Lion coffee is a popular brand among consumers in Hawaii and is therefore well known and used by various people, who have known its quality and competitive edge. Retail sales of the lion coffee are very promising with retail stores making increased sales. Wholesale trades are also promising with the recent consolidation of different brands as one company which has come out synergistically strong.
The consolidation of the lion coffee and Royal Kona has increased the profit margins since the lion coffee is majorly involved in retail sales while the Royal Kona is majorly involved in food service, and in some cases it's also given a chance in retail sale. The two together are better considering that before the consolidation; the lion coffee was not making much profit because it only depended on retail sales. Together there are improved profit margins and bigger business opportunity and even room for growth. The key thing in dealing with two brands would be to ensure that there is no crossing on the strengths of the two brands and maximizing the weaknesses as well as looking for new opportunities for each brand that could help increase profit margins of the company.
Dealings has been said to be very popular among coffee companies. While this increases sales volume, it may in a big way affect the profit margins, as it involves selling the products of previously more costly package at a lower price. At retail level, this is not profitable since customers buy few units and therefore should be minimized. To lessen dealings at retail level, the company should only allow for a discount for a certain number of units bought, which should translate to wholesale buying. Dealings on small packages should not be allowed and only larger packets should be traded on deals. This will ensure economies of scale are maintained in the company.
Expansion to the main land would be faced by many challenges such as competition from other companies which apply robust marketing strategies than lion coffee. This had caused the same company to collapse in bankruptcy. The brand is also already popular in mainland and so there would be little change on the product sales by the consumers. The main advantage in expansion could be tapping new market for their products and to reinforce the supply of the products. If expansion to the mainland is to be considered then it should focus on virgin areas, where the brand may not be popular and change the marketing strategies that were used earlier in the mainland so as to penetrate the market again.
Starbucks foray entry into retail could mean new competition and the first strategy would be to counter the same by making sure that the company does not lose its market share. Since it's a renowned trendsetter, then this could mean keen observations of their tactics in order to sharpen our marketing strategies, or negotiate a merger with them so as not to lose everything to them, in case they became too smart for our financial capabilities.
The Hawaii coffee company has a great potential for growth considering that it has three brands under the same umbrella that are actually designed to face the problems that could face the company. A distribution specialized company, the paradise beverage ensure strong physical distribution capabilities while the Royal Kona food service brand has reduced dependence on retail sales from the Lion coffee. The synergism of the different brands makes the company a formidable giant in this particular market.
The main challenge though is competition from other national companies in the same business and the quality of products they produce as the consumer has become more sophisticated on the coffee products they prefer. Expertise is therefore needed in the production area so as produce fine brands. However with all the indications on performance during this time, in the middle of a global financial crisis, the company is all set for take off without a doubt.