Expresso Expresso Case Study

Introduction:

Expresso Espresso was a new coffee shop that opened in March 2006 in Mobile, Alabama. It was located directly across the street from the University of South Alabama and mainly catered to the students and faculty of the University. Although the business had only been in business for 12 weeks, the dynamic entrepreneur, Todd Sylvester, was already making plans to expand into the mid-town area of the city. He thought the business model would be successful anywhere, and to achieve his long-term goals, he felt growth was imperative. He made it a point to get customers to smile before they would leave the shop. Todd priced his expresso 10% below his competitors.

Problem:

Should Todd open another store or not, what can be changed within the store so that it is profitable.

Five Forces:

Threat of new entrants: Starbucks 4 new locations, they have capital and lots of money.

Bargaining power of buyers: buyers have majority of the power, there are many substitutes and alternatives, buyers can pick and choose where to go for coffee, buyers can live without coffee there are over 13,000 potential buyers across the street; students at the University of Alabama are typically older and have more disposable income than students at most 4 year universities.

Threat of substitutes: Expresso Expresso is very specific with a specific target market; there are many substitutes for coffee shop items such as juice, soda, water etc…

Bargaining power of suppliers: suppliers have power in terms of price, most menu items at Expresso Expresso are priced 10% lower than competitors.

Rivalry among existing competitors: there are at least 11 different competitors, with the largest being Starbucks offering multiple locations, larger menu, and an established brand. Starbucks, Beaners, Daily grind are a few of Expresso Expresso’s competitors

What Expresso Expresso is currently doing right:

- Very cozy

-Welcoming feeling

-Excellent customer service

-Employees feel like family

-Ethically sound

-Donate tips to local charity

-Recognizing customers for personal service

Current Marketing:

Advertising- utilizing a local radio station and campus newsletter

Promotion- one-day coupon flyer at a local apartment complex, live music with no fee to get in

Publicity- tips are going to different local charities