Marketing – Company Analyz
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A lot of people know that Swedish people is one of the main coffee consumer in the world, by drinking 3,2 cups of coffee each day this and to have a specific word for having a coffee, “fika”. There for there is a lot of companies in Sweden which main business is to provide a good cup of coffee; one of those companies is Espresso House. (Bruzelius, Johansson, 2012) The company Espresso House is not an old company; the first Espresso House coffee shop in Sweden was opened 1996 in Lund, one of the biggest student cities in the southern parts of Sweden. Its owners Charles and Elisabet Asker had the thought to start a small coffee shop to provide their slogan “att ge världens bästa gäst världens bästa kaffeupplevelse”(Espresso House, 2012), which means, giving the best guest in the world the best coffee experience. At Espresso House there is no customers, only guests. The chain Espresso House operates in 25 different cities in Sweden and have 120 different coffee shops spread in those cities. (Espresso House, 2012)
Espresso House’s Market Mix
Espresso House use a marketing strategy, which contains tools as world of mouth, where they rely on their loyal guests to speak good about their coffee experience. The company does not rely on WOM (word of mouth), they also take the opportunity when opening new coffee shops to sample coffee and small pieces of pastry’s, promoting the new shop or boosting for an existing shop. When sampling they sometimes as well hand out smaller offers, as buying one latte get one for free or vouchers for a free coffee (Attachment 1). Espresso House use as well social medias, such as Facebook and Twitter. (Nyheter-Pressmeddelande, Espresso House, 2011)
Espresso House maintain a secure level on their pricing, which is a little bit higher then other foodservice chains as 7-elven, Pressbyrån and Mc Donald’s; this since Espresso House focus heavily on coffee and the quality of every cup served. Espresso House provide their guests with customized coffee for each guest, as an extra shot of coffee or flavoured; this is something that other foodservice chains is unable to offer their guests.
The products provided in the shops include all the nutrition charts and ingredients, so the guests are able to se what is included in the products. Espresso House offer more intangible products then tangible; intangible products as their coffee and service are the main revenue for the shops/company. The different shops even sell other product related to the business, such as coffee beans, different types of coffee machines for the guest to take the experience home; but this is more of ancillary revenue for the company. (Vaart Kaffe, Espresso House, 2012)
Espresso House is as mentioned earlier located in 25 different cities and in almost all of those coffee shops they distribute and produce their products such as sandwiches, salads and the coffee is produced in the shop in front of the guest.
Espresso House as written earlier is a company that is growing bigger and is at place number 9 when it comes to leading chains in consumer foodservice brands (table 21). When narrowing it down to cafés they are positioned as the leading chain of cafes in Sweden, 2011(table 7)(Euromonitor Passport, 2012)
In southern parts of Sweden in a city named Malmö, Espresso House has their bakery to forwardly integrate the company. The bakery bakes for all the shops, then shock-freezes the products so they will maintain the same quality when unfrozen in the shops. (Bageri, Espresso House 2012) Espresso House co-operate with a award-winning company named SOLBERG & HANSEN, which is a big company in Norway providing qualified coffee (Vaart Kaffe, Espresso House 2012). The variety of products get delivered to the different shops, stored in the back area and then distributed by the baristas. (Höjing, 2012)
The company has 900 employees all included from owners to baristas; beyond them are the different suppliers such as SOLBERG & HANSEN and Servera (Vaart Kaffe, Espresso House, 2012). Servera is a Swedish reselling company. These suppliers are the backbone of the chain, because all suppliers supply for all the different shops. Suppliers together with the different staff in the coffee shops, makes it possible for the chain to function. (Höjing, 2012)
Characteristics of the company
Espresso House business is focused on serving coffee and lighter dishes for in-House eating or take away, such as hot drinks, cold drinks, pastries and sandwiches and salads. But still it is a business that provides both a service and products. The different products that are sold in the shops are cold juices, smoothies and a variety of soft drinks. As well as drinks, there are lighter dishes such as sandwiches and salads served hot or cold. Espresso House does not only have intangible products and services, they also sell their coffee products to use at home; such as their cups, the coffee beans and the syrups they use to the different coffee types. (Vår meny, Espresso House, 2012) Variability in the business
People visiting Espresso House does not now for sure what to receive; but as written earlier the staff receive courses in how to make the perfect coffee. Espresso House does this so guests could receive similar service and products between the different shops. The aiming after consistency is something Espresso House work very hard for, since there is 120 different coffee shops and when visiting one, the coffee should taste exactly the same; this is why they have standard recipes of all the drinks and dishes so the staff has a guideline to go after. (Höjing, 2012)
The concept Espresso House relies on is that the guest and the employee has to be present for the service to be received and the product to be delivered; this is why the employees are trained to always serve the guests before anything else. When a guest enters a coffee shop she or he should always be welcomed and served, if a guest leaves it is lost revenue and bad WOM. Espresso House train both employees and guests, so after the guests has ordered, they sit down an wait for the Barista to shout out that their drink is done and ready to pick up. Other training for their guests is if wanting additional supplements as sugar, straws they pick it up at the supplementary station themselves as well as cleaning the table from dish. (Höjing, 2012)
Owing a service, renting a cup
The percentile of business that Espresso House offer is service that turns in to a product. In this process the guest first pay and then wait for the product to be distributed and then consumed. It is in this step that a guest could be dissatisfied because the guest is buying the product unseen and they will not own the product; they will rent the cup and the plate until they decide to leave.
The different seasons
Sweden has four different seasons, which regard Espresso House shops a lot regarding to the revenue. Summer season in Sweden is a very busy time for most cafes and restaurants, because a lot of tourists spend their vacation in Sweden. This circumstance enhance the business for many coffee shops, because they are located near guests, such as in the main shopping streets in and close to central stations; which makes them easy to access. The biggest season for Espresso House is the winter season because a lot of people are out shopping for Christmas gifts and are in general a lot more out in malls shopping streets. The total of what tourists and inhabitants of Sweden spend on food for both summer and winter season is 98,8 million kronor during 2011. (Svenska Dagbladet, 2012)
Position in Existing and Future markets
Espresso Houses market contain a lot of competitors; three main competitors as Wayne’s, Elite Hotel, Coffeehouse by George. By having a similar product and price, all four of them compete in the same product category. The competition in the same product category contains a few more actors such a service outlets; Pressbyrån, 7-eleven and Mc Donald’s, companies with a larger variety of products such as newspapers and other products. The general competition that Espresso House faces is all stores or cafes that provide coffee such as grocery stores selling packaged coffee. For the same value of money the guests may ask themselves if this experience at Espresso House is worth the money. With the existing competition Espresso House still have the largest share of the market compared to given competitors, showing that a lot of people choose Espresso House before others; a bigger share of heart. There is though one obstacle when speaking about what guests chooses, such as share of mind because coffee is an addicting product and a lot of customers will buy from the most accessible distributor. (Euromonitor 1, 2012)
Espresso House will always have treats, such as competitors expanding when Espresso house cannot regard to barriers to entry, finances or no suitable locations. It could as well be when buying a peace of real estate the business does not break even and they cannot leave it, which would be a barrier to exit as well as a barrier to entry. Year 2011 the VAT was reduced from 25% till 12% (Euromonitor 1, p.13, 2012) which changed the economic environment for Espresso House, an opportunity for them to lower the prices and hire more staff. (Nyheter-Pressmeddelande, Espresso house, 2012) The environment is as well something that concerns Espresso House to show that the supplement have smaller indications that you should think twice for the environment (Attachment 2). More then being aware of the usage of the supplements, Espresso House introduced a product called keep cup to decrease usage of non-recyclable cups. By doing this they look after the nature as well; the expense of non-recyclable cups they reinvest by building schools in Finca Buena Vista, El Salvador and replant new trees for usage to the former cups. (Miljomug, Espresso House, 2012)
Collection of Marketing Information
For internal collection of information, Espresso House have Coffey card which itself has over 80 000 exclusive users throughout the company. The guest buys a coffeycard, fill it up with 100SEK, money that will be stored on the card and every time the guest comes to any coffee shop, they could purchase their items and pay with the card. If the guest wants to eat in the shop, they receive 10% discount and if they take away they get 20%; another function with this card is that it stores information about the guest, for example, which is the most frequent product the guest buys. In this way Espresso House is always on top of their loyal guests requirements. Even though the coffeycard, Espresso House conduct research through guest comment cards and guest satisfaction surveys, these surveys often come with a complimentary drink as a reward. Theses surveys are send out by e-mail mostly to younger people and mothers who have the time to fill them, send them back and get a receipt which will give them a complimentary drink. (Höjing, 2012)
Position within Chained Cafés
Espresso House segment itself by having youthful and modern shops, modern cafes with Wi-Fi and up to date menus. The clientele is mixed with teenagers who comes to “hang-out” or study, mothers having a coffee with friends or businessmen who stops by for take away products. (Espresso House) In that way they work with an undifferentiated market as well as psychographic. In the guests mind Espresso House has both locational and personal differentiation comparing to other chains that provides coffee. For example at Wayne’s coffee House it is up to the franchise taker if he or she want to educate its staff, where as at Espresso House you have to go trough a service and barista education before you are allowed to work in a coffee shop. Espresso Houses locational differentiation differ from other chains, since they are located as close as possible to their guests, that why there could be six coffee shops in the same city. (Espresso House)
Process of Service Quality
Espresso House work with over desk service as their distribution channel, with their front-employees giving first moment of truth and handles the request from guests. With this in mind the company could focus at the quality provided and to secure this, they have very highly trained staff and promotes them with bonuses if their shop exceed monthly sales or if their shop preform best in a specific campaign. (Attachment 4). (Höjing, 2012). The company manages their service control in two ways; the first is that the employees should be aware of the five steps in retaining the guest. The first step is to be responsible for the work to be done in a quick and helpful as well as having knowledge about the products and being polite towards the guests; every guest should receive their individual attention.
The appearance as well as the tangibles of the employees has to be impeccable; the uniform and the status of the coffee shop, clean and organized. With these different components the dependability and accuracy of the company is at the top, to provide the best coffee experience to the best guest. (Dagens Nyheter, 2009) Espresso House wants to retain these qualifications so they have follow-ups, such as mystery shoppers and a program called “the way of the barista”. The way of the barista follows different steps make sure that the products follow the guidelines as well as the store, to provide expected service. (Höjing, 2012)
How to Satisfy Guests
The motto for the company as written earlier is focused on satisfying the guests to ensure that the needs and wants are met for the guest. There fore the menus have a wide variety of the products. Year 2011 Espresso House started a new concept with a greener lifestyle, Green Drizzle, which is a company within the company. Espresso House focus on the coffee and Green drizzle focus on the lighter dishes because there was a request from existing guest for a healthier choice. (Nyheter, Espresso House (n.d)) The coffeycard as mentioned earlier gives the guest evidence that Espresso House values them as guests; so does the silver card that very important guest receives, which gives the guest 20% always, either if it is take away or in-House. (Höjing, 2012)
Critics and Conclusion
Espresso House struggles to provide an impeccable service, they do not always succeed; the human factor varies and that is an element that cannot be removed. Because of the human factor the variability of the service could not always outweigh the price the guest has to pay. The guests who come back as a loyal guest expects similar service as in the last visit, but if the experience not meet or exceed the expectations and image of the shop, the guest will leave unsatisfied. The company constantly work with these problems and this is a continuing process; generally with the statistics and revenue coming in Espresso House is company that will continue growing and sustain as the leading chain within cafés.
* Dagens Nyheter (2008) Espresso-House-frukosttest. Available from: http://www.dn.se/pa-stan/ata-ute/Espresso-House-frukosttest Accessed 9th November 2012 * Datamonitor (2012) CAFÉS/BARS IN SWEDEN: Euromonitor International. London: Passport. Available from: https://www.portal.euromonitor.com/Portal/Handlers/accessPDF.ashx?c=08%5CPDF%5C&f=WS-214259-22074608.pdf&code=pj0R561ohTz3O2X3GbljQIUAgDg%3d Accessed 3rd November 2012 * Espresso House (2012) Vaart Bageri. Available from:
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* Höjing, A. (2012) Marketing Report on Espresso House. Interview. By: Höjing, A., 10th November 2012.
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