Establishing a New Standard in the Home Coffee Market

Establishing a New Standard in the Home Coffee Market
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Establishing a New Standard in the Home Coffee Market
Coffee beverage is perceived to be different from other types of drinks for instance tea in regard to the quality and the taste it has. People like different beverages due to different reasons. They may be due to health reasons or regarding the aspect of quality of the beverage. When the coffee manufactured by Sara Lee Douwe Egbert's (SLDE) is compared to other beverages, its quality is of high standards according to the research findings as conducted by Senseo. This has boosted marketing of Coffee in many countries in a profound extend, for instance, it has expanded the markets into the United States as well as the European region. The breakthrough in the process of marketing is alluded to the two Dutch giants that had joined forces to launch the Senseo brewing coffee which marked a single revolutionary in the coffee brewing system. The two giants comprised of Sara Lee Douwe Egbert's (SLDE) and the Philips group. Various approaches were used by the competitors, and an example is the use of innovative methods that aimed at raising the standards of the competitors' products. The two partners became stronger as time went by and expanded their market to the United States introducing a new leverage of coffee. Critical challenges of the alliance design are well explained, for example, the challenge of equity which was lower at the place and the incumbents had prepared to defend their territory (Henry, 2005). The problem of deciding the type of marketing strategy to be employed was also common. The two partners, mostly the SLDE, have three prolonged strategies for the coffee business. The strategy mainly focused on the branding approach, marketing method used and innovative ways employed in the process of coffee production. They are aimed at boosting the attractiveness of coffee as compared to other beverages. The appropriate business model to be applied, the successes of the two alliances and their performances, as well as, if the partners should enter the US market, the approaches to be employed for them to survive is well explained in the essay.
The Brief Summary of the Case Study
The case study is concerned with establishing a market globally for the selling of the beverages. Various organizations were producing the same product, and therefore, the competition was a big challenge. Consumers' product selection was based on the quality of the product which was to be of required standards. There were also other factors which were minor though of paramount importance in determining the consumers' choice of the products. An example was the branding strategy employed in making the product together with the color of the product distinguishing it from the others. The companies were forced to combine the forces to come up with the brands that made stiff competition for the market to other companies producing similar product (coffee beverage). In the beginning, Philip group unified with Nestles, which later turned down in 1997 and was forced to join the SLDE, which had made much prosperities. Philips had to wait for some time for it to start enjoying the benefits since it had initially turned down the offer. To catch up with the SLDE that had made many investments earlier, Philips was to work hard and then gain the returns later. According to the case study, United States has been seen to offer the highest market globally and the consumers are always interested in the quality of the product. This explains why every producing company that considered its customers first survived because the consumers focused on the quality of the product. Other countries consuming coffee as per the studies includes; Netherlands, Greece, Brazil, Germany, Italy and the United Kingdom. The joined forces of SLDE and the Philips was successful as much profits were realized.
Critical Challenges of the Collaboration Design
The alliance faced various problems that needed the careful approach for the success to be achieved. Some of the challenges include:
Competitors started to get into the market creating marketing competition which impacted negatively on the cost of the product. The problem resulted to low profits being realized. The competition was a major challenge particularly enhanced by the Chines manufactures. The Chinese came up with cheap and consistently improved products that gave stiff competition to the Philips' productions hence impacting their branding. The Philips were left with only one option to ensure that they stand in the contest, and that was the use of new innovative approach in making their brands which resulted to a lot of expenditure while saving very little. The challenge led to small profits being realized since the company's target was to eliminate its competitors first and then benefits to be achieved later.
According to the studies, the companies were operating in mature and declining markets where the sales were flat and the margins were fading away due to competitive pressure and product commoditization. In France and Germany, the market leader by the name Kraft offered pods that were compatible with Senseo machines. The challenge made it difficult for the customers to choose between the two similar products manufactured.
There was the time factor challenge in ensuring that equity was well regarded while making up the brands. Hence, investment in brands became a profound challenge too. The design machine consumed a lot of time before it could work efficiently. The research asserted that the launch of the device had been delayed twice since the study for the system alone consumed six years, and the internal analysis of computer alone took two years.
The brands were mainly made disregarding the fact that the business was sensitive to macroeconomic circumstances and suffered recently both a 4% drop in the amounts according to the research. The weak economy was a challenge that affected branding too. The situation forced the company to close five roasting facilities and only refocused on its sales that forced on high-value customers particularly those with higher margins specialty coffee and gourmet coffee needs.
The company faced a challenge of how to introduce new machine design without confusing the consumers. The customers were used to the older systems and could not change promptly as the alliance expected of them. It served as the reason as to why the company was weighing on modifying the design because the cost of the original machine in the production process appeared to...