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KAAFE

3.1: Product Positioning

The objective of Kaafe’s product positioning is to ensure that it occupies a clear, unique and advantageous position in the consumer’s mind that will ensure they continuously purchase the products that are being offered by the Corporation. As the venture into Kuwait is a novice undertaking of the company, the intention of the positioning strategy would be first to analyze the chocolatier market as it is and engage in product differentiation that focuses on a target market that will respond positively to the product. Kaafe Chocolatier has purposed to produce fine chocolates that are combined with authentic Arabic taste.

 The company produces and sells premium handmade Belgian chocolates and other related products that hold on to the flavors of Qatari culture and flavors of chocolate. In a bid to penetrate into Kuwait’s chocolate market, there will be a need for more market research on the authentic flavors of Kuwait’s culture. The product that is being sold at Qatar that is richly engraved in their culture might not do well in Kuwait. This is because Kuwait has its own culture and would have a more positive reception of the product if it resonated well with their culture.

Even though the chocolate industry in Kuwait has matured over time and is predominantly occupied with over 75 competitors, Kaafe Chocolatier has an opportunity to penetrate into this market due to its unique capabilities that differentiates it from the competition. Kaafe specializes in a variety of luxurious chocolate products with a single touch of Arabian flavors. The company has the ability to produce customized chocolate products that can be ordered according to the tastes and preferences of the customer.

 Kaafe Chocolatier is focused towards customer satisfaction and retention. Since it is a luxurious brand, in Kuwait it will ensure that it interacts actively with its clients getting to know what their particular flavors and needs might be so as to meet them. The chocolate products that will be sold to their customers are unique to only them and will respond to their preferences. The ability to serve their customers on an individual basis without producing a standardized product that sometimes might not be appealing to customer needs and preferences will give the company an edge in the chocolatier industry in Kuwait.

It is important for Kaafe Chocolatier to maintain the reputation that has made it quite successful in Qatar as it expands its operation on a global platform. The brand is luxurious and should target high-end consumers who can partake in its consumption effectively. If the corporation maintains the brand image that it has already established then, its reputation can be sufficiently conveyed in the international market, and the corporation would have set up a niche of its own. With this in mind, the target market for the company in Kuwait should be citizens who have high amounts of disposable incomes.

Kaafe can target women as a priority since they are the ones who arrange for family get-togethers thereby creating a demand for luxurious desserts.  The middle-upper class and upper class citizens of Kuwait who love to engage in gift giving, weddings, and parties will find the products of Kaafe quite resourceful and will actively purchase them so that they meet their individual needs. The advantage concerning income that the corporation has in Kuwait is that the country comprises of largely wealthy families with an average income being stated at $3,893.76. Families in Kuwait spend approximately 75% of their income on expenditure, and most people would be willing to spend it in purchasing chocolates from the company. The age bracket of the target market ranges from 20-55 years old. Kuwait has developed most of its physical amenities. Therefore, the communication and transport system are quite drawn up to access all geographical locations in the nation. In addition, the country is small, and Kaafe would be in a position to supply its products in all urban areas found within the Kuwait nation. 

In an effort to position the product effectively in the Kuwait market, there is a need to develop a perceptual map. A perceptual map is a visual technique that is designed to show how the target market within a particular region comprehends the positioning of products that are competing within an industry. The tool essentially maps out the perceptions of the customers and their understandings in a diagram. The current perceptual map of the chocolate industry in Kuwait is as highlighted below. (Diagram I)

From the perceptual map in diagram I, Kaafe Chocolatier has an opportunity to position itself in the high-quality high price segment. This is because it is a luxury brand that offers its clientele high-quality Belgian chocolates that might be quite expensive. Positioning itself within that segment will ensure that it can attract the right customers to consume the products that it is offering. When the company can establish itself with the right customers to meet its objective, then it ensures it can run a successful business that is focused towards customer loyalty and retention.

(Diagram I)

3.2: Product Strategy

The main goal of Kaafe Chocolatier is to enter successfully the Kuwaiti market and ensure it can acquire a reputable marketable share within the chocolate industry. Currently, Kaafe operates only in Qatar and has been able to have a huge market share in that country due to the unique characteristics the product offers. The company would like to grow into new markets in Kuwait by including different flavors of chocolates. Kaafe can grow its sales within the new market by increasing brand awareness within Kuwait and expanding into various retail shops that are available within the country. By the end of five years, Kaafe would have expanded into new markets meaning that its market share would also expand within the industry to a speculated market share of approximately 20%. The company would also have ensured that customer satisfaction with the products would be enhanced on a consistent basis with initial customer satisfaction being stipulated at 95%.

It would be prudent to launch the product with the same brand name in Kuwait. The brand is presently being developed into a multinational platform, and there should be a need to preserve its origin and history. However, if the corporation insists on ensuring that it encompasses authentic flavors in the country it operates on, then there will be a need to develop a unique product for each and every country it ventures in for business. In Kuwait, there is a need to identify Arabic flavors that are well suited to the tastes and preferences of locals. This would mean that Kaafe would have to invest in a different packaging technique that would be appropriate for the clientele in Kuwait.

Kaafe should introduce various categories of products into the Kuwaiti market key among them being the seven they have been successful in Qatar. These are chocolate cups, kids treats, chocolate treats, truffles, chocolates, sweets, and sweets cups. Kaafe should introduce over ten flavors that are unique to the Kuwaiti market. With such a depth of the product line and a variety of product lines to be offered to customers, the corporation would ensure that it can deliver effectively to the preferences of all clientele.

 However, there is a need for restraint while introducing these products to the Kuwaiti market. Since the market is largely competitive, there are certain product lines that might not sell in the Kuwaiti market. With this in mind, it would be healthier to have a sequential introduction of product lines into the market where two product lines are launched at a time and monitored to evaluate their performances. By undertaking this, the company will be able to identify product lines that are bound to generate revenue and focus on producing them to meet the objectives of their clientele. With time, more product lines can be developed that are well suited for the Kuwaiti market.

There is a need to concentrate on the packaging of the products that will be distributed in the Kuwaiti market. Chocolates should be packaged in brightly colored, and quality wrappers that have the brand name of the company emboldened on them. The culture of Kuwait is reasonably different from that of Qatar, and the packaging should be modified by having animated aspects of Kuwaiti culture on the packaging. The world is quite concerned about the actions of corporations and the consequences they might have on their immediate environs. Kaafe as an environmentally conscious company should ensure that the materials utilized in packaging are recyclable to appeal well to the clientele who are concerned about the environment. The success of the product will largely depend on the standards of quality that will be maintained in the Kuwaiti market and the continuity of research that can be conducted on the market. Furthermore, significant efforts should be made towards the development of new products that are unique to the Kuwaiti people and a communication support system that will enhance operations in the novice market.

The product offered by Kaafe will be better than those offered by competing firms due to the extra offers that their products come with and the guaranteed quality. The company has promised its customers that it will provide a consistent product that is fresh and profound in aroma. Their products do not contain any additives and are free of blemish and distinct in color. Its uniqueness will establish a competitive advantage in the Kuwaiti market. Another aspect of competitive advantage is that Kaafe values the needs of their customers and can produce chocolates by customers’ tastes and preferences. This sets it apart from the competition since other companies produce standardized products for the market without focusing on the specific needs of individuals within the market. An extra benefit that Kaafe will offer to its customers is the delivery of chocolates to the doorsteps of customers on temperature regulated vehicles. The brand has already been recognized in the wider GCC region due to the company’s intensive social media advertising and will be able to set up shop in Kuwait quite successfully since it has been able to amerce some level of interest in the products it has to offer. The fact that Kaafe promises to dedicate 2.5% of its profitability towards charitable activities will boost its operations within Kuwait since people endeavor to take part in corporations that promise to contribute positively to the progress of the community as a whole.

3.3: Pricing Strategy

Pricing strategies are quite complex in the international market especially because there are many stakeholders who have a particular market share in the industry. A firm that is expanding its operations to a novice country might have to follow a different pricing strategy than the one it implemented in its nation of origin to guarantee that it penetrates a market effectively. Whatever strategy is considered for implementation, the company should reflect on the proper value of the product in the consumers’ eyes. Pricing should provide a significant tactical and strategic competitive weapon that can be utilized in international marketing. Pricing strategy is an essential element in any marketing mix that needs to be controlled largely to facilitate growth into a specified market. A proper integration of pricing with other elements of international marketing is, therefore, the key to ensuring that an international marketing plan is quite effective in the foreign market.

The pricing objective of Kaafe in Kuwait is to make sure that it can increase its market share in that country by increasing sales revenue and output. However, there needs to be an increase in the price that is going to be charged in Kuwait essentially because the transport logistics is complicated. It will take time before Kaafe can establish a proper production unit in Kuwait. In the meantime, products will have to be carried from Qatar into Kuwait, and this will increase the pricing of commodities due to transport logistics. An increase in pricing of a commodity has been established to have some level of increase in the gross profit of a corporation (McKinsey & Company 8).

In the research of 2400 companies, the research was able to establish that an increase of price by 1% leads to an increase in profits by 8%. Such an increase essentially reduces the fixed costs and variable costs by 1% leading to smaller increases in profits in the long run. The demand curve for chocolate products is not price elastic meaning that consumers are willing to pay a higher rate for a product that is considered to be of a superior quality. If Kaafe can maintain the high quality of goods that are to be introduced into the Kuwaiti market, then they can charge high prices that will ensure they target the right clientele for their products.

There are definite elements that should be considered by the Corporation in a bid to determine the type of pricing strategy that is going to be implemented in a given nation. The first step towards an effective pricing strategy is to establish a proper understanding of the market and strategize according to the demand and income levels of the market. There is a need to create a competitive product pricing strategy that can ensure the corporation achieves its goals, which, in this case, is to increase market share and penetrate the competitive chocolate market in Kuwait. A competitive pricing strategy ensures that the corporation can have a sound basis within a specified market and achieve real growth levels in the long term. Pricing can either break or make a brand in a foreign market so it should be handled with the utmost care. There are seven factors that are quite important when designing a pricing strategy in any international market.

The first factor that should be reflected on in pricing strategy is the level of competition within the marketplace (Martins 1). It is advisable to study the degree of competition within a foreign market before setting up operations. Most entrepreneurs often fancy the idea of selling their products at the highest margin possible. However, this can only be achieved in a monopolistic market. When the competition is quite elevated in a market, it is advisable to utilize a flexible pricing strategy. Competitor prices in the Kuwaiti market need to be considered before deciding on the best pricing strategy to implement. If the competitor offers the same quality of a product to consumers at lower prices, it might threaten the business since consumers will opt to consume the other product.

The second factor that should be considered when establishing a pricing strategy is the perceived value of the product (Martins 1). This is a component that must be taken into consideration since customers often have a perceived value towards a product that is being offered in the market. Perceived value of a product is a critical factor to be considered in a product pricing strategy since customers often associate low prices with low quality.

When products are priced too low, then consumers will feel that the raw materials utilized in production were of an inferior quality, and, therefore, the product does not meet the expected quality standards. There is a need to foray a balance between the price of a product and its perceived value when establishing a proper pricing strategy. For Kaafe, the Kuwaiti market consists of many individuals with the much-needed amounts of money that can be spared for chocolate consumption. There is a high demand for high-quality chocolate products since the country has a high collectivism principle that should be maximized on. 

The third factor that needs to be deliberated on when designing the pricing strategy is the product development cost. Market economics demands that a product should not be priced at a value that is below the actual cost price of production. The real product value is to be determined by the total cost of production divided by the amount of products that have been produced (Martins 1). The product development cost, the cost of bringing an innovative product to the market, and the cost of research should be considered thereby newly introduced products should command a high price. A high price for the product will ensure that Kaafe can recover the significant investments that were channeled towards the development of the product in Kuwait.

The fourth factor that should be considered is the economic trend that is taking place within the nation. This unavoidable factor often influences the pricing of a product within a market. Business executives seeking to venture into a new country should know the economic factors in that country which include taxing rates, currency exchange rate, the fiscal and monetary policy in the country, and the labour cost (Martins 1). All these economic factors have a significant impact on the pricing strategies that are implemented within a country.

The fifth factor that should be considered when venturing into a foreign market is the level of market demand for the product. This significant economic factor elaborates on how an effective pricing strategy can be established within a market. Basic economics of demand and supply apply in the foreign markets too. When the demand of a product exceeds its supply, there is an apparent mad rush for the limited products that are available thereby leading to inflation and an increase in prices of the products that are being offered (Martins 1). However, if the supply is greater than the demand, then recession takes place that involves the reduction of prices. A corporation should establish the demand and supply of the products they want to offer before venturing into business to avoid the risk of losses in business.

The sixth factor is demographics that influence the pricing of the product in the market. There are specific demographic factors that need to be considered before taking a price stand of the product. These are the age bracket of customers being targeted, the location of business and customers, and the educational status of those who have been targeted. Demographics should focus on the characteristics of the targeted market and their geographical locations (Martins 1).

The seventh factor to be considered while establishing an effective pricing strategy is the class of targeted customers. In a society, there are generally three social classes, which are the poor, middle class, and the wealthy. They can also be classified as low-income earners, middle-income earners, and high-income earners. A product that targets high-income earners will command a higher price. If products are priced lower, then the rich will view them as low quality and will not partake in their purchase and consumption (Martins 1).

All the seven factors need to be considered as Kaafe endeavors to establish a pricing strategy that will be effective in Kuwait. There are two strategies that could be executed in Kuwait that is skimming strategies and penetration pricing strategy. Since Kaafe is a novice business in Kuwait, the penetration market strategy would be effective since the objective would be to gain a foothold in a market that is highly competitive. However, the strategy would demand the setting up of prices that are lower than those of other competitors. Low prices in penetration strategy stimulate market growth and ensure the corporation can capture a market share. Such a strategy is not in tandem with the marketing principles and objectives of the Kaafe brand, which has already proven itself as a luxury brand.

The best pricing strategy for Kaafe would be the skimming strategy that focuses on achieving the highest possible contributing within a short time. This is because the product being offered by the company is unique, and the target market is willing to pay the high prices that are involved. The strategy will deliver results because the target market perceives high prices to be related to the high quality of products. Furthermore, the target market will be willing to buy the commodity at a higher price so that they can be opinion leaders in the society. The product will enhance the customer’s status in a society, and this will enhance the demand despite the prices that are set. Competitors of luxury chocolate brands in Kuwait have set the price at around 5 to 15 KWD key among them being the Zchocolat, the Victorian Chocolaterie, and DeBrand Fine Chocolates. Kaafe should price its products at 7KWD that is $33.23 to ensure that it can achieve a proper market share in the luxury chocolate market.

3.4: Promotional Strategy

The promotion of the products offered by Kaafe should support the primary objectives of positioning the product as a luxury product that can be purchased by authentic Kuwaiti residents due to its quality and flavor. The promotional strategy should create awareness about the product while conveying any information concerning any changes to the product that is being offered. The message presented to customers should be simple and clear and be consistent with customer perceptions and beliefs. The Kuwaiti market is mostly dominated by foreign brands of chocolates, and there is a lack of a domestic brand that is rich in authentic flavors. Kaafe could fill this gap by providing authentic Arabic flavors that are demanded by the locals. The corporation could utilize social media and the creation of a website to create a buzz about the introduction of the product into the market. Through these two platforms, the company can position the product as a quality homemade luxurious product with the highest value for everyone in the society. The agenda of the promotion should be to enhance the uniqueness of the product in terms of authentic Arabica flavors from a corporate brand that is quite renowned. The bottom line is that the promotion should highlight the aspect of new flavors and packaging so as to encourage the target market to try the product and ensure the corporation can launch an aggressive, competitive campaign within the industry.

The corporation should also invest in both print and visual advertising in Kuwait. Messages should be carefully designed in a way that can be conveyed through these avenues in a bid to reach out to all clientele. The content should appeal to consumers by relating chocolate to fun and healthy activities that enhance satiety. An appeal to emotion is quite necessary where emphasis needs to be made on the impact the product has when used as a gift for special occasions. The advertisements can be displayed on billboards and posters with a simple slogan that identifies the key elements of the product that is being offered. TV commercials can also come in handy during this process especially when utilized during popular family shows to target families and specifically women in Kuwait. Furthermore, there is a need to sponsor a key event in Kuwait that is attended by many locals. The Hala Festival is an important annual event in Kuwait, and Kaafe could sponsor activities during this time to raise awareness of the product it is offering. Perhaps the most important promotional strategy would be the word of mouth where satisfied customers can recommend the products to their friends. When the company can ensure that there is a high customer satisfaction rate then the product will ultimately be promoted by consumers themselves and this can play a significant role in ensuring the product is successful in the long term.

3.5: Distribution Strategy

The success of a product depends largely on the channels of distribution of the brand. Distribution essentially brings the product to the market and intensifies its demand thereby providing the company with a better position in the market as compared to the rest of its competitors. Since the goal of the marketing strategy is to increase market share in Kuwait, it would be prudent for Kaafe to develop direct sales to the end customer. Kaafe has been able to establish itself as a business to Customer Company, and this has made it quite successful since customers get to interact physically with the company as they communicate what their tastes and preferences are. Two distributional channels will be effective in this venture, these being exclusive distribution and the e-commerce platform. Kaafe should establish a store in one of the major malls in Kuwait where it can sell its commodities directly to customers. The e-commerce platform is quite effective since customers will get to order for their products, and it will be delivered within a stipulated period. These distribution channels would be the best for a luxury brand that is establishing itself in an international market.

3.6: Conclusion and Key Recommendations

The marketing strategy proposed for Kaafe provides a solution on how the corporation can successfully transfer its operations from a current position that is only centered in Qatar to a future position in Kuwait and possibly other GCC countries. There is a need for strategy formulation when venturing into the international chocolate market to maneuver creatively through a turbulent business environment. Resources should be utilized rationally during this process, and there should be a coordination of development projects. There is a need for marketing study in the international market, and its significance cannot be downplayed at all. Moving forward, the corporation would have to research on the particular needs of the Kuwait market. New product lines should be developed to cater for the specific needs of Kuwait citizens and the corporation should be quite careful in deciding the type of flavors that work well for their specific niche. Kaafe should implement a competitive marketing strategy and set prices higher than the ones established by competitors. Intensive distribution needs to be carried out that is integrated with marketing communications to increase effectiveness. In the end, Kaafe needs to ensure there is a system of control that can ensure the marketing objectives are met in the long-term.

Works Cited

Martins, Ajaero Tony. 7 Factors That Will Influence Your Product Pricing Strategy. 2015. 16 May 2015. <http://www.mytopbusinessideas.com/factors-product-pricing-strategy/>.

McKinsey & Company. “The Power of Pricing.” The McKinsey Quarterly 2003: 29.