low prices, resulting into the losses that were being experienced in the coffee shop at some point. Such knowledge has been helpful in determining the right prices to sell and buy to improve the profitability.
In the process of competing with the new approach to salaries issues, so that turnover rates can be lowered, Nancy’s Coffee had to begin with offering the tips to the workforce. This approach was taken with the aim of improving the employee pay and making it standardized, while, at the same time, providing the pay incentives, so that any of the services offered would be rewarded. This is a motivation approach, especially to the young generation who considers first the salary that they are to be paid before they take on the offer. The cases of employees walking out any time due to demand for more pay has been rampant in Nancy’s Coffee, thus by developing the means and ways of counteracting, Beth and colleagues will soon attain stability through reduced employee turnover.
Such turnover had gone so high that it hit the 700%. However it has reduced to around 200%. As noted, the turnover in the company is mostly contributed to by youthful employees who never stay at one place due to the demand of more salary. As a strategy to counter this, Beth had to stop the hiring of the under-18 employees on the grounds that the law did not allow them to be employed. The directive given by the labor department is that some of the steam equipments used for cooking cannot be operated by minors who are underage. To reduce the high turnover, Beth eliminated the idea of employing minors, especially for retailing services. This made it possible for improved services and hence the profitability levels. The elimination of the underage from the work force has really reduced the training costs, which all of the employees went through upon recruitment as well as hiring.
Apart from the team which is doing administrative work in the entity, there are supervisors that have been brought to board. They are in charge of the training, recruitment and quality supervision of every activity that takes place within the entity. It is with this that Nancy’s Coffee is now beginning to realize the loyal services, which is contributed to by the senior managers which now form a part of management team. In fact, it is being revealed that it is the retail employees that bring lots of problems, hence, resulting to franchising of an entity when it goes beyond levels that some managers cannot manage.
Marketing Strategies that Should Be in Place
Communication is the first strategy that should be in place, so that value can be achieved in the targeted segments. Advertisements placed strategically are one of the first methods that can ensure that the people are reached and made aware of the products and services that are in Nancy’s Coffee. This can be done through newspapers, magazines and other media through which information can be relayed. In most cases, such kinds of advertisements can be the most desired ones, since they reach quite a good number.
Another platform through which marketing can be done is by the relationship with other companies in the same industry, so that joint strategies can be laid on how to reach out to the targeted group. In this strategic relationship, the companies benefit mutually and thus each of them develops visibility to each other. This will involve consultations with other coffee restaurants, like Starbucks, so that a way out can be deliberated to help each of them develop and hence result in a fair competition between these firms.
Lastly, one of the ways in which Nancy’s Coffee could do the marketing is by the use of coupons. This will influence the friends and those who have received the services of Nancy’s Coffee, so that they can come and test how everything works. Such coupons serve as incentives to those who are coming in for the very first time. At the same time, they serve as a basis for referral and this helps to build up confidence in those who have been referred. In the process of such strategies being implemented, it is in order that the marketing mix is taken into account.
In terms of pricing, it should be set as per the practices of the Nancy’s Coffee and not influenced by other players in the market. It should solely depend on the price set by Beth and her team. On the one hand, distribution or place should be done from the retails of Nancy’s Coffee and not from any other space or stores. On the other hand, promotion and advertisement should be through the media and strategic relationships that work to improve the services offered, while retaining high levels of quality. This whole process should not leave behind the customer requirement evaluation and working to ensure that the customers are satisfied by the services offered. These should all be done by Nancy’s Coffee to operate properly in the market, seeking to satisfy the customer.
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Evaluation of Alternatives & Recommendations
There has been a good increase in the number of stores in various areas all over the regions of the United States of America. These areas include the Nashua, Niagara Falls, and Boston, just to mention a few. Some of these stores had been acquired from other owners, after it proved hard to stabilize them. What the company did was to improve their conditions through renovation, so that they could be in good condition for use. Some of these coffee shops acquired used to run low in terms of gross margin, as they were being managed from elsewhere and no frequent visits were being made. In fact, Beth noted that there was a need for them to monitor the costs of foods, as well as the employee working hours. According to her, it was through this the profit margins were improved to around 50% from the thirties that they used to be in at the time of acquisition. Also to note is that in that process of acquisition, not all members of the former stores were retained. This happened with a view to reduce the cost of operation of these centers which were acquired. The few who were incorporated were mixed with those who were the long time employees of Nancy’s Coffee, so that they would learn from them. This brought a lot of positive changes that were helpful to the operation of the entity. It is, thus, recommended that Beth’s team should continue with the merger and the acquisition process.
Concerning the linkage of the skills requirement and the performance of the employees for the purposes of rewarding, Beth’s team tried but it could not work. This is because some of these areas and stores were left in very bad conditions by their former owners. They could not produce something, which was worthwhile to the organization. Performance bonus was done based on the operating income, sales and labor, and such a bonus was not received by any, since it was set very high for people to work hard and improve the company. It can, thus, be recommended that the whole process of trying to reward employees should not just be done; it should be based on merit. This is the way out if the company is to experience improvement in the process carrying out the business. In the event that any other methods are used, levels of profitability would not be improved, resulting in fewer returns.
In her move to lower the prices, Beth sought to increase the volume of transactions and more competitive advantage over other firms in the industry. As they rise higher and higher, the quality of the coffee that was bought also increased, so that it would be more attractive to more customers that were getting into the business to take coffee. Normally, whenever a brand and quality gets diluted with time, it is impossible to dial back the quality aspect. This is because it might affect the confidence level, while, at the same time, lowering the sales. The company must not allow this, since it might bring in low loyalty levels due to the fact that more people need more quality than anything else in the market. The income that comes out needs to be looked into clearly, so that a percentage can be ploughed back into the business for expansion. This strategy can help to develop the sustainable profitability levels of the firm.
For the company to increase its profitability, it is required that the number of the stores should be increased all over the nation of the United States and beyond its borders. To achieve this, one of the Nancy’s Coffee stores can consider taking loans from a bank, so that more and more branches can be opened for improved performance. At the same time, it can also consider mergers and acquisition as another way in which it will be able to realize more profits through the increased sales. In the implementation process of these strategies, it is proper to stick to the standards of business that have enabled the company to expand over the years. This way, it will be able to continue promoting its brand and establishing more loyalties.
In the implementation of the strategies that Beth, the CEO, had put in place to revive the business, the company is supposed to identify and focus on its target groups. The first group is the drip coffee drinkers, which, according to the SBDCNet data, form a greater percentage of those who drink coffee in the United States of America. These coffee drinkers consist of students and business workers, as they report to work stations or as they attend to their classes for the cases of students. By looking at the group independently, the company is able to set the prices that are favorable to them even if it is not the standards price (Zeng, Go, & de Vries, 2012). The choice of prices in the various stores can be informed by the social class and age of these people who are drip drinkers. These factors matter a lot, since they dictate the prices, as well as the quality of the coffee being sold. According to the data above, close to 40% of the youths drink coffee daily, while the rest, which is 55%, are the adults. Thus, age matters a lot in the process of making business in the coffee market and will need to be taken seriously by Beth and her team of managers.
Another target group should be the coffee shop lovers. This segment forms the group who are spending most of their time in the coffee shops and areas, where specialty drinks are sold. The group is unique because they do not come for one time touch and then head to their destinations but they stay within the coffee shop for quite some time. This group of people is the well educated, as well as the affluent in the market, whose disposable income allows them to drink even more. For any of the coffee restaurants, they form close to 30% of the customers and are of varied ages. Based on their importance to the growth of Nancy’s Coffee, the coffee shop has to ensure that the services given to them are influential, so that they can be loyal to the point of referring to their friends. In addition, the company can consider offering them free services, like internet services, which is very much cherished by the young people. If these strategies are considered by the Nancy’s Coffee, then it might improve its sales and the levels of profitability.
Another group is composed of specialty coffee drinkers, especially in the new centers and branches that are being considered in other areas, where there has never been any. In fact, it is proper that drinks, like espresso, lattes, mochas and cappuccinos be availed at such branches, which Beth and her team are yet to do. Such markets, which are characterized by the drinks mentioned above, can help Nancy’s Coffee to experience growth that is continuous if their customers are well treated by their staff. However, it will call for the training of the human resources on how to handle customers, giving them the best treatments. At the same time, this segment of the market considers value so much because it is only through that many are retained, once they have come for the first time.
Lastly, Nancy’s Coffee has to ensure that it looks at the market in totality, where all bean buyers are considered in its marketing strategy. In the process of operating in the market, even the target group who buy beans for home coffee making are ought to be considered. It may call on the management to offer them verities of coffee to choose from; for instance, either Arabica or Robusta variety. It should, thus, never be coffee alone, but also the selling of beans for those who would want to grind and make fresh coffee.