Marketing is a core business function; it promotes consumers buying your products. The foundational aspects of effective marketing addresses your product, pricing, placement, and promotion. Successful marketing also considers the audience to whom your product is marketed, the physical evidence involved, and the business processes.
Marketing coffee requires addressing the 7Ps of the marketing mix:
- Physical Evidence
Defining the product your coffee company brings to the market helps you successfully serve relevant market segments. The coffee market consists of many segments, including out-of-home consumption (e.g., cafes), at-home consumption, instant, and the ready-to-drink (RTD) segment.
Each of these segments can be further classified according to premiumization, a coffee industry trend.
Your coffee company may target any of these segments, or you may target a different coffee market segment. Whichever target market your coffee company focuses on, you must consider the four layers of coffee products.
The Four Layers of Product
The core benefits your brand provides to consumers.
Great coffee that makes you feel satisfied and confident about being a man amid hipsters and the socially woke.
The product being provided.
Strong specialty coffee, crafted, and sold in small batches.
The physical aspects surrounding the product.
Delivered in bold masculine packaging; the product looks good on the countertop of your kitchen or woodworking shop.
Other aspects of the product that enrich the product for the consumer.
Veteran Owned, American, a popular brand podcast.
Pricing strategy is a method used for establishing the best price for a product. It helps you choose prices to maximize profits, while considering consumer and market demand.
There are many pricing strategies. The five most relevant to marketing coffee are:
- Competitive pricing
- Cost-plus pricing
- High-low pricing
- Penetration pricing
- Premium pricing
Competitive pricing is also known as competition-based pricing. This pricing strategy references the current market rate for a company's product. It doesn't consider the cost of the product (i.e., cost of goods sold (COGS)) or consumer demand.
Instead, competitive pricing treats the competitors' prices as a benchmark. Businesses who compete in saturated or commodity markets (e.g., coffee) may choose this strategy.
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Most new coffee businesses choose competitive pricing as their initial pricing strategy. With many retailers selling coffee online, researching your competitor's pricing is straightforward.
Competitive pricing is appropriate when the consumer has strong price expectations. In such cases, if coffee brand A sets its prices too high, the customer would choose coffee brand B.
Yet, distinguishing between price and value is important. Customers often look for the best value, which isn't always the same as the lowest price. Coffee brands can enrich the perceived value of their products by highlighting product benefits and adding intangible value.
A cost-plus pricing strategy considers the cost of goods sold (COGS), which includes the actual product, freight, and packaging.
Cost-plus pricing is also called markup pricing; businesses apply a "markup" on their products based on their desired profitability. To apply the cost-plus pricing method, add a fixed percentage to your product cost.
Cost-plus pricing is often used by sole proprietors of coffee companies because it allows them to set profit margins and recoup some costs quickly. However, cost-plus pricing can leave your coffee business vulnerable to competitors focusing on customer acquisition.
A high-low pricing strategy is when a company begins by selling a product at a high price but reduces the price later, often when the product is less relevant or novel. This pricing strategy is more often applied in marketing tea than coffee.
Yet, some retailers may use this pricing strategy to launch and clear out seasonal inventory (e.g., coffee advent calendars, seasonal coffee merchandise).
Penetration pricing is a strategy in which companies enter a market with a low price product. This draws attention and revenue away from higher-priced competitors to the new entrant.
This pricing method works best for new coffee businesses looking for customers, or existing coffee companies testing new products. For example, a new coffee shop may advertise a free small coffee when customers spend $5 or more.
Similarly, when coffee chains (e.g., Starbucks) test new products, they may initially sell these products at lower price points to test the market's response and build demand. Once demand is confirmed, the product discount ends and the product sells at a higher price, more typical of the market.
Premium pricing, also called prestige pricing, is a strategy by which companies price products high, positioning products as luxury items. Premium pricing emphasizes the products' perceived value rather than the actual cost. Coffee brands that apply this tactic provide status to consumers through their products.
Specialty coffee brands can premiumize their product with this strategy. Coffee brands implementing this pricing strategy often strengthen their premium positioning with tactics like influencer marketing.
For example, Corvus coffee offers an “Exotic Series” product line, their more premium offering. Corvus coffee partners with nano coffee influencers (e.g., 180gramcoffee) to reinforce the premium positioning of their products with images and captions.
“I have to mention the packaging for this as well. Yes, the art is beautiful but I also appreciate the details inside the card about the coffee and its producer. The amount of care that goes into the packaging reflects the amount of care put in by Jaime Cartuche in growing the coffee, and Corvus’s care in roasting it.”
A coffee company's objective is to expose their products to consumers who are most likely to buy. Successful placement means customers can easily find and access your products.
When your coffee business selects its placement strategy, you’re selecting your business model (e.g., brick-and-mortar store, e-commerce store). This decision has major implications on your coffee business's distribution strategy. This decision also has major implications for your marketing strategy. For example, digital marketing for a cafe uses different tactics than selling coffee online.
How your cafe or coffee shop designs its retail space can set you apart from your competitors. To effectively promote your products, you want to visually showcase your products. Consider allowing people to see or sample the coffee blends you sell.
A strong e-commerce website is critical if you’re selling coffee online. Online coffee stores must consider traffic channels by which visitors arrive at their website. Common means by which prospective customers can arrive at your website include search engine optimization (SEO) and pay-per-click advertising (PPC).
You must also consider how visitors can interact with your product online (e.g., images, videos) and how your products can be purchased (e.g., checkout experience, payment options).
Promotion involves activities by which you make your customers aware of your coffee products. Promotion can involve many marketing tactics, and it delivers on your coffee company's marketing strategy.
Your website can be a powerful asset for your coffee company. You can use it to sell products and influence customer behavior. Your online coffee store should have strong product pages (e.g., product photos, sales copy, social proof). You should also consider using content marketing, and enhancing it with search engine optimization (SEO).
Your coffee website should also support your email marketing effort, allowing you to promote products to people long term. Email marketing can have a strong return on investment (ROI); email can effectively encourage prospects to become consumers, and influence customers to spend more. Steeped Content analyzed coffee newsletters to identify what retailers are doing well.
Search marketing promotes websites and web pages on search engines using paid and unpaid tactics. It’s classified into two categories:
- search engine optimization (SEO)
- search engine marketing (SEM), also frequently called pay-per-click (PPC) advertising
Search engine optimization (SEO) uses unpaid tactics to gain prominence in the search engine results pages (SERPs). By contrast, search engine marketing (SEM) uses paid advertising. Coffee businesses benefit from using both tactics in their digital marketing.
Paid tactics generate quicker results, but costs may make this option less accessible to small coffee businesses with lower marketing budgets. The coffee industry has many small players, with some small to mid-sized coffee brands owned by larger conglomerates. These large brands may outbid small competitors on PPC ads.
Search engine optimization (SEO), an unpaid tactic, takes longer to generate results. It requires specialized expertise and time to pay dividends, which is why some coffee brands may deemphasize this tactic.
However, the effort required for blogging and SEO must be weighed against the business value it creates. Blogs and SEO can be a stable traffic source to your coffee companies website and contribute to product sales and awareness.
Social Media Marketing
Many coffee brands incorporate social media marketing into their promotion efforts, and for good reason. Coffee is a visual product with elements of culture and craftsmanship that are effectively portrayed with images. Images make it easy to show coffee and coffee products within the context of their consumption (e.g., pour-over coffee, espresso being made).
The role of social media marketing varies between coffee businesses and between the different coffee business models. For example, e-commerce coffee companies may benefit more from social media channels that promote shopping behavior (e.g., Pinterest). In contrast, cafes and coffee shops may prefer platforms that facilitate visual storytelling (e.g., Instagram) or reach (e.g., TikTok). In both cases, coffee businesses should seek to tie social media marketing into their post-purchase marketing efforts.
Coffee Advertising Campaigns
Advertising involves producing advertisements for products; it’s paid media (as opposed to earned, owned, or shared media). The two most common channels for coffee advertising campaigns are paid search (e.g., Google Ads) and paid social (e.g., Facebook advertising). The strategies that make these campaigns successful differ based on the platform (e.g., Google, Facebook).
People are an important element in building a successful coffee business; the people in your target market and those in your company are the two most important.
Your target audience is the segment of the coffee market your company focuses on; it represents your actual and ideal customer. Selecting a precise segment lets you focus your messaging and marketing budget.
To better attract and resonate with your target market, leverage your satisfied customers. Consider using satisfied customers in your post-purchase marketing efforts (e.g., user-generated content) and digital PR (e.g., affiliate marketing).
Your internal team may reflect a range of important functions (e.g., accounting, HR), but those related to selling your coffee are especially important (e.g., marketing, customer support). To market your coffee company effectively, you need to hire in-house talent or work with an external marketing service provider, such as Steeped Content.
Selling coffee requires dedicated staff in a physical location (e.g., cafe) or team members that can provide support digitally (e.g., offshore customer service support). Hiring and retaining the right people is critical to the success of your coffee business.
Process refers to internal systems (e.g., standard operating procedures for barista), procedures (e.g., your roasting process), or initiatives (e.g., product launches) that support your coffee company's business goal. Ensuring your business has a good process saves time and money, improving efficiency and profitability.
Your coffee business's physical evidence includes everything your customers see when interacting with your company (e.g., retail store, website, Google reviews). Physical evidence includes aspects such as product packaging, branding, and how your staff dresses and acts. Your store’s layout, fixtures, and signage can act as branding opportunities and work to increase sales. Physical evidence is particularly important when branding coffee shops.
The marketing mix 7 Ps (i.e., product, price, place, promotion, people, process, and physical evidence) are examples of marketing fundamentals. The marketing mix is captured in a marketing plan, along with other valuable content.
A marketing plan should combine with a strong strategy and branding foundations. By focusing on branding (e.g., brand strategy, brand communication guidelines, brand identity guidelines) and strategy (e.g., marketing strategy, digital marketing strategy, content marketing strategy), you can distinguish your coffee company in the market.
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