1. CASE STUDY
CAFÉROMA
I-BACKGROUND:-
Caféroma is a well known coffee brand made by PEFD, a company based from Turin, Italy.
Italian style coffee is its exclusive product, which is a ground coffee with an slightly bitter taste
and strong flavor. It costs more than other ground coffee available in the market.
II-PROBLEMS FACED:-
Market share has faced a downfall upto 30%.
Loss of brand loyalty in customers who have become more cost conscious ie they are
preferring brands which are less in price compared to Caféroma.
Supermarkets started selling coffee brands under their own label at lesser prices.
Caféroma’s logo and brand name is old fashioned ie not in par with the current world
trends.
III-DESCRIBING STATS ON CAFÉROMA’S PROBLEMS:-
Caféroma’s market share experienced a significant downfall in the past year.
The top five competitors from Europe has increased their sales and market share
whereas Caféroma’s shares declined. The other companies are have made a great stand
in the market and so caféroma’s market share is very much the same.
Supermarkets own brand names have their market value at the same level in the time
period.
When compared to the previous years, Caféroma’s share declined almost 20%. The
downfall was highest in supermarkets whereas hotels experienced only a 10% decrease
in sales.
2. Even though sales in restaurants and hotels have gone down, the sales in specialist shops
has increased by 10% in the last year.
IV- POSSIBLE SOLUTIONS:-
Solutions Proposal Benefits Pitfalls
Repositioning The
Product
A total change of
image appropriate to
the modern market
trends
Makes the product
more eye-catching
and more modern
compared to the old
fashioned Caféroma’s
image
Too expensive and
difficult to change
and perhaps the loss
of customers who
liked the old
fashioned Caféroma
Price Reduction Reduce the pricing
which is more equal
to the price of market
competitors
People prefer other
brands because of
their low pricing, If
Caféroma reduces
prices it can attract
more potential
customers
Decrease in the profit
margin
Advertising Introducing a new
advertising campaign
and a grand relaunch
Attracts a lot of
positive feedback and
increases number of
potential customers
Too expensive
Multiple Brands Selling of new lower
priced Caféroma
products with
different brand names
Gives customers the
choice in trying
different products and
different flavors
Quality of the
premium product
may go down
Own Brand Label
Products
Allows to sell
Caféroma products
under the
supermarket’s brand
Use of the already
popular supermarket
brand names,
increase of sales and
The customers
wouldn’t know that
they are buying an
Caféroma product
3. name and
continuation in
marketing of the
standard Caféroma
products
substansially increase
in the number of
customers
and the spoils have to
be shared with the
supermarket
New Product Launching a new
instant coffee or a
decaffeinated under
the Caféroma brand
Opens up many
options and widens
market segments
Customers need to be
convinced and
competition of
similar products from
the market
Stretching The Brand Allowing makers of
coffee equipment
(Cafeterias,
Percolators, Coffee
Machines, etc.) to use
Caféroma’s brand
name on their goods
for a licensing fee
A good way to
advertise
Most of the coffee
makers wouldn’t be
too keen to use
another product on
their equipment
V-INFERENCE:-
Introduction of new exotic coffee brands and new flavors under new
names can catapult Caféroma’s image in the market. There is also annecesscity to follow new
advertising and marketing techniques. The new products will be a sensation and a winner in the
market because people will be tempted to try the new coffee brands which is an great advantage.
Plus the setting up of stalls and giving away samples of the product will attract more buying
potential. The Caféroma logo has to be completely redesigned to attract all the age groups of
customers. A new advertising campaign will increase the reach of the product and lowering
prices will help Caféroma to cherish even in strong competition and goods like coffee cups
cups, sugar bags can also be introduced using the company’s logo.
4. Dear Mr.Cumino,
The below are the given possible strategies which came up during the discussion
in accordance with company’s current problems.
SUGESSTIONS BENEFITS PITFALLS TURN-OUT
New Product Company’s Image
Enhancement
Vigorous Marketing
Required
Increased Market
Share
Pricing Lowering the price
attracts more
potential customers
Profit Margin
Decreased
Increase in profit and
market share
Advertising Campaign New advertising
campaigns and new
products
Too expensive Increase in market
share
Survey Interaction with
costumers
Time Consuming Understand
customers better
The actual reasons for the downfall in the market and the
loss in business are as follows:-
No increase in sales or profits.
Introduction of new and cheaper coffee brands in the market.
Packaging is too old fashioned even though the quality of the product is world class.
No advertising campaigns.
Loss of potential customers because similar products are priced 30% - 40% lower than
the caféroma product.
Difficulty in understanding customer needs.
From: To: Mario Cumino
Subject: Strategies to Solve Caféroma’s problems
5. SOLUTIONS:-
The introduction of new products and exotic flavors allow to increase the
popularity of the company and it would be a good Launchpad to lower prices also because great
coffee in a much more attractive price will increase the products potentiality in the market. It will
attract the price conscious customers and will be a smashing hit making more lucrative business.
It is also important to understand customer needs by conducting a survey. It is very helpful to get
ideas from the customers to create and launch new products as well.
Thank You,
Kind Regards,
