The Five P’s of International Coffee Marketing

April 20, 2016

The four P’s—Product, Price, Promotion and Place—were introduced to participants on the first day of a three-day intensive training course in coffee marketing earlier this year. Held in conjunction with the Thai Specialty Coffee Association festival in Bangkok, the training course attracted 26 participants, both male and female, from Myanmar and Thailand.

The fifth P in marketing—People—was also highlighted, given the importance of personal relationships in the exchange process, and feedback at the conclusion of the course about lessons learned focussed on the customer: “Know how to build enduring relationships”.

Participants came from a diversity of sectors, including coffee producers, processors, wholesalers and distributors, traders, retailers, market consultants and quality assurance auditors. Either directly or indirectly, all participants were involved in sourcing Arabica coffee from smallholder farmers.

Peter Batt, of Peter J Batt and Associates, ran the training, which was organized conjointly by the Agriculture and Food Marketing Association for Asia and the Pacific (AFMA) and the Specialty Coffee Association of Thailand (SCATH).
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Over the three days, twelve 90 minute modules were prepared for presentation. Using price as the key variable, the costs of production, first at the farm level and then in the subsequent wet and dry processing of the coffee, were explored. Improving quality and productivity of agronomic practices at the farm level was a major part of the training.

To benefit from the economies of scale and the experience curve, participants were urged to engage with collaborative marketing groups and establish enduring long-term relationships with downstream customers. Using data from the International Coffee Organization (ICO) participants were introduced to the dynamics of supply and demand. A Starbucks example was used to examination the value chain—it was revealed to participants that for a $4.80 cup of coffee, the value of the coffee itself was less than 2%.

On the demand side, issues about consumers wanting to know more about where their coffee has been produced, the impact on the environment and biodiversity, and ethics of production, were all used to explore opportunities for differentiating the product in the market. However, whenever producers seek to secure a premium price, if the product is to meet customers’ expectations, producers need to adopt a quality assurance system. By global standards, as Thailand is a very small producer of Arabica coffee and much of its value is attributed to its uniqueness, delivering a consistent taste in the cup will be paramount in establishing a reputation for producing specialty coffee.

This important lesson was not lost on the participants, whose feedback on what lessons they will take back to their worksite included “Quality management: every product should have a quality standard to ensure it meets the customers’ expectations”.

At the conclusion of the day, the President of the Specialty Coffee Association of Thailand addressed the participants who were then awarded with their Certificates of Attendance.