Koi cafe annual report

1.0 Executive Summary

The purpose of this report is to provide a feasibility study for Koi Café in Singapore as a proposal for an entry into Surabaya, Indonesia. Koi Café in Singapore was opened in 2007 as the first overseas branch of a Taiwan’s iconic bubble tea brand from Taipei, Taiwan. Nowadays, Koi has 46 branches globally including in Jakarta, Indonesia. This report will provide the current Surabaya’s environmental analysis and implications for Koi Café from political, economic, cultural, technological, and legal environment sectors. The next parts are SWOT analysis and its implication, marketing objectives, market segmentation, marketing mix strategies such as product, price, place, and promotion that may be utilized by the company, followed by the implementation and evaluation about the marketing mix for the next 12 months and the conclusion in the end of this report. Research for this report are based on credible academic journals, reliable book, some trustworthy and private websites. The depth and breadth of this report is limited to the 25 pages.

The current situations in Surabaya, Indonesia has shown opportunities for Koi Café to open a branch there. This can be seen from the good mayor of Surabaya that makes a stable political situation which benefits Koi Café. Moreover, the situation of economic in Surabaya stands at 7.6%, which shows a higher growth than the National rate. Indonesia has many people residing belonging from various cultures, with a majority of residents belonging from the Islamic Culture and also includes the Hofstede's Culture Dimension table. The technology analysis includes the air flights, Surabaya ports and direct roadways which connects Surabaya and Jakarta. In the Environmental analysis, the temperature of Surabaya is suitable for the customers to consume the Koi Café beverage as well as to grow tea plantations for making the beverage. Legal analysis of Koi Café for Surabaya include the tax rate for foreign companies and the legal system of Indonesia.

Koi Café plays the strength in being a demand product, customisation of drinks, and being halal. The weaknesses include the obligation on collaborating the ownership with local companies in order to venture into the domestic market. The opportunities exhibits the population of potential customers in Surabaya and favourable weather that complements with the product. On the other hand, the threats for Koi Café include a higher tax rate for foreign companies and indirect competitors in Indonesia.

Koi Café’s marketing objectives is to achieve 20% of market share, $850,000 of profits, and 75% of brand awareness by 31 December 2018. The main target market are students and young adults start from 12 years old to 35 years old.

Standardization on the brand name could reduce the advertising cost and exhibits a positive image of Koi Café as a global brand. Elastic product such as Koi Café should not make the price higher than other competitors. Market pricing is suggested to be used along with cost-plus pricing to achieve the profit objective. In the future, relationship pricing can be implemented to bring down the price. International joint ventures with local private limited liability company is needed for international brand to venture into Indonesia. As the main target market are students, social media and internet are become the main promotional media to advertise. Continuous scheduling social media and internets ads in a regular manner throughout the year is done to create demand and to influence customers into buying the products.

In conclusion, the PESTLE and SWOT analysis have shown a favourable results for Koi Café to venture into Surabaya to start its operation where its marketing objectives can be achieved internationally with an appropriate marketing mix.

2.0 Introduction

Koi Café is a brand of Taiwan’s iconic bubble tea. In Taipei, the capital city of Taiwan, bubble tea shop can be found out of every 20 shops especially when it is in the area of the night markets (Daniel Food Diary 2013). In 2006, two stores of Koi Café were opened in Taichung, Taiwan to strengthen the brand name. In 2007, Koi Café expanded their business overseas for the first time to Singapore as an effort to make the brand go internationally (About Us 2012). However, in Taiwan, the original name of Koi Café is 50 Lan. The company decided to change its name to Koi Café as a strategy to attract Singapore local youths by serving contemporary vibes (Daniel Food Diary 2013). As Koi wanted to go internationally, Koi Café expanded to Xiamen, China in 2011. The store was put at the intersection of Hexiang West Road and Hubin Central Road (About Us 2012). In 2013, Koi Café asseverated to not only bring Taiwanese teas to become a global heritage through introducing genuine Taiwanese teas, but also make the pleasant experience by tasting the tea (About Us 2012). According to their website (About Us 2012), they have 46 branches globally in Taiwan, Singapore, Xiamen, Quanzhou, Macau, Indonesia, and Cambodia.

Koi Café which specializes in bubble tea, also has another kind of beverages to choose. They offer tea, milk tea, bubble tea, macchiato, handmade Café , and fruit-flavored tea. For those who love the real taste of tea, they have Jasmine Green Tea, Assam Black Tea, Honey Green Tea. For those who like their tea to be milky, Koi has Milk Tea, Chocolate Milk, Honey Milk Tea. Moreover, they have their specialty Bubble Tea, Bubble Milk Tea, Grass Jelly Milk Tea. Koi also offer macchiato such as Ovaltine Macchiato, which is one of their best seller. Macchiato is known for the sweet cream on the top of the drink. For those who do not like tea, there is fruit-flavored such as Fresh Lemon Juice, Honey Lemon Lime Juice, Honey Aloe Vera. In addition, Koi put coffee on their menu for those who prefer coffee over tea such as Café Macchiato, Golden Bubble Koi Café, and Konjac Jelly Koi Café (Our Products 2012). The drinks can be customized by adding toppings such as bubbles, pearls, grass jelly, aloe vera, and konjac jelly. Furthermore, the customers also can choose the sugar level starts from zero sugar, 25%, 50%, 75%, 100%, and 120%. The customization does not stop until there; the customers can choose the ice level such as less ice or more ice on their drinks (Yu 2015).

3.0 Corporate Vision

The heritage of the Taiwan bubble tea has been kept alive by the Koi Café with the quality controlled in a sturdy manner and very high standard of the standardized preparation process (About Us 2012). The Koi Café has very dedicated and service-oriented employees and also the enterprise that has the basic vision of love sharing with the customers, and also its customers (About Us 2012).

4.0 Mission Statement

The Koi Café has not only vowed to make the bubble tea tasting a very pleasant experience, but the Koi Café group has also vouched the teas of the Taiwan heritage into making a global brand by introducing various kind of beverages to everyone. The Koi Group has a mission on travelling around the world, opening up their brand in majority of the places in the world, the mission has inspired the founder of the Koi to bring their outlets in countries like Hawaii, Australia, Tokyo and Singapore, and making it is a taste for the customers for their craving for Taiwanese homemade bubble tea (About Us 2012).

5.0 Corporate Goals

The Koi Group’s corporate goals is to impress people around the world with their joy-filled Taiwanese bubble tea (About Us 2012).

6.0 Environmental Analysis

6.1 Political

Indonesia just held its election in late March, where its current President Joko Widodo approval rating won 66% of the Indonesians heart. But the fall of Ahok has caused some religious opinions in the political world where religion can be part of a strategy to win the election (Coca 2017). Tri Rismaharini, known as Risma, is the current Mayor of Surabaya since 2010, and she has been one of the most influential leader that appears in 2013’s Forbes magazine as the local governments have undergone strict rules and regulations for businesses since her administration. The foreign investors has come to a liking on her honesty and expertise in leading the office as they benefit from the rising cost on their business. Her intention as a leader has won the heart of the citizens of Surabaya as she cares for the people more than her votes where she enhanced on the greenery developments in the city, the health care, the education and the business as well (Hove, McCawley and Baskoro 2014).

The corruption level in Indonesia has steadily decreased since the rise of Jokowi’s election where the improvement on corruption prevention had rose from 22% in 2005 to 37% in 2016 (10 Reasons Why to Invest in Indonesia 2017). Indonesia Corruption Rank (2017) forecasted that the corruption rank in Indonesia will drop from number 80 to 77 by 2020. The Mayor of Surabaya, Risma has won the anti-corruption award for having the initiation in developing a clean city with her e-government application in all government department which allows the people to monitor the process and progress (The Jakarta Post 2015). This is a good sign where there seems to be a transformation in terms of their administrative systems together with a good leader in Surabaya.

Koi Café could operate well in a trusted hand as there will be less regime changes and even coup that makes them prevent uncertainty where they are able to forecast predictability on future events. Koi Café manage to increase its time efficiency by controlling their production line more effectively as lesser time spent on the administration process lowers the business cost due to less interference and more controls in running the business. This enables the Koi Café to apply penetration strategy in the local market in order to strengthen their products in a more competitive advantage by providing more values to the customers.

6.2 Economic

According to XE Currency Converter (2017), Singapore currency has stronger exchange rate than Indonesia currency where one Singapore Dollar is equal to the amount of Rp9,850.96 at 16 September 2017. It has shown that the currency exchange rate for Rupiah to Singapore Dollar has become weaker over the years from Rp9,327 to Rp9,824 per one Singapore Dollar since December 2016 to August 2017. The nominal currency exchange rate of Rupiah in 2016 was 5.3% whereby in February 2017 it was increased to 9.3% (DBS Treasures 2017). According to DBS Treasures(2017), the export growth in Indonesia has reached its peak as Indonesian Central Bank has started to strengthen the IDR in order to increase import rate and the investment flow.

According to Numbeo (2017), Surabaya employees earn 36.69% less than Jakarta employees in terms of their monthly salary and therefore this makes the purchasing power of Surabaya customers weaker than Jakarta customers. Surabaya has a lower cost of living compared to Jakarta where the market price in Surabaya such as restaurants, markets, utilities, sports and leisure, clothing and shoes, rent, and apartment are lower than in Jakarta (Numbeo 2017).

Indonesia growth rate rose from 4.9% to 5% in last quarter of 2016 to first quarter of 2017 due to the increase on government spending and the high demand of the export (The World Bank 2017). The private consumption growth becomes more robust as it involves a more stable Rupiah and inflation, higher investment percentage, and a decline of interest rate. Inflation in Indonesia rises to 3.9% in 2017 due to the increase of electricity price and it was expected to reach 4.3% in the future. Domestic investment in Surabaya from 2013 to 2015 provides great results to the economy as they had increased their service investment in the city (The World Bank 2017). The economy in Surabaya is as stable as other cities in Indonesia whereby the economic growth stands at 7.6%, that shows a higher percentage than the national rate where Mayor Risma promises the increase in growth rate once the city projects started in the future (Move Over Jakarta 2016).