ABSTRACT 5
1. INTRODUCTION 6
2. METHOD 10
3. EXTERNAL SITUATION 12
3.1INDUSTRY ANALYSIS 13
3.1.1MACRO ENVIRONMENT 13
3.1.2AGGREGATED INDUSTRY FACTORS 14 3.1.3INDUSTRY STRUCTURE 15
3.1.4ANALYSIS 17 3.1.5CONCLUSION 19
3.2CUSTOMER ANALYSIS 21
3.2.1LOCAL QUESTIONNAIRE 22
3.2.2ANALYSIS LOCAL QUESTIONNAIRE 23 3.2.3TOURIST QUESTIONNAIRE 23
3.2.4ANALYSIS TOURIST QUESTIONNAIRE 25 3.2.5CONCLUSION 26
3.3COMPETITOR ANALYSIS 28
3.3.1IDENTIFICATION AND CHOICE OF THE COMPETITORS 28 3.3.2OBJECTIVES AND STRATEGIES OF COMPETITORS 29 3.3.3SUCCESS PROVIDING FACTORS AND STRONG AND WEAK POINTS 30
3.3.4ANALYSIS OF COMPETITORS AND EXPECTED STRATEGIES 32 3.3.5CONCLUSION 33
3.4DISTRIBUTION ANALYSIS 34
3.4.1DISTRIBUTION ON MACRO LEVEL 34 3.4.2.DISTRIBUTION ON MESO LEVEL 34 3.4.3DISTRIBUTION ON MICRO LEVEL 36 3.4.4ANALYSIS 38
3.4.5CONCLUSION 39
3.5SUPPLIER ANALYSIS 41
3.5.1SUPPORTING SERVICES 41 3.5.2PRODUCTION RESOURCES 41
3.5.3SEMI-FINISHED PRODUCTS AND RAW MATERIALS 42 3.5.4THE KRALJIC APPROACH 42
3.5.5ANALYSIS 43 3.5.6CONCLUSION 43
3.6ANALYSIS OF THE EXTERNAL ENVIRONMENT 44
4. INTERNAL SITUATION 47
4.1STRATEGY 48
4.1.1STRATEGY PROCESS 48 4.1.2STRATEGY CONTENT 49 4.1.3ANALYSIS 49 4.1.4CONCLUSION 50
4.2MARKETING MIX 51
4.2.1PRODUCT 51
4.2.2PRICE 53
4.2.3PROMOTION 54 4.2.4PERSONNEL 55 4.2.5ANALYSIS 56 4.2.6CONCLUSION 57
4.3STRUCTURE 58
4.3.1STRUCTURE CHARACTERISTICS 59 4.3.2PROCEDURAL CHARACTERISTICS 59
4.3.3CRITERIA 61 4.3.4ANALYSIS 62 4.3.5CONCLUSION 63
4.4PRIMARY PROCESSES 64
4.4.1COFFEE PROCESSING PROCESSES 64 4.4.2COFFEE SELLING PROCESSES 65 4.4.3COST OF PRODUCING 65
4.4.4ANALYSIS 66 4.4.5CONCLUSION 66
4.5FINANCIAL POSITION 67
4.5.1FINANCIAL RATIOS 67
4.5.2COST/VOLUME/PROFIT ANALYSIS 68 4.5.3HEDGING 69
4.5.4ANALYSIS 69 4.5.5CONCLUSION 70
4.6ANALYSIS OF THE INTERNAL ENVIRONMENT 71
5. SWOT ANALYSIS 72
5.1SWOT MATRIX 73
5.2PROBLEM CONCLUSION AND DEFINING STRATEGIC OPTIONS 77 5.2.1PROBLEM CONCLUSION 77
5.2.2DEFINING STRATEGIC OPTIONS 78
5.3CHOICE 79
6. OBJECTIVES 81
6.1STRATEGY 82
6.1.1STRATEGY PROCESS 82 6.1.2STRATEGY CONTENT 83
6.2MARKETING OBJECTIVES AND STRATEGIES 84
6.3FINANCIAL OBJECTIVES AND STRATEGIES 85
7. DESIGN 86
7.1MARKETING MIX 87
7.1.1PRODUCT 87
7.1.2PRICE 88
7.1.3PLACE 89
7.1.4PROMOTION 90 7.1.5PERSONNEL 91
7.2STRUCTURE 91
7.2.1STRUCTURE CHARACTERISTICS 91 7.2.2PROCEDURAL CHARACTERISTICS 92 7.2.3CRITERIA 95
7.3PRIMARY PROCESSES 96
7.4FINANCIAL POSITION 97
7.4.1FINANCIAL RATIOS 97
7.4.2COST/VOLUME/PROFIT ANALYSIS 99 7.4.3HEDGING 99
7.5TOTAL VALUE NEW DESIGN 100
7.6SUGGESTIONS FOR IMPLEMENTATION 100
7.7ESSENCE 101
EPILOGUE 103
REFERENCES 104
Abstract
This research is carried out for CoopeSanta Elena R.L., a small coffee cooperative located in the mountainous area of the Monteverde Region in Costa Rica. This cooperative sells coffee under the brand name Café Monteverde, which they sell as Export Quality aimed at tourists and a Consumo Nacional aimed at the local population.
The cooperative asked for this research because they felt local competition for the first time in its history for the Export Quality and have problems facing this competition. CoopeSanta Elena doesn’t have a clear picture of themselves or the local market at the moment, because they have financial problems as well and do not have the resources to perform market research.
The objective of this research is to give advice to the management of CoopeSanta Elena which actions CoopeSanta Elena has to take to strategically position Café Monteverde on the best way on the local market to build and sustain a competitive advantage.
The research question accompanied with this objective is: how is Café Monteverde strategically best positioned on the local market to build and sustain a competitive advantage and which actions must be taken to reach this objective? When Café Monteverde is said in the objective, mind that this is the Export Quality as well as the Consumo Nacional.
Different models are combined to answer the research question. The research strategy used is mainly action research, but there is also made use of literature research, survey and case study.
The data collection methods used are primary and secondary data, participant observation and case study.
Out of the SWOT analysis appeared that the product of CoopeSanta Elena is a very strong asset.
Tourism forms a paradox on the Monteverde Region market. Because more and more tourists visit the Monteverde Region more coffee can be sold to tourists, but more and more farmers stop growing coffee, because going into the tourism business is more profitable than growing coffee.
Out of the analysis further appeared that the strategy of CoopeSanta Elena doesn’t fit the external and internal environment. CoopeSanta Elena faces a lot of difficulties right now, but not all difficulties are caused by the new competition. A lot of problems were already present at the coop, long before new competitors entered the market. A bigger source of problems inside the cooperative is the internal situation of CoopeSanta Elena: the structure of the marketing activities, the organizational structure, the primary processes and the financial position.
Because there is no marketing employee no research is done about positioning or optimal selling prices. As a result the Consumo Nacional is sold below cost price. Also the financial issues are not always paid the right attention too. A lot of money is spilled by the high Average Collection Period (5 months) and the fact that CoopeSanta Elena doesn’t undertake hedging strategies while out the analysis appeared that these could be profitable.
As an answer to the research question can be said that Café Monteverde, Export Quality as well as Consumo Nacional, is best positioned with a differentiation strategy and that for both qualities it is possible to achieve and sustain a competitive advantage.
The actions that are taken to achieve this are formulating strategies and objectives and operational these in a new organizational design. The new objective of CoopeSanta Elena is: change the current situation in such a way that net profit is achieved in the end of book year 2004/2005 and manage to cooperative in such a way that net profit is maintained the coming years as well.
There is chosen for a strategy from a financial point of view, because on this field CoopeSanta Elena faces most problems. And without a good financial situation CoopeSanta Elena is not able to survive and that is one prerequisite constraint to achieve the objective. Next to this overall strategy marketing objectives and strategies are formulated as well for the book years 2004/2005 and 2005/2006.
The main actions CoopeSanta Elena has to take are: having an actual strategy, be busy with marketing in such a way the objectives can be achieved, decentralize the organization, decrease the power of stakeholders, sustain the supply of cherries and act more cleaver in financial issues and strategies. With all these actions CoopeSanta Elena has to be able to fulfil the objectives.
1. Introduction
CoopeSanta Elena
CoopeSanta Elena was founded in 1971 in Santa Elena de Monteverde in Costa Rica, in an initial assembly, made up of 52 Costa Ricans and 16 foreigners. Their mission is to centralize, select, classify, manufacture and any other process to prepare for sale, be it self financed or through cooperative members, all agricultural and industrial items produced by its members.
A short description of the development of the Cooperative will follow below:
• 1971 – 1982: Grocery + hardware store
• Early 1980’s: Involved in the development in gardens, arts and crafts, and coffee in the region
• 1986: Production and commercialization of arts and crafts under the name CASEM
• 1988: Integration of coffee as a CoopeSanta Elena product, with the establishment of the brand name Café Monteverde
• 1990: Establishment of savings and loan services
• From 1985 until 1994: Support to educational programs of cooperativism and the environment in local schools in coordination with the Monteverde Conservation League
• Since 1997: Scholarship program for students of high school and university, donations to area elementary schools through the support of the “Fundación Hijos del Campo”, which is supported by CoopeSanta Elena.
• 2002: Splitting up of the cooperation into separate organizations. CoopeSanta Elena now only encloses the production and selling of the coffee as well as operating the supermarket. CASEM is now an independent cooperative.
CoopeSanta Elena is one of nine cooperatives which fall under Grupo Coocafé R.L. Coocafé was set up on January 23, 1988 and is an integration organization that works as a second level cooperative. The objective of Coocafé is to integrate and market the cooperative associates’
products, resources, and efforts to generate a sustained and integral development.
Currently, CoopeSanta Elena gathers the effort of about 110 members, of which 75 are coffee growers. There is a Consejo de Administracion of about 7-9 members which work like a board of directors, as well as Education and Vigilance Council. The Cooperative has 9 full time, and 4 part time employees, which consist of a Director, accounting, coffee sales, production and a small supermarket. The supermarket was taken over by the cooperative in 1971. An organization chart can be found in appendix 1.
During the coffee harvest of 2003-2004, 75 coffee growers cultivate coffee in harmony with the cloud forest, using shade trees and reducing chemical fertilizers, but their number varies over the years. Through the Fair Trade certification, the cooperative implements a fair distribution of the sales price to its affiliated growers (Coocafé, 26 January 2004).
Café Monteverde
CoopeSanta Elena sells the coffee brand “Café Monteverde” which they offer in two different qualities in the local market: the first is of export quality which they offer to tourist groups and the other one is second grade coffee for local consumption. All the coffee they sell at the local market is locally roasted in the roaster in San Luis or in Monteverde. The local market is defined as the Monteverde Region, which consists of the villages Santa Elena, San Luis, Cerro Plano, Monteverde, and some communities in the Monteverde Region. The Monteverde Region are those communities that use Santa Elena as their commercial and cultural center. Café Monteverde has a Fair Trade certificate.
For export they use only the first grade coffee. The coffee which is exported goes first to the second level cooperative Coocafé, which sells it to international buyers. CoopeSanta Elena has a few large buyers of Café Monteverde on the international market: Montana Coffee Traders, Equal Exchange and Dowex, a new Canadian buyer. Further, Café Monteverde is sold on the Fair Trade Market in Europe, but then Coocafé blends this coffee with the other coffees of the nine cooperatives.
The total amount that is exported, not only of Café Monteverde but country wide, is far less than that of big coffee countries like Brazil, Vietnam and Colombia. That’s why the Costa Rican government approved a law which stated that the only species of coffee that can be cultivated in Costa Rican is Arabica Coffee, which is the best quality coffee compared to the Robusta species. On the international market Costa Rican is diversified as a high quality coffee.
On the national market, there is only this high quality Arabica coffee available. Arabica coffee grows best on altitudes between 900 and 1700 meters above sea level. There can be made another classification in the quality of coffee: Hard bean (HB) and Strictly Hard Bean (SHB). Coffees grown between 800 –1.200 meters are usually classified as hard bean (HB) and above 1.200 meters are classified as strictly hard bean (SHB) and often command significant premiums in the market (koffeekorner, 26 January 2004). Café Monteverde is classified as Strictly Hard Bean. Appendix 2 has more information about different types and qualities of coffee.
Problem
The cooperative Santa Elena is feeling local competition for the first time in its history, because of a
‘local’ brand called Café Rainforest. The owner of this brand has a deal with the owners of the supermarket Esperanza. Because he rents space from the owner of the supermarket, the supermarket gives his brand a preferential position in the shelves, so that the owner of Café Rainforest is better able to pay his rent. It is estimated that 35 percent of the total local consumption of coffee is sold in Supermercado Esperanza. Last year this supermarket refused to sell Café Monteverde, but this year it is sold again in the supermarket. This Café Rainforest coffee is sold in two qualities, just as Café Monteverde, in a first grade quality coffee and a second grade one. This second grade coffee is sold under the brand name “Café de Altura”. The last years the sales of Café Monteverde did not increase as much as the years before. They experience stagnation or a little growth in their sales of Café Monteverde. But the market is growing. Each year more people come to live in Monteverde and more and more tourists visit the Monteverde Region. In terms of market shares, Café Monteverde decreased.
Not only on the selling part Café Monteverde competes with Café Rainforest, but on the supply part as well. Café Rainforest buys their coffee from farmers in the area of CoopeSanta Elena and in the area of Coopeldos, a neighboring coffee cooperative. So, CoopeSanta Elena has fewer farmers that sell coffee to them and that result in a lower production.
Besides the stagnating sales, the Cooperative has already severe financial problems. They have borrowed money from the second level cooperative Coocafé. There a two kind of loans: the regular harvest loans and “special” (emergency) loans. The first loan, the regular harvest loan, is an annual loan, which Coocafé provides to the Cooperative, so that the farmers can pay for the coffee pickers and raw materials. When the Cooperative sells the coffee, they are able to pay the biggest part of this loan back to Coocafé. The “special” loans come from the time that the Cooperative provided loan services and credits to its members who have not cancelled their debt and probably will not do so. CoopeSanta Elena is not in the position to pay this loan back, each year they only pay the interest. The cooperative has some debts with other financial institutions as well as from community members.
At the moment, the Cooperative doesn’t have a clear picture of their position in the local market.
Before, they had a monopoly, but now due to the new competition, not any more. With this new competition they have to redefine their position on the market in such a way that a (sustainable) competitive advantage can be achieved.
This problem is seen through most members of the cooperative, as well as the management and employees, but the management of CoopeSanta Elena undertook action by demanding that research is done about this problem.
Objective: Give advice to the management of CoopeSanta Elena which actions CoopeSanta Elena has to take to strategically position Café Monteverde on the best way on the local market to build and sustain a competitive advantage.
Research question: How is Café Monteverde strategically best positioned on the local market to build and sustain a competitive advantage and which actions must be taken to reach this objective?
Conceptual Model
The conceptual model (figure 1) can be found on the next page. This model is derived from using a model to make a strategic marketing plan (Alsem 2001, p.48), a model for making a marketing plan for the local market (Mühlbacher et al 1999, p.841) complemented with the DOV model of de Leeuw (De Leeuw 2000, p.291). In the current situation there is no clear image of the organization and the environment. The analysis of the chosen characteristics must provide the organization useful information about their situation, about the internal situation as well as the external situation. To do this, several theories can be used. When the actual situation is known a SWOT
competitive advantage. If this is clear, a new strategic objective can be made, as well as marketing objectives and strategies, and financial objectives. After this stage marketing mix decisions can be made and is discussed if the structure or primary processes of Cooperative Santa Elena have to be changed in order to achieve the new objectives. In this stage the marketing plan is budgeted. At last recommendations for implementations are made.
Figure 1.1: Conceptual model
SWOT analysis
Objectives and strategies
Financial Objectives Marketing objectives and strategies
Strategy Objective External Analysis
Competitor Analysis Industry Analysis
Customer Analysis
Distribution Analysis
Supplier Analysis
Internal Analysis
Primary Processes Structure Marketing Mix
Strategy
Financial Position
Design Marketing mix decisions
Primary process changes Structure changes
Financial Budgets
Suggestions for implementation Total value new design
Sub questions
By dividing the research question into sub questions, the research is operationalized. The sub questions are divided into a diagnosis phase, a objective phase and an activity plan.
Diagnosis
• What is the external situation of the CoopeSanta Elena?
o How is the industry structured?
o Who are the customers?
o Who are the competitors?
o How is the distribution structured?
o How is the supply structured?
• What is the internal situation of the CoopeSanta Elena?
o What is the strategy of CoopeSanta Elena?
o What is the marketing mix of CoopeSanta Elena?
o What is the structure of CoopeSanta Elena?
o What are the primary processes of CoopeSanta Elena?
o What is the financial position of CoopeSanta Elena?
SWOT Analysis
• What are the gaps between the internal and the external situation?
• Which strategic options can be formulated?
• Which strategic option is the best for CoopeSanta Elena?
Objectives
• What is the intended strategic position of CoopeSanta Elena?
• What are the marketing objectives and strategies CoopeSanta Elena?
• What are the financial objectives?
Design
• What are the marketing mix decisions?
• In which way does the structure of CoopeSanta Elena has to change?
• In which way does the primary processes of CoopeSanta Elena has to change?
• What are the financial budgets?
• What does the total design add to CoopeSanta Elena?
• Which suggestions for implementation can be given?
Readers Manual
Chapter two is giving more information about the methods used in this research. In the third chapter the external environment is analyzed and in the fourth the internal environment. The diagnosis chapters only contain the most important elements of the diagnosis, a total description of the elements are in the appendices where is referred to in the chapters. The fifth chapter is connecting chapter three and four by making a SWOT analysis. In this chapter also a choice for a new strategy is made. This strategy is worked out in chapter six where also new objectives are formulated. These new objectives are operationalized in a design, chapter seven. A new organizational structure designed as well as organizational processes. In this chapter also recommendations for implementation of the design are given. At last the essence of this research is formulated.
2. Method
In this chapter the research method will be discussed. First the research objective and research question will be repeated.
Objective: Give advice to the management of CoopeSanta Elena which actions CoopeSanta Elena has to take to strategically position Café Monteverde on the best way on the local market to build and sustain a competitive advantage.
Research question: How is Café Monteverde strategically best positioned on the local market to build and sustain a competitive advantage and which actions must be taken to reach this objective?
This research is carried out at CoopeSanta Elena in Monteverde, Costa Rica. The information was gathered in the period of 9 February to 25 July 2004. This research will analyze the internal situation of CoopeSanta Elena as well as the external environment. These two analysis are then combined into a SWOT analysis where will be concluded if the strategy of CoopeSanta Elena fits the external and internal environment and what the real problem of CoopeSanta Elena is. With these conclusions strategic options are formulated and a choice is made with which strategy CoopeSanta Elena can build and sustain a competitive advantage best. When this new strategy is defined new objectives are formulated and with these objectives a design is made for CoopeSanta Elena.
The research approach is an inductive one. My purpose is to get a feel of what is going on in the market, so as to understand better the nature of the problem (Saunders et al 2003, p.87).
Inductive research is defined as a research approach involving the development of a theory as a result of the observation of empirical data (Saunders et al 2003, p.479). A theory is defined as:
formulation regarding the cause and effect relationships between two or more variables, which may or may not be tested (Saunders et al 2003, p.492). In this research I will gather data about the situation and develop a theory about how Café Monteverde is strategically best positioned on the local market. The goal is that they build and sustain a competitive advantage.
The main research strategy that I will use is action research. Action research is a research strategy concerned with the management of a change and involving close collaboration between practioners and researchers. The results flowing from action research should also inform other contexts (Saunders et al 2003, p.472). Further, this research will make use of literature research, survey and case study.
This research is of cross-sectional nature, which means a study of a particular phenomenon (or phenomena) at a particular time (Saunders et al 2003, p.96). I have only limited time in Costa Rica.
The data collection methods that are used are using secondary data, participant observation, and interviews. Participant observation is where the researcher attempts to participate fully in the lives and activities of subjects and thus becomes a member of their group, organization or community (Gill and Johnson 1997; cited by Saunders et al 2003, p.222). I will use participant observation as a tool to learn more about the coffee process and how this process is embedded in the lives of the farmers. The research role I adopt is the ‘observer as participant’ role. By taking this role I am a spectator.
This research is of exploratory nature. Exploratory studies are a valuable means of finding out
‘what is happening to seek new insights; to ask questions and to assess phenomena in a new light’
(Robson 2002; cited by Saunders et al 2003, p.96). To get to these new insights there will also made use of descriptive studies. The object of descriptive research is ´to portray an accurate profile of persons, events or situations (Robson 2002; cited by Saunders et al 2003, p.97). There is also made use of explanatory research, as causal relationships between variables are determined (Saunders et al 2003, p.97), for example in the customer analysis.
To answer the research question this research I will use a strategic marketing model of Alsem (2001) combined with a model for writing a local marketing plan (Mühlbacher et al 1999, p.841), the strategic market management model of Aaker (1996, p21), and the DOV model of De Leeuw (2000) Translated into English this method has the following elements: diagnosis, design, and change.
In the diagnosis stage my objective is to define the strategically best position for Café Monteverde in the local market for building up and sustaining a competitive advantage. I make use of different theories to get a multiform picture of the organization and her environment. To answer my sub questions I will gather data from using the data collection methods described above.
I will search for information about the current situation in annual papers, company statements, presentations which are available in power point format. Further I will search on the internet and conduct interviews with the people concerned. Next to that, I will participate on two coffee tours.
On a coffee tour the coffee process from plant to cup is explained and its makes clear under what conditions the coffee farmers have to live. I visit a coffee plantation, see the selection process of coffee, visit the coffee mill, see how the coffee is packaged, and at last how the coffee is sold. I will see how coffee is embedded in the environment and how important coffee is for the people who live here.
For the customer analysis I made use of questionnaires. Two questionnaires are developed, one for the local population and one for the tourists who visit the Monteverde region.
In the diagnosis stage a vague organizational problem will be transformed to a well described organizational problem (De Leeuw 2000, p.69). To define the problem I will do a SWOT analysis.
Further in the diagnosis stage the best strategy for CoopeSanta Elena to achieve a sustained competitive advantage is defined.
With the possible sustained competitive advantage new objectives for the organization is defined as well as new marketing objectives and strategies, and financial objectives. With the new objectives the new design is made. The design phase will encompass a design for the marketing mix, as well as a design for the structure, primary processes and financial position of CoopeSanta Elena. The design is made according to the principles of the generalized contingency theory (De Leeuw 2000, p.480).
According to the DOV model there should be a chapter about implementation. But because it is difficult to implement the strategy from a distance and it is difficult to evaluate the strategy within the boundaries of this research there is chosen to give only suggestions for implementations.
Eternal Analysis
Competitor Analysis Industry Analysis
Customer Analysis
Internal Analysis
Primary Processes Structure Marketing Mix
Strategy
SWOT analysis
Objectives and strategies
Financial Objectives Marketing objectives and strategies
Strategy Objective Distribution Analysis
Supplier Analysis Financial Posin
3. External Situation
Design Marketing mix decisions
Primary process changes Structure changes
Financial Budgets
Suggestions for implementation Total value new design
The external situation will describe and analyze the environment of CoopeSanta Elena. This will start with an industry analysis, then a customer analysis, a competitor analysis, distributor analysis and a supplier analysis.
3.1 Industry analysis
In this paragraph the answer will be given to the question ‘how is the industry structured?’ An industry analysis has to get insight in:
• The attractiveness of the market
• Opportunities and threats out of the industry
In an industry analysis are every possible factor analyzed which can influence the industry attractiveness. These factors are divided into three groups:
• Macro environment factors
• Aggregated industry factors
• Industry structure factors
3.1.1 Macro environment
A company’s macro-environment is generally defined as the political, legal, economic, ecological, social, cultural and technological dimensions of the universe in which the operating environment of the firm is embedded. Whereas the macro-environment of a company strongly influences the structure and state of its operating environment, individual members of the operating are restricted in their influence on the development of the macro-environment (Mühlbacher et al 1999, p. 50).
The factors used are the DESTEP factors, demographic, economic, social-cultural, technologic, ecologic, and political-legal factors. The full text of the macro environment can be found back in appendix 3, in this section only the most important elements out of the macro environment are mentioned.
Economic
Costa Rica is the most stable and wealthiest country in the region. The economic growth is about 2.2% (2002) of which tourism is the largest growth sector. Due to governmental regulations agriculture is not longer the most important economic factor (minbuza, date 14 April 2004).
The inflation rate in 2002 was 9.8 percent and will remain at this level the next years (websiec, date May 2003; cited by nethemb, date 14 April 2004). The national currency, the Colón, is deliberately overrated and that is the reason that the price level in Costa Rica is relatively high (nethemb, date 14 April 2004).
International Coffee sector
The whole coffee market can be roughly divided into two categories: one is the market for the normal coffee which is plagued by sluggish growth of consumption, is awash in low quality coffee with international prices at record-setting lows. Estimated production for the 2001/2002 season is about 115 million bags, while consumption is predicted at 106 million bags. The international Coffee Organization (ICO) composite price indicator fell from a peak of $1.80/lb in May 1997 to
$0.82 in January 2000 and then to $0.48 in September 2002. The other market is the specialty coffee market industry which is in dire shortage of high quality coffee. In other words, there is a
“coffee crisis” in producing countries due to low international prices, which is affecting the livelihoods of millions of farming households, while specialty roasters scramble to find good quality coffee at any price (Ponte, November 2002).
National Coffee sector
The Costa Rican coffee industry suffers strongly under the low world market prices. Coffee production finds place in small and middle sized corporations. In comparison with other Central American countries the production costs in Costa Rica are relatively high (evd, date 14 April 2004).
In Costa Rica one is thinking how to stimulate the agriculture through diversification and specialization. There are plans to diversify the coffee production into special coffee species and special growing methods, such as high quality and sustainable. In this way Costa Rica hopes to create a niche in the coffee market to meet customers at the high end of the market (nethemb, date 14 April 2004).
In Costa Rica the summer holidays of children are in the picking season of the coffee. Although child labor is forbidden, children do work on the coffee plantations for a couple of hours a day. The objective is to teach the children how to work with the land and to respect the land.
To get a living out of coffee growing a coffee plantation has to have a size of 5 hectares. Most coffee farmers connected with CoopeSanta Elena have only one hectare. They have to develop additional activities to make a living. Farmers with such a small farm do not hire people to help picking the coffee. If their family is big enough they can handle it. The bigger farms, with 5 hectare or more, hire people to work on the land. Most of this people come from Nicaragua. The people from Costa Rica don’t want to work on the land to pick coffee, the economic and social situation of Costa Rica give the people more opportunities to work in activities different than coffee. Another factor is that the people have more opportunities to study. So, each year a lot of Nicaraguans enter the country for a couple of months. The situation in Nicaragua is pushing the people to look for better economic options in Costa Rica. They are cheap labor forces.
Tourism
Tourism is one of the most important and most dynamic sectors of the Costa Rican economy. The sector is by far the most important sector of foreign devices for the country. Costa Rica profiled herself on the area of ecotourism. This is based on the enormous biodiversity in the country in the form of rain forests, coral reefs, volcanoes and a great amount of national parks. The greatest part of the visitors traditional comes from the United States, but since 1999 there is an increasing amount of tourists from South-America (nethemb, date 14 April 2004).
Environment
Costa Rica has a reputation where it goes about protecting the environment. Political desire, legislation, and education has contributed to this. Next to the heavy industry, this topic is high on the agenda of some specific industries. These are for example the coffee- and banana sector, which were traditionally very polluting industries, and tourism (evd, date 14 April 2004). 23.8 percent of the country is protected area, but policies regarding the “brown environment” can be better (minbuza, date 14 April 2004).
Foreign policy
Relation Central America countries: The Central-America region exists from North to South out of Guatemala, El Salvador, Honduras, Nicaragua, and Costa Rica. The five countries together form a market union, the Mercado Común Centroamericano (MCCA), in which countries don’t pay import- and export rights over goods and services that are produced in these countries, with some exceptions. There are common import rights for import out of third countries. This common market in five countries has approximately 33 million inhabitants and the population is growing fast. For the next 25 years a doubling of the population to 65 million people is expected. The region has with an average economic growth of 3.5 percent reached a higher and more constant growth than the South American neighbors. These results are primarily owed to the United States. About 50 percent of the in- and export comes and goes to the United States.
The past ten years a new form of integration is visible which must result in a Custom-Union at the end of December 2003. This Union will have a common agricultural policy, custom administration, external trade policy, and free traffic of goods. This integration is supported by international donors and trade partners. The United States and the European Union even have made this point a condition for a possible free trade agreement with these countries. The high level of regional economic integration is translated into 11 percent increase in the trade between one another in 2001.The molding of the customs-union and the achievement of the free trade agreement with the United States will enable the Central American countries as a favorable production location for the American imports. The Central American area is strong dollarized, more than 60 percent of the balances, debts and transactions are in dollars (nethemb, date 14 April 2004).
3.1.2 Aggregated industry factors
Aggregated market factors are variables that are defined around the total demand of the market (Alsem 2001, p. 51). In this paragraph is defined how attractive the market is: what is the size of the market, is there growth and if there is a dependency on certain seasons.
The geographic market in this research is defined as the Monteverde Region, which consists of the Monteverde District and some other communities. The Monteverde District consists of the villages
Santa Elena, San Luis, Cerro Plano and Monteverde. The history of this region can be found back in appendix 4. The Monteverde Region has a total population between 5,000 and 7,000 people and their number is increasing each year. People are attracted by the good economic climate in Monteverde. The economy is prospering because approximately 200.000 tourists come to Monteverde each year (Camara de turismo de Monteverde, 7 May 2004). The product market is defined as the coffee market. The market size for the export quality coffee is 200,000 persons and the market size for the Consumo Nacional is 6,000 people. Both markets are not very big.
Below there is a table about the development of the total amount of people visiting Costa Rica and Monteverde. The market has grown for the last years, only in 2002 and 2003 there was a negative growth. According to the minister of Tourism, Rodrigo A. Castro Fonseca this is due to the effects of 11 September 2001 (visit Costa Rica, 12 May 2004). The high season is from December to April, when more than 100,000 visitors come each month to Costa Rica. The least tourist come in September, about 60,000 people (Canatur, 12 May 2004, based on figures of ICT). The forecast is that the number of tourists will grow each year. The US magazine “Recommend” held an annual survey among several thousands of travel agencies on tourist destinations. This survey placed Costa Rica as number one tourist destination in Latin America while this country was also awarded a first place in ecotourism and adventure tourism (Visitcostarica, 12 May 2004).
Table 3.1: Development of total amount of people visiting Costa Rica and Monteverde
Year 1997 1998 1999 2000 2001 2002 2003 2004
Total 811,000 943,000 1,032,00
0 1,088,00
0 1,132,00
0 1,113,00
0 1,091,00
0 1,200,00
*
% of last year 16.3 9.4 5.4 4.0 -1.7 -2,0 10
% tourists visit
Monteverde 17.4 16.2 - 16.0 15.7 - - -
Total tourists visit
Monteverde 141,114 152,766 - 174,080 177,724 - - -
* estimation (visitcostarica, 12 May 2004). Source: Canatur, 12 May 2004, based on figures of ICT
The main reason for tourists to visit Monteverde is as a part of their trip through Costa Rica.
Because Costa Rica is recommended for its ecoutourism, a lot of tourists visit Costa Rica because of this. In Monteverde, there is the Monteverde Reserve and the Santa Elena reserve, which have a wide diversity on wildlife.
3.1.3 Industry structure
The industry or operating environment of a firm contains all actors, that is individuals or people representing organizations and institutions, which have aspirations concerning the behavior and performance of the company in doing its business (Mühlbacher et al, p. 50).
In any industry, whether it is domestic or international or produces a product or a service, the rules of competition are embodied in five competitive forces: the entry of new competitors, the threat of substitutes, the bargaining power of suppliers, and the rivalry among the existing competitors. The collective strength of these five competitive forces determines the ability of firms in an industry to earn, on average, rates of return on investment in excess of cost of capital (Porter 1985; cited in de Wit et al 1998, p.345).
Figure 3.1: The Five-Forces Framework Source: Porter 1970; cited in Besanko et al 2000, p. 361 Internal
Rivalry Supplier
Power
Substitutes and Complements
Buyer Power Entry
Internal Rivalry
Internal Rivalry refers to the jockeying for share by firms within a market (Besanko et al 2000, p.
361). On the local market there are several sellers in the market. To compare these brands a classification can be made on quality and on price. The qualification on quality is made after conversations with different employees and the manager. Three levels of quality can be distinguished: the A-quality, which is a specialty coffee market, and a medium quality coffee, which is good quality coffee, but no specialty coffee, and a low quality coffee. On the quality side there are 2 brands of A-quality coffee, 6 brands of medium quality, and 4 brands of low quality coffee.
Another classification can be made on price. The price they charge in Supermercado Esperanza is taken to compare the coffee brands. The price segments made are: below 2,000 colones per kilo, between the 2,000 and the 4,000 colones per kilo, and coffee above 4,000 colones per kilo. On the price side there are 3 brands in the high price segment, 1 brand in the middle price segment and 8 brands in the low price segment.
When comparing the brands in this way a good picture is given about the spread of different types of quality and price. Remarkable is that companies who produce a medium quality coffee, sell it as a high quality coffee, or as a low quality coffee. For customers, not trained in tasting the quality of coffee, the price is an indicator for the quality.
Market structure refers to the number and distribution of firms in a market. A common measure of market structure is the N-firm concentration ratio. This gives the combined market share of the N largest firms in the market (Besanko et al 2000, p. 235). Although not based on facts it is suspected that the three-firm concentration ratio for the tourist market is about 0.90. This indicates that the market structure on this market is an oligopoly. The one-firm concentration ratio for the local market is 0.80. This one firm is Café Monteverde, which is having a monopoly on the local market.
Out of the questionnaire it appears that the price of the Consumo Nacional is relative inelastic and the price of the Export Quality is relative inelastic, although less than the price of the Consumo Nacional. These figures are calculated after asking people if the price does not matter to them. The figures of the Export Quality correspond with research done last year by students of the University of Missouri. They concluded also that the price was inelastic, because price was not rated as an important attribute of coffee.
The industry is growing each year, but although there are more sales each year, production is not growing. More and more farmers stop with growing coffee and go into the tourist business. Soil is very expensive in the Monteverde Region, because of the tourists, and sometimes it is more profitable for farmers to sell land to a hotel or restaurant owner or go into this business themselves. But there are no exact figures about this development available, but the trend is real.
The capacity the coffee selling companies have depends on the farmers willing to sell the coffee to them.
Entry
Entry erodes incumbents’s profits in two ways. First, entrants steal incumbents’ business, essentially dividing up market demand among more sellers. Second, entrants decrease market concentration, thereby heating up internal rivalry and reducing price-cost margins (Besanko et al 2000, p.362).
For coffee companies who want to sell coffee originated from the Monteverde region it is difficult to enter the market. Space in the Monteverde Region is limited and less and less land is devoted for growing coffee. This factor, the scarce amount of good soil, is the only entry barrier.
Substitutes and Complements
Substitutes erode profits in the same way as entrants by stealing business and intensifying internal rivalry. Complements boost the demand for the product in question, thereby enhancing profit opportunities for the industry (Besanko et al 2000, p.363).
More and more farmers go into the tourist business. Most of them who quit sell their land and start a restaurant or hotel on only a small piece of their former land. Tourism in this case is a substitute for the farmers. Some farmers try to combine tourism and coffee growing, by offering agro- tourism. These are small bed and breakfast companies on the farmers’ area. Here tourism can been seen as complementary
Another substitute for farmers is selling their coffee to a neighboring cooperative. Although the cooperatives respect each others area, farmers are free to choose a cooperative. The choice of a cooperative is mostly limited by distance, as most coffee farmers do not have enough money to travel a long way with the coffee cherries after picking and bringing them to the mill. But the farmers on the border of two cooperatives may consider changing.
As mentioned above tourism is a complement of specialty coffees. Most tourists that visit Monteverde want to try a special coffee from the neighborhood and buy some packages for themselves to use at home or give as a gift to friends.
Supplier Power
An assessment of supplier power takes the point of view of a downstream industry and examines the ability of that industry’s upstream input suppliers to negotiate prices that extract industry profits (Besanko et al 2000, p.363).
For the coffee growers, the input of their coffee growing process is land, labor, fertilizers, pesticides, water and sun. The last two are free and most farmers own their own piece of land.
Labor is cheap and consists of the own family and Nicaraguan people. The only suppliers with some power are the cooperatives which pay the farmers in advance to pay the coffee pickers.
For the companies that buy coffee from the farmers the suppliers are the coffee farmers. Although they have some choice among firms to sell to, they do not have a great power to negotiate price.
The fair trade companies pay the fair trade price to the farmers. Other companies, not bound on a minimum price, can pay the farmers the international coffee price. Coffee companies can refuse beans of the farmers if they are according to their opinion below the quality they need.
Cooperatives have only the right to refuse the C-quality, the lowest quality beans.
Buyer Power
Buyer power refers to the ability of individual customers to negotiate purchase prices that extract profits from sellers (Besanko et al 2000, p.364).
The buyer power of the coffee buying companies is discussed as the supplier power for the coffee farmers. The buyers of coffee in the Monteverde Region are tourists, residents of the Monteverde Region and businesses in the Monteverde Region. The first two groups have no buyer power. The last group, local businesses have some power to negotiate about prices. Especially the big supermarket is for Café Monteverde a buyer with much power.
3.1.4 Analysis Coffee market
Out of the data appears that the coffee market in Costa Rica is becoming more open and more specialized. Compared with the developments on the international market this is a good development, because there is a shortage on the specialty coffee industry. Another factor why this development is good for Costa Rica are the high labor and production costs compared to neighboring countries and their disability to compete on price. Because all the factors in Costa Rica are available to produce a high quality coffee it is good to make this a base for competition. But although the government tries to influence this development no figures are found about this trend.
It is not sure how many coffee growers invest in producing a higher quality coffee.
For Café Monteverde this development is good for the name of the country, but the brand is already a high quality coffee and with the stimulation of the government to pursue other companies to produce higher quality coffee, Café Monteverde will face more competition.
It is expected that with the open borders from the Mercado Común Centroamericano more coffee will come into Costa Rica from neighboring countries. This can be normal coffee as well as specialty coffee. This coffee will be cheaper than Costa Rican coffee and the low quality Costa Rican coffee that compete on price will face more competition from this new entrants than the higher quality coffee that compete on quality.
Tourism
Costa Rica has a name on the field of ecotourism and is appealing to a lot of tourists because of that. For CoopeSanta Elena such a name is positive, because they profiled their selves also on this
field. The slogan of the cooperative “grown in harmony with the cloudforest” is appealing for environmental concerned people.
The environmental name together with the good quality coffee produced in Costa Rica and by CoopeSanta Elena makes that tourists are willing to pay a good price for good quality coffee.
The only figures available about the amount of tourists that come to Monteverde is from canatur.
The ‘Camara de Turismo’ in Santa Elena doesn’t know how many tourists come to Monteverde, but they give an estimation. But both sources indicate that the amount of tourists that visit the Monteverde area is about 200,000 this year. Also the reasons of visiting the Monteverde area are not clear. The main reason people come to Monteverde is as part of their trip through Costa Rica, so travel agencies choose Monteverde, although the reason for this is not well defined. But it is quite obvious that the cloudforest of Monteverde, the rainforest of Santa Elena, the sky trek and sky walk events, and the history of the area all have something to do with it.
Local market
It is very hard for farmers to make a living out of growing coffee. The farmers of CoopeSanta Elena are getting the fair trade price for their coffee, but still they have to cultivate 5 hectare or more.
Most farmers of CoopeSanta Elena only have 1 hectare, so they have to develop other activities besides growing coffee. For farmers in Monteverde it is an attractive solution to go into the tourism business.
Tourism forms a paradox for the Monteverde local market. On one hand tourists are important, because they are the buyers of the Export Quality of Café Monteverde. But on the other hand, more and more farmers stop farming because of the high profits that can be made when doing business with tourists (hotel, restaurant). Less and less ground is devoted to growing coffee and more and more for tourism business. That means that there are more opportunities to sell coffee to tourists, but less and less coffee is available to sell.
The local market is not very big. Approximately 16 percent of the tourists that come to Costa Rica visit Monteverde, that are about 200,000 people in 2004 and this amount is increasing each year.
The increase is due to the fact that every year more and more people visit Costa Rica and not due to the fact that Monteverde gets more attractive to tourists. Despite that the total local market, residents plus tourists will grow the coming years, because more tourists will come each year to Monteverde and more and more people are attracted to live and work in the Monteverde Area because of the tourism development.
Competition
Because of this scarcity of land, it will be difficult for new entrants to sell coffee grown in Monteverde. For Café Monteverde that means that their special niche– specialty coffee grown in the Monteverde region – is safe for new entrants. But that does not mean that there is no possibility for new entrants. On the whole coffee market, including the specialty coffee market, new entrants can easily enter the Monteverde market with coffee grown somewhere else.
In the high price segment there are high margins, which is an opportunity for the Export Quality of Café Monteverde, and there are low margins in the low price segment, which is a threat to the Consumo Nacional. Another threat to the profits is the power of Supermercado Esperanza. This supermarket is the main selling point of Consumo Nacional, but they favor Café Rainforest.
When analyzing the internal rivalry by the price segments, one can say that in the high price segment there is fierce competition. Although there is no price competition on this market there is a competition on base of quality and image. On the medium price segment there is no competition and on the low price segment there is fierce competition. New entrants can relatively easy enter the market; the only barrier is the available land to grow coffee in the Monteverde region, or the willingness of the farmers to sell to a new coffee selling company. Tourism is a substitute as well as a complement, so it is at the same time a threat to, as well as a source of profits. The supplier and buyer power is low. Individual buyers do not negotiate about the price, they are willing to pay a higher price for the coffee. Only the bigger buyers, such as supermarkets, restaurants, and hotels bargain about the price.
In the next tables the attractiveness of the local market and tourism market as well as the threats to profits due to competition is summarized.
Table 3.2: Attractiveness of the local market (1= not attractive, 5 = very attractive)
Factor Weight Judgement Score Value
Aggregated Market Factors
Market size 0.10 Small 2 0.20
Market growth 0.10 Saturated 2 0.20
Dependency of season 0.10 Low 4 0.40
Industry Structure Factors
Profit Margin 0.20 Low 1 0.20
Internal Rivalry 0.15 High 2 0.30
Threat of new entrants 0.10 Medium 3 0.30
Threat of Substitutes/ Complements 0.15 Medium 3 0.45
Supplier Power 0.05 Low 4 0.20
Buyer Power 0.05 Low 4 0.20
Total 1 2.45
Table 3.3: Attractiveness of the tourist market (1= not attractive, 5 = very attractive)
Factor Weight Judgement Score Value
Aggregated Market Factors
Market size 0.10 Medium 3 0.30
Market growth 0.10 Growth 3 0.30
Dependency of season 0.10 High 2 0.20
Industry Structure Factors
Profit Margin 0.20 Very High 5 1
Internal Rivalry 0.15 High 3 0.45
Threat of new entrants 0.10 Medium 3 0.30
Threat of Substitutes/ Complements 0.15 Medium 3 0.45
Supplier Power 0.05 Low 4 0.20
Buyer Power 0.05 Low 4 0.20
Total 1 3.40
When comparing the local and the tourist market, the last one has a higher score and is thus a more attractive market. A score of 3.40 with a maximum of five can be called good, especially the factor profit margin scores good. The local market has a total score of 2.45. This is a little bit below the half of the total score. So this market is not as attractive. But most of the competition on the local market can be found in the low price segment. The competition in the middle price segment is almost zero, which would change the scores of the factors profit margin (from 1 to 3) and internal rivalry (from 2 to 4). The total score would then be 3.15 which indicates that the market is attractive.
3.1.5 Conclusion
This paragraph answered the question ‘how is the industry structured?’ To answer this question the industry was divided into three sub areas: macro environment factors, aggregated industry factors and the industry structure factors.
The coffee market in Costa Rica will get more specialized in the future. Café Monteverde will then face more competition on the national/ local market. Also in the lower price segment it is to be expected that there will be more competition. This is because of the open borders in the Mercado Común Centroamericano.
About 200,000 tourists visit Monteverde this year and this amount is rising each year, because of the growing amount of people that visit Costa Rica each year and not because Monteverde gets a more attractive place to visit.
Tourism forms a paradox on the Monteverde market. Café Monteverde sells more and more coffee to tourists on the local market, but less and less coffee is supplied by farmers, because they get more and more into the tourist business.
The tourist market is an attractive market to operate. The profit margin is very good and there is enough growth in the market and a comforting level of internal rivalry to assure that in the future this market is profitable as well.
The local market does not seem so attractive on first sight; a score of 2.45 with a maximum of 5.0 cannot be called good. But when operating on the middle price segment instead of the low price segment the picture changes and the market looks attractive.
3.2 Customer analysis
The central question in this paragraph is the sub question ‘who are the customers?’ Not only is researched who the customers are, but also what they think is important about coffee and what they think about Café Monteverde. An in-depth knowledge of what consumers use a product for may be extremely helpful in designing the customer value creation process. CoopeSanta Elena offers two different qualities of coffee, and each is targeted at a different segment. The first grade coffee is offered to tourists who visit the Monteverde Region, the second grade coffee is offered to the local population.
The result of the questionnaire should be the perception and behaviour of people about Café Monteverde. The ideal theory to use is the “Theory of reasoned action of Aizen and Fishbein (1975) the theory of reasoned action represents a comprehensive integration of attitude components into a structure that is designed to lead to better explanations and better predictions of behaviour (Schiffman and Kanuk, 2000). Both questionnaires are build up according to the components in the model. In addition to this model it is important to know what locals and tourists think as most important elements of drinking coffee and what feelings they have with drinking coffee. To do this the elements, attitude, benefits and values are included. The benefit factor is also used for the model and with these questions also is asked for the importance of the benefit. The questionnaires can be found back in appendix 5.
Figure 3.2: Theory of reasoned action
The methods used and the further analysis can be found back in appendix 6. In this paragraph only the outcomes of the theory of reasoned action are discussed together with a general analysis of both questionnaires. For a more detailed description about the analysis’s I refer to appendix 6.
Attitude toward the behavior
Behavioral Intention
Subjective norm Beliefs that the
behavior leads to certain outcomes
Evaluation of the outcomes
Beliefs that specific referents think that one should (not) perform the behavior
Motivation to comply with the specific
referents
Behavior
2 1 0 -1 -2 3.2.1 Local Questionnaire
The behavioural intention is build up with two questions in the questionnaire: the probability that one advises Café Monteverde to friends and the probability that one buys Café Monteverde within one year. The Attitude and the Subjective norm both influence the probability that one advises Café Monteverde to friends. The attitude influences the probability to buy Café Monteverde within one year more than the subjective norm. When combining the attitude and the subjective norm it can be concluded that 34.4 percent of the variation of the probability to advise Café Monteverde to friends and 20.1 percent of the probability to buy Café Monteverde can be explained by the two factors.
From the buying decisions the probability to buy has the most influence on the buying decision. In total 17.4 percent of the variation of the buying decision can be explained by the probability to advise Café Monteverde to friends and the probability of buying Café Monteverde within one year.
General Remarks
In the questionnaire for local people were asked about different characteristics of Café Monteverde and about the importance they attach to it. These are objective characteristics, a coffee possesses such elements or it does not. Only the price does not belong in this category, but asking about how good the price of Café Monteverde is not possible as well. The score ranges from 2 (totally agree) until -2 (totally disagree)
Score
1.71 1.45
1.60 -0.76
Fair Trade Pure
Organic Price CM too high
Organic and pure are the two most important characteristics of coffee for local people. In these two characteristics there is a significant difference between buyers and not buyers of Café Monteverde.
Buyers of Café Monteverde attach more importance to the two factors. The price is definitely not perceived as too high, as more than 60 percent disagreed with the proposition that the price of Café Monteverde is too high.
The local people were also asked about their opinion about Café Monteverde and if Café Monteverde lives up to the importance people attach to certain characteristics of coffee. These characteristics are subjective, because in opinion about these characteristics can differ between two persons. Taste, for example is perceived different by everybody.
Factor
• Experience
• Taste
• Quality
• Aroma
• Soc. impact
• Env. impact
Score Café Monteverde Importance for coffee
On all items Café Monteverde scores well, the total experience of people with Café Monteverde scores an average of 1.71. And compared to the importance attached to the factors taste and aroma score good. Quality scores a little bit less, the quality is perceived as good, but compared to the importance the quality of Café Monteverde doesn’t live up to the expectations. The Social and Environmental impact of Café Monteverde scores not as good as the other factors. On an average the factors score good, but compared to the other factors and the importance attached to those two items not.
The probability that the questioned person or their family will buy Café Monteverde within one year is very high. More than 80 percent answered this question with ‘very high’ and almost 13 percent with ‘high’. For almost 78 percent of the local population Café Monteverde is the first choice coffee and for more than 12 percent it is the second choice. More than 10 percent of the questioned
2 1 0 -1 -2
people were not willing to choose a second brand coffee, because the only brand they bought is Café Monteverde.
About the subjective norm can be said that the impact of the social environment on the decision to buy Café Monteverde is large to very large and that the social environment of most people would react positive on the intention to buy Café Monteverde.
Most of the coffee is bought in Supermercado Esperanza (more than 55 percent) and in the Supermarket of CoopeSanta Elena (12 percent). The rest of the coffee is bought at different places, mostly in pulperias and mini-supers. At the super of CoopeSanta Elena only Café Monteverde is available.
3.2.2 Analysis Local Questionnaire
The attitude towards coffee and the subjective norm plays a role in the buying decision of the local people in Monteverde. Although a large part of the variation in the buying decision cannot be explained by the behavioural intention it is still important to know how the attitude and the subjective norm are for the local people in the Monteverde Region.
The attitude of local people towards Café Monteverde is good. The importance people attach to the objective characteristics are favorable for CoopeSanta Elena. Although Café Monteverde is not organic, it has more organic features than competitors of other brands of a Consumo Nacional. And the price is perceived as definitely as too high. Although this does not indicate that the price is too low at the moment, it can be assumed that if the price is raised not a lot of customers are lost.
Other characteristics of Café Monteverde that are judged are the subjective characteristics. For Café Monteverde these outcomes mean that the taste and aroma of the coffee is good, but that the quality can be better. Also the social and environmental impact of Café Monteverde to the local environment can be better. This can have several causes: growing coffee is never good for the environment, but is good for the economic development. One has to seek for the best solution to combine those two, but when answering the question about the natural environment if one answers objectively the answer will be negative. Another reason can be that CoopeSanta Elena isn’t making enough effort for the social and natural environment, and the last possibility is that CoopeSanta Elena is doing enough for the social and local environment, but there isn’t enough information about what CoopeSanta Elena does exactly.
A very high percentage indicates that Café Monteverde is their first choice coffee. Because of lacking market information, the amount of people indicating that Café Monteverde is their first choice coffee is taken as a figure for the market share of Café Monteverde on the local market for the Consumo Nacional. This is almost 80 percent.
Most of the coffee is bought in Supermercado Esperanza and then in the little super of CoopeSanta Elena. In this last location only Café Monteverde is available. Supermercado Esperanza is very important when actions are undertaken to communicate with the (potential) customers. The relation with the Supermercado has to be kept good. A refusal like last year of Supermercado Esperanza to sell Café Monteverde is a missing link to (potential) customers. But out of internal documents it appeared that buyers of Café Monteverde bought Café Monteverde that time elsewhere. So as the relation is important, not too many sacrifices should be made as CoopeSanta Elena is in a strong position.
Although there were no questions asked about loyalty, people spontaneous indicated that Café Monteverde is the only brand they buy. They rather do not buy coffee or buy it at another time or place than buying another brand. There can be assumed that more than the 10 percent that already indicated that they only bought Café Monteverde are loyal customers, but that other when there was asked about a second brand properly answered the question.
3.2.3 Tourist Questionnaire
The subjective norm influences the behavioural intention most. 26.9 percent of the variation van be explained by the two factors. From the buying decision only 5.5% of the variation can be explained by the behavioural intention. A lot of variation is caused by other factors.
2 1 0 -1 -2 General Remarks
Most of the tourists who visit the coffee shop come from the United States (73 percent). 18 Percent comes from Europe and the rest come mainly from Central America. 64 percent visit Monteverde as part of their trip through Costa Rica. Nature only accounts for 14 percent.
In the questionnaire people were asked to describe their perception of Café Monteverde in a couple of words. The main items mentioned are:
• Rich
• Good Taste
• Good Coffee
• Natural
• Aromatic
Al the answers given are very positive and refer to the taste or quality of the coffee, the social or natural environment of Café Monteverde or other words, such as mysterious, warm and amazing.
In the next figure an overview is given how people get acquaintance with Café Monteverde. It appears that a guide (23%) plays a very big role. Including the guide it can be stated that word of mouth advertisement is most important at the moment for Café Monteverde (54%) Advertisements only account for a small percentage (7%). Another remarkable fact is that a lot of people didn’t know the brand until they entered the coffee shop (21%). This high percentage corresponds with the outcomes of a research done in the summer of 2003 by students of the University of Missouri.
They concluded that 62 percent of the people they interviewed at the Sky Trek/Sky Walk and the Monteverde Cloud Forest Reserve never heard of the brand Café Monteverde.
Figure 3.3: The way people get acquaintance with Café Monteverde
Also tourists were asked about their opinion about the objective characteristics of coffee. Totally agree is scored with two points and totally disagree with -2 points.
Score
1.09 0.98
0.61 0.27 -0.63 -0.85
Fair Trade 1.09 Pure 0.98
Organic 0.61 Price CM too high -0.63 Low Caffeine -0.85 Shade Grown 0.27
Fair Trade and Pure coffee are the most important characteristics of coffee for tourists. Organic and Shade Grown is important as well, although for shade grown there are only 128 valid cases were they others all have about 140 and of these 128, 74 people dotted the neutral box. A low level of
How get acquintance with Cafe Monteverde 7%
23%
13%
11% 7%
21%
3%
15% Other tourists
Guide
Family or friends who visited Costa Rica
Advertisement in Monteverde Restaurant, cafe or hotel When I entered this coffee shop in the shelves of a shop other
