The speaker of this memo has proposed that Excelsior offer its own brand of coffee. The assumption is that coffee is a ‘expensive food item’, and that since there are many established brands of coffee, the best way to gain customers would be to do what Superior did when it introduced its newest brand. This conclusion is based on several questionable assumptions

First, the speakers makes the assumption that coffee is an expensive food item, but he does not define the term ‘expensive’. In fact, there are cheap, inexpensive, and expensive brands of coffee. Starbucks sells coffee at prices that compete with McDonalds’ burgers. Other companies sell coffee that costs less than a dollar a cup. The price range can be as wide or narrow as the customer chooses. If a company wants to sell a product that is priced beyond the means of many consumers, they need not match a competitor’s lower price strategy

Second, the speakers assumes that since there are many established brands of coffee, the best way to gain customers would be to do what Superior did when it introduced its newest brand. This assumes the superiority of Superior’s brand, and that every brand of coffee should be compared to it. However, there could be many competitors selling similar products, and Superior might be the only coffee company offering a new product. The company could introduce a product with the same ingredients as its competitors, but it could sell at higher prices. If Superior’s product is superior, customers will purchase it even though it will cost more than other brands. Third, the speakers assumes that the only way to gain customers is to offer a discount or a special offer. If coffee is a ‘expensive food item’, then the company could simply sell its product at the regular price. If coffee is inexpensive, then the company could offer a discount to entice customers to try the product. If the product is superior, they will purchase it at full price

Fourth, the speakers assumes that all consumers are the same. Some coffee drinkers prefer dark roasts, while others prefer light roasts. Some prefer brands flavored with cocoa or vanilla, while others prefer brands flavored with cinnamon or chocolate. Offering a discount or a special promotion might entice some consumers, but will not attract others who like a specific type of coffee. Fifth, the speakers assumes that a company cannot rely on experience when it introduces a product. If a company has been in business for ten years, it might be wise to let the consumers decide for themselves whether the company’s product is superior. The company should let the consumers decide by conducting surveys and offering free samples. After all, the consumers are the ones who will purchase the coffee, and they know which brands are of the best quality. Sixth, the speakers assumes that consumers will select the brand that offers them the best bargain. This is not necessarily true. Many companies offer free samples, and consumers often select the free samples over a package of coffee. Finally, the speakers assumes that free samples, discounts, and coupons will draw customers to the company’s products. Customers often select a product that they know and like, and then they purchase additional products from the same company. Offering a discount or a coupon might entice some consumers to try the product, but it will not convince customers to purchase a product that they already dislike

The speaker of this memo offers a good marketing strategy, but several assumptions are flawed. If the speaker wants to gain customers for Excelsior, then he should define the term ‘expensive’, research the market for coffee, and take advantage of the experience that his company has gained over the years.