Illy Coffee Company: market analysis, roll-out of consumers’ survey, Marketing strategy design for new product line’s launch.

1. M A R K E T I N G P L A N :
Elena Massaro
Giorgia Zamprogno
Giovanni Paba
Lorenzo Pulicati
A.A. 2020-2021
Marketing For Made in Italy course

2. EXECUTIVE SUMMARY:
ANALYSIS STRATEGY ACTION
Rising Organic coffee consumption, in
2018 it grew by 18%
To make the iconic Illy coffee Jar->
Recyclable, with a «bring it back» service
offering e-shop vouchers
Selling in High-end GDO and biological
specialized shops
Revenue in the coffee segment
amounts to $11,832m and it’s
expected grow of 7.7% in 2022 ($
12,4m).
To Focus to Bio-organic &
Fairtrade certification to capture the
attention of a target interested to
environmental issues
Social Media Marketing campaigns and
Google Search advertising
Illy has a strong brand awareness
and the know-how to launch a new
product to appeal a young target
audience
To Donate 5% of the profits to a Climate
Change fight association
Start selling in vending machines at
Workplaces and Universities
Conducted a consumers’ habit survey
regarding the consumption of Coffee
products and its organic versions.
To Innovate Illy’s production with Solar
Roasting System technologies
Give information via «Bio-Coffee
Corner» at Vegan restaurants & Bistrots
+90gg
2

3. MISSION: To delight all those who appreciate beauty and flavour worldwide with
the best coffee nature can offer, enhanced by the best of technology and art with a
particular focus in respect of the environment.
VISION: Illy aims to be the reference standard for coffee excellence and culture
worldwide, an innovative company that offers the best products and places to
enjoy them, and thanks to this grows and becomes a leader in high-end coffee
and sustainability.
COMPETITIVE ADVANTAGE:
• Vertical-integrated Supply Chain
• Coffee growers selected and motivated by rewarding their excellent quality coffee production efforts.
• Knowledge transfer via the Università del Caffè and regular visits to the coffee plantations.
• Direct raw material purchase in order to pay a lower market price and build an enduring relation with suppliers.
• Patents and innovations represent Illy's long-term value:
e.g.: Nitrogen pressurization system; the Secret blend of Arabica coffee and the Solar roasting system.
• Sustainability focus: Jar recycling initiative and Climate change project support.
3

4. PEST ANALYSIS
POLITICAL ECONOMIC
• EU Regulation 848/18 of the European
Parliament and of the Council of 30 May
2018 on organic production and labelling
of organic products
• Fairtrade certification services
• Organic production certification (EMAS, BRC
FOOD, UTZ, etc.)
• Rising Organic coffee consumption, in 2018
it grew by 18%
• Major costs for organic production
• Extra costs to obtain certifications (around
1000€ per year)
SOCIAL TECHNOLOGICAL
• Rising Sustainability trend
• Rising Environmental ethics awareness
• Increasing attention towards organic
products
• Solar roasting system
• Compostable coffee capsules
• Biological control methods (insects,
pheromones, manual weeding)
• Major quantity of labor is necessary

5. COMPETITIVE ANALYSIS:
ILLY BIO’S MAIN
COMPETITORS Pellini Bio Coffee
-100% arabica
-bio-organic certified coffee
-250 g → 5,99 €
-Bioethic project
LavazzaTierra Bio-Organic Coffee
• 100% arabica • Easy to find in GDO
• Biologic and UTZ certification
• Standard bag packaging
• Rainforest Alliance project
• 180g → 2,99 €
Vergnano Bio Coffee
• 100% arabica • Bio certification
• Family-size packaging: 1kg at 25 €
• 250 g → 3,50€
Kimbo Bio-Organic Fairtrade Coffee
• 100% arabica • Bio-organic certification
• Fairtrade certification
• Aluminium packaging for sustainability and taste
preservation
• 250 g → 4,90 €
5

6. FIVE FORCES’ MODEL:
Buyer Power
-High power of intermediate buyers
(retail channels) due to increasing large
scale distribution channels.
-The power final single buyer is
increasing since today’s customers are
more and more conscious and
demanding of organic production
standards.
Competitive
Enviroment
Competitive Rivalry
-Maturity of the coffee market but not full
maturity of bio market.
-Many competitors with little differentiation.
-Very low switching costs for customers.
Threats of Substitution
-Tea, herbal tea, ginseng coffe, infusion products.
-Traditional coffee.
Supplier Power
-Low bargaining power of many coffee producers based in developing
countries with a favorable exchange rate for our company.
-Long-lasting relationship with suppliers.
-Suppliers loyality.
Threats of New Entrants
-No big capital investitures needed
at the beginning for companies
already operating in the market.
-High brand awareness.
MEDIUM
LOW
LOW
MEDIUM
HIGH

7. COFFEE INDUSTRY’S KEY SUCCESS FACTORS
BRANDING
To make a memorable impression on
consumers and to distinguish from the
competitors, stating what makes you the
best choice.
QUALITY OFTHE
PRODUCT
Through R&D, since quality is one of the
most important elements that make
consumers buy again the same coffee and
become loyal
DISTRIBUTION CHANNEL
Managing transfer of products from
producer to end customer ensuring an
efficient, cost-effective, profitable and
secure distribution of products
MARKETING
Advertising campaigns make sure that
customers are well informed about our
products and it heps to build and
maintain a relationship with them.

8. 1: MARKET POTENTIAL
MARKET ANALYSIS:
How large is bio-coffee market in Italy?
Italy:
- Residents: 60.2 million people
- Families: 25.7 million in 2019 1
11 :AVAILABLE MARKET
- Household net income: € 31.393
- Italian GDP per capita: € 29,611 (33,228 US dollar)
-31% Low income; 34% Medium income; 34,4% High income
-Average ground coffee pricing 2: lowest 11€/kg - highest: 23€/kg
A) STRUCTURAL ANALYSIS:
1 ISTAT, 2019
2 https://www.statista.com/statistics/1068360/ground-arabica-coffee-prices-in-italy-2019/
8

9. 111: ACTUAL MARKET DEMAND:
MARKET ANALYSIS:
Revenue in the
coffee segment in
Italy amounts to
$11,832m and it’s
expected to show
a revenue growth
of 7.7% in 2022 ($
12,4m) 1.
1 Statista dossier, 2019, study id: 44414, «Coffee industry in Italy»
2 Consumer Survey Nomisma per Sana 2017 [https://bit.ly/3sEPb9f] 9
ONLINE MARKET:
SALES VOLUME:
TURNOVER VALUE:
The sales volumes of
coffee in Italy in the first 3
months of 2020 show that
sales volume of moka
coffee reached over 48
million units (or
€159,4M), an increase in
volume of 15%, followed
by capsules with over 29
million units. In 2019, Italian online retailers sold roasted coffee products
for a total value of 29.3 million euros. Data for the
first quarter of 2020 showed that the e-commerce market
value of coffee amounted to 11.4 millioneuros. This
would represent an increase of 84 percentage points, if
compared with the same quarter of the previous year.
BIO/ORGANIC MARKET:
According to bio food consumer
survey2 47% of Italian
households consume organic
food at least once a week, and
the penetration rate of “bio
food” is constantly growing,
reaching approximately 78% of
the Italian market in 2017.
In 2018, total organic coffee
sales reached a value of €2.1
billion.

10. MARKET ANALYSIS:
1 0
1V - MARKET SHARE:
Observing the leading Italian coffee companies’ revenues, Illy’s market share
amounts to approximately 13,71% of the observed market.
It is second only to Lavazza, who has around 52% market share in revenue, while the
remaining companies do not manage to exceed 5% of the market share each.
Lavazza Spa;
52%
Illy Spa; 13,71%
Kimbo Spa;
5,90%
Other
companies
(Gimoka,
Segafredo,
Vergnano, etc.);
28,39%
LEADING ITALIAN COFFEE COMPANIES REVENUES IN
2018
(IN 1,000 EUROS)

11. MARKET ANALYSIS:
1 1
B) Behavioral Analysis: SURVEY
Taste is the defining feature of all hot drinks1:
1 Statista, 2019, survey on more than 9,000 adult consumers in the U.S., UK, Germany, the Netherlands, Italy, Poland, and China on their hot drink habits.
In our Consumer Survey2, 64% of respondents
indicated “Taste intensity” as the main
characteristic that influence coffee purchase,
followed by “Characteristics of the blend”
(36% of respondents)
2 OnlineSurvey “Abitudini di consumo del caffè e percezione dei prodotti biologici” [https://forms.gle/68PBG9W7TmFCQiNS6]
Our consumer habits survey also shows that the
most preferred coffee format is the ground coffee
(for Moka machines), selected by 72% of
respondents, while “Coffee capsules” are preferred by
32% of them.
What are main expected benefits and
determinants of customer’s behavior?
•In general, coffee serves as a daily
energy booster for a vast majority in all
western countries3.
•Regarding a biological product, for our
responding customers the two main
expected benefits are the presence of
healthy ingredients (54,2%) and the
absence of food preservatives (45,8%)
3 Statista, 2019, Global Consumer Survey, id: 55495 “Hot drinks report”

12. SWOT ANALYSIS
POSITIVE: NEGATIVE:
STRENGHTS
• Vertically integrated
• High brand awareness & Good brand image
• High level of know-how
• Heritage
• Ethics & Environment Certification
• Exclusivity and high quality of the products
• Customer loyalty
WEAKNESSES
• Need to get expertise in the organic
production
• Few advertisings campaign compared to the
competitors
OPPORTUNITIES
•Affiliation with vending machine companies
•Reaching a younger cluster of consumers
•Breaking into the organic coffee market
•Saving money for the packaging via
sustainable methods
THREATS
• Cannibalization / Business risk
• Increasing number of competitors
• Expensive costs of production and machinery
• Possible saturation of the coffee market
INTERNAL:
EXTERNAL:

13. TARGET:
1 3
Young people in the Italian market - Age: 25 to 35 years old - Education: high level (Graduate+)
Abstract: our consumers are very passionate about top quality Made in Italy coffee, but at the same tame are
concerned about environment and ecological issues. They are the generation of the future, but they are
also scared for the future of the planet they are living in: that's why when they’re shopping, they always choose
the most sustainable option both for the environment and for human rights defense.
MARIA:
Age: 25 years old
Income: 500€/month
Instruction: Master’s degree student
Occupation:Bartender, weekend part-time job
Abstract: She likes to be informed about politics and
actuality, and she cares a lot about the environment,and
human rights. What concerns her the most is inequality
and pollution,that's why she buys clothes mainly from
vintage stores or small Made in Italy business.She does
her grocery shopping at the local market and when she
goes to the supermarket,she always chooses the most
sustainable option.
Preferred Socials:
DANIEL:
Age: 30 years old
Income: 1500€/month
Instruction: Master-s degree graduate
Occupation:Software developer
Abstract: He is an open-minded guy, who is trying to
improve both his life both theWorld he is living in.The
respect of the environment is crucial for him. He went
vegetarian few years ago, after finding out the horrible
effect of intensive farming on the Planet. He pays a lot of
attention to recycling and he aims to stop buying plastic
containers in the future.
Preferred Socials:

14. UVP - UNIQUEVALUE PROPOSITION:
Illy Bio is a certified organic coffee produced following certified fair-trade standards that, while
maintaining the typical qualities of Illy’s secret blend and the excellence of its advanced manufacturing
technologies, aims to reduce the environmental impact of coffee consumption with its recyclable package
and actively contributes to climate change fighting by donating a 5% of its sales to a Climate Change
fighting project: the Helmholtz Centre for Environmental Research project1.
1 4
Lavazza caffè macinato Tierra!
bio-organic
CaffèVergnano 1882
caffè100% Arabica bio
KIMBO Bio organico fair-trade caffè Pellini 100% Arabica Bio
Points of Parity
• Organic ground coffee
• Origin: 100% Arabica
• Expression of Italian lifestyle
• Well established brand
• Organic ground coffee
• Origin: 100% Arabica
• Well established brand
• 1kg Bag family package
• Organic ground coffee
• Origin: 100% Arabica
• Bio-Organic + Fairtrade
Certification* (Attention to
environment issues)
• Jar package
• Well established brand
• Organic ground coffee
• Origin: 100% Arabica
• Jar package
Points of Difference
• Bag-type package
• Bio-Organic Certification only
• No focus on environmental
issues
• Bio-Organic Certification only
• No focus on environmental
issues
• Strong focus on tradition
• No focus on environmental issues
*India and Nicaragua fair trade origins
• “Bio-ethic” industrial project
• Focus on new socials and
trends: Pellini Atelier
• No focus on environmental
issues
POSITIONING:
1 UFZ Integrated Project: https://www.ufz.de/index.php?en=34206

15. MARKETING MIX – SOME DIRECTIONS
PRODUCT: Illy Bio – recyclable jar
1 5
PRICE:
▪ Made of 100% arabica accurate selected coffee beans
▪ Produced using Illy’s Solar Roasting System®
▪ Bio-organic certification
▪ Fairtrade certification
▪ Packaging makeover: information on Illy’s recycling initiative
and Climate Change fight project donation.
▪ Traditional Nitrogen pressurization System packaging that promotes a suitable
habit, returnable and recyclable.
▪ Possibility to have a 1kg family-size packaging to reduce waste.
▪ 7,00 € for standard 250g jar | 26,99 € for 1kg family size
▪ Surplus on Illy's standard coffee: 10%
▪ Higher than competitors: the additional costs support the Helmholtz Centre for
Environmental Research project, they also cover Illy’s technological research and
selection of the top material quality beans.
▪ Moreover: A higher price reduces the risk of cannibalization.
▪ Final target is willing to pay this price, as our consumer survey reports:
They are aware and concerned about environmental problems, and a small 5-10%
surcharge does not affect their price-sensitivity

16. 1 6
MARKETING MIX – SOME DIRECTIONS
PLACE:
PROMOTION:
• High-end GDO and biological specialized shops (e.g. NaturaSì)
• E-commerce: Amazon + Illy.com online shop
• Social e-commerce: Illy’s Instagram page (in-page shop)
• Universities' bars
• Vending machines (e.g.: YouBestBreak partnership) in Offices and Universities
AWARENESS: Google ADS (SEO+SEA); Social Media Marketing (Instagram, Facebook)
«Bio-Coffee Corner» (Vegan restaurants, Coffee Bistrots); «Illy Bio Coffee Stand» @ Universities
APPEAL: Coffee Jar Recycle initiatives (in GDO and Illy-Shop points)
5% donation to Climate Change project (Helmholtz Centre for Environmental Research)
1kg Family-pack (to reduce wastes)
Social media Bio-coffee contents (product launch posts + IG stories on Illy main page)
AFFECTION: Recycle: bring it back and get a voucher for Illy online shop; Social media contents.

17. LAUNCH IDEAS:
SUSTAINABILITY &
WASTE REDUCTION
1kg Family pack + Jar Recycle service
REACHYOUNG TARGET AUDIENCE
Social media + Universities
Marketing ILLY Bio COFFEE STANDS
CLIMATE CHANGE AWARENESSS
5% profit donation to Climate Change project
(Helmholtz Centre for Environmental Research)
SOURCE OF PROFIT AND
AVAILABILITY
Coffee vending machines in Workplaces
and Universities

18. THANK YOU
FOR THE
ATTENTION
Elena Massaro
Giorgia Zamprogno
Giovanni Paba
Lorenzo Pulicati