Reference no: EM131461578

Question: In 1966, Alfred Peet opened a shop selling coffee beans and loose tea-and unknowingly started the gourmet coffee movement in America. Peet's family had been in the coffee business in Holland; so Peet decided he would roast the coffee beans in his Berkeley, California, shop just as they did in the old country. Customers would come into the shop, and Peet would offer them a cup of coffee while they waited for their beans to be roasted. The community atmosphere in the shop became contagious, with customers enjoying and talking about coffee. Peet's Coffee & Tea now has more than 120 neighborhood stores selling a variety of coffee and tea products that are consumed on and off the premises.

Throughout its history, Peet's stores have been the hub of the business. This is where most people discover Peet's unique coffee and tea products for the first time. Store personnel are constantly introducing new coffees to customers. In fact, there are pots of new flavors for visitors to sample in each of its stores. Peet's employees are enthusiastic about coffee and tea, and they share their enthusiasm with store visitors. Educating customers as to what makes Peet's different is an important part of their responsibilities. Peet's also sells coffee and tea through home delivery which over time has become a significant part of its business. Customers from all over the world can now order Peet's products through their call center or website. Because Peet's is able to roast its coffee, pack it, and ship it the same day, it can ensure the freshest possible product reaches those customers that don't live near a Peet's store. In 2003, Peet's introduced its Peetniks Program. This automatic replenishment program allows customers to have one or more products shipped to them on a regular basis. Over time, Peet's expanded this replenishment service to a true loyalty program.

The program is completely flexible in that customers can spend as much or little as they want and still be a member. Peetniks members experience a sense of community similar to that in the stores. Members have a special phone number to call in their orders and a special place on the website for managing their deliveries. Also Peetniks are sent special offerings that are only available to members which give them a strong sense of belonging. When the company sends out surveys, it gets a tremendous amount of feedback from members who say they love being a Peetnik. The name Peetnik is what Peet's calls its employees. By extending the name to the members of the Peetniks Program, it is making them part of the Peet's family. In addition to this sense of community, Peetniks receive the convenience of a constant supply of great tasting coffee, a 15 percent discount off shipping and special merchandise. For example, members of the program were recently sent a free Peetnik embroidered baseball cap which was very well received. Peet's informs its customers about new coffee and tea products in a number of ways. In addition to in-store sampling, it trains its call center employees to fully engage customers when they place an order.

Telephone personnel look at what customers have been ordering, ask them what flavors and qualities in coffee they like, and recommend new coffees. Peetniks Program members also receive e-mails announcing new products, describing their flavor and origin and discussing what makes them special. Peet's discovered that one of the most effective ways to get customers to try new products is through coffee samplers. These are promoted through its stores, call center, and the Peetniks Program and online. Over the years, Peet's has built a strong relationship with its customers through education and information. Peet's has successfully bridged the gap between its past and the future. By staying true to its traditions such as hand roasting and by constantly creating a sense of community with its users, it has developed a loyal international group of satisfied customers.19 For more information about this company, go to www.peets.com.

1. Is Peet's market monopolistic or an oligopoly?

2. What are some ways that Peet's Coffee & Tea tries to differentiate its product offering?

3. What consumer needs is Peet's satisfying?