Cielo Business and Marketing Report

Introduction

‘Cielo’ which was formerly known as ‘baraka’ is a coffee roastery founded by a couple, Nick & Linda Castle in the year 2008 with a lot of help from the people in the local community. It is a business based out off Leeds ,UK. It focusses on using high quality coffee beans to produce high quality coffee powder and other coffee products. They try to make their products out off materials which are locally and ethically sourced. And they are a social company, so they put back all their profits back into local communities for their development. (cielo,about)

The following project aims to identify and analyse Cielo’s marketing environment with aid of information and data collected from secondary sources such as newspaper,magazines,trade journals, academic journal,books,articles so that we would get a clear picture of the business’s marketing environment from a wide micro and macro perspective while using tools such as SWOT analysis and is followed by recommendations for the future marketing strategy of the company’s efficient and effective progress.

Business Environment

“A company’s Marketing Environment consists of the actors and forces outside marketing that affect marketing management’s ability to build and maintain successful relationships with the target customers.” (Phillip Kotler et al.2017, p.69)

Kotler says that marketing environment consists of macroenvironment and microenvironment. Microenvironment consists of actors which as close to the company that affects its ability to build and maintain successful relationships with target customers. The macroenvironment consists of larger societal forces that affect the microenvironment. These are demographic, economic, natural, technological, political and cultural forces. .(Phillip Kotler et al.2017 ,p.69)

Cielo – The Macro Environment

Cielo coffee is currently only available in the UK. So, all the information and studies shown here would be from UK standpoint.

Demographic Factors

UK as of 2017 has roughly a population of 66 million and is expected to reach a population by the current trend 73 million by the end of year 2041. (Office for National Statistics (ONS) ,2017). The UK is also the 21st most populated country in the world. (worldometers, 2018.). But when it comes to the consumption of coffee in the world, UK is lagging, UK turns up at number 45. (Telegraph,2017).

In the UK there has been a soaring increase in the consumption of coffee, the consumption of coffee in the year 2008 was 70 million cups of coffee per day but as of now we consume 95 million cups of coffee per day. There has been an increase in consumption of coffee by 20 million over the last 10 years. (telegraph,2018).

According to survey conducted by Centre for Economics and Business Research (CEBR) which included a survey of 2,000 adults in the UK, It is found that nearly one third of the total subjects didn’t drink coffee at all, while on the other end of the scale six per cent admitted to drinking six cups or more a day. With an average person consuming around two cups of coffee per day. It is also revealed that 65 per cent of coffee was drunk at home,25 per cent at work or while studying and the rest 10 per cent was consumed in shops, bars and restaurants.

The survey also showed that those under the age of 20 drink the least coffee at just half a cup a day, while millennials (20-37 of age) consumed 2.2 cups a day and people belonging to the age group 38 to 72 consumes most coffee with an average of 2.15 cups of coffee per day. (CEBR,2018).

It is also found that millennials drink more of the speciality coffee which are found in restaurants, bars and coffee shops. And many people are trying to cut back on caffeine consumption due to health concerns but according to experts, there is clear evidence which show that in moderation, around three to five cups per day for most people, coffee can contribute to a healthy, balanced diet.(Independent,2018)

“coffee is also associated with certain health benefits such as improving alertness, physical performance levels, decreasing risk of cognitive decline and even reducing risks of some cancers” (Dr. sarah, 2018).

In conclusion, although surveys are prone are often prone to inaccuracies due to sampling errors, it can be observed from the above data that the UK a country with increasing coffee consumption. This provides a good opportunity for Cielo.

Economic Factors

In terms of the economy factors which are the factors which effect consumer’s purchasing power and spending patterns, it has a good increasing effect on coffee consumption.

According to Ellie Tragakes (2016), in every economy prevails a natural rate of unemployment, even during periods of full employment. In periods of full employment, the economy functions in an effective manner, optimising all its resources efficiently. In such periods the natural rate of unemployment is said to be roughly 4%.

According to the office for National Statistics (2018), the current state of unemployment in the UK is at 4%. Although this rate is desired, unemployment rates are subject to fluctuations. During the financial crisis of 2008, the unemployment rate can be seen rapidly increasing. During these phases, the disposable income of the population reduces and in principle this could affect coffee sales.

However, coffee sales have not been subjected to much change. In fact, during times of economic distress, there has been steady increase in the sale of coffee and other beverages such as tea and cocoa in the UK. (National Statistics,2018)

Natural Factors

As the coffee industry is directly depended upon nature, Nature as a factor plays a huge role.

“Coffee prefers the cool, moist, frost-free climate found at higher altitudes in the tropics and subtropics. The optimum growing conditions include:

(British Coffee Association,2018)

So it is impossible for cultivating coffee in the UK, as UK doesn’t meet the needed natural and climatic conditions required to grow coffee.

Coffee According to Cielo (2018) , the coffee they use are completely imported. And they are very careful on picking their coffee, they only pick coffee of best quality and only those which are ethically sourced. By this Cielo is helping the local small-scale coffee planters across the world. So, for a steady supply of quality coffee beans to be processed by cielo a good harvest should take place so a good environment and natural inputs are needed. If the natural forces are not in favour, the input for the coffee industry would be insufficient or poor in quality creating a crisis for coffee.

Cielo – The Micro Environment

“Marketing success requires building relationships with other company departments, suppliers, marketing intermediaries, competitors, various publics and customers” (Phillip Kolter et al. 2017, p.70.).

The quote mentioned above gives idea about what micro environment comprises of. Micro environment are factors within the business’s  reach and can be influenced by the business itself unlike the factors from outside the business as in macro environment.

Cielo

Cielo, is a social enterprise start up by a couple  Nick & Linda Castle with a lot of help from the local community. As all start-ups Cielo too don’t have much capital. There were people who gifted their bookshops to cielo to try to give cielo a future. And there were volunteers dropping into do their bits. (Cielo,2018)

Kolter (2017) suggests that marketing plans can only be intended if the marketing management take its other business functions such as top management, accounting, finance, purchasing, research and development and operations into account.

Competitors

Coffee industry, in general is a very big and competitive in nature, but when coming to cielo’s competition there is only few company’s which focus on being socially responsible rather than just focusing on making profit.

So here are some coffee companies’ which are also social enterprises:

i)                    Old spike: It is a social enterprise which was set up in early 2015 with a aim of fighting homelessness. When taking the comparison of the products offered by old spike and cielo, cielo has better range of products consisting of Espressos, De-caffeinated coffee, single-Origin cielo speciality coffees and equipment such as cups, whereas old spike just sell filter coffee and espresso. Old spike products are a bit expensive than cielo coffee as a bag of 250g Cielo-espresso whole bean costs £6.50 while Old spike’s whole bean espresso of 200g costs £7.50 . Even though both companies have their own online shop, Cielo also has better number of outlets across the Uk with four outlets while Old spike has just one. (Old spike,2018)

ii)                  Ozone Coffee: It is also a social enterprise with a aim to help coffee planter and the society, was started in the year 1998 with three passionate people roasting coffee out of a small shop. When compared Cielo, Ozone too just have one outlet in the UK whereas cielo has four. Ozone is also quite expensive when it comes pricing, ozone offers the most expensive coffee out of the three selected brands here,  Ozone starts with a pricing range of £9.00 for a bag of 250g coffee. Cielo gets the upper hand here too. (Ozone,2018)

Suppliers

As cielo is a socially responsible café and roastery, their most important raw material to be supplied to them is coffee, and as explained in the natural factors it is impossible to grow coffee in the UK. The coffee used by Cielo is completely sourced from small farms across the world . And cielo makes sure that most of the coffee which they use is ethically sourced.

Source:statista,2017

From the above graph we are able to understand how heavily the industry is depended on other countries.

Some of the top coffee producing countries in the world include Brazil, Vietnam, Colombia, Indonesia and Ethiopia.

SWOT Analysis

The SWOT analysis here is used to assess strengths and weaknesses based on external and internal factors of the company to assess what it can and cannot do.

The following analysis is based on data mentioned above.

Strengths

A)    Social cause behind the products: Cielo has a good cause behind their business all the profits made from the business goes back into helping people and the society. They also source their coffee ethically and from small farmers across the world, so they are helping the small planters earn a livelihood instead of buying bulk coffee from big planters at a cheap rate and make more profit.

This can draw customers who too want to help the company give back to the community, helping to increase their sales.

B)    Wide product range: Cielo offers a diverse variety of products. They have speciality espressos, a good collection of ‘single origin collection’ which as different collections of coffee coming from different parts of the world with different flavours and blends, such as Brazil Morada Da Prata, Uganda Rwenzori Brumu, Brazil eagle etc. they also offer decaf coffee and different equipment such as cups, whereas other competing companies doesn’t offer a wide variety of product like what cielo offers.

C)    Location: Cielo has a good number of locations across the UK when compared to its competitors. So cielo is able to serve more people and sell more products enabling cielo to generate more revenue.

Weaknesses

A)    Marketing: cielo doesn’t invest much on spreading the word of how good the quality of the product is and how it helps the society. Increased marketing and awareness would help increase sales drastically.

B)    Heavily depended on imports: this industry is solely dependent imports for its functioning, a study shows a possibility of cultivating coffee in green houses which could help decrease the dependence on imports.

Opportunities

A)    Increasing the number of locations: Cielo already has a good number of outlets when compared to other social-coffee enterprises but when compared to non-social coffee enterprises, Cielo has very less number of outlets across the UK, and as cielo has a good quality product, with expansion to new places it would be easy to generate more sales due to the superior quality of the product.

B)    Marketing and  advertisement: having a better marketing would help cielo to increase the sales and make people aware about the need of social enterprise.

Threats

A)    Competition: The competition analysed above are only a fraction of what really exists, competition for cielo from the larger companies would be a big threat and these companies have more capital and diverse range of products to offer their customers.

B)    Brexit: If Brexit occurs, the price for all raw materials required for production of coffee would go up and as this industry is solely depended upon imports, it would effect the pricing of the products very badly.

Conclusion and Strategic Recommendations

In conclusion, overall, although far from perfect, cielo has showed good signs of growth of an organisation that could help in making quality coffee available to the consumers. However, certain recommendations could be made in order for the company to perform even better and get a better market share and do good to society:

A)    Increasing the number of locations: as cielo is now only present at only four locations, cielo could definitely do better with starting up more stores at more locations, they could do this by partnering up with locals of the area and make it possible.

B)    Marketing the product : cielo could definitely need to do better in marketing so that people would be able to know about the goodness of the coffee and how it helps the society.

C)    Diversfying the product range: Cielo could diversify the product range from what they have now with more products like other beverages like Tea, which has a good potential market.

Personal Account

Through the personal account I would like to explain about the project and my experience with it, this paper aimed to analyse and define Cielo- A social coffee enterprise. This helped me to implement and know how to apply the theory of marketing I learned. This task allowed me to study many things. It taught me about. The nature of coffee industry in general, how the processes go, and what are the marketing mix involved in it. It also helped to improve my analytical skills as it helped my to analyse and identify different characteristics and factors in the study.

As this is one of my first assignments to de done, It helped me teach myself how to cite sources effectively and to reference sources. The tutorials and lecture were very helpful as they gave me an insight to where the information realting to my topic could be collected from.

All of the companies from which I had to choose for this project were social enterprises and after going through the companies profile I understood the responsibilities as business enterprise we have towards the society. It inspired me to do my bit towards the society by purchasing and supporting social enterprises in any way as possible.

I choose cielo because coffee is something most of us consume on a daily basis and is a familiar topic for all. and I was familiar with marketing done by coffee companies because they are everywhere around us. Another reason why I chose this brand because they were helping people all around the world even if its in small scale as they supported planters all around the world and also the people involved in the process.

Overall, the essay helped me to understand the inner workings of an organisation in depth and allowed me to apply what I learned from the module.

It also gave me more information on marketing when I was referencing through articles and textbooks to gather information for the project and allowed me to apply these to real life scenarios.

References

1. Kotler, P. and Armstrong, G. (n.d.). Principles of marketing. 7th ed.

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  1. Cebr.com. (2018). The Independent – Brits now drinking 95 million cups of coffee per day | Centre for Economics and Business Research. [online] Available at: https://cebr.com/reports/the-independent-brits-now-drinking-95-million-cups-of-coffee-per-day/ [Accessed 20 Nov. 2018].
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  1. Ozonecoffee.co.uk. (2018). Home. [online] Available at: https://ozonecoffee.co.uk/ [Accessed 20 Nov. 2018].
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