'Wake Up and Smell the Coffee' - Case Study of E-Business 'The Coffee Exchange Company'

University Degree Business and Administrative studies

‘Wake Up and Smell the Coffee’

Case Study

E-Business

Ms. Lorna Walker

Simone Harris

06/10/04

Describe the e-business strategy of the Coffee Exchange Company.

Coffee Exchange decided to enter unfamiliar territory by expanding the company through the Internet. In an already saturated coffee roasters market dominated by a handful of companies, an e-business strategy gave Coffee Exchange the comparative advantage needed to differentiate them from the relatively homogenous competition.

Caffeine Rush, the sister operation, was started to expand the business through the franchising of mobile coffee-making units. These units are promoted through the company’s online website where prospective franchisees can view the mobile units and learn more about the company. Extensive online information enables these people to be ‘60% down the line before they talk to’ the company directly. This not only keeps staff costs down but enables the company to keep information up to date meaning that they only attract interested franchisees that are beyond the enquiry stage. Prospective franchisees can download documents, brochures and look at photographs using a simple to navigate and humorous website. The style of the website and the mobile coffee units are targeted at part-time workers looking for additional income with flexible hours whilst maintaining ownership of a business. People can quickly decide whether it is the right business opportunity for them and therefore acts as an efficient and cost effective pre-sales tool which in turn enables Coffee Exchange to remain competitive in the market. Awareness of the company website and franchise opportunities is further promoted through the coffee cups used by the company which contain the site address. The website also provides Coffee Exchange with a valuable communication line between the franchisee and the company itself in order to maintain limited control over the running of the mobile units by the franchisee. This is achieved through online support networks, continuous up dating of information, and management tools and techniques which can be downloaded by the franchisee community from the website. Regular emails sent by Coffee Exchange provide an indispensable link and encourages a relationship with the Coffee Rush franchisees. This e-business strategy can be followed beyond the boundaries of the UK market enabling the expansion of Coffee Exchange with low expansion costs through the promotion of its franchise operations with the online website.

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What do you consider to be the strengths and weaknesses of this approach?

Strengths:

Coffee Exchange’s e-business approach provides a cost efficient method of expansion and enables the company to access a larger market whilst retaining competitive advantage differentiating them from the proliferation of traditional coffee roasters such as Starbucks, Coffee Republic and Costa Coffee to name but a few. An online extension of the company encourages more efficient methods of sharing information and updating franchisees of Coffee Rush as well as reinforcing low cost direct communication networks. It offers a quick, efficient and simple ...

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What do you consider to be the strengths and weaknesses of this approach?

Strengths:

Strong communication channels and continuous up to date information and reporting lines have enabled rapid expansion of the company.

The website itself offers a cost effective way of increasing awareness of the company and encourages word of mouth advertising through prospective franchisees. The website layout targets a specific segment of the market whom are regular internet users looking for part-time flexible work and additional income. Extensive online information about the company and its franchise mobile coffee units ensures that only serious applicants enquire further by speaking directly with the management of Coffee Exchange. Regular email updates, additional information and tools to assist the management of a franchise encourage the motivation and loyalty of the franchisee developing a relationship between the franchisee and the company thus promoting effective word of mouth advertising as well as customer satisfaction. The Internet provides a powerful and supplementary marketing tool.

Update and change information easily and quickly

Weaknesses:

Attract the wrong people without meeting them until much further down the line

Difficulties in overseas expansion

Communication purely online

What future opportunities or threats could there be in this market?

Opportunities:

The website can be continuously developed to have all the creative flair of an advertisement, the style and information of a company brochure, the tailored presentation of face-to face interaction and should ensure that it always leaves the visitor clear as to what action should be taken next.

Threats: Relatively low barriers to entry mean that Coffee Exchange must continuously remain ahead of new and existing competition by offering new or improved products and services and providing more incentives to prospective franchisees and customers.

The need for fast loading and response times can be a difficulty for online marketing because of the technology driving website use. Improved video graphics, plug-ins and sophisticated rich media can enhance the visitors experience when entering the Coffee Exchange website. This means that increased investment into the e-business extension of the company can produce increased profitability and the number of prospective franchisees. A survey in the US found that there were four essential characteristics of a good website. It must be easy to navigate, continually updated, have in-depth information on its subject and must offer quick loading and response times.

How else could the Coffee Exchange Company use the Internet to promote its business?

Future developments of the Coffee Exchange website can become a valuable means of communicating with a potentially global audience easily and cost effectively, freeing them from the constraints of geographic catchment areas experienced by their traditional coffee roasting competitors.

Links

Coffee Exchange should utilise database software to register interested franchisees online, and visitors whom would like more information on the products and services on offer. By obtaining market information, Coffee Exchange will be able to assess the needs and requirements of their target market with more accuracy and will then be able to offer more specialised products and services by analysing customer feedback and response. Email newsletters containing the latest news, information and updates can then be sent to potential franchisees and customers encouraging a stronger relationship with the company and increasing awareness of the brand.

The website should reinforce the corporate identity and produce and display online product catalogues. It should be used to inform potential investors and franchisees; provide detail of current and archive press releases; provide basic product and location information; present the company history, mission and achievements and views; inform suppliers of developments; communicate with employees; attract new job recruits and have a Q&A page with frequently asked questions about the company and products.

Sponsorships

Survey conducted by Gaudin on 300 daily internet users. Brassingtom, Frances, ‘Principles of Marketing,’ 3rd Edition, Pearson Education Ltd, 2003.