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- Who are your customers? Define your target market(s).
- Are your markets growing? Steady? Declining?
- Is your market share growing? Steady? Declining?
- If a franchise, how is your market segmented?
- Are your markets large enough to expand?
- What pricing strategy have you devised?
- How will you attract, hold, and increase your market share? If a franchise, will the franchiser provide assistance in this area? Based on the franchiser’s strategy, how will you promote your sales?
The Competition
Competition in the specialty coffee and tea segment of the beverage service industry is fierce. Because of the volatility and competitiveness in this area of the beverage market, it is vital that you know and understand your competitors. Questions like these can help you stay ahead of the competition:
- Who are your five nearest direct competitors?
- Who are your five nearest indirect competitors; for example, gourmet coffee, and tea retail stores?
- Are their businesses steady? Increasing? Decreasing?
- What have you learned from their operations? From their advertising?
- What are their strengths and weaknesses?
- How does their menu or service differ from yours?
Create a file on each of your competitors containing examples of their advertising, promotional materials, and pricing strategy techniques. Review these files periodically, determining when and how often they advertise, sponsor promotions, and offer sales. Study, for example. Is their copy is short, descriptive or catchy? Do they reduce prices for certain promotions?
Pricing and Sales
You can use your pricing strategy to improve your overall competitiveness. Get a feel for the pricing strategy your competitors are using. That way you can determine if your prices are in line with your competitors and if they are in line with specialty coffee and tea service industry averages. Pricing considerations should include:
- Beverage and food menu cost and pricing
- Competitive position
- Pricing below competition
- Pricing above competition
- Price lining
- Multiple pricing
- Service components
- Material costs
- Labor costs
- Overhead costs
The key to success is to have a well-planned strategy, to establish your policies, and monitor prices and operating costs constantly in order to ensure profits. Even in a franchise where the franchiser provides operational procedures and materials, it is a good policy to keep abreast of the changes in the marketplace, because these changes can affect your competitiveness and profit margins.
Advertising and Public Relations
Many owners of retail beverage outlets operate under the mistaken concept that the business, its products, and service will promote itself, and end up channeling money that should be used for advertising and promotions to other areas of the enterprise.
Advertising and promotions, however, are the lifeline of a business and should be treated as such. We have devoted a whole chapter to marketing and promoting your coffee, espresso, and tea shop ( see Chapter 16: Internal Marketing:
How to Keep Customers Coming Back to Your Establishment ). Develop a plan that uses advertising and networking as a means to promote your specialty beverage business. Create short, descriptive copy (text material) that clearly identifies your beverages, services, prices, and your shop’s location.
Use catchy phrases to arouse the interest of your readers, listeners, or viewers. In the case of a franchise, the franchiser will provide advertising and promotional materials as part of the franchise package; you may need approval to use any materials that you and your staff develop.
Even if this is not the case, as a courtesy, allow the franchiser the opportunity to review, comment on, and, if required, approve these materials before using them. Make sure the advertisements you create are consistent with the image the franchiser is trying to project. Remember, the more care and attention you devote to your marketing program, the more successful your coffee, espresso, and tea shop will be.
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