1. Cafédirect is a UK-based fair trade organization that sells coffee, tea and other hot drinks. It aims to help smallholder farmers through fair trade practices like minimum prices and premiums. 2. Over time, Cafédirect shifted from a charity model to a more commercial social enterprise approach, focusing on quality, distribution channels and brand marketing to compete in mainstream markets. 3. Theories like the Corporate Reputation Quotient model, Kano model and Product/Market Grid were applied to Cafédirect's marketing strategies and product development over the years.

1. The Story of Cafédirect Social Enterprise Marketing

2. Agenda Introduction Social Enterprise Fair Trade Cafédirect Theories Corporate-Reputation Quotient Kano Model Product/Market Grid Case Application Learning Insights 1

3. S ocial Enterprise Social enterprises social mission driven organizations which trade in goods or services for a social purpose. 3 Social Enterprise Commercial business To generate profit to further their social and environmental goals To maximize shareholder value e.g. Cafédirect e.g. The Body Shop

4. S ocial Enterprise 4

6. Sources: see Littrell and Dickson, 1999; Mayoux,2001; Tallontire, 2001a 6 How fair trade work? A minimum price , which always be paid even if the world market price falls below this point. A price premium of a given percentage, which is paid when the world market price rises beyond the minimum price. Pre-financing of 60% of the total order to allow smallholders to buy raw materials. Training in quality control and marketing know-how to build the capacity to also trade on the world market independently of fair trade.

9. Timeline (1989-1993) Increase of products quality At the very beginning, the company focus purely on charity rather than quality, which led to an dissatisfaction towards its products. After Penny Newman stepped onto the company’s MD, she accelerated the organization’s shift from charity spin-off to ethical business venture, by pushing for more customer focus and repositioning Cafédirect as a high quality coffee brand. 9

10. Sales Growth (1992-2000) 10

13. C afedirect Original Oxfam’s over 600 shops Traidcraft’s mail-order catalogue Increase of distribution channels 13 In 1993, Gained national distribution in the Co-op and other supermarkets. Later stages, Offering its products through vending machines Expanding its products distribution channels to overseas

14. 14 Source: Marketing Relationship, Helen Peck, Chartered institution of Marketing

15. C afedirect Increase of products varieties 15

17. C afedirect 17

18. Agenda Introduction Social Enterprise Fair Trade Cafédirect Theories Corporate-Reputation Quotient Kano Model Product/Market Grid Case Application Learning Insights 18

24. Kano Model Theory 2 Source: Noriaki Kano(1984), Attractive quality and must-be quality, The Journal of the Japanese Society for Quality Control, April, pp.39-48 24

26. Kano Model Theory 2 Kano Model applied to Food&Beverage industry Source: Noriaki Kano(1984), Attractive quality and must-be quality, The Journal of the Japanese Society for Quality Control, April, pp.39-48 26 Factors KANO Category How to do better Sanitation & Safety Basic Needs Have to keep the customers above the average satisfaction level Quality Basic Needs Taste Performance Sustaining improve on to gain more return Package Performance Distribution Performance Sales Promotion Surprise Dig and focus on Brand Surprise

27. Kano Model Theory 2 Quality - Clients were usually concerned citizens for whom the charity aspect of fair trade prevailed over product quality. - Penny Newman-reposition Cafédirect as a high quality coffee brand - Direct Trade(long-term contracts and producer education built-in supply chain for reliable high-quality gourmet coffee) Sanitation & Safety - Government report - Product Recall of Cafédirect product (found small pieces of glass) - Hazard Analysis Critical Control Point, or HACCP, is a standard of food safety management system for any food producer wanting to sell into the UK and other European markets. Now it is for all parts of the supply chain Basic factors 27

29. Kano Model Theory 2 Performance factors Package - Pure for charity (poor people & slogan for sympathy) - Cafédirect undertook a major brand relaunch in 2006 to help unify the brand look and aid it competitiveness 29

30. Kano Model Theory 2 Excitement factors Brand - 8 Awards in 2008 - August 2008: Cafédirect triumphs in Great Taste Awards - In a survey of 2,000 global brands Cafédirect ranks No. 1 as the most recommended brand Social Enterprise concept - Combining taste, price, ethics, and availability - 良心消費主義 (ethical consumerism) 30

31. Product/Market Grid Theory 3 Source: Cafédirect annual report 2006-2007 31

32. Product/Market Grid Theory 3 Ansoff Matrix Igor Ansoff, Strategies for diversification, Harvard Business Review, Vol. 35 Issue 5, Sep-Oct 1957,pp. 113-124 32

35. Product/Market Grid Theory 3 When the current product is launched in a new market, there are three approaches to develop the market: 1. Expand distribution channels. 2. Sell in new locations. 3. Identify the potential users. Igor Ansoff, Strategies for diversification, Harvard Business Review, Vol. 35 Issue 5, Sep-Oct 1957,pp. 113-124 35

37. Source: Cafédirect annual report 2006-2007 37

38. Product/Market Grid Theory 3 Cafédirect Annual report 2005-07 38

39. Product/Market Grid Theory 3 Originally, coffee, later, hot chocolate When a new product is launched in the current market, the intensive growth strategies could be to: 1. Develop new features. 2. Develop different quality levels. 3. Improve the technology. Igor Ansoff, Strategies for diversification, Harvard Business Review, Vol. 35 Issue 5, Sep-Oct 1957,pp. 113-124 39

40. Product/Market Grid Theory 3 Cafédirect Annual report 2005-06 40

41. Agenda Introduction Social Enterprise Fair Trade Cafédirect Theories Corporate-Reputation Quotient Kano Model Product/Market Grid Case Application Learning Insights 41

42. Nike vs. child labor in the 90s Corporate Reputation Quotient application Source: Charles J. Fombrun, Cees Van Riel- Fame and Fortune: How Companies Build Reputations 42

46. Kano Model application 46

50. Photo Editing “ Wow, my photos are sharpened automatically” 50

51. Photo Editing “ Wow, I can add my own Text and Stickers” 51

52. Community “ Wow, I can find something interesting about Hong Kong” 52

53. Community “ Wow, this guy is quite popular here” 53

54. Fun “ Wow, the way of browsing is cool” 54

55. Fun “ Wow, I can explore the world” 55

56. Fun “ Wow, they have widgets can be embedded into other sites” 56

58. Product/Market Grid application The result was a 2.2% increase in net sales to 136,312 million yen 58

61. Agenda Introduction Social Enterprise Fair Trade Cafédirect Theories Corporate-Reputation Quotient Kano Model Product/Market Grid Case Application Learning Insights 61

62. Learning Insights From Cafédirect’s case, we learn that 1. SE should keep long-term relationships with small-holders and set high standard of quality 2. SE should market itself just like commercial organizations 3. Guarantee basic factors, improve performance factors and make “Social Enterprise” identity as the excitement factor 4. Expand to mass market by increasing distribution channels 62 New Cafédirect Old Cafédirect Style Business Idealistic Skills Sales, Marketing Intellectual Values Commercial but ethical Non-commercial Staff Professional Semi-volunteers Structure Performance-based, clear responsibilities Democratic, Political

67. 67 Learning Insights The Divine Chocolate

68. Divine Partners (Smallholders in South African) 68 Learning Insights The Divine Chocolate

69. Q&A

70. Backup

71. F air Trade Global Fair trade Sales 2007 $2,381,000,000 2006 $1,623,000,000 2005 $1,141,570,191 2004 $831,523,066 2003 $554,766,710 2002 $300,000,000 2001 $248,000,000