Marketing Plan for Relaunching Brewed Coffee: A Case of Maxwell House

Introduction

Coffee, which is known by a variety of names in different parts of the globe, is quite popular. According to the most current numbers compiled from simply the general population of the United States, each day, Americans consume a total of 400 million cups of coffee, which works out to an average of 3 cups per person (Vest, 2021). One thing is for certain, coffee is here to stay, and it is good for business. Whether one thinks of it as a routine drink, a means to wake up in the morning, or simply a way to relax, one thing is definite that it has many uses. Coffee businesses like Maxwell House have made a fortune from the love people have for coffee. Even then, some of the products have failed to pick up in the target markets. Organizations like Starbucks, Tim Hortons, and Dunkin’ are examples of the largest multinationals dealing with coffee and coffee products (O’Keefe, DiNicolantonio, & Lavie, 2018). The aim of this marketing plan is to detail the reasons – through the analytical lens of the marketing environment – Maxwell House brewed coffee failed.

Description of Business, Product and Target Customer

In terms of the overall business, Maxwell House Coffee continues to be a major player in the global coffee industry. One of the subsidiaries of Kraft Foods, which is the parent business of General Foods Corporation, is responsible for the production of the Maxwell House brand of coffee. The Maxwell House Hotel, located in Nashville, Tennessee, provided the inspiration for its naming, which occurred the same year, 1892 (University of North Florida, 2010). Up until the late 1980s, it dominated the market as the most sought-after kind of coffee in the United States.

On the product under review, Maxwell House Ready-To-Drink Coffee was first introduced to the market by General Foods in the year 1990, a significant amount of time after Mr. Coffee’s initial conception and just before to the meteoric rise of Starbucks and other major competitors (O’Keefe et al., 2013). The distinct packaging of Maxwell House could be found in the cold storage area of the shop. It offered a new method to experience the full flavor of Maxwell House Coffee that was simple to use and it came with a lot of great perks.

The target consumer of the product for Maxwell House Coffee was very specific. Launched in a period where coffee products were only begin to gain popularity, the Maxwell House Ready-To-Drink Coffee targeted the entire household as the key consumer. Freese (2021) notes that a majority of coffee businesses selling off the store coffee products target households and offices in a bid to reinforce the coffee drinking culture. Maxwell House Coffee was hoping for a significant penetration of the household category of consumers.

Why the Product Failed? Marketing Environment Analysis

A. STEEPLE

Social People’s actions in the coffee industry are greatly influenced by the many economic circumstances (Keiko, 2018).

Maxwell House failed to act on when consumers had more disposable income to spend more on goods that enhance the quality of their lives.

Another concern was the expansion of the coffee drinking population growing up in an era of domestically brewed hot morning coffee (Heng, House, & Kim, 2018), which Maxwell House failed to segment properly.

Technological The headquarters of Maxwell House Coffee were located in a nation that had an advanced technology infrastructure (Keiko, 2018). When a nation’s infrastructure for technological advancement is robust, this made it difficult for the new product to be accepted since it was associated with failure.

Economic The capacity of businesses in the coffee industry to achieve financial objectives is directly impacted by a complex collection of circumstances referred to as economic considerations (Higgins et al., 2018).

High economic growth rates, on the other hand, make it simpler to spend money (Seninde & Chambers, 2020), a factor that Maxwell House overlooked in a time where spending in the economy was high.

Environmental The concept of a closed-loop and the circular economy quickly became the standard in a number of industries as well as the coffee sector.

When an industry has strong institutional backing, recycling and reusing materials may become more simpler practices to implement. In a similar fashion, citizens of several nations participate actively in the recycling process.

Political At any point throughout the year, governments may alter the tax policies and trade regulations that are in place (Chen et al., 2019), which in turn may alter the environment in which businesses operate for the coffee industry, a situation that has been observed with various import-export policies between China and the United States.

Because it is distributed in so many different regions, Maxwell House Coffee is exposed to a greater number of political, structural, and systemic issues.

Businesses in the coffee industry need political stability since it has an impact on the confidence of both customers and investors, which Chen et al. (2019) note has a broad variety of repercussions for the economy.

Legal Businesses like Maxwell House Coffee were able to operate with less risk when they properly adhered to the regulations governing intellectual property.

Better operations in the industry was due to the fact that their patents are shielded from being duplicated, which provides them with a durable edge over their competitors.

Ethical Bean prices versus the retail prices

Pricing to match costs of production versus profitability

B. Porter’s Five Forces

Competitive Rivalry

For starters, Maxwell House Coffee confronts severe competition from other brands. Maxwell House Coffee faces competition from the brewing business, food service sector, and coffeehouses since it sells coffee in addition to other drinks and food. Potential competitors include Nescafe and Lavazza (de Figueiredo Tavares & Mourad, 2020). It might be a major franchise like Costa Coffee, or a tiny mom-and-pop establishment. Restaurants and bakeries like Greggs, Starbucks, and McDonald’s Cafes are featured in this category. There is fierce competition since so many enterprises compete in the same market. Finally, there is more competition since switching providers is inexpensive. Due to the availability of coffee shops in the region, customers may easily swap coffee shops in the morning. To conclude, Maxwell House Coffee confronts fierce competition due to its numerous competitors, limited product selection, and low cost of switching brands. This shows a high degree of competitiveness in the industry.

New Entrants

Starting a business like Maxwell House Coffee requires little upfront capital. Prices may vary depending on whether the new firm wants to construct a single coffee shop or a large coffee chain. Smaller coffee shops generally have lower costs for supplies, labor, and space than major coffee companies. As a consequence, new boutique coffee shops and other businesses may more easily compete with Maxwell House Coffee. To build a bigger network of coffee shops, though, one would need to invest much on branding (Brizek, 2012). They’d need to invest money on supplies, personnel, and facilities, but also on a plan to outperform a worldwide coffee shop chain or brand like Maxwell House Coffee. This would be on top of the other fees. In conclusion, the low costs of starting a company like Maxwell House Coffee and the high costs of building a brand make new competitors a little danger to Maxwell House Coffee. New competitors pose a moderate danger to the company.

Bargaining Power of Buyers

Changing service providers is easy and inexpensive for Maxwell House Coffee customers. Because there are so many places to obtain coffee, switching coffee shops is as simple as going to a new one first thing in the morning. It is easy for customers to switch coffee shops since there are many different types of coffee shops on nearly every street, especially in cities (D’Elia et al., 2019). There are also many options, so people may compare coffee suppliers and choose the one that best suits their needs based on availability and flavor. People may go to a coffee vending machine, swap brands, or buy a coffee machine to prepare coffee at home. They have all of these alternatives. Buyer power is important for Maxwell House Coffee since customers may easily switch suppliers, there are many alternatives, and the average purchase size is small. This shows that buyers have a lot of negotiating power.

Supplier Bargaining Power

First, since most suppliers are similar in size, they have similar negotiating strength. A small supplier indicates they only deal with a few firms and have a few clients (Patterson, Scott, & Uncles, 2010). They can’t suddenly boost prices or they’ll lose clients. Also, Maxwell House Coffee and other coffee shops wield influence, not providers, due to the diversity of vendors. Maxwell House Coffee may select from a variety of vendors and choose the most convenient. Finally, the abundance of coffee and tea makes suppliers weaker. Overall, Maxwell House Coffee suppliers have less leverage since they are small, provide a wide range of items, and are plentiful. Suppliers have little negotiating power.

Threat of Substitutes

Customers may choose from a variety of alternatives. We also know that switching coffee suppliers does not significantly raise cost burden. Finally, it seems that alternatives are not extremely expensive (Samoggia & Riedel, 2019). The cost of coffee from a vending machine or brewed at home is cheaper than coffee from Maxwell House. Maxwell House Coffee is also sometimes more expensive than other coffee shops, which may discourage people from using the company. The threat of substitutes is high for the firm since there are many possibilities, moving coffee suppliers is not costly, and substitutes are cheap. This suggests a high risk of replacement competition. The danger of new goods and competition appear to have weighed heavily on Maxwell House Coffee.

C. Consumer Behaviour

It was Maxwell House Coffee’s intention that the manner in which the coffee was packed, the ease with which it could be obtained, and the emergence of a new coffee culture would be the primary reasons why people would purchase their product (Fisher, 2004). If a company wants to market the ease of their product as an advantage, then the product itself has to be convenient in every aspect (Samoggia & Riedel, 2019). This is just good sense. The consumer population should have voiced their concerns over the foil-lined packaging during the focus group discussions that were conducted. If it had been packaged differently, this brand-new product may still be used today. Additionally, obtaining the freshly brewed coffee was not any simpler than making a pot of coffee at home or purchasing coffee from a cart at work.

Product Re-Launch – New Market Opportunity

It is important to note that the product failed mainly because of how it was marketed as a convenience product yet had no convenience when compared to the technological developments in the coffee industry at the time. Today, a new opportunity for Maxwell House Coffee regarding the same product would be completely repackaging it and rebranding it as a ready to drink beverage and packaged to compete with energy drinks such as Monster and Redbull. Coffee has already made a name as one of the best energy drinks to kick start a morning or to generally provide the steam required to keep on going (O’Keefe, DiNicolantonio, & Lavie, 2018). In America, it is a very trusted commodity. Therefore, rebranding the poor marketing, poor packaging, and poor branding on the original product will enable Maxwell House to reintroduce the product as an energy drink that can be consumed as is packaged, chilled, or even heated where necessary. These features will achieve the original ideas of trendy, convenient product, and an improved formula that is not confusing to the market (Freese, 2021). Additionally, the marketing will shift from the households only and focus on young people, offices, schools, and workplaces where coffee is supplied in vending machines (Higgins et al., 2018). can take advantage off. By completely altering the use of the product, the market will associate an already trusted brand to a relatable use.

Product Re-Launch – New Segmentation, Targeting and Positioning

People are purchasing based on trends that stress increased quality in a range of things rather than affordability, and one example of this is the rise in popularity of higher-quality coffees. Both mass-market coffees and specialty coffees have their own distinct places in the consumer landscape of the coffee industry in the United States. Products that are, on average, sold at inexpensive prices and may be found at supermarkets and convenience stores. The consumption of coffee sold in mass markets has been decreasing at a rate of 5% per year as a direct consequence of the trend toward increased consumption of specialty coffees outside of the house by consumers of all ages (Lombardi, Chidiac, & Record, 2021). Grocery stores are working with specialty coffee roasters to broaden their coffee offerings of higher quality in order to capture a bigger share of the mass market sales channels. Coffee shops were the only places in which you could get specialty coffee in the past since it was a branded, high-quality product (Haskova, 2015). In terms of quality, cost, and distribution, there was a clear divide, five years ago, between the coffees sold in mass markets and those sold in specialty shops. It is now more difficult to discern which category a coffee falls into due to the existence of two subcategories known as Premium and Specialty (Cranfield et al., 2010). It is recommended that Maxwell House aim for the general consumer market. In addition, the product has to be positioned in such a way that it is consistent with the rising trend of consumers becoming more health-conscious.

Maxwell House Coffee should develop and market the brewed coffee as an energy beverage with less calories. The geographic segment targeted is mainly urban, ages 22-60, and regionally in high coffee drinking nations like the US, Canada, Europe, China, Africa, and Latin America. Demographics include young couples, bachelors, single males, single women, energetic young people, students, and employees. In terms of behavior, the new product should reach to hard core loyalist, coffee lovers, and regular users. The Middle and upper classes of society are also targeted in terms f the psychographic elements.

Product Re-Launch – New Consumer Behaviour

Cultures greatly impact people’s decision-making processes in a positive manner. There is a cultural connection between people preferring Maxwell House Coffee over other coffees. Social characteristics have a favorable and considerable influence on brand choices. Some people’s preference for the new Maxwell House product over the old may be due to societal factors (Patterson, Scott, & Uncles, 2010). The choice is significantly influenced by one’s own circumstances. Social factors impact people’s purchases of Maxwell House’s new product. Psychological factors have a large role in influencing a choice, both favorably and negatively. Thus, psychological factors play a part in why some people favor Maxwell House coffee over other brands. Consuming goods with a reputation like Maxwell House’s should be considered if they want to improve. People don’t buy coffee-related things based on their socioeconomic position. Instead, they buy them for reasons they can see and feel, such product quality (especially coffee), atmosphere, and service. Despite the fact that drinking coffee is a habit that should be maintained, more people are increasingly experimenting with a broad range of coffee products (Haskova, 2015). Many people now drink coffee every day (Lombardi, Chidiac, & Record, 2021). Those looking to buy coffee will always have a solid alternative if Maxwell House Coffee continues to make the best coffee possible.

Marketing Mix (4P’s)

A fresh, high-quality product that is simple for consumers to recognize as having value and a purpose should serve as the foundation for the product strategy that Maxwell House Coffee employs. A market that is already acquainted with coffee goods and that has embraced and depended on energy drinks to keep people going during the day and at other times makes a lot of sense for a coffee-flavored energy drink because of the combination of these two factors. Therefore, for each of its goods, Maxwell House has to provide an experience that cannot be beaten or replicated by its competitors.

When it comes to pricing, a premium pricing plan is the one that works best. This pricing strategy takes advantage, within the framework of the marketing mix, of the fact that consumers have a tendency to purchase more costly items due to the misconception that higher prices indicate greater value (Cranfield et al., 2010). The price of brewed coffee from Maxwell House that is packaged and promoted as an energy drink should be higher than that of the majority of its rivals, such as Red Bull and Monster.

When it comes to its geographic positioning, Maxwell House should make the most of the fact that their coffee is sold in more than 70 countries throughout the globe. The continents of Africa, North America, Oceania, South America, Europe, and Asia are represented as key coffee drinking zones (Lombardi, Chidiac, & Record, 2021). Maxwell House should use their well-designed website, which contains information on how to make coffee, the various kinds of coffee that are available, how to get the best quality coffee and help farmers, how to make the perfect coffee for you, details about the taste, recommendations for the best equipment, and how the energy drink will be manufactured.

The marketing and advertising strategy for Maxwell House energy drink has to center on promoting the company’s brand via several channels, including social media, television, print advertisements, and email marketing. Maxwell House should never forget its obligation to its clients, the value it provides for the price it charges, and the importance of giving back to society; this is true even if the company has a vast customer base.

Conclusion and Recommendations

The ready-to-drink Maxwell’s coffee, which first appeared on the market in 1990, does not seem to be much liked by Americans, despite a notable love for instant products. The cognitive dissonance was generated by the fact that the enticing cartons, which included an image of a coffee cup that was steaming hot, were placed in store freezers directly next to bottles of milk that were frozen solid, making it difficult for customers to make sense of the packaging. It was said in the promotional materials for the beverage that it would provide consumers with a handy new way to savour the rich flavour of Maxwell House Coffee. Without a doubt, this was an original and intriguing concept. Due to the fact that the ready-to-drink coffee was packaged in aluminium foil, the container that it arrived in could not be heated in the microwave. Having these restrictions worked to the disadvantage of the product and the brand. Additionally, it seemed as if consumers enjoyed pouring hot coffee as it was the popular thing to do at the time. There was no longer a need for ready-to-drink coffee as a result of the widespread availability of fully automated drip coffee machines. Over eighty percent of homes had a Mr. Coffee machine, which made it simple and fast for consumers to brew coffee at home. The Maxwell House Ready-To-Drink Coffee did not provide too many advantages to the consumers who were intended to purchase it. It is recommended that the product is changed to a coffee-based energy drink and packaged as a ready to drink product.

Reference List

Brizek, M. G. (2012). Coffee wars: The big three: Starbucks, McDonald’s and Dunkin’Donuts. Journal of Case Research in Business & Economics, 5, 1-12.

Chen, X., Liu, Y., Jaenicke, E. C., & Rabinowitz, A. N. (2019). New concerns on caffeine consumption and the impact of potential regulations: The case of energy drinks. Food Policy, 87, 101746.

Cranfield, J., Henson, S., Northey, J., & Masakure, O. (2010). An assessment of consumer preference for fair trade coffee in Toronto and Vancouver. Agribusiness, 26(2), 307-325.

D’Elia, L., La Fata, E., Galletti, F., Scalfi, L., & Strazzullo, P. (2019). Coffee consumption and risk of hypertension: a dose–response meta-analysis of prospective studies. European journal of nutrition, 58(1), 271-280.

de Figueiredo Tavares, M. P., & Mourad, A. L. (2020). Coffee beverage preparation by different methods from an environmental perspective. The International Journal of Life Cycle Assessment, 25(7), 1356-1367.

Fisher, C. (2004). Why Buy Fair?: Consumer Reactions to Fair Trade Coffee in a High-End Retail Venue.

Freese, L. (2021). Hungry minds: the visual and verbal language of taverns and coffee houses in early American periodicals. Word & Image, 37(4), 299-310.

Haskova, K. (2015). Starbucks marketing analysis. CRIS-Bulletin of the Centre for Research and Interdisciplinary Study, 1, 11-29.

Heng, Y., House, L. A., & Kim, H. (2018). The competition of beverage products in current market: a composite demand analysis. Agricultural and Resource Economics Review, 47(1), 118-131.

Higgins, J. P., Babu, K., Deuster, P. A., & Shearer, J. (2018). Energy drinks: a contemporary issues paper. Current sports medicine reports, 17(2), 65-72.

Keiko, O. (2018). Coffee as a global beverage before 1700. Journal of International Economic Studies, 32, 43-55.

Lombardi, C. V., Chidiac, N. T., & Record, B. C. (2021). Starbucks coffee corporation’s marketing response to the COVID-19 pandemic. Innovative Marketing, 17(2), 177.

O’Keefe, J. H., Bhatti, S. K., Patil, H. R., DiNicolantonio, J. J., Lucan, S. C., & Lavie, C. J. (2013). Effects of habitual coffee consumption on cardiometabolic disease, cardiovascular health, and all-cause mortality. Journal of the American College of Cardiology, 62(12), 1043-1051.

O’Keefe, J. H., DiNicolantonio, J. J., & Lavie, C. J. (2018). Coffee for cardioprotection and longevity. Progress in cardiovascular diseases, 61(1), 38-42.

Patterson, P. G., Scott, J., & Uncles, M. D. (2010). How the local competition defeated a global brand: The case of Starbucks. Australasian Marketing Journal, 18(1), 41-47.

Samoggia, A., & Riedel, B. (2019). Consumers’ perceptions of coffee health benefits and motives for coffee consumption and purchasing. Nutrients, 11(3), 653.

Seninde, D. R., & Chambers, E. (2020). Coffee flavor: A review. Beverages, 6(3), 44.

University of North Florida. (2010). Maxwell House Coffee. Digital Commons. https://digitalcommons.unf.edu/historical_architecture_main/2246/Vest, A. R. (2021). Can Two Coffees a Day Keep the Heart Doctor Away?. Circulation: Heart Failure, 14(2), e008297.