Last Updated 27 Jul 2020

Market Analysis

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Essay type Research
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Market Analysis Bubble tea is specialist drink increasingly being offered in cafes, coffees shops and bars. It originates from Asia and is made up of hot or cold tea, milk, sugar and giant black tapioca balls. Ice is then added and the drink shaken to create the bubble effect. Bubbletea is often referred to as pearl shake, tapioca ball drink; boba ice tea and bubble drink among other things. Owing to their influences, bubble tea cafes are often Asian-themed in decor and may alsosell Asian snacks and food.

They are often situated in fashionable areas of cities, populated by urban professionals with high disposable incomes and an interest inalternative eating and drinking venues. Bubble tea is a tea beverage that originated in Taiwan in the 1980s. The term "bubble"refers to the tapioca balls in the drink. These chewy tapioca balls, or "pearls," areconsumed along with the beverage through a wide straw. Bubble tea is especially popular in many East Asian and Southeast Asian regions such as Taiwan, Brunei, China(including Hong Kong and Macau), Malaysia, the Philippines, Singapore, South Korea,Thailand, Indonesia, Vietnam and Australia.

Bubble tea is a mixture of iced or hot sweetened tea, milk, and often other flavorings. Thedistinctive characteristics of bubble tea are the black gummy balls made of tapioca (or,more commonly in East Asia, yam starch), called "pearls" or "boba" or balls that sit at the bottom of the cup. The pearls are larger than those found in tapioca pudding, with adiameter of at least 6 millimeters, but smaller ones are occasionally used. They aregenerally translucent brown with a darker brown center, although pearls of other colors or 'jelly cubes' have also recently become available.

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The original bubble tea consisted of a hot Taiwanese black tea, tapioca pearls, condensedmilk, and honey. As this drink became more popular, variations were created. Initiallyiced versions with a hint of peach or plum flavoring began to appear, and then more fruitflavors were added until, in some variations, the tea was removed entirely in favor of realfruits. Today you can find shops entirely devoted to bubble tea, similar to bubble teacafes of the early 1990s. They usually contain colored pearls that are chosen to matchwhatever fruit juice is used, in addition to brightly colored oversize straws for sucking upthe pearls.

Bubble tea is generally split into two types: fruit-flavored teas, and milk teas. Milk teasmay use dairy or non-dairy creamers. The mixtures that make up bubble tea vary. Several examples of flavors are strawberry, passion fruit, mango, chocolate, and coconut, and may be added in the form of powder,fruit juice, pulp, or syrup to hot black or green tea, which is shaken in a cocktail shaker or mixed in a blender with ice until chilled. The mixture is usually combined with milk andcooked tapioca pearls.

Bubble tea bars often serve bubble tea using a machine to seal the top of the cup with plastic cellophane. This allows the tea to be shaken in the serving cup. The cellophane isthen pierced with a straw. Other cafes use plastic dome-shaped lids. Even fruit slushiesand smoothies can have boba added to the drinks. These tapioca pearls are made mostly of tapioca starch, which comes from the tapioca, or  bitter-cassava plant. In other parts of the world, the bitter-cassava plant may be calledmanioca or yuca. Cassava is native to South America, and was introduced to Asia in the1800s.

The balls are prepared by boiling for 25 minutes, until they are cooked thoroughly but have not lost pliancy, and then cooled for 25 minutes. After cooking they last about 7hours. The pearls have little taste, and are usually soaked in sugar or honey solutions. There are two shops that claim to be the first creator of Bubble Tea. One is Liu Han Chiewho worked in Chun Shui Tang teahouse Taichung City, Taiwan in the early 1980s, andexperimented with cold milk tea by adding fruit, syrup, candied yams, and tapioca balls. Although the drink was not popular at first, a Japanese television show generated interestamong businessmen.

The drink became well-known in most parts of East and SoutheastAsia during the 1990s. An alternative origin is the Hanlin Teahouse in Tainan City, Taiwan, owned by Tu TsongHe Hanlin Bubble tea is made by adding traditional white fenyuan which have anappearance of pearls, supposedly resulting in the so-called "pearl tea. " Shortly after,Hanlin changed the white fenyuan to the black, as it is today. In the late 1990s, bubble tea began to gain popularity in the major North American citieswith large Asian populations, especially those on the West Coast and East Coast and inTexas.

The trend in the United States started by Lollicup in the city of San Gabriel,California and quickly spread throughout Southern California. The beverage has receivedmuch attention from mainstream American media, including covers on National PublicRadio show Morning Edition and the Los Angeles Times. Bubble tea has spreadinternationally through Chinatowns and other overseas Asian communities. In the U. S. , major chains such as Boba Bee in Chicago are expanding into suburbanareas, particularly those with large Asian populations. Bubble tea can also be found inmajor European cities such as London and Paris.

Bubble tea is also gaining in popularityin Canada, particularly in and around the cities of Vancouver, British Columbia; Toronto,Ontario; and Montreal, Quebec where there are large Asian-Canadian communities. It isalso gaining popularity in Australia, especially in Sydney, Brisbane and Melbournewhere there are also high concentrations of Asian immigrants and descendants. Capital Bubble Tea Cafe's focus is on meeting the demand of a regular local residentcustomer base, as well as a significant level of tourist traffic from nearby highways

Market Segmentation Customers are likely to be: * Young professionals may consider bubble tea a novelty and luxury alternative tothe commuter, lunchtime or after-work coffee. * Although it contains sugar, bubble tea is a much healthier alternative tocarbonated fizzy drinks and may therefore appeal to health conscious consumers. * It is popular for people to hold meetings such as craft circles and book groups inlocal cafes and coffee shops and a bubble tea cafe could appeal as an unusualalternative. Due to its fairly new status, bubble tea has a certain novelty value that mightappeal to people looking to try different tastes and flavors. * Office workers looking for a quick snack and drink or a relaxing meeting place. Travelers will be attracted to bubble tea cafes situated at transport locations suchas railway stations or airports; these can provide a useful way of relaxing beforeor during journeys. Increasingly bubble tea cafes or outlets are being located attransport terminals servicing clients throughout journeys, even short distance commutes.

Capital Bubble Tea Cafe will focus on two different market segments: Commuters andCaptive Consumers. Commuters are defined as any one or more individuals in a motorized vehicle travelingfrom point "A" to point "B. " Capital Bubble Tea Cafe greatest concentration will be oncommuters heading to or from work, or those out on their lunch break. Captive Consumers would include those who are tethered to a campus environment, or ina restricted entry environment that does not allow free movement to and from.

Examples would include high school and college campuses, where there is limited time between classes, and corporate campuses where the same time constraints are involved, but regarding meetings and project deadlines, and special events; such as carnivals, fairsor festivals--where there is an admission price to enter the gate, but exiting would meananother admission fee, or where refreshments are an integral part of the festivities. Capital Bubble Tea Cafe focuses on the middle and upper-income markets. These marketsegments consume the majority of bubble tea. Local Residents

Capital Bubble Tea Cafe wants to establish a large regular customer base. This willestablish a healthy, consistent revenue base to ensure stability of the business. Tourists Tourist traffic comprises approximately 35% of the revenues. High visibility andcompetitive products and service are critical to capture this segment of the market. Target Market Segment Strategy The dominant target market for Capital Bubble Tea Cafe is a regular stream of localresidents. Personal and expedient customer service at a competitive price is key tomaintaining the local market share of this target market.

Market Needs Because Capital City has a warm climate for eight months out of the year, bubble tea products are very much in demand. During the remaining four months of the year, warmdrinks are in significantly higher demand, along with a slower but consistent demand for  bakery products. Much of the day's activity occurs at lunchtime, with a relatively steadyflow for the remainder of the day. Service Business Analysis The retail bubble tea industry in the U. S. has recently experienced rapid growth. Theclimate in Capital City stimulates consumption of cold beverages throughout the year.

Bubble tea drinkers in the U. S. are finicky about the quality of beverages offered at thenumerous cafes across the region. Despite low competition in the immediate area, Capital Bubble Tea Cafe will positionitself as a place where customers can enjoy a cup of delicious bubble tea with a fresh pastry in a relaxing environment. Competition and Buying Patterns Competition in the local area is somewhat sparse and does not provide nearly the level of  product quality and customer service as Capital Bubble Tea Cafe. Local customers arelooking for a high quality product in a relaxing atmosphere.

They desire a unique, classyexperience. In addition to sales through company operated retail stores, leading competitors selldrinks through other channels of distribution (specialty operations). Larger chains varytheir product mix depending upon the size of each store and its location. Larger stores carry a broad selection of drinks in various sizes and types of packaging, aswell as accessories such as storage containers, travel tumblers and mugs. Smaller storesand kiosks typically sell a limited line of drinks and, maybe, a few accessories such astravel tumblers and logo mugs.

Technologically savvy competitors make fresh bubble tea and bubble tea-related productsconveniently available via mail order and online. Additionally, a few larger competitorshave made mail order catalogs offering bubble tea, certain food items, and select bubbletea-making equipment and accessories, available. Websites offering online stores that allow customers to browse for and purchase bubbletea, gifts, and other items via the Internet have become more commonplace as well Strategy and Implementation Bubble tea cafes shops are heavily reliant on impulse buying and passing trade.

Thereforethey will benefit from a strong image that is attractive to clearly identifiable types of customer. They are at the forefront of ‘lifestyle’ branding and as such reflect the changes in theUS’s demographic make-up. Issues to consider when developing a bubble tea cafes client base include: * Visibility - location will be vital. However, high street sites may be difficult toobtain due to high rent and intense competition, particularly from major chains. * Ease of access - other locations to consider includes those close to transport, e. g. near railway and bus stations. Shop design – bubble tea cafes usually cater for both the leisure and takeawaymarket by having separate areas, e. g. a lounge area and a walk-in area. Manychains have been modeled on specific themes such as Asian style. However, anindependent bubble tea cafe may need to differentiate itself from the large chains. Advertising in a variety of local publications will increase knowledge of your  bubble tea cafe and a favorable review in the local media will increase interest. Consideration should be given to additional activities that may attract custom.

For example displaying art works of local artists or students may bring in customers. Live music could increase interest or hosting ‘reading group’ meetings (anincreasingly popular leisure activity) could bring in additional and regular custom. * Promotional offers - most bubble tea cafes attract younger customers, therefore promoting the business to older age groups may be worthwhile or offering dealssuch as ‘bubble tea and... ’ deals. * Good quality food and drink will be an essential element as the market is highly competitive. If other drinks are served this could be promoted along with any other unusual elements of the business. * Word of mouth recommendation will also be important therefore it is important that you offer good customer service and staff are aware of this requirement. Capital Bubble Tea Cafe will succeed by offering consumer’s high quality bubble tea, as well as bakery products with personal service at a competitive price. Competitive Edge Capital Bubble Tea Cafe's competitive edge is the relatively low level of competition in the local area in this particular niche.

Capital Bubble Tea Cafe will involve the customers in community support efforts byexplaining that a portion of their purchase price will be donated to a charity of their choosing. In so doing, Capital Bubble Tea Cafe has: * Provided a customer with a quality product at a competitive price. * Provided the customer with a more convenient method for obtaining their desired product. * Demonstrated how Capital Bubble Tea Cafe appreciates their loyalty and patronage by donating money to their personal cause. Marketing Strategy Capital

Bubble Tea Cafe will be implementing a low cost advertising/promotioncampaign which could involve drive-time radio, but not much more. Capital Bubble Tea Cafe will rely on building relationships with schools, charities and corporations to provide significant free publicity because of its community support program. By giving charitable contributions to these institutions, they will get the word out to their students/faculty/employees/partners about Capital Bubble Tea Cafe. Word of mouth has always proven to be the greatest advertising program a company can instill.

In addition, the media will be more than willing to promote the charitable aspectsof Capital Bubble Tea Cafe and provide the opportunity for more exposure every timeCapital Bubble Tea Cafe writes a check to another organization. Pricing StrategyCapital Bubble Tea Cafe pricing will be comparable to the competition, but with thevalue-added feature of immediate convenience. Promotion StrategyThe long-range goal is to gain enough visibility to leverage the product line into other regions and generate inquiries from potential inventors.

To do that, Capital Bubble TeaCafe needs: * Public relations services at $1,000 per month for the next year intended togenerate awareness of editors and product information insertions, reviews, etc. Itis anticipated that the school fundraising program will generate a fair amount of  publicity on its own and will, perhaps, minimize--or even eliminate--the need for a publicist. * Advertising at $1,000 per month concentrating on drive time radio. CapitalBubble Tea Cafe will experiment with different stations, keeping careful track of results.

As with the school fundraising program, Capital Bubble Tea Cafe expects the facilities and signage to be a substantial portion of our advertising. However,in the start-up phase, Capital Bubble Tea Cafe needs to let people know where tolook for the facilities. Marketing ProgramsDistinctive Logo:Capital Bubble Tea Cafe wants to touch every customer every day. That is why the use of the term “Come Again” with a smiling logo lends itself to being the corporate identifier. Distinctive Buildings:Capital Bubble Tea Cafe has worked closely with the manufacturer to make the buildingdistinctive, so that it is easy to recognize, and functional.

Advertising and Promotion:In the first year, Capital Bubble Tea Cafe plans to spend $20,000 on advertising and promotion, with the program beginning in **. This would not be considered a seriousadvertising budget for any business, but Capital Bubble Tea Cafe feels the exposure willcome from publicity and promotion, so most of the funds will be spent on a good publicist who will get the word out about the charitable contribution program and how itworks in conjunction with the website.

Capital Bubble Tea Cafe also believes that word-of-mouth advertising and free beveragecoupons will be better ways to drive people to the first and second locations. In the second year, Capital Bubble Tea Cafe is increasing the budget to $40,000, since itwill need to promote several locations, with particular emphasis on announcing theseopenings and all the other locations. Capital Bubble Tea Cafe will continue to use publicity as a key component of the marketing program.

In the third year, Capital Bubble Tea Cafe will increase its advertising and promotion budget to $80,000, with the majority of the advertising budget being spent on drive timeradio. Sales StrategyThere will be several sales strategies put into place, including posting specials on high- profit items at the window. The staff will also hand out free drink coupons to those whohave purchased a certain number of cups or something similar.

Capital Bubble Tea Cafe will also develop window sales techniques such as the staff asking if the customer would like a fresh-baked item with their bubble tea. Sales Programs * Corporate Tasting Events - Capital Bubble Tea Cafe plans to host tasting eventsfor customers on a quarterly basis. Each quarter, at the introduction of eachseason, Capital Bubble Tea Cafe will be adjusting its menu to reflect the changesin the flavors served. * Drink Coupons - At fundraising events for schools and corporate events, we will be giving away drink coupons as door prizes or awards.

This encourages the person to come in for their free beverage and bring a friend or buy a baked item or a package of our bubble teas. * Chamber of Commerce and Professional Memberships - Because of the need tosell our services, Capital Bubble Tea Cafe will be an active participant in the Regional Chamber, local Chambers of Commerce, Foodservice Associations, and Specialty Beverage Associations. The exposure and education that these organizations provide is outstanding, but equally important are the contacts and opportunities made available

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