CASE STUDY  

Michael's Caf recently made a change to their product by switching to a coffee bean blend of their premium exotic beans and a lower standard non-organic bean that is low cost. This will reduce their expenses. They also engaged a marketing consultant to develop an advertising campaign to help boost their sales and increase their loyal customer base. The campaign was based on suggesting that their premium exotic coffee beans will increase metabolism leading to weight loss. At the end of the second week of the campaign several customer complaints have been made, suggesting false advertisement and their weekly sales have dropped. There has also been a steep decline in the number of loyalty program customers being served.

Extract from Michael's Caf Marketing Plan:

Marketing Objectives

Grow total sales by 10% annually

Build customer loyalty through customer service experience and by offering a premium product

Target Market

Office Workers - many local Government offices

Health Professionals - from nearby Hospital and medical suites

Public Transport consumers - from nearby train station and bus junction

Positioning

Michaels' Caf will position itself as an upscale coffee house. Their coffee beans are a premium exotic blend not seen in the local area before, and the food that they cook, and sell is organic and caters to several allergies.

Marketing Mix

Michaels' Caf marketing efforts will focus on building a loyal base of customers that will buy and drink their coffee on an almost daily basis. Product/Service

Michael's Caf will sell an organic premium exotic coffee in a cup with Michael's Caf and the bean brand names and logos.

Michael's Caf will only sell food that is organic in nature and will cater for common allergies such as gluten-free, dairy free, nut free, etc.

Michael's Caf will ensure its staff are trained and educated to the industry standard Master Barista within three months of their employment commencement so to give their customers an unforgettable coffee experience. Pricing

Michaels' Caf applies a premium pricing strategy to its coffee beverages. There are several cafs in close proximity that sells similar product but do not have a premium product. They apply a combination of cost-based and psychological pricing strategies for the food they cook on site.

Promotion

Michaels' Caf will spend $1,000 on promotion and advertising per year. Promotion will focus on the local market and building a loyal customer base.

Specific marketing efforts will focus on:

Sales promotion - loyalty incentives - buy 5 coffees get the 6^th one free.

Advertising - printed material for local area and shop front promoting exotic coffee beans

Place

Michael's Caf will sell their product from their Queen St premises. As a competitive advantage, we will open at 5.30am and close at 5.30pm. Other local cafs do not offer these extended hours.

1.Read Michael's Caf Marketing Policy and the case study and outline how the Caf has not complied with their own policy.

2.Discuss the success of the advertising campaign, outlining why sales and loyalty program customers might have dropped.

3.Assuming that Michael's Caf is going to stay with the coffee bean blend mentioned in the case study, suggest changes to the marketing mix to meet the change in product.

4.Discuss how would you monitor the marketing mix. Be specific in your answer as to what methods you would recommend for monitoring the marketing mix.

5.Evaluate how these changes will impact Michael's Caf's marketing objectives, customer base and the desired position.

6.Briefly discuss what budget will be required for adjusted marketing mix.

7.Submit your report to your assessor.

8.Deliver a 15-20-minute presentation on topic "Methods to monitor and adjust marketing mix"