Costa coffee is considered as one of the largest and the fastest growing chain of coffee shops in United Kingdom. In 2010, it was voted as the nation’s favorite coffee shop. Costa coffee was founded by Italian brothers Bruno and Sergio in 1971. Since its inception onto the market through the opening of its first shop based on London, the company has enjoyed amazing growth making it an own of over 1,300 stores in UK, and more than 700 stores in other 24 markets.
Regardless of being in a market that has historically proved to be driven by consumption rather by quality, Costa coffee has managed to successfully change the way customers think, buy and consume coffee (Geisser, 1993). It was the first UK coffee shop china to commit itself to sourcing from Rainforest alliance certified coffee. All of its baristas are coached in art of hand making coffee at its unique Costa coffee training academics. The company is already the UK’s leading coffee shop brand. It is the second largest international coffee shop with more than two thousand stores outlets globally.
It has strategized at facilitating expansion in UK and targets at opening around hundred stores during the 2011/2012. New stores include high street locations, universities, hospitals and adding to already established retail outlets through partnerships with companies like Tesco (Ellis, 2010). In addition, Costa coffee targets at furthering expansion into international markets with help from its 2009/10 acquisition of coffee heaven (Gilchrist, 1996). The acquisition has added 89 more stores in central Europe region.
The company also targets to open more than 200 more stores in key markets including India, china, Central Europe and Middle East (Oshi, 2005). Considering the great plans for the coffee shop, this paper will utilize the company’s background information and use marketing models, theories and competes to propose and develop a three year marketing plan for Costa coffee. The plan will include market segmentation, targeting and positioning alongside its growth opportunities. Also, marketing and promotion strategies will be explored in the plan. Mission statement
The mission of Costa coffee is to serve the best coffee in true Italian style. In order to achieve this, the company focuses on quality control at every stage in the process of making of coffee right from bean to cup (Kotler & Wong, 2007). This is complemented by the fact that the company has its own roastery that ensures a constant unique blend. Costa coffee envision to being the best hospitality company with a family related hotel, restaurant, and leisure club brands recognized by its people, customers and investors as leaders in every market it operates. Product service
Costa coffee is part and parcel of the Whitbread and other family of brands engaged in the business of providing hospitality services in a single form. The company operates UK’s number one brand around the world and together serves more than ten million happy customers monthly. Costa coffee is considered as one of the world’s leading force in the coffee market thus its brand is reputedly renowned and preferred. Target market Costa coffee strives to ensure that it appeals to all ages hence, young and mature customers are expected to derive satisfaction from the company’s array of choices of products and services.
The company’s menu is designed such that it specifically caters diverse customers’ preferences (Makridakis, Wheelwright & Hyndman, 1998). Also, it guarantees that its coffee satisfies the most discerning customer tastes. Therefore, its coffee is bound continue to satisfy customers across the globe. Market segmentation Market segmentation of Costa coffee can be defined using various market segments based on economic profiles, cultural groups, age groups, professional classification, marital status and ethnic or religious.
Market segmentation based on economic profile includes the middle class, upper middle class, and the privileged class, whereas age groups are classified as teenagers, young adults, and adults or mature. Professional market segment includes students, young professionals, mature professionals and the retired. In addition, based on ethnic/religious classification customers fall into Christian, Hindu, Muslim, and other, while ethnic segment include Asian, African -American, Caucasian, European or Latin-American customers.
On the basis of familial and marital statuses, Costa Coffee’s target customers are either single, single with dependents, married, married with children or married with dependents. Market positioning strategy used by Costa coffee in Chinese market is maintenance of its global positioning as the Italian coffee masters. This is position is attributed to the fact that the company offers the best and the unique coffee with the best quality when compared to that of its competitors. Costa coffee boasts of better tastes, unique and production of its coffee under strict hygienic conditions.
Also, the underlying positions for the company both its global and upcoming markets in china and India include highest standard of luxury, best service and excellence in reputation. The company’s tag line, the Italian coffee masters plays a significant role in communicating the company preeminent position as a business of the masses. This positioning is essential in magnetizing more customers to join the company. The company’s customer insight group targets using store designs and development of new products to gain access to Chinese and Indian markets.
Based on age, Costa coffee targets at market segment of UK customers who are mainly averagely aged 44yeras old. The other segment of the market is the international businesses. They have age average range of 28 years of age consisting of young people who are advocates of the media. Indian and Chinese market segments consist of populations aged below 25 years and aspires for being part of the western culture. Competition Costa coffee faces competition from a number of competitors including Statbucks which gained an entry into Chinese market ten years ago.
Also, a regional player in the Indian market called cafe coffee day is posing a threat to the company because it is expanding into the European market and has become synonymous for the majority of Indians with a cafe experience. Quick service restaurant brands like KFC and Subway are joining Costa’s cafe competitors list. The MacDonald’s is increasing its presence in the European market, hence increasing competition for Costa cafe. In its plans to expand to Chinese market, Costa cafe strategizes to reduce the levels of competition by entering the market through partnerships with a local company.
This will reduce levels of competitions while also ensuring the company gains understanding of the local culture of Chinese customers in a competitive way. This will enable the company to stay competitive with the establish players like Starbucks. Marketing mix Market mix at Costa coffee includes its products brand name, image/theme, and service and product variety. Company’s brand name COSTA is its signature and it signifies excellence, luxury and perfection around the world.
Alongside quality, status and image, the company has made its brand name a trademark recognizable and pursuable in today’s market environment (Turchin, 2007) Costa’s image or theme is luxury, and is specially designed with company’s consumers in mind. The company’s image emphasizes on comfort and luxury with style. It provides trendy and soothing ambience (Kotler et al, 2008). Therefore, sobriety of the company theme helps in inviting consumers to spend their quality time with the company without tacky flash and glitter.
Colors sued in the company’s brand logo, color scheme of its premises and general feeing of the entire premises portray a relaxing mood and warm tones. Costa’s dominant color is brown with some touches of white, black and green (Kotler & Armstrong, 2004). The color scheme chosen for the company aims at providing a relaxed and comfortable environment that is upbeat and trendy. At Costa coffee, its reputation does not only apply to its exceptional coffee tastes, but also on its insistence on offering a perfect service.
Its marketing mix involves recruitment and retention of highly motivated and very talented staff capable of delivering the best service to company customers. Emphasis is placed on opportunities that improve their skills, expertise and performance (Marder, 1997). This is achieved through rewards systems, training and development programs. Also, they are well equipped with essential company’s information that enable them work towards specific mission and business objectives. Another marketing strategy employed by Costa coffee is providing of a wide variety of products.
The diverse coffee products offered ranges from espresso, cappuccino, ristretto, mocha, caffe latte, Americano among many others. In addition to the selection of the finest coffee, the company also, offers a wide range of alternatives that include iced coffees, hot chocolate, frescato, teas and infusions. Pricing structure Costa coffee is as internationally renowned for its unique blends of Italian coffee, high regard for quality, first rate service and its determination to ensue it provides the best handmade coffee for its most discerning consumers across the globe.
These have made the company customers remain loyal and appreciative of the costs put it. The company’s commitment to satisfy customers’ needs has made its customers realize the cost that comes with providing such luxury (Kress & Snyder, 2004; Bennett & Blythe, 2002). Therefore, cost often does not deter them from pursuing their satisfaction at Costa coffee. Prices offered at Costa are usually quite high, but it is offset by discerning rates and outstanding quality. One of the reasons, why Costa coffee prefers higher middle class as its market segment is because of its prices.
Promotion mix The setting or locale of Costa’s future expansion is anticipated to take pace in all markets including UK, Asian countries and in United States among other potential coffee markets that have shown continued growth. This marketing plan is mainly intend to tap into the emerging markets in central Europe, India and china (Bradley, 2007). A comprehensive market research conducted by customer insight revealed that customers in UK are different from customers from the rest of the world.
Markets in United Arab Emirates resemble UK markets, but markets in china and India uniquely different. Thorough study and comprehensive analysis of these markets indicate that china and India are the perfect locations in terms of accessibility, exposure, and competitive advantage required. As a result of the cultural way of life and ideal markets potential, shanghai china is chosen as a launching pad for initiation Costa coffee into Chinese market. The prime location has undergone renovations, designing and revapishment to reflect standard of Costa franchises worldwide.
In addition, the uniqueness of the market segmentation in China has prompted that site locations of the company outlets are situated next to some popular stores including Prada and Gucci (Taesler, 1991). Despite the selective location of stores to allow accessibility, Costa coffee has put in place mechanisms that ensure its company’s premium value. Stores in china are designed to reflect the young demographic that utilize them for socialization. Designers ensure that the stores put in place are a bit cooler, funky and must have a vibrant color palette with a soft seating.
Promotion in Chinese market is best done using digital avenues involving the use of social website like Facebook and tweeter. Also, mobile phones are used to foster the promotion through making of calls. The market segment consists of the young audience, thus right messages and sentiments are delivered to them through blogging which is quite huge in china. Moreover, promotion of the company’s products in china is conducted through campaigns run across the national press, radio, online, regional outdoor, as well as in the company stores.
In promotion mix, product diversification is also an essential strategy of gaining access to the Chinese market. The company offers core products which are classified as category A. These products include chocolate muffin, blueberry muffin, Panini and croissant. Despite the fact that customers appreciate Costa’s service of western food, Chinese market prefers some local flavors (Hyndman & Koehler, 2005). Costa coffee promotion mix involves offering of category B products which tend to be regional. In china, essential products under this category are Szechuan chicken Panini.
Finally, Chinese market is also tapped through the provision of category C products that are specific to Chinese market only. Costa’s variety of products includes Chinese moon cakes which are given as gifts. In Indian market, savory snaking is very crucial fro attracting customers. Generally, Costa coffee marketing strategy in Chinese market is based on marketing myopia theory which proposes marketers must look towards the market and modify products to fulfill customer needs. This is a fundamental strategy, as opposed to focusing on the company and its potential before catering for the market (Christensen, 1997).
Costa’s customer insight has applied this theory to determine a customer’s specific need in the Chinese market. Also, it has used it to determine how best the company can adapt its western products to suit the changing market. This theory has enabled customer insight to be more customer-focused, innovative, understand customers’ desires as well as to design marketing strategies while keeping customers’ at the back of the mind. Sales forecasting In order to forecast company sales in the Chinese and Indian market, several orecast models including adoption, diffusion, and idea and product life cycle were used. Chinese market is still a new market untapped by many coffee firms, thus idea of introducing a new brand into the market, has a high success potential (Rescher, 1998). Costa coffee is a global brand that is discerned by many customers around the world for its premium and quality coffee experience. In addition, the product life cycle in the region is still at early stages, thus venturing into the market has high chances of the product being successful in the target market (Dev, & Schultz, 2005).
According to the proposition by marketing concept that success of a firm highly dependent on its capabilities to deliver better value as compared to its competitors, Costa coffee entry into Chinese market is likely to be successful through effective marketing strategies. The company has been crowned as the Italian coffee masters, and its entry stagey into Chinese market aims at providing the best coffee experience especially to the youngsters who are digitally oriented.
Therefore, most of the company strategies targets use of digital media including blogging and face booking to deliver company message and sentiments to the young target audience. Market attractiveness According to the market opportunity analysis, it is considered important for a company to evaluate opportunities in a new market to ensure the business is growing and sustainable in the highly competitive world characterized by competitors capabilities to trap opportunities available in the market. Market opportunities determine market attractiveness and the company probability of success.
Costa attractiveness in china’s market is above average (Flyvbjerg, 2008). This is attributed to the escalating coffee culture and increased coffee drinkers in china show a positive growth. Considering the nature of the enterprise, technological burden on the company is quite low as most of its production is handmade and requires limited application of technology. Chinese market is standard, thus advanced technology owned by the Costa coffee is sufficient to deliver the best service to the market.
Nature of Chinese target market segments is stable thus contract with suppliers, employees and transporters will be fostered by the partner’s interests, hence the company is protected from any danger. The overall market attractiveness of Chinese market is above average, hence suitable for entry by Costa coffee. Business strength Costa coffee is a well established, internationally known enterprise, and a successful member of the Whitbread family. The quality of its products is thought as the best and unquestionably considered as the Italian coffee masters.
Therefore, through its international history of success, recognition and awards, the company’s products speak for itself. It has gained a global reputation and the market share of its brand name is increasingly growing with many company outlets opened in the UK, India, Pakistan, Middle East, Poland, Bulgaria Romania and now china (Armstrong, 2001). By keeping up with its exemplary reputation for excellence, the company aims to employing the best of resources available in china to foster success of its brand name.
These include resources available for promotion, production and the distribution team. Its intention is boosted by the fact that Costa coffee has a global reputation as it pertains to recruitment of employees, training and retention which will also be uphold in china. Strategic plan According to the current market position and expected high sales in the new market, it is conclusive that intensive growth strategy is the best method to be applied.
In using ANSOFF product/market expansion grid, it is evident that a combination of well established and new businesses characterized by great strength and entry into new markets, coupled with forecasts in its growth, adoption of a market development strategy is considered useful. This is where there is arousal of interests in previously unexplored environment. Therefore, entry into this market mandates that the company launches opening of new outlets, establishment of clientele, brand recognition, and production and distribution channels.
In addition, the company must establish local management and employees. Implementation The consumer insight has gathered information on market segment in china. From the detailed research, Chinese market segment consists of young people averagely ages 25 years of age. Chinese culture is closely knit hence, individual socialize at public places like coffee shops. Costa coffee plans to target this segment through promotion and site design. Company outlets will be designed to reflect the needs of the young audience. It will be made to be more cozy, funky and vibrantly colored with soft seating.
The market segment will be reached through use of digital technology including blogging and use of social websites like Facebook. Also, the outlets will be located in popular locations in malls that already have great attractions fro youth. Product development is another stagey to be used to attract customers to the new outlets. Several new products will be launched including Costa light and brews that customers can share. The new products target group of customers concerned with watching their body weights, or those interested at drinking less amounts of caffeine.
Moreover, the company will launch Costa light comedy challenge competition to aim at finding new stand up talent. This is aimed at pushing up company sales by seven percent. Moreover the product is also expected to boost the morale of the staff. Also another segment of Chinese is the mature group consists of individuals seeking coffee experience. They are more aligned to status thus, marketing plans intended to introduce tiered system to promote customers loyalty. The program will entail some customers’ activity aimed at motivating them consume company’s products.
According to research by customer insight, Chinese customers prefer instant rewards and status essential in making them feel good. This will target at making them loyal. Loyalty schemes to be used by the company include use of tiered system and the loyalty card. The loyalty scheme targets at luring customers to seek company outlets to obtain incentives awarded. Products introduced to the Chinese customers will be charged premium prices to position the company to its international standards.