Halo Coffee Assignment

ASSIGNMENT ONE

The report is going to identify the strategy of HALO Coffee and to investigate the strategic issues facing the company through external analysis.

1. Identifying the strategy of HALO coffee

The paper uses the choices framework invented by Roger Martin (Lafley and Martin, 2013) to analyse the current strategy of HALO Coffee.

1. What is HALO coffee’s winning aspiration?

Based on HALO’s information (2016), its winning aspiration is to enter to the coffee capsule market, with the 51,000 capsules target sales starting with 1790 capsules sales in the first year. The second winning aspiration is, regarding to the desire of Nils (the third director), to take the largest market share in high class segment (Halo Coffee, 2016a). Another detail should be analysed in this section is how long to achieve the aspiration. Based on the market growth rate 300%, starting point of 1790 capsules and the target achievement of 51,000 capsules (Halo Coffee, 2016a), the required time is around 4 years or 5 years.

1. Where will HALO coffee play?

In order to identify its playing field, product categories, customers segments, distribution channels, vertical stages of production and its geographies are concentrated (Lafley and Martin, 2013).

Halo coffee’s product is coffee capsules, which are required by the clients from Bespoke Beverages-the mother company of HALO (Halo Coffee, 2016a). Therefore, the first target customer is the clients of the mother company who belong to the high class world regardless of B2B or B2C clients. Considering B2B clients, HALO sell coffee capsules to providers who could interact with high class people; for example, yacht and jet providers, top jet FBO or hotel chains. Regarding to B2C clients, HALO focuses on people who would like to be associated with brand aspiration, they are willing to pay for the brand and care about their impacts on the environments (Halo Coffee, 2016a). With these description, we also see that even in B2C clients segment, HALO coffee also target high class people. However, basically HALO still puts more effort in B2B clients, especially the yacht & jet providers – the key strategic partnership (Halo Coffee, 2016a). In B2B customer segment, HALO plays as a coffee capsule wholesaler while HALO plays as a retailers in B2C customer segment.

1. How will HALO coffee win?

To find the answer for How to win question, we should look how HALO deliver its unique value to the clients in a totally different way from its competitors (Lafley and Martin, 2013).

The first and foremost unique point of HALO is the reason for its existence. It is established due to the requirement of Bespoke Beverages’ clients – the high class customers (Halo Coffee, 2016a). Moreover, high class people tend to care about the brand and other issues such as environment which are the characteristics of the needs on the top of Maslow’s hierarchy. Hence, its “how to win” strategy is attempt satisfy high class people by supplying coffee capsules which contains the best and rarest coffee in the world and which has the relatively highest price compared to other coffee capsules; on top of that, HALO focuses on how to make coffee capsules become eco-friendly. In order to show its attempt to provide coffee capsules for high class people, HALO carefully design the capsules-which is biodegradable and “improves flow and extraction rate to create a better coffee” (Halo Coffee, 2016a) and the package. Furthermore, HALO does not use mass distribution channel; the products are displayed in and provided to some specific store, and if somebody want to buy, they need to contact with HALO first (Halo Coffee, 2016b)

• In summary, HALO differentiates itself from other coffee capsules suppliers by supplying the highest quality and specialty coffee, eco- friendly capsules and innovative filter. It targets the high class segment in which there are high class consumers and high class business clients. Its current aspiration winning is entering and taking a huge part of the high class coffee capsules market within 4 to 5 years.

1. Strategic issues based on current and future external analysis

1. Strategic issues raised by customers:

The positive affect:

The concentration on environment from the government has a huge impact on customer behaviours. For example, the policy of Hamburg – a second large city of German – where abandon capsules which contain harmful chemicals (BBC News, 2016) or according to Lusher (2015), the capsule inventor also feels bad about his invention due to its effect on the environment; and there are also a campaign in America preventing customers use too much coffee capsules (BBC News, 2016). The trend is more emphasized by the attempt of other brands in coffee capsules market to improve its products to be friendly to the environment (BBC News, 2016). Due to this trend, we could see the perspectives about environment protection of consumers are high. Considering B2B clients, they ought to also refer eco-friendly products because they will not purchase something which cannot be resold due to abandonment policy. This trend has a positive effect on HALO because its coffee capsule’s mission is to provide the best coffee in the best way for the world (Halo Coffee, 2016c).

Another advantage for HALO’s strategy is that consumers currently prefer specialty coffee (CBI Ministry of Foreign Affairs, 2016) and out-of-home coffee (which means that they are requiring convenient products) (Mintel, 2016). These demands really match with features of HALO’s coffee capsules.

In addition, from Appendix 1 and some analysis, HALO’s strategy could take advantage from targeting high class consumers. The UK population is ageing (ONS, 2015) while 50-to-59-year-old individuals both enjoy high quality coffee (Mintel, 2016) and are willing to pay for it because they have the highest disposal income (ONS, 2016). Hence, thanks to this trend, HALO could have wider B2C market, which may help reduce the bargaining power from other countries’ customers (will be mentioned below).    

The negative affect:

Customers may have bargaining power due to Brexit. Brexit makes Sterling weak, which is a disadvantage for the UK’s import industry, but it is a benefit for those exporting goods from the UK (Whittle, 2016). In contrast, an issue could be raised when HALO exports to other B2B customers in other countries, especially the loyal ones. The reason is that these customers may try to reduce the price due to their awareness of the advantage for the UK’s exporters.

1. Strategic issues raised by competitors

• Substitutes:

Appendix 1 indicates that the target consumers of HALO is around coffee, hot chocolate and tea. However, according to Mintel (2016), in terms of take-away beverages, coffee (71%) is the most favourite choice in comparison to hot chocolate (27%) and tea (26%). Therefore, the other types of drinks except coffee are not an intense threat towards HALO. However, the coffee pods is a threat because it has so many features in common with HALO’s coffee capsules. It is biodegradable, and some coffee pods brands also deliver high quality coffee. Nonetheless, with current technology, coffee pods cannot protect the whole flavor of the grounded coffee inside (The Coffee Pod, no date). Due to that weakness, high class consumers may not want it but we are not sure about the future technology.