mky issue 2
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The Story of Cafédirect
Social Enterprise Marketing
AgendaAgendaIntroductionIntroductionSocial EnterpriseSocial EnterpriseFair TradeFair TradeCafédirectCafédirect
TheoriesTheoriesCorporate-Reputation Corporate-Reputation QuotientQuotientKano ModelKano ModelProduct/Market GridProduct/Market Grid
Case ApplicationCase Application
Learning InsightsLearning Insights
AgendaAgendaIntroductionIntroductionSocial EnterpriseSocial EnterpriseFair TradeFair TradeCafédirectCafédirect
TheoriesTheoriesCorporate-Reputation Corporate-Reputation QuotientQuotientKano ModelKano ModelProduct/Market GridProduct/Market Grid
Case ApplicationCase Application
Learning InsightsLearning Insights
SSocia
l En
terp
riseSocial enterprises are social mission driven organizations which trade in goods or services for a social purpose.
Triple bottom line: people, planet and profit
social, environmental, financial
not-for-profit -- more than profit
SSocia
l En
terp
rise
FFair Tra
de
Fair trade
is a trade partnership, based on dialogue, transparency and respect, that seeks greater equity in international trade.
contributes to sustainable development by offering better trading conditions to, and securing the rights of, disadvantaged producers and workers - especially in the South.
Its organizations are actively engaged in supporting producers in awareness raising and in campaigning for changes in the rules and practices of conventional international trade
FFair Tra
de
2007$2,381,000,00
0
2006$1,623,000,00
0
2005$1,141,570,19
12004 $831,523,0662003 $554,766,7102002 $300,000,0002001 $248,000,000
Global Fair trade Sales
CCafed
irect
1989• Collapse of
the International Coffee Agreement
1991• Cafédirect
was born
2004• Cafédirect
become a publicly listed company
2007•Cafédirect was voted as the most recommended brand in the nation in a survey of 2,000 companies
CCafed
irect
– 39 grower organizations across 13 developing countries– 260, 000 farmers and directly improving the lives of more than 1.4 million people
– Invested more than £3.3 million of profits directly into communities of growers, and paid more than £13 million over and above market prices for the raw material
Today
CCafed
irect
CCafed
irect
CCafed
irect
1993 -1995
CCafed
irect
1996 -1998
CCafed
irect
1999-2001
AgendaAgendaIntroductionIntroductionSocial EnterpriseSocial EnterpriseFair TradeFair TradeCafédirectCafédirect
TheoriesTheoriesCorporate-Reputation Corporate-Reputation QuotientQuotientKano ModelKano ModelProduct/Market GridProduct/Market Grid
Case ApplicationCase Application
Learning InsightsLearning Insights
Corporate Reputation QuotientCorporate Reputation Quotient Theory 1Theory 1
• Six drivers of the corporate reputation quotient
Corporate Reputation QuotientCorporate Reputation Quotient
• Products and Services– To guarantee high quality
• Cafédirect controlled the produce delivered• it also invested heavily in training producers on the
ground– Key achievements in 2000 demonstrated
Cafédirect’s success in attaining high quality• “Best coffee” by Best magazine• Awarded 5 stars by Prima magazine • Voted “ favorite coffee” by the UK’s leading consumer
magazine– Fair trade – Direct trade
• By providing long-term contracts and producer education, direct trade allows importers to obtain high quality coffee – year in and year out While most large coffee importers buy coffee beans on the spot market, direct trade has a built-in supply chain for reliable high-quality gourmet coffee.
Theory 1Theory 1
Corporate Reputation QuotientCorporate Reputation Quotient
• Vision and leadership– Ian Lepper: Cafédirect’s first CEO.
• After he left, Cafédirect went through some turbulent stages:
– The partnership between the four founding ATOs was being stretched.
– Overall sales in 1998 increased by only 8%.– The underlying direction of the charity spin-off was unclear.
(the interests of business partners, producer groups, grassroots supporters and founders diverged)
– Penny Newman:• She was a milestone MD of Cafédirect. • Bring Cafédirect from charity spin-off to ethical business
venture• New vision: reposition Cafédirect as a high quality coffee
brand– Anne MacCaig: Cafédirect’s new Chief Executive
• She has a wealth of business and marketing experience– She has an economics degree from the University of
Birmingham. – In the past 20 years she has worked with major brands here in
the UK and abroad, including Persil and Rolls-Royce plc.– Most recently, as Ribena’s Marketing Director, Anne led the
brand’s strategic turnaround
Theory 1Theory 1
Corporate Reputation QuotientCorporate Reputation Quotient
• Workplace environment:– For Cafédirect, employees are their producers
(small-holders in the third world)
– Several benefits are provided to its producers• A minimum price, which will always be paid
even if the world market price falls below this point.
• A price premium of a given percentage, which is paid when the world market price rises beyond the minimum price.
• Pre-financing of 60% of the total order to allow small-holders to buy raw materials.
• Training in quality control and marketing know-how to build the capacity to also trade on the world market independently of fair trade.
Theory 1Theory 1
Corporate Reputation QuotientCorporate Reputation Quotient
• Social responsibility:– Cafédirect’s mission statement:
• At Cafédirect our mission is to change lives and build communities through inspirational, sustainable business. We focus our social and economic impact in the developing world.
Theory 1Theory 1
Kano ModelKano Model Theory 2Theory 2
Kano ModelKano Model
3 categories of quality attributes influence customer satisfaction:
• Basic FactorsDissatisfier - Must be’s – Cost of Entry
• Excitement FactorsDelighter – Latent Need – Differentiator
• Performance Factors Satisfier – More is better – Competitive
Theory 2Theory 2
Kano ModelKano Model Theory 2Theory 2
Factors KANO Category How to do better
Sanitation & Safety Basic NeedsKeep and have to satisfy
customers above the average level
Quality Basic Needs
Taste Performance
Sustaining improve on to gain more return
Package Performance
Distribution Performance
Sales Promotion Surprise
Dig and focus onBrand Surprise
Kano Model applied to Food&Beverage industry
Kano ModelKano Model Theory 2Theory 2
Quality - Clients were usually concerned citizens for whom the
charity aspect of fair trade prevailed over product quality.
- Penny Newman-reposition Cafédirect as a high quality coffee brand
- Direct Trade(long-term contracts and producer education built-in supply chain for reliable high-quality gourmet coffee)
Sanitation & Safety - Government report - Product Recall of Cafédirect product
(found small pieces of glass)- Hazard Analysis Critical Control Point, or HACCP, is a
standard of food safety management system for any food producer wanting to sell into the UK and other European markets. Now it is for all parts of the supply chain Basic factors
Kano ModelKano Model Theory 2Theory 2
Performance factors
Distribution - Target the mainstream distribution channels such as supermarkets, catering, and coffee bars
Taste - "Some batches tasted very good and others tasted very poor. That generated a lot of negative reaction in the UK to Cafédirect in the first years." (Hudghton, 2002, interview)- Cafédirect's Gold Standard Programme - Train growers to professionally taste their own products, helping them to improve quality and understand market value
Kano ModelKano Model Theory 2Theory 2
Performance factors
Package - Cafédirect undertook a major brand relaunch in 2006 to help unify the brand look and aid it competitiveness
Kano ModelKano Model Theory 2Theory 2
Excitement factors
Brand - 8 Awards in 2008- August 2008: Cafédirect triumphs in Great Taste Awards - In a survey of 2,000 global brands Cafédirect ranks No. 1 as the most recommended brand
Social Enterprise concept- Combining taste, price, ethics, and
availability- 良心消費主義 (ethical consumerism)
Product/Market GridProduct/Market Grid Theory 3Theory 3
Ansoff Ansoff MatrixMatrix
Product/Market GridProduct/Market Grid Theory 3Theory 3
Source: Cafédirect annual report 2006-2007
Product/Market GridProduct/Market Grid Theory 3Theory 3
Ansoff Ansoff MatrixMatrix
Product/Market GridProduct/Market Grid Theory 3Theory 3
Cafédirect use 3 major approach
Encourage current customers to buy more
Attract competitor’s customers
Convince non-users to use the product
Product/Market GridProduct/Market Grid Theory 3Theory 3
Tesco increased its Cafédirect offering by another five products in 2006
Morrison’s expanded Cafédirect range, adding Medium Blend, Organic Decafeninated, Machu Picchu and Palenque Roast etc in 2006
At the beginning of 2007, Co-op increased the number of their stores selling Cafédiret’s products. They have agreed a strategy to encourage customers to buy more Cafédirect products this year. (annual report 2007 p.21)
Keep high quality products Emotional approach
Product/Market GridProduct/Market Grid Theory 3Theory 3
When the current product is launched in a new market, there are three approaches to develop the market: 1. Expand distribution channels. 2. Sell in new locations.
3. Identify the potential users.
Product/Market GridProduct/Market Grid Theory 3Theory 3
Annual report 2005-06
Cafédirect introduce existing products in foreign market Hong KongListing with a major supermarket chain “Parknshop” 50 storesIrelandNow available in all their major supermarket and many independent storesSales increased by 19% in 2005Paris
Product/Market GridProduct/Market Grid Theory 3Theory 3
Annual report 2005-07
Product/Market GridProduct/Market Grid Theory 3Theory 3
Originally, coffee, later, hot chocolateWhen a new product is launched in the current market, the intensive growth strategies could be to: 1. Develop new features. 2. Develop different quality levels. 3. Improve the technology.
Product/Market GridProduct/Market Grid Theory 3Theory 3
Annual report 2005-06
AgendaAgendaIntroductionIntroductionSocial EnterpriseSocial EnterpriseFair TradeFair TradeCafédirectCafédirect
TheoriesTheoriesCorporate-Reputation Corporate-Reputation QuotientQuotientKano ModelKano ModelProduct/Market GridProduct/Market Grid
Case ApplicationCase Application
Learning InsightsLearning Insights
Nike vs. child labor in the 90s
CorporatCorporate e
ReputatiReputation on
Quotient Quotient applicatiapplicati
onon
People criticizes:•“Nike’s success story is not based on good name and advertising alone but also attached to it is the tears of tortured workers and child labor.”•“Nike has the habit of hiding behind its good public image and its effective means of promotions and advertising. “
Consumers - "Just don't do it."
CorporatCorporate e
ReputatiReputation on
Quotient Quotient applicatiapplicati
onon
• Nike’s solution– Code of Conduct,1992– Minimum age for employment, 1998
• Footwear(18), others(16)• Apply Occupational Safety and Health
Administration (OSHA) standard– Nike set up a Corporate Responsibility
and Compliance Department, 2000• Join the Global Alliance for workers and
communities and Fair Labour Association
CorporatCorporate e
ReputatiReputation on
Quotient Quotient applicatiapplicati
onon
• Nike’s Current Code of Conduct– Prohibition of forced labor – Prohibition of child labor– Compensation:pay at least the minimum total
compensation required by local law– Benefits :comply with all provisions for legally
mandated benefits– Ensure overtime payment– Ensure a health and safety working
environment– Environment: continuous improvement in
processes and programs to reduce the impact on the environment
– Maintain on file and documentation to demonstrate compliance with this Code of Conduct, and to make these documents available for auditor's inspection upon request
CorporatCorporate e
ReputatiReputation on
Quotient Quotient applicatiapplicati
onon
Kano Kano Model Model
applicatiapplicationon
✴ Active Links✴ Legibility✴ Safety
Kano Kano Model Model
applicatiapplicationon
✴ Storage✴ Upload speed✴ Tag & Search
Kano Kano Model Model
applicatiapplicationon
✴ Photo Editing✴ Community✴ Fun
Kano Kano Model Model
applicatiapplicationon
Photo Photo EditingEditing
““Wow, my photos are
Wow, my photos are
sharpened automatically”
sharpened automatically”
Photo Photo EditingEditing
““Wow, I can add my own
Wow, I can add my own
Text and Stickers”
Text and Stickers”
CommuCommunitynity
““Wow, I can find something
Wow, I can find something
interesting about Hong Kong”
interesting about Hong Kong”
CommuCommunitynity
““Wow, this guy is quite
Wow, this guy is quite
popular here”popular here”
FunFun
““Wow, the way of browsing is
Wow, the way of browsing is
cool”cool”
FunFun
““Wow, I can explore the
Wow, I can explore the
world”world”
FunFun
““Wow, they have widgets can
Wow, they have widgets can
be embedded into other
be embedded into other
sites”sites”
Product/Product/Market Market
Grid Grid applicatiapplicati
onon
•Aggressively expanding the number of stores in Japan
•Strengthening the group’s core brands and maintaining flexibility with regard to distribution channels and retailing formats
Product/Product/Market Market
Grid Grid applicatiapplicati
onon
The result was a 2.2% increase in net sales to 136,312 million yen
Product/Product/Market Market
Grid Grid applicatiapplicati
onon
•Business Expansion in the Asian and American Markets•Overseas sales increased 17% year on year 2007 due to the business expansion on China, Taiwan and South Korea.
Product/Product/Market Market
Grid Grid applicatiapplicati
onon
•2005, JILL STUART•2006, Perfume containing natural fragrances Skin care series featuring natural fruit extracts
AgendaAgendaIntroductionIntroductionSocial EnterpriseSocial EnterpriseFair TradeFair TradeCafédirectCafédirect
TheoriesTheoriesCorporate-Reputation Corporate-Reputation QuotientQuotientKano ModelKano ModelProduct/Market GridProduct/Market Grid
Case ApplicationCase Application
Learning InsightsLearning Insights
Learning Insights
“New Fair Trade” ATOs
Style Business Idealistic
Skills Sales, Marketing Intellectual
Strategy Make money to help Advocacy
Values Commercial but ethical
Non-commercial
Staff Professional Semi-volunteers
System Dependable More ad-hoc
Structure Performance-based,clear responsibilities
Democratic, Political
From Cafédirect’s case, we learn that1. SE should keep long-term relationships with small-holders and set high standard of quality2. SE should market itself just like commercial organizations3. Guarantee basic factors, improve performance factors and make “Social Enterprise” identity as the excitement factor4. Expand to mass market by increasing distribution channels
Learning Insights
Learning Insight -- Student residence canteen in Cityu
In previous years, it was owned and manipulated by Women cooperation ( 妇女合作社)
Women cooperation is a sub-organization of Hong Kong Work Association for Women ( 香港妇女劳工协会), which is a registered non-profit organization. The organization aims at concerning women’s working problem and providing them with working opportunities.
However, at that time, the situation in the residence canteen was:
•The food was not delicious at all.
•The food quality was quite bad.
•The attitude of the staff towards residence students was annoying.
•Residences complained a lot about the residence canteen.
Learning Insight -- Student residence canteen in Cityu
SRO realized this problem, and change the owner from 妇女合作社 to Homey Kitchen.
It is just like the residence canteen move from pure non-profit organization to more customer-focus.
This change was proved quite successful.
Mission of Homey Kitchen:
To provide residents with healthy and delicious food as well as comfortable service.
• Homey Kitchen provides food and drinks with good quality, and staff attitude is very nice.
• Homey Kitchen does quite a number of promotions, here are two examples:
1. EXPRESS Lunch Box: Only $12 can buy you a single entrée and pre-packed lunch box!
2. FREE Drink: Come for a free soothing drink after 9pm (while suppliers last) from 28 April to 18 May 2008!