Most Americans drank something called "coffee" that came ground up very finely in vacuum-sealed tins. Nevertheless, there was appeared tiny Seattle based chain with innovative idea of how to do business that in a few years changed the vision about the process of drinking coffee not only in USA but worldwide. Cutbacks has evolved Into a great success due to their Implementation of Integrated Marketing Communications. What Is Integrated marketing communication? For many, MIMIC Is concerned with the harmonistic of customer oriented promotional messages.
Duncan and Everett 1993) suggest MIMIC has been referred variously as orchestration, whole egg and seamless communication. It is regarded by some as a means of combining the tools of the promotional mix in a more efficient and synergistic manner. Increasingly MIMIC is seen to include all consistent interactions a stakeholder has with an organization (Schultz and Schultz 1998) and therefore any definition needs to include or refer to concepts such added value, relationship marketing, corporate blending and with it, the blending of internal and external communications.
One of the primary motivations why Cutbacks moved towards MIMIC was the reduction n costs that It was possible to realize through this approach. The rise In some media costs, most notably television through sass, the proliferation of media opportunities and the splintering of audiences has led to a reappraisal of the communications strategies used by organizations and a reformulation of their promotional and media mixes.
By reducing their reliance on above-the-line media and by attempting to move towards the use of media-neutral mixes to deliver consistent messages that cut through the increasing clutter, Cutbacks has moved, if unintentionally, towards some form of integrated marketing communication activity. Agreeing a definition of MIMIC is proving elusive but one of the more popular, simple and intrinsically satisfying views of MIMIC is that the messages conveyed by each of the promotional tools should be harmonious In order that audiences perceive a consistent Image of a product or organization.
One Interpretation of this perspective Is that the key visual triggers (design, colors, form and tag line) used In advertising should be replicated across the range of promotional tools used, including Point-of- some of the promotional tools. One such combination is the closer alliance of advertising with public relations. Increasing audience fragmentation means that it is more difficult to locate target audiences and communicate with them in a meaningful way. By utilizing the power of public relations to stimulate word-of-mouth communication about brands and advertisements.
Basically, we see that Cutbacks' success was built on two things: the store experience (Cutbacks' image) and the quality of its product - it really is a better cup of coffee The first one is so sacred that on Cutbacks employees initiative the chain even prohibited smoking in its stores in Vienna, where cigarettes and coffee are inseparable, because Cutbacks doesn't want anything to interfere with the seductive scent of fresh-brewed espresso. That's why top-management of Cutbacks deeply believed that employees make the store that they work in.
A Cutbacks employee needed to be very knowledgeable, communicative, and helpful to the customers. Customers need to know the difference in the new roasted coffee Cutbacks will offer. Well-educated employees will surely handle this requirement. Cutbacks need to use strong cultural incentives to drive the identification of opportunities. In Cutbacks all employees are called "partners," signaling a level of responsibility maintained by few companies with sales in the billions of dollars. Anyone who has an idea uses a one-page form to pass it to the senior executive team--and gets a response.
When the company pursues an idea, its author, regardless of tenure or title, is typically invited to Join the launch team as a full-time member. New-style marketing organizations, by contrast, hire marketers not for Jobs but for two broad kinds of roles: those of integrators and specialists. Integrators are marketers with broad skills who coordinate the delivery of products and services to the market from beginning to end. Specialists--more narrowly focused marketers with specialized skills--can be embroiled quickly to provide the particular expertise a given opportunity team requires.
Cutbacks is one of them and finding its way of capturing the market it will surely pay high attention to the recruitment process. If communications are to be used effectively then there is a need to communicate aspects of the direction in which the organization intends moving and how it intends to achieve this. In other words, the business philosophy and its aims and objectives, often expressed formally through mission and vision statements, need to be incommunicado to particular audiences in a way that is synchronized and co- ordinate with the organization's other communication activities.
At a strategic level MIMIC has at its roots the overall business strategy of the organization. Using Porter's (1980) Generic Strategies, if a low cost strategy is being pursued then it makes sense to complement the strategy by using messages that either stress any price advantage that customers might benefit from or at least do not suggest extravagance or luxury. If using a differentiation focus strategy (e. G. Waitress) then price should not figure in NY of the messages and greater emphasis should be placed on particular attributes that enable clear positioning. Rover of the finest coffee in the world while maintaining our uncompromising principles as we grow". The development of the mission statement was the start of the company's marketing management initiative. Cutbacks overall objective in the eye's of the leaders was defined. This mission does not want to Jeopardize the quality, ambiance, or service due to expansion into a global marketplace. Besides writing a mission, Cutbacks has outlined their guiding principles, which they follow in their business: 1 .
Provide a great work environment and treat each other with respect and dignity; 2. Embrace diversity as an essential component in the way we do business; 3. Apply the highest standards of excellence to the purchasing, roasting, and fresh delivery of our coffee; 4. Develop enthusiastically satisfied customers all of the time; 5. Contribute positively to our communities and our environment; 6. Recognize that profitability is essential to our future success. There can be little doubt that the elements of the marketing mix, however configured, also communicate (Smith 1996).
The price and associated values; the product, in arms of the quality, design and tangible attributes; the manner and efficiency of the service delivery people, and where and how it is made available, for example the location, retailer/dealer reputation and overall service quality, are brand identity cues with which recipients develop associations and images, which in turn through time may shape brand reputations. It is suggested, therefore, that MIMIC cannot be achieved just by saying the same message through a variety of promotional tools.
Effective communication underpins the stability and quality of relationships. While the origins f MIMIC might be found in the inadequacies of the prevailing structural conditions, an understanding of what MIMIC is or should be, is far from being resolved and is evolving as the industry matures. The elements involved in MIMIC are many and numerous. Depending upon the perspective an individual might adopt, those elements might range from a simple configuration of the promotional mix through to a fully integrated and culturally driven mission and corporate strategy.
Cutbacks chose the second one (Product Concept) and their success over the past 25 years has a lot to do with the quality of the product, which has attracted a loyal and rowing following among consumers. The retail strategy has been to put a coffee quality products and charging a premium price. However, the product mix has changed significantly over the years, with beans accounting for about of the chain's sales and company needs to remember this entering the Russia market. Meanwhile, Cutbacks is expanding its offerings, with a line of ice cream for supermarkets and a Joint venture with Pepsi Cola to market Production.
At the same time, the company continues to develop sales in alternative outlets, including foddering and non-traditional retail sites as United Airlines, Holland America cruise nine, Seattle Kingdoms, an Alliance with Barnes & Noble bookstores, among others. Stoking the niche for seasonal drinks, Cutbacks added caramel apple cider and white chocolate mocha Just in time for the holiday and winter months. This year's lineup of new summer beverages will be announced in a few weeks. The last cornerstone of the marketing strategy of Cutbacks is clustering.
The company locates stores within close proximity in the world and it should do it the same way in Russia. Clustering is becoming important because company's objective is to become a household name and it can be reached by fierce expansion and high coverage. Cutbacks must open their doors and be in the Russian market before anyone else. This would give them a great fist-mover advantage. Once consumers experienced Cutbacks service, quality coffee, and ambiance of their stores there would be a great switching cost for the consumer to go anywhere else. The success of becoming a household name worldwide is now close to reality.
The company received very high profits. However, Schultz measured his success by not compromising Cutbacks ideals to maximize profit and was doing it very successfully. To keep up with this expansion Cutbacks opened three manufacturing plants to relieve itself of he large transportation and storage costs. This decision really improved Cutbacks' distribution of the product. Cutbacks could now distribute faster, fresher, and more product to many more of their stores. The plants also allowed them to enter the supermarket coffee sales industry in the spring of 1998 and will allow to dominate in the Russian market.
To accomplish the goal of being a household name brand coffee in Russia, Cutbacks should choose to implement an expansionary strategy (as they are doing in any other country). Cutbacks should use the first-mover element to Jump in and gain consumer loyalty. With its fierce expansion, Cutbacks should try to open new stores at a rate of more than one per day. This strategy will allow Cutbacks to enter a Russian market and win consumer loyalty before anyone else can. After visiting a Cutbacks, switching costs for the consumer will be extremely high due to the great service and quality that Cutbacks can assure.
Their decision to open three manufacturing plants to distribute their product more efficiently was essential to accomplish this strategy. Prior to these new plants it was difficult and costly to deliver the quality of the product. Cutbacks saved a great deal of money by using this new distribution method. They no longer have to pay for the shipping and storage of the product. With Cutbacks expanding globally, the only adjustment they might want to consider is a plant overseas to help distribution there. The decision to enter the supermarket probably should do this in Russia.
Two thirds of the world's coffee is sold in stores for home consumption. Not only will they be able to reach millions of coffee consumers, but also this will ensure a great distribution channel that will help lock out some potential competitors. Consumers an now enjoy great quality coffee at home or by stopping in a local store. This is a key step in ensuring that Cutbacks becomes a household brand name. The only adjustment Cutbacks must consider is that they are in a new industry with huge competitors such as Maxwell House, Folders, and many others.
Cutbacks must make sure that the organization stays with its mission statement. In accomplishing the market development strategy of promoting the company's range of services to a wider audience the work group fitted to the theory of the Kettle' marketing mix. Hence the allocation of the 4 Up's, product, price, place and promotion. Having determined the desired markets that the company would compete in the next step was organizing a promotional strategy in these area. Following the apportionment of a marketing budget discussions were held in order to decide the best way of using this allocation.
In this idea of market development the company would attempt to sell its range of services to a wider market. Cutbacks should have a unique promotional strategy in Russia: Only $300,000 million on advertising annually; Relies on ubiquity and word of mouth; In comparison, McDonald's spends $3-4 million annually in Russia; No commercials on TV The price as regards building contracting is largely determined by the amount of margin to be added to the build up of the estimate for the project. Price is almost always considered as being the single most important factor for the client as 99% of contracts are let to the lowest bidder. The setting of the correct price is of enormous importance in marketing - both in getting the product accepted by the target market, and in generating sufficient revenue for the organization. " Cutbacks pricing policy is also unique. It's expensive. In USA you'll pay about $2 for a jugular coffee and $3-4 for a specialty one. In the Russian market the numbers will differ but the point will stay the same (expensive). As for place, there is one good phrase about it: "Cutbacks is caffeinated the world" (5,689 stores in 28 countries.
And the product itself is always been paid high advantages; it is one of our products, " says Mr.. Hong, manager of Chinese Cutbacks division. "You cannot have a complete Cutbacks experience if you have smoky air. We need to win people over on the importance of aroma. Nevertheless, before entering the Russian market Cutbacks need to realize that there were some pitfalls: . Although Russian marketers evidence the trend of increasing coffee consumption in Russia, more than 50% of population prefer to drink tea and don't like coffee, at all. . The volume of Russian coffee imports is equal to 100,000 tones (2003) and will increase 10-20% per year basing a good economic situation to Russia 3. Most Russian coffee drinkers use instant or soluble coffee, with this category accounting for 76 percent of imports. 4. If coffee drinkers, 91 percent drink both coffee and tea with only nine percent drinking only coffee, he said. Coffee drinking is concentrated in European Russia and he south near Turkey and Armenia, which have strong coffee traditions 5.
Even with the increase in imports this year, Russian's per capita consumption of coffee will only be 650 grams, compared with four keg in Brazil and 10 keg in Scandinavia However, if look at Chinese market, which has like Russian one a history of drinking tea and low level of coffee consumption and see how it all changed after Cutbacks entered the market, we may assume that the same situation will repeat with the Russian market because of Cutbacks power of brand. In order for Cutbacks to become a brand name in Russia, they must not stray from he strategy they set forth in the past.
Their commitment to the mission statement, their employees, and expansion is what got them where they are. To stray from these ideals would prove tragic in their goal of world recognition. In order for Cutbacks to develop in Russia they must remember the success factors they used in the United States. Should Cutbacks stay loyal to their own beliefs they can only grow bigger. With stores opening all the time in new markets, Cutbacks' greatest challenge is managing its phenomenal growth. Their market is affluent, conscientious and discriminating.