To generate increased revenues from both new and existing customers, the company should increase the average transaction size. Average transaction is mainly important because it assists in measuring success when increasing larger sales from each customer. Ideally, the average transaction size should constantly be increasing because it suggests strongly that the company is not just continued, but increasing success in selling coffee to its consumers. Alternatively, the company could increase the frequency of transactions per customer. Frequency of transactions per customer is critical, for example, if a new consumer comes in once in a month, convincing them to patronize the business every week will increase revenue.
The solution that the company chooses will depend on the circumstance of the individual organization. Even though there is a need to purchase high-quality material, there is also a need for a high-quality organization to purchase the products. This way Sue's Cafe can choose to minimize purchasing of materials from suppliers. By renegotiating the supplier contract, the company will be able to minimize costs significantly. However, they should try not simply to minimize the spending on resource supply but also to increase their effectiveness more customers, more sales, more transactions processed, more new products, better resources. In addition, if the managers feel that their support spending is higher than the competitors and relative to the benefit being generated, they could set objectives to minimizing, say administrative expenses as a percent of sales or distribution or selling expenses and marketing. However, objectives to decrease expenses and cost levels, should be balanced, on the score cards through other measures, say of consumer representatives, performance, and quality so that the cutting does not have any impact on achieving important clients and internal practice objectives.
THE BREW-IT-YOURSELF AT HOME COFFEE TREND
To deal with the recent emerging brew-it-yourself single cup coffee system, Sue's Cafe need to excel through creating unique coffee offerings, improving interior decoration and ambiance, and further developing their menus. The ambiance of the shop is especially regarded as a significant part of the augmented product. In addition, the company could set its sights on introducing brewers that enable customers to make single shots of coffee along with drinks and lattes. For this to be possible, the company could adopt the competitive and innovating coffee machines such as the Starbucks Verismo (Simon 49), to function as a single-serve coffee machine.
Staying afloat from existing and potentially new competitors will depend critically on various factors, such as the companys ability to maintain adequate working capitals; skills of the manager in making strategically accurate choices of markets and products; the degree of freedom managers are able to exercise in downsizing in areas which include external competition strikes; and longer term, the availability of capital for restructuring. Underpinning these mentioned factors is the rate at which the entire economy stabilizes. Every deep step in a recession will minimize the companys chance of survival as does every percentage point of inflation. Important to note, is that as the number of components becomes large, the gain in market share could possibly become important as to offset price reduction that stems from intense competition.
PREDICTIONS FOR THE FUTURE
The demand for coffee is mainly determined by price point but is additionally affected by the substitute beverages and changing consumer taste. Based on the current competitive environment from existing and potentially new competitors, it is safe to predict that there will only be a minimal change for Sue's Cafe of coffee consumption in the next five years. This is largely contributed by the fact that per capita consumption of coffee in the US has declined, which has been attributed largely to the changing tastes such as consumers being able to access soft drinks to compete with coffee as a social drink.
Simon, Bryant. Everything but the coffee: Learning about America from Starbucks. University of California Press, 2009.
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