Marketing and Coffee-mate

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Marketing case 9: Coffee-Mate

Thomas Tallberg E4 Kristian Sällström E4 Christian Westermark E4

1. What are the main benefits of Coffee-Mate and what is limiting its sales?

The main benefits of Coffee-Mate are its ability to substitute for real milk or cream and it can be stored for a longer time. It is made of health promoting ingredients such as dried glucose and vegetable fat (cannot be legally defined as non-diary, since it also contains milk derivatives) and it comes in various packet sizes. The sales are limited by the market which is characterized by its low interest level, since most buyers do not see it as a weekly shopping item. Another factor that affects the sales is that the consumers prefer ordinary milk or cream instead of powder milk. It is used as a whitener in tea or coffee only in emergency situations in which the household has run out or run low on supplies of milk. Not everybody is using milk with their coffee.

2. How would the promotion of Coffee-Mate change with the benefits promoted and the competition targeted?

The promotion would need to be shaped so that they would focus on the core benefits that the Coffee-Mate offers. This has to be at least as good as the targeted competitor. They also have to be aware of how the competitor currently markets his product. By knowing how he operates they could either copy and improve the existing one or then completely change and try a more radical approach. If the Coffee-Mate would want to succeed they would need to convince the consumer how he can benefit from our product better in contrast to the competitor.

3. Should Coffee-Mate be mass marketed, aimed at one segment or aimed at multiple segments

In mass marketing you are trying to serve the whole market with the same product. Companies have not always practiced target marketing. In fact, for most of the 1900s major consumer products companies held fast to mass marketing-mass producing, mass distributing, and mass promoting about the same product in about the same way to all consumers. Henry Ford epitomized this marketing strategy when he offered the Model T Ford to all buyers; they could have the car “in any colour as long as it is black.” Similarly, Coca-Cola at one time produced only one drink for the whole market, hoping it would appeal to everyone. We believe that the market for powder milk cannot be mass marketed because it is segmented. The segments demand a certain need that cannot be satisfied by one single product. If we were only to aim at one segment we would only cover with standard 41 % of the total 55 % that Coffee-Mate currently possesses and loose the 14.5 % which Lite has. The only right answer is to proceed with multiple segments where Coffee-Mate needs to improve its efficiency to gain a bigger market share. Another option is to identify new segments which are worth going for.

4. How would the different alternatives alter the marketing mix used to market Coffee-Mate? Why launch Coffee-Mate Lite?

We believe that the different alternatives would affect the marketing mix in different ways. You would need to concentrate on the products depending on what segments you target. They must be able to satisfy the targeted segments need, such as quality and size of the package. It is impossible with a product like this to satisfy many segments with a product like this. The price can vary depending on the production cost, advertisement expenses and consumer demand and price awareness. When offering diverse products in a market where the differences between products are significantly small you can easily combine their promotion. Why they launch the Coffee-Mate Lite flavour was because the analysed the market and acknowledged that there was a relatively high demand for low-fat powder milk. They answered the need by...
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