Market Segmentation, Targeting and Positioning Assignment

Table of Contents
INTRODUCTION...........................................................................................................................3
QUESTION 1...................................................................................................................................3
Justification regarding choice of country....................................................................................3
QUESTION 2...................................................................................................................................4
Tailored marketing mix................................................................................................................4
QUESTION 3...................................................................................................................................6
Key factors Marvin and Smith should consider while expanding business in Denmark.............6
QUESTION 4...................................................................................................................................7
Calculation of ratios.....................................................................................................................7
QUESTION 5...................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Business essentials are the set of different elements which are required to be focused by
all the organisations in order to attain long term goals. These are product quality, profitability,
liquidity, market image etc. While planning to expand the business in new locations it is very
important for owners of enterprises to focus on all these aspects (Ahsan and Pedersen, 2018).
This report is based upon a coffee shop named Marvin and Smith which is planning to expand its
business in Denmark. For this purpose various topics are discussed under this assignment such as
justification regarding choice of country, marketing mix in relation to the coffee shop, factors
which should be considered by Marvin and Smith etc. Along with this, calculation of different
ratios and a conclusion regarding validity of the expansion is also covered under this report.
QUESTION 1
Justification regarding choice of country
Hank Marvin and Patty Smith were working together since a long period. They were
working together for catering and food industry and having a dream of establishing their own
business so they planned open a new coffee shop. After conducting a market research of 12
months a coffee shop was established by them in Wandsworth in South London, United
Kingdom in year 2017. Finest beans to prepare the drinks were used by them in order to stand
out of the market. High quality tea and herbal infusions are also used for the purpose of meeting
expectations of clients. After attaining success in London they planned to expand business in
new location which is Denmark.
This country was selected by them by conducting market analysis. They have analysed
that Denmark is one of the 10 countries which are considered as top 10 coffee consuming nations
(World's top 10 coffee consuming nations, 2019). All the factors which were taken in to
consideration while formulating the decision are as follows:
Political conditions of Denmark: Hank and Patty conducted research about Denmark in
order to assess political conditions of the country. They have analysed that political stability in
the nation is high which means the organisations that are executing business in that country do
not have to make changes in their policies frequently. They have observed that legal authorities
of the region provide support to such businesses which can help to develop the economy. Their
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business is having high liquidity and profitability so it can also contribute in the growth of the
nation. By considering all these aspects they have planned to expand business in Denmark.
Social factors: From the studies it has been researched by Hank and Patty that every
Danish Citizen sip 1.46 cup of coffee per day which makes the country the price of the hot
brown drink. In Denmark it is served with each meal of the day and in special occasions it is
served to guests with cookies, small sandwiches, pancakes and cakes. From the research which
was conducted by them they have assessed that this region sales world's 6th most expensive
coffee to the customers. All these social factors are analysed by Hank and Patty while
formulating decision regarding expanding business in Denmark (World's top 10 coffee
consuming nations, 2019).
Economic conditions: Economy of Denmark is known as modern economy where living
standards are comfortable, level of government services is very high and it is mainly dependent
upon foreign trade. Due to all these elements economic conditions in the region are stable which
helps business entities to attain higher profits with the help of governmental support. These
factors are analysed by Hank and Patty to expand their business in Denmark as it can help them
to generate high profits (Ajami and Goddard, 2014).
QUESTION 2
Tailored marketing mix
Marketing mix: It can be defied as mixture of four different elements of marketing
which are required to be focused by all the organisations while establishing a new venture or
expanding existing business. As Hank and Patty are willing to expand their business of coffee
shop in Denmark so it is also essential for them to analyse all these aspects in order to make sure
that their cafe will be able to attain success and growth in new location or not. An analysis of all
the four P's (Product, Price, Place, Promotion) for Marvin and Smith is as follows:
 Product: Hank and Patty's business of coffee shop is going to be expanded in Denmark
and both of them have decided to focus on tangible and intangible aspects of their
business. In order to meet expectations of clients they are going to offer different variants
in coffee such as cappuccino, latte, cafe macchiato, caffe mocha, caffe americano, flat
white, affogato etc. (Engwall, Kipping and Üsdiken, 2016). For the purpose of providing
good customer experience to clients they have planned to use innovative theme for
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interior in which they are going to add chairs and tables in the form of cup. They have
also formed strategies to provide best environment to customers so that they can help to
promote the new business in Denmark. USP of their business will be that green coffee
beans will be used by them for all beverages and they will make all the drinks sugar free
as sweetness will be added by honey.
 Price: In order to meet expectations of customers it is very important for the
organisations to set appropriate prices for the products and services that are offered by
them. There are various pricing strategies which are used by enterprises to offer their
products to customers. These are premium, penetration, economy, price skimming
strategy etc. In premium pricing entities such as Coasta Coffee set high price for items
that are going to be sold by them due to high quality and uniqueness of it, in order to
attain competitive advantage in the market. In penetration strategy enterprises set low
prices for their products at initial level so that large number of customers can be attracted
toward the business (Feinberg, 2019). Economy pricing is used to grab attention of such
consumers who are price conscious as low price is set under this technique for products.
Skimming strategy is totally opposite from penetration pricing and its main goal is to
maximise sales of new items. As Marvin and Smith's coffee shop is going to be
established in Denmark as owners Hank and Patty are planning to expand their business
in a new location. Both of them have planned to use penetration pricing for the items that
are going to sold in new country. This strategy is selected to set price for new drinks of
coffee shop because Denmark is a new place for new business and this pricing option can
help to attract large number of customers.
 Place: While establishing business in a new place it is very important for business
owners to focus on physical places where their products are going to be sold in future. As
Hank and Patty are willing to expand their business in Denmark so it also vital for them
to focus on the place where they will open their new coffee shop. They have planned to
open first cafe in Copenhagen which is the most popular city and capital of Denmark. It
is also known as food and drink capital of region. It is one of the main reason of selecting
this location as a place where new coffee shop will be opened by Hank and Patty. This
place is very famous for food and beverages so the owners of Marvin and Smith have
decided to establish their business there (Copenhagen and coffee, 2019).
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 Promotion: In order to aware clients regarding products and services that are sold by
business entities it is very important to conduct attractive promotional activities. As
Marvin and Smith's Coffee Shop is going to be opened in Copenhagen, Denmark so,
owners have decided to market coffee shop with the help of publishing pamphlets,
creating pages on social media etc. (Juul, 2015). Apart from this, they have also decided
to give coupons to customers who are going to visit cafe on launching day which could
be redeemed by them in future in specific time limit. All these promotional activities are
going to be conducted by them in order to raise awareness of presence in new market,
encourage target segment to engage profitability with market offerings.
QUESTION 3
Key factors Marvin and Smith should consider while expanding business in Denmark
While expanding business in a new location it is very important to focus on different
aspects such as finance, accounting, marketing, human resource management etc. As Hank and
Patty are planning to establish their new coffee shop in Denmark so it is also essential for them
to focus on all these elements in order to attain success. Description of them with the factors that
Marvin and Smith should consider while expanding business in an unfamiliar territory and the
way in which the challenges that may take place while expansion can be dealt is as follows:
Finance and accounting: Denmark is an unfamiliar territory for Marvin and Smith's
coffee shop so it is essential for its owners Hank and Patty to focus of sources of funds as huge
investment is required to establish business in a new location. For this purpose they can apply for
a bank loan, use personal savings etc. The challenges related to finance and accounting which
may take place while expansion are as follows:
 Credit and liquidity risk: As Marvin and Smith's Coffee Shop is a business which is
going to be expanded in Denmark so the owners may have to face challenge regarding
credit and liquidity because banks won't allow it credit without any security. Low
liquidity can also be faced by the coffee shop because of new business and low number of
clients (Kiørboe, 2015).
 Accounting policies: Accounting rules and regulations in all the countries are different
from each other so Hank and Patty have to spend monetary resources to understand
accounting principles of the nation. Due to this issue finance related problems may also
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take place as without following appropriate standards it will become difficult to manage
funds.
Both the above described issue and challenge are interlinked with each other because lack
of knowledge of accounting standards can result in liquidity risk and insufficient monetary
resources for business execution. This problem can also take place due to low awareness of
business. In order to manage the issues Hank and Patty are required to make sure that they aware
customers regarding coffee shops and understand accounting policies used in Denmark (Kjerland
and Bertelsen, 2014).
Human resource management: In order to execute business appropriately it is very
important to have sufficient number of employees as it can help to attain growth. For Marvin and
Smith's Coffee Shop it is also vital to be focused. Key factors required to be considered related to
it are as follows:
 Recruitment related challenges: While expanding business in Denmark Marvin and
Smith have to face challenge related to recruitment of new staff members as they are
required to operate business. Due to unfamiliarity of Denmark Hank and Patty will to
deal with issues related to hiring of new employees as they are not aware of preferences
of individuals living there (Pruzan, and et.al., 2017).(wage-salaries)
 Employment law: Laws and regulations changes with nation. Hank and Patty will also
face challenges regarding employment related rules of nation. Due to lack of awareness
of them they may deal with some governmental interferences in business operations.
Both the above described challenge and issues are related to each other because they can
affect business execution ability of the coffee shop. In order to manage them Hank and Patty can
conduct research regarding Denmark and gather information regarding these factors. With the
help of it problems can be resolved.
QUESTION 4
Calculation of ratios
Liquidity ratios: All these ratios helps to measure liquidity of an organisation so that it
can be measured that company will be able to pay all current liabilities with the help of short
term funds. In order to analyse liquid strength of business which is going to be expanded in
Denmark by Hank and Patty following ratios are calculated:
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 Current ratio: This ratio helps to analyse that the business will be able to meet all the
short term debts with the help of available resources or not. With the help of it Hank and
Patty will be able analyse that their business can be established in Denmark successfully
or not.
 Quick ratio: It is also known as acid test ratio which is used to measure capability of a
company to pay current liabilities with the help of quick assets. It will help Hank and
Patty to analyse liquid strength of their idea of business expansion in Denmark.
Both the above described ratios are calculated below:
Liquidity ratios Formula Calculation Result
Current ratio Current assess/ current
liabilities
35400/ 6200 5.71
Quick ratio Quick assets/ current
liabilities
27400/ 6200 4.42
The above calculated ratios are showing that liquidity of the business is very good and
Hank and Patty can expand their business in Denmark as their business is having sufficient
resources to establish their business in a new location. If they do not have appropriate liquid
funds for their business then it can influence their decision of expansion because with
insufficient monetary resources it will be difficult for them to to expand business (Sørensen and
Tarbensen, 2018).
Profitability ratios: In order to analyse ability of generating profits profitability ratios
are calculated by business entities. For the purpose of determining ability of their business to
generate profits Hank and Patty can calculate following ratios:
Profitability ratios Formula Calculation Result
Net profit ratio Net profit/ sales *100 26800/ 360000*100 7.44%
Gross profit ratio Gross profit/ sales
*100
208000/ 360000*100 57.78%
The above calculations are showing that gross profit ratio of Hank and Patty's business is
very high as compare to net profit which shows that their business is facing various indirect
expenses which has reduced its net profits. It can influence decisions of business expansion as it
is showing a huge difference between both the ratios.
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QUESTION 5
Hank and Patty are planning to expand their business in Denmark and they have also
formed plans to offer different variants of coffee in order to attract large number of customers.
For the purpose of assessing profitability and liquidity of the business ratio analysis is conducted
which has helped to assess that Marvin and Smith's Coffee Shop have good liquidity and average
profitability. Both the owners have decided to use penetration pricing for coffee in order to
attract large number of clients. They planned to use green coffee beans and ignore sugar while
preparing coffee. For the purpose of promotions they planned to publish pamphlets, conducting
online marketing etc. by analysing all these aspects it has been assessed that business have high
viability as the plans which are formulated by owners are very good. For all the business entities
it is very important to focus on different elements such as social factors, economic conditions,
political stability etc. while planning to expand business in a new location. In order to measure
viability of business ratio analysis can be conducted. Marketing mix is also required to be
focused as it helps to for strategies for promotion, pricing, location and product quality.
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REFERENCES
Books and Journals:
Ahsan, D. and Pedersen, S., 2018. The influence of stakeholder groups in operation and
maintenance services of offshore wind farms: Lesson from Denmark. Renewable
energy. 125. pp.819-828.
Ajami, R. and Goddard, J. G., 2014. International business: Theory and practice. Routledge.
Engwall, L., Kipping, M. and Üsdiken, B., 2016. Defining management: Business schools,
consultants, media. Routledge.
Feinberg, M., 2019. Exploring an emerging land use conflict: GIS based site selection for
expanding forests in Denmark.
Juul, M. M., 2015. The Mermaid and the Merlion—50 Years with Denmark and Singapore.
In 50 YEARS OF SINGAPORE-EUROPE RELATIONS: Celebrating Singapore's
Connections with Europe (pp. 56-60).
Kiørboe, N., 2015. Moving Towards a Circular Economy: Succesfull Nordic Business Models:
Policy Brief. Nordic Council of Ministers.
Kjerland, K. A. and Bertelsen, B.E. eds., 2014. Navigating Colonial Orders: Norwegian
Entrepreneurship in Africa and Oceania. Berghahn Books.
Pruzan, P. and et.al., 2017. Leading with wisdom: Spiritual-based leadership in business.
Routledge.
Sørensen, P. and Tarbensen, K., 2018 US INVESTMENTS IN DENMARK, 1945-1972. AN
OVERVIEW WITH FOCUS ON MOTIVES AND ATTITUDES.
World's top 10 coffee consuming nations. 2019. [Online]. Available through:
<https://www.worldatlas.com/articles/top-10-coffee-consuming-nations.html>
Copenhagen and coffee. 2019. [Online]. Available through:
<https://www.reddit.com/r/Coffee/comments/bpw5zy/guide_to_specialty_coffee_in_co
penhagen_denmark/>
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