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Global Marketing

Global marketing strategy of BMW

The world has continued efforts to globalize the market. Global players, including BMW, a prominent automaker from Germany, are vigorously articulating marketing strategies to create value that better serves customer needs.

In order to create a successful marketing plan, managers must configure the varying aspects of the marketing mix and identify precise market segmentation to understand different patterns of customer purchasing behavior.

BMW implemented a different marketing mix to sell cars to different socioeconomic segments, aggressively emphasizing premium segments. BMW initiated the goal of segmenting the premium market by optimizing the fit between the purchasing behavior of consumers and the marketing mix to maximize sales to that segment. Responding sensitively to unique values and purchasing behavior enabled BMW to transcend intended performance.

To begin with, BMW vehicles sell well to consumers who have high standards for quality, luxury, and performance because BMW builds those attributes into its automobiles.
The fact that BMW concentrates on premium segments on a global scale and consistently defines high-end brand identification renders success. Attractive and trendsetting products ranging from the 3 to 7 series that deliberately focus on affluent customers demonstrate the success of the automaker’s global marketing strategy.

The firm’s global marketing strategy represents leadership through innovation. Originally an aircraft engine manufacturer, BMW incessantly sought an innovative spirit to satisfy the premium market’s demands.

Recently, requirements for clean energy and green environmental factors have rendered many companies to concur with their business strategies with the shifting paradigms of environmental demands.

BMW’s innovation initiates from the realization of such requirements for clean energy, such as hydrogen. The innovative spirit of BMW’s testing of hydrogen-fueled automobiles since 1978 and applying the technology to production demonstrates its futuristic mindset and innovative leadership.

BMW creates value, competitive advantage and ramifications of innovation through various marketing efforts heavily committed in the premium segments of significance.

Though disciplines of marketing are universal, the method of global marketing strategy that BMW addresses reflect the significance of premium relevance.

BMW does not feature minivans segmented as MPV (multi-purpose vehicles) in its product lineup.

The logic is simple. BMW is a premium brand that does not compromise and cater to any segment of the market. Its global marketing strategy underscores the selected premium target market.

In addition to premium marketing, BMW has shifted its position as “the ultimate driving machine” to “sheer driving pleasure” that refers to a gradual movement from the emphasis on automobile performance to the involvement of customers and taking emotional factors into serious consideration.

The company attempts to underpin the new theme of communication that integrates superior performance of automobiles into emotionally sensual marketing communication worldwide. The global marketing strategy underscoring activities that form an emotional foundation spotlights consumers actually enjoying driving premium and superior automobiles that BMW create.

Not to be conventional, the emotional marketing perspective that intertwines with the premium marketing in BMW’s global marketing strategy interplays synergistically to maintain its strong leadership in the automobile industry.

Advertising appeal is the communicative approach relevant to the motives of the targeted customers. Emotional appeals may evoke feelings of response that directly affect customers purchasing behaviors. BMW perspicaciously combined premium marketing and molded into emotional marketing to represent the company’s global marketing strategy.

Overall, BMW’s global marketing strategy bridging premium and emotional marketing have compensated the company with superior economic performance and a strong leadership position in the automobile industry.

BMW strides further alongside its profitability to commit in an outstanding manner to long-run corporate social responsibility (CSR) activities to create shared value. BMW vividly pays attention to CSR activities, specifically in obligations to science and engineering education and an eco-friendly environment.

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Global Marketing

Haier’s Overseas Market

 

In the late 1990s, Haier Group entered “Internationalization Strategy Stage”, in an effort to tap into overseas markets.

Unlike some Chinese enterprises pursuing short-term gains as international manufacturing factories in overseas markets, Haier, since the beginning of its international expansion, has formulated a “Brand Building” strategy with a commitment to offering the product quality, technical specification and after-sale service of the highest standards to overseas customers under its own brand. Statistics show that the export of Chinese household appliances occupies only 2.46% of the total overseas market share, 82% of which comes from Haier.

Branding relies on successful market development strategy. While formulating differentiation tactics, Haier came up with the “three-step strategy” of “going out, going in and going up”. That is, first gain ground in the traditional major household appliance markets like Europe, USA and Japan by making into the niche markets, then with the advantageous positions obtained in these major markets, rapidly expand the market presence in the developing countries. Next, take to the main channels of local markets with localized products that meet mainstream local user needs, and ultimately become the market leader of high-end and innovative products. Currently, Haier has entered the top ten chain channels in Europe and USA with its markets across over 100 countries and regions. Every minute on average 125 overseas consumers are becoming Haier customers.

Upon entering the “Global Brand Strategy” stage, Haier accelerated the development of overseas markets into the fast lane. During this stage, Haier has gradually built up its marketing network, R&D and manufacture bases in overseas markets totally relying on the power of its own brand. Moreover, Haier has achieved quick expansion and consolidation of overseas resources through differentiated international acquisitions. In October 2011, Haier announced the acquisition of Sanyo's white goods business in Japan and Southeast Asia. This multinational acquisition is a milestone event for Haier. It not only intensified Haier's presence in Southeast Asia, but more importantly, via differentiated cultural integration and mechanism innovation, instilled Haier's doctrine of “Entrepreneurship and Innovation” to the acquired companies and employees, allowing the integration and development of Haier and Aqua brands in Japanese and Southeast Asian markets. Because the acquisition involved wide coverage, extensive content and complex process, it was chosen as one of 2011 Five Outstanding Overseas Acquisitions by “China Business Law Journal”. Just one year later, Haier acquired Fisher&Paykel, a New Zealand household appliance leader, and strengthened its competency in R&D and manufacture of high-end household appliances. On June 7th, 2016, – Qingdao Haier, Inc. (SH600690, “Qingdao Haier”), of which Haier Group (“Haier”) holds a 41% stake, along with General Electric (NYSE: GE), announced that they had signed the necessary delivery documents to fulfill Qingdao Haier’s acquisition of GE Appliances, making GE Appliances a formal member of Qingdao Haier. Currently, Haier has established 10 R&D bases, 7 industrial parks, 24 manufacturing plants and 24 trading companies  and basically created a localization mode of “three in one” – combining design, manufacture and sales – to provide ongoing support for global brand development.

As global household appliance market advances into the Internet age, customer needs are getting individualized and information fragmented. Faced with such great transformation, Haier has long been building the Internet ecosystem for user interaction in its overseas markets, leveraging Internet tools to aggregate users and fulfill great purchase experience from both online and offline. With its “networking development stragety” as the gudeline,   Haier is building the core competence of “Zero Distance to the Customer” in overseas market.

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Global Marketing

Coca Cola’s marketing strategy in China

Marketing is vital for Coke to maintain its competitiveness. Marketing and advertising are designed to make customers brand loyal while nourishes consumer awareness. This helps with maintaining the long-term growth. With regard to Coke's localization strategy, Coke made sure that its Chinese name had an appropriate meaning along with sounding like Coca-Cola. It has created a Chinese version for its famed logo. They believed that many aspects such as music, color and Chinese people's interests are important to bear in mind if they wanted to capture the local people's hearts. They take on innovative approaches to advertising and promotions to strive for the difference. Whenever there was a chance Coke would sponsor football games and many other types of media and activities that the Chinese are interested in to achieve maximum exposure. These also participated in SMS campaigns and hired famous celebrities to help promote the brand. The SMS campaigns were implemented taking into account China is the largest mobile market in the world.

Coke had to constantly keep up with the changing local trends to maintain the ability to be up to date with the Chinese taste which best suited every occasion. Coke must implement an efficient distribution channel to remain competitive. The quality of their products must no doubt be kept at its best at all times, therefore bottlers only chose certain inputs that met Coke's global standards. Coke had the intention to localize every aspect of the business from sourcing inputs, to production, sales and distribution but this had proven to be a difficult and lengthy process. The consequence from adapting this strategy is the strong market presence it has created today. With an increased sales profit since 1990, it was able to generate yearly revenue of $1.2 billion. Without Coke, the mass additional employment opportunity of over 55000 people would have been forgone and China would lose all the technological updates and training Coke had invested over the decades.

Product positioning and Market segmentation

Coke's marketing campaigns were customized with the local areas since different geographic locations would contain diverse people of various ages who share a different mindset and taste. Doing this had helped the company establish a traditional and consistent company in China. Consumers in the rural and urban areas had a vast difference in their per capita income which affects the purchasing power in every region. There is a large consumer potential in rural areas. So imperatively China's market should be considered to be segmented according to economic diversity. The four largest cities in China consisted of 4% of the population with only 15% of retail sales, on the other hand, the small cities constituted 80% of the population with the retail market of 50%, according to 2003 statistics. Strategic marketing mix

The Coca-cola strategy is a mixture of various factors aiming to capture the global market. The strategic binding of these factors enabled it to make its presence in the target market. The following includes two of the four marketing tactics which Coke had implemented in order to achieve its significant positioning in China.

Product

By recognizing consumers' wants and needs Coca-cola was able to produce diverse products which include carbonated drinks like Coke classics, Sprite, Fanta; Beers like Barq's Root Beer and Dr. Pepper. It also supports the local brand names Qoo, Sensation, Tianyudi, and SMART which are ready to drink (RTD) tea drinks and juice drinks to suit local preferences. The growing demand of healthy beverages had influenced it to get diversified in soft drinks sectors. Meeting the diverse demand and taste had resulted in the packaging in different sizes and shapes of glass bottles, plastic containers, and cans. A key to Coke's success is the differentiation in products; this makes the customers coming back for more.

Price

The pricing strategy of Coke is influenced by the strategies of its competitors. In China the biggest competitor of Coke is Pepsi and its price fluctuates according to Pepsi's pricing. However, coke has always held a better position in the market due to a head start of several years which had lead Pepsi to suffer some downfalls. Still, the price of Coca-cola is the benchmark in the market with it costing 15 to 20 cents higher than Pepsi. This high price is supported by the brand equity of its various products in the market. The competition has lead to better improvements in products and more attractive promotions which are favourable to customers. Without a strong brand image consumers would choose a product with the most competitive price.

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Global Marketing

What future challenges does YUM face in China?

Yum, which known as the parent company of restaurant chains, such as KFC, Pizza Hut, and Taco Bell. Since they opened the first KFC restaurant in Beijing in 1987, nowadays they become one of the most successful Western restaurant groups in China. However, Yum still faces some challenges. Many analysts believe that they have to solve problems including market burden, rising competition, food safety issues and slowing economic growth.

Market burden

In the United States, fast food restaurants, such as McDonald's, KFC and Burger King, people consider them as junk food. With the lower price compare to other restaurants, people who go to these fast food restaurant most likely to be lower middle class. Thus, they struggled with targeting the middle class because of the increased wealth gap. To be more concise, consumers would not go to KFC because they are wealthy enough to other places, having decent food. On the contrary, with limit income, people who come to KFC or McDonald’s usually would satisfy with a fast food combo. In China, it has been developed so rapidly that wealth gap also growing between the middle class and upper class. It is a vicious circle that people go to KFC, spending 5 to 10 bucks, eating junk food. That is why obesity problem becomes more and more serious in China. Nowadays, customers are well educated than before. They started to realize that they should avoid having fast food. Thus, Yum has to understand and learn what people like to eat and consider to develop and adjust menu.

Rising competition

As information and sources become more accessible and convenient, more and more small restaurants start to appear. Other restaurants chain also saw the success of what Yum did and began to expand their restaurant to China. In my opinion, if Yum will not make any change in the future, they may fail and lose their competitiveness. Thus, Yum had a very aggressive program for product development. Generally, Chinese customers expect more variety than customers in the United States. According to the Yum, they introduce more than 85 new products within a year. In addition, they develop the different product for different regions because people live in different places have different dietary habits. From my perspective, Yum did a very great job on product development, yet still, they need to focus on what are people’s needs. I would say that design a signature meal rather than changing items frequently.

Food safety

The constant problem which China always has is food safety issue. This problem in China, where overall system sales fell, and store declined because of the food safety scandal. I still remember that KFC and McDonald's meat supplier was shown in a TV news report reusing meat and the story was shocked that they use meat which falls to the factory floor and mixing fresh meat with expired meat. Even if they announced that they had already switched the meat suppliers. This negative story caused a huge impact on brand image. Driving Chinese consumers away from KFC restaurants. Yum had a numerous loss because they relied on KFC as a high revenue percentage. Unlike the United States, always pay a lot of attention to food safety issue. Customers trust the quality provided by restaurants. In China, Yum mush establishes their own supply chain and stick to rules of quality control. Instead of losing consumers and market share, they should truly face the food safety issue. Although it may take a lot of effort and internal cost, brand image, and reputation are more important than other factors in the long run.

 

 

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Global Marketing

What is the Secret to McDonald’s Global Branding Success?

With a product that’s served in over 117 countries, feeding millions of customers every day, McDonald’s branding success is undeniable. The key to McDonald’s branding and marketing success is segmentation and experimentation.

Segmentation

McDonald’s main focus is the US, where they spend most of their budget and trial more new products and innovations. The American audience is their largest – Americans spend more money at McDonald’s than any other fast food restaurant in the country. In the US, advertising normally targets children. In Japan, the advertising campaigns are more varied when approaching the demographics, sometimes they focus on children but they also target adults. One advertisement used McDonald´s as a fetish object with sexy girls promoting the burgers, something you would never see in the US. Although a multinational giant, McDonald’s adapts its business and menu to the different countries they operate in. They respect cultural differences and every country has its own policy of developing menu items.

Testing

Experimentation is vital, and it is often carried out by adding or deleting the food from menus according to latest consumer trends and local popularity. In Japan, apart from the traditional menu, you can find seasonal and limited-time items such as “The Teri Tama Burger”, served during spring or “The Tsukimi Burger”, served during Tsukimi season (in the autumn). In the US there is the popular “McRibs”, just available for a short time each year. This is a good example of adapting to customers’ tastes, vital when talking about marketing. Experimentation is vital, and it is often carried out by adding or deleting the food from menus according to latest consumer trends and local popularity.

The Secret Sauce

It is true that the marketing and branding strategy of McDonald’s is based on uniformity, no matter where in the world, you will always be able to order the most iconic menu items such as the Big Mac. The same kind of atmosphere and experience mean that your expectations will be fulfilled because you know what you can expect from the restaurant. Despite its geographic variety, the brand is actually very consistent, with a lot of attention to detail to ensure the values are applied globally.

Global Product Marketing

When we look at the strategic differences between US McDonald’s and the Japanese version, we can appreciate the localized marketing strategies. For example, the name of the restaurant is adjusted for the katakana, the appropriate Japanese script for foreign words. In Japan, they call it ‘Makudonarudo’, (マクドナルド), a more appropriate and attractive sound in Japanese. Drink sizes and fries are much smaller than the ones in the US, and burgers are a bit smaller too, to suit eating habits. McDonald’s ensures the correct sizes before exporting for international target markets. Although McDonald’s offers its products everywhere in the world, being the most popular restaurant on the planet, the brand keeps recognizable with its original meaning and identity whilst catering to local tastes.

Innovation and Collaboration

For McDonald's, globalization has meant embracing and engaging different cultures while at the same time retaining a strong enough brand to be immediately identifiable. But how can you ensure your brand transcends cultures and regional approaches to marketing? This is where online innovations really come into their own by bridging the cultural and physical gaps that can inhibit connection with a global audience.

 

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Global Marketing

The Strategies of Alibaba Group

Alibaba focused on the dominant wholesale trading market since it was established. Jack Ma, the founder of Alibaba, developed the company rapidly through financing capital with his advanced concept. When the development of company was blocked, he took a risk to invest heavily in YAHOO China to open market and boost popularity. As the captain of the Alibaba, Jack Ma realized the trend of online shopping so made a huge effort to promote the development of the internet in China. Through constantly participating in social activities, Alibaba gradually established the brand awareness. It never stops the innovation of technology to improve the experience of online shopping, such as communication between sellers and buyers, quality control, and unique brand promotions. Alibaba also led the revolutions of the delivery system and payment method which brought people better service that encourage them to shop online. Nowadays, Alibaba has been the monopoly of the market of online trading business. The most powerful strength of Alibaba is its brand awareness. In China, it has become the pronoun of online shopping. With more and more people joining in the online trading platform to make trades, Alibaba‘s growth will continue for the foreseeable future. The unique technology of payment method is another strength of Alibaba. It has even changed the lifestyle of many Chinese people, especially young generation, and increased their reliance on the Alibaba. However, there is still some weakness associated with Alibaba. The most significant one is an issue of fake and inferior products. Due to the free registration policy for sellers, morally corrupt and dishonest sellers can easily escape the punishment of selling pirated products. While the legitimate right and interest of consumers are undermined, the brand of a trading platform would also be affected. Another weakness of Alibaba is malicious negative feedback. Because the registration as a buyer is free without any need of proof, some sellers might hostilely attack their competitors by registering as a buyer and give negative feedback to competitors. Without strict censorship, sometimes this might cause unhealthy competition.

Strategies

According to the analysis of Alibaba, there are several strategies can be complemented to sustain the competitive advantage of Alibaba. An adequate credit guarantee system could be established to increase the user scale, and it also builds the foundation of customer loyalty. People will lose faith and patient if they buy a fake product from a trading platform. Similarly, a more strict censorship is needed to protect consumer’s right. Under strict market supervision, a consumer can build their faith and reliance on this industry which is the most important thing for an emerging market. In addition, Alibaba should try to distinguish it from substitutes and use their unique advantages, which are low cost and high efficiency, to compete with physical stores. It has the ability to draw in a large number of sellers and purchasers, so it can change the rules of the game to enhance its market position and competitive strengths.

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Global Marketing

THE INTERNATIONALIZATION OF HUAWEI

The company was formed in the context of the chinese economic reform of the 1980s (Fannin, 2013), which brought about an economic zone in shenzhen and a wave of companies that sustain the country's economic advances, turning china into what it has been since 2014, a leading nation in economic terms. in this period, the majority of the companies were dominated by the state in china, but Huawei was an exception as it was a private business in the form of a cooperative, although it received help from the state in terms of land donation and contract adjudication.

Victor Zhang (2013), CEO of Huawei in europe, says that the development of the firm has been divided into three important stages since the end of the 1980s, the first involving the conquest of its domestic market and the other two involving its internationalization. In that development, as will be seen, the bases of its competitiveness were its functions of r&D and manufacturing/logistics, which allowed it to generate consistent, innovative offerings in products adapted to the needs of its clients, low costs, and speed in its response to demand. Huawei manufactures high-tech products and R&D is essential for that; similarly, the extensive development of software requires constant R&D operations; the same applies to the logistics of attending to hundreds of clients throughout the world and delivering thousands of products. The triad of R&D, manufacturing, and logistics has been essential to understanding Huawei's great dynamism and internationalization.

During its first phase (1987-1992), Huawei began as a company selling PBx products (telephone exchanges for the public network of landline phones) and a little later began to produce its motherboards, using their own designs. its market was rural areas, with low costs and without competition from other companies that preferred urban markets.

The company's first R&D center dates to 1990, and it thus established an important competitive advantage over other chinese communications companies, which operated exclusively as the business agents for Western firms that entered into the new and massive chinese market. The second stage of Huawei encompasses 1993 to 2000, and is one of energetic economic growth and organizational structuring, which set it in place as a company with international competitiveness. The chinese government opens the market to foreign companies and dynamically increases demand for telecommunications equipment, both fixed and mobile (Dussel, 2014). Huawei maintains its hegemony in the rural market thanks to its lower costs resulting from its R&D capacities.

In 1997, the company established partnerships with leading corporate consulting firms dealing with organizational structure: Hay Group, IBM, and Price Waterhouse Cooper helped Huawei through a process of organizational transformation, with the end of turning it into a company that operates within the framework of best global practices (larçon, 2009).

The third phase encompasses 2000 to date, and consists of an accelerated internationalization, reflected in the fact that since 2006, about 65 percent of the company's income comes from the international market, in contrast with 10 percent in 2000 (Larçon, 2009).

A concept that aids the understanding of these three phases of Huawei's development, is that of core competencies (Prahalad and Hamel, 1990), which says that it is difficult for competing businesses to imitate the capabilities another company has accumulated throughout its history. core competencies have the following characteristics: 1) they contribute to increasing what clients perceive as added value to the product, 2) they are exclusive to the company, in such a way that they are distinguished from the competition, being very difficult to imitate, and 3) they have wide application toward a large variety of products (Prahalad and Hamel, 1990).

The global economic context in which Huawei evolved in recent years included the striking increase in demand for mobile phones: the number of mobile phones in use in the world jumped from around one billion in 2000, to six billion in 2012, of which 30 percent correspond to China and India (World Bank, 2012; Chablé, 2012).

Huawei today maintains a competitive advantage in the equipping of transmission infrastructure, which is the technological heart of the information society. For that, it must deploy its competitive capacities in hardware and software that allow customization in the various national markets controlled by telephone companies. Its big incursion as a global seller in the face of its principal competitors has made it one of the main players in the information society market.

The business structure of Huawei is divided into three segments: business for the operators' networks, which represents 69 percent of the company's income; consumer business (24 %); and business with companies (7 %). The three business areas are defined as follows: business for the operators' networks (development and manufacture of a wide range of wireless networks, fixed networks, software, and solutions for carriers); business for consumers (development, manufacture, and delivery of mobile devices for broadband, domestic devices, smartphones and their apps); and business for companies (development of products and solutions) integrating information and communication technologies, including network infrastructure for companies, data centers with services in the cloud, security for company information, unified systems of communication and collaboration used by vertical industries, such as government, public infrastructure and energy, transportation, and finance companies.

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Global Marketing

Starbucks in China (2/2)

Some weaknesses

Firstly, the efficiency of organizational structure is not sufficient. For any enterprise, it is a challenge to manage so many stores uniformly and efficiently in China. Moreover, Starbucks relied on getting the original agent to unify and integrate the Starbucks stores in the Chinese market. At present, Starbucks still does not achieve 100% of the equity control of Chinese Starbucks stores. It just has the operational management rights of most of China. It can be imagined that Starbucks needs to take more effort to coordinate and manage in different regions, when it faces to different joint venture partners. In addition, because the expansion of Starbucks's global model has four different parts of the business model, which lacks a unified management model and operational platform. And Starbucks's management team, come from the United States, is obviously not fully familiar with the Chinese economic and legal environment, it will take considerable time to adapt these differences.

Secondly, the supply chains management. Starbucks intends to use its own unified logistics center to manage the original suppliers and transportation, which is a huge challenge for Starbucks logistics center. Most challenges are not only on the efficiency, accuracy and professionalism of the cluster management, but also on integration pressure of different inventory management approaches in different parts of the market.

Thirdly, the pressure of capital chains management. The speed of opening additional stores too fast will inevitably affect the Starbucks’ capital chain, which also will affect the company's cost control and financial decisions.

Coffee, tea and ice cream competition

In China, the speed of the revival of the tea house is equally amazing, although it has not produced a giant chain brand. Some cities inherit a traditional tea cultural heritage, such as Guangzhou, Chengdu and Suzhou. For “Western” Shanghai, all kinds of the tea house were booming in the past 15 years.

Ice cream shops also have charm to attract the young. For instant, Haagen-Dazs, a very general ice cream brand in the USA, becomes the consumption of high-end ice cream brand after entry into China. Although the taste is not really consistent with Chinese taste buds, some people also choose it to show fashion. Every summer and mid autumn, these ice cream stores always introduce some innovative products and mooncakes to attract a large number of consumers and stimulate their purchasing power.

The future strategies

Enhance the training of employees and the influence of culture. Because Starbucks’ marketing strategy core is culture, it means emotional marketing. One of Starbucks's foremost competitive strategies is to communicate with customers in the coffee shop. As the public face of the Starbucks, the employees are media between the enterprise and the customers, so communicating between the staff and the customers is the most important. Service persons should know the customers’ needs, when staff explains the different tastes and aroma of coffee, a bold eye contact with buyers is needed.

In addition, Starbucks could strengthen the relationship with customers through the customers’ comments. Howard Schultz said “We are not in the coffee business serving people, but in the people business serving coffee. The equity of the Starbucks brand is the humanity and intimacy of what goes on in the communities… The Starbucks environment has become as important as the coffee itself.”

Moreover, Starbucks should continue to spread and experience, increase consumer awareness and professionalism of coffee, and word of mouth to bring new customers.