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Mky Issue 2


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Mky Issue 2

  1. 1. The Story of Cafédirect Social Enterprise Marketing
  2. 2. Agenda Introduction Social Enterprise Fair Trade Cafédirect Theories Corporate-Reputation Quotient Kano Model Product/Market Grid Case Application Learning Insights
  3. 3. Agenda Introduction Social Enterprise Fair Trade Cafédirect Theories Corporate-Reputation Quotient Kano Model Product/Market Grid Case Application Learning Insights
  4. 4. S ocial Enterprise Social enterprises are social mission driven organizations which trade in goods or services for a social purpose. Triple bottom line: people, planet and profit social, environmental, financial not-for-profit -- more than profit
  5. 5. S ocial Enterprise
  6. 6. F air Trade Fair trade is a trade partnership, based on dialogue, transparency and respect, that seeks greater equity in international trade. contributes to sustainable development by offering better trading conditions to, and securing the rights of, disadvantaged producers and workers - especially in the South. Its organizations are actively engaged in supporting producers in awareness raising and in campaigning for changes in the rules and practices of conventional international trade
  7. 7. 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
  8. 8. C afedirect <ul><li>1989 </li></ul><ul><li>Collapse of the International Coffee Agreement </li></ul><ul><li>1991 </li></ul><ul><li>Cafédirect was born </li></ul><ul><li>2004 </li></ul><ul><li>Cafédirect become a publicly listed company </li></ul><ul><li>2007 </li></ul><ul><li>Cafédirect was voted as the most recommended brand in the nation in a survey of 2,000 companies </li></ul>
  9. 9. C afedirect <ul><li>39 grower organizations across 13 developing countries </li></ul><ul><li>260, 000 farmers and directly improving the lives of more than 1.4 million people </li></ul><ul><li>Invested more than £3.3 million of profits directly into communities of growers, and paid more than £13 million over and above market prices for the raw material </li></ul>Today
  10. 10. C afedirect
  11. 11. C afedirect
  12. 12. C afedirect 1993 -1995
  13. 13. C afedirect 1996 -1998
  14. 14. C afedirect 1999-2001
  15. 15. Agenda Introduction Social Enterprise Fair Trade Cafédirect Theories Corporate-Reputation Quotient Kano Model Product/Market Grid Case Application Learning Insights
  16. 16. Corporate Reputation Quotient Theory 1 <ul><li>Six drivers of the corporate reputation quotient </li></ul>
  17. 17. Corporate Reputation Quotient <ul><li>Products and Services </li></ul><ul><li>To guarantee high quality </li></ul><ul><ul><li>Cafédirect controlled the produce delivered </li></ul></ul><ul><ul><li>it also invested heavily in training producers on the ground </li></ul></ul><ul><li>Key achievements in 2000 demonstrated Cafédirect’s success in attaining high quality </li></ul><ul><ul><li>“ Best coffee” by Best magazine </li></ul></ul><ul><ul><li>Awarded 5 stars by Prima magazine </li></ul></ul><ul><ul><li>Voted “ favorite coffee” by the UK’s leading consumer magazine </li></ul></ul><ul><li>Fair trade – Direct trade </li></ul><ul><ul><li>By providing long-term contracts and producer education, direct trade allows importers to obtain high quality coffee – year in and year out While most large coffee importers buy coffee beans on the spot market, direct trade has a built-in supply chain for reliable high-quality gourmet coffee. </li></ul></ul>Theory 1
  18. 18. Corporate Reputation Quotient <ul><li>Vision and leadership </li></ul><ul><li>Ian Lepper: Cafédirect’s first CEO. </li></ul><ul><ul><li>After he left, Cafédirect went through some turbulent stages: </li></ul></ul><ul><ul><ul><li>The partnership between the four founding ATOs was being stretched. </li></ul></ul></ul><ul><ul><ul><li>Overall sales in 1998 increased by only 8%. </li></ul></ul></ul><ul><ul><ul><li>The underlying direction of the charity spin-off was unclear. (the interests of business partners, producer groups, grassroots supporters and founders diverged) </li></ul></ul></ul><ul><li>Penny Newman: </li></ul><ul><ul><li>She was a milestone MD of Cafédirect. </li></ul></ul><ul><ul><li>Bring Cafédirect from charity spin-off to ethical business venture </li></ul></ul><ul><ul><li>New vision: reposition Cafédirect as a high quality coffee brand </li></ul></ul><ul><li>Anne MacCaig: Cafédirect’s new Chief Executive </li></ul><ul><ul><li>She has a wealth of business and marketing experience </li></ul></ul><ul><ul><ul><li>She has an economics degree from the University of Birmingham. </li></ul></ul></ul><ul><ul><ul><li>In the past 20 years she has worked with major brands here in the UK and abroad, including Persil and Rolls-Royce plc. </li></ul></ul></ul><ul><ul><ul><li>Most recently, as Ribena’s Marketing Director, Anne led the brand’s strategic turnaround </li></ul></ul></ul>Theory 1
  19. 19. Corporate Reputation Quotient <ul><li>Workplace environment: </li></ul><ul><li>For Cafédirect, employees are their producers (small-holders in the third world) </li></ul><ul><li>Several benefits are provided to its producers </li></ul><ul><ul><li>A minimum price, which will always be paid even if the world market price falls below this point. </li></ul></ul><ul><ul><li>A price premium of a given percentage, which is paid when the world market price rises beyond the minimum price. </li></ul></ul><ul><ul><li>Pre-financing of 60% of the total order to allow small-holders to buy raw materials. </li></ul></ul><ul><ul><li>Training in quality control and marketing know-how to build the capacity to also trade on the world market independently of fair trade. </li></ul></ul>Theory 1
  20. 20. Corporate Reputation Quotient <ul><li>Social responsibility: </li></ul><ul><li>Cafédirect’s mission statement: </li></ul><ul><ul><li>At Cafédirect our mission is to change lives and build communities through inspirational, sustainable business. We focus our social and economic impact in the developing world. </li></ul></ul>Theory 1
  21. 21. Kano Model Theory 2
  22. 22. Kano Model <ul><li>3 categories of quality attributes influence customer satisfaction: </li></ul><ul><li>Basic Factors </li></ul><ul><li>Dissatisfier - Must be’s – Cost of Entry </li></ul><ul><li>Excitement Factors </li></ul><ul><li>Delighter – Latent Need – Differentiator </li></ul><ul><li>Performance Factors </li></ul><ul><li>Satisfier – More is better – Competitive </li></ul>Theory 2
  23. 23. Kano Model Theory 2 Kano Model applied to Food&Beverage industry Factors KANO Category How to do better Sanitation & Safety Basic Needs Keep and have to satisfy customers above the average 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
  24. 24. 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
  25. 25. Kano Model Theory 2 Performance factors Distribution - Target the mainstream distribution channels such as supermarkets, catering, and coffee bars Taste - &quot;Some batches tasted very good and others tasted very poor. That generated a lot of negative reaction in the UK to Cafédirect in the first years.&quot; (Hudghton, 2002, interview) - Cafédirect's Gold Standard Programme - Train growers to professionally taste their own products, helping them to improve quality and understand market value
  26. 26. Kano Model Theory 2 Performance factors Package - Cafédirect undertook a major brand relaunch in 2006 to help unify the brand look and aid it competitiveness
  27. 27. 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)
  28. 28. Product/Market Grid Theory 3 Ansoff Matrix
  29. 29. Product/Market Grid Theory 3 Source: Cafédirect annual report 2006-2007
  30. 30. Product/Market Grid Theory 3 Ansoff Matrix
  31. 31. Product/Market Grid Theory 3 Cafédirect use 3 major approach <ul><li>Encourage current customers to buy more </li></ul><ul><li>Attract competitor’s customers </li></ul><ul><li>Convince non-users to use the product </li></ul>
  32. 32. Product/Market Grid Theory 3 <ul><li>Tesco increased its Cafédirect offering by another five products in 2006 </li></ul><ul><li>Morrison’s expanded Cafédirect range, adding Medium Blend, Organic Decafeninated, Machu Picchu and Palenque Roast etc in 2006 </li></ul><ul><li>At the beginning of 2007, Co-op increased the number of their stores selling Cafédiret’s products. They have agreed a strategy to encourage customers to buy more Cafédirect products this year. (annual report 2007 p.21) </li></ul><ul><li>Keep high quality products </li></ul><ul><li>Emotional approach </li></ul>
  33. 33. 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.
  34. 34. Product/Market Grid Theory 3 Annual report 2005-06 <ul><li>Cafédirect introduce existing products in foreign market </li></ul><ul><li>Hong Kong </li></ul><ul><li>Listing with a major supermarket chain “Parknshop” 50 stores </li></ul><ul><li>Ireland </li></ul><ul><li>Now available in all their major supermarket and many independent stores </li></ul><ul><li>Sales increased by 19% in 2005 </li></ul><ul><li>Paris </li></ul>
  35. 35. Product/Market Grid Theory 3 Annual report 2005-07
  36. 36. 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.
  37. 37. Product/Market Grid Theory 3 Annual report 2005-06
  38. 38. Agenda Introduction Social Enterprise Fair Trade Cafédirect Theories Corporate-Reputation Quotient Kano Model Product/Market Grid Case Application Learning Insights
  39. 39. Nike vs. child labor in the 90s Corporate Reputation Quotient application
  40. 40. <ul><li>  People criticizes: </li></ul><ul><li>“ Nike’s success story is not based on good name and advertising alone but also attached to it is the tears of tortured workers and child labor.” </li></ul><ul><li>“ Nike has the habit of hiding behind its good public image and its effective means of promotions and advertising. “ </li></ul><ul><li>Consumers - &quot; Just don't do it .&quot; </li></ul>Corporate Reputation Quotient application
  41. 41. <ul><li>Nike’s solution </li></ul><ul><li>Code of Conduct,1992 </li></ul><ul><li>Minimum age for employment, 1998 </li></ul><ul><ul><li>Footwear(18), others(16) </li></ul></ul><ul><ul><li>Apply Occupational Safety and Health Administration (OSHA) standard </li></ul></ul><ul><li>Nike set up a Corporate Responsibility and Compliance Department, 2000 </li></ul><ul><ul><li>Join the Global Alliance for workers and communities and Fair Labour Association </li></ul></ul>Corporate Reputation Quotient application
  42. 42. <ul><li>Nike’s Current Code of Conduct </li></ul><ul><li>Prohibition of forced labor </li></ul><ul><li>Prohibition of child labor </li></ul><ul><li>Compensation:pay at least the minimum total compensation required by local law </li></ul><ul><li>Benefits :comply with all provisions for legally mandated benefits </li></ul><ul><li>Ensure overtime payment </li></ul><ul><li>Ensure a health and safety working environment </li></ul><ul><li>Environment: continuous improvement in processes and programs to reduce the impact on the environment </li></ul><ul><li>Maintain on file and documentation to demonstrate compliance with this Code of Conduct, and to make these documents available for auditor's inspection upon request </li></ul>Corporate Reputation Quotient application
  43. 43. Kano Model application
  44. 44. <ul><li>Active Links </li></ul><ul><li>Legibility </li></ul><ul><li>Safety </li></ul>Kano Model application
  45. 45. <ul><li>Storage </li></ul><ul><li>Upload speed </li></ul><ul><li>Tag & Search </li></ul>Kano Model application
  46. 46. <ul><li>Photo Editing </li></ul><ul><li>Community </li></ul><ul><li>Fun </li></ul>Kano Model application
  47. 47. Photo Editing “ Wow, my photos are sharpened automatically”
  48. 48. Photo Editing “ Wow, I can add my own Text and Stickers”
  49. 49. Community “ Wow, I can find something interesting about Hong Kong”
  50. 50. Community “ Wow, this guy is quite popular here”
  51. 51. Fun “ Wow, the way of browsing is cool”
  52. 52. Fun “ Wow, I can explore the world”
  53. 53. Fun “ Wow, they have widgets can be embedded into other sites”
  54. 54. Product/Market Grid application <ul><li>Aggressively expanding the number of stores in Japan </li></ul><ul><li>Strengthening the group’s core brands and maintaining flexibility with regard to distribution channels and retailing formats </li></ul>
  55. 55. Product/Market Grid application The result was a 2.2% increase in net sales to 136,312 million yen
  56. 56. Product/Market Grid application <ul><li>Business Expansion in the Asian and American Markets </li></ul><ul><li>Overseas sales increased 17% year on year 2007 due to the business expansion on China, Taiwan and South Korea. </li></ul>
  57. 57. Product/Market Grid application <ul><li>2005, JILL STUART </li></ul><ul><li>2006, Perfume containing natural fragrances </li></ul><ul><ul><ul><ul><li>Skin care series featuring natural fruit extracts </li></ul></ul></ul></ul>
  58. 58. Agenda Introduction Social Enterprise Fair Trade Cafédirect Theories Corporate-Reputation Quotient Kano Model Product/Market Grid Case Application Learning Insights
  59. 59. 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 “ New Fair Trade” ATOs Style Business Idealistic Skills Sales, Marketing Intellectual Strategy Make money to help Advocacy Values Commercial but ethical Non-commercial Staff Professional Semi-volunteers System Dependable More ad-hoc Structure Performance-based, clear responsibilities Democratic, Political
  60. 60. Learning Insights
  61. 61. Learning Insight -- Student residence canteen in Cityu <ul><li>In previous years, it was owned and manipulated by Women cooperation ( 妇女合作社) </li></ul><ul><li>Women cooperation is a sub-organization of Hong Kong Work Association for Women ( 香港妇女劳工协会), which is a registered non-profit organization. The organization aims at concerning women’s working problem and providing them with working opportunities. </li></ul><ul><li>However, at that time, the situation in the residence canteen was: </li></ul><ul><li>The food was not delicious at all. </li></ul><ul><li>The food quality was quite bad. </li></ul><ul><li>The attitude of the staff towards residence students was annoying. </li></ul><ul><li>Residences complained a lot about the residence canteen. </li></ul>
  62. 62. Learning Insight -- Student residence canteen in Cityu <ul><li>SRO realized this problem, and change the owner from 妇女合作社 to Homey Kitchen. </li></ul><ul><li>It is just like the residence canteen move from pure non-profit organization to more customer-focus. </li></ul><ul><li>This change was proved quite successful. </li></ul><ul><li>Mission of Homey Kitchen: </li></ul><ul><li>To provide residents with healthy and delicious food as well as comfortable service. </li></ul><ul><li>Homey Kitchen provides food and drinks with good quality, and staff attitude is very nice. </li></ul><ul><li>Homey Kitchen does quite a number of promotions, here are two examples: </li></ul><ul><li>EXPRESS Lunch Box: Only $12 can buy you a single entrée and pre-packed lunch box! </li></ul><ul><li>FREE Drink: Come for a free soothing drink after 9pm (while suppliers last) from 28 April to 18 May 2008! </li></ul>