Business analysis and strategy recommendation of juc

Charlie Chen EMBA Student ID: 00004301 | Managerial Marketing | June 20, 2014
Business Case Analysis and
Recommended Marketing Strategy
FOR JUST US! CAFE

Table of Contents
Document Objective..................................................................................... 3
Case Background......................................................................................... 3
Problem Statement....................................................................................... 4
Market Analysis ............................................................................................ 5
Competitive Analysis ................................................................................... 5
Environment Analysis .................................................................................. 6
Technology trends ....................................................................................... 6
Consumer trends ......................................................................................... 7
Economic Trends......................................................................................... 7
Internal Analysis........................................................................................... 7
sales and profitability ................................................................................... 8
customer brand loyalty................................................................................. 8
Strengths and weakness ............................................................................. 8
threats and opportunities ............................................................................. 9
Strategic Analysis ........................................................................................ 9
Threat of new entry.................................................................................... 10
The Power of suppliers .............................................................................. 10
the power of buyers ................................................................................... 10
the threat of substututes ............................................................................ 10
Rivalry among existing competitors ........................................................... 10
Strategic Alternatives................................................................................. 10
Fit and Attractiveness Analysis................................................................. 11
Recommendation ....................................................................................... 12

where and how to compete........................................................................ 12
References.................................................................................................. 14
Appendix A ................................................................................................. 15

Document Objective
In this case study and strategy recommendation document the author use the
knowledge and methodologies learned in the managerial marketing course of
(EMBA) to analyze the position dilemma that Just Us! Cafes (JUC) is facing
and help the management team of the organization addressing some of its
burning issues. By leveraging analytical tools and framework learnt from the
course the author able to produce a competitive, sustainable strategy for the
business.
The ultimate goals of this document are to provide a structured
recommendation to JUC management team and mapping the relationship
between competitive forces and business strategies and answering the
question of where to compete and how to compete.
Case Background
JUC Profile
Just Us! Cafe started by its founder Jeff and Debra Moore in 1996. It
structured as worker-owned co-op and their main product is organic coffee
which imported from fair trade certified coffee producers all over the world.
JUC Business Objectives and Initiatives
JUC‘s goal and objectives are simple and humble.
 Role model in fair trade business and community ownership
 Provide best value and exceptional service
 Ensure the business operated with sense of environment responsibility
 Accountable to its members and broader community
JUC was the first fair Trade coffee roster in Canada. It has unique principle of
“people and planet more important than profit”. The founders of JUC also
established a non-profit organization: Just Us! Development and Education
Society which promote social and environmental awareness by providing
documentary and educational activities to schools and organizations.
Sales Performance Summary
The company managed to have a healthy sales growth (over 10%) for
8consecutive years (refer to Just Us! Cafes Revenues 2002-2008 report). The
company has relatively small diversified product range (coffee bean, Tea,
sugar and chocolate). Those diversified products also brought high
percentages of sales growth.

JUC had built strong customer loyalty in its product with young, educated
ethical conscious consumers. They are not only interested in its products but
also interested in its activities and philosophies.
From sales revenue perspective its main sources are large amount of retail
stores. It also established strong relationship with local specialty food stores
and office market.
Substantial JUC sales revenue comes from wholesaling to large retail stores
and supermarkets chain. JUC obtained enormous brand recognition and
loyalty from local distribution channel which contributing 40% of its total
revenue.
Problem Statement
As for all other business, JUC has been facing many challenges after almost
10 years 2-digit consecutive growths.
Externally it has faced a few major national competitors Kicking House, Tim
Hortons and Second Cup.
Furthermore some of the large international players such as Kraft, P&G and
Nestle are also extending their coffee product into this category. In Canada,
large supermarket chains also provide their private label organic and fair trade
coffee products.
Locally those small coffee roasting companies and independent coffee shops
(which people from surrounding neighbors use for family and friends gathering
places) and well known chains with strong financial muscles and strong brand
equity were trying to get into the “fair trading trend”. One of them is Trident
Bookseller & Café. It offered fair trade certified as well as conventional coffees
and other beverages.
Starbucks with strong global brand equity has entered the local market too.
Internally, the lack of advertising skills and knowledge of the existing
management team limited the brand to reach more border consumers.
Clearly the advertising efforts of JUC brand are far less than its competitors.
Coffee product market is very competitive. After over 12 years in the
business, the company landed on its turning point in 2008.
The company management team is seeking to answer following strategic
questions:
 How to compete with national/international and local competitors
 How to leverage current loyalty customers as core and extending
existing customer base
 Should JUC consider to extend the variety of its products

 How to leverage all forms media and new technology to promote JUC’s
products and philosophy
 How to better engage and interactive with target customers (i.e. college
students and young professionals)
 Should JUC extend their distribution channel?
 How to further engage all staffs of the organization and encourage
them to try their best to serve our customers
Market Analysis
University students,
young professional office
workers
Super Market,
Retail Store
Shoppers
Coffee shop take away
customers
Needs Social, relax and enjoy
premium coffee product
Quantity, quality,
organic coffee
product
Social, family gathering
food, beverages, drink
Driven By Quality of product and
Fair Trade and
environmental
awareness
Price, package,
promotion,
Location, activities,
interior decoration
Competitors Kicking House, Trident
Bookseller & Café, Java
Factory
Kraft, Private-label,
P&G, Second Cup
Starbucks, independent
shop, Tim Horton,
Characteristics Premium location, high
quality and high price
Large quantity,
lower price
Multiple products,
various customers
% of Market medium but growing large small
Table 1-1: Market Segmentation of Coffee Product
Young professional consumer market is the primary market of JUC. The
organization need to develop strong market strategy in order to consolidate its
leading position in this sector.
There is large emotional element involved in purchase JUC product and the
organization need to find a way to stimulate this intangible asset. Facebook
and Twitter are great tools in terms of stimulate customers emotional element.
They are also a useful tool to explore customer’s unmet needs.
Competitive Analysis
Core Product Category: high quality roasted coffee and Tea product sourced
from fair trade partners as well as sugars, chocolate.
Most Direct Competitor Key Strengths and
weaknesses
Position in Market
Kicking house e-commerce site, market has
been extended US and Europe;
Solid local clients base, Loblaws
stores, Upscale food retailers
Kraft International food brands, strong
finance, national distribution; Not
Supermarket, retailers,
independent coffee shops,

Fair Trade Certified restaurants
P&G Leading gourmet coffee brands,
strong finance, Fair Trade
Certified
restaurants
Private-Label Strong finance, national
distribution, cheaper price, large
customer base
restaurants, consumers
Second Cup Largest Canadian specialty
coffee retailer; Not Fair Trade
Certified
Various consumers
Starbucks International brands, strong
finance, variety of food and
beverages
Various consumers
Tim Horton Large chain of quick service
restaurant, not Fair Trade
Certified
Various consumers
Table 2-1: Competitors table
JUC was facing competition from different directions by competitors with
different strengths. The organization not only have to compete with local
players, supermarket chains but also have to compete with international
players. But, there are some unique valuable propositions JUC possessed.
Directly works with coffee farmers and has its local coffee roster facility
enabling JUC to cut mid-man cost and control the distribution of its products in
order to ensure the freshness of the products. Co-op business model which
gives employee a great sense of belonging and enabling them to present their
best and to improve customer experience when they visit JUC coffee shops.
However, we cannot ignore heavy weight competitors such as P&G, Kraft.
They can launch massive marketing campaign in order to grab market share.
They are backed up by their strong financial muscle and able to leverage their
existing distribution channel to lower the cost of the product.
Large supermarket chain Loblaws not only is the most important customer of
JUC but also is a strong competitor with their own organic and fair trade
private label coffee product. Figure 1-1 illustrated the competitors and JUC’s
relationship.
Environment Analysis
In this section the author uses the PEST methodology to analyze the business
environment of JUC currently facing.
TECHNOLOGY TRENDS
The internet and social media revolution transformed our society to a
complete new world that we have never experienced before. There are
increasing trend that organization leverages social media to consolidate their

existing customer base as well as attract new customers. Social media
provides complete new way for organization to engage consumer and also
can be used for target marketing. The good news is those new methods are
relatively cheaper than traditional advertising and much effective from
customer engagement perspective.
CONSUMER TRENDS
Coffee drink becomes more popular even in developing world (i.e. China).
Drink Coffee becomes a statement of fashion of Chinese middle class.
According to the consulting firm Dragonomics, China middle class population
has over 300 million people. They have “significant discretionary spending
power,” and to tap into the total financial assets of China’s middle class—
roughly ¥1.3 million ($213,900) per capita, according to Forbes China. It will
be a significant market for any coffee retailer even those reaching the tip of
the iceberg. Most of the publication of middle class in China is well educated.
China also has most advanced and matured e-commerce infrastructure in this
planet. The biggest China e-commerce (B2B, B2C) provider –alibaba.com has
over 1 million goods supplier, Revenue over 1 Billion in 2010.
On the other hand, years of global warming campaign made consumer in
developed and developing countries become more and more environmental
consciousness and appreciate those companies invested in social and
environmental responsibility.
ECONOMIC TRENDS
Local economic of Canada is in the middle of recession. Coffee product
expenditure will be inevitably reduced by domestic consumers. We can see
some small coffee retailer and large national/international retailer started to
reduce the price in order to maintain their market share. The superb quality
products with higher price are particularly vulnerable.
Figure 2-1 PEST diagram graphically illustrated how JUC surrounded by the
environment.
Internal Analysis
As Aaker (2011) suggested, the management team need to know if company
existing assets and competencies are good enough for them to win the
competition, if not then the current strategy need to be enhanced, extended or
even changed.
What are the brand core
capabilities
Which of these capabilities
is a source of competitive
advantage?
What do these capability
advantages allow the brand
to deliver in the
marketplace?
Produces high quality organic
coffee
It makes JUC different
compare with normal coffee
Meet requirement of group
customer who enjoy high

Table 3-1: Internal Capabilities
Figure 3-1 SWOT diagram graphically illustrated strength, weakness,
opportunities and threats that JUC is facing.
SALES AND PROFITABILITY
Since 2008, the number and range of Fair-trade certified products imported to
Canada have been growing steadily and Canadian consumers have gradually
contributed to the movement and willing to change their shopping list in order
to participate this movement and be part of global Fair-trade solution (Sara et
al. 2009). JUC has enjoyed its natural market growth for over 10 years since
1996. However the situation has changed due to: increased numbers of
competitors from large international brands and increased numbers from local
and nationally coffee roster/distributers. Numbers of those competitors backed
by much stronger financial resource and much more sophisticated marketing
strategies as well as distribution channels. JUC’s market share is facing
pressure from competitors.
CUSTOMER BRAND LOYALTY
This is the most important asset of JUC. Customer brand loyalty helped JUC
to hold their market share and has sustainable profit even the competition
intensified in last few years. The grocery store wholesale channel is relatively
strong and demonstrated the high customer satisfaction with the product.
Since JUC actually spent very little on advertising this brand loyalty appeared
to be very solid and valuable.
STRENGTHS AND WEAKNESS
The unique position in the coffee retailing market of JUC and the brand loyalty
(which built by their reputation of early entering into the fair trading business
and high quality coffee product) are strengths/competencies of JUC. It usually
requires decade and million dollars to build. It is very powerful in consumer
product business.
product provider quality coffee
Source raw material via fair
trade partners
Attractive to business ethical
sensitivities’ customers
Purchase JUC products
=contribute to fair trade
activity and environment
Co-op business model Great sense of ownership of
business
Employees will put extra
effort to produce goods and
service
Strong relationship with retail
distribution channel
This is an extreme valuable
asset of JUC and one of Key
Success Factor
Those customers have great
influence in consumer market
and bring JUC sustain
revenue
Royalty customers This is another key success
factor of JUC
Deep customer engagement
for product promotions,
package deals, etc.

The unique business model is JUC’s another strength because it co-op
philosophy and way they operated which gave employee a great sense of
belonging, But on the other hand its relatively small scale of production,
narrow product range and not so strong finance made them vulnerable and
hard to compete with those competitors are backed up with diversified product
range and unmatchable financial strength.
The other weakness is the management team lack of experience in
competitive market and lack of understands the importance of advertising and
e-commerce.
THREATS AND OPPORTUNITIES
JUC should use recession as drive to turn threats become opportunities. JUC
should increase its marketing budget to boost their product market activities in
order to gain better market position. The author believe JUC should:
 aggressively promote itself as an organization with business ethical
culture and at the same time supply superb value of organic coffee
products
 launch its loyalty program with tangible rewards to its loyal customers
 launch kids beverage value deal
 developing new market internationally by leverage new technology
 looking for joint venture opportunities in developing countries such as
China
 increase its distribution channels physically or virtually
 developing new product to extend its existing market
Strategic Analysis
As strategy advisor, the author would like to work with the management team
of JUC to find answer for the following questions as Aaker, (2011) addressed
in his book “Strategic Marking Management”:
1. Are existing assets and competencies enough to enable the company to
win the competition?
2. Should the management team consider enhancing, extending, or even
altering and replacing the existing strategy?
In essence, the effective strategy should base on fully understanding the
company’s current position in the market and competition facing then figure
out how to change its position and envision what the company will achieve
after the change. The position change should base on what are the
strengths/advantages the company has compare with its competitors as
Michael Porter told us in one of his speech (on Youtube).
By using Porter’s 5 forces Competition analytical tool, we can easily visualize
the relationship of 5 forces in JUC case (Figure 4-1).

THREAT OF NEW ENTRY
Heavy weight competitors such as P&G, Kraft diversifying from their tradition
market to coffee product market have the ability to leverage their existing
capabilities and cash flow to launch marketing campaign and price war with
JUC. Coffee retailing industry has relative low entry barriers made new entry
easier. The ability to purchase higher volume raw product made those large
scale players easy to negotiate huge price discount with any supplier in the
market. Their existing logistic resource can easily observe the cost of
relatively small amount of coffee product from source to the destination and
allow them further reduce the total cost of sailing product and maximize the
profit margin.
THE POWER OF SUPPLIERS
The taste of coffee very much depends on its raw material: coffee bean. It is
almost impossible for coffee roster to switch supplier after they established
their product in the market. The supplier may increase the price during low
harvest season which will push the cost of final product higher and reduce the
profit margin.
THE POWER OF BUYERS
The consumer enjoys over supplied coffee products in the market. They have
absolute bargaining power. Consumer can select product based on quality,
price, tastes, brands and service. During the recession period consumers tend
to be more prices sensitive. Distributors and retailers have strong bargaining
power because they can indirectly influence downstream customers (M.
Porter, 2008).
THE THREAT OF SUBSTUTUTES
Substitutes of JUC product are non-coffin drink include but not limited to such
as fruit juices, soft drinks, water, energy drinks and beers. Whereas pubs,
bars, restaurants, Starbucks and McDonald’s can be highlighted as substitute
places for customers to meet someone and spend their times outside of home
and work places.
RIVALRY AMONG EXISTING COMPETITORS
Rivalry among existing competitors is high within the industry JUC’s major
competitors are Kicking house, Kraft, P&G, Private-Label, Second Cup,
Starbucks, and other small local coffee shops and cafes.
Figure 4-1: Author uses Porter’s Five Forces Model Competition to
demonstrated JUC current situation.
Strategic Alternatives

JUC has established it unique market position by its management team and
co-op workers. As Porter pointed out in his article “The Five Competitive
Forces That Shape Strategy”, the company ether “faced with pressures to
gain market share or enamored with innovation for its own sake, managers
can spark new kinds of competition that not incumbent can win” (M. Porter,
2008).
There are four areas that contribute to business strategies.
Energizing the business: 1) Involve loyal customer to contribute internet
marketing campaign to write comments on Facebook/Twitter of their brand
experience. 2) Motivate loyal customers with JUC membership volume
discount, 3) Offer buy 5 get one free in JUC’s retail stores. 4) Offer promotion
to attract new customer. 5) Use sponsorships, endorsers, social program as
brand energizer to promote JUC as coffee product producer with organic raw
material and superb quality as well as leader of CSR in the country.
Leveraging the business: understand the strengths of the firm (refer table 3-1)
develop business strategies to maximize the competitive advantages. 1)
Provide market materials to support grocery channel in order to enhance
brand image in their retail stores and provide consumer guidance. 2) Instead
of physically extended market to another region, JUC should leverage internet
technology to extend its market nationally or even internationally.
Creating a new business and going global: 1) Partner with domestic coffee
machine manufactures to provide them organic coffee capsules/pods for their
private labels. 2) Provide those products to hotel and motel chains. 3)
Leverage Internet/e-commerce to go national/global.
Figure 5-1: Alternative Strategic Positions
Fit and Attractiveness Analysis
Orgnic coffee capsaule /POD
• Core Buyer Segment:
Domestic coffee machines
(Electrolux, Phillips,
Delonghi, Miele, Map Mia,
Aldi)
• Value Proposition: healthy
Coffee drink for consumers
at home
• Soruce of Competitive
Advantage: orgnic coffee
bean
• Market Size: Emerge market
and will be huge
Orgnic sachet/capsaule/POD
for hotel/Motel
• Core Buyer Segment: chain
of hotel and motel,
conference venues, etc.
• Value Proposition: small
package for easy use and
reduce wast
bean
• Market Size: established
large market
Go national/global via e-
commance
• Core Buyer Segment: global
market (inc. China Middle
Class via alibaba e-
commence platform)
• Value proposition: healthy
Coffee drink for consumers
at home globally
bean
• Market Size: very large

There are pros and cons regarding those possible strategic approaches. Let’s
take a look those pros and cons against each approach.
Those approaches in energizing and leveraging the business section are
significant cost less and risk less compare with the approaches in creating
new products and going global.
However those shot term approaches may only enable the firm to gain
temporary advantage in a very competitive local market and some of the
competitors will very soon catch up by using same method(s) or even better
method(s) and in a larger scale.
With the innovation approaches that has been illustrated by Figure 5-1, the
firm actually able to create a new battle field in the traditional coffee roaster’s
market. The major challenge of this approach is the significant capital
investment of new product line.
Recommendation
As marketing strategist, author suggests the management team should take 2
legs approach.
WHERE AND HOW TO COMPETE
On one hand JUC need to adopt approaches in energizing and leveraging
business sections. These short term strategies will help company to
consolidate its current market share.
On the other hand JUC need to enter a complete new market to produce
small capsule/pod/sachet for domestic coffee machine manufactures. These
small package products will not only bring large profit margin but also will
have huge market potential. These new products will fully utilize the JUC’s
strengths (organic coffee product and marketing image as leading firm of
social and environment responsibility) and provide customer a complete new
experience.
As the funding of new production line (for producing capsule/pod/sachet), the
author suggests the management team should consider to leverage its unique
corporate structure to invite co-op members, employees, business associates
and border community to sponsor the capital investment of equipment (co-
ownership, business partnership or even IPO.).
Author also strongly recommends that JUC management team should
consider leverage e-commerce technology to go national/global.
E-commerce is one of the greatest benefits of internet. It provides a virtual
platform for any business to go global. Here is a list of the competitive
advantages of e-commerce over internet:

 Very low initial (upfront) cost compare with traditional marketing method.
 Minimize and streamline the back-end of product order/deliver process.
(refer following diagram).
Figure 7-2: Lifecycle of e-commence
o Receive customer payment at the same time as the order placed.
Greatly improving company’s cash flow
o On demand producing product means that there will be no
overstock cost
o Customer will always receive freshness product.
 It provides a low barrier for JUC product to reach mass market nationally
and internationally. The virtual platform (e-commence) enable JUC to go
global without huge marketing expenditure.
 With increasing awareness of environmental impact and corporate social
responsibility globally, JUC products and corporate image will gain good
marketing attraction globally via this virtual platform.
As Porter cleverly point out in 2001, the powerful e-commerce technology can
become a powerful force for the competitive advantage of the business by
integrated it to overall business strategy.
In order to establish a distinctive strategic position in the market, the
management team need to have the ability to define the business’ unique
value proposition and willing to make tough decision which will determine
where to compete and how to compete (refer Figure 7-1: Plan to win).
Customer order
goods online
goods production
on demand
Good deliver to
customer directory

References
1. Loudyi, S., Sagebien, J., Turgeon, N. & Mckillop, I. 2009, ‘Marketing
Planning At Just Us! Cafes’, Ivey Management Services, Version (A)
2010-06-09.
2. Aaker, D., 2011, Strategic Market Management, John Wiley & Sons Inc.,
Hoboken NJ.
3. Porter, M., 2008, ‘The Five Competitive Forces That Shape Strategy’,
Harvard Business Review, January 2008, pp. 79-91.
4. Porter, M., 2001, ‘Strategy and the Internet’, Harvard Business Review,
March 2001, pp. 63-78.
5. http://www.chinabusinessreview.com/marketing-to-chinas-middle-class/
6. https://m.youtube.com/watch?v=ibrxIP0H84M.
7. http://www.privco.com/alert-alibabas-revenue-52-yoy-to-record-846-billion-
alibaba-profit-175-stunning-growth-names-partners-and-directors
8. http://www.franchiseek.com/market_trends_coffee_china_1004.htm
9. Holdsworth, D., 2014, ‘Strategic Positioning Workbook’, UTS: PSB.

Appendix A
Figure 1-1: competitors’ and JUC relation diagram
Figure 2-1: PEST Analysis of JUC
Nestle,
Starbucks,
Tim Hortons,
Second Cup
Kraft, Private-
Label, P&G,
independent
Coffee shop
Kicking House
Java Factory
Trident
Bookseller &
Café
Increased public awarness of fair
trade and demand of high
quality coffee product in Canada
Reatively tight comsumer's budget
since Canada is in the middle of
recession. Cost of the product become
major factor for general comsumers
Increased coffee product
comsumers in local Universities
Increased coffee product
comsumers in the general public
Increasee coffee product
comusuers globally
Internet E-commence (B to B, B to
C)become more import for any trading
company since it drematically reduce
the fix and variable cost of operation
and enable the product to reached vast
of consumers anywhere
Impact Just Us!
Cafe Current
Position
Competitor fulfill
same needs in an
alternative Way
Competitor fulfill
some same needs
Competitor fulfill all
same needs

Figure 3-1: SWOT Analysis of JUC
Figure 4-1: Porter’s Five Captivities Model
more consumers perfer fair trade
and high quality product than
covnventional product
Strong Presense in local Unis
Strong Customer loyeraty
Relatively nerrower market reach so do its
customers range
Lack of mass media reach, and very low
marketing budget
Lasck of mutiple distribution channels
Extend products lines in retails stores
Extend products distribution channels
nationaly and intrnationaly
Attract family members of loyalty
customers and promote Fair Trading
The country is in midst of a recession
local compatitors are caching up
Large international food
companies are entering the market
with hguge finacial musules
JUC Need
Improve Itself
Rivaly
Among
Existing
Firms
Threat of
New
Entrants
bargaining
power of
buyers
Threat of
Substitute
products
bargaining
power of
suppliers

Figure 6-1: Fit/Attractiveness Analysis
Top end
product line
for retails
new package for
domestics coffee
Machine Makers
Domistic
market
national/
International
Local retail distribution
E-commence
national/international
partners with domestic coffee
machine makers
Hotel/Motel in room refill
pod/sachet
High
FIT
Low
ATTRACTIVENESS High
A Winning Business Strategy
Where to Compete
The new production line
investment decision
Program How to Compete
Complete new Fully Utilize current Go Global via
Products Assets & competencies e-commence
Figure: 7-1: Plan to Win
Present
products
New
products
Present
Markets
New
Market

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