Mystic Monk Analysis
PORTERS FIVE FORCES MODEL (SPECIALTY COFEE)
Porters Five Forces Model:
The main points of concern that arise out of the Five Forces model is the number of substitute products. If one were to generically think of a substitute as any liquid that does/does not contain caffeine and may or may not be hot then the virtually all competitors can be a substitute. Even if concentrated on just the warm/hot liquids the threat is still significant (i.e.- Tea, Hot Cocoa, Cider). Secondly the existing competitors have a fierce loyalty among consumers. In order to overcome this a considerable amount of financial outlays will be required for marketing via samples and advertising other than their current single source (website).
VALUE CHAIN ANALYSIS
The value chain analysis visually depicts several key information point regarding the breakdown of Mystic Monk Coffee. Mystic Monk coffee is only achieving an 11% profit on their $9.95 specialty coffee blend. This equates to $1.09; when compared to the costs of approximately 60% (representing the cost of goods sold and operating expenses), there is a significant need to reduce both of these in order to increase profit margin.
KEY SUCCESS FACTORS
DIFFERENTIATION
DISTRIBUTION CHANNELS
RECOGNITION
CUSTOMER SERVICE
Differentiation. Mystic Monk must find a way to separate their product from the Starbucks that are located on every corner.
Distribution Channels. Simply selling on their website and on location is not a sustainable model to achieve growth. Mystic Monk must expand their channels in which products are sold.
Recognition.