Question

KURUKAHVECİ MEHMET EFENDİ

Established in 1871 in Eminönü-İstanbul by Mehmet Efendi, a young 25-year-old entrepreneur, Kurukahveci Mehmet Efendi started as a local coffee roaster and grew to become a national coffee manufacturer whose name is synonymous with premium-quality coffee, be it Turkish coffee, filter coffee, or espresso. After Mehmet Efendi’s death in 1931, the family business passed to his three sons. The family formally took “Kurukahveci” as their last name in 1934. Passionately attracted by the innovation and product development side of the business, the Kurukahveci family overlooked the importance of monitoring the competitive surroundings, market dynamics, and the purchasing behavior and consumption habits of customers. With competition intensifying and competitors investing heavily in venues and product mix, Kurukahveci Mehmet Efendi found itself struggling to maintain its sales and share despite the growth of the Turkish coffee market locally or overseas.

To remedy this situation, management realized the need for reliable market information as a basis upon which to base their new competitive strategy. According to Marketing Manager Hasan Koç, “a valuable decision management took which had major implications on our decision-making process was subscribing regularly to the coffee category of the A. C. Nielsen Retail Audit. The report revealed huge weaknesses in Kurukahveci Mehmet Efendı’s distribution and market coverage. It also shed light on the presence and share of each major player in the category across different geographical regions and trade channels with in-house analysis of their strengths and weaknesses.”

To ensure proper coverage, Kurukahveci Mehmet Efendi found that a huge investment in human capital, vans, and technology was required, which would not be reasonable for such a limited product portfolio. In 2010 a strategic decision was made to outsource the distribution operation to a specialized national distributor that can ensure a proper Turkish market presence for Kurukahveci Mehmet Efendi products.

Change was not limited to the distribution strategy. Management also decided to revise all its marketing mix elements including product packaging, pricing, and communication. Mustafa Kamil Kurukahveci noted that “the exercise was led by a team of professionals from leading regional research houses who initiated tailor-made studies of the existing market conditions, trends and techniques in packaging, pricing, and communication, and to suggest recommendations for the launch of the re-engineered Kurukahveci Mehmet Efendi’s product line.” This undertaking resulted in the architecture of the Mehmet Efendi brand being changed, with color coding to emphasize the heritage, and in repositioning the brand through innovative packaging and a creative but focused communication, pricing, and distribution strategies. “The right positioning is the key to the success of every brand,” said Abdullah Kıratlı, General Manager.

Management also focused on export markets. Market research reports by Euromonitor provided valuable insights about macro-country indicators as well as specific market information related to coffee, such as volume, value, trends, consumer habits, and competition. In addition to field visits by marketing and top management, the management used that information to identify promising regional and world markets and to decide how to penetrate these potential markets.

Kurukahveci Mehmet Efendi’s current manufacturing facility handles all the export markets, focusing on serving the Central Asia (Kazakhstan, Kirgizstan, Azerbaijan, and Turkmenistan), as well as the Gulf countries in the Middle East, North Africa, Europe, and the Americas.

“Market intelligence and research can never be 100% accurate; yet it is highly insightful and enlightening,” concludes Cem Kurukahveci, owner and major shareholder of Kurukahveci Mehmet Efendi.

QUESTIONS

2) Identify the sources of secondary data that Kurukahveci Mehmet Efendi utilized. How were these sources helpful? (2pages)

Answer 1

The company used several sources of secondary data.

First and foremost they opted for the coffee category of the Nielsen Retail Audit report. This report focused on secondary data which gave valuable information regarding the competition in the market, this helped in assessing the number of companies and at what price points they were selling coffee of different variants. Market dynamics such as the nature of the business cycle and where is the product being consumed. Purchasing behaviour and consumption habits of the customers in order to determine at what price points should the company sell the products. The report also helped in describing the value chain process and where did the company lack. It helped in improving the distribution channel by outsourcing the work to a specialized distribution channel, the geographical presence of the company in the long run also improved. Assessing the strengths and weaknesses of the competitors helped in determining and taking advantage of the weaknesses, to showcase the companies strengths in those areas. It also helped in changing the product mix, packaging to make it more attractive, pricing to make it more affordable and improvement in the communication channels.

Euromonitor also helped increase the companies exports as it provided worldwide trends on the consumption of coffee, competitive scenario and pricing power. Getting the right contacts is the key and thus by gaining all this information, the company was able to network and thereby penetrate some local markets and increase its exports.