Market Analysis for Expanding Coffee Shop Business

This article provides a detailed market analysis for expanding a coffee shop business in an international market. It covers factors such as political, economic, social-cultural, and technological aspects, as well as the marketing mix and key challenges involved. The article also includes a financial analysis of the current business.

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Table of Contents
Introduction......................................................................................................................................2
Justification of Selected country......................................................................................................2
Macro Environment Analysis..........................................................................................................2
Marketing Mix.................................................................................................................................3
Key Factors......................................................................................................................................5
Human Resources Management...................................................................................................5
Marketing.....................................................................................................................................5
Financial Analysis...........................................................................................................................6
Analysis of Current Business.......................................................................................................6
Influences of Ratios.....................................................................................................................7
Conclusion.......................................................................................................................................7
References........................................................................................................................................8

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Introduction
Market analysis plays a vital role in the growth and success of the business. Hank Marvin, as
well as Patty Smith, is the business partners who worked together in the business. They have
opened their coffee shop in London that made them successful in such country. They deliver and
cater high-quality coffee to their consumers that make them more satisfied. Hank Marvin, as well
as Patty Smith, uses the finest coffee beans from Gumutindo Coffee that enhanced the taste of
their coffee. They support fair trade practice in their business that helps them to achieve success
sustainably. Hank Marvin, as well as Patty Smith, has already opened two coffee shops in
London. Therefore they have decided to open their coffee shop in the international market. Such
expansion will help them to target a maximum number of consumers and increase their share in
the international market (Baker, 2016).
In the following part, there will be a detailed analysis of the market in which Hank Marvin and
Patty Smith will expand their business and key challenges involved in the business.
Justification of Selected country
The suitable market for Hank Marvin and Patty Smith will be Denmark due to the reason the
industry of coffee in Denmark has grown at a fast pace. The coffee market in such country is
forecast for the continued growth as well as expansion without the threat of saturation in the near
future. Denmark is considered as predominately coffee drink nation with a tradition that leads to
the consumption of the approximately 20 million cups every day. The consumers are keen on the
coffee as they visit great numbers of café every day. It represents that the growth of the coffee
shop in such a country is high than in other countries (Bjorngaard, et al., 2017).
Macro Environment Analysis
There are certain factors that will help in analyzing the macro environment f the country that is
essential for the company to analyses. They are explained in below points.
Political Factors: to open a coffee shop in Denmark, the individual has to follow rules and
regulations that have been set by the government of the country. However, in such industry, the
government has not imposed lots of rules and regulations as well as in such industry the laws and

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rules do not change frequently that will create easiness for the individual to open their coffee
shop in such country in an effective. It represents that the political environment of the country is
flexible for the business that will give an opportunity to them to enhance their revenue in an
effective and efficient manner (Vestergaard and Nielsen, 2016).
Economic Factors: the economy of Denmark is expected to reach $353.1 billion in the year
2017 with the CAGR of 1.9% over the next five years. To enhance the growth potential, the
massive investment, innovation as well as entrepreneurship has been undertaken. The corporate
tax has been reduced and the government has taken various initiatives to grow the GDP of the
company. Such a growing economy will create an opportunity for the business to enhance their
sales and able to control over their cost by paying fewer amounts in any kind of taxes. The
government has also given various redemptions to the businesses to promote them (Martinez-
Sanchez et al., 2016).
Social-Cultural Aspects: the population of country rededicated to the coffee in an effective
manner. The Nordics are amongst the highest consumers of the coffee in Europe. However, the
rise of the branded coffee shop market represents that most of the individual is choosing to drink
coffee out and currently approximately 25% of the Norwegians, as well as Swedes, visit the
coffee shop at least once a week. Therefore an average of 18% of the customers is expecting to
enhance the number of times they visit the coffee shops that enhancing the prediction that the
market of the coffee shop will continue to expand at greater level (Jensen, Stickley and Edgley,
2016).
Technological factors: the technological factor play a role in the coffee shop chain at a certain
extent. As the people are keen for the coffee, therefore, the companies have taken initiatives
towards the technological advancement in such field that helps in making the coffee more
attractive and tasty with an increase in the speed of services. Denmark is considered a
technologically advanced country that will support the coffee shop to enhance their skills in an
effective manner (Kneidinger-Muller, 2017).
Therefore, it represents that the favorable macro environment in the country will boost the
business of Hank Marvin and Patty Smith which is the main reason to a select that country in an
effective manner.

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Marketing Mix
Product and Services offering
Tangible products
Hank Marvin and Patty Smith will service and offer a different variety of coffee to their
consumer’s such as espresso that will belong from the superior quality in which the chef will use
the finest coffee beans from Gumutindo Coffee. Hank Marvin and Patty Smith will cater all the
needs of the consumers as well as each coffee that will be unique as well as will see for the
smallest details. In espresso-based coffee, they will offer Cappuccino, White Chocolate Mocha,
Caramel Macchiato, as well as Vanilla Latte (Dagevos, 2016). They will be served with a unique
pattern that will attract the maximum number of consumers towards their products. Moreover,
hey will also add tea as well as herbal infusions in their menu list to target the tea lover’s
consumers as well. Furthermore, they will serve some inspired and theme based pastries, snacks
as well as cold drinks such as fresh mango juice (Charter, 2017).
Intangible services
Apart from the product being serviced by the coffee shop, they will also concentrate on the
services that will be provided to the consumers. They will deliver fast services and will provide a
comfortable environment to their consumers and will provide service of free WIFI, powerpoint
charging phones, laptops and light music with deem light to make them feel comfortable.
Waiters will be provided on each table and consumers can track their orders through a tablet that
will be put at every table.
Unique Selling Proposition
The unique selling propositions for the coffee shop will be their theme and services that will be
provided to the consumers. They will offer the theme evening such as board game night as well
as chat with Nanna. They will promote fair trade practice in their business and give a chance to
the consumers to participate in such activity that will make them unique from their competitors
in an effective manner (Charter, 2017).
Price

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There is a different type of pricing strategies that are majorly used by the business such as
premium pricing, penetration pricing as well as economy pricing. The Coffee Shop will use
penetration pricing strategy in their business in which they will offer low price product to their
consumers with high quality due to the reason the coffee shop is new in the market (Pomering,
2017).
Justification
To compete in such market they are required to attract the consumers through attractive pricing
policy and by catering high-quality products to their consumers. It will help them to gain quick
attention to their business as well as build the base of the consumers with word of mouth
publicity.
Place
Hank Marvin and Patty Smith will set their retail outlet which directs to sell to the consumers.
The outlet is at the point where a maximum number of consumers can be covered. To offer an
environment they will provide an environmentally friendly environment that will make them feel
of the environment of Ugandan. They will also offer their products through the platform of
online to cover a maximum number of consumers in a limited period of time (Isoraitė, 2016).
Promotion
There are certain promotional strategies that will be adopted by Hank Marvin and Patty Smith
while promoting their business as they are explained in below points:
Social Media: it is one of the effective tools that are mostly used by companies to target their
consumers. The people of Denmark are highly active in social media that will give an
opportunity to the Coffee shop to target their consumers through the platform of social media.
Sales Promotion: it is the best manner to attract the maximum number of consumers. They will
offer various discounts and offers such as buy one get one free, fifty percent off on beverages till
3 PM to increase sell in the lean time.

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Pull Strategy: Hank Marvin and Patty Smith will adopt pull strategy in their business in which
they will advertise more about their café to the consumers through the source of newspaper,
radio as well as internet to reach out the maximum number of consumers (Wettstein, and Suggs,
2016)
Key Factors
The two key factors that Hank Marvin and Patty Smith should consider while expanding their
business in the unknown territory are Human Resource Management and Marketing. They are
explained in below points:
Human Resources Management
Challenges
Hank Marvin and Patty Smith may face issues in managing the Human Resources for their
business. Human resources Management play a vital role in the growth and success of any
business. Selection and recruitment of human resources for Hank Marvin and Patty Smith will
create the biggest challenge for them due to the reason they have huge business culture
difference, language differences that create an issue for them. Moreover, they will also face in
retaining them in their coffee shop. Hank Marvin and Patty Smith will face issue in making
coordination with their employees due to the reason of cultural difference they would not able to
understand their point of views that will enhance the communication gap in between them and
increase the level of demotivation among the human resources that will be hired by them (Arrfelt
et al., 2015).
Manage
They can manage such issue by hiring effective human resource in their business that has great
leadership power that can manage such issues and activities of the employees that will motivate
them employees towards the targeted goal set by the Hank Marvin and Patty Smith. Moreover,
the training and development program will be set for the employees to enhance their skills to
ensure that the staff will be trained to the highest standard as well as will offer a wage and

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development opportunities that make them feel motivated in the Coffee Shop in an effective and
efficient manner (Pisano, Pironti and Rieple, 2015).
Marketing
Challenges
In the new market, Hank Marvin and Patty Smith may face in marketing their product in the
competitive market. Marketing is one of the effective tools that are used by the business to
expand their sales and to spread awareness about their products in an effective manner.
Therefore, marketing their business in the competitive market will create the biggest challenge
for the Coffee Shop. The number of competitors is high in such an industry that has strong
marketing strategies and they will also face a challenge in gaining the trust of their consumers in
the new market through marketing in Social Media.
Manage
They can manage such a challenge by analyzing the marketing strategies adopted by their
competitors to market their business accordingly. Through analyzing the marketing strategies of
competitors, Hank Marvin, and Patty Smith will able to understand the manner consumers can
attract in such new market due to the reason every market has a different perspective for
attracting the consumers. Therefore it will help them at a greater level. Moreover, they should
analyze the taste and preference of their consumers that will make them more competitive in
marketing their products. They need to adopt the different platform to spread awareness about
their business and need to adopt attractive marketing strategies to cope up from the challenges
that they may face in the new market (Keinanen and Kuivalainen, 2015).
Financial Analysis
Profitability Ratios
Ratios Formula Calculation Result

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Net Profit Ratio Net Profit/Sales 26800/360000 7.44%
Return on Assets Net Profit/ Total Assets 26800/113000 23.72%
Liquidity Ratios
Ratios Formula Calculation Result
Current Ratio
Current Assets/Current
Liability 35400/6200 5.71
Liquid Ratio
Liquid Assets/Current
Liability 27400/6200 4.42
Analysis of Current Business
The profitability ratio of the company represents that they have earned enough profit from the
business that they have set up they can able to earn almost 8% in their business that helps the
company to achieve their targeted goal. They can able to sell enough product to the consumers
that depict them towards the profit in an effective and efficient manner. The performance of the
company represent prospective that create great earning to the company
The ratio of Return on Assets represents that the company has managed its assets efficiently that
gives good return to them. The company has fully utilized its resources. It represents that the
company has a category called goodwill that representing the extra money paid for the business
over and above their actual book value at the time of the acquisition.

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The liquidity ratio represents a positive perspective of the business. They have managed their
assets and liabilities in an effective manner that makes their business more competitive in the
market. The idea ration of current assets is 2:1 therefore; the ratio of the company is above them
that represent that the company has a good flow of current assets and has taken and has great
control over their liabilities.
Moreover, the ideal ratio of liquid assets is 1:1 therefore, the liquidity ratio of Hank Marvin and
Patty Smith represent that their business has an efficient flow of cash that can be used for their
business in an effective manner.
Influences of Ratios
Such ratios represent that the business of Hank Marvin and Patty Smith is going well. They have
enough funds to expand their business in another market. The expansion of the business will help
in enhancing their profitability ratio at a greater level. They need not get worried about the fund's
requirement for the investment. Therefore, they can expand their business easily without facing
any hurdles in funds management (Zolfani, Yazdani, and Zavadskas, 2018).
Conclusion
From the above analysis, it can be concluded that the international market is full of the
opportunities. The company is required to grab that opportunity to enhance its revenue in an
effective manner. There were two partners Hank Marvin and Patty Smith who worked together
in the catering business. They have planned to open the new coffee shop. Therefore, they have
opened their coffee shop in London. They have set up more two new café at the same place.
Afterward they have realized that they are required to expand their business in the overseas
market to enhance their overall sales or revenue of the business. Therefore, Denmark is
considered is one of the effective overseas markets in which Hank Marvin and Patty Smith can
do their business. There is great demand for coffee in such a market. Moreover, the laws and
rules of the country are simple and not frequently changes that represent that the political and
economic culture of the country is flexible. Furthermore, the consumers are also keen on the
coffee that will give an opportunity for them to target such consumers easily. They can attract
their consumers by delivering and offering a variety of coffee products to make them easy to

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choose in between such variety. They will target their consumers through social media, sales
promotion to attract a maximum number of consumers in an effective and efficient manner.

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