Halo Coffee Assignment

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- Direct & Indirect competitors:

Appendix 2 illustrates that currently, there is not intense direct competition toward HALO because most of other brands do not pay attention to high class target customers yet and a few of them has invented eco-friendly capsules. Most of the indirect competitors also produce coffee capsule machine along with its capsules in order to prevent brand switching (Escande, 2014). However, HALO’s capsules are compatible with any machines (Nils Leonard, 2016), so that is not a great threat. Nevertheless, if these machine’s structure is changed; HALO needs to redesign its products to fit them; otherwise, HALO could not fulfill its commitment and could lose creditability.

- New entrants

There is an extreme potential direct competition from Nespresso. Nespresso may offer not very costly coffee capsules but the way its marketing looks luxurious; for example, it refuses mass distribution channels (Escande, 2014); thus, we could determine that Nespresso might be leading the masstige segment, “positioned between mass and prestige” (Lafley and Martin, 2013). Moreover, Nespresso could take advantage of Cofico coffee capsules. Cofico’s coffee capsules are 100% biodegradable, eco-friendly, and, more importantly, it is compatible with Nespresso coffee capsule machine (Cofico, no date). Imagine that, in the future, these two brands collaborates, their products could highly be able to enter high class market, directly compete with HALO.

- Strategic issues raised by suppliers

As a result of environmental climate changes, the harvest seasons could be unpredictable, and the suitable areas for coffee cultivation is forecasted to decrease significantly by 2020 (CBI, 2016) while the high quality and green specialty coffee is grown and taken from a few specific location. This trend will badly affect HALO’s strategy via the supplier bargaining power. To clarify, the price of the input coffee will rise due to the shortage of coffee, especially the specialty coffee, whilst there are more and more retailers entering specialty green coffee market, the number is expected to be double in 2020 (Brown, 2015). The price increases not only because of the increase in the coffee growing cost but also because of the auction among coffee buyers–paying more money to be supplied first or taking a risk of queuing.

In conclusion, there are both positive and negative strategic issues from the outside that HALO may be facing.

- The positive

- HALO has followed the right trend: environment care, specialty coffee, convenient product, more and more individuals with highest income and concern about coffee’s quality.

- A potential widening national consumer segment reduces the impact of Brexit’s disadvantages on importing costs and the bargaining power of B2B foreign customers.

- The negative

- The bargaining power from B2B (loyal) clients, especially the importers from other countries.

- The potential threat from coffee pods.

- A potential entrance of Nespresso to high class segment.

- A risk of commitment to be compatible with any machine.

- A great bargaining power from suppliers.

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References

BBC News (2016) ‘Is there a serious problem with coffee capsules?’, 19 February. Available at: http://www.bbc.co.uk/news/magazine-35605927 (Accessed: 13 November 2016).

Brown, N. (2015) ‘UK specialty coffee boom just beginning, 100% growth expected by 2020’, Daily Coffee News, 24 August. Available at: http://dailycoffeenews.com/2015/08/24/uk-specialty-coffee-boom-just-beginning-100-growth-expected-by-2020/ (Accessed: 13 November 2016).

CBI Ministry of Foreign Affairs (2016) Which trends offer opportunities on the European coffee market?. Available at: https://www.cbi.eu/market-information/coffee/trends/ (Accessed: 13 November 2016).

Cofico (No date) Coffee Shop. Available at: https://cofico.co.uk/ (Accessed: 13 November 2016).

Escande, M. (2014) Nespresso marketing analysis 2014. Available at: http://www.slideshare.net/marinescnd/nespresso-marketing-analysis-2014-complete-analysis (Accessed: 13 November 2016).

Halo Coffee (2016a) ‘Halo Coffee London Ltd’. 16-17SEM1AABSS040-3 Strategy and Creativity. Available at: http://breo.beds.ac.uk (Accessed: 03 November 2016).

Halo Coffee (2016b) Shop. Available at: https://halo.coffee/shop/ (Accessed: 03 November 2016).

Halo Coffee (2016c) The Mission. Available at: https://halo.coffee/2016/09/22/the-mission/ (Accessed: 03 November 2016).

Lafley, A. and Martin, R. (2013) Playing to win. Boston: Harvard Business Review Press.

Lloyd, E. and Kennedy, M. (2016) ‘Competitor and Customer Mapping’. 16-17TYAABSS021-3 Business Practice Portfolio. Available at: http://breo.beds.ac.uk (Accessed: 08 November 2016).

Lusher, A. (2015) ‘Inventor of the coffee capsule “feels bad’ for environmental damage – and prefers to use filters’, Independent, 03 March. Available at: http://www.independent.co.uk/life-style/food-and-drink/news/inventor-of-the-coffee-capsule-feels-bad-for-environmental-damage-and-prefers-to-use-filters-10083379.html (Accessed: 10 November 2016).

Mintel (2016) On a high: Coffee shop sales to top £3 billion in 2016. Available at: http://www.mintel.com/press-centre/food-and-drink/on-a-high-coffee-shop-sales-to-top-3-billion-in-2016 (Accessed: 13 November 2016).

Nils Leonard (2016) HALOTM. Available at: https://vimeo.com/167427834 (Accessed: 05 November 2016).

Office for National Statistics (2015) Ageing of the UK population. Available at: http://webarchive.nationalarchives.gov.uk/20160105160709/http://www.ons.gov.uk/ons/rel/pop-estimate/population-estimates-for-uk--england-and-wales--scotland-and-northern-ireland/mid-2014/sty-ageing-of-the-uk-population.html (Accessed: 13 November 2016).

Office for National Statistics (2016) Average household incomes, taxes and benefits by age of household reference person, 2014/15. Available at: https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/adhocs/005706averagehouseholdincomestaxesandbenefitsbyageofhouseholdreferenceperson2014to2015