Silvera and Sons
Strategy and Implementation Summary
Silvera & Sons strategy is to expand production capabilities in order to fulfill the requests of importers with whom we currently deal for larger orders which we are unable to currently fulfill. In addition Silvera & Sons seeks to establish additional contracts with importers on the West Coast of the United States and increase the volume of green coffee sold on the Brazilian market. We intend to first maximize quantity of coffee sold within existing channels and second, establish additional accounts through targeted marketing efforts.
5.1 Competitive Edge
Silvera & Sons competitive edge comes from the advantage of having established relationships with American importers, and Brazilian coffee growers, green coffee brokers and wholesalers. Silvera & Sons has received affirmation of the demand for their product in the form of requests from importers for larger product shipments. Ours is a superior product offering because of the larger average size of the bean and because we purchase from growers who rely on the use of chemicals and pesticides less than two percent of the time. In addition, prompt preparation and shipment provides importers with a product that is up to one month fresher than beans sold by many exporters.
5.2 Strategy Pyramid
Our main strategy is to communicate the unique and desired attributes of our coffee to larger segments of the American and Brazilian markets. We sell a superior product, yet one that can be considered a commodity. It is therefore important that we effectively communicate the unique aspects which make it ideally suited for a niche market.
The unique aspects of our products include superior product selection and preparation, quality assurance, and efficient distribution. These are things we have done since we started doing business. The tactics we will use to communicate these strengths include, personal selling, targeted print advertising, and improved communication capabilities via information system improvements and a sophisticated website.
As tactics below the pyramid, we have identified three specialty publication in the United States and two in Brazil in which we will run print ads. We also plan to increase personal selling efforts to additional American importers. Part of the personal selling will include invitations to importers to visit our facilities, at our expense.
5.3 Marketing Strategy
Silvera & Sons marketing strategy will include the use of targeted print media advertising and direct selling to importers in the United States who provide green coffee to specialty roasters. We will capitalize on existing relationships with importers who have stated their willingness to contact West Coast affiliates and recommend Silvera & Sons coffee. We have positioned ourselves as a differentiated provider of the highest quality Arabica beans. The primary goal of all marketing efforts will be to communicate this to existing and potential customers.
5.3.1 Promotion Strategy
Relationships are key to success in the export business. Importers in Florida have on several occasions visited the Silvera & Sons facility, family home, and farms from which coffee is purchased. Additional accounts and contacts with West Coast importers have all been established and maintained through personal contact. Personal selling will remain our most important means of promotion. Marco Silvera Jr. will continue to lead this effort. In addition to personal selling Silvera & Sons has identified several specialty publications within which print advertisements will run. Direct mail, in the form of personal letters will also be used to communicate with existing and potential clients. Our budget for promotion activities is as follows:
- Personal Selling which includes phone expenses, travel for Silvera & Sons employees and for importers who we invite to Brazil: ($BRL) 35,000 annually.
- Print Advertising in three specialty publications and direct mail: ($BRL) 12,000 monthly.
- World Wide Web presence: ($BRL) 125,000 to produce a new site and $2,500 annually to maintain the site.
5.3.2 Distribution Strategy
Distribution is one of the greatest challenges faced by Silvera & Sons. The distribution system of Brazil is largely outdated and inefficient. Moreover, taxes, specifically excise taxes are high. Distribution costs for internal sales are absorbed by the customer but distribution costs for exports are absorbed by us. Increasing the volume of our exports makes us eligible to receive reduced fees and helps ensure that trucks and rail cars are running at maximum capacity.
5.3.3 Marketing Programs
Our most important marketing program is an increase in personal selling combined with targeted direct mail and print advertising. Marco Silvera Jr. will be responsible, with a budget of ($BRL) 35,000 and a milestone date of May 30, 1999. The program is intended to establish contractual agreements with 10 additional importers, increase brand awareness of our product in the United States, and communicate our position as a provider of the highest quality green Arabica beans on the market.
Another key marketing program is the development of a sophisticated Website. The goal of this program is to increase our presence on the world wide web and provide additional means of communication and customer data collection. The website will cost ($BRL) 125,000.
5.3.4 Positioning Statement
For American importers of Brazilian coffee who use our coffee to supply specialty roasters, Silvera & Sons coffee beans are the highest quality and largest beans available. Unlike many exporters, our beans exceed the minimum acceptable quality standards and are shipped within one week of preparation to ensure the largest and freshest beans on the market. Our products are perfectly suited for the specialty roasting market which constantly strives to offer award winning coffee.
5.3.5 Pricing Strategy
Because Silvera & Sons adheres to higher quality standards, the price of our coffee is slightly higher (four to nine percent) than the market average. The import market largely determines the price of imported coffee in the United States. Beans that do not meet Silvera & Sons quality standards are resold on the Brazilian market at the current market price. Green coffee, on the import market, now sells for US$ 213.56/60kg bag. According to Silvera & Sons pricing strategy, Silvera & Sons coffee would sell for approximately US$ 224/60kg bag. Importers have to this point been willing to pay the additional cost.
5.4 Sales Strategy
Silvera & Sons strategy focuses first on meeting the increased demand from importers with whom we have established relationships for larger orders. These importers are critical to our ability to acquire additional accounts on both the East and West coasts of the United States without having to spend a great deal on sales efforts. Secondly we will focus on increasing the volume, while maintaining the percentage of sales, of beans sold to the internal Brazilian market. When we have reached maximum sales to existing channels we can then shift the majority of our focus to securing additional import accounts.
5.4.1 Sales Forecast
The following chart and table show our present sales forecast. We project healthy growth in sales in 1999, a slightly smaller increase again in 2000, and reach maximum for production capacity in 2001 representing a large growth over the previous year.
|Import and Export||100,200||120,000||160,000|
|Total Unit Sales||100,200||120,000||160,000|
|Import and Export||$262.08||$275.18||$288.29|
|Import and Export||$26,260,416||$33,021,600||$46,126,400|
|Direct Unit Costs||1999||2000||2001|
|Import and Export||$212.00||$222.60||$233.20|
|Direct Cost of Sales|
|Import and Export||$21,242,400||$26,712,000||$37,312,000|
|Subtotal Direct Cost of Sales||$21,242,400||$26,712,000||$37,312,000|
5.4.2 Sales Programs
Personal selling: Through personal contact we need to confirm in writing orders for larger quantities of our product from American importers and Brazilian wholesalers. In addition we need to establish sales agreements with at least six, possibly ten, additional American importers. Marco Silvera Jr. is responsible and the due date is May 30, with a budget of ($BRL) 24,000.
5.5 Strategic Alliances
Our most valued alliances are those we have developed with American importers. They have the ability and willingness to purchase larger quantities of our products and recommend us to other importers. Additional alliances with trucking contractors and the Porto de Santos Cafe Commission are currently established.
The accompanying table shows specific milestones, with responsibilities assigned, dates, and budgets. The milestones represented in this plan are those which we have determined to be the most important.
|Milestone||Start Date||End Date||Budget||Manager||Department|
|Secure Financing||1/1/1999||2/1/1999||$12,000||M. Silvera Sr.||Finance|
|Establish Import Accounts||1/1/1999||5/1/1999||$18,000||M. Silvera Jr.||Sales & Marketing|
|Increase Production||1/1/1999||9/1/1999||$18,000||A Silvera||Production & Shipping|
|Hire Intl. Legal & Finance Specialist||1/1/2000||3/1/2000||$35,000||TBA||Administration|