Business and Management
Submitted By jozeeb
Table of Contents
Situation Analysis…………………………………………………………2 External (Refer to appendices A)…………………………………2 Internal (Refer to appendices B)………………………………….4
Segmentation Analysis (Refer to appendices C, D, & F)……………..6
Strategic Alternatives (Refer to Appendices F, G, & H)……………….9 Alternative 1…………………………………………………………9 Alternative 2………………………………………………………..10 Alternative 3………………………………………………………..11
Implementation (Refer to appendices I)……………………………….13
Executive Summary Jumba Juice, a chain of smoothie restaurants from the United States, is facing a marketing challenge that will be solved throughout the following case study. The company needs to define their target market, as well as create brand awareness in Canada through a new marketing plan. There are four alternatives that the clients should consider; a) marketing to Generation Y, b) marketing to the Millennial generation, c) marketing to business people, and d) marketing to health conscious individuals. The recommended alternative is to market to suburban areas across Canada because they contains three of segments of Jamab Juice’s market; Generation Y, the Millennial’s and health conscious individuals. This region has the best-predicted outcome of new consumers and will result in more revenue for Jamab Juice.
Problem Statement Jamba Juice is currently operating in the United States and would like to establish themselves in Canada to increase market share. Situation and segmentation analysis is necessary in order to create an effective marketing plan for Jamba Juice to penetrate the Canadian market.
External Analysis (Refer to appendices A)
Regulatory/Political: Fortunately for current smoothie bars owners there are intellectual property rights and contracts that will protect them against those who wish to create similar stores. People are always trying to take concepts from others and these rights allow smoothie company’s to protect themselves.
Economic: The smoothie industry is rapidly growing beating out frozen dessert and smoothie mix industry’s (Corporation 2000). North American sales have topped 2.5 billion and has outpaced the fast food industry (Fresh n.d.). The growth means that others may want to open a smoothie bar. However in these times, people are not purchasing as much as they used to (Sarver n.d.). Both are threatening to the smoothie industry.
Social: A recent trend that has been emerging is health consciousness. People have been trying to become healthier and smoothie bars encompass that trend providing a perfect target.
Technological: The technological aspect of the industry is posing a threat existing smoothie bars as each is trying to have a competitive advantage. Juva Juice has implemented vending machine with smoothie drinks in them, a convenient way to access them (Entrepreneurship 2009). City Blends has automated their blending and dispensing making the service more efficient and accurate (Liddle 2004).
Competitive: In 2001 juice and smoothie bars took up 66.5 of the smoothie and juice market share (Research 2001). It is continuing to increase allowing opportunity for profit to grow for existing companies. There are many competing companies like retail refrigerated juices, ice cream dessert stores, convenience and other stores and sandwich chains (Research 2001). Booster Juice, Euphoria Smoothies and Jugo Juice are the biggest competitors in Canada (Nielson n.d.)
Supply Chain: The supply is simple, as smoothies are made on the spot for customers. The customers place their order; the juice, fruit, sorbet, yogurt and ice are blended and given to the customer.
Channel of distribution: There are a number of products needed for making smoothies including various fruit, juices, sorbet or frozen yogurt that come from suppliers and are shipped to smoothie bars. However, since all the fruit is imported in, if the cost of fruit goes up, the companies will have no choice but to pay the asking price for them.
Internal Analysis (Refer to appendices B)
Company Objective: Jamba Juice wants to establish brand ubiquity, reach 5,000 stores, increase revenue by 25-35%, store growth by 20-30%, comparables sales by 3-7% in the next three to four years (Breen 2007).
Marketing: Jamba Juice shows all strengths in its marketing. They have four products that are positioned to increase revenue. They have smoothies of course, Jombola for stop cross shopping at outlets and offer complete meal solution to takeaway, Souprimo to increase sales in the winter and power meal (smoothie and Jambola combo) to increase over all sales (Research 2001). Jamba Juice also had a promotion called BOGO Social Twist where people could visit a social networking website (Twitter or Facebook) and receive a BOGO coupon. They had 24,677 referrals and 29,605 click thrus, which was a great success (Twist n.d.). In the summer of 2010 they had many events going on where they gave out $1 dollar off coupons (Juice, Team Jamba Juice Athlete Manual 2010). Jamba Juice is the largest smoothie enterprise (Research 2001) located in 25 states and 341 stores. Each store is set to give a California experience with bright colours and a modern design. They target people in high income, high education areas, shopping malls, sports arena, strip centres, airports, and Whole Foods markets (Research 2001).
Production: Smoothies are made quickly and on the spot for customers. The customer orders and it is assembled. Although the process is quick, if any fruit, juice, or sorbet runs out the smoothie cannot be sold unless it is substituted with something else and there are many people who are only happy with the smoothie they want (unmodified).
Finance: The financial aspect of Jamba Juice is promising. Between 1997-2001 sales have grown 20.9 % (Research 2001). In 2005 alone they had a 22.5% sales gain (LeClaire 2005). They also have four key investors, who include Howard Schultz (Starbucks) and Bob Kagle (Benchmark Capital) (Research 2001).
Research and Development: There is always research going on for the latest beneficial fruit, Jamba Juice’s most recent addition is the Acai super fruit, that is full of health benefits (Juice, Pre-Boosted Smoothies n.d.). Although Jamba Juice has incorporated this super fruit, there are many other fruits that other companies have already made a part of their menu like the caja berry and capuacu.
Management: The franchises can pose as a weakness, as individuals may like to run things differently compared to others, and although there are some regulations that must be followed, management style can vary.
Human resource: Company owned stores strengthen the company because they are more formal and abide by the general procedures set out by the company making them all uniform. The franchises can be a weakness, as their HR decisions can vary from franchise to franchise.
Technology: Recently Jamba Juice updated their systems with Microsoft products. These products increased employee productivity, business intelligence and sales. The process of integrating a new system allowed Jamba Juice to use more of their time to serve and do upfront work rather than spending it on doing administrative work (Microsoft 2009). In 2002, they began replacing and rebuilding all old hardware from corporate, most of it was replaced with NCR RealPOS equipment, which is much better than the older equipment (Aloha n.d.).
Segmentation Analysis (Refer to appendices C, D & E) Generation Y is the market segment that could induce the most growth and provide the most profit. Individuals in this generation will pay high prices to get what they want; this age group would buy Jamba Juice for nourishment to get them through a long day of school, work, and personal activities. With an expected population of “9.2 million in Canada by 2011” (Beaton, 2007), Generation Y would provide the largest opportunity for growth in Canada, but you have to go above and beyond the normal standard of advertising to reach them. B&T Magazine states that Generation Y “have higher disposable incomes than other generations had at the same age, and are willing to spend”(Cranston 2008), which makes them a profitable target for Jamba Juice’s expansion in Canada, and “although the fast-food industry plays a large part in the daily lifestyle of a young adult, health-conscious choices are always on their mind” (Sarver, 2007). In addition, research has shown that individuals within this age range, compared to other generations, are most likely “to switch brands sometimes (36 percent) or even most of the time (2 percent)” (Dolliver, 2009). Since Jamba Juice has not been established in Canada, Generation Y’s lack of brand loyalty will provide them with the opportunity to more easily attract the competitor’s customers with a strong marketing plan. Members of Generation Y constantly change their mind on food, fashion, and everything in-between, and “this demographic can make or break a company” (Sarver, 2007). The Millennial’s are Jamba Juices’ secondary target market. Members of this generation are looking for low prices. Studies conducted by the Journal of Management and Marketing Research stated that, “With spending power of $172 billion a year, millennial spending power is a market force of significance that captures the interest of many players in the economy” (Cudmore 2010). With food being the largest object of spending for young teens, at 16% (Teen Spending, 2010), the Millennial’s are a profitable target for Jamba Juice in Canada. “Today's kids have more autonomy and decision-making power within the family than in previous generations” (How Marketers Target Kids, 2010), targeting them with advertisements can draw in families containing the members of this generation that would generally not be able to purchase Jamba Juice products on their own. Furthermore, Statistics Canada states that “childhood obesity and inactivity have been at the forefront of child health concerns in Canada in recent years, with compelling evidence that childhood obesity is rising and inactivity levels are high” (Tremblay, 2010), Jumba Juice’s products would allow this generation to get the servings of fruits and vegetables needed for healthy growth in a smoothie or juice that has a taste that appeals to them. Health conscious individuals are a primary target for Jamba Juice’s freshly squeezed juices and shots, and a secondary target for all other products. They are willing to pay whatever it takes for products that provide health benefits. Today, “the popular obsession with dropping pounds and losing inches certainly feeds into the health food trends that fuel juice bar popularity” (Bev, 2010) and “there is a high level of interest in nutrition and healthy eating and customers both young and old are demanding healthier choices more than ever before” (Murdoch & Berryman, 2005). Jamba Juice provides organic options, “light” smoothie options that contain 44% fewer calories and 53% less sugar then the classic smoothie options, freshly squeezed fruit and vegetable juices, and shots that are high in antioxidants like Acai and Matcha (Nutritional Facts, 2010), there is a large range of healthy options that would interest a large range of Canada’s health conscious consumers. Business people are Jamba Juice’s primary target for its breakfast plan and for meal combos. These individuals are looking for high convenience and quality and therefore, will be willing to pay high prices. “Business people lack free time to have breakfast, thus providing Jamba Juice an opportunity to capitalize into the breakfast market” (Helter, Szelp, Ruecker, Parmentier, Pham, & Kremlicka, 2006). Research has found a trend with business woman between the ages of 25 to 40 that Jamba Juice can take advantage of, “their need to stay fit and preserve their youth, leading them to consume expensive and unhealthy diet medicines” (Helter, Szelp, Ruecker, Parmentier, Pham, & Kremlicka, 2006). Jamba Juices nutritious smoothies, health breakfast options, such as steel cut oats, and wraps, salads and sandwiches are a health option for dining on the run and will give these business people the energy they need to get through a long work day.
Strategic Alternatives (Refer to Appendices F, G, & H) The forecasted cost of Jamba Juice opening a store in virtually any location would most likely be about $250,000 while a franchisee opening a store would be about $350,000 ($250,000 in assets and $100,000 in cash reserves) (GlobalBX n.d.). Revenue for company owned stores are generally more than franchised stores; the average for company owned is about $774,000 a year while franchises average around $599,000 (Breen 2007).
Alternative 1: The first alternative would be for Jamba Juice to market its product to those between the ages of 16-35 in suburban areas. Mintel research shows that age range were the ones to purchase the most smoothies in the last month and have the highest usage rate (Entrepreneurship 2009). Jamba Juice is targeting middle class consumer with a high disposable income that are single or newly married. They are more interested in healthy alternatives (Sarver n.d.). These people are generally found in educational areas, shopping malls, and strip centers (Research 2001). Suburban areas usually have all three, with high schools, elementary schools, strip malls and freestanding stores. Jambe Juice should promote themselves as “category-defining leader in healthy blended beverages, juices, and good-for-you snacks” (Juice, Nutritional Facts n.d.) in order to differentiate themselves from others who do not focus on healthy snacks. The strengths of this alternatives are that it targets the age range that are most likely to purchase smoothies, they have hot products (unlike other Canadian smoothie bars) to cater to the colder weather, and it also focuses on many segments. A weakness is that it may be difficult to find good locations in each province; population should be above 45,000 within 2 miles (Juice, Real Estate Site Criteria n.d.). An opportunity is that surrounding stores, malls and schools will bring business to Jamba Juice. A threat is that where there are malls, schools and other stores there are fast food restaurants and other competition, due to the fact that it is a good location.
Alternative 2: The second alternative for Jamba Juice would be to targeting business people through establishing stores in downtown areas and financial districts of highly populated cities throughout Canada. For this alternative the price and product will remain the same, however the place and promotional techniques will differ. Place; Jumba Juice will be marketing its products in Canada, their stores will first be established in the downtown business districts of five of the most highly populated cities in Canada. They will be located in Toronto, Montreal, Vancouver, Calgary, and Ottawa (Population estimates and projections, 2010). Promotion; the main market strategy for this region is will be to create brand awareness by handing out coupons and distributing product samples and pamphlets. This is an easy way to inform potential consumers on the benefits of you product and create word of mouth advertising. This alternative has several strengths; due to the high concentration of businesses and corporation that are generally present in the proposed region, there are large amounts of vehicle and foot traffic which will provide free exposure for Jamba Juice. The recommended promotional strategy is also relatively inexpensive compared to mass advertising. A weakness of this strategy is that the cost of renting real estate downtown regions is generally more that then cost in less dense suburban areas. The high concentration of business and corporations provides Jumba Juice with maximum exposure to the targeted segment, business people. A threat to this alternative is the fact that competitors are likely already located in these areas.
Alternative 3: The third alternative for Jamba Juice would be to target members of Generation Y through establishing stores in colleges and universities across Canada. For this alternative price will remain the same, however product, place, and promotion will differ. Product; Jumba Juice offers a wide variety of products (smoothies, tea, coffee, juice, wraps, salads, flat bread, and oatmeal, to name a few), but universities and colleges may not always have a kiosk or a spot in a cafeteria that is large enough to sustain all the frozen and fresh goods needed to provide Jumba Juices full range of products. Therefore, Jumba Juice will only provide beverages in its university and collage stores. Place; Jumba Juice will be marketing its smoothies, juices, and hot drinks in Canadian universities and colleges, through locations in cafeterias or kiosks around campuses. Promotion; universities and colleges have a limited amount of dining options so the news of the introduction of Jamba Juice will likely travel fast. Colourful posters can be posted around the university prior to the opening of the store; this will spark interest and curiosity creating buzz marketing. The strengths of this alternative mainly come from very low costs of marketing, due to word of mouth, and the standard flow of students that will always be expected in areas like a cafeteria. The weaknesses are the potential space limit ( in the smoothie business large freezers are needed to keep buckets of frozen fruits, fridges are needed to store the raw vegetables, and a dip cabinet is needed to keep the buckets of fruit being used cool) and the fact that universities and colleges mainly run for only eight months of the year. An opportunity for this alternative is opportunity to create brand loyalty with members of Generation Y. This would prove to be extremely profitable for Jumba Juice in the future since “by 2020, as the Baby Boomers...start to pass away, Generation Y will take over as the largest adult generational” (Generation Y, n.d.). The threats for this strategy include food and drink services that are already established in the universities and colleges.
Recommendation The chosen alternative is based on targeting suburban communities across Canada. The decision criteria was based on the relative effectiveness of all options, and the maximum potential for long run profitability, because the immediate cost of opening a store in any of the proposed regions will be similar. The recommended alternative, targeting suburban areas, has the most potential to grow Jamba Juices market share in Canada because these densely populated areas contain three of Jamba Juices target markets; the Millenial’s (there are generally many elementary and high schools in these areas), Generation Y (singles or newlyweds residents with high disposable income), and health conscious individuals (these suburbs generally contain several fitness clubs). This region has many opportunities such as the potential revenue that could be brought in from surrounding stores, malls, and schools. The only weaknesses to this alternative is the difficulties involved in finding the right communities and the lack of foot traffic in these areas, compared to the other alternatives, and the threat of fast food companies that are often present in these areas. Public education regarding Jumba Juices superior product heath benefits and variety would ameliorate this threat.
Implementation (Refer to appendices I) In order to carry out the strategy outlined in the recommendation, Jamba Juice must consider product, price, promotion, place, people, physical evidence, process, and productivity. November to December Jamba Juice must look for potential locations all over Canada, they should meet some criteria such as 1,200-1,400 sf, highly visible, abundant parking, residential population above 45, 000 within 2 miles, median household income $50,000-$75,000, average age less than 38, and strong vehicle and foot traffic (Juice, Real Estate Site Criteria n.d.). Once, a location is selected, construction can begin, the California setting should be the theme of Canadian stores too. In April, marketing research should begin, such as looking for local sports team to sponsor with discount coupons, best locations and they best way to advertise and how to create a successful grand opening. May is when the marketing should actually start and the training of employees should occur in May also. In June, Jamba Juice should have its grand opening with free samples, pamphlets and staff prepared to educate the community on the benefits and different products (smoothies, Jambola, Souprimo, tea, baked goods, California flatbread, juice, and oatmeal (Juice, Nutritional Facts n.d.)) of Jamba Juice. Pricing should be the same all over Canada, each smoothie is around $5 in US dollars, and so $5.50 would be fair for a large size as Booster Juice is currently charging $6.05. From then on, they should remember to promote themselves as “category-defining leader in healthy blended beverages, juices, and good-for-you snacks” (Juice, Nutritional Facts n.d.).
After conducting market research, analyzing the case and preparing three strategic alternatives to solve the main marketing problem, Jamba Juice should be confident in the final recommended section and implementation process chosen for the company.
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