04. discussion week 4

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Johnson and Wales University *

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Marketing

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Feb 20, 2024

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Come up with a name for your coffee shop and provide a rationale for suggesting that name. A great coffee shop name should be unique and short. The name should convey the brand, and personality and help supply what the customers should expect to eat or drink from the location (Snaiderman, 2022). For this reason, I am using the name “Roastery”. In my opinion, it has great brand appeal, it displays the style of the shop and it has a personality. We will sell a premium blend of coffee from small farmers around the world, to go with the upscale name. Considering your unique brand position, that you can understand from the description above, how would you arrive at prices for your coffee? How important are EACH of the 4 Cs (costs, competition, customers, company strategy) for in determining pricing for the products you sell? The four Cs play a significant role for any business to thrive. The location depends on the customer base and competition. "4C success starts with knowing your target customer and identifying their needs and wants. Then you can respond with products or services that they feel are valuable and watch sales skyrocket" (Pratt, 2013) Customers: Customers are the basis for all businesses and knowing your clientele and tailoring your business to them is important. “One study from Forbes stated that 86% of customers would pay up to 25% more to get a better customer service experience. A solid customer experience that focuses on the individuality of the target audience will create loyal followers” (RCM solutions, 2020). The goal of “Roastery” would be to provide exceptional customer service. The staff would be exquisitely trained on where the coffee came from and the individual notes of each style or blend ensuring that customers get the exact flavor of coffee they are looking for to make every morning or afternoon. Cost: “Customers make judgments about pricing based on perceived value, not production costs” (Burnett, 2011). Considering the coffee shop’s style is an upscale roastery with incredible customer service, selling premium coffee, the location and price are important. We will need to be in a moderate to an upscale neighborhood that can afford the product price point. Competition: “Starbucks’ competitive advantage is based on its strategy of product differentiation, which makes the brand stand out from its rivals in 2022” (Thomas, 2021) . The “Roastery” will be a product, unlike the other local coffee shops, offering a premium blend of coffee from small farmers around the world. This will make us stand out from the local competition. The “Roastery” would be positioned somewhere that is not overly saturated with coffee shops in a moderate to upscale neighborhood. Company Strategy: “Once a business has segmented its marketing and identified the target audience, the next stage is to position the business” (Hanlon, 2020). Creating a business strategy is essentially creating a roadmap for achieving your business goals and setting the business priorities and decisions into action. The business strategy would be based on the overall vision for the company.

Consider the pricing objectives and strategies (see our textbooks description of pricing objectives and strategies which start on p241) - what are your objectives as a new shop and what is your pricing strategy (long-term)? Explain your rationale. “ Firms rely on price to cover the cost of production, to pay expenses, and to provide the profit incentive necessary to continue to operate the business. We might think of these factors as helping organizations to: (a) survive, (b) earn a profit, (c) generate sales, (d) secure an adequate share of the market, and (e) gain an appropriate image” Burnett, 2011. My objectives as a new shop are to survive, earn a profit and generate sales. Unfortunately, passion isn’t enough to beat out our competition. Talent and skill are just as crucial. As the “Roastery” is an upscale coffee shop providing a premium blend of coffee made from small farmers I will also be utilizing CSR marketing (corporate social responsibilities) in our branding. “By showing that your business cares about social and environmental concerns, you convey what values you uphold” (indeed, n.d.). Because of this, we will include in our marketing to talk about the small farmers and the products that they produce. Millennials place a premium on corporate social responsibility (CSR) efforts (Center for Social Impact Communication, n.d.). Millennials are our target market. Our customers would be choosing their coffee seeking premium coffee, helping small farmers. Therefore, the pricing strategy I would choose for the business is value-based pricing. "Value pricing is customer-focused pricing, meaning companies base their pricing on how much the customer believes a product is worth" (Bloomenthal, 2019). Propose an average price that you will charge for a cup of coffee. And then, assume the following factors - the average variable cost for all coffee sold is 15%; fixed costs for the shop in NYC = $50,000/month, and determine how much coffee you need to sell, at the average price per cup you're recommending, to breakeven (i.e., cover all costs) for a month? Fixed Cost: 50,000 Unit Price: $4.25 Variable Cost: 0.6750 Break-even point = 50,000 / (4.50 - (4.50 x 15%) = 50,000 / 3.8250 = 13,072 units per month

References: Burnett, J. B. (2011). Introducing Marketing. BCcampus. Snaiderman, D. (2022, May 27). How to Choose a Cafe Name + 50 Cafe Name Ideas to Inspire You (2022). On the Line | Toast POS. Retrieved July 28, 2022, from https://pos.toasttab.com/blog/on-the- line/cafe-names Thomas, M. (2021, November 23). Starbucks Competitive Advantages (9 Different Factors). QuerySprout. Retrieved July 28, 2022, from https://querysprout.com/starbucks-competitive-advantages/ Hanlon, A. (2020, December 22). 4Cs marketing model: 2 models with the same acronym. Smart Insights. Retrieved July 28, 2022, from https://www.smartinsights.com/marketing-planning/marketing-models/ 4cs-marketing-model/#:%7E:text=The%204Cs%20(Clarity%2C%20Credibility%2C,of %20Marketing’%20(2009). Center for Social Impact Communication. (n.d.). Corporate Social Responsibility Matters: Ignore Millennials at Your Peril. Retrieved July 28, 2022, from https://csic.georgetown.edu/magazine/corporate-social-responsibility-matters-ignore-millennials-peril/ indeed. (n.d.). What Is Corporate Social Responsibility? Retrieved July 28, 2022, from https://www.indeed.com/hire/c/info/what-is-corporate-responsibility? gclid=Cj0KCQjw54iXBhCXARIsADWpsG9727GZoRiGRXnZ9DcR9VQ-8lf6oqKnW6711gGrn- 8rXG5Oq66vmrgaAnNXEALw_wcB&hl=en&aceid=&co=US rcmsolutions. (2020, May 29). Why a tailored customer service approach is worth it | Prosper RCM Solutions. Prosper. Retrieved July 28, 2022, from https://www.prosperrcm.com/why-a-tailored- customer-service-approach-is-worth-it/ Bloomenthal, A. (2020, August 28). Valuing Value-Based Pricing. Retrieved from https://www.investopedia.com/terms/v/valuebasedpricing.asp Pratt, M. (2020, April 09). Why the 4C's Marketing Model is Good for Business. Retrieved from https://www.business.org/marketing/sales/4cs-marketing-model- good-business/

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04. discussion week 4

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