Rethinking Coffee Houses: The House of Wisdom
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Start Up Model that is supposed to redesign the coffee shop industry.
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Rethinking Coffee Houses: The House of Wisdom
- 1. Izmir Vodinaj, Jiayi Ge, Asher Zhao, Soohyun Kwon, and Jue Gao April 23, 2015
- 2. Outlining Our Talk Introduction to our idea Talking about the industry Crafting A Business Model & Testing the Idea Targeting, Segmenting, Positioning, and Analysis of the Situation Analyzing Product Features, Distribution, Pricing, and Promotion
- 3. Traditional Coffeehouses Feature Problem Take out products Waiting period is too long Study or read a book Too much noise Business Meeting No privacy Community Engagement Rarely anything organized
- 4. Design Library Style-Civic Houses that contribute towards building informed, active, and vibrant communities. New Coffeehouses
- 5. Analyzing The Industry Supplier Power = Weak Many avenues to get products Threat of New Entrants = High No barriers to enter this industry. Threat of Substitutes = Low Low Prices Low Elasticity Buyer Power - Weak Large number of consumers Degree of Rivalry = Medium Many Coffee Shops Available Unique value preposition Medium Exit barriers Rivalry
- 6. Crafting A Business Model Key Partners Coffee Suppliers Book Stores & Libraries Colleges & High Schools Farmers IT Firms Key Activities Prepare and sell products Create and hold community dialogues Bring together experts to have lectures Value Proposition Community Learning & Engagement Organic Products Unique Store Design Accessibility & Convenience Customer Relationships Membership Program Reward Programs Weekly Specials Customer Segment Geographic: Local Communities Demographic: Upper/Middle Class Psychographic: Educated, Community Oriented IndividualsKey Resources • Employees & Management team • Launch up capital • Building, machines, school supplies Channels • Word of mouth, posters, email.. • Free coffee samples • In Store • Post sale (Customer Reach) Cost Structure Rent & Other Fixed Costs Raw Materials Marketing Information Technology Revenue Streams Monthly Membership Fee Sale of products and services
- 7. Surveys Yes No Quiet Study Area 80.43% 19.57% Office & School Supplies 67.39% 32.61% Organic line Food/Drink 63.04% 36.96% Relaxation Room 80.00% 20.00% Social Community 50.00% 50.00% Social Dialogues 76.09% 23.91% Story Sharing 76.09% 23.91% Give Lectures 65.22% 34.78% Membership Fee 52.17% 34.78% Testing The Idea: 46 Surveys & 3 Interviews
- 8. Pros Convenience Healthy Beneficial Services Research Insights Suggestions Better usage of space Consider the American busy life
- 9. Concentrated Strategy Targeting & Segmentation Geographic Segmentation: Lakewood, OH Income Segmentation: Middle & High Income $$$ Family Life Cycle Segmentation: Young Singles Young Married without Children Middle Aged with or without children Older Unmarried Psychographic Segmentation: Educated Community Oriented
- 10. What is Lakewood like? Categories Data Population 51,143 High school students 10,453 College and Graduate School Enrolled 4,428 College Graduates and Professionals 17,492 Proportion of population between 16 and 35, 35 and 50, and over 50 33.1%, 21.1%, 29.7% Average Income $27,858 > National and State Averages Coffee Houses 3 Serve Espressos + 5 Dunkin’ Style Schools & Libraries 2 Universities, 2 High Schools, 1 Library
- 11. Testing The Waters 15 Coffee House Observations 0 5 10 15 8:00 am - 11:00 am 11:00 am - 3:00pm 3:00 pm - 7 :00 pm Number of People Alone Studying, Reading, or Using Computers Number of People Alone Studying, Reading, or Using Computers
- 12. SWOT Analysis Strengths Company Culture Well trained baristas & management High Quality products Community oriented business model Weaknesses No trademark, No patent. Initial Costs Complex project Opportunity Growing learning communities Collaboration with Libraries and Schools Threats Competition: Local coffee shops
- 13. Positioning Map Luxury Community Engagement Dunkin’ Donuts Starbucks Root’s Cafe Panera Bread The House of Wisdom
- 14. A Sample of The Ideal Customer Ibrahim’s Time • Drinks Coffee Daily • Participates in Dialogues Weekly • Participates in story time biweekly • Gives monthly lectures at the Coffee House • Posts his essays and ideas in the discussion board. • Very engaged in the community. Characteristics • Income: $94,000 • Education: PhD • Profession: Teaches at Case Western • Age: 42 • Married Ibrahim
- 15. Basic Innovation • Improved Quality of Coffee • Health line Organic Products • Mix of coffee house and library Sustaining Innovation • School supplies available Printers and Fax Machines • Quiet Study Space • Top 10 Books of every discipline Available Breakthrough Innovation • Dialogue Circles • Story Time • Community Scholarship Knowledge Sharing Disruptive Innovation • Relaxation Area • Organized Posting Board Product Innovation Matrix
- 16. Product Lines Beverages Food Services Coffee & Tea Products Organic Sandwiches & Salads Study Areas Other Organic Beverages Organic Yogurts & Sweets Community Engagement Beverages: organic cappuccinos, teas, smoothies, milk shakes, natural sodas, etc. Food: organic cakes, cookies, bread, sandwiches, salads, etc. Services: quiet study area, relaxation space, school supplies, discussion board, books, magazines, newspapers, regular community based activities, etc.
- 17. Getting the Products Organic coffee products directly from a sourcing company, traders/farms Sustainability Low inventory Book stores and libraries Office Supply Store Organic Foods from farmers Books-used book store/magazine Product processing Long contract with suppliers IT Firms Management relation system Beverages Food Suppliers Coffee House Customer Services
- 18. Setting the Right Price Roots Coffee Coffee $1.6 No Frapuccinos Panera Bread Coffee $1.69 Mocha Frap. $4.95 Erie Island Coffee $1.7 Mocha Frape $3.90 Starbucks Coffee $1.75 Frappuccino $3.95 Objective Profit-Oriented Strategy Penetration pricing Prestige pricing Bundled Membership
- 19. 0 1 2 3 4 5 6 7 Introduction Growth Maturity Decline Introduction Growth Maturity Decline Coffee Price 1.7 1.75 1.8 1.8 Membership Fee 3 4 5 5 Penetration Pricing Life Cycle Pricing
- 20. Bringing Awareness New media • Videos • Social Media(LinkedIn, Twitter, Foursquare) • Smartphone App • Yelp • Emailing list • Website, SEO Traditional media • Word of mouth (Inspired through Videos, Academic discussion, cooperation with student organizations) • Artistic store interior design • Flyers (around the city) • School magazines, School newspapers, Local newspapers, Local magazines. • Mailing List
- 21. Evaluation • Events: (Free coffee sample once a week, Free lectures, dialogues, forums) Post-sale • Special gifts to members yearly • Personal interview with customers • Suggestion box • Management Open Door Inspiring Action
- 22. Thank you!!!