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J.CO Donut & Coffee Marketing ( Principles of Marketing )

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J.CO Donut & Coffee Marketing ( Principles of Marketing )
Faculty of Communication and Media
Universiti Selangor

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J.CO Donut & Coffee Marketing ( Principles of Marketing )

  1. 1. J.CO DONUT AND COFFEE SUBJECT PRINCIPLES OF MARKETING | JMS1263 PREPARED BY ZULFADLI BIN YUSMAR 4151004191 ZULKARNAEN BIN ZAINAL ABIDIN 4151006631 MUHAMAD SHAFIQ BIN AMSIR 4151002751 NUR LIYANA INSYIRAH BINTI SAAYA 4151006601 AKMAL SYAFIQ BIN MOHARMI 4151003831 NUR ELYANA ZALINI BINTI AHMAD ZULHILMI 4151006131 MUHAMAD AZLIE BIN MOHD AZZHAR 4151003941 NIK MUHD HANIF FATHI 4154009731 LECTURER MR. ROSLEE BIN ALI SUBMISSION DATE 3 DECEMBER 2015
  2. 2. CONTENT 1.0 EXECUTIVE SUMMARY 1 - 3 2.0 CURRENT MARKETING SITUATION 2.1 Environment 2.1.1 Market Desciption 4 2.1.2 Product Review 4 Competition 5 Distribution 6 2.2 Market Analysis 2.2.1 Market Segmentation 2.2.1.1 Geography 7 2.2.1.2 Demography 8 2.2.1.3 Psychographic 9 2.2.1.4 Behavioral 10 2.2.2 Target Market 11 2.2.3 Positioning 11 3.0 STRENGTH, WEAKNESS THREAT AND OPPORTUNITY (SWOT) ANALYSIS 12 3.1 Strength 13 – 14 3.2 Weakness 15 - 16 3.3 Oppurtunity 17 – 18 3.4 Threat 19 - 20 4.0 OBJECTIVES AND ISSUES 21 4.1 Vision 4.2 Mission 4.3 Award 4.4 Objective 4.5 Issue 5.0 MARKETING ENTRY STRATEGY 22 5.1 Marketing Mix 5.1.1 Product 23 - 26 5.1.2 Price 27 5.1.3 Promotion 28 5.1.4 Place 28 5.2 Strategy Alternatives 5.2.1 Product Life Cycle (PLC) 29 5.2.2 BCG Growth-share Matrix 30 5.2.3 Five Forces Driving Profitability
  3. 3. 5.2.3.1 Supplier Power 31 5.2.3.2 Buyer Power 31 5.2.3.3 Threat of New Entry 32 5.2.3.4 Threat of Substitute 32 5.2.3.5 Competitive Rivalry 32 5.2.4 Product-Market Expansion Grid 33 5.3 Marketing Communication Mix 34 6.0 ACTION PROGRAM 6.1 Gantt Chart 35 - 36 7.0 BUDGET 7.1 Products 37 7.2 Calculations 38 7.3 Profits 39 7.4 Breakdown 39 7.5 Budgeting Method 40 7.6 Promotions and Activities of J.CO Donuts & Coffee Malaysia 41 - 42 8.0 CONTROL 8.1 Annual Plan Control 8.1.1 Sales Analysis 8.1.1.1 Sales Target for a Month 43 8.1.1.2 The Issues Why J.CO Donuts & Coffee Can’t Achieve Target 44 8.2 Market Share Analysis 8.2.1 Big Apple 45 8.2.2 Krispy Kreme 45 8.2.3 Most profitable product 46 8.2.4 Marketing Expense to Sales Analysis 46 8.2.5 Profitability Control 8.2.5.1 Internal Control 46 - 47 8.2.5.2 External Control 48 9.0 APPENDIX 49 10.0 REFERENCES 50
  4. 4. 1   1.0 EXECUTIVE SUMMARY J. CO Donuts & Coffee is a franchise of café restaurant chains best known for their tasty donuts, coffee and frozen yogurt that spans over four Asian countries. The company is owned and managed by Johnny Andrean Group. Starting their first chain of stores over 8 years ago in Indonesia, J. CO has grown to have 187 stores in Indonesia, 14 stores in Malaysia, 38 stores in the Phillippines, and 6 stores in Singapore. The main focus of the report is the chain of J.CO Donuts & Coffee in Malaysia that started in 2007. The report will contain the current marketing situation of J.CO, the strength, weakness, threat and opportunity (SWOT) analysis, the objectives and issues, the marketing entry strategy, the action program or implementation strategy, the budget for marketing, and the marketing control for J.CO Donuts. The marketing process or method is made up of three main elements that will be described in detail in the following report. The first element is the market analysis. When the target market is known, it will be easier to design a marketing strategy that would best attract the customers and thus increase sales. Market analysis aims to find out who will buy a product, and is done through segmentation, targeting and positioning. The second element is the marketing-mix planning used to prepare a marketing plan and program that is thorough and would send the intended value to customers that have been chosen during the market analysis. This planning includes the marketing tools of market entry, called the 4 Ps in short, which are product, place, promotion and price. In determining the market entry strategy, the 4 Ps are found by asking the questions of what, where, how much and how. The last element is the control element in which evaluation of the marketing plan is done. This is to find out whether or not the plan was a success. The tools of control that are used are annual-plan control, profitability control, and strategic control. The report begins with the current marketing situation of J.CO Donuts and Coffee Malaysia. The environment in which J.CO mainly focuses on is the urban environment and aim towards the urban community as their target market. Adults and children are targeted with their large variety of products consisting of donuts, coffee and frozen yoghurt to fulfill the consumer appetite regardless of age. All of J.CO products in Malaysia are sold at a reasonable price. J.CO mainly focuses on their soft and premium donuts that have unique names as the main product with about 26 different flavors. Recently a wide variety of beverages was also introduced into the menu. Quality is emphasized by the use of high quality raw materials imported from other countries to make their donuts and beverages.
  5. 5. 2   This brand has successfully penetrated into the local market in Malaysia going against Dunkin Donuts and Big Apple as their main competition. With each having their own identity and strategies to attract their customers, J.CO stands out by using the café concept and does not only focus on donuts like the other competitors. They also have their own trained barista and baker to serve the foods and drinks. J.CO Donuts started in Indonesia, and with the positive feedback from customers they spread their chain to Malaysia in 2007, Philippines in 2013 and Singapore in 2008. The location of J.CO outlets are also easily reachable with it usually being in major shopping malls in the cities. J.CO market segmentation focuses on locations with a high population that leads to a variety of consumers from different backgrounds, buying behavior and needs. Geographically, J.CO targeted Johor Bahru as the location that is most profitable after they had done their research.They focus on groups of people that love to eat and have a sweet tooth which is why Asian countries are chosen as the base of the marketing scope because they believe that most Asians love to eat. For J.CO, a strategic location is crucial as it can affect the profits of the company causing them to choose urban shopping malls as their top priorities. They aim people with a medium to high rate of income as their product may be considered pricey by those with a lower income. According to their researches, they concluded that people nowadays are attracted to cafes with a classy theme, great ambience and music causing J.CO to maintain these elements in their café design. The main selling point of J.CO is their premium quality products that comes with great taste that is suitable for all types of people. J.CO believes that their brand strength is enough to help position themselves in the market. The strength, weakness, threat and opportunity (SWOT) analysis helps J.CO Donuts in developing a strong business strategy as they have made known all the factors that will help them stay as the best against their competitors. The strength of J.CO is in their quality products that taste better than their competitors, high quality raw materials and still being sold at a medium price. Their product innovation brings fresh air to the market. J.CO Donut also prides itself for creating a life café concept that is vibrant and energetic, stylish yet interactive, customer friendly, and more to a family concept. Their weaknesses are from the lack of promotion and activity to develop more loyal customers as well as to retain the customers. The external weaknesses that J.CO Donut & Coffee face is they do not provide any online ordering or deliveries to their customers. For opportunities, J.CO have planned to further expand their franchise to new locations. For J.CO, they know that their products are considered pricey to some and this is their opportunity to offer attractive promotions, offers and discounts to their loyal customers.
  6. 6. 3   As a large company, there are bound to be threats from the competition. As a newcomer in the food industry, J.CO had to compete with other companies to ensure that they can survive in the donut industry. Therefore, before the company opened their first store, the founder of J.CO Donut & Coffee, Johnny Andrean, had done extensive research on the making of donuts and flavor to generate donuts that are unique to beat the current competitors in the industry. The main vision of J.CO is to establish itself as a trend-setting lifestyle and the foremost international premium donuts and coffee brand in the industry. Its missions revolve around putting the customers as the utmost priority. In J.CO Donuts marketing entry strategy into the Malaysian market, they have done a franchising strategy as it is works well for a company that have a strong brand name. The first element of marketing mix is product. J.CO products include donuts, coffee, chocolate and yoghurt. Pricing is the second element in the mix and is the most important as this generates a turnover for the company. J.CO underwent several pricing strategies when it entered the Malaysian market. The pricing strategy they used was penetration pricing to attract new customers. Currently the price is set using competition pricing strategy where they set a price in comparison with competitors such as Big Apple Donut and Dunkin Donut. The third element is promotion which to J.CO is the business of communicating with customers. J.CO uses the pull strategy to attract customers using social media. The last element is place. For J.CO Donut & Coffee, they prefer to sell the product directly to their customer which also known as direct distribution to consumer. For their strategy alternatives, J.CO uses the Product Life Cycle to ensure that they do not lose their customer, profit and to delay the decline of a well-established product which has the potential of generating further revenue. J.CO also uses the BCG Growth-share matrix and the identification of the five forces driving profitability. For J.CO Donuts & Coffee’s market communication mix, it is their policy that they rarely advertise on television and radio. They usually rely on sales promotion during the festive season and public relations to promote their products or services. They also do a lot of corporate social responsibility (CSR) program. The action program of J.CO is shown in the form of a Gantt chart in the report. It is shown that J.CO does promotion during the celebrations of each religion in Malaysia. Besides that, they have CSR activities three times a year and occasional management meetings. The budget section of this report aims to analyses the overall budget of J.CO in terms of how they spend their income on the promotion and activities or the company. The last part of this report is the marketing control to compare the results to the marketing plan. J.CO uses an annual plan control and profitability control for their business. It is recommended that J.CO continuously adapts its marketing mix to keep up with the changing times. In conclusion, this report has shown a clearer picture of how a business uses marketing mix to identify its target market, attract them and retain their loyalty.
  7. 7. 4   2.0 CURRENT MARKETING SITUATION 2.1 Environment 2.1.1 Market Description J.CO Donut & Coffee is a café restaurant that is selling donut and beverages thus J.CO Donut & Coffee is considered to be in food and beverages (F&B) industry. They claimed that since their opening in Jakarta, their always target a high income customer because their price are quite too expensive from their competitor as they use price skimming strategy or known as premium pricing strategy. Other than donut, they also knew for their high quality of the frozen yogurt that they sold. Jco Donut’s headquarter was located at Jakarta, Indonesia. Most of the J.CO Donut & Coffee outlet was built in urban environment. By doing this, it will help and increase the J.CO Donut & Coffee sale and customer rate. For their customer, J.CO Donut & Coffee aim the children up to adult as their main customer. That is why they have variety type of food to fulfil their customer appetite regardless of their age and different background. J.CO Donut & Coffee food is quite pricy hence it makes peoples that have medium to high income suitable for J.CO Donut & Coffee goods. There are so many company that sell donuts as their main product. For example of them are Big Apple, Krispy Kreme, and Dunkin’ Donuts. Each of their product has their own unique ways and strategies that they use to attract consumer. Starbuck can also become one of the J.CO Donut & Coffee competitors due to the café concept and menu that they both provide to the public. 2.1.2 Product Review J.CO Donut & Coffee have several types of product, food and beverage for their customer. Currently they focused on donut, coffee and frozen yogurt which has become one of Jco Donut’s main or core product. For their donut, there are about 26 flavors that consist of chocolate flavors, vanilla, coffee and many more. Besides that, they also provide cool and hot beverage that come with so many choice. Meanwhile, the price range of J.CO Donut and Coffee set their donut price at about RM2 to RM4 for ala carte. They also sell their donut in combo set that comes with affordable price. For their beverage and coffer, the price range is RM8 to RM17. J.CO Donut & Coffee are emphasizing the importance of their high quality product and services for their customer. They will make sure that their customer having a high quality of foods and good time in their café. Hence, Jco Donut are using high quality raw material to make their foods and drinks. Most of their raw materials are imported from other country. For example they are using chocolate from Belgium and Coffee from Brazil.
  8. 8. 5   2.1.3 Competition In Malaysia, there are several companies that produce the same product like J.CO Donut & Coffee. For example of company that sell donut as their main product in Malaysia is Dunkin Donut and Big Apple. Even though they all sell the same products which is donut and coffee, each of them have their own identity and strategies to attract their customer. For J.CO Donut & Coffee, they are different from their competition in few aspects such as their ingredient, their café concept, their donut name and many more. First of all, J.CO Donut & Coffee are using café concept that not only focusing on their donut just like others competitor. They also emphasize their beverages, coffee and frozen yogurt to customer. They claimed that their beverages especially their coffee taste better because they use Brazil coffee bean. Other than that, J.CO Donut & Coffee said that they are different from their competitors because Jco Donut is using high quality of material and ingredient to make their donut. Their flour is originally imported from Indonesia and they not only use machine to produce the donut, they also use baker skill to produce ‘light as an air’ donut. Most of their material was imported from other country such as their coffee beans are imported from Brazil and some of their chocolates are from Belgium. They also only choose the best quality and healthy material to produce their product. Every three hour, they will replace their unsold donut with the fresh donut in order to maintain a high quality taste. They said that it’s important for them to give their customer the best, great service and food because they believed that by provide a great customer service it will help them to ensure that their customer will come back again. In addition of that, they also have their own well trained barista and baker to serve the foods and drinks. By hired the high skilled barista and baker, it will help Jco Donut to ensure that all of their customer satisfy with these foods and drinks. From the interview, J.CO Donut & Coffee claimed that by using a unique and easily remembered name for their product, it will attract their customer and create an unique identity which will help the customer to differentiate J.CO Donut & Coffee from other competitors. Some example of their product that have unique name is ‘Tira Miss U’ which is a donut with tiramisu toping. Other than donut, they also have unique flavor of beverages such as Oreo Frappe.
  9. 9. 6   2.1.4 Distribution J.CO Donut & Coffee is one of the great café that serve fresh and tasty foods and drinks out there. They all started from Indonesia then growth to other Asia country. Due to positive feedbacks that J.CO Donut & Coffee received from consumers, they open up their outlet and build a network to other country such as Malaysia, Singapore, Thailand, Philippines and many more. By doing this, J.CO Donut & Coffee can distribute their product to other country and ensure outsider consumer can grab J.CO Donut & Coffee goods. Urban location and mega mall is one of the places that J.CO Donut & Coffee usually choose to open their new outlet. By choose these types of location, J.CO Donut & Coffee café can be easily founded by consumer and have a high rate of visitor or buyer per days. There is about 11 J.CO Donut & Coffee outlet in Malaysia and 260 outlets around Asia. On 2007, J.CO Donut & Coffee launch their first branch in Malaysia. After that, they expand their business to Singapore on 2008 and Philippine on 2013. Currently J.CO Donut & Coffee only sold their product through their restaurant and they not did provide any delivery or online ordering services.
  10. 10. 7   2.2 Market Analysis 2.2.1 Market Segment 2.2.1.1 Geographic For geographic segment, Jco Donut is usually choosing any location that have high rate of population of people that come with a good rate of income. In Malaysia, there are about 11 J.CO Donut & Coffee’s franchise has been opened at different state that have high percentage of working people. There are 4 franchises at Johor Bahru, 3 at Selangor, and 1 franchise for Kuala Lumpur, Melaka, Penang and Seremban. Each of the J.CO Donut & Coffee are specifically located in mega mall that have a good reputation, high rate of visitor per day and good popularity for each of the state. They believe that by doing this, they can easily spread and promote their product to the locals. J.CO Donut & Coffee exposed that they choose to open their store near to the mall entrance so it can be easily spotted by their target customer. From the chart above, J.CO Donut & Coffee said that they open most of their store at Johor Bahru than other state because of the geography factor. It’s because majority of Johor Bahru people have high rate of salary. This is because Johor Bahru is one of the national trading center. Other than that, Johor Bahru also known as one of the biggest tourism center in Malaysia because in Johor Bahru they got attractive places such as Legoland and many more. Hence it may affect the total customer of J.CO Donut & Coffee, profit and many more. A similar situation also occurred in Selangor which is one of the advanced states in industrial plants so, it indirectly have a positive effect on the income of resident of Selangor. Johor Bahru 37% Kuala Lumpur 9% Melaka 9% Penang 9% Selangor 27% Seremban 9% Geographic segmentation by state
  11. 11. 8   2.2.1.2 Demography For demographic segment, J.CO Donut & Coffee target customer are those who are come from medium and high rate income customer. This is because they set any their price a little bit higher than their competitor as they are using price skimming strategy. Due to the price rate of Jco Donut product, customers that come with medium to high rate of income are suitable and most likely would buy Jco Donut product. Regardless of their gender, Jco Donut is emphasizing their customer who is teenagers, adult and senior citizen. With the variety product that come with different taste and form which is hot and cold, it cause the Jco Donut customer scope become larger. Low Income Rate 20% Medium Income Rate 35% High Income Rate 45% Demography segmentation by cusomer's income status
  12. 12. 9   2.2.1.3 Psychographic During our interview, J.CO Donut & Coffee claimed that Malaysian are having one common things that can help their businesses growth up rapidly which is majority of Malaysian are love to eat fast food. During the first week after the launch of JCO Donut & Coffee at Pavillion, Kuala Lumpur, it was reported that people were having a long queues just to buy their donut. During our interview, JCO Donut & Coffee claimed that knowing your customer is one of the important elements that they must practicing in order to have a good outcome for their business. One of these elements is by knowing the customer’s personality and life style. Besides that, J.CO Donut & Coffee stated that Malaysia is one of the great market place due to their citizen that known for their eating habit. Majority of Malaysian are love to eat fast food and dessert. This has been proved through research that has been done on 2014 by British medical journal, The Lancet, showed that 49% of women and 44% of men in this country were found to be obese. They said that Malaysian’s obesity rate is the highest in Asia. Another element that plays an important role is the customer life style. As we know there are rural and urban place in Malaysia. Different environment can lead to different life style of certain population. Since J.CO Donut & Coffee choose urban place or environment to open their store, let’s take a look with peoples that live in that area. Urban Area 70% Rural Area 30% Psycographic segmentation based on J.CO Donut & Coffee Background
  13. 13. 10   From the situation that has been observed, peoples that live at urban and city area are usually like to eat at the restaurant and café especially for those who are single. Unlike for those who are live at rural area, they prefer to cook by them self. This situation is occurred because most of the people that live at urban area are too busy with their daily life and work until some of them could not cook a meal because of time matter or too tired after through a stressful day at workplace. Through this problem, they take another alternative way by go to café or restaurant. From this situation, J.CO Donut & Coffee conclude that they are more profitable and high potential customer in urban place such as downtown or city area. 2.2.1.4 Behavioral Besides knowing the customer life style and personality, J.CO Donut & Coffee also said that they must identify the shortage and needs of the customer. By doing this, J.CO Donut & Coffee can improve and makes their business suitable with the customer’s needs. From what has been observed by JCO Donut & Coffee Company, they said Malaysia is lack of café that sell variety of foods and beverage in the same times in order to fulfill people needs. Even though they are so many café and food company has doing their business in Malaysia, most of them especially for company that sell donut or coffee are usually focusing in one type of the food or drink. Through this situation, consumers are served with limited menu and choose. Due to this situation, JCO Donut & Coffee come with few solutions by providing much more option and choice of foods and beverage to the customer that has different needs and want. For example, J.CO Donut & Coffee is selling donut that has various flavor consist of fruit, creamy, chocolate and nuts ingredient. For example of people that have an allergic with nuts still can enjoy and eat the J.CO Donut & Coffee foods cause of the various type of donut’s flavor or ingredient. A good, healthy and high quality food is one of the common things or needs that people usually seeking for. With these need, J.CO Donut & Coffee has accomplish them by provide a foods or beverages that has made from high quality ingredient. By using a great quality of ingredient that has been imported, it will make the customer feel pleasure to eat J.CO Donut & Coffee’s foods and beverages. Even though most of the J.CO Donut & Coffee product are pricy, it’s still worth it for the customer to invest their money for having a great experience with J.CO Donut & Coffee foods. By this, J.CO Donut & Coffee believe most of the consumer around Malaysia will be happy with the concept and menu that provided at JCO Donut & Coffee.
  14. 14. 11   2.2.2 Target Market There is a reason why J.CO Donut & Coffee choose an urban and mega mall as their top priorities. For them, a strategic place or location is everything because it can affect the result and profits of a company. By selecting these type of location, they can easily having and attract consumer that suitable for their product. J.CO Donut & Coffee set an aim for people that come with medium to high rate of income as their customer because most of their product quite pricy. Even though it’s a bit pricy, it’s still worth because of the quality that J.CO Donut & Coffee provide for their consumer. They only use the best quality of raw material that mostly imported from other country. For example, J.CO Donut & Coffee are using chocolate from Switzerland to make their drinks or donuts. They also choose Brazil as their supplier of coffee to ensure that their coffee full of aromatic and delicious. In their research, they conclude that people nowadays are so in love with café that comes with classy theme, great ambience and music. In order to attract more people, J.CO Donut & Coffee keep these 3 elements in their café design. They will make sure that their customer feels relax and safe while enjoying their cup of hot coffee or chocolate, lovely and fresh yogurt or their signature foods which is donut. Jco Donut’s target market is not only come from group of adult people. They also aim the child and teenagers as their customer regardless of their gander. 2.2.3 Positioning J.CO Donut & Coffee are famous with their premium quality of products. Come with the great taste that suitable for all type people, its help them to make their customer attracted and will buying J.CO Donut & Coffee product for the second times. J.CO Donut & Coffee believe that their product qualities are the best. Even though, they are not advertising their product through medium such as television, radio or printed media, people still come to them cause of their great service and goods. J.CO Donut & Coffee also trust that their brand strength. This is how they ensure that their customer will think automatically of J.CO Donut & Coffee whenever they talk about donuts, coffee or yogurt.
  15. 15. 12   3.0 STRENGTH, WEAKNESS, OPPORTUNITY AND THREAT (SWOT) ANALYSIS ANALYSIS J.CO DONUT & COFFEE STRATEGY Strength  Quality donut  Innovation with their product line  More to relax and family concept  Change new donut every 2 hours  Lower price than competitor  Selling fast and good coffee at good value  Price: Premium Pricing Strategy  Product: All ingredient are import  Promotion: Attractive offer during festive  Place: High income location Weaknesses  Lack of promotion to develop more loyal  No online ordering or delivering  Expensive product  Lack low calories options  Lack of marketing effort  Location not suitable  Using social media for promotion  Strong marketing strategy Opportunity  Further expansion in new location  Wide range product more preferred by consumer  Offer attractive promotion and offer  Online sale  Menu diversification  More strategic place for new outlet  Changes in social pattern and lifestyle Threat  Number of competitor  Changing taste of consumer  Equipment breakdown  Number of competitor  Unhealthy lifestyle  Maintain product quality  Produce new flavor
  16. 16. 13   3.1 Strengths J.CO Donut & Coffee and Dunkin’ Donuts are two biggest donut companies in the world. These two companies provide same product which is donut and beverage to their customers. The different from quality and facility become the strength for the J.CO Donut & Coffee. J.CO Donut & Coffee offer a quality donut to their customer meanwhile Dunkin’ Donuts offer a lower price to their product. Its means that they only uses the best ingredients from all over the world such as Belgian Chocolates, Californian Almonds, Japanese Matcha Green Tea and Italian Roasted Coffee in their products. J.CO positions itself to be that “Elegant donut with a medium price.” It serves the market to be satisfied with a quality donut that tastes even better than its competitor who has been in the market for a much longer time. Dunkin’ Donuts attract their customer by offer lower price among donut companies in the world. That a main reason why Dunkin Donut become a first choice to people. People are preferred a product with more affordable price even they also complaint about the product quality. Beside, J.CO Donut & Coffee also become innovation with their product lines and Dunkin’ Donut selling a fast and good coffee at good value. Dunkin donuts as a market leader was already in their comfort zone make them uncompetitive to the innovation, consumer as the market didn’t have their ability to choose another product, since Dunkin’ is the only one at that moment. J.CO Donut & Coffee as the new player bring the fresh air to market, by make donuts as a trend setting lifestyle. Marketing mix between Sakura strategy and open-kitchen in every outlet seems attract customer curiosity to tried and tastes the new J.CO Donut & Coffee experience. J.CO Donut & Coffee comes out with new idea and environment to attract the target people for their products. They do not only focus on their products but also the environment of their outlet because one of the ways to attract people is from the decoration of their outlet. J.CO Donut & Coffee also prides itself for creating a life café concept that is vibrant and energetic, stylish yet interactive, customer friendly, and more to family concept. This not only means customers can bring home food to the house, but they can also relax with friends or family. The modern concept that created by the J.CO Donut & Coffee has made their customers enjoy when dine in at the café. J.CO. Donuts & Coffee seem to be different from other products in the country because the product is positioned as a lifestyle and targeted to consumers of the middle and upper segment with a dynamic lifestyle, young and modern. For the modern technology now, people looking for the innovative café that can cheer up their day or moments. As well as the basic materials, more than 50% is imported from abroad. Like the chocolates imported from Belgium and milk from New Zealand. Also, to drink, the ingredients mostly imported anyway. Most coffee powder imported from Italy and Costa Rica. All the donuts also changes every two hours to make sure the quality of the donuts. Because when the donuts left for too long, it will make the donuts become hard and cold. That why they change to new donut every two hours.
  17. 17. 14   So, to make J.CO Donut & Coffee become well than their competitor, they use 4P as their strategy to involve in market which is product, price, promotion and place. For the product, J.CO Donut & Coffee only use a best product to make sure their quality is maintained. All ingredients are import to make sure that all the donuts that they sell in a great quality. For them, quality is more important than a quantity of the products. The consumer will judge their products by the quality, that why J.CO Donut & Coffee take this seriously. People nowadays are looking for foods that are something new that can satisfy their cravings without being conscious on their health. J.CO Donut & Coffee is currently serving its customers a less sweet donut with soft, thin and chewy bread. The size of each doughnut is perfectly enough. It’s worth the pay since it’s delicious, not too oily and its taste is not as sweet as other donuts. For the price, J.CO Donut & Coffee use a price skimming strategy which means their price are expensive due to their product quality. They know that their price are expensive to the market, but they promised that consumer will get the satisfaction after buy their products. J.CO Donut & Coffee will not produce a product if their quality is bad. J.CO & Donut also believe that their customer will always stick with them even their price are expensive because they get a customer capability from the beginning of their outlet in Malaysia. For the promotion, they already know that their product is expensive and this is their opportunity to offer an attractive promotion, offers and discount to their loyal customers. This is how they manage their marketing strategy. Usually J.CO Donut & Coffee will make offer during the festival or celebration such as New Year, Independence Day and “Hari Malaysia”. Every festival they will come out with new donuts that only offer for the limited time. For example, the promotion is buy 1 dozen will get free 1 drinks of coffee and only offer during the festival celebrated. J.CO Donut & Coffee will never decrease or reduce their price, but they only make a promotions or offer for a certain time only. Last, for the place J.CO Donut & Coffee choose a high class place to open their outlet such as in a shopping mall. Therefore they are only open outlets in shopping malls that have many visitors. J.CO Donut & Coffee choose a high class places because from there people will see their outlet and easy for their customer to get their product after they have spend a long time during shopping. For example, J.CO Donut & Coffee open their outlet in Pavilion Kuala Lumpur because the place is famous and most the visitor is come from a high profile background.
  18. 18. 15   3.2 Weaknesses Every company has their own weaknesses behind of their successful. The weaknesses can be defined from the internal or external factor. For the J.CO Donut & Coffee, their weaknesses are from the lack of promotion and activity to develop more loyal customers as well as to retain the customers and for the Dunkin’ Donuts their weakness is lack low calories options for the consumer. J.CO Donut are rarely use advertisement in newspaper or television. The reason is because they believe on their product capability in the market even they do not do a big promotion of their products. Meanwhile Dunkin’ Donuts do a lot of promotion of their product to make people become more alert to their product. That why Dunkin’ Donut is more positioning in people mind. Dunkin’ Donut also lack low calories options to their customer which means their customer didn’t have a choice for the donut if some of them are not eat sweeter donut. Other than that, the external weaknesses that J.CO Donut & Coffee faced is they do not provide any online ordering or delivering capability to their customers. To be a good and different donut company J.CO Donut & Coffee should come out with the new strategy which is makes a delivery of their products. Not to all outlets make a delivery, but only a few outlets that get a higher demand. From the interview, they have no plan to make a delivery of their products since they believe that their customers will stick with them even they do not provide any delivery. This is because they believe on their product capability. For their competitor, Dunkin’ Donut weakness is lack of marketing effort to increase their product quality. That the reason why J.CO Donut & Coffee is more strong than their competitor. Dunkin’ Donut did not do any effort in order to increase their quality even they receive a lot of complaint from their loyal customer. From the interview, one of the weaknesses of J.CO Donut & Coffee is their product are expensive. J.CO Donuts & Coffee is too expensive maybe because the quality and taste made by J.CO Donuts & Coffee itself is different from other donuts it would cost a fortune. For J.CO Donut & Coffee, they will not put the price if their quality products are bad. It means that the price is suitable for the quality of donuts and coffee because all the ingredients are imported. J.CO Donut & Coffee will never decrease their price even their customer complaint because for them, even their customer always complaint about their price, but they will buy because they only serving good food and delicious. J.CO Donut & Coffee know that their weaknesses will make their competitor take a chance to become more better from them. So J.CO Donut & Coffee using a social media as their strategy to make their advertisement or promotion become wide. This strategy is realized in the form of sampling around the store, making a twitter account, webpage and Facebook fan page in the virtual world. For J.CO Donut & Coffee, endorsement visitor, long queues snaking through at the outlets and media who write a story about the delights and distinctiveness J.CO Donut & Coffee more important than advertising. This branding strategy succeeded in creating word of mouth and reap the publicity.
  19. 19. 16   Beside, J.co has a website www.jcodonuts.com that provides a variety the menus inside the complete content to answer the curiosity of enthusiasts J.co and web design is very appealing. J.CO Donut & Coffee will also have a twitter account for the media promotion of highly innovative in addition to facilitate the costumer to find out the latest products from J.CO Donut & Coffee. They do not do advertising in newspapers or television, but only using social media and their own websites. Ineffective advertising would limit the user's knowledge about J.CO Donut & Coffee or products sold by them. This is because there are certain groups who do not use social space as a source of reference even those still using print media or on television advertising to influence them. Without extensive advertising, this certainly would limit the promotion of their products. Furthermore, J.CO Donut & Coffee also use strong marketing analysis in order to overcome their weaknesses such as market segment, target market and positioning. For market segment, J.CO Donut & Coffee are usually choose any location that have high rate of population. They believe that by doing this, they can easily spread and promote their product to the locals. Another benefit of choosing this kind of place, they can have variety of consumer that come from different background, buying behavior and needs. For demographic, most of the J.CO Donut & Coffee consumer are come from group of people that love to eat, especially for food that have sweet taste regardless of their genders and ages. This is why J.CO Donut & Coffee choose Asia country as their base or center of marketing scope because they believe that most of the Asian love to eat something that not to heavy but tasty. Beside, for target market J.CO Donut & Coffee choose an urban and mega mall as their top priorities. For them, a strategic place or location is everything because it can affect the result and profits of a company. By selecting these type of location, they can easily having and attract consumer that suitable for their product. J.CO Donut & Coffee set an aim for people that come with medium to high rate of income as their costumer because most of their product quite pricy. Even though it’s a bit pricy, it’s still worth because of the quality that J.CO Donut & Coffee provide for their consumer. Last for the positioning, J.CO Donut & Coffee come with the great taste that suitable for all type people, its help them to make their costumer attracted and will buying J.CO Donut & Coffee product for the second times. J.CO Donut & Coffee believe that their product quality is the best. Even though, they are rarely advertising their product through medium such as television, radio or printed media, people still come to them cause of their great service and goods. This is how they ensure that their costumer will think automatically when they talk about donuts, coffee or yogurt.
  20. 20. 17   3.3 Opportunities As we all know, Malaysian people love to eat snacks and most of people make a donut as their side dishes. So, J.CO Donut & Coffee takes this opportunity to further expansion in new location. Different for Dunkin’ Donut, they take an opportunity due to Malaysian people love a sale by do an online sale for their loyal customer. In Malaysia, J.CO Donut & Coffee has opened a total of 11 branches throughout the country. In Johor, J.CO Donut & Coffee has opened 4 outlets, followed by Selangor at 3 outlets. Others such as Kuala Lumpur, Negeri Sembilan, Malacca and Penang is one outlet only. Since J.CO Donut & Coffee already known by Malaysians, especially, so J.CO Donut & Coffee has plans to open two new branches in Kedah and the East Coast. This is an excellent opportunity because this will helps to increase sales and expand J.CO Donut & Coffee empire and continues to be recognized in the eyes of the world. Beside, wide range of products is much preferred by consumers. This is good opportunity for J.CO Donut & Coffee to attract their loyal customer to keep stick with them. Because of J.CO Donut & Coffee introduce various types of donuts, it became a magnet for strong attraction by the customer. Buyers have a huge selection of donuts and coffee to choose. Each donut is served with different flavors that are sure to make their customers really love it, especially young people. Coffee is also on special import from Costa Rica and it smells delicious. Each donut creatively named based toppings and flavors. This creates a unique and easy to remember, for example, Cheese Me Up is the name for a donut with melted cheese on top layer. Tira Miss U is the name for a donut topped with tiramisu. It’s different with other donut company. While other companies compete to increase promotion for their products, J.CO Donut & Coffee just to make sure that their products is always in good quality. For Dunkin’ Donuts, this is time for them to make menu diversification. The company has more than just entertained the idea of breaking into lunch and dinner day parts over the past few years. Dunkin has added new sandwiches and drink options to its menu to meet this growing demand. Furthermore, for J.CO Donut & Coffee, they already know that their product are expensive and this is their opportunity to offer an attractive promotions, offers and discount to their loyal customers. This is how they manage their marketing strategy. Usually J.CO Donut & Coffee will make offer during the festival or celebration such as New Year, Independence Day and “Hari Malaysia”. Every festival they will come out with new donuts that only offer for the limited time. For example, the promotion is buy 1 dozen will get free 1 drinks of coffee and only offer during the festival celebrated. J.CO Donut & Coffee will never decrease or reduce their price, but they only make a promotions or offer for a certain time only. The offer also will be in two or three days, not more than five days so that they do not incur significant losses.
  21. 21. 18   In order to compete with their competitor, J.CO Donut & Coffee make a strategy that their new outlet will be open in more strategic place. The opening of a new outlet is from the survey that was conducted among visitors to the mall involved. Based on survey was done, mall visitors in Kedah and the East Coast are welcomed the opening of their donut empire since J.CO Donut & Coffee there is no longer any open branches there. Most of them are very interested donut produced by J.CO Donut & Coffee and can only be bought donuts and coffee if they travel to Kuala Lumpur or Penang. This has restricted their desire to buy donuts from J.CO Donut & Coffee. So by opening their branches in two states was selected will make the public more familiar with what J.CO Donut & Coffee generate for consumer who likes to eat a donut. J.CO Donut & Coffee can also meet the high demand in the region. By choosing a strategic places, J.CO Donut & Coffee can expand their business and make all the Malaysian people know about their products. Everyone knows that Malaysian people love to eat. Even they said the price are expensive, they will still buy it. From this J.CO Donut & Coffee take this opportunity to change the way people live by change in social patterns and lifestyle. When J.CO Donut & Coffee managed to persuade Malaysians to be interested in all the food and drinks they provide, this will change people life style especially for donut lover. If before this many people prefer to eat Korean food like sushi, they can try all kinds of donut and no sense of doubt because the company has received approval from Jakim and has the Halal logo that have been recognized. With each outlet themed family concept, so this will be of interest primarily with families to come and relax in their outlets. Without having to queue and café imaginable user-friendly, it will delight everyone who came. For young teenagers especially, they can having time with their friends at any J.CO Donut & Coffee outlet and enjoy with some donut and cups of coffee. This is how J.CO Donut & Coffee attracts young people to become half of their loyal customer and can change a teenager’s lifestyle from hangout at mall for nothing to have some enjoy at their donut café.
  22. 22. 19   3.4 Threats As large companies that produce the best donut in the region asia, certainly behind the success there must be some great competition on a par with them. It cannot be denied since before the existence J.CO Donut & Coffee, there are other companies that produce similar products such as Dunkin Donut and they also has a same threat like J.CO Donut & Coffee. As a newcomer in the food industry, J.CO Donut & Coffee had to compete with other companies to ensure that they can live a long time in the making donut industry. This is definitely a big challenge for them because they have to be more innovative in making donuts from being seen together with other donut company. Therefore, before the company opened a donut their first empire in Indonesia, the founder of J.CO Donut & Coffee, Johnny Andrean, has done extensive research on the making of donuts and flavor to suit every donut produced. This study is important because it needs to generate donut with the uniqueness that beats the existing donut. Beside, changing taste of the consumer is also one of the challenges or opposition to be encountered by J.CO Donut & Coffee. What we can seen now, a variety of "hipster" foods which became popular especially among a young people. Among the latest is the preferred choice of homemade donuts. Homemade donuts produced similar with the donut that produced by all companies in the country's. Homemade donuts are produced with some new flavor that will appeal to donut lover. Prices were much cheaper than J.CO Donut & Coffee or other companies. This becomes a great challenge for J.CO Donut & Coffee especially because of changing consumer taste will affect the sales of their donut but J.CO Donut & Coffee will not overreact by this issues. They take this positively because they strongly believe that their products are the best. Even everyday their competitors will produce a new donut with new flavor it still can’t be same with their donut that has been produce by the best ingredients. Same goes to the coffee. Now, many of homemade coffee people can get with a cheapest price. But J.CO Donut & Coffee still become the best choice among the coffee lover. For Dunkin’ Donuts, unhealthy lifestyle become their threat because their customer complaint that their product are too sweeter especially for old man. Too many people have a problem with a lot of sugar intake. This can lead to many diseases such as, Diabetes. Dunkin Donuts uses a lot of sugar in their products could be threatened by this issue. Based on the interview, equipment breakdown also become one of the threat in their management. Machinery breakdowns are always costly and it will take a long time before they get a new machine. This becomes a major problem because they had to borrow a machine in another outlet nearby. This damage has slowed their service and suffered losses due to a donut that has been damaged. This needs to be faced by J.CO Donut & Coffee when their machine is damaged. They had to close the shop for a few hours while waiting for the machine to be borrowed. There
  23. 23. 20   are times when they had to close up shop earlier than usual to avoid any problems arising from an interrupted process. They also faced a problem that sort of workers in every outlets. When asked if the salary is making it a shortage of workers. J.CO Donut & Coffee answered salary offered is among the highest in the food industry in Malaysia. The reasons given by the J.CO Donut & Coffee is the average Malaysians lazy to work and it become problem when having a full house, due to sort of workers, their service become slow and make a customer waiting in long queue. To overcome the threats, J.CO Donut & Coffee need to maintain their product quality to make sure that their product still in first choice of Malaysian people. J.CO Donuts & Coffee’s donut are made using machines, both when mixing the ingredients, cooking and making donuts topping. All machines are used entirely imported from the USA. In order to maintain high quality product for their customer, J.CO Donut & Coffee imported more than 70% of their ingredients from abroad. The chocolate used for donut topping are specially imported from Belgium and the milk from New Zealand. Most of their coffee products are imported from Italy and Costa Rica. Based on all this, J.CO Donuts & Coffee positioned their self as a premium quality products in the donut market in Malaysia. Most of the raw material for making donuts J.CO Donuts & Coffee use goods imported directly from the USA. J.CO Donut & Coffee also will produce a new flavor for donut that will meet their loyal customer next year. Their new flavor is fresh and no other competitor has produced the flavor in the market. They promised that their new flavor will full their customer satisfaction and as a sign of appreciation for the loyalty of their customers. J.CO Donut & Coffee will keep improve their quality in the future so that their customer will always remember their products. To overcome the problem sort of workers, they had to bring in workers from J.CO Donut & Coffee Jakarta to fill a vacancy in any of their outlets. This is also one of the obstacles for J.CO Donut & Coffee because when they lack workers, they had to draw workers to a longer time. The strategy that J.CO Donut & Coffee do to overcome their threats will help them in future and become strong company that produces good products in the world.
  24. 24. 21   4.0 OBJECTIVES AND ISSUES 4.1 Vision  To establish J.CO Donuts & Coffee as the foremost International Premium Donuts and Coffee brand  To be the trend-setting lifestyle in the Donuts & Coffee industry  To be the right company for the right people who want to achieve their dream 4.2 Mission  To provide premium quality donuts & coffee  To encourage people to attain their dreams  To put customers as our first priority  To commit ourselves in giving excellent service sincerely  To make a difference in our community  Grow the number of customers by 25% by the end of 2015  Increase revenue from existing customers by 30% in 2 years  To provide perfect locations for hanging out  To treat each other with respect and dignity 4.3 Awards In its first year of operation, J.CO Donuts & Coffee was awarded "Marketing Award" as the brand with the best product innovation. Following this award, J.CO won "Best Donut 2006" by FREE Magazine at the end of 2006. In early 2008, J.CO Donuts & Coffee received the award "The Integrated Marketing Strategy Champion 2008" by SWA business magazine and MarkPlus Co. Since its establishment, J.CO has already won many awards. 4.4 Objective J.CO Donuts & Coffee are international premium Donuts and Coffee brand, and they offer unique flavours of donuts and beverages to their customer like they've never tasted before. J.CO Donuts and Coffee only uses the best ingredients from all over the world - such as Belgian Chocolates, Californian Almonds, Japanese Matcha Green Tea and Italian Roasted Coffee in their products. The first outlet opened in Indonesia on June 26th, 2005 at Supermall Karawaci. After founded on June 2005, within less than 6 years of operation, J.CO has succeeded in opening more than 120 outlets throughout Asia with its expansion in Indonesia, Singapore, China and Malaysia. 4.5 Issue J.CO Donut & Coffee did have an issue about several thing such as shortage of workforce in Malaysia and the imported ingredient are whether damage during shipping or held by the authority for a long time until the ingredient is unusable.
  25. 25. 22   5.0 J.CO DONUTS & COFFEE’S MARKETING ENTRY STRATEGY Market entry strategy can be defined as the planned or method of delivering and distributing products or services to a target market. As J.CO Donut & Coffee are originated from Indonesia, they need a strong market entry strategies in order to maintain in their business outside Indonesia. In marketing, there are many ways on how a company can enter foreign market or international market. According to J.CO Donut & Coffee Malaysia, they use franchising strategy as it is works well for a company especially food industry that have a strong brand name. J.CO Donut & Coffee said that they believe in their brand name and thus it can be utilized internationally around South East Asia. Other than Malaysian and Indonesia, J.CO Donut & Coffee are available in Philippine and Singapore. They are planning to expand their business in Brunei and Korea in the next 5 years. 5.1 Marketing Mix According to McCarthy’s, there are 4 basic elements that comprise any marketing strategy which is product, price, promotion and place. As a new player in a food and beverages industry in Malaysia, J.CO Donut and Coffee have use these four element in order to reach certain target customer. According to them, their marketing mix is simple to understand and it is important for them especially their franchisor to identify on what market sector there were in. In general, the first element of marketing mix is price which refers to how and how much a client will be charged. The product can be anything from cheap to a luxury item. It can be paid for all at once or divided into monthly payments. There are also other strategies, such as psychological price, pay what you’d like, auctions and many more. Second, place are refers to the setting in which this product will be made available. It could be online or in physical stores. Delivery and service deadlines are also a concern to be addressed in this element. In many cases, it’s best to make sure that company’s product and place match as much as possible. For example, sports products are best sold in gyms or recreation centres. The next element of marketing mix is product. Product refers to the company’s product or service’s characteristics and attributes. Company therefore should decide on size, colour, design and the general functionality of what the company offered to their customer. Lastly, promotion refers to the marketing strategies used. This involves both digital marketing such as affiliate links, Fan Page, social media, and offline strategies such as outdoors and newspaper advertisement.
  26. 26. 23   5.1.1 J.CO Donuts & Coffee’s Product J.CO Donuts & Coffee is present in the community with several kinds of products on offer. Their products are donuts, coffee, chocolate, as well as the newest products, yogurt. JCO Donut and Coffee claimed that their product such as beverages as superior quality beverages and innovative range of “light-as-air-donuts”. Differ from their competitor, J.CO Donut and Coffee served the same product with the same name in all their store in South East Asia. J.CO Donuts & Coffee’s donut are made using machines, both when mixing the ingredients, cooking and making donuts topping. All machines are used entirely imported from the USA. In order to maintain high quality product for their customer, J.CO Donut & Coffee imported more than 70% of their ingredients from abroad. The chocolate used for donut topping are specially imported from Belgium and the milk from New Zealand. Most of their coffee products are imported from Italy and Costa Rica. Based on all this, J.CO Donuts & Coffee positioned their self as a premium-quality products in the donut market in Malaysia. Most of the raw material for making donuts J.CO Donuts & Coffee use goods imported directly from the USA and several other countries. Therefore, the procurement of raw materials is a very important part in the production process of J.CO Donut & Coffee’s products. J.CO Donuts & Coffee offer unique experience to their customer by offering open kitchen concept in their store, where their customer can actually see thru the glass panel the making of J.CO Donut & Coffee’s donuts and product. This uniqueness make their brand different from other competitors and it make them one step forward over their competitors. Other than that, J.CO Donut & Coffee have named each of their donut in accordance with creative toppings and flavours to create a unique and easy to remember names, for example, Cheese Me Up is the name for a donut with melted cheese on top. Tira Miss U is the name of a donut topped with tiramisu. Currently JCO Donut & Coffee offered 28 different flavour and topping of donut, 26 various flavour of beverages and four yogurt based product to their customer. The J.CO Donut & Coffee offer high quality packaging for their product as they believe that a quality product starts from how it look on the outside. Currently, J.CO Donut & Coffee will served their donut on a box of 12 pieces, 6 pieces and 3 pieces. For their beverages, their offer a plastic cup, glass mug and their customer can buy their own J.CO Donut & Coffee merchandise such as special printed glass mug and bottle. Below are some of the J.CO Donut & Coffee’s donut that was currently offered in market:
  27. 27. 24   Berry Spears Al Capone Avocado DiCaprio Black Jack Blueberry More Candycane Cheese Cakelicious Choco Caviar Chocolate Choco Caviar Strawberry Choconutzzy Coco Loco Copa Banana
  28. 28. 25   Crunchy Don Monchino Forestglam Glazzy Heaven Berry Jacky Chunk JCoccino Mesisipi MrGreen Tea Oreologi Snowwhite Strawberry Fondue
  29. 29. 26   Sugarrice TiraMissU White Desert Why Nut
  30. 30. 27   5.1.2 J.CO Donuts & Coffee Price J.CO Donuts & Coffee mentioned that pricing is one of the most important elements of the marketing mix, as it is the only mix, which generates a turnover for the company. The remaining 3p’s are the variable cost for the company. It costs to produce and design a product, it costs to distribute a product and costs to promote it. Price must support these elements of the mix. Pricing is difficult and must reflect supply and demand relationship. According to J.CO Donuts & Coffee, in Malaysia market, pricing a product too high or too low could mean a loss of sales for the company. In order to maximize their profit, J.CO Donuts & Coffee have listed some of the factors that affected their product’s price such as fixed and variable costs. Currently J.CO Donuts & Coffee fixed cost are rent, insurance, license and loan payments while their variable cost are ingredients, staff salary, and many more. The next factors are their competitor’s price, their target group salary and their willingness to pay for the product. J.CO Donuts & Coffee reveal that they undergo several pricing strategy when it enter Malaysia market. Some of the pricing strategy that they use is penetration pricing which is the pricing technique of setting a relatively low initial entry price, usually lower than the intended established price, to attract new customers. According to J.CO Donut & Coffee, this strategy aims to encourage customers to switch to the new brand in Malaysia because of the lower price. J.CO Donut & Coffee said that this strategy have some advantages for their company such as encouraging word-of-mouth recommendation for the product because of the attractive pricing thus making promotion more effective. Other than that, it also forces the business to focus on minimising unit costs right from the start as the productivity and efficiency are important. Currently J.CO Donut & Coffee price was set using competition pricing strategy where they set a price in comparison with competitors such as Big Apple Donut, Dunkin Donut and many more. Among this three major competitor, J.CO Donut & Coffee price are at the highest because they said that they believed their customer will always come back to their store as they are using high quality ingredients imported from all around the world to produce high quality product such as donut and beverages. Setting the price higher also known as price skimming strategy as the price are set to high to reflect the exclusiveness of the product as J.CO Donut is known for their high quality of their ingredient and exclusiveness of their café and restaurant. All transaction in all store in Malaysia with their customer based only on cash only.
  31. 31. 28   5.1.3 J.CO Donuts & Coffee Promotion When asked about promotion that was being used by J.CO Donuts & Coffee, they said that promotion is the business of communicating with customers. Referring to the promotion mix strategy, J.CO Donut & Coffee claimed that they are using pull strategy which mean they usually use social media network to advertise their product in order to create a stronger consumer demand. They believe that promotion will provide information that will assist their customer in making a decision to purchase a product or service. The cost associated with promotion often represents a sizeable proportion of the overall cost of producing the product. However, successful promotion increases sales so that promotion and other costs are spread over a larger output. Though increased promotional activity is often a sign of a response to a problem such as competitive activity, it enables J.CO Donuts & Coffee to develop and build up a succession of messages and can be extremely cost-effective. They also believe that promotion is the method that they should be using to spread the word about their product to customers, stakeholders and the broader public. According to J.CO Donuts & Coffee, once they’ve identified their target market, they’ll have a good idea of the best way to reach them. For J.CO Donut & Coffee, they are choosing sales promotion strategy and public relations strategy to promote their products. 5.1.4 J.CO Donuts & Coffee Place In the marketing studies, place is concerned with various methods of transporting and storing goods, and then making them available for the customer. Getting the right product to the right place at the right time involves the distribution system. For J.CO Donut & Coffee, they prefer on selling the product directly to their customer or also known as direct distribution to consumer. According to J.CO Donut & Coffee, efficient and effective distribution is important if the company is to meet its overall marketing objectives. If a company underestimate demand and customers cannot purchase products because of it, profitability will be affected. They choose not to distribute their product by using wholesaler, retailer or agent because they need to maintain the freshness of their product in order to maintain the high quality taste of their donut and beverages. Other than that, they also regularly change their unsold donut each in 3 hours and some of the unsold donut will be given to orphanage house to prevent any waste of food. As J.CO Donuts & Coffee are one of the exclusive café, they deliberately chose a place that is frequently visited by public. It became J.CO Donut & Coffee priority to ensure that their store are located in suitable area such as shopping mall. In Malaysia, all J.CO Donut & Coffee café are situated inside famous shopping mall such as Pavillion, Palm Mall Seremban, Queensbay Mall Penang and many more. They said the location will be the key of the success of their store so they focus on choosing a ground floor location and near an entrance location in the shopping mall.
  32. 32. 29   5.2 Strategy Alternatives 5.2.1 Product Life Cycle (PLC) J.CO & Donut said that their customer always expect new product during the festive season and this is become customer demand are unlimited and it is J.CO Donut & Coffee challenge to accommodate the needs of their customer. The needs and demand of their customers change over time and thus the product offering has to be changed accordingly. In order to stay in top of the business, J.CO Donut & Coffee always assume that what is favourite product today may be out of market within few month. Thus innovation is required to maintain the customer needs and the company profit. To counter these changes J.CO Donut & Coffee have their own research and development (R&D) located in Jakarta, Indonesia. The J.CO Donut & Coffee R&D are responsible on producing a new flavour whether it is donut, beverages or yogurt. They claimed that their R&D played an important role in attracting their customer thus although they experience loss during product development stage, they always gaining profit when the product reached growth stage. Since its opening in Indonesia, J.CO Donut & Coffee are continuously introduced a new products during festive season and has phased out the old ones which were at the decline stage of their product life cycle. The introduction is timed such that the new product does not cannibalize the product already in the maturity or growth stage. Thus the secret lies in getting profits with same product but different topping or flavour in the different stages of the PLC. J.CO Donut always monitored their annual sales volume based on product to keep their time on PLC in maturity mode. Whenever J.CO Donut & Coffee product reach the some level of their maturity, J.CO Donut will either replace it with new product or withdrawn it from the market. This is to ensure that they didn’t lose their customer, profit and to delay the decline of a well- established product which has the potential of generating further revenue.
  33. 33. 30   5.2.2 BCG Growth-share Matrix According to BCG Matrix, J.CO Donut & Coffee can be considered as the question mark in the Malaysian donut industry. The reason for this is its high market growth and their low market share in the Malaysia market. These happened due to the several reason such as J.CO Donut & Coffee are the younger competitor in donut industry. In Indonesia market however, J.CO Donut is the star because they have high market share and high market growth. J.CO Donut & Coffee are aiming to become the star in Malaysia donut industry by planning to open several dozen café in the coming year. By having a high market share and high market growth, Big Apple Donut & Coffee are the star because they have 85 outlet and café selling their product and some of the public are already being customer with Big Apple Donut for a long time as Big Apple is Malaysian company and it’s the pioneer in Malaysian donut café concept. The cow in Malaysian donut industry is Dunkin Donut as Dunkin Donut although have high market share, it have a low growth rate. Currently, Dunkin Donut are having 81 café in Malaysia including Sabah and Serawak. Dunkin Donut have low growth rate may be due to their same menu with new product being introduced since their opening. Lastly, Krispy Kreme are considered as the due to its low market share and low market growth. Krispy Kreme currently have 12 store in Malaysia and it is assume that it the dog because the brand is from United State of America and it is not widely known by public. STAR QUESTION MARK COW DOG High Low GrowthRate High Low Market Share
  34. 34. 31   5.2.3 Five Forces Driving Profitability 5.2.3.1 Supplier Power J.CO Donut & Coffee’s case have a large population of suppliers for their ingredient however they claimed that their bargaining power of suppliers is moderate. This is because they have a good relationship with their suppliers thus making the bargaining power is fairly stable currently. It is also believed that the reliance that J.CO Donut & Coffee’s has on suppliers is equal to the reliance suppliers have on J.CO Donut & Coffee’s. On one hand, J.CO Donut & Coffee’s has a good supply chain of quality ingredients at fair prices while on the other hand, suppliers are surely content with supplying to a large consuming company such as J.CO Donut & Coffee’s. However, there are many substitute suppliers out there that can replace current suppliers such as their supply of coffee bean and chocolate. J.CO Donut & Coffee are importing their ingredient for their product came from same region for all their store in South East Asian. Most of the J.CO Donut & Coffee ingredient supplier are kept as company secret. 5.2.3.2 Buyer Power The biggest challenge faced by J.CO Donut & Coffee is the buyer power as in Malaysia, there are many others competitor and it usually have a significant choice in donut and coffee shops. In addition to that, with the Malaysia law, it was with difficult and involve a lot of money to patent their coffee, donut or yogurt product. Due to this reason, a lot successful innovations by J.CO Donut & Coffee such as the Oreo Frappe are subject to copycat products. In order to serve their customer well, J.CO Donut & Coffee have an official customer service website in their official website where their customer can shared their idea about J.CO Donut & Coffee new product or giving suggestion on how the company should improve. Since its opening in Malaysia, J.CO Donut & Coffee received more than 2, 500 ideas and suggestion from their customer and Malaysia. From that number, J.CO Donut & Coffee have regularly do a blind taste for their product to all their loyal customer. According to the study done by the J.CO Donut & Coffee R&D Department, their decision which is to allow the customer share their idea is helping them building a stronger relationship with their customer. Listening to customers will generate loyal customer, which is clearly critical in an industry with low switching costs. J.CO Donut & Coffee claimed that they need to maintain their product and customer service at the highest level because there are many competitor in Malaysia donut and coffee market.
  35. 35. 32   5.2.3.3 Threat of New Entry J.CO Donut & Coffee brand image is very strong in South East Asia as a high quality donut and coffee seller. This creates power by reducing customer susceptibility to visiting competitor stores in proximity to J.CO Donut & Coffee, making it a hard market for new entrants. According to the J.CO Donut & Coffee and regular visitor of Pavilion, after 3 month of J.CO Donut & Coffee opening its store in Pavilion, their competitor Dunkin Donut have closed their store in Pavilion. In Malaysia, there is a relatively low threat of new entrants into the Malaysian coffee and snack shop industry. Other than that, there is not many competitor in exclusive donut & coffee café, it is not an easy for a new entry to build a strong brand that could match the J.CO Donut & Coffee brand. According to J.CO Donut & Coffee, they build a strong brand name for almost 10 years in South East Asia and many of their competitor take almost 15 years. Although it is still possible for a new entrants to thrive in this market, they may experience several problem for example, licenses, insurance, or other qualifications that may be required are not hard to obtain In addition, since customers incur minimal switching costs when switching suppliers, they are able to buy from multiple stores. This element of the Five Forces analysis shows that the threat of new entrants is a low threat issue for J.CO Donut & Coffee. 5.2.3.4 Threat of Substitute In all of the five forces, threat of substitute is the highest threat to the company. The threat of substitute products and services is high. Coffee and snacks café concept restaurant that are serving donut is a substitute products for J.CO Donut & Coffee. Café and restaurant that served similar donut include nationwide chains are Dunkin Donut, Big Apple Donut, Krispy Kreme and also Mister Donut. Substantial substitute products exist in the Malaysian donut & coffee industry whether they are similar in nature or completely different, yet still classifiable as fast food. 5.2.3.5 Competitive Rivalry To conclude, it is clear from the above explanations that the J.CO Donut & Coffee brand does offer the company significantly enhanced competitive rivalry through its contribution to the reduction of all four threats. Therefore, in accordance with Porter’s Five Forces theory, it can be said that J.CO Donut & Coffee strong brand influences its external environment and the donut and coffee industry as a whole. J.CO Donut & Coffee’s faces tough competition because the donut and coffee market is already saturated. J.CO Donut & Coffee also claimed that their brand identity within the industry is also a huge factor for the rivalry, as three major brands have captured the majority of the market. It is important to note, however, that the industry does not have over capacity at the moment
  36. 36. 33   5.2.4 Product-Market Expansion Grid In the Product-Market expansion grid, J.CO Donut & Coffee are located in the product development strategy. They claimed that this strategy suit the business that they are in. Product develop can be define as developing new products and offering to the existing current markets. These strategies often try to sell new products to regular customer. Product development is used when there is a new product which has to be introduced in an existing market. In J.CO Donut & Coffee, they regularly introduced new donut topping and beverages flavour. When they introduced new product, they sometimes removed the less profit product. The department that responsible for product development in J.CO Donut & Coffee are their Research and Development (R&D) department. Existing Product New Product Existing Market Market Penetration Product Development New Market Market Development Diversification
  37. 37. 34   5.3 Market Communication Mix For J.CO Donuts & Coffee, it is their policy that they rarely use advertising on television and radio. They usually rely on sales promotion and public relations to promote their products or services. Sales promotion relates to short term incentives or activities that encourage the purchase or sale of a product or service. Some of the promotion that J.CO Donuts & Coffee do is each festive season, they will introduce new donut flavour with lowest price in order to increase their chance to get new customers. Other than that, J.CO Donuts & Coffee also contributed a lot to the society thru corporate social responsibility (CSR) programme. Public relation refers to how you handle your relationships and the flow of information with your various "publics" or the people who have a stake in or are affected by your business. This includes the general public, consumers, shareholders, employees, partners, competitors and the government. J.CO Donuts & Coffee’s CSR programme is also known as one of the public relations (PR) strategy used by J.CO Donuts & Coffee. According to Chartered Institute of Public Relations, public relation is defined as the deliberate, planned and sustained effort to establish and maintain mutual understanding between an organisation and their publics. J.CO Donuts & Coffee said that their public relations is about building good relations with the public of your business by obtaining favourable publicity, building a good corporate image and handling or heading off unfavourable rumours, stories and events. Currently, J.CO Donuts & Coffee CSR programme only involved activity with orphanages and homeless people around Kuala Lumpur area. J.CO Donuts & Coffee believe that building good relationships with your stakeholders, particularly customers, you can generate positive word of mouth and referrals from satisfied customers. Many small businesses do not devote enough attention to public relations in their promotional mix but done properly, it can be a powerful and cost effective business development and marketing tool.
  38. 38. 35   6.0 ACTION PROGRAM 6.1 Gantt Chart Based on the Gantt Chart stated above, JCO Donut and Coffee had a promotion during each festival that celebrate in every religion. At each year, they will do a promotion include the Chinnesse New Year, Hari Raya Aidilfitri, Deepavali and Christmas. Besides on the promotion, at every three times a year, they will do a sponsor towards the orphanage withthin January, May and December. Meeting with the international JCO meeting had always done total of six months in a year which is straight from the January untill June. On top of that, on the grey scale above stated that JCO had their service equipment at every three times a year that is on March, April and May. Therefore, their equipment is always in a good condition. On the black scale above, the JCO Donut and Coffee hiring and training the employees at every three months in a year which on January, February and March. Throughout the training, the company served a good technique and skill for their work. Most of the time, research and development had the longest period compare to the other activities. The Gantt chart above shows that, the company done it at every twelve times in a year that from the January and December which they always making an improvement on the taste of their drink and food to satistfied their customers. Before the development been made, they always done a research by having a survey and online survey giving out towards the customers to know exactly what is less on their foods and drink or even their services. Activity JAN FEB MAR APR MAY JUN JUL OGO SEP OCT NOV DEC AMOUNT BUDJET Promotion Raya RM 8000 Orphanage and Sponsor RM 12000 International JCO meeting RM 18000 Serivce Equipment RM 15000 Hiring and Training RM 9000 Research and Development RM 12000 JCO Malaysia Meeting RM 4500
  39. 39. 36   Last but not least, At every three times in a year JCO held a meeting between the CEO’s of the JCO in every state in Malaysia that are on April, May and June. Throughout the meeting, most of the time, they are disscussed about the finacial problem or to solve the problem that their company faces. The problem that the company faced in targeting the time that had been set, there are several problem that they face especially because of the employees itself. Less numbers of workers caused the company severe a problem. As what that we had earned from the interview that we had made, Malaysian people are not giving their interested towards the jobs and demanding for a better job. Other than that, from what we have known based on the interviewed that we had done, the problem that cause the problem is the equipment. Less of equipment that are provided for the company. The JCO Donut and Coffee divided the task towards their employees in order to achieved their time that have been set, the company find a solution to acheive it by creating a timetable toward each of the employee. The time working for each of the employee for the JCO donut and coffee is eight hour a day. The period of time for the work hour is long due to the lack of worker for the JCO. On the other hand, if the worker didnt perform well for the JCO they will attend for the couching and counseling and they will have 2 months notice before they been terminated for the job.
  40. 40. 37   7.0 BUDGET This section aims to analyse the overall budget of J.CO Donuts & Coffee Malaysia (Pavillion Branch) in terms of their target sales and the actual generation of income which consists of 3 phases; daily, monthly and yearly projection. 7.1 Products To understand how J.CO Donuts’ budget works within its business operation, we must first take a look at the range of product they deliver to understand the dispersal of prices. J.CO Donuts’ offers 5 different varieties of food products, which are: 1) Donuts: The donuts that comes in 24 different flavours are sold in 3 different quantities which are a dozen per box, half a dozen per box and ala-carte. The amount of donuts produced in J.CO donuts (Pavillion) is 5000 pieces daily. The actual projection they managed to sell is at the capacity of 3,500 pieces daily average, which amounts to 105,000 pieces monthly. 2) J.Coffee: J.Coffee managed to sell at an average of 90 cups per day, which comprised of 3 different sizes; tall, grande, venti. For an extra RM1.00, you can upgrade from medium to large. This coffee comes in 26 different varieties. 3) J.Club- J.Club are sold at an average of 30 units per day, they come in 2 different flavours. They are one of the least within the product to generate sales throughout their daily operation. 4) J.Pops- J.Pops or Baby Donuts is also popular among its customers, with a box of 24 pieces, they are selling at an estimated 40 boxes per day. 5) J.Cool Yogurt- The J.Cool Yogurt is also apparently selling 40 cups average per day which comes in 4 different sets.
  41. 41. 38   7.2 Calculations The breakdowns for the calculation of unit sold are as follows: 1) Donuts- (i) 12pc x 230 boxes (RM 26.00)= 2760 units (ii) 6pc x 110 boxes (RM13.00) = 660 units (iii) Ala-carte (RM3.00) = 80 units 2760+660+80 = 3500 units (daily) 3500 x 30 = 105,000 units (monthly) 105,000 x 12 = 1260000 units (annually) RM26.00 x 230 = RM5980 RM13.00 x 110 = RM1430 RM3.00 x 80 = RM240 RM5980+RM1430+RM240 = RM 7650 (daily) RM7659 x 30 = RM229500 (monthly) RM229500 x 12 = RM2754000 (annually) 2) J.Coffee- (i) venti (rm 8.00) = 50 cups (ii) grande (rm7.00)= 30 cups (iii) tall (rm 5.00) = 10 cups 50 + 30 + 10 = 80 cups (daily) 80 x 30 = 2400 cups (monthly) 2400 x 12 = 28800 cups (annually) RM 400+ RM 210+ RM 50 = RM660 (daily) RM 660 x 30 = RM19800 (monthly) RM 19800 x 12 = RM237600 (annually) 3) J. Club- (i) Cheezy Rich (RM6)- 15 units (ii) Red Velvet (RM6)- 15 units 15 + 15 = 30 units (daily) 30 x 30 = 900 units (monthly) 900 x 12 = 10800 units (annually) RM 90 + RM 90 = RM180 (daily) RM180 x 30 = RM5440 (monthly) RM 5400 x 12 = 64800 (annually)
  42. 42. 39   4) J. Pops- 40 boxes daily ( RM18.00) 40 x 30 = 1200 boxes (monthly) 1200 x 12 = 14400 boxes (annually) RM 18.00 x 40 = RM720 (daily) RM 720 x 30 = RM21600 (monthly) RM 21600 x RM259200 (annually) 5) J. Cool Yogurt- (i) J. Cool Single (RM 6.50) = 12cups (ii) J. Cool Couple (RM 12) = 10 cups (iii) J. Cool Sharing (RM 13) = 10 cups (iv) J. Cool To Go (RM 10) = 8 cups 12 + 10 + 10 + 8 = 40 cups (daily) 40 x 30 = 1200 cups ( monthly) 1200 x 12 = 14400 cups (annually) RM 78+ RM 120 + RM 130 = RM 80 = RM408 (daily) RM 408 x 30 = RM 12240 (monthly) RM 12240 x 12 = RM 146880 (annually) 7.3 Profits 1. Gross profits: (i) Daily = RM 7650 + RM 660 + RM 180 + RM 720 + RM 408 = RM 9618 (ii) Monthly = RM 229500 + RM 19800 + RM 5440 + RM 21600 + RM 12240 = RM 288,580 (iii) Annually = RM 2,754,000 + RM 237,600 + RM 64800 + RM 259,200 + 146880 = RM 3,462,480 7.4 Breakdowns Monthly gross profit = RM 288,580 1. Cost of raw materials: RM 70,000 (24.25%) 2. Workmanship: 20 employees ( RM 1,800 each) + 2 store manager (RM 2,200) = RM 40,400 (14%) 3. Premis rental: RM 20, 000 (7%) 4. Utility bills: RM 5,000 (1.7%) 5. Franchise monthly fee: RM 10,000 (3,4%) 6. Monthly Profit Margin: RM 143,180 (49.61%)
  43. 43. 40   7.5 Budgeting Method For this section, we will use Task and Objective approach of budgeting. This method will analyse and determine how much funds to be spend on sales and promotion, marketing and advertising which will based on the desired results. It will involve: 1) Setting specific objectives 2) Deciding what tasks need to be completed to achieve those objectives 3) Calculating how much money it will cost to complete the task list J.CO Donuts and Coffee Malaysia uses the objective and task method of setting up its advertising budget. The advertising manager feels that this method is the best way for the company to plan its advertising. The store’s staffs first identify the merchandising events that will be held during the budget period. Then the manager determines the advertising that will be needed to promote these events properly, how much advertising will cost, and sets up the budget according to these figures. If the competition proves particularly active in promoting one category of merchandise the advertising budget can be adjusted so that additional funds can be spent to promote this merchandise. (a) Planning the budget The following list explains the merchandising events, which are held during this year. For each event funds have been estimated for advertising expenditures that will be needed to accomplish the promotion. 7.6 Promotions and Activities of J.CO Donuts & Coffee Malaysia  Raya Promotions include Chinese New Year, Hari Raya Aidilfitri, Deepavali, Christmas (Digital Advertisement RM2000)  Orphanage and Sponsor (CSR)- January, May and December (RM 4000 each month)  J.CO International Meeting- January until June (RM3000 each month)  Equipment Service- March, April and May (RM5000 each month)  Hiring and Training- January, February and March (RM3000 each month)  Research and Development for 1 year (RM1000 each month)  JCO Malaysia Meeting- April, May and June (RM1500 each month)
  44. 44. 41   MONTH TASK OBJECTIVE CALCULATION AND COST JANUARY  CSR  J.CO International Meeting  Hiring and Training  Research/Development  Donation for Orphanage  Discuss marketing plans  Enhance staffs performance  Enhance sales and services  RM 4000  RM 3000  RM 3000  RM 1000  TOTAL: RM 11,000 FEBRUARY  J.CO International Meeting  Hiring and Training  Research/Development  Discussing means of effective promotions  Enhance Staffs  Enhance sales and services  RM3000  RM3000  RM 1000  TOTAL: RM 7,000 MARCH  Raya Promotions (Digital Advertisement)  J.CO International Meeting  Hiring and Training  Equipment Servicing  Research/Development  Chinese New Year Promo  Discussing unified agreements  Enhance Staffs  Maintain and restore equipment’s  Enhance sales and services  RM 2000  RM 3000  RM 3000  RM 5000  RM 1000  TOTAL: RM14,000 APRIL  J.CO International Meeting  Equipment Servicing  Research/Development  J.CO Malaysia Meeting  Discussing problems and solutions  Maintain equipment  Enhance sales and services  Discussing local promo  RM3000  RM5000  RM1000  RM1500  TOTAL: RM 10,500 MAY  CSR  J.CO International Meeting  Equipment Servicing  Research/Development  J.CO Malaysia Meeting  Old Folks Home  Discussing expansion  Maintain equipment  Enhance sales and services  Discussing problems  RM4000  RM3000  RM5000  RM1000  RM1500  TOTAL: RM 12,500
  45. 45. 42   TOTAL: RM11, 000 + RM7, 000 + RM14, 000 + RM10, 500 + RM12, 500 + RM5, 500 + RM3, 000 + RM1000 + RM 1000 + RM 1000 + RM 3000 + RM 7,000 = RM76, 500 annually RM 3,462,480 - RM76, 500 = RM 3,385,980 annual nett profit. JUNE  J.CO International Meeting  Research/Development  J.CO Malaysia Meeting  Maintaining Efforts  Enhance sales and services  Discussing Solutions  RM 3000  RM 1000  RM 1500  TOTAL: RM 5,500. JULY  Raya Promo (Digital Advertisement)  Research/Development  Hari Raya Aidilfitri Promo  Enhance sales and services  RM 2000  RM 1000  TOTAL: RM 3,000 AUGUST  Research/Development  Enhance sales and services  RM 1000 SEPTEMBER  Research/Development  Enhance sales and services  RM 1000 OCTOBER  Research/Development  Enhance sales and services  RM 1000 NOVEMBER  Raya Promo (Digital Advertisement)  Research/Development  Deepavali Promo  Enhance sales and services  RM 2000  RM 1000  TOTAL: RM3,000 DECEMBER  Raya Promo (Digital Advertisement)  CSR  Research/Development  Christmas Promo  Orphanage donation  Enhance sales and services  RM 2000  RM 4000  RM 1000  TOTAL: RM7,000
  46. 46. 43   8.0 CONTROL Marketing control is the way to compare your actual results to your marketing plan. To confirms that your company already in the right track. The control step will help the company to improve the performance. There is four tools of control in marketing which is Annual-plan control, Profitability control, Efficiency control, Strategic control. J.CO Donuts & Coffee is using an Annual plan control and profitability control for their business purposes. Annual plan control is the process to aim and achieve sales volume and all objectives which already have been set up by the company. After that, profitability control is how the company controls the sales made, profit earned and expenditures incurred by them. Usually it relates with profit earning capacity of firm’s product by the company. J.CO Donuts & Coffee will look back all the process get to know what they achieve. Even though J.CO Donuts & Coffee already plans their strategy smoothly but there’s no guaranty profit for it. 8.1 Annual Plan Control J.CO Donuts & Coffee 8.1.1 Sales Analysis 8.1.1.1 Sales Target for a Month Sales Goals 5000 pieces day X 30 days = 150,000 pieces of (donuts a month) J.Coffee = 200 cups per day J.pops = 100 boxes per day J.cool yogurt = 70 cups per day J.club = 50 units per day J.CO Donuts & Coffee target their sales every month depends on quantity of donut that produce. they target that every outlet will produce around five thousand pieces every day which is can produce around hundred and five thousand pieces of donuts every month. MARKETING CONTROL ANNUAL PLAN CONTROL PROFITABILITY CONTROL
  47. 47. 44   Actual sales 3,500 pieces X 30 days =105,000 pieces of (donuts a month) J.Coffee = 90 cups per day J.pops = 40 boxes per day J.cool yogurt = 40 cups per day J.club = 30 units per day Eventually, J.CO Donuts & Coffee not achieve their target every month, their just achieve around 3,500 pieces of donut a day. This show has some issue of what they already planned. . 8.1.1.2 The Issues Why J.CO Donuts & Coffee Can’t Achieve Target Price The most important part that the company needs to consider is price. Before J.CO Donuts & Coffee enter Malaysia market their already has their plan for price. For instance, J.CO Donuts & Coffee used penetration pricing which is the pricing technique of setting a relatively low initial entry price, usually lower than the intended established price, to attract the customer. J.CO Donuts & Coffee was not achieve their target sales because of the others competitors has a cheaper price of donut than them, their gives the best quality of donut to the customer. The price of J.CO Donuts & Coffee actually the most reasonable, the company can’t low the prices due to the quality of ingredients that their used. For instance, J.CO Donuts & Coffee used the chocolate that import from oversea such as from Belgium. Style J.CO Donuts & Coffee actually not seem the others ordinary donut company. J.CO Donuts & Coffee ideas actually selling lifestyle, which is all type of people, can enjoy their donut and coffee with happiness in the outlet. They most competitors are Big Apple and Crispy Crème because these company also selling donut, but J.CO Donuts & Coffee also takes the café such as Starbuck and coffee Bean as their competitors too. That the reason they one of the pricy Donut among the competitor. Promotion Promotion is the one of the strategy to makes the company popular in market. J.CO Donuts & Coffee is the company just do the promotion in the outlet with give information to the customer about their new promotion and to increase their sales. Due to this style of promotion J.CO Donuts & Coffee enables to develop and build up a succession of massages like the others competitors did.
  48. 48. 45   8.2 Market Share Analysis Market share based number of outlets that J.CO Donuts & Coffee have in Malaysia. Market share is the amount of consumer sales dominated that same product in particular industry. The market share analysis of J.CO Donuts & Coffee, this Cafe has two close competitors which are Big Apple and Krispy Kreme. These brands were selling the same product with them which is Donut and coffee. Big Apple leading the market followed by J.CO Donuts & Coffee and next is Krispy Crème. 8.2.1 Big Apple This is because Big Apple already has over 80 branches in Malaysia. Big Apple brings the cheaper price of donut compared to the J.CO Donuts & Coffee. They also creates makes the topping of donut to the maximum compared to them. The fact is J.CO Donuts & Coffee actually brings the truly taste of donut not just about the feeling and topping. 8.2.2 Krispy Kreme Krispy Kreme already has 12 branches around Malaysia. The price of Krispy Crème more pricy compare to this two brands. Besides doughnuts, Krispy Kreme also offers high-quality brewed coffee, roasted by Krispy Kreme’s own roast master and a variety of other delicious beverages. 11 80 12 Total of outlets Jco Big Apple Krispy Kreme
  49. 49. 46   8.2.3 Most profitable product The most profitable is the Donut, majority customer carving for it. J.CO Donuts & Coffee staff said glaze donut is the best donut that they have. After that is baby donut, the 24 pieces of small donut with a variety flavors that compile all together. Everyday J.CO Donuts & Coffee donuts will sell donut around 230 box of dozen. 8.2.4 Marketing Expense to Sales Analysis Promotion gross profit 8.2.5 Profitability Control J.CO Donuts & Coffee marketing department said the way they achieve the target sale for every month depends on expenditures internal and external in their company. The most important. After that, the external control is based on promotion, customer and place of shop. 8.2.5.1 Internal control Staffing Usually internal factors are about the staffing in the company. In J.CO Donuts & Coffee all the staff will be divided by three departments which is first is store manager and assistant manager, next is bakers and lastly is the front line. JCO Donut and Coffee hiring and training the employees at every three months in a year which on January, February and March .Throughout the training, the company served a good technique and skill for their work Workmanship: Employees salary (Each Outlet) 20 employees (RM 1,800 each) + 2 store manager (RM 2,200) = RM 40,400 (14%) Type of product Gross Profit Monthly 105,000 units donuts RM 229500 2400 cups coffee RM 19800 900 units of Jclub RM 5440 1200 boxes of Jpop RM 21600 1200 cups of yogurt cup RM 12240 Total monthly RM 288,580 When it comes to promotion month the sales will increase around 40% RM404,012 = RM 115,432 Budget for promotion each outlet is RM20,000
  50. 50. 47   The manager needs to monitor the bakers to achieve the target amount of donut every day and the front liner needs to push the sales of donut and coffee. J.CO Donuts & Coffee needs to produce every day is about 4000-5000 pieces. Every day the manager has to updates the sales report. After that, they needs to analyze and compares the report. From the amount of donut, the cup of coffee and yogurt is the way how they control their profitability every day. Staff Training J.CO Donuts & Coffee do their ongoing promotion in the outlets, usually the staff needs to know how communicate and attracts with the customer to increase their sales. For example, when the customer just want to buy the half dozen of donut the front liner needs to show the customer will save a lot when they buy for a dozen. Hiring and Training - January, February and March (RM3000 each month) J.CO Donuts & Coffee has their own strategy to control their profit. First with Staffing and push the sales of product by the staff. J.CO Donuts & Coffee also said the most important to fight with their competitors is trust on the quality of what they using. Even though their donut is one of the pricy but the most important the quality of ingredient that their using. Quality and price actually are come together.
  51. 51. 48   8.2.5.2 External Control Promotion J.CO Donuts & Coffee said their do the promotion in outlets which is the promotion needs to be done by the front liner. Other than that, J.CO Donuts & Coffee do their promotions with celebrates the Malaysia feast such as Hari Raya Aidilfitri, Deepavali, Chinese New Year and Christmas. Every feast J.CO Donuts & Coffee will change the theme of their outlets and donut design. OUTLET RAYA PROMOTION  MARCH  RAYA PROMOTIONS (Digital Advertisement)  Chinese New Year Promo = RM 20,000  JULY  RAYA PROMOTIONS (Digital Advertisement)  Hari Raya Aidilfitri = RM 20,000  NOVEMBER  RAYA PROMOTION (Digital Advertisement)  Deepavali Promo = RM 20,000  DECEMBER  Raya Promo (Digital Advertisement)  Christmas Promo = RM 20,000 Next, J.CO Donuts & Coffee also makes their customer satisfied with their service. They needs to make sure that the customer will come back to the café to having their donuts and be a loyal customer. Usually, the loyal customer will select the best of taste and experience that their get. J.CO Donuts & Coffee improve their relation with stakeholder regularly. Lastly, J.CO Donuts & Coffee maintain their strategic place and know the profitability place. Usually, they choose the place that have many crowd such as Pavilion Shopping Centre and IOI Mall Puchong. The placing of shop also takes the important role, what we can see J.CO Donuts & Coffee chose their shop that near to the entrance of the mall.
  52. 52. 49   9.0 APPENDIX CONTACT NUMBER J.CO Donut & Coffee Malaysia (Pavillion Kuala Lumpur) Marketing Department +60127313391

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