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Kool Beans & Brew
1. Kool Beans and Brew
German Market Entry
Team Members:
Jillian Fowler
Daniela Krajacic
Crystal Kappel
Rozel Bepari
Richard Nodal
2. Country Information
Capital of Germany is Berlin.
Population is approx. 81 million.
Ethnic Germans compose 91.5%
German is the official language.
Current economy is the 5th largest in the world.
Primary Natural Resources : coal, gas, lignite, natural gas, iron ore,
copper, nickel, uranium, potash, salt, construction materials, timber,
and arable land.
“Germany has one of the world's most technologically advanced
telecommunications systems; as a result of intensive capital
expenditures since reunification, the formerly backward system of
the eastern part of the country, dating back to World War II, has
been modernized and integrated with that of the western part” (CIA
World Factbook, 2012).
3. Industry Information
Global cafés/bars in Western Europe account for
40% of global value sales in 2010.
In the Café/Bar Industry 4 types exist: Cafes,
Bars/Pubs, Juice/Smoothie Bars, and specialist
coffee shops.
“For cafés/bars, the key advantage relative to other
operators will remain its status as a bastion of local
drinking culture, offering a social component
unmatched in any other category” Euromonitor,
2011).
4. Current Competitors in Local Market
95 competitors in the Local Market
The TOP 3 in the local market:
Balzac is in the middle of city life you can read
and do your academic studies. They offer
macchiatos, coffee, banana bread, and lunch bread
products.
Manalo is a coffee spot with a dinner/restaurant
feel. They offer coffee, teas, chocolates, salads,
breads, and pies.
Starbucks is an American coffee chain that is filled
with tourists and working people, but not very
comfortable and individual. They offer sweet
muffins, nibbles, and bagels.
5. Comparative Product Analysis
In Western Europe $175 Million vs. the US is
$450 billion.
Globally coffee culture is increasing. 40% of
Café/Bars are located in Western Europe.
“Rising competition has dramatically
increased the number of operators offering the
types of products other cafés/bars specialize in
- coffee/tea, alcoholic drinks, and experience -
placing severe pressure on what are often
small, independent operators, forcing many to
close their doors” (Euromonitor, 2011).
6. Government Subsidies/Interventions
Very difficult for a foreigner to qualify for
government subsidies.
A business plan is needed in order for the
government to review.
Subsidies up $150,000 from the German
government.
A health and food inspection is also
required before permits are granted for
food to be served on premises.
7. Growth Risks and Challenges
Trend indicates that chained brands are
becoming popular among German
consumers.
If this continues, consumers will less likely
consider independent alternatives.
One of the largest threats in Germany is from
large chained shops like Starbucks.
They will be expanding their presence into
untapped markets.
8. Current Consumption/Future Demand
German consumer trends have changed
rapidly with large and independent coffee
shops emerging in the market.
The current trend among consumers is now
trendy and flavored coffees.
Future demand will consist of anything in
the market which differentiates itself from
the rest.
9. Consumer Needs
The local demand of a Café/Bar is a very profitable
market to enter in Berlin, Germany. “Coffee
consumption has been traditionally high amongst
German consumers, with per capita consumption of
150 litres per year and 70% of consumers drinking
coffee regularly, according to figures by the
European Coffee Federation (Euromonitor, 2012).
Germany is a coffee dominated industry.
Consumers are also looking for a pleasant place to
consume coffee in.
Consumers also need modern technology and
conveniences like Wifi as they consume their coffee.
10. Survey Research
Specialty coffee and tea drinks are preferred by young adults
Coffee variants like lattes and cappuccinos & tea variants like chai
latte
Drinking coffee is a cultural experience
Consumers value nice coffee shop atmosphere and socializing with
friends and family
Preference for gourmet coffee, fair trade certified, freshly locally roasted
Preference for health conscious snack/food menu
including ingredients that are organic and/or locally sourced,
sustainable and otherwise eco-friendly
Drinking coffee - affordable indulgence, part of lifestyle
Prefer “to go” option when needed
In-store entertainment: added benefits - live music at night, beer
Favorable attributes: Wi-Fi, mounted iPads, Mobile pay App, Reward
Stars
11. Existing and Emerging Segments
Concept of Gemütlichkeit (“akin to cosiness”)
increasingly present in Berlin‟s cafés
„Third Wave‟ artisan espresso bars reflect the
demands of an increasingly international
population: café becomes the office
The “third place” concept encourages longer stays
and more frequent visits
A typical customer is:
“young, trendy, discriminating” Berliners
“a professional, a creative, a world
citizen…cosmopolitan, often multilingual, aware
of food, music, and fashion; friendly and open”
12. Macro-Segmentation Variables
In 2010, , Germany held the largest total annual disposable income in
Western Europe, as well as one of the largest in the world (US$2.1 trill).
Income inequality is low and between 2010 and 2020, it will only rise
moderately.
The middle class is large - 31.5% of all households in 2010.
High savings rates, but real per capita consumer expenditure will increase
only by 9.5% over 2010-2020.
Germany had the most foreign citizens in Europe in 2011 (7.2 million).
Economic immigrants bring a young and dynamic workforce, which is
providing commercial opportunities and offsetting the country‟s
rapidly ageing population.
Berlin has the highest urban population in Germany. Berlin urban
population has been steadily increasing.
Thus, Berlin is a very suitable central location for opening of a first
Kool Beans & Brew café/bar.
13. Other Variables Affecting the Success of Kool Beans & Brew
Private consumption will increase from 1.4 % in 2011 to 1.7 % in 2013.
Activity will further increase as confidence improves and domestic demand
strengthens.
The positive rebound in private consumption will be enticed by strong labor
market performance, low deleveraging needs and favorable financing conditions.
Business confidence should be further boosted by the expected recovery of world
trade and the rest of the euro area.
Café/bars and specialist coffee shops appeal to different type of customers - either
youngish or elderly consumers:
Kool Beans & Brew will position its outlet to appeal to a younger target group,
including students and young professionals.
The positive development of café/bars market is greatly due to the economic
recovery in 2010 and 2011.
The proportion of food in cafés/bars total foodservice sales has increased from
year 2006 to 2011:
Due to extended food offering and a wider selection of products
Kool Beans & Brew featuring a limited health conscious food menu.
14. Team Objective
Open Kool Beans & Brew In Berlin, Germany.
95 different competitors that sells Coffee.
Many indirect competitors.
Team is betting on the differentiation.
Promoting the predominately through social
media.
Kool Beans & Brews mission is to provide highest
possible quality coffee, food, beers, service and
espresso using the state of art technologies, and
provide a place to relax, socialize and have access
to communication and related technologies.
15. Target Market
Kool Beans & Brews will focus on
working professional and students between
the ages of 20-35
Focus will be given to health conscious
consumers
16. Foreign Market Entry
Licensing Agreements
Bonanza Coffee Roasters
Neumann Kaffee Gruppe
Berliner Bürgerbräu
Differentiation strategy
Cater to Berliner‟s by appealing to their “lingering” coffee
shop culture
Kool Beans & Brew brings an innovative café design that
combines a relaxed atmosphere with an interactive
technology setting
18. Product/Service Information
Kool Bean & Brew Services
Extended hours between 8 AM – 2 AM
In store Entertainment to enhance customers
experience likely to increase revenue
Place for relaxation, social hour, and leisure with
an at home feeling will help create loyal customers
Wi-Fi service as well as mounted iPads for work,
and study.
Absolutely the best possible customer service.
19. Product Positioning and Brand Image
We will adapt our product to the target market by
consumer and brand ourselves within the market in
Germany by 5 ways:
Online Marketing as the future of food service
branding
Focus on the dining experience
High-margin items in the spotlight
Health and wellness
Spicy International flavors
Absolutely the best possible customer service.
German Café Culture will be integrated.
20. Pricing Strategy
Annual disposable income in Germany is forecasted to
increase over the next several years.
Kool Beans & Brew will adopt the following pricing
tactics:
Short-term pricing tactic – Kool Beans & Brew will
adopt a competitive pricing strategy in the short term.
Long-term pricing strategy – Kool Beans & Brew will
adopt a diversification strategy which allows our menu
to have pricing variety.
Diversified Menu will help drive profitability
Profit margin expectation is 15%
21. Location and Promotion Strategy
Single location in a central city area -
Kreuzberg quarter of Berlin.
Café will cater to German‟s “lingering” coffee
shop culture
Primary Promotion Strategy: On-line
advertising and social media.
Internet is available to most Germans, with
67% of people using the internet in 2009.
Introduction of the Kool Beans & Brew App
Editor's Notes
These are the most important facts of Germany: The capital is Berlin, Population is Approx. 81 million, Ethnic Germans compose 91.5%, German is the official language, Germany is 5th in the world, The Primary Natural Resources : coal, gas, lignite, natural gas, iron ore, copper, nickel, uranium, potash, salt, construction materials, timber, and arable land.
I think all the above needs to be said verbatim.
There are 95 competitors, but just to name the top 3 are Balzac, Manalo, and Starbucks. They all offer coffee, munchies and a different type of environment setting.
All above should be said.
Primary research usinga survey was conducted. Survey results revealed that the traditional pattern of drinking standard filtered coffee has changed with the growth of chained and independent coffee shops.Verbatim from slide - connect while reading so it makes sense, read it shorter if needed since presented on slide
The concept of Gemütlichkeit (meaning “akin to cosiness”) is increasingly present in Berlin’s cafés. The so-called ‘Third Wave’ of coffee is spreading from east to west of the city. The introduction of artisan espresso bars is amounting to something of a revolution in coffee consumption. It reflects the demands of an increasingly international population for whom a café becomes the office.Germans did not have a culture of indulgence. The city was not known for gourmet things. It changed through the people who moved to Berlin, as the city became more international. While leveraging the “third place” concept that encourages longer stays and more frequent visits, Kool Beans & Brew will cater to those “young, trendy, discriminating” Berliners who love to indulge in high quality gourmet coffee.
Verbatim from slide
Verbatim from slide – feel free to shorten it while reading if seems too much, since audience can read from the slide
Kool Beans & Brew will open in Berlin, Germany. The cafe will face 95 competitors, and many indirect competitors including retail stores that sell coffee beans. Needless to say market is very saturated. We will be focusing on Differentiation. Kool Beans & Brew will be promoted predominately through social media. In a nutshell, Kool Beans & Brew’s objective is to provide highest possible quality coffee, food, beers, service and espresso using the state of art technologies, and provide a place to relax, socialize and have access to communication related technologies.
Our focus for our target market is going to be men/women, working professionals and students, between the ages of 20-35. According to a Euromonitor International, “Cafés, bars/pubs and specialist coffee shops appeal to different type of customers. While independent cafés are mainly visited by middle-aged consumers and families, specialist coffee shops usually have a much younger target group, including students, young professionals and couples. We will also brand ourselves as a place for health conscious consumers.
Kool Beans and Brew will enter the German Market by licensing the use of products through Bonanza Coffee Roasters, Neumann Kaffee Gruppe, and Berliner Bürgerbräu. Kool Beans & Brew has eliminated the risk of introducing a brand of coffee and beer that would not meet the tastes of our target market.As part of our differentiation strategy, Kool Beans & Brew will cater to Berliner’s by appealing to their “lingering” coffee shop culture. To do so, we will enter the market by bringing an innovative café design that combines a relaxed atmosphere with an interactive technology setting.
Verbatim, or whatever makes it sound better.
Verbatim, or whatever makes it sound better.
The lifestyle of many working professionals is busy and hectic. In Germany they work long hours and often grab quick snacks and bites to eat. In order to focus on a target market we need to focus on consumer spending. The focus of many consumers is price, quality, recommendations, and branding. We will adapt our product to the target market by consumer and brand ourselves within the market in Germany by 5 ways: Online Marketing as the future of food service branding Focus on the dining experience High-margin items in the spotlight Health and wellness Spicy International flavorsOur research has shown that the German culture favors ambience and special environments with comfort, art, vintage, music, and uniqueness. We will brand our establishment as a unique café/lounge to our consumers with an at home feeling
Annual disposable income in Germany is forecasted to increase over the next several years. By 2019, the per capita disposable income in Germany is expected to be over U.S. $25,000. This positive forecast along with the German cultural tendency for frequenting cafés has played an integral role in setting Kool Beans & Brew’s pricing strategy.Kool Beans & Brew will adopt the following pricing tactics:Short-term pricing tactic – Kool Beans & Brew will adopt a competitive pricing strategy in the short term. With Starbucks being a primary competitor, we will focus our pricing to be approximately 10–20% below Starbucks. Kool Beans & Brew will initially be priced between Starbucks and McDonald's McCafe.Long-term pricing strategy – Kool Beans & Brew will adopt a diversification strategy which allows our menu to have pricing variety.. Kool Beans & Brew will offer a diversified menu that includes higher profit earning products such as pastries, espresso and Iced-coffee beverages. “Snack and beverages often have high mark-ups, especially beverages (espresso-based drinks, smoothies, alcohol). High-margin items help maximize profits and help offset the effects of discounting” (Euromonitor International, 2011). Food Service (i.e. pastries) will be a key driver in Kool Bean & Brew’s revenue. In Germany, nearly 60% of sales in Cafes and Bars were driven by food. (Euromonitor International, 2011). As a smaller operation, the management at Kool Beans & Brew will maintain tight expense and labor cost controls and as a result believes that a 15% profit margin is attainable.
Our high-end café/bar named “Kool Beans & Brew” will enter the German market as a single location in a central city area - Kreuzberg quarter of Berlin. At night, the café/bar will also offer craft brews from the local brewery and have an in house pastry maker. The café/bar will be open daily, offering free Internet and live music at night in order to cater to the German “lingering” coffee shop culture. Online advertising and social media are the relatively easiest ways to reach consumers and is often cost effective. Germany is a developed country with highly evolved technologies. Internet is available to most Germans, with 67% of people using the internet in 2009.Kool Beans & Brew will focus on the online marketing and social media, as well as implementing technology-based services such as mobile pay using the Kool Beans & Brew App and a scanner. The app will allow the customers to perform the scan themselves and this fast and easy option.
