Folgers Coffee (Secondary Research) Myra Correa Jan. 18, 2011 COFFEE INDUSTRY Coffee is the second largest commodity market next to oil, and growth is expected to continue at a strong pace. The US coffee market is approximately US$40 billion (inclusive of both retail and food services sales). The US ground coffee market is about US$1. 9 billion and it is estimated to grow up to 2. 8 billion by 2012. Folgers retail sales is 44% of the overall ground coffee market.? B. Target Market: 54% of adults living in the USA drank coffee every day, about 166 million people.
Another 29% occasionally consume coffee and 17% do not drink coffee. Regular coffee drinkers in the USA have about three cups daily—that’s about 336 million cups of coffee. However, college Students drink far less coffee than their baby boomer parents, and, when they do, it’s more likely to be on the go. Only 37% of young American adults 18-to-24 drink coffee, compared with 60% of those 40-to-59 and 74% of those 60 and over. Folgers will focus on College Students because they have the largest potential for growth.
Within 5 years they will be married and will have less disposable income but they will want to maintain their premium coffee consumption, but without paying the high price. C. Target Market Growth: College students continue to grow at a steady pace, at nearly 13%, Business workers continue to add value and growing at 5%, Seniors are becoming an important part of consumers, growing at almost 2%. Therefore, college students represent the most lucrative opportunity. COMPANY OUTLOOK3: Since Folgers merger with J. M. Smucker Co. , the company has been financially successful.
Folgers had added 856 million in sale and 241 million in profit during fiscal year 2010. Our strength is our everyday affordability and trusted name. We now have a first place market share of 44. 8% of home brewed coffee market, followed by Maxwell house and Nestle. However, we realized that our major consumers are adults over the age of 40 and the college students consists only 13% of our sales. We believe this is due to our brand image of being family/ senior brand and the fact that college students tend to buy coffees on the go.
This group will soon become family/ office drinkers and we must take this opportunity to capture this market now. Our goal is to increase market share of college students by 2% in the first year and 1. 5% in the second year. In order to meet our objectives, we will 1) Introduce new packaging to change the image, maintaining current product line 2) Increase distribution to college students; 3) Hold promotions and events at college/ universities. Controls will be measured before and after the campaign with customer satisfaction surveys and vendor statistics to analyze sales patterns.
Competition Review4: : Folgers coffee competes for retail shelf space with other coffee product producers, both branded and private label. Folgers is confident in its ability to be a strong competitor because of its brand, high quality, varied offerings, innovations, and distribution network #1 Folgers: $856 million in sales: Since the acquisition sales have doubled the Folgers’s market cap, this proves we are the leaders in selling coffee by far with a market share of 44. 8%. #2 Maxwell House: $660 million in sales: The second largest coffee brand, with a market share of 34. %, Maxwell House offers ground caffeinated, ground decaf, flavored coffee and instant coffee. #3 Nescafe Taster’s Choice $391 million in sales: Nescafe Taster’s Choice offers original and decaffeinated brand, Gourmet Roast. Their largest size is 12 oz. jar Flavor Coffee like Vanilla and Hazelnut are sold as the single serve packets. Nescafe has a market share of 20. 5%. S. W. O. T ANALYSIS A. Strengths: Affordability: Folgers Classic Roast is an excellent affordable option for ground coffee when trying to make smart money decisions in today’s economy.
Compared to its competitors Maxwell and Nescafe, Folgers offers a low affordable brand without sacrificing quality. Consumers won’t feel as though they had just spent a fortune on coffee. Established and trusted name: Having been in the market since 1850, Folgers has developed a trusted brand name. Throughout all these years, Folgers has been a constant in people’s lives, providing coffee to start one’s day or as an afternoon drink. Through successful past and current advertising campaigns, Folgers is known as “the best part of waking up. ” This slogan has stuck with consumers since the jingle premiered in 1984.
B. Weaknesses: Distribution: Folgers has a dominant role in the older demographics of the coffee market but lacks as strong of a presence among the younger generation, especially college students. The coffee that college students are introduced to, at a time where the majority of them become regular coffee drinkers for the first time, may be the one they stick to in their later years. Elderly and slow-paced image: Folgers has successfully marketed itself to mothers and fathers and the elderly through its “best part of waking up” campaign.
These have focused on family members waking up to the aroma of coffee to begin their day. However, Folgers has not created a marketing campaign geared towards college students who perceive coffee as an “anytime drink,” whether in the morning to get their day going, a pick-me-up in the afternoon, or a late night drink to keep oneself up while studying for finals. Folgers’ image is a leisurely-paced drink and has not expanded to a fast-paced coffee image. Graphics/packaging: Currently, packaging consists of the rising sun in the morning, signalizing the beginning of a day with Folgers coffee.
However, these graphics are not applicable to the college students who are asleep during the day and stay up late at night when there is no longer any sun. C. Opportunities: Universities and college students: Folgers has opportunities to capture more of the market that it does not currently lead. Through partnerships with universities, Folgers can become the vendor to them, ensuring that their products will be advertised and bought on campus. Folgers can also have contracts with on-campus restaurants and shops to be their coffee supplier.
D. Threats: End to home-brewing: As our society increasingly becomes more fast-paced, consumers tend to lean towards products that advertise themselves as ‘quick” and “on-the-go. ” If people no longer had time to wait for a pot of home-brewed coffee, they will steer towards instant or coffee stores. This could be potentially a significant threat to the ground coffee market and especially to Folgers. Competitors Lower Prices: If Folgers’ competitors lowered their prices, a threat would exist to Folgers affordability.
Currently, Folgers is the best economic choice in terms of price for ground coffee. If a leading competitor were to beat Folgers’ price, it could be detrimental to Folgers’ market shares. Market Research: Here is the market research strategy: * Sales and market share by areas and demographics (Secondary research) * Target markets and its demographics (Secondary research) * Brand awareness test and Study measuring ANT, Trier’s, CP and Laps purchases in order to find out consumers’ behavior and predict future growth * Blind taste tests (New Folgers vs.
Original Folgers vs. Maxwell house vs. Nescafe) * Emotional bonding test to find out brand image * Price elasticity test by segments, and study deeply in college segment * Package test for the newly designed package targeting college students * Concept product test to find out if our new package and product matches the expectation * Test market done by simulation at Folgers warehouse * Ad test for new campaign for college students (TV, online advertisement, banners and SNS)
In order to measure the impact, I plan to do following research along the way. * Increase in overall sales and market share by areas and segments * Increase in sales in the new distribution areas targeting college students * Sales of newly designed package coffee * Brand awareness test and study to analyze how much ANT moved to Trier’s, CP vs. Laps * Ad test using Neilson (Number of people who saw the ad vs. how many actually purchased) * Emotional bonding test asking college students vs. ther target markets. (We need to make sure our current markets are not feeling unhappy about targeting college students. ) * Number of text entries we had from the campus sampling event. CONCLUSION: In conclusion I find that Folgers Coffee is brand you can trust. In order for this brand to continue to be trustworthy and #1 in the market place it needs to connect with the new younger generation but also maintain the same brand awareness that loyal consumers know and love.
Market Research will provide the insight and will give Folgers a new strategy to obtain this new target audience and grow their brand. ——————————————– [ 1 ]. http://www. allbusiness. com/professional-scientific/specialized-design/445615-1. html [ 2 ]. National Coffee Association http://www. ncausa. org/i4a/pages/index. cfm? pageid=39 [ 3 ]. Folgers http://folgers. com/products 4 Annual Report: http://phx. corporae-ir. net/External. File? item=UGFyZW50SUQ9MzQyODkzfENoaWxkSUQ9MzI5MzkwfFR5cGU9MQ==&t=1