Marketing Report

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Table of Contents
1. Introduction:........................................................................................................................................4
2. Company background:.........................................................................................................................4
3. External Analysis:...................................................................................................................................5
3.1 Market trends:....................................................................................................................................5
3.2 PESTEL Analysis:.......................................................................................................................6
3.3 Competitor Analysis:...................................................................................................................8
3.4 Supply and Distribution:..............................................................................................................9
4 Target segmentation:.........................................................................................................................10
5 Internal Analysis:...............................................................................................................................12
5.1 Strengths:.........................................................................................................................................12
5.2 Weaknesses:...............................................................................................................................13
5.3 Opportunities:............................................................................................................................13
5.4 Threats:......................................................................................................................................13
6 Factors affecting the organization:.....................................................................................................14
7. Ethical Concerns:...............................................................................................................................15
8. Recommendations:............................................................................................................................15
8.1 SMART Goals for Innovation Project:......................................................................................15
8.2 SMART Plan for implementing the identified goals:.................................................................16
8.3 Competitive Offerings achieved via this plan:...........................................................................16
9. Conclusion:........................................................................................................................................17

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List of Figures
Figure 1: PESTEL Analysis of Cafedirect...................................................................................................7
Figure 2: Price comparison of Instant Coffee brands in $/Ounce Source: Amazon, 2020.........................10
Figure 3: Cooperatives(suppliers) of Cafedirect........................................................................................11
Figure 4: Products of Cafedirect................................................................................................................12
Figure 5: Market Segmentation of Cafedirect............................................................................................12
Figure 6: Factors affecting the Cafedirect..................................................................................................15

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List of Tables
Table 1: SMART Plan for Cafedirect........................................................................................................17

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Executive Summary
The present report aims at analyzing the strategical marketing planning of a social enterprise

operating in the UK. Cafedirect is one of the leading social enterprises of UK that was

established in 1991. It was the UK’s first social enterprise to achieve fairtrade certification in

1994. Following the Golden Standard Principles, the organization strives hard to pay a fair price

to its farmers, and suppliers. The company reinvest 50-60% of its profits within a charity named

Producerdirect that is run by farmers for farmers. Moreover, the company has also integrated the

environmental and sustainability concerns within its business processes and acquired B Corp

certification in 2018.

Analyzing the marketing planning of Cafedirect in the light of theoretical frameworks and

models, it is revealed that politically stable environment in the UK, rising inflation and interest

rate due to corona, altering lifestyles and increasing consumption of coffee, use of technological

innovations for improving the quality and addressing the environmental concerns, and

compliance with consumer and environmental laws are major macro environmental factors

affecting the organization. Further analyzing the external environment, it was indicated that the

organization has not segmented its target audience clearly and faces intense competition from big

brands like Nescafe, Jacobs, and Folgers. On the other hand, the internal analysis has revealed

that its experience in fairtrade policy is one of its major strengths while low profit margin ratio

while pricing is major weakness. While new brands entering within the fairtrade market and

potential of expanding its operations are its major threats and opportunities. Based upon the

internal and external analysis, the TWOS matrix then identified the major factors affecting

Cafedirect and also identified strategies to address these factors.

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The report also suggested an effective innovation plan based upon the factors identified through

TWOS matrix. The major aims of this plan are to improve the brand salience and market

positioning of the company in the UK and introduce the brand in Asia. The report has identified

three SMART goals for accomplishing these aims and has also given a roadmap in the form of

SMART action plan for implementing these goals. It is expected that executing these goals will

not only improve the brand presence and competitive strength but also enabled the organization

to expand its operations.

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 1. Introduction:
A social enterprise is referred to an organization that operates with social objectives. The social

enterprise tends to maximize the profits it earns by using it for the betterment of the society and

environment. Social enterprises play a significant role in addressing social issues and improving

the lives of deprived societies through their innovative training and development programs.

Considering the significance of social enterprise, the present report is also focused on preparing a

comprehensive market report of a social enterprise i.e., Cafedirect operating in the UK.

2. Company background:
Cafedirect is a UK-based fairtrade social enterprise that was established in 1991. The company

was started after the drop in coffee prices to give a significant part of the purchase price to the

growers of coffee, tea, and coca. Cafedirect was the first social enterprise in the UK that acquired

the fairtrade certificate in 1994 and it was also the first social enterprise that reinvested 50-60%

of its profits in training and development programs for growers. In 2013 the company started

integrating its social and environmental strategies within its business strategy for reflecting the

integration of sustainability concerns within its business model. Moreover, in 2018, the company

became the first UK company to win B Corp Certification. The certification is a reward in

response to the company’s continued effort in integrating a sustainable hybrid business model

that enables it to consider its impact on all segments of society in addition to the environment

(Davis, 2019).

The award-winning social enterprise works with 29 cooperatives in 13 countries and possesses

45 employees. The company’s target market is the UK and its products are sold in a variety of

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UK superstores. The company is the third-largest coffee selling brand in the UK with a share of

34% and the 7th largest tea selling brand with a market share of 32% in 2020 (FTA, 2020).

The company maintains the best relationship with its stakeholders including suppliers, growers,

and customers as two of the eight seats within the company’s board are occupied by producers

and 89% of the producers possess shares within the company (Cafedirect, 2018). It is because of

its powerful relationships with its stakeholder that have enabled the company to enjoy a leading

position within the UK coffee and tea market.

3. External Analysis:
3.1 Market trends:
Analyzing the market trends for Cafedirect, it has revealed that consumption of coffee, tea, and

similar products has been increasing for the previous years. The research done by British Coffee

Association has revealed that coffee consumption in the UK increased to 95 million ups a day in

2018 (Cafedirect, 2018). Similarly, the statistics given by Statista have indicated that consumer

spending on coffee, tea, and coca enhanced to 39.3 billion British Pounds (Ridder, 2020). The

market analysis has further revealed that both out-of-home coffee shop experience and at-home

innovation increased significantly. Since research has shown that more than 80% of UK people

go to coffee shops once a week. Moreover, at the same time, people also started recreating the

barista experience at home by moving towards roasted and grounded formats.

Consumers also started valuing fair trade and environmentally sustainable products. This is the

reason that the retail sales of fairtrade coffee enhanced by 250% from 2004-2014. This increase

is attributed to the introduction of a large number of ethical coffee accredited brands like UTZ

and Rainforest Alliance. Research has shown that 9 out of 10 tea brands and 7 out of 13 coffee

brands possess ethical accreditation (Cafedirect, 2018).

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The average price of coffee products has increased thus increasing the worth of the UK coffee

market to £1.3bn in 2018. However, despite this growing exhilaration in coffee, Cafedirect

values £8.6m which is quite less as compared to Nescafe having £402m. Moreover, the brand

also needs to revitalize its grounded and roasted category and harness the maximum benefit by

attracting out-of-home coffee enthusiasts (Armour, 2019).

3.2 PESTEL Analysis:

PESTEL analysis is one of the most effective frameworks for analyzing the impact of macro

factors on the organization (Buye, 2021). See the figure below for the detailed analysis:

Figure 1: PESTEL Analysis of Cafedirect

Source: (Buye, 2021).

1. Political: The political factor plays an essential role in either providing a favorable or

unfavorable environment for the growth and development of different businesses.

Analyzing the external environment, it is revealed that a politically stable environment,

UK stable currency, government support for new startups and ethically responsible

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 companies, and environment-friendly laws and policies are the main political factors that

can influence the operations of Cafedirect (Cafedirect, 2021).

2. Economic: The economic factor poses a significant impact on the operation and

performance of Cafedirect. The ongoing corona pandemic has placed serious impacts not

only on the global economy but also hit the UK economy hardly, thus influencing

business organizations in all sectors. The increasing inflation and interest rate, rising

operational cost due to escalating cost of different materials and resources, and rising

fluctuation in income are prominent economic factors that possess the significant

potential of affecting Cafedirect (Cafedirect, 2019).

3. Social: The social factor is another important macro-environmental factor that can place

a significant impact on Cafedirect by influencing the demand and consumption of coffee,

tea, and other related products. The social factors that are important for Cafedirect

include adequate disposable income, changing preferences and lifestyle, rising coffee

consumption, increasing awareness about fairtrade and ethical products, and rising

popularity of both in-home innovations and out-of-home coffee consumption. All of these

social factors led to a significant rise in demand for coffee products and enhance the

competition, thereby acting as a challenge for Cafedirect.

4. Technological: The increasing technological innovations and advancements are also

important for business organizations operating in different sectors. The technological

factors impact the organizations due to the potential in improving the quality and

integrating the environmental and ethical concerns within the business processes. The

major technological factors possessing the potential to influence Cafedirect are the use of

innovative material for making alternative packages, using innovative technologies while

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 manufacturing and recycling coffee, improving the carbon footprint of coffee, the cost of

installing these technologies, and the cost of training employees for using these

technologies (Davis, 2019).

5. Environmental: The rising awareness about environmental protection and sustainable

development also makes it an important factor for all organizations. As consumers started

preferring and buying those products that are environmentally responsible and integrate

environmental protection and sustainable development within their business processes.

Moreover, consumers value the brands that strive to reduce their carbon footprint both

locally and internationally (FTA, 2020).

6. Legal: The legal factors are also very important for guaranteeing the adequate repute and

position of organizations within the market. Compliance with the relevant and applicable

laws are very essential as in the other case, it will lead to court proceedings and penalties

which not only affect the organization’s repute but also influence the financial health of

the company. The applicable laws in the case of Cafedirect include laws governing tax,

licenses, employee management, and laws relevant to environmental protection

(Cafedirect, 2021).

3.3 Competitor Analysis:

Cafedirect faces intense competition from big brands like Nescafe, Jacobs, Folgers, Maxwell

House, and Yuban. Nescafe is the largest selling brand in the UK and other brands are also

gaining popularity thus acting as a challenge for Cafedirect. (Cafedirect, 2019). The price

comparison of Cafedirect Instant Coffee brand with other leading brands is given in the figure

below:

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 $4.00

$3.50

$3.00

$2.50

$2.00

$1.50

$1.00

$0.50

$0.00
Nescafe Gold Espresso Cafédirect Fairtrade Jacob Cronat Gold Folgers Classic Decaf
Instant Coffee Machu Picchu Instant Instant Coffee Instant Coffee
Coffee

Figure 2: Price comparison of Instant Coffee brands in $/Ounce Source: Amazon, 2020

The price comparison has revealed that Cafedirect is expensive as compared to Jacob and

Folgers Instant Coffee. While on the other hand, it is cost-effective as compared to Nescafe

which indicates that the profit margin within prices is very low in case of Cafedirect for paying a

fair price to growers.

3.4 Supply and Distribution:

The suppliers of Cafedirect are 29 cooperatives in 13 different countries of the world. The

company while purchasing products from cooperatives ensures to give 100% fairtrade price to

the local farmers/growers. This price not only enabled the farmers to cover their cost of

production but also maintain their farms sustainably and ensure good quality. The company is

also considered a reinvestment company as instead of paying the dividend to shareholders, it

reinvests its 50% of the profit into Producerdirect, a charity run by farmers for farmers.

Moreover, the company also procures 50% of its coffee as organic coffee and pays an additional

organic premium to farmers (Cafedirect, 2019). The cooperatives with which Cafedirect works

are as below:
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 Figure 3: Cooperatives(supplier’s) of Cafedirect Source: (Cafedirect, 2019)

On the other hand, the distribution channels of Cafedirect include

 UK superstores including TESCO, Waitrose, Sainsbury’s, ASDA, OCDo, BOOTHS,

Bidfood, Brakes, The Big Issue, The Cooperative, and ethical superstores.

 Cafedirect online shop

 Third-party online stores like Amazon

4 Target segmentation:
The products offered by Cafedirect are different varieties of coffee, tea, and chocolate. Some of

the products are (Cafedirect, 2022):

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 Figure 4: Products of Cafedirect

Cafedirect deals with both retail and online customers. Both types of customers belong to a wide

age group of 18-45 years old. The customer segmentation of Cafedirect is given in the figure

below:

Figure 5: Market Segmentation of Cafedirect Source: (Singh, 2019)

The market segmentation of Cafedirect has revealed that it has four segments. Geographically,

Cafedirect offers its products within UK superstores and online stores. While demographically, it

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serves both males and females belonging to an age group of 18-45 years. This segment includes

young students, young and old professionals, and retired people. Psychologically, it has attracted

and retained its customers by providing fairtrade and environmentally responsible products. And

behaviorally, the offered products aimed at offering fine quality and taste, ensuring the

acknowledgment of suppliers and farmers, and improving farmer’s live through effective training

and development programs (Cafedirect, 2018).

5 Internal Analysis:
SWOT analysis is one of the most effective frameworks for analyzing the internal strengths and

weaknesses and external opportunities and threats to an organization (Namugenyia, 2019). The

SWOT analysis of Cafedirect is discussed below:

5.1 Strengths:
Some of the strengths of Cafedirect include (Cafedirect, 2018):
 A strong relationship with all stakeholders including customers, growers, and suppliers

 Work with specialized growers possessing great expertise in producing high-quality

coffee and tea

 Investing 50% of the profit within Producerdirect, a charity run by farmers for farmers.

The charity aims to help farmers by providing them with training, technical assistance,

financial assistance, and other developmental programs

 Integrating environment and sustainability within their business processes by buying 50%

of the organic coffee beans and paying an organic premium

 Pay 100% fair price to consumers that not only allow them to cover their cost of

production but also run their farms sustainably and maintain premium quality

 Cafedirect is the first Coffee brand that acquired fairtrade certification

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  Moreover, the company also obtained B Corp Certification in 2018 for adequate

integration of environment and sustainability

 The focused marketing campaign of Cafedirect has enabled the company to build a strong

brand image which has led to constant growth in revenues

5.2 Weaknesses:
Some of the weaknesses of the company are (Davis, 2019):
 The company possesses a huge potential of generating a large amount of profit and

paying the dividend to its shareholders, however, the fairtrade policy of the organization

based upon its Golden Standard Principles has refrained it from doing this. Therefore, the

company’s profit margin is very less while pricing the products to deliver a fair price to

growers

 Moreover, the company also reinvests 50% of its profit within a charity i.e.,

Producerdirect for the growth and development of growers and farmers

5.3 Opportunities:
Some of the prominent opportunities for Cafedirect are (Cafedirect, 2019):

 The strong relationship with growers and suppliers has built strong credibility and image

within the market

 This acts as an opportunity for Cafedirect to expand internationally in different parts of

the world.

5.4 Threats:
Some of the major threats to the organization are (FTA, 2020):

 The entry of new coffee brands within the fairtrade market may pose a threat to the

market share of Cafedirect

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  A sudden alteration in the prices of coffee or tea can pose serious impacts on the

organization

 A natural disaster or uncertain event can pose serious damage to the crops of coffee, tea,

and coca

 Though Cafedirect possess a strong relationship with suppliers, however, high offering

from other brands can disturb their relationships and supplies

 A weak positioning of Cafedirect within the market can affect its position and share

within the market.

6 Factors affecting the organization:

In the purview of both external and internal analysis of Cafedirect, TOWS matrix is one of the

best frameworks to identify the factors affecting the organization. The TOWS matrix identifying

important factors for Cafedirect is shown in the figure below (Dandage, 2019):

Figure 6: Factors affecting the Cafedirect

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Figure 6 has indicated six important internal and external factors that can affect the position of

the company within the market. The TWOS matrix has also enabled to define some strategies for

addressing these factors. Implementing these strategies will not only help the company to

maintain its market share in the UK but also acquire good market shares in Asia, Latin America,

and other countries, thus making it an international organization.

7. Ethical Concerns:
Following the Golden Standard Principle, the company always purchases 100% fairtrade

products from suppliers and ensures that growers are paid a minimum plus an additional fairtrade

premium. The premium is used for setting up healthcare units within remote areas for saving

many lives, building classrooms in various schools, paying school fees for orphans, and other

community projects. Above all, the company also invests 50% of its profits in improving

farmer’s lives by running charities, providing access to agricultural workshops, microloans, and

offering marketing support and data management.

8. Recommendations:
For avoiding the negative impacts of highlighted factors, the report suggests the innovation

project focusing on improving the market positioning of the company and then introducing the

company outside the UK. This innovation project can be implemented through the following

SMART goals and objectives:

8.1 SMART Goals for Innovation Project:

The SMART goals for implementing the innovation project are:
 Increase the brand salience by 50% within five months

 Improve the market positioning of the brand by 50% within five months

 Introduce both grounded and instant coffee within Asia within one year

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 8.2 SMART Plan for implementing the identified goals:
For implementing the identified SMART goals, the following plan is recommended:
Table 1: SMART Plan for Cafedirect

Objective Substantiation Strategies to accomplish the objectives KPIs (critical success

(informed by a factors)
situational analysis)
Increase brand It possesses weak Assess brand category opportunity via a The effectiveness of
salience by 50% brand salience, brand lift study brand salience can be
within five months however, its strong Enhance brand salience with videos either accessed via:
image and credibility using emotional stories or highlighting the
of Cafedirect due to brand offerings (Toyama, 2020). Taking in-depth feedback
its good relations Establish an engaging advertisement by from the audience via
with suppliers can be highlighting the beliefs of the brand and surveys or focus group
employed to enhance creating a brand experience that encourage discussions (Hilson,
brad salience people to associate themselves with the 2021)
brand (Hilson, 2021).

Improve the market It possesses weak Identify the target market and segment it The effectiveness of
positioning of the market positioning appropriately market positioning can be
brand by 50% within and its profit-margin Highlight the value proposition and measured via:
five months ratio is also low for competitive offerings of the brand clearly
delivering a fair price Showcase your expertise by finding your Visibility of your
to farmers place within the competitive landscape and products
pricing the products properly (Prewitt,
2017). Comparing the sales
before and after the
strategy implementation
(AMW, 2018).

Introduce the brand New entrants within Conduct comprehensive market research to The effectiveness of the
within Asia in one the fairtrade market know the trends of coffee consumption and brand launch in a new
year affecting the position popular choices country can be evaluated
of Cafedirect Identify the target audience and must know via (Mirman, 2019):
what competitors are offering
Secure the online position before launching Leads generated
physical stores Website traffic
Attract the audience through unique News coverage
offerings Consumer usage
Market share
Sales and revenue
Win rate of competition

Source: Author’s analysis

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 8.3 Competitive Offerings achieved via this plan:
By implementing the SMART plan recommended above: Cafedirect will possess a strong brand

presence within the UK as consumers will think about Cafedirect whenever they need coffee, tea

or hot chocolate. Moreover, the improved competitive strength of the brand will also inspire the

consumers to prefer Cafedirect over its competitors within the UK and lead to increased sales.

The brand launch in Asia will not only enable the company to expand its operations and become

global but also improve its yearly profits.

9. Conclusion:
In conclusion, Cafedirect is one of the exemplary social enterprises in the UK which has always

prioritized its fairtrade policy and worked for the betterment of its growers and farmers. Though

it possesses a prominent position within the UK coffee market, nevertheless, its weak brand

salience and market positioning are some of the most pressing challenges. Moreover, the low

profit-margin ratio while pricing the products also sometimes diverts the consumers towards

other brands. The suggested SMART action plan intends to address all of these challenges within

one and a half years and it is expected that implementing this plan will strengthen the company’s

position both within and outside the UK.

It was initiated in
response to the collapse of
Coffee prices with a purpose to

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give a large portion of the
purchase
price to growers of coffee
bean, tea, and cocoa.
Cafedirect was the first
social enterprise
organization who obtained a
certificate of fair trade and
reinvested sixty percent of its
profits in
development programs and
training of growers. Cafedirect
strategic innovation has
empowered

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the organization to increase its
market share. They have
become the fifth largest coffee
brand in
the UK with a market share of
thirty-four percent. In the tea
th
market, they are a ranked 7

largest
brand with a market share of
thirty-two percent. Cafedirect
purchases a large portion of tea
and
coffee beans from a
Kayonza Growers Tea
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Factory Limited and support
the factory by
purchasing on a price that
allows the factory to cover its
costs. Cafedirect also pays a
premium to
its suppliers, which is used in
setting up healthcare units in
remote areas to save lives of
people,
building classrooms of different
schools, paying a school fee of
orphans, and in other projects of
community (D

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