5. MARKETING PLAN AND SALES STRATEGY.
To complete our market analysis and develop a marketing strategy is important to review first our current competitors. Follow by the proposal on four marketing decisions of price, position, place and promotion. The product portfolio has been already detailed in section 4.
5.1. Competitors Analysis
El Salvador’s kids café market is still in early stage with few coffee shops that offer a more kid friendly environment that could be consider competitors for our business. Here is a short description of our three main competitors41.
5.1.1. La Luna de Mateo
More than a café itself, “La Luna de Mateo” is a children´s development center and library. It was designed with the purpose of promoting creativity and imagination through art and educational games. The indoor playground also follows a Montessori inspired design. With areas to develop motor skills, mathematics and crafts. They offer workshops for kids and adults, similar to an afterschool learning place. They have a limited menu, with a few drink or snack options. Kids pay an entrance fee of $5 USD, which includes unlimited time in the playground and material for the craft´s workshop. Adults pay an entrance fee of $3 USD. They offer rental venue and summer camp.
5.1.2. La Petite Maison Kindercafe
This is a family oriented café located in San Salvador. They have a small indoor playground and an outside garden playground with slides and swings. Their playground design is more traditional, similar to the ones provide by fast food chains. They provide a full menu for breakfast, brunch, sandwiches, pizzas, coffee and natural juices. They promote four special events during the year: Easter egg hunt, Children´s Day, Christmas and costume´s party. They also offer the rental venue and event packages for parties.
41 El Diario de Hoy. “Four places to visit for both kids and parents”. 2019.
https://www.elsalvador.com/entretenimiento/turismo/565729/diversion-al-maximo-4-lugares-fuera-de-lo-comun-para-ninos-que-tambien-disfrutaran-los-papas/
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As for prices, “La Petite Maison Kindercafe” charges $5 USD per kid. The entrance fee can be consumed in food for adults or kids from Tuesday to Friday, and on the weekends this amount can be used only for kid´s menu.
5.1.3. Fun House Café
This is potentially our main competitor. This business has a concept of both café and kids playground. In addition to coffee and drinks, they offer breakfast and afternoon meals such as hamburgers, sandwiches and pizzas. They want to provide a healthy option with a yogurt based drink that has no sugar but the option to add Oreos or Nutella. Their Facebook page shows images of fried food options–beans, French fries, plantains, etc.- They´ve designed a baby room area, where parents can enter to play with their toddlers. The baby room main attraction is a balls pool. They also have an older kids area and outdoor playground with both wooden toys and traditional swings-slides. Their playground is divided into two areas a baby zone for children 0 to 2 and another one for children 2 to 5.
They charge an entrance fee of $5 USD per kid to use the playground area. Adults pay only their food or drink´s consumption. The kid´s entrance fee is non consumable, except for special dates when it includes a “Fun meal”. In addition, they offer rental venue for parties and summer camps.
All the above places are located inside houses either at Colonia San Benito or Colonia La Mascota. These two districts belong to San Salvador and are categorized as high income neighbors. The houses are big, with large inside gardens. These places were founded between 2014 and 2016, being “La Luna de Mateo” in the market for over four years.
Annex B contains a table with the addresses, website and operations schedule of each competitor for any reference.
5.2. SWOT Analysis
After having an overview of our potential competitors, a SWOT analysis is a useful technique to have a clear view of where OHANA Play Café stands, in order to plan our strategy as a startup business. Table III shows a SWOT Analysis with OHANA´s current position to enter market.
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Strategies for exploiting strengths and opportunities
• Build brand differentiation
o Emphasis in healthy food displayed in creative art. “OHANA Play Café where eating fruits and veggies is fun”.
o Advertise as a café that promotes coffee suitability. “OHANA making a difference in families from the bean to your cup”.
From OHANA Play Café value “Make a difference” a commitment to support small and medium producers to promote community sustainability.
• Focus entertainment for both adults and kids. A café for adults and playground for kids.
Table 3. OHANA Play Café. SWOT Analysis
Strengths
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o OHANA Play café offers the OHANAsitters as a plus to release parents of looking after theirs kids while they drink the coffee.
Strategies for minimize weaknesses and threats
• Promote brand awareness.
o Choose efficient channels to reach our target customers. Allocate advertise expenses according to our customers main communication channel –social media and word of mouth.
o Collaborate with kindergartens that teach the Montessori method. Offer special discounts for theirs students in exchange for publicity in their schools.
• A combined price strategy.
o Price penetration strategy lower the cost of our service as an opening promotion to gain market share.
o Bundled pricing. Special prizes for events package and entrance fee with food.
• Create customer experience. Reinforce customer relationship management. We don’t sell coffee, we create a relaxed space. We want our customers to feel within family.
5.3. Positioning Strategy
With established competitors in the market, OHANA Play Café needs to build brand awareness.
Yet, to create a competitive advantage we need to promote our Café as something different. A perceptual map is a practical tool to visualize the market position that OHANA aims to reach.
Figure 20 shows a perceptual map of OHANA´s main competitors positioned according to two categories. The vertical line represents the business customer focused orientation tendency for adults or children. The horizontal line stands for a food option of healthy and fast food.
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To differentiate our business, OHANA Play Café will position as a healthy food option, focus in both children and adults. Although one of our main features is our playground design, it is also intended for the children to play independently. Having the OHANAsitters will allow parents to enjoy our quality coffee and spend adult time, not having to worry about their children.
At the same time that we promote fun activities for the kids in special holidays, we can also have events for parents, for instance live music, cooking workshops about healthy snacks, working moms pep talks etc.
5.4. Pricing Strategy
To enter the kids café market, we need a combined price strategy. As we´ve seen, most business in the kids café market charge an entrance fee for the use of playground. In El Salvador, our three main competitors charge $5.00 USD per kid, which can be consumed in food or not depending on the place.
Children entrance fee. We´ll begin with a special promotion for the kid´s entrance fee at $4.50 USD for the first three months, as we need the “word of mouth” to spread among customers.
La Luna
La Petit Maison Kindercaf
Fun
OHANA
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The kid´s fee will include a selected drink or snack from the menu for the kid. After the promotion period, we´ll raise the price at $5.00 USD, this price will still include a snack or drink from the menu. This fee will be charge for kids from 1 to 6 years old. Children from 7 to 8 will pay $2.00 USD if they want to use the tablets at the Reading Corner.
Adult entrance fee. There won´t be an entrance fee for adults. But, we will request a minimum consumption fee of $4 USD per table.
Senior´s discount. As we want to attract grandparents and to boost up the customers on the weekdays, we´ll offer a special senior discount. There will be a happy hour in selected desserts buy 1 get 2 –grandparents will usually go in pairs, grandmother with another grandmother, etc.-.
In addition, if they order American Coffee, we will have one free refill on the house. In El Salvador is pretty common for restaurants to offer unlimited refills of black coffee during breakfast. Thus, offering one refill of black coffee is a plus for attracting customers.
OHANA Kiddie Membership. To make our customers feel valued and to build loyalty, we will create a membership for kids. It will be a small printed ID card with the name of the kid.
Many adult coffee shops in El Salvador offer frequent client reward cards, for instance collect 10 stamps and receive a free drink. In the case of OHANA, if the kid collects 8 stamps, they can receive a free snack or drink. In addition, we can give a special discount if it´s the kid´s birthday month. In special seasons or slow months, we will post in our Facebook page a special week discount or benefit that our customers can have by using the OHANA Kiddie Membership. For instance, buy 1 get 2 promotions, receive one dessert by buying two drinks etc.
Bundled Price. As we will promote the venue rental for birthday parties or other celebrations, we can offer bundle price for the cake and entertainment, when buying the food package.
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Advertising of OHANA Play café will be done by two main channels digital and physical.
Social Media. Facebook and Instagram will be our mainstreams to promote our brand and concept. Facebook provides a platform to interact with our customers, receive feedback, questions, reviews and expand our customers network. Instagram, on the other hand, will give us the opportunity to show our edible art, to attract our customer´s eyes. We want to create plates that are Instagram story. In Taiwan, coffee shops pay a lot of attention to food presentation, everything has to be cute, clean or perfect to meet their customers’ demands. In El Salvador, millennials are starting to adopt the Asian food photo tendency. Therefore, OHANA´s healthy menu will be presented with creative edible art.
We will create a website to promote our brand, share our company values and specially develop the Blog section. In this blog, we will post trends in healthy food, how to balance work and parenthood, testimonials, etc. Customers can submit their questions and share their experiences.
Publicity in stores. With a limited budget for physical advertisement is important to invest in places where our target customers go. Thus, we´ll start with the collaboration with kindergarten and private schools that follow the Montessori teaching method. Among these, “Mi Casita Montessori” –kindergarten- and “Acton Academy El Salvador” –preschool through 8th grade- will be our main focus. These two schools leads the Montessori teaching method in El Salvador, parents that send their kids there are potential customers.
In addition to schools, we´ll place publicity in main beauty salons and yoga centers. We are targeting millennials parents, within these the working moms whose disposable income is increasing. Yoga classes are rather expensive in El Salvador, in some places up to $90 USD the monthly fee42. People than can afford yoga classes has the disposable income to visit Kids café.
Also if they take yoga classes, they will most likely have a tendency for healthy food. In addition to working moms, at yoga centers we can promote the brand as an alternative for those single women that want to enjoy a coffee with her friends that already have kids.
42 Reference from “Yogashala”. Yoga Center in El Salvador. http://www.yogashala.com.sv/precios
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5.6. Location Strategy
OHANA Play Café will be located in the district of Santa Elena. This district belongs to the city of Antiguo Cuscatlán, which is part of AMSS Metropolitan Area of San Salvador- previously detailed-. This is a strategic location because not only is a medium-high income neighborhood, but it is surrounded by many offices and diplomatic agencies, including the U.S.
Embassy, the Germany Cooperation Office, etc. In addition, is close to “Acton Academy El Salvador” – the Montessori school where we want to promote our services-. Our main supplier for food “PriceSmart El Salvador” is also located in Santa Elena district, which will guarantee fresh deliveries.
We also choose a different location from our competitors to provide a closer alternative to people who live in Santa Tecla city –an emerging house market for young professionals with middle income-. El Salvador might be a small country and distances are relatively short, but we have a problem of high traffic. For instance, in normal hours it will take a 10 minutes’ drive on the highway that connects Santa Elena with San Benito- our competitor´s location- yet in rush hours it will take around 40 minutes.
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6.1. Production and Suppliers
Coffee. “Finca Los Andes” will be our main supplier for coffee beans. They will deliver the beans as needed. The coffee beans will be the base for our baristas to prepare the different drinks at our café. One expresso shot needs an average of 9 -10 grams of ground coffee43, which means that 1 golden quintal -46kg- can served up to 4,600 expresso shots.
Food. We are choosing “PriceSmart El Salvador” wholesaler to distribute the raw materials – fruits, vegetables, etc.-. This wholesale offer special prices for business, free consulting in products, email ordering-purchase and delivery service. In addition, they have credit payment options from 15 to 45 days44. As we mentioned before, “PriceSmart El Salvador” has a branch in Santa Elena, making delivery and communication fast and convenient.
6.2. Inventory Management
One of OHANA´s company values is consciousness, we offer a healthy choice for our customers. Thus, inventory management is highly important to keep up with the quality standards of fresh and healthy that we´ll provide. The inventory will be registered on a weekly basis, counting the items of the beginning of the week, purchases and ending inventory, later to be compiled in a monthly basis. Managing a weekly inventory, although requires spending more time, is a good practice for food retailers not only to keep the fresh ingredients and make purchases as necessary, but to avoid food waste. As we´ll work with perishable items, is necessary to keep the inventory turnover as low as possible, less than seven days.
In addition, the information compiled will serve to develop cost related metrics. For instance, there is a metric to assign specific food cost to total cost, by tracking the main ingredients of an item, the sales and how much we are spending on them. These metrics can help to detect most
43Standards are provided by Specialty Coffee Association Of America, yet baristas could choose to add 1 or 2 grams more to provide a stronger taste.
44 PriceSmart El Salvador. https://www.pricesmart.com/site/es/sp/business-services