Vietnam Youth Business Forum Online Case Competition
KEEP A CUP â€“ SAVE THE EARTH
Nguyen Le Ngan
Executive Summary The purpose of this report is to identify the current problem regarding overconsumption of Styrofoam coffee cup at Bluebag and outline 2 proposals to deal with this issue, together with our plan to implement the strategies. Overall, the report contains the following sections: •
A conceptual issue – Disposable vs. Reusable: This section categorizes current coffee cup types being used worldwide according to their materials and briefly state a movement towards reusable cups for our coffee chain.
New proposals: a short -to -medium term strategy and a longer-term strategy are proposed to achieve our greener objective.
Marketing plan: Our method to encourage the greener behavior of our customers to support our new scheme.
Table of contents Section
1. A conceptual issue - Reusable versus
3. Marketing plan
Introduction Historically, enterprises entered the market to take advantage of every opportunity to make profit regardless of the likely impacts of their business activities on the surrounding society. However, the recent improvement in public awareness leads to the ultimate emergence of the very concept “Corporate Social Responsibility”. As the founder of “Bluebag” take-away café currently opened and incredibly favored by the Youth in Hanoi, we proactively initiate to deal with the volume of plastic cups being consumed everyday, which is detailed in our codes of conduct. We understand our customers would be more than happy to know they are consuming products from a provider that cares about ethical issues.
Discussion 1. A conceptual issue - Reusable versus Disposable? Before outlining our new strategies regarding the materials of coffee cups, we believe it would be more convenient for readers to know the advantageous and disadvantageous impacts on the environment of disposable and reusable cups. 1.1. Disposable Cups: Hughes (n.d) further classified disposal cups into Styrofoam and Paper. At the moment, all coffee cups used in our stores are made of Styrofoam which is considered to be superior than paper in 3 aspects according to Papa (2010): better insulation and preservation of hot drinks, made of Polystyrene which is recyclable, and requires less energy to be produced. [Appendix 1] As a result, we can confirm that we will not proceed with the paper-cup option, however, an alternative for Styrofoam cups still has to be devised because despite being recyclable, many places around the world including Vietnam do not have access to the right technology and equipment, thus, these cups are littered everywhere after consumption. 1.2. Reusable Cups: Hughes (n.d) also discovered through his research that reusable cups, including ceramic, glass cups…can contribute to much more sustainable work ethics. However, at the present, energy has been wasted to create these mugs as they are yet to be widely used, and moreover, owners must be able to use it more than 40 times to be able to break even in comparison with the use of pure Styrofoam as storage for our coffee.
2. New proposals: Given that although our current Styrofoam cups are considered more environmentfriendly compared to paper counterparts, we resolve to come up with a better substitute. We have 2 proposals, one of which involves an immediate action and the other incorporates a longer-term perspective. 2.1. Outsourcing: For a temporary replacement for the use of Styrofoam cups, we plan to use the cup from an Australian supplier named KeepCup. The greatest advantages of the new cups from KeepCup according to their website (n.d) are firstly, they can go into most domestic recycling bins and since they are manufactured from separable component, the recycling process will be more effectively. Secondly, enough plastic in 28 disposable cups and lids can be used to make a small KeepCup, and each KeepCup cup lasts up to 3 years which is economical to avoid waste of plastic. Finally, if a KeepCup is used instead of disposable cups, after the 15th coffee, customers start contributing to environment saving. [Appendix 2] On the other hand, the drawbacks comprise, to begin with the likely increase in cost of a drink which may have a negative impact on our sales. KeepCup currently only has distribution and assembly line in Australia, US and UK, thus extra cost of transportation will incur. In addition, as already detailed above, ceramic or glass cups are alternatives to this plastic KeepCup and at this moment they are not widely welcomed. However, according to KeepCup (n.d), ease of use, speed of services and esthetics are the 3 keys to make their brand renowned. [Appendix 3]
2.2 Innovation: The second proposal adopts a longer-term view, once our business becomes financially strong enough, part of our retained earnings shall be invested in developing our own branded mugs or reusable cups. According to Starbucks (n.d), the new $1 reusable plastic cup has recently been introduced to the public with the belief that a lower-cost option can finally change the habits of their customers. Perhaps, this should be the lesson for our company, before the product development stage takes place, a small survey should be carried out to analyze which factors attract most public attention if our own branded cups are created. These factors can include cost-effective, appearance…and the outcome of the survey plays a very important role in our R&D process.
3. Marketing plan: According to the NBS findings (n.d), consumers who are willing to pay more for green products should be identified early and relevant marketing strategies should be applied. The findings include an astonishing fact, up to 80% green customers refuse to buy from companies that were accused of being polluters. Hence, in order to encourage our consumers to purchase the new cups, both from KeepCup right now, or our own branded cups in the future, it is inevitable to show that we can make a difference compared to our competitors. We believe that in order to raise consumer awareness, the following 3 strategies should be implements: Ø Educate consumers about how green products help the environment For instance, the Body Shop did so by providing leaflets, window displays and instore videos to inform their customers of the environmental effects of purchasing decisions. This could be an option to be taken for consideration for our coffee chain. Ø Use ad campaigns to show how individuals can make a difference to the environment Ø Provide feedback to show that they already make a difference
Conclusion Having a well-known brand and hence customerâ€™s loyalty is one of our strength at the moment should we wish to incorporate a greener work ethic. The previously mentioned proposals should be accounted for, however, more detailed analysis should be carried out. This includes an industry analysis to position our competitiveness in the coffee market; SWOT analysis to know our internal strength and weakness; PESTEL to realize the current external factors that might appear to be an opportunity or a threat; and finally, a financial analysis, by analyzing our current financial statements to know of the financial picture, and an NPV calculation accompanied by qualitative analysis to compare the costs and benefits regarding every alternative we have.
Appendices [Appendix 1] In fact, paper cups cannot be recycled due to the plastic lining that makes it leak proof (Hughes, n.d.) [Appendix 2] Statistics: •
500 billion disposable cups are discarded to landfill every day. That’s 1 million cups every minute, every hour, every day of every year.
Most disposable cups are lined with polyethylene, contaminating the recycling stream.
Polypropylene is the choice for KeepCup material, which is BPA and has greatest capacity for reuse and recycle at end of life. (www.keepcup.com)
[Appendix 3] Assumption: Bluebag is a well-known coffee chain in the EU and Australia, and at the moment, our store is a franchise of this brand.
Bibliography Hughes, B. (n.d). ‘Paper cup usage in coffee shops, Reusable vs. Disposable’. [Internet] Available at: <http://www.acadiau.ca/~bissix/Posters/Hughes_Coffee_Consumption_Poster_.pdf> KeepCup(n.d). [Internet] Available at: <http://www.keepcup.com> Network for Business Sustainability (n.d). ‘Research insights’. [Internet] Available at: <http://nbs.net/wp-content/uploads/RI-Firms-attract-consumers-who-will-pay-more-forgreen-products-by-showing-them-theyre-making-a-difference.pdf> Papa, J (2010). ‘Styrofoam vs Paper Cups: Which is more Eco-friendly’. [Internet] Available at: <http://1800recycling.com/2010/03/styrofoam-paper-cups/#.UqXqdmRdUT8> Starbucks (n.d). ‘Cups and materials’. [Internet] Available at: <http://www.starbucks.com/responsibility/environment/cups-and-materials>