This Essay will deal with the Four P’s of marketing as it relates to Folgers Coffee. It will be demonstrated how the marketing function is visible in these four areas. It will also be shown how the coffee giant had lost its lead in market share and then recovered it in the mid 1990’s. We will explore how now that Folgers is being operated by Smuckers, the coffee giant has used some clever marketing schemes.
The Four P’s
In looking at our product, Folgers Coffee, a sure way to see where a product is going sometimes is to look at where it has been. In 1992, Kraft’s brand of coffee, Maxwell House, had gained the lead in market share and appeared to be poised to drive a nail in the coffin of Folgers. The obituary for Folgers was premature as Folgers began a marketing campaign that consumers still remember. You can ask almost anyone who makes the “Mountain Grown” coffee and almost all will answer “Folgers”. It took them a year to regain the lead with sales of almost $120 million compared to Maxwell House’s sales of $102 million. (Deveny, 1993) According to Business Week, “Folgers primarily engages in sourcing, blending, and roasting green coffee beans; and packaging, marketing, and distributing branded coffee products. Folgers three divisions, Commercial, Retail and Millstone are showing that the company is diversifying its products. The offerings of the retail division are Folgers Classic Roast and Folgers Coffee House Series. Folgers is also offering single serve coffee products, such as Folgers Pods, Folgers Cappuccino, Folgers Singles, and Folgers Instant. Also included are ground coffee and gourmet roast products, such as Dunkin’ Donuts licensed retail packaged coffee products and Folgers Gourmet Selections. The Commercial division provides packaged roast and ground coffee products to offices, foodservice, quick service and casual dining restaurants and convenience stores. The Millstone division offers Millstone gourmet roast and ground and whole bean coffee products. It sells products in packaged and bulk whole bean form throughout its direct delivery system to stores. This division also produces and sells private label brands in packaged and bulk whole bean form by various retailers, such as Brothers and Veneto’s. The Folgers Coffee Company is a subsidiary of The Procter and Gamble Company. As of November 6, 2008, The Folgers Coffee Company operates as a subsidiary of The J. M. Smuckers Company.” (Business Week, 2008)
One industry analyst said that coffee is perceived as a commodity product with little differentiation. Premium prices could be obtained only by turning it into a convenience prod¬uct, which seems to have been P&G's intention. (Lawrence, 2001) But consumer tastes are changing fast, and Folgers is under threat from a whole rash of specialist blends and hybrid coffee spin-offs. Until now the brand has been one of consumer giant Procter & Gamble's biggest products, worth more just under $2 billion a year. However it has also become an increasingly uncomfortable fit with the rest of the P&G portfolio, and in 2008 the group announced plans to divest the business. It was acquired by food company JM Smuckers, which has previously purchased other brands from P&G including Jif peanut butter. Coffee is a competitive market where the product is sold cheaply, a mere fraction of the comparable per-serving cost for soft drinks. Higher margins are possible with specialty coffees, but such major firms as P&G entered this market late and almost reluctantly. Folgers' Gourmet Supreme coffee, an effort to appeal to gourmet buyers with a premium product, has met with little success. (The only consolation here was that sales of Maxwell House's comparable product, Rich French Roast, have also fallen. (Deveny, 1993) While Americans still gulp down coffee—consumption is up 9% from 2001 to 2006—supermarket...
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