CASE STUDY CAFEROMA I. BACKGROUND AND PROBLEMS 1.

BACKGROUND Caferoma is a well-known coffee brand made by a company called PEFD, based in Turin, Italy. Brand image : Italian-style coffee, exclusive product for people who love ground coffee, has strong and slightly bitter taste, cost more than almost every other ground coffee product on the market. 2. PROBLEMS Market share has declined by almost 30% Consumers have become less loyal to brands and more price conscious (they are rather buying economy brands than premiere brands) Supermarkets are selling ownlabel brands at much lower prices There are lot of copycat products cheaper Italianstyle brands that have established themselves as a strong competition to highend brands like Caferoma. Caferomas brand image seems to be outdated, no longer exciting and new. DESCRIBING CAFEROMAS PROBLEMS BY USING THE DATA IN GRAPHS Caferomas market share has declined substantially in the last year. In comparison with Caferoma, top five European coffee brands have increased their market share significantly. Other coffee brands on the market have been holding their market position strongly, showing no significant increase in market share.

Supermarket ownlabel brands are also maintaining their market share stable showing no changes in the last year.

When compared to the situation two years ago, it is evident that Caferoma reduced its sales in the last year.

The strongest decrease in sales is evident in the percentages of sales in supermarkets where sales of Caferoma fell by almost 20 percent.

Sales in hotels also show a slight decrease by less than 10 percent, althougT the situation is not as serious as in supermarkets. Although the sales in restaurants and specialist shops had been low even two years ago, in the last year they showed a slight increase in sales, particularly specialist shops which report a moderate increase of slightly over 10 percent in last year.

II. SOLUTIONS Solutions Main ideas Repositioning Change the product Caferomas image to appeal to a different market segment. Pricing Advantages Disadvantages Make the Its difficult to product more change to make exciting to attract new exciting more people image and cost a because current lot of money to Caferomas create. Perhaps image is said to lost current be old-fashioned customers by new and boring. image. Reduce the Many people It maybe price by, say, said that decrease profits. 20% to 30% so caferomas that it is in the product is nt medium range value for money of prices. while competing products are selling at prices 30 to 40% lower than it we need to reducr the price Develop a new Provide It costs a lot advertising Information to the of money to campaign to customer succeed in relauch the advertising a Attracting brand. product. huge number of potential

Advertising

Multiple brands

Own brand label products

A new product

Sell Caferoma, with small changes to product, under different brand names at lower prices. Allow supermarkets and hypermarkets to sell Caferoma under the supermarkets own brand labels. Continue to market the Caferoma brand at the same time. Bring out an instant coffee or decafffeinated product under the Caferoma brand as soon as possible.

customers and make positive impact about products. Lead to direct feedback from customers to improve product Make people have many choices to sastifice their different taste. Increase sales, quantity of new customers. Use the advantage of supermarkets brand. Attack psychologically using new brand of customers.

The company can not focus on main product and quality maybe go down. The customer never know products that they are using are caferoma brandlost caferoma brand gradually Share profit with the supermarkets. Competition between two labels.

Stretching

Allow some

Using available brand caferoma Using old distribution system save costs. Widen many market segments respond customers needs. Advertise

New product: customer need time to receive. Difficulties in competing with available products in market. Its not strength product of caferoma. Few makers

the brand

makers of coffee equipment ( cafetieres, percolators, coffee machines, etc.) to use the Caferoma band on their goods, for a licensing fee.

brand to many customers.

of coffee equipment accept. They dont want to advertise another product on their products.

III.

CONCLUSION Create a new coffee with a new taste and a new name will be allowing launching Caferomas brand image and reputation in the market that will show improved features such as quality and pricing.. To introduce the new coffee it will be good to have a limited edition (maybe coffee with taste of chilli). It is necessary to create a new package with an exlusive design for example in gold. Furthermore we give special introduction prices for both coffees. Most people want to try out new brands just to know how it tastes - this is our advantage. In order to bring the old brand back to life, will be a good idea to give small additional samples on the new coffee package . Moreover we need a new design of the logo, as the old one is boring. There is no relation between this logo and the exclusive taste oft the coffee. Maybe it could be similar to the package of Caferoma (golden, italic type). The next step will be a change of adversiting. It is necessary to find the typical Italian style for old and young people. Advertising will help in communicating, meeting and gaining contracts from customers due to better pricing and quality before competitors are taking over.

POSSIBLE SOLUTIONS o Repositioning the product changing the brand image to appeal to different market segments. o Reduce the price to reach the medium price range. o Create new advertising campaign relaunch the brand. o Sell Caferoma under different brand names at lower prices o Allow supermarkets to sell Caferoma under their own brand labels o Create a new product under the Caferoma brand introduce instant coffee or decaffeinated coffee under the Caferoma brand name. o Allow makers of coffee equipment to use Caferoma brand on their goods for a licensing fee goods like cafetieres, percolators, coffee machines, cups, coffee mugs, sugar bags, etc.

From:

To: Mario Cumino

Subject: Action Plan for Caferomas Problems

Dear Mr. Mario,

The below are the predetermined along with possible solutions for discussion in the meeting that will definitely solve Caferomas Problems:

Action
1) New

Advantages Improve current image

Disadvantages Requires aggressive marketing Shrink in profit margin Expensive

Impact Gain market share Gain market share and profit Gain market share and sales Understand

Product
2) Pricing

Attract price conscious customers 3) Advertising Launch new product and communicate with the customers 4) Survey Customer input 50% lower

Time-consuming

customer needs The reasons for the above actions are that the current product resulted in loss of business and downsize in market share. Moreover, there are no potential sales or increase of profits. There will be no potential sales increase with the continuation of the current product due to previous decline in sales in restaurants, shops, hotels, and supermarkets.

The new product will be allowing launching our brand image and reputation in the market that will show improved features such as quality and pricing. The pricing lowering to 50% will make sure that it is meeting positively price consciousness of the customers because competitors are 30-40% lower than us. Advertising will help in communicating, meeting, and gaining contracts from customers due to better pricing and quality target all chain of customers before competitors are taking over. It is very important and essential to understand in detail and in specific about customer needs and wants before designing and launching new product, which is only possible to obtain by means of survey.

Thank you. Kind regards,