Business Model for Own Coffee

We will use differentiation as our business strategy. We provide 100% Arabica coffee bean which Imported from Indonesia, Mexico and Kenya. We sell three different sizes of coffee and every sizes only RM 1 different. The prices are RM 14. 90 for 450ML, RW 5. 90 for 550 ML and RM16. 90 for 650ML. We also provide civil cat coffee to our customer but with higher price, RM25 for 50ML. Beside coffee, we also selling some home make sandwich and cake Ilke carrot cake, New York cheese cake, chocolate cake, black forest cake and red velvet cake.

And the cake menu will change every week to ensure our customer wills not getting bored with the menu. During the first day of opening, the first 20 customer will get an Esp©rance cup or tumbler as a free gift and we will reserve a slot for them so when next time they visit, they only need to show their identity card and we will make coffee using their cup or tumbler, and they can enjoy 10% discount. Other customer who want to buy tumbler or cup also available and each of the tumbler or cup cost RM49. 90. 1. 0 Company description Esp©rance Is a French word which means 'hope'.

The concept of this business Is simple; everyone can choose their own coffee based on their own preference. Esp©rance is a partnership business. This business is owned by Low Chin Yuan, Cha Teng Chian, Queenie Yong Ven Yee and Chan Ching Soon. The initial cost for the business provided by the entire partners, each of them will contribute RM30, 000 into the business for the first five months operation. We plan to open 2 more outlets within 3 years. Our first shop will locate In Publica shopping gallery. We believe that, quality is the best prove for our business.

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Therefore we use 100% Arabica coffee hich imported from Indonesia, Kenya and Mexico.To become the best coffee shop and leading the coffee brand in Malaysia.  Deliver high quality coffee to our customer. Everyone have their own preference, let them choose. Basically, Esp©rance is a coffee shop and of course our main selling product is coffee. Our coffee is made by 100% Arabica coffee bean with designed latte arts on the surface of the coffee.

We are also selling homemade cakes and sandwiches to our customer which to ensure they will not feel bored with our menu. The homemade cake menu will be change every week. Just like most of the coffee shop, we also sell our own brand of tumbler or cup. When customer purchase our tumbler or cup will get a free drink and the next time they visit our shop with their tumbler, they can enjoy 10% discount for any drinks that they purchase. Our business strategy is differentiation, as we are selling high quality coffee and all coffee beans are imported from Indonesia, Kenya and Mexico.

What make our shop different from other is, when customer walks in our shop, we will ask them some uestion about their preference for coffee and determined what the most suitable roasted level of coffee beans for them. We provide high quality coffee with affordable price. Based on our research, pricing level for most of the coffee shop are from the range between RM 16. 90 to RM18. 90. In Esp©rance we believe that, high quality with lower price can attract more customers. Furthermore, our shop also provides the civil cat coffee, but with a higher price.  Core competencies are about the competitive advantage of the business own. The iggest competitive of Esp©rance are the understanding of preferences for customer. In today business environment, we can fgure how to attract customer, we will become the winner. As we know, teenagers nowadays are different from previous; they like something new for example 3D Latte Art . 3D Latte art are one of the famous reason for teenagers visit a coffee shop. One of the competitive advantages for Esp©rance is, we will demonstrate to our customer how 3D Latte Art is made.

We will also design a cartoon face that look alike with our customers' face or customer can customize Latte Art for themselves. For example, some one love Obama and they can ask us to make an Obama latte art Publica shopping gallery recently had become the spot for teenagers and middle upper level income people to hang out. Esp©rance is located in publica shopping gallery; it is an advantage for us as people will want to find a place for them to sit down and chat along with a cup of coffee. Furthermore, teenagers will walk in order a drink and enjoy their time connecting to our shop's free Wi-Fi.

Next we had imported Siphon coffee maker (refer to appendix 4) from USA. Siphon coffee maker is one of the most complicated coffee maker machines in the world. Through our research, coffee that make by siphon coffee maker is tastier than other type of coffee maker. Practice make perfect, all our latte art staff has at least 3 years of latte art making work experiences. This ensures the latte arts they make are perfect. As they had ending ideas of latte arts.  The suppliers which our company will choose to collaborate with are from Indonesia which the company named Coffindo.

We choose Coffindo as our main supplier it is ecause their company is the fastest growing company in the coffee industry. Moreover, Coffindo also have the largest coffee plantation in Indonesia which creates advantages towards our caf© because the company can fulfill our caf© coffee demand and provide reasonable price compare to others suppliers. Not only that, Coffindo also imported some Arabica coffee bean from Kenya and Mexico. This had fulfill our supplier requirement, the most important thing is economic of scale, when we order coffee bean with Coffindo, we can get a better price since we order a lot of coffee bean with them.

Next, the plantation also located in a very strategic area which is Takengon and Sidikalang and these two places is the famous Arabica coffee producing area. These places are called strategic because of their volcanic soils which are very fertile and it contains high nutrients when a volcano erupts. So, the quality of the coffee is assured and there are supplying roasted and ground coffee. Besides that, Coffindo also have the rental of the coffee machine services. Coffindo offer various types of package options of the coffee machines.

For example, Coffindo Espresso (single and double group) and vending machines which we can process a asteful and fresh ready to drink coffee. In this case, our caf© can save cost of the coffee machine by renting from the company, because of the innovative of the technology, the coffee machine functions will be upgraded time by time, so our caf© can up-to-date with the coffee machine when we rent it from the company so that our cafe create and brew the best coffee to our customers.  We partner with Fuji bakery shop to enhance our business . 0ur Cakes and pastries will supply by the Fuji Bakery Shop.

The reason why we collaborate with this bakery hop is because this company is the leading manufacturer of bakery and pastries goods in Malaysia which their quality and freshness of the goods are assured. Moreover, Fuji Bakery also provides various types of cakes for example red velvet which is their most popular cakes, Swiss roll and sandwiches. The most important factor why we choose Fuji Bakery is because of their strategic location which is nearby our caf© in Publica. In this case, Fuji Bakery can provide fast delivery service to us when the cakes and parties are out of stock which can avoid the disappointment of our customers.

Besides that, the price of the cakes and pastries are offer with a very reasonable price which our caf© can earn profits from here as well and not depending on the coffee only.  One of the most important parts for a business plan is the market analysis. The market analysis includes market segmentation, 4P, SWOT analysis for own product and competitor analysis. Market segmentation is an effective way which allows us to segment our customer by using demography, geographic, behavioral or psychographic.

The SWOT analysis allows us to analyze the advantages and isadvantages of our products. There is a saying that 'knows your enemy and you can Our company segments our market based on demography. The components that included in demography are age, income, gender, and life style. Life style and income is the main thing that we need to segment. As we know, people who like to enjoy their life are willing to spend more money in order to get a better quality of goods and also food. Our company provides high quality of food and drinks to those who love to enjoy their "coffee break" in comfortable surroundings.

Next, people who are willing to spend more money usually have a higher salary. Therefore, these people are our target customers.

SWOT Analysis

Strength

Esp©rance company strength is it have their own brand which different from others competitor. For example, the brand image was easy to remember by the public so that the peoples can realize the existing of the company and have a try for the first time. Furthermore, Esp©rance also give option for the customer to choose their Esp©rance and the taste which will give them a good image for Esp©rance company reputation.

Beside that's, Esp©rance have provide 100% Arabica coffee beam which imported from Indonesia, Mexico and Kenyan. Other than that, When the customer come to the Esp©rance retail shop, it will offer special services for the first 20 customer who visit and consumer our product by giving them discount and give them a tumbler or a Esp©rance coffee cup as free gift. Besides that, Esp©rance also have a coordination and communication between each retailer which it can easily manage to control the information flow and labor forces.

For example, when there is a stock out in certain area, Esp©rance will have a backup plan for each of the retail by storing some product such as coffee bean and cake with the supplier.

Weakness

First of all, the Esp©rance weakness is their financial background, the company does not have large capacity and financial to support the daily operation which involve high cost on handling the advancement of equipment such as coffee maker which needed highly advance to create a quality coffee for the customer and the cost of high quality ingredient also is one of the considerations.

Beside that's, lack of skilled labor at certain place cause inconvenience to find a suitable bartender to produce a quality coffee for the customer and if there is a skilled labor, the salary will be cost ore than normal worker do because of the lack of skilled worker.

Opportunity

The opportunity of Esp©rance have is it will get more attention from the competitor which the competitor might request to Join venture together with them which will increase the Esp©rance financial capable to compete and bot of the partner will achieve win-win situation. For example, Esp©rance can provide their idea for the partner and the other parties will be providing investment on the idea.

Threat

One of the biggest threat for Esp©rance is the competitor, like Starbucks which have a ighly reputation and their financial background was stable enough to compete with Esp©rance The competitor might reduce the price in certain amount and will continue in a month or longer time which will cause the demand for Esp©rance decrease and Esp©rance can't compete if Starbucks continue to compete in the same manner of way, thus, Esp©rance might be in a risk which needed to stop some of the operation.

Starbuck can compete in this method because it can cover the cost from its own strong financial background. In term of pricing, Esp©rance price range are RM 14. 90 to RM 16. 0 each coffee and each 100ml add on will be charge for RM 1 to attract the customer to spend a little more to get more drink. Beside that's, for the cake pricing range will be each piece is RM8 to RM 15 depend on what type of favorite does customer wants. However, the highest price which is RM 25.

The price will be higher compared with Starbucks but it has provided right quality for the customer at the right price. The price of coffee drink will be increase soon due to the lack of high quality resources and the competitor also might be increase the price due to the coffee industry environment ffect. Esp©rance is new in the Kuala Lumpur area, thus the focus of retail shop location will be in a Publica shopping gallery. Publica shopping gallery had become one of the famous hang out place for teenager, by having a strategic location Esp©rance might gain more customer. In the promotion ways, Esp©rance will have an event in each of the institution area such as Tunku Abdul Rahman Collage University and University Tunku Abdul Rahman for promoting our product by giving coupon and free membership for the students. Besides that, promoting advertisement through online is the most common way now a day, it's because of the cost of advertising trough online is free and it only take short time to form an advertisement for example: facebook, Instagram and tweeter.

The Esp©rance first product will be the civil cat coffee and brewed coffees, espresso beverages, cold blended beverages and tea. Additionally, it also provide sandwich and cake like carrot cake, New York cheese cake, chocolate cake, black forest cake and red velvet cake. The cake menu will change every 2 week to ensure the customer wills ot getting bored. Not only Just that, Esp©rance also provides games, magazine, comic, novelty for the customer when they are having their drink or breakfast.

Esp©rance not Just only sell beverages but, it also sell coffee beam for the customer to try out their self to have their Esp©rance made in-home.  In Esp©rance we using the strategic of understanding customer taste. In Esperance, we believe everyone has different taste for coffee, we allowed our customer to choose the roasted level of coffee bean, as we know, and different roasted level of coffee will ake the taste of coffee totally different. We will try our best to fulfill our customer satisfaction by providing them with high quality coffee and professional services.

Next, we allowed our customer to customize the latte art on their coffee according to their will. Not only that, we will upload all our latte art making process to Youtube as to share the uniqueness of this special creation. We sell three different sizes of coffee and every sizes only RM 1 different. The prices are RM 14. 90 for 450ML, RW 5. 90 for 550 ML and RM16. 90 for 650ML. combo set had ecome one of the promotion technic to induce customer purchase more of our product. To enhance the inventory turn over time, our company will having a promotion combo set.

With purchase 650ML, customer only needs to add RM5 and they can choose either homemade cake or sandwich. We also provide civil cat coffee to our customer but with higher price, RM25 for 50ML.  Today, there are many coffee shops we can get in the market like Starbuck, coffee bean, Dr Caf©, pacific coffee and etc. Every customer has their own preference for the coffee brand; some of the customer is Just too loyal to the brand. Besides that, the customer may also prefer to other substitutes drink instead of coffee. The threat of substitutes is very high.   There is not easy to run a quality coffee business, because the initial cost is high. The cost of machine, coffee bean cost, equipment cost and renovation cost will cost at least RMIOO, 000. Furthermore, the competitor is too strong such as Starbucks and Coffee bean. This 2 coffee brand had built up a place in consumer heart. When people want to go coffee shop, the first place they think about is Starbucks. Thus, the hreat of new entrants is low. The rivalry among existing firm is high due to there are many different brand of coffee in the market.

Based on our research, coffee selling prince for our competitor from RMI 2. 90 to RMI 8. 90 and they offer a larger size of drinks. The rivalry among existing firms is not only about price but also environment. As we know most of the coffee shop will provide free Wifl to their customer. We will also do in the same way, we provided free 20Mbs Unifi to our customer.  Coffee bean is the soul of a good coffee, without good coffee bean, seller not able to make a good coffee. The coffee bean we will purchases from 5 different suppliers.

As we know , if we can only purchase with one supplier ,than we will have a better negotiation power, but this is very dangerous if the supplier not able to provide the quality of coffee bean that we require or the coffee bean out of stock. Therefore, we decided to purchase with 5 different suppliers, in order to get a better price, we will sign 1 year contract with them. Thus, the bargaining power of supplier is low in coffee industry. Unfortunately, the bargaining power of buyer is high due to that there is many choice of coffee shop in the market.

Consumer can very get a coffee even in seven-eleven. Not only that, due to we are selling 100% Arabica coffee bean and the coffee bean are fully imported from different country this make our cost goes higher compare to other famous brand coffee shop. However, most of the consumer only cares about the price but not the quality of the coffee. To overcome these challenges, we will have promotion to our customer. First of all, when we talk about coffee, Starbucks always come to our mind; therefore, Starbucks is our main competitor.

Starbucks is known as the world's number one coffee retailer, has over 14,000 coffee shops which more than 37 countries. Starbucks outlets offer not only coffee drinks but also food items, beans, coffee accessories and teas. Starbucks does not compete on price but focus on the experience of customers receives while visiting their coffee shop. Starbucks focuses its retail choice on the "best places in town". As we know , the firm is focuses on the high-traffic and also the igh-visibility locations.

Starbucks locates stores in shopping malls, and focus on places that provide convenient access for pedestrians and drivers such as the drive thru system. Next, Coffee Bean & Tea Leaf was based in year 1963. In 2005 the Bean use is to "Keep Innovating". Coffee Bean is known for its depth choice of coffees and teas. Besides that, it is also have a good reputation for its innovation. For example, the ice-blended coffee drink and chai latte. Moreover, Coffee Bean has also get into the overseas market, finding niches in Starbucks-free markets, for example

Israel which almost all of their drinks had certified as kosher. Besides that, San Francisco Coffee also our competitor as the shop is located in Publica and same floor with our shop. This coffee company is founded in year 1997 with a noble mission who is save good people from bad coffee. This company dare to admit that the standard of their coffee is in high quality which they serve only fresh brew coffee from the best coffee farms in the earth. Furthermore, San Francisco Coffee emphasize in their timing which they will never break the rule when it comes to the taste and the reshness of their coffee.

Not only that , but they will never use the roasted beans which are more than one month to ensure the freshness and the quality of the beans. However, strong competition within this industry for the new customers and consumers which our caf© will provide special offers which create more choices of the coffee flavour. and new strategic location which located near the retail store or university campuses. Moreover , the service and environment also one of the factor to compete with our competitors is that our caf© will have the music , comfortable eating areas and short waiting queues to ensure the comfort of our customers. Furthermore, our caf© also will have the loyalty programs which are the bonus cards to ensure the frequency of visits of the customers.

Conclusion

In conclusion, business plan above that we provide included the estimated of cost, potential customer, potential competitor and our potential supplier. We understand every business has risk, and we understand there is a possibility we will losing money or not earning money in the first few month. But we believe our business plan eventually can bring us high profit.

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