SWOT Analysis
Nabob Company
Strengths
 Established R&D Department (Efficient Innovation)
 Market Leader
 High Volume of Sales
Weaknesses
 Summit Brand Cannibalizing Tradition Brand (50% Cannibalization Rate GTA)
Opportunities
 Both Current Nabob Brands Have Yet to Reach Maturity in Product Lifecycle
 Inclement Weather*
Threats
 Maxwell House – Primary Competitor
 Tim Horton’s, Second Cup, Starbucks (GTA) – Secondary Competitors
 Inclement Weather*
* Inclement weather can be either a threat or opportunity given the time of year it
happens and our stockpiles at the time. If frost drives up price after production but before
sale, we could be looking at profit increases of 70%. If the frost comes either before
production or after selling off our product, then we could be looking at sales volumes
dropping anywhere from 5%-15% depending on other company’s supplies.
Summit Brand
Strengths
 Most Successful Launch in Coffee History
 Distribution Exceeds 50% in All Areas Marketed (High of 89%)
 Currently Perceived as “Top of the Line” Brand
Weaknesses
 Poorly Designed Product Has Led to Product Cannibalization of More Profitable
Brands such as Tradition
Opportunities
 Continued Growth due to Early Stages of Product Lifecycle
 Excellent Co-op Advertising Subsidies
Threats
 Maxwell House Gold – Primary Competitor’s Premium Brand
 Private Label Coffee Shops
Primary Objective


Re-Marketing Brand / Expanding Business to make up the $2,461,368 lost as a
result of product cannibalization last year
Increase weighted co-op advertising subsidy from 16 cents to 23 cents to provide
a viable business model for sustained growth
Alternative 1 – Nabob Prestige
Nabob Prestige product line:
 Flavour Disks
 Vitamin Disks
 Vitamin Coffee
 CoffeeShop w/Flavour Injection
 Portable Flavour Packs (Cofshots)
 Proprietary Filters
We will be launching our Nabob Prestige product line in order to better position
ourselves as a source of relaxing energy for individuals in the most healthy and delicious
way possible while exploring the utility of a drink. Our Proprietary coffee brewer,
CoffeeShop, will be the centerpiece, including the never-before-seen flavour and vitamin
disk capabilities. Our flavour disks will come in flavours such as white chocolate,
hazelnut, strawberry shortcake, etc. There will be over 15 flavours at launch. In addition
to flavours we will also have vitamin disks. These disks will have different uses, such as
a multivitamin or an energy source with all the NATURAL ingredients to provide you
with energy and counter-act the caffeine crash for all those adults needing the energy that
drinks like red bull can provide, but without enduring all of that sugar. The best part is
there are two ejectable “disk-drives” allowing for customer creations between flavours
and vitamin boosts. The CoffeeShop will also have special filters only made by Nabob.
For your coffee on the go we also have Cofshots, portable single-serving packets of our
flavour disks.
Currently, our company profitability is at an average of 46% over all product lines and
brands. The Federation of Columbian Coffee Growers has agreed to increase their
weighed co-op advertising budget for us from 16 to 23 cents if we can raise that average
profit margin 7% (6% = +6 cents, 5% = +5 cents etc). We are going to accomplish that
profit margin through our product line expansions and the added brand equity that will
come into play from the CoffeeShop. The CoffeeShop has the ability to mix and match
up to 2 of the disks (of either type) leading to wonderful user creations. This will allow
our summit brand to operate on its own at the same profit margin as Tradition, effectively
eliminating our cannibalization problem. Furthermore, because this increase in funding
will further accelerate our profit margins, completion of this deal would take our average
profit margin up an extra 2%.
These efforts will be supported by heavy TV advertising and in-store product promotion
as well as demonstration. Sales bonuses will be calculated on a retailer-by-retailer basis,
but will not be large enough to constitute a heavy pull factor with regards to initially
stocking our new product line. These commercials will be indicative of our all-around
premium positioning and played on channels such as CBC, CH, TSN, Food Network, W,
Home & Garden, Slice, or other lifestyle channels directly predominantly baby-boomers.
Our in store promotions will NEVER include coupons, but will have draws for free
brewers and coffee supplies. We will have our maker ONLY placed RIGHT beside the
fresh ground self-serve coffee stations because of the ambience of that specific area of the
store. Of course our products will only be found in high-end grocery retailers such as
Sobeys, Fortino’s, A&P, to maintain its premium positioning. This will further be
supported by taste-testing demonstrations in the stores. Online product sales will
strengthen our revenue base.
*14 Months After Nabob Prestige Launch*
Fourteen months after the Prestige launch we will be doing a major advertising shift as
well as a tentatively scheduled new brand. We will be doing market research to measure
the penetration and market share in our target areas (Ontario, British Columbia, Alberta).
From these results we will determine if the time is appropriate to make a shift from new
product advertising in those areas to “upkeep” advertising (cheaper, less prevalent, used
to remind as opposed to educate) in those targeted Areas. This will allow a shift in focus
(financially) so that we will now be able to hit Manitoba, Saskatchewan, Quebec, & the
Maritimes with new product advertising, further penetrating our brand into their markets
and ensuring prolonged brand life in Canada for years to come. This shift in advertising
will be for coffee only, and will also allow us to use our successfully developed markets
for cost-effective deployment of a test market program. This test market program will
first be used for a potential new brand of Energy drink aimed at the baby boomers. This
non-carbonated energy drink could have a very lucrative market if the right segment is
selected to target, and we have two full years to complete the market research and then
time on top of that to allow for a strategic decision to be made.
Nabob Prestige Objectives


60% awareness for our Nabob CoffeeShop in the advertised area within 6 months.
75% awareness within 12 months.
o 5% of aware audience making CoffeeShop purchase
Maintain or increase market share
Alternative 2 – Nabob Sunrise/Sunset
Instead of trying to expand operations with the intention of increasing brand equity to
provide a sustainable future, this alternative is a more conservative approach to refining
our operations to increase efficiency with minimal product line changes. While this is the
most conservative, it’s also foreseen as the least profitable.
With this alternative we will try to re-tool our company to have brands that work very
well together collectively, as opposed to having brands that work very well on their own.
This will be done by associating Nabob with a personal routine. We also needed to take
an angle that showed consumers that one flavour of coffee is not enough.
We will associate ourselves with personal routine through the release of two (or three
depending on how you look at it) new products. The first of which is a new Night/Day
team of coffees bringing a balanced position of yin and yang to the table of perception.
Our morning coffee has the invigorating ingredients you need such as ginseng, taurine,
guarana, to start you day; while the night coffee has relaxing ingredients such as
chamomile and lavender to help you unwind after a long day. This will be the first coffee
to ever take a specific time-oriented stance in terms of usage. This would be limiting if
there was only the one brand, but since we provide enough selection to have the
consumer satisfied at ANY of the different times required we actually get a synergetic
effect because they feel like they are getting more benefit from their coffee, also
increasing brand loyalty. These brands will both be made of 100% Columbian coffee
beans and will be heavily marketed as such in order to maintain the co-op advertising
support of the Columbian federation of coffee growers. They will be priced at parity with
the competition because of the increased value consumer receive for the same price.
The other product line extension would be our vitamin coffee. Coffee enriched with
enough vitamins and minerals to get you feeling happy and healthy throughout the day on
only one cup. This would also speak to replacing a daily personal routine with our brand
as this coffee would be developed in partnership with large pharmaceutical manufacturers
to essentially create customers’ morning multivitamin in a cup of coffee.
This will be supported by large amounts of TV advertising, as well radio advertising in
traffic-heavy areas of Ontario (no radio done in Western Canada) and billboards. Our ads
will also be sported on billboards and home magazines all focusing on our new slogan
“Need My Morning Bob”
Nabob Revisited Objectives


55% awareness for Nabob Sunrise/Sunset in the advertised area within 6 months.
70% awareness within 12 months.
o 45% of aware areas making purchase
Maintain or increase market share
Recommendation
Because of the aggressiveness of the marketing strategies employed, and also because of
the breadth of new products being released, it is our recommendation to proceed with
Nabob Prestige as a strategic course of action. The added brand equity from a premium
position as a market leader will provide us with the sustainable business model we need
to remain a viable, competitive company for years to come. At Nabob we haven’t been
immune to slow economic growth in our sector, but with Nabob Prestige this issue will
be addressed as Nabob will be shifting its focus from coffee, to providing relaxing energy
Prestige Line
Development
Prestige Release
Start up Stage of
Advertising/Promotion
Aggressive
Advertising/Promotion
• Mkt Research for NRG Bev.
• I.D. for future
• Gauge success of discs
Implementation Plan
Energy Beverage
Release
Sustaining Stage of
Advertising/Promotion
without the high-impact crash of tradition sources of energy. This will be done while still
at all times remaining true to our companies vision, to make the best coffee possible.
Implementation Plan
Timeline
Break-Even Analysis
Profitablility
Product
Summit
Tradition
CoffeeShop
Flavour Disk
Margin
Operations
Cost
Price
42%
50%
65%
88%
Wages
$4,800,000.00
R&D
$1,000,000.00
Production
Total
$1,300,000.00
$7,100,000.00
% of Projected Total Profits
Summit
Tradition
CoffeeShop
Flavour Disk
Profit Per
$3.50
$3.50
$119.95
$5.99
Break-Even
Marketing
Expenses
Operations
Expenses
Total Expenses
Required Sales
44
36
2
8
$1.47
$1.75
$77.97
$5.27
Summit
Tradition
CoffeeShop
Flavour Disk
$15,270,000.00
$7,100,000.00
$22,370,000.00
$
Units
$9,842,800.00
$8,053,200.00
$447,400.00
$1,789,600.00
Marketing Details
TV ($24,300/GRP/channel)
CBC → Hockey Night in Canada, News, Prime Time
TSN → All Shows, 11am – 1pm, 4pm – 2am
W → All Shows, All times
Food Network → All Shows, All Times
Slice → All Shows, 7am – 5pm
CTV → News, Primetime
Print ($16,000/year/publication)
Women’s World, Home & Garden, In Style, Chatelaine, Women’s Health, Men’s Health,
Shape, Health & Home, and 14 yet-unselected publications
Billboard ($1,000/week/location)
GTA (Toronto, Mississauga, Scarborough, Markham, Vaughan, Oakville, etc) – 24;
St Catharine’s – 2; Sarnia – 2; Guelph – 3; Niagara Falls – 2; Owen Sound – 1; Thunder
Bay – 4; North Bay – 4; Sault St. Marie – 2;
Conclusion
Expanding our product lines will not only allow us to develop more favourable profit
margins but further ensure our position atop our market as the premium provider of
coffee, providing us with an excellent financial foundation for continued growth.
686,043
471,499
5,738
339,505
The increased sales will secure the co-op advertising budget provided by the Federation
of Colombian Coffee Growers.