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Di Bella Coffee Case Study

Executive Summary

Since its establishment in 2002, De Bella Coffee has tremendously thrived and rapidly expanded not only across Australia, but also into the booming Asian Pacific coffee market. Under Philip Di Bella, the coffee company has spanned its distribution in major Australian cities like Brisbane, Sydney, and Melbourne, and Adelaide, as well as China and India. Philip Di Bella’s incredible sense of direction and passion for his coffee products coupled by digitalization and unparalleled customer service explains De Bella tremendous success.

De Bella introduced TORQ (a blend of espresso coffee and instant coffee) to fill a need in the coffee market for a new category of coffee. However, the firm faced several challenges in creating this innovative product. Technological infrastructure was a major issue since some international markets were technologically unsophisticated, making it very difficult to sell TORQ there. The coffee company established physical stores in such markets to address this challenge. Furthermore, the corporation encountered relatively low consumption of milk-based products particularly in the Chinese market. Low demand for milk-based products was an important issue because De Bella offers a number of these products. Another important challenge was whether to offer adapt or offer standardized TORQ across all markets. Standardization refers to offering the same product at the national, regional, and international levels rather than customizing the product to meet the unique needs of differing market segments.

De Bella Coffee offers standardized products across all markets. The corporation perceives the world as its market and for this reason the company offers a standardized range of coffee products to both domestic and international markets, as well as its online market. By selling its products in a standardized format, De Bella eliminates the need to create customized marketing and promotion strategies to access overseas markets. Moreover, offering products globally improved its competitive advantage besides allowing it to enjoy economies of scale in manufacturing, marketing, advertising, research and development.

Ultimate coffee experience helped De Bella successfully target its products for sale in the Chinese and Indian markets. It pursued strategic alliances with both domestic and international partners to expand its operations locally and globally. It secured several contracts firms like Siemens Medical Factory and Big Bamboo Group of Sports, which helped it successfully, penetrate the Chinese market. Another strategy that facilitated its expansion is digitalization of its processes by adopting a full digital interactive platform throughout its stores. For instance, it installed tablet computers to facilitate self-ordering from the menu. Also, it developed (MyDiBella.com), an online store to directly sale its coffee products to wholesalers and customers. All these features supported is international aspirations as well. Additionally, De Bella leveraged unparalleled customer service and robust corporate social responsibility to target its products in international markets. Besides offering higher-quality coffee and ultimate coffee experiences, the corporation works closely with coffee growers and communities in which it operates to improve their quality of life.

De Bella Coffee has effectively utilized the internet to successfully market its products international. Specifically, its full digital interactive platform is to incorporate social networking interaction, which the company leveraged to create and foster a personal connection between their customers and their brand. For example, MyDeBella.com site allows their customers to view its product offering, provide feedback, and place orders at their convenience. The interactive media allows the company to converse with its customers on Facebook and Twitter as well as keep a track of all orders. From these interactions, the company has the ability to generate greater insight into customer needs and preferences, hence improving their customer service and satisfaction.

Issues at Di Bella Coffee:

Di Bella Coffee was started in Australia and has decided to expand by launching their headquarters in Shanghai and opening their second venture in India. By expanding globally, Di Bella will approach many decisions that will establish their company as an international brand. The first decision that they will need to make is whether or not to customize their product for each market they enter or whether to standardize their product and not provide different products and marketing platforms for each country. Customizing their product for each market can be very expensive because there will be increased costs for modifying advertising, ensuring the customized product still upholds the values of their brand, increased manufacturing costs, and increased research and development costs to ensure the customized product will be successful in that particular market. By deciding to keep their product standard for all markets, Di Bella can achieve economies of scale and invest more funds into creating the ultimate experience in their storefronts.

Another issue that Di Bella may incur is hiring management that has international experience and knows how to successfully penetrate global markets in order to ensure the company is able to address the legal framework in each market. The need to obtain local bank accounts, gaining product approval, and register the company can be very daunting. Management must also ensure that the company understands the culture of the markets they are entering. The business culture and the culture of the people differ in each market, therefore, being aware of those differences is pertinent in order to establish the business and carry out day-to-day operations. Management must also be knowledgeable to use technology in order to market their products using an online strategy that will allow success in the different Asian markets.

Di Bella has created a new category of coffee, called TORQ, that fuses espresso coffee with instant coffee. However, when entering the Asian markets they may incur issues in clearly differentiating their product. Asian countries are currently the fastest growing in the demand for the coffee market, so Di Bella management must decide how they will attract customers to their product while maintaining a standardized product across countries. Di Bella must clearly understand the culture of each market they enter in order to thrive. They must decide whether to differentiate based on cost, product packaging, promotions, or create brand loyalty through the innovation of their products.

Lastly, Di Bella may incur an issue ensuring the company’s corporate social responsibility is upheld in each region the company obtains their coffee beans for production, by focusing on the improvement of the quality of life in those areas. As the company grows, the ability to achieve economies of scale is sought which can lead to unsustainable production practices.

Conclusion:

Di Bella Coffee is facing several choices for their expansion into India. They must choose the best method of entering into the market by either customization or standardization, finding management with global knowledge, differentiation, and their corporate social responsibility. These choices will lead to either the success or failure of the company in India and will also lay the foundation for moving into more countries in the future.

In preparing for the move globally it is imperative that the company know and understand the culture and customs it is trying to market its product(s) to. Di Bella Coffee has an effective strategy in Australia but hiring the right people to market the brand to a different culture can be difficult if not done properly. Choosing the correct wording and pictures to promote the business is important so as not to offend to people, just as much as choosing the right location to bring the people in. Di Bella Coffee will need to surround themselves with global minded people to lead them into the next phase of their organizational journey in order to be successful. Not only can Di Bella Coffee be successful opening a store in other countries, but they can also sell online. They can reach many other nations just through the click of a mouse. Di Bella Coffee can continue to grow and be profitable thanks to the digital age.

Resources:

http://www.deakin.edu.au/about-deakin/media-releases/articles/many-australian-smes-struggle-to-network-the-chinese-way-deakin-report

https://www.businessinsider.com.au/the-five-biggest-practical-challenges-for-foreign-smes-in-the-chinese-market-2010-12?r=US&IR=T

https://dibellacoffee.com/Our-Story/About-Di-Bella-Coffee

https://www.investopedia.com/terms/p/product_differentiation.asp