Market Analysis

Market Analysis Bubble tea is specialist drink increasingly being offered in cafes, coffees shops and bars. It originates from Asia and is made up  of hot or cold tea, milk,  sugar and giant black  tapioca balls. Ice is then added and the drink shaken to create the bubble effect. Bubbletea is often referred to as pearl shake, tapioca ball drink; boba ice tea and bubble drink  among other things. Owing to their influences, bubble tea  cafes are often Asian-themed in decor and may alsosell Asian snacks and food.They are often situated in fashionable areas of cities,  populated by urban professionals with high disposable incomes and an interest inalternative eating and drinking venues. Bubble tea is a tea beverage that originated in Taiwan in the 1980s. The term â€Å"bubble†refers to the tapioca balls in the drink. These chewy tapioca balls, or â€Å"pearls,†Ã‚  areconsumed along with the beverage through a wide straw. Bubble tea is especially popular  in ma ny East Asian and Southeast Asian regions such as Taiwan, Brunei, China(including Hong Kong and Macau), Malaysia, the Philippines, Singapore, South Korea,Thailand, Indonesia, Vietnam and  Australia.Bubble tea is a mixture of iced or hot sweetened tea, milk, and often other flavorings. Thedistinctive characteristics of bubble tea are the black gummy balls made of tapioca (or,more commonly in East Asia, yam starch), called â€Å"pearls† or â€Å"boba† or balls that sit at the  bottom of the cup. The pearls are larger than those found in tapioca pudding, with adiameter of at least 6 millimeters, but smaller ones are occasionally used. They aregenerally translucent brown with a darker brown center, although pearls of other colors or  Ã¢â‚¬Ëœjelly cubes' have also recently become available.The original bubble tea consisted of a hot Taiwanese black tea, tapioca pearls, condensedmilk, and honey. As this drink became more popular, variations were created. Initiallyiced v ersions with a hint of peach or plum flavoring began to appear, and then more fruitflavors were added until, in some  variations, the tea was removed entirely in favor of  realfruits. Today you can find shops entirely devoted  to bubble tea, similar to bubble teacafes of the early 1990s. They usually contain colored pearls that are chosen  to matchwhatever fruit juice is used, in addition to  brightly colored oversize straws for sucking upthe pearls.Bubble tea is generally split into two types: fruit-flavored teas, and milk teas. Milk teasmay use dairy or non-dairy creamers. The mixtures that make up  bubble tea vary. Several examples of flavors are strawberry,  passion fruit, mango, chocolate, and coconut, and may be added in the form of powder,fruit juice, pulp, or syrup to hot black or green tea, which is shaken in a cocktail shaker or  mixed in a blender  with ice until chilled. The mixture is usually combined with milk  andcooked tapioca pearls.Bubble tea ba rs often serve bubble tea using a machine to seal the top of the cup with  plastic cellophane. This allows the tea to be shaken in the serving cup. The cellophane isthen pierced with a straw. Other  cafes use plastic dome-shaped lids. Even fruit slushiesand smoothies can have boba added to the drinks. These tapioca pearls are made mostly of tapioca starch, which comes from the tapioca, or  Ã‚  bitter-cassava plant. In other parts of the world, the  bitter-cassava plant may be calledmanioca or yuca. Cassava is native to South America, and was introduced to Asia in the1800s.The balls are prepared  by boiling for 25 minutes, until they are cooked thoroughly  but have not lost pliancy, and then cooled for 25 minutes. After cooking they last about 7hours. The pearls have  little taste, and are usually soaked in sugar or honey solutions. There are two shops that claim to be the first creator of Bubble Tea. One is Liu Han Chiewho worked in Chun Shui Tang teahouse Taichung Cit y, Taiwan in the early 1980s, andexperimented with cold milk tea by  adding fruit, syrup, candied yams, and tapioca  balls. Although the drink was not popular at first, a Japanese television show generated  interestamong businessmen.The drink became well-known in most parts of East and SoutheastAsia during the 1990s. An alternative origin is the Hanlin Teahouse  in Tainan City, Taiwan, owned by Tu  TsongHe Hanlin Bubble tea is made by adding traditional white fenyuan which have anappearance of pearls, supposedly resulting in the  so-called â€Å"pearl tea. † Shortly after,Hanlin changed the white fenyuan to the black, as it is today. In the late 1990s, bubble tea began to gain popularity in the major North American citieswith large Asian populations, especially those on the  West Coast and East Coast and inTexas.The trend in the  United States started by Lollicup in the city of San  Gabriel,California and quickly spread throughout Southern California. The be verage has receivedmuch attention from mainstream American media, including  covers on National PublicRadio show Morning Edition and  the Los Angeles Times. Bubble tea  has spreadinternationally through Chinatowns and other overseas Asian communities. In the U. S. , major chains such as Boba Bee in Chicago are expanding into suburbanareas, particularly those with large Asian populations. Bubble tea  can also be found inmajor European cities such as London  and Paris.Bubble tea is also gaining  in popularityin Canada, particularly in and around  the cities of Vancouver, British Columbia; Toronto,Ontario; and Montreal, Quebec where there are large Asian-Canadian communities. It isalso gaining popularity in Australia, especially in Sydney, Brisbane and  Melbournewhere there are also high concentrations of Asian immigrants and descendants. Capital Bubble Tea Cafe's focus is on meeting the demand of a regular local residentcustomer base, as well as a  significant level of tourist traffic from nearby highwaysMarket Segmentation Customers are likely to be: * Young professionals may consider bubble tea a  novelty and luxury alternative tothe commuter, lunchtime or after-work coffee. * Although it contains sugar, bubble tea  is a much healthier alternative tocarbonated fizzy drinks and may therefore appeal to health conscious consumers. * It is popular for people to hold meetings such as craft circles and book groups inlocal cafes and coffee shops and a bubble tea cafe could appeal as an unusualalternative. Due to its fairly new status, bubble tea has a certain novelty value that mightappeal to people looking  to try different tastes and flavors. * Office workers looking for a quick snack and drink or a relaxing meeting place. Travelers will be attracted to bubble tea  cafes situated at transport locations suchas railway stations or airports; these can provide a useful way of relaxing beforeor during journeys. Increasingly bubble tea cafes or outlets are being located attransport terminals servicing clients throughout journeys, even short distance commutes.Capital Bubble Tea Cafe  will focus on two different market segments: Commuters andCaptive Consumers. Commuters are defined as any one  or more individuals in a motorized vehicle  travelingfrom point â€Å"A† to point â€Å"B. †Ã‚  Capital Bubble Tea Cafe greatest concentration  will be oncommuters heading to or from work, or those out on their lunch break. Captive Consumers would include those who are tethered to a campus environment, or ina restricted entry environment that does not allow free movement to and from.Examples would include high school and college campuses, where  there is limited time  between classes, and corporate campuses  where the same time constraints are involved,  but regarding meetings and project deadlines, and special events; such as  carnivals, fairsor festivals–where there is an admission price to ente r the  gate, but exiting would meananother admission fee, or where refreshments are an  integral part of the festivities. Capital Bubble Tea Cafe focuses on the middle and upper-income markets. These marketsegments consume the majority of bubble tea. Local ResidentsCapital Bubble Tea Cafe  wants to establish a large regular customer base. This willestablish a healthy, consistent revenue base to  ensure stability of the business. Tourists Tourist traffic comprises approximately 35% of the revenues. High visibility andcompetitive products and service are critical to  capture this segment of the market. Target Market Segment Strategy The dominant target market for Capital Bubble Tea Cafe is a regular  stream of localresidents. Personal and expedient customer service at  a competitive price is key tomaintaining the local market share of this target market.Market Needs Because Capital City has a warm  climate for eight months out of the year, bubble  tea  products are very much in demand. During the remaining four months of the year,  warmdrinks are in significantly higher demand, along with a slower but consistent demand for  Ã‚  bakery products. Much of the  day's activity occurs at lunchtime, with a relatively steadyflow for the remainder of the day. Service Business Analysis The retail bubble tea industry in the  U. S. has recently experienced rapid growth. Theclimate in Capital City stimulates consumption of cold beverages throughout the year.Bubble tea drinkers in the U. S. are finicky about the quality of beverages  offered at thenumerous cafes across the region. Despite low competition in the immediate area, Capital Bubble Tea Cafe will positionitself as a place where customers can  enjoy a cup of delicious bubble  tea with a fresh  pastry in a relaxing environment. Competition and Buying Patterns Competition in the local area is somewhat  sparse and does not provide nearly the  level of  Ã‚  product quality and cus tomer service as Capital Bubble Tea Cafe. Local customers arelooking for a high quality product in a relaxing atmosphere.They desire a  unique, classyexperience. In addition to sales through company operated retail stores, leading competitors selldrinks through other channels of distribution (specialty operations). Larger chains varytheir product mix depending upon the size of each store and its location. Larger stores carry a broad selection of drinks in  various sizes and types of packaging, aswell as accessories such as storage containers, travel tumblers and  mugs. Smaller storesand kiosks typically sell a limited line of drinks and,  maybe, a few accessories such astravel tumblers and logo mugs.Technologically savvy competitors make fresh bubble tea and bubble tea-related productsconveniently available via mail order and  online. Additionally, a few larger competitorshave made mail order catalogs offering bubble tea, certain food items, and select bubbletea-making equ ipment and accessories, available. Websites offering online stores that allow customers to browse for and purchase  bubbletea, gifts, and other items via the Internet have become more commonplace as well Strategy and Implementation Bubble tea cafes shops are heavily reliant on impulse buying and passing trade.Thereforethey will benefit from a strong image that is attractive to  clearly identifiable types of  customer. They are at the forefront of ‘lifestyle’ branding and as such  reflect the changes in theUS’s demographic make-up. Issues to consider when developing a bubble tea cafes client base include: * Visibility – location will be vital. However, high street sites may be difficult toobtain due to high rent  and intense competition, particularly from major chains. * Ease of access – other locations to consider includes those close to transport, e. g. near railway and bus stations. Shop design – bubble tea cafes usually cater for both the leisure and takeawaymarket by having separate areas, e. g. a lounge area and a walk-in area. Manychains have been modeled on specific themes such as Asian style. However, anindependent bubble tea cafe  may need to differentiate itself from the large chains. Advertising in a variety of local publications will increase knowledge  of your  Ã‚  bubble tea cafe and  a favorable review in the local  media will increase interest. Consideration should be given to additional activities that may attract custom.For  example displaying art works of local artists or students may bring in customers. Live music could increase interest or hosting ‘reading  group’ meetings (anincreasingly popular leisure activity) could bring in additional and regular custom. * Promotional offers – most bubble tea cafes attract younger customers, therefore  promoting the business to older age groups may be worthwhile or offering dealssuch as ‘bubble tea and†¦ ’ deals. * Good quality food and drink will be  an essential element as the market is highly competitive. If other drinks are served this could be  promoted along with any other unusual elements of the business. * Word of mouth recommendation will also be  important therefore it is important that you offer good customer service and  staff are aware of this requirement. Capital Bubble Tea Cafe  will succeed by offering consumer’s high quality bubble tea, as well as bakery products with personal service at  a competitive price. Competitive Edge Capital Bubble Tea Cafe's competitive edge  is the relatively low level of competition in the local area in this particular niche.Capital Bubble Tea Cafe  will involve the customers in community support efforts byexplaining that a portion of their purchase price will be donated to a charity of their  choosing. In so doing, Capital Bubble Tea Cafe has: * Provided a customer with a quality product  at a competiti ve price. * Provided the customer with a more convenient method for obtaining their desired  product. * Demonstrated how Capital Bubble Tea Cafe  appreciates their loyalty and  patronage by donating money to their personal cause. Marketing Strategy CapitalBubble Tea Cafe  will be implementing a low cost advertising/promotioncampaign which could involve drive-time radio, but not much more. Capital Bubble Tea Cafe  will rely on building relationships with schools, charities and corporations to provide significant free publicity because of its community support  program. By giving charitable contributions to these institutions, they will get the word out to their students/faculty/employees/partners about Capital Bubble Tea Cafe. Word of mouth has always proven  to be the greatest advertising program a company can instill.In addition, the media will be more than willing to promote the charitable aspectsof Capital Bubble Tea Cafe  and provide the opportunity for more expo sure  every timeCapital Bubble Tea Cafe writes a check to another organization. Pricing StrategyCapital Bubble Tea Cafe  pricing will be comparable to the competition, but with thevalue-added feature of immediate convenience. Promotion StrategyThe long-range goal is to  gain enough visibility to leverage the product  line into other  regions and generate inquiries from potential inventors.To  do that, Capital Bubble TeaCafe needs: * Public relations services at $1,000 per month  for the next year intended togenerate awareness of editors and product  information insertions, reviews, etc. Itis anticipated that the school fundraising program will generate a fair amount of  Ã‚  publicity on its own and will, perhaps, minimize–or even  eliminate–the need for  a publicist. * Advertising at $1,000 per month concentrating on drive time radio. CapitalBubble Tea Cafe will experiment with different stations, keeping  careful track of  results.As with the school fundraising program, Capital Bubble Tea  Cafe expects the facilities and signage to be a  substantial portion of our advertising. However,in the start-up phase, Capital Bubble Tea Cafe needs to let people know where tolook for the facilities. Marketing ProgramsDistinctive Logo:Capital Bubble Tea Cafe  wants to touch every customer every day. That  is why the use of  the term â€Å"Come Again† with a  smiling logo lends itself to being the corporate identifier. Distinctive Buildings:Capital Bubble Tea Cafe  has worked closely with the manufacturer to make  the buildingdistinctive, so that it is easy to recognize, and  functional.Advertising and Promotion:In the first year, Capital Bubble Tea Cafe plans to spend $20,000 on advertising and  promotion, with the program beginning in **. This would not be considered a seriousadvertising budget for any business, but Capital Bubble Tea Cafe feels the exposure willcome from publicity and promotion, so most of  the funds will be spent on a  good  publicist who will get the word out  about the charitable contribution program and  how itworks in conjunction with the website.Capital Bubble Tea Cafe  also believes that word-of-mouth advertising and free beveragecoupons will be better ways to drive  people to the first and second  locations. In the second year, Capital Bubble Tea Cafe is increasing the budget to $40,000, since itwill need to promote several locations, with particular emphasis on announcing theseopenings and all the other locations. Capital Bubble Tea Cafe will continue to use  publicity as a key component of the marketing program.In the third year, Capital Bubble Tea Cafe will increase its advertising and promotion  budget to $80,000,  with the majority of the advertising budget being  spent on drive timeradio. Sales StrategyThere will be several sales strategies put into place,  including posting specials on high-  profit items at the window. Th e staff will also hand  out free drink coupons to those whohave purchased a certain number of cups or something similar.Capital Bubble Tea Cafe  will also develop window sales techniques such as  the staff  asking if the customer would like a  fresh-baked item with their bubble tea. Sales Programs * Corporate Tasting Events – Capital Bubble Tea  Cafe plans to host tasting eventsfor customers on a quarterly basis. Each quarter, at the  introduction of eachseason, Capital Bubble Tea Cafe will be adjusting its menu to reflect the changesin the flavors served. * Drink Coupons – At fundraising events for schools and  corporate events, we will  be giving away drink coupons as door prizes or awards.This encourages the  person to come in for their free beverage and bring a friend or buy a baked item or  a package of our bubble teas. * Chamber of Commerce and Professional Memberships – Because  of the need tosell our services, Capital Bubble Tea C afe  will be an active participant in the Regional Chamber, local Chambers of Commerce,  Foodservice Associations, and Specialty Beverage Associations. The exposure and education that these organizations provide is outstanding, but equally important are the  contacts and opportunities made available