Pearson Education



Video Title: Gaviña Gourmet Coffee: Marketing Channels and Supply Chain

Run Time: 7:35

Classroom Application: Instructors will find this video useful in the study of marketing channels. Gaviña Gourmet Coffee serves as a good case study for this topic because they faced the challenge of how to grow in an industry dominated by price competition, and Gaviña Gourmet Coffee’s way of meeting this challenge was to grow one channel at a time. Providing students with such knowledge can help them to better understand the role of marketing channels and a company’s supply chain.

Synopsis

Gaviña Gourmet Coffee was founded in 1967 and is based in Los Angeles, California. It is family-owned and operated by the Gaviña family, whose ancestors have worked in the coffee industry for over 150 years. As a relatively small company, Gaviña Gourmet Coffee faces the challenge of growing in an industry dominated by price competition. The company meets this challenge by focusing on growing one channel at a time. The Gaviña family’s hope for the future is that a passion for their product and hard work will continue to grow the brand and allow them to pass the company on to future generations of the family.

Discussion Questions

1. Apply the concept of the supply chain to Gaviña.

As a manufacturer, Gaviña relies on suppliers of its core ingredients to produce quality products at prices that won’t break its bank. What this video doesn’t show is the efforts that Gaviña has gone to in order to create a reliable supply chain for high-quality coffee beans that are rooted in fair trade practices. What the video does show is just how much the fluctuating price of the coffee commodity affects the way it does business.

2. Sketch out as many consumer and business channels for Gaviña as you can. How does each of these channels meet distinct customer needs?

It should be noted that all of Gaviña’s channels ultimately end with the consumer. However, there are many end-users who do not realize that they are drinking a Gaviña product. This is because they are purchasing the coffee by the cup through one of Gaviña’s institutional customers.

Consumer (retail) channels

Gaviña ( Costco ( end-user

Gaviña ( Kroger (and all other grocery stores) ( end-user

Gaviña ( Liborios (chain catering to Hispanics) ( end-user

Institutional (wholesale) channels

Gaviña ( McDonald’s ( end-user

Gaviña ( Donut shops (and other small food service accounts) ( end-user

Gaviña ( Wholesaler ( Donut shops (and other food service accounts) ( end-user

Gaviña ( Wholesaler ( Office coffee services ( end-user

3. How has Gaviña’s distribution strategy affected its product mix?

The video clearly identifies various channels that Gaviña uses to distribute its product. This multi-channel strategy has had a big impact on how Gaviña’s product mix has evolved. For example, it develops and distributes private label goods for retailers like McDonald’s and small shops. It has its core brand, Don Francisco, that it distributes through grocery stores. It developed Don Francisco Family Reserve for that channel to answer the demand for a premium coffee customer can brew at home. As it entered the club store channel with Costco, it developed José, a proprietary premium brand for that retailer. For the channels that distribute to ethnic customers, the brand Café la Llave is the product.

Quiz

1. What advantage does Gaviña Gourmet Coffee have over larger competitors?

a. a faster production process

b. more professional advertising

c. higher quality coffees

d. better distribution channels

Answer: c

Explanation: Even though Gaviña Gourmet Coffee faces tough competition from large competitors, the company’s advantage is their focus on customer satisfaction. To please their customers, the Gaviña family focuses on producing the highest quality coffees possible. It is their belief that larger companies focus more on profit and often sacrifice product quality to increase their profits.

2. Which of the following statements best describes Gaviña Gourmet Coffee company’s vision for the future?

a. to double profits every 5 years

b. to increase production to 80 million pounds per year

c. to create more contracts with food service organizations

d. to hand the company off to a fifth generation of the family

Answer: d

Explanation: The vision for the future at the Gaviña Gourmet Coffee company is to continue a tradition of passion and hard work. The owners wish to continue to grow the business and the brand and be able to pass the company on to a fifth generation of the Gaviña family.

3. Which of the following most accurately describes the greatest challenge facing Gaviña Gourmet Coffee?

a. They must determine how to grow in an industry dominated by price competition.

b. They are too dependent upon a single customer segment.

c. Customers have a negative perception of the company’s brand.

d. They are too dependent upon a small group of coffee growers.

Answer: a

Explanation: The main challenge facing Gaviña Gourmet Coffee is the problem of how to grow a relatively small company in an industry dominated by price competition. The price of coffee has more than doubled over the past year. Many roasters have started mixing inferior coffees into their blends to compensate for the price increase. Gaviña Gourmet Coffee prides itself on the company’s quality product and refuses to use such tactics. This, however, makes it difficult to compete with larger companies and grow the business.

4. Which of the following best describes the growth of Gaviña Gourmet Coffee?

a. Gaviña Gourmet Coffee grows by focusing on profits and trying to lower production costs.

b. Gaviña Gourmet Coffee grows by focusing on retail customers only.

c. Gaviña Gourmet Coffee grows by focusing on channel relationships and trying to improve one channel at a time.

d. Gaviña Gourmet Coffee grows by focusing on wholesale customers only.

Answer: c

Explanation: Gaviña Gourmet Coffee focuses on growing one channel at a time. The company chose to focus on building relationships with small, independent retailers, regional supermarket chains, club stores, and food service organizations one at a time. By focusing on each one separately, the company was able to develop ideas that would help each channel grow. And in this way, the entire company has grown continuously and managed to compete with much larger competitors.

5. Which of the following has helped Gaviña Gourmet Coffee to succeed?

a. focusing only on the largest national supermarket chains

b. selling in company-owned retail stores

c. doing business with companies of all sizes from small retailers to national chains

d. spending significant amounts of money to inform coffee drinkers of the superiority of the Gaviña brands

Answer: c

Explanation: Gaviña Gourmet Coffee does business with small, independent retailers, regional supermarket chains, club stores, and food service organizations. Developing a relationship with those in each marketing channel has helped Gaviña Gourmet Coffee to succeed.

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