A&A Coffee: Leading Manufacturer And Retailer Of Quality Coffee In Australia

Mission Statement and Vision

The mission statement of A& A coffee was “to be the leading manufacturer and retailer of quality coffee in Australia” which has now changed to “to inspire human spirit by one coffee a day by becoming leading manufacturer and retailer of quality coffee in Australia”.

The organisation’s vision is to explore the market in equipment as well as in raw coffee and pods. The vision is to retain market share in the distribution of its A& A hardware and to retain market share in the sales of it consumables. The company wants to develop 10% market share of the café retail business.

The purpose of the company is very clean and extensive. The company specialises in selling superior Roubust A & Arabica coffee beans (Bunn, Läderach, Rivera & Kirschke, 2015). They also sell espresso machines and accessories. The company has now included brewed coffee in its product range and now rebrands the running café’s and not the coffee products.

A & A believes in having a dedicated work force and therefore the staffs strive to improve continuously. They respect and support each other. They also have an ownership in their work (Strom, Sears & Kelly, 2014). They also look forward to satisfy their customers and hence follow few more core values like,

• Finding new ways to grow our company and doing it with the help of work force.
• Delivering our very best in all we do.
• Creating a culture of warmth and belonging across the organisation.

A & A has developed a loyal client base and has long-serving staff members. The company has never sought to sell franchises and hence the store managers report directly to Head Office (Aghdaie & Alimardani, 2015). On the basis of the market facts and competitors in the market the company made an analysis of its current marketing statistics. It was observed that in the mid of 2014, the company’s performance began to decline. It was also seen that in September, the revenue growth was negative for the first time in the company’s history. The reasons concluded were changing customer tastes, the rising costs and an increasingly competitive retail coffee market. From the competitor market performance report it was seen that in 2013, A & A ‘s market share were 25.3% while in 2014 it was 20.6% but in 2015 it was only 15.9% and hence it is seen that the market share is declining year by year.

From the evaluation of A & A and the industry growth it was seen that in 2010, A & A’s year market growth was at 20.29% but in 2015 it declined to 15.90%. By the current market trend, it was also seen that the most demanded product is in-store and take aways and capsules. And the in store and take away products consumed of A & A was just 40.3% while the consumption of capsules was 16.4%.  It was also observed that the two competitors of A & A are Roasted Amigos and Mocha Del Mar which seem to have the highest jump over the last two years due to their successful R & D strategies.

Product Range and Specialization

The company has decided to increase the sales of the company and is trying to improve its reputation in the market. Various measures the company will be taking include different aspect i.e. in terms of product range and competitors. The management will be launching a counterattack to its main competitor by including in its product range brewed coffee using a variety of its in store raw coffee beans. This will not only help in retaining the current customer base but will also help in regaining the brand image (Amos, 2016). The company will be expanding its retail initiative across Australia over the next year. Along with this, the company will be totally rebranding the products by focussing more on the running café’s and not on the coffee products. They have also decided to revise the consumable product range and are removing the products which do not have any potential. And the management advised to get out of the equipment i.e. espresso machines altogether.

A & A Coffee is a chain of retail specialist coffee shops, which is owned by A & A Group. A & A now operates 22 stores along the five states of Australia. The company specialises in selling superior Robust A & Arabica coffee beans and has its own coffee roaster facilities. A & A also sells espresso machines and accessories and manufactures both machines and capsules.

Strengths:

1. The main strength of A & A Coffee is its work force which continuously strives to perform well. They help and support each other and every time shows the feeling of ownership (Clarke, Friese & Washburn, 2015).
2. As the company excel in equipment’s as well in raw coffee and pods therefore it can easily afford to price its products in the premium as well as middle tier range so that any type of customer can afford it (Nagle, Hogan & Zale, 2016).
3. The company has strong financial performance in all sectors of coffee; the company is valued at more than $5 billion.
4. The company is known in the market because of its brand, and for providing quality at an affordable rate.
5. The employees of A & A Coffee are provided with many perks. The company is also known for different types of products with a wide product line (Armstorng, Kotler, Harker & Brennan, 2015). For now, the company’s product line includes:  capsules, instant& flavoured coffee jars, single-serve coffee sachet, ground coffee beans and bags along with bottled coffee drinks.

Weaknesses:

1. Recently, the company was accused practising unethical marketing practices where it ran an advertising promotion and was offering an incentive to buy bulk and was unable to supply the products (Crane & Matten, 2016).
2. A big market of the company is dependent on the coffee producers like El Salvador, Colombia, Kenya and Indonesia and hence any problem from the producer’s side creates a problem for the company also.
3. The companies equipment market i.e. the espresso machines business is declining day by day and hence is a drawback for the company.
4. The company has limited stock levels of certain products leading to a lack of variety in the outlets.
5. There was also incorrect pricing on a leaflet drop in key locations which confused customers about the prices.

Opportunities

1. The company has an opportunity to expand its producer’s network and expand the range of producers from whom it sources products. This will help the company in becoming less sensitive to the prices of the products of the few suppliers.
2. The company can leverage the use of the new technologies to attract more number of customers. As people are getting technology oriented (Westerman, Bonnet & McAfee, 2014).
3. Apart from limiting the business in Australia, the company can expand its business into new emerging markets to catch more people and increase the profitability.
4. With the information received on SIMRA reports, the company knew the problems and hence can now focus on customer’s tastes and preferences.
5. The company can understand the trends and developments in the macro environment and can easily make changes in the products on basis of these trends.

Threats

1. As the company used unethical marketing practices where it ran an advertising promotion which was against the code of conduct of the company and hence the brand image is in problem (Trevino & Nelson, 2016).
2. The company also faces threats from the rising prices of the machines from the producers of the company and is a risk which is related to fluctuations in the prices.
3. The company faces intense competition from other coffee retailers and hence to discriminate its products and must develop new product range (Chintagunta, Qin & Vitorino, 2017).
4. The company has to expand into emerging markets as a necessity as the developed markets are growing day by day and it is getting for the company to survive in the market.
5. The incorrect pricing on a leaflet drop in key locations created a problem for the company as it has to revise its prices again and have to seek customer satisfaction.

The core ethical principles of A & A coffee is outlined by the Australian Responsible Children’s Marketing Initiative(RCMI) which is basically regulated by Australian Food & Grocery Council(AFRG)which makes sure that the quality of the products is good i.e. healthier products are being promoted to children.

The aim of RCMI is to reduce the advertising and marketing to children for food and drinks which are not healthy. This also includes advertising and marketing to children to promote healthy eating. A & A Company can only advertise healthier choices to children which encourage healthy lifestyle, and is not allowed to advertise and market to children in Australian schools until and unless they are asked by the school.

As a member of the Australian Market and Social Research Society (AMSRS), A & A is bound by the Code of Professional Behaviour, which covers both the ethical and requirements and standard conditions of conducting and reporting market and social research (Moody’s, 2015). According to this code, the market and social research cannot directly sell and promote the goods and services. This code is outlined for three basic areas which are,

• Researchers and clients mutual rights and responsibilities
• Responsibilities to respondents
• Researchers professional responsibilities

Core Values and Customer Satisfaction

A&A follows the code which provides practical guides to achieving the standards of health, safety and welfare required under the Work Health and Safety (WHS) ACT and WHS regulations. This comes under Model Codes of Practice which is a practical guide to achieve the standards of health and safety required under the model WHS Act and Regulations.

To ensure lawful marketing practices, A & A aligns its core marketing operations and activities with the legislative instruments contained in the following acts and regulations:

Age Discrimination Act 2004– Discrimination on the basis of age – protects both younger and older Australians (Cascio, 2018) .

Also includes discrimination on the basis of age-specific characteristics or characteristics that are generally imputed to a person of a particular age.

Australian Human Rights Commission Act 1986- (Australian Human rights commission, 2016)

Discrimination on the basis of race, colour, sex, religion, political opinion, national extraction, social origin, age, medical record, criminal record, marital or relationship status, impairment, mental, intellectual or psychiatric disability, physical disability, nationality, sexual orientation, and trade union activity.

Fair Work Act 2009-

Discrimination on the basis of race, colour, sex, sexual orientation, age, physical or mental disability, marital status, family or carer responsibilities, pregnancy, religion, political opinion, national extraction, and social origin (Regan & Lee, 2015).

A & A Coffee is a chain of retail specialist coffee shops which is owned by A & A Group. A&A opened its first store in Hornsby, NSW, in 1992 and I now operating over 22 stores along the five states of Australia. The mission statement of the company is to inspire human spirit by one coffee a day and by becoming leading manufacturer and retailer of quality coffee in Australia. The company carries a vision to retain market share in the distribution of its hardware’s and in the sales of its consumables.

It was observed that in the mid of 2014, the company’s performance began to decline. It was also seen that in September, the revenue growth was negative for the first time in the company’s history. The reasons concluded were changing customer tastes, the rising costs and an increasingly competitive retail coffee market. The management will be launching a counterattack to its main competitor by including in its product range brewed coffee using a variety of its in store raw coffee beans. This will not only help in retaining the current customer base but will also help in regaining the brand image. The company will be expanding its retail initiative across Australia over the next year. Along with this, the company will be totally rebranding the products by focussing more on the running café’s and not on the coffee products. They have also decided to revise the consumable product range and are removing the products which do not have any potential. And the management advised to get out of the equipment i.e. espresso machines altogether.

Market Share and Competitor Analysis

The company’s strength is its workforce because it continuously strives to perform well. While the company’s weakness is that the equipment market business which is declining day by day. And the company was accused practising unethical marketing practices where it ran an advertising promotion and was offering an incentive to buy bulk and was unable to supply the products. The company has an opportunity to expand its producer’s network and expand the range of producers from whom it sources products. This will help the company in becoming less sensitive to the prices of the products of the few suppliers (Tseng, 2014). The company faces intense competition from other coffee retailers and hence to discriminate its products and must develop new product range.

The core ethical principles of A & A coffee is outlined by the Australian Responsible Children’s Marketing Initiative (RCMI) which is basically regulated by Australian Food & Grocery Council(AFRG). As a member of the Australian Market and Social Research Society (AMSRS), A & A is bound by the Code of Professional Behaviour. A&A follows the code which provides practical guides to achieving the standards of health, safety and welfare required under the Work Health and Safety (WHS) ACT and WHS regulations. A & A aligns its core marketing operations and activities with the legislative instruments contained in the following acts and regulations: Age Discrimination Act 2004, Australian Human Rights Commission Act 1986 and Fair Work Act 2009.

It was observed that in mid-2014, the performance of the company began to decline as observed from the given graph. It was also observed that in September, the year-on-year revenue growth was negative for the very first time. The reasons for the decline were changing customer tastes, rising costs and an increasingly competitive retail coffee market.

A brief analysis of the market performance of competitors and A & A was made and showed considerable downward trend of the company.

A brief analysis showed that A& A has many marketing opportunities as described

This graph shows the performance of major products between 2010 and 2015. Hence, A & A should consider introducing new, more profitable, health-conscious, sustainable and convenient products to meet the needs of the market.

Depending on the market trends and developments, A & A should consider following marketing strategies:

• As Australians have been shifting to a healthy-living lifestyle, hence A& A Coffee can introduce new products to meet the needs of the market (Gilson, 2014).
• As new products are getting launched by competitors, A& A can launch more products at lower costs.
• As observed from the graph and the table, prices for hot beverages are falling in the capital cities and hence the company can expand to the West Coast.
• The company can retire less popular products and introduce new, profitable products.
• The company can penetrate these new products into giant supermarkets for example, Coles, Woolworths, ALDI, etc.

The two major products of A & A Coffee Company which are in trend according to the Statistical International Marketing Research Agency are in store or take away and Capsules.

Strategies to Increase Sales and Reputation

In-store or Take Away-

In this, the coffee is sold by brick and mortar coffee shops where consumers may choose to enjoy their coffee in the shop or as take-away.

SWOT analysis of in-store or take away:

Strengths

1. The number of customers visiting is more as the shops are appealing.
2. Take away is in trend as it lessens wastage of time and the customers can enjoy their meal anywhere they want to.
3. This facility is more feasible for travellers and hence the foot fall of customers is more.

Weaknesses

1. If the service provided at the shop is not good the customers gets disappointed and hence do not visit the café again.
2. The staffs engaged in take away have to be fast and precise in their work.

Threats

1. The competitors provide instant healthy coffee products which is a threat to A&A.
2. The competitors cover a large area of Australia and hence customers prefer shops which are near to their location.

Opportunities

1. A& A can increase the number of coffee shops in the country.
2. They can also launch new products to increase profitability and can attract more customers easily.
3. The staff members can work collectively and provide good service for take away and can gain customer satisfaction.

Capsules:

Capsules are disposal plastic or aluminium container which contains ground coffee and is designed for special pod-coffee making machines in order to brew a single serve of drinkable coffee.

Strengths

1. These capsules are compatible with the coffee machines which are sold by global providers and A&A many famous producers of machines.
2. These capsules are sold in giant supermarket chains which include Woolworths, Coles, ALDI and IGA and all around Australia and hence make profit for the company on a large scale.
3. As the sale is high, therefore the company lowers the cost of capsules which is beneficial for the company in long-term.

Weakness

1. The sale of the products totally depends on the producers of the machine and if they do not send the equipment’s on time the sale is stopped.
2. As the sale gets high, it is getting difficult for the company to manage the quality of the products.

Threats

1. There are many competitors who have capsule products and hence the company has to cover a good market range.
2. The competitors have made a lower price range of these products.

Opportunities

1. The company can increase the product range of capsules to capture a great range of market.
2. It can also reduce the prices of the products as compared to the prices of the competitors to attract more customers (Huck, Lünser & Tyran, 2016).
3. The sale of the products totally depends on the producers of the machine and if they do not send the equipment’s on time the sale is stopped.

Identify viability and contribution to the business

The cost of the two products over a three-year period of A & A which are described above is $0.74/capsule and $4.50/serving respectively. The revenue over a three-year period of the above mentioned two products is approx. $500 billion. The costs and revenue will use the spread sheet technology i.e. the tool will be Microsoft Excel.

The most preferable product from the two analysed based on its fit with the organisation is capsules. The capsule products are preferred over in-store and take away products because capsule products cover a wide range of market.

 It will benefit the organisation in many ways like; they will be able to use the coffee machines which they buy from the globally famous producers (Mackey, Perrewé & McAllister, 2017). As they cover wide range of market hence the company can easily set up shops all around Australia which will help it in making profits. The sales of these products are high and hence the company can lower the cost of the products which is beneficial for the company in long-run.

Along with this, there are many weaknesses of capsule product i.e. as the sale of these products totally depends on the producers of the machine therefore the whole depends on them. Also, the sales are getting high and hence the company is not able to manage the quality of the products. Therefore, the company is revising the product range and is trying to get out of these equipment’s so that they can focus more on the product range.

Strategic objective for a 3 year-period of in –store and take away products are:

1. Maintain profitability- The Company is about to make a balance between revenues and the expenses. As the company is investing more on the interior of the shops and is launching new shops therefore it is analysing the amount it is able to invest to maintain profitability.
2. Increase share of market- The Company is focussing on selling to more customers i.e. the focus is on attracting new customers and retaining the older ones. And hence it is going to increase its market share. It will be opening new shops and cafes to cover more areas of Australia.
3. Making staff more productive- As the workforce of the company is already good. But still to gain more customer satisfaction, the company is investing in extensive tools to make the staff more productive.

Strategic objective for a 3 year period of capsule products are:

1. Improve research and development- As the number of competitors is more, the company will be focusing on specific innovation. The number of sub products of capsules is more and hence it is improving the innovation on one product line over another.
2. Best value for the cost- The market share of these products is more and hence the company is focusing on managing lower costs at high quality.
3. Improve customer retention- The Company is setting measures and projects around these products which will help in retaining the old customers (Agnihotri, Dingus & Krush, 2016).

Strategic objective for 1 year-period of in –store and take away products are:

1. Improve customer satisfaction- The Company is trying more to improve customer satisfaction by providing good services to the customers. The company is focusing around few particular areas of satisfaction specifically.
2. Reduce error rates- As the number of products available in store are more and take away therefore the chances of error is high. The company is focusing on ways to reduce these errors so that the customer gets right order.
3. Improving reporting and transparency- The way company reports is changing so that it can do better cost accountings. It is also adapting ways to create transparency between the products and the customers.

Strategic objective for 1 year-period of capsule products are:

1. Manage cost- As the number of capsule products is more the cost is low hence, the company is trying to manage between the costs of the business and the cost of the products provided to the customers. A manage is necessary to gain profitability.
2. Increase reliability of operations- The Company is encouraging management to have a look at investments and is making changes in processes which can increase the reliability.
3. Improve productivity- As the demand of these products is more, therefore the company is taking measures to increase productivity by encouraging staff to work more.

It was observed that in the mid of 2014, the company’s performance began to decline. It was also seen that in September, the revenue growth was negative for the first time in the company’s history. From the competitor market performance report it was seen that in 2013, A & A ‘s market share were 25.3% while in 2014 it was 20.6% but in 2015 it was only 15.9% and hence it is seen that the market share is declining year by year. The company can understand the trends and developments in the macro environment and can easily make changes in the products on basis of these trends. And as the company used unethical marketing practices where it ran an advertising promotion which was against the code of conduct of the company and hence the brand image is in problem.

Strengths, Weaknesses, Opportunities, and Threats (SWOT Analysis)

The main risk of A & A coffee company is financial risk which includes changes in price of commodities and producers, along with changes in market prices or internal failures of business such as staff, system and processes (Wook, Beresford, Pettit & Rodrigues, 2016). A & A coffee company has adapted different risk management strategies like,

1. Analysing the market strategies and reports of the competitors to understand the market prices.
2. Proper training of employees on how to handle the equipment. And making them understand how to resolve problems of the customers.
3. Proper advertising and branding of the available products.

According to the surveys, it was concluded that majority of the consumers drink coffee because they enjoy the taste and need caffeine to stay focused. And consumers select a particular coffee product because of its feasibility and ease of maintenance. The stakeholders analysed the report of Statistica International Marketing Research Agency and concluded that there are many factors which are affecting the sales of the company and hence it is declining. The two competitors i.e. Roasted Amigos and Mocha Del Mar have adapted many strategies to take over the market. Roasted Amigos has launched products which are more convenient solution for people and has taken over the market and hence A & A’s business is declining.

Therefore, the company has adopted marketing objectives which are of both long range and short range. These objectives are developed on the basis of the feedbacks received from the stakeholders and the report of Statistica International Marketing Research Agency. These objectives include maintaining profitability of the company, and increasing share of market all over Australia. The operations of the company have to be analysed and re arranged to increase reliability. The more focus is on making staff more productive by inventing tools which will make them more productive.

The company is taking measure to deliver the best value for the cost and in improving redundancy and transparency between the customers and the products. Next main focus is on providing good customer services to achieve customer satisfaction. This will help in retaining the old customers and in attracting new customers. For products which are in huge demand, the company has made adaptations to manage their costs and to improve its productivity. Other measures taken by the company includes:

• To regain the brand image the company has decided to include brewed coffee in its product range by using a variety of it’s in store raw coffee beans.
• Total rebranding of the product by focusing only on running café’s and not on coffee products
• Revise the consumable product range and remove those which don’t have potential.
• It is not getting out of the espresso machines market.

The main risk of A & A coffee company is financial risk which includes changes in price of commodities and producers, along with changes in market prices or internal failures of business such as staff, system and processes. A & A coffee company has adapted different risk management strategies like,

1. Analysing the market strategies and reports of the competitors to understand the market prices.
2. Proper training of employees on how to handle the equipment. And making them understand how to resolve problems of the customers.
3. Proper advertising and branding of the available products.

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Ethical Principles and Codes of Conduct

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