Costa Coffee Essay

1. Executive summary In this stock report we ar analysing the business environment in which our conjunction BESO and its briny competitor costa drinking chocolate operate. The main objective is to research, providevass and understand the competitors business dodge, to find come forth if thither is a gap in their action plan and how we can find out advantage of this. The report consists of SWOT analysis of BESO and PEST analysis of some(prenominal) companies. The target commercializes of both BESO and costa coffee berry ar similar. That discharges the aspiration in the midst of them even self-aggrandizingger.The report as well as discusses the alimentstuffing approach and the various publicizingising streamlets conducted by costa Coffee and the advertizing techniques we decide to surveil in the long run. The distri justion system of rib Coffee is too considered and plans to open to unalike locations. The set strategy of BESO is based closely to the s trategy of costa Coffee as we study adopted warring damage. In damage of ethical produces we examined the various types of corporate social responsibilities of costa Coffee. 2. IntroductionThe business report includes an analysis of costa Coffee as a main competitor of BESO Coffee. The report examines the business environment where both companies operate in. It has been quest from the bewraying Director of BESO and also has to be foc employ tho on the UK market. 3. BESO Brief history BESO Coffee is a cocoa chain settled in the UK in 2001. It has been established by an independent trader merely later on when the business has gr cause, vernal stakeholders appe ard. At first BESOs target market was limited as well as the products it furnished- simply a few types of cocoa and limited types of confectionary.However, only two old age after sending BESO on the market it became popular done different bases of swelled number, therefore the menu became much diversifie d and the target market as well. BESO has sh knowledge great(p) performance during the eld and has be practice one of the close recognize names on the current market. That is why costa Coffee is persistent as a main competitor of BESO. 4 5 The market employment 4. SWOT and PEST analysis 4. 1. SWOT analysis Strengths cost-effective and trained staff Customer loyalty Brand recognition eminent prize deep brown Friendly and relaxing atmosphere for our customers.Weaknesses Limited figure of speech of outlets Low levels of advertisement Interior design needs updating much seethe of the types of java available. Continual change in consumer taste tail be seen as an unhealthy product Opportunities Based in telephone exchange capital of the United Kingdom which covers a double demographic of customers Olympics 2012 exit bring in more(prenominal)(prenominal) sales Introduction of impertinent products including healthy options. Retailing mugs and umber equip ment Threats Customers demanding fair-trade and organic coffee. Big chain coffee shops dominating the market. Economic issues and crisis overleap of ownership of primary resources e. g.Coffee farming. 4. 2. PEST analysis on that point ar many different Political, Economic, Social and Technological issues that both our company and also rib Coffee face at bottom the coffee industry. Firstly, the first political issue to consider is that majority of coffee beans argon brought and made in developing countries, so companies need to ensure that their coffee is made by fair-trade dealers and they need to consider the ethical conditions of the labor used. An opposite political issue includes whole the taxes and tariffs incurred by any business operating within the UK, whether it be import tariffs or VAT on goods sold.The economic factors that our companies face are similar to the issues faced by many businesses within the whole goods and work market, this including the economic recession of 2008. Customers now tolerate less disposable income to blow over and as a result cut-down on the purchasing of non-vital goods. This is due to of unemployment acclivity and the levels of debt increasing. The social factors that need to be taken into consideration is that consumers are consumption more currency on coffee due to the demand for fibre goods. This can be seen in the comparison of value of tea and coffee industry with coffeevaluing at 738 million according to the Times (2008). As a result, companies need to ensure that buying coffee is non only a quick purchase, as they need to founder value-added for customers including high prize coffee and a relaxing 5 6 The trade concern atmosphere. Lastly, the technological issues that both our company and costa face is the introduction of successful home coffee by the use of coffee machines specifically tailor-made to make at home, for example, the Senseo coffee-machines. This can be seen as a terror to coffee shops as it is a cheaper alternative for customers in the long run.5. object market According to a Mintel report titled Coffee Shops print February 2012, Two thirds of consumers buy coffee out of home, rising to three in four among 16-24-year-olds as core users. costa Coffee has the highest number of outlets within the UK totaled to 1,302 coffee shop chains as opposed to Starbucks who has 739 and Caffe Nero with 509 shops. It also claimed that Costa has different store designs to suit different purposes such as Metro which is aimed at the younger/urban consumers and Evolution which is designed for more mature customers in provincial locations.It states its customer segments are Recharge, Relax, Refuel. thusly the target market for Costa Coffee ranges from a all-encompassing range of customers of different ages as it caters to many different needs. Students have been said to make up 30% of their target market, Professionals 45%, Families 10% and mature consumers 15% of the clientele. At BESO Coffee, our market we aim to target at is very wide as it ranges from teenagers to mature customers. We even target at families as we bye menus for younger children and parents.Our products are reasonably priced so it can be bought from people of many different income level groups, from working to upper class. 6. marketplaceing approaches Costa coffee have used many different marketing approaches and defends in come in of battle to succeed within the industry as it is classic to continually update their marketing strategies. Costa has introduced campaigns such as How Do You the like Yours, which countenanceed customers to customize their coffees by for example adding espresso or syrup.This dishs them disunite themselves from competitors as it gives consumers more power and control over their purchase. Another campaign introduced by Costa was the arrival of Costa light in 2011, which offered low-calorie and healthier options to customers. This was an im portant step for Costa as there has been an increase in healthy eating flairs, which can be seen in the figure below. get into Consumer demand for display of calorie content on restaurant menus, June 2010-December 2011 6 7 The Marketing Profession new(prenominal) campaigns included the launch of Costa Coffee Gift Card in November 2011 which allowed customers to buy card with pre-paid kernels of up to ? 75 and a more recent campaign at the offshoot of 2012 when Costa collaborated with the Spirit Pub Company which ensured that Costa coffee would be used in its restaurants chains including Chef & Brewer and Flaming grill. Costa has used many forms of media to advertise their campaigns to the public. One method used to specify customers was through and through the use of television advertising in 2008 whereby Costa launched its first ad.The advert helped to illustrate the superiority of Costas products and according Reynolds (2010) its message was that the send is on a mission to save the world from mediocre coffee and seven out of 10 coffee lovers prefer Costa. Other forms of media used by Costa include Billboards as it can be seen by many commuters within the UK by their use of enlarged heady writing and minimal distraction of the main message. Their billboards are distinctive as they have a continual theme colour, text and logo, which are appreciate by customers.Our approach to our marketing campaign is to use alternative uses of media to present our message, including the use of the Internet, as it is a popular form of media used in todays society. We aim to use Facebook and Twitter to advertise our campaign and the company as a whole as it covers a large demographic. 7. Distri barelyion strategy Costa operates in the UK through its own coffee shops, franchises and wholesale outlets. On the18th of October 2011, Whitbread stated that the number of Costa UK stores had risen from 1,217 in marchland 2011 to 1,302 in September 2011, including 95 openings a nd ten store closures.In comparison, Costa International increase its stores from 654 to 701 during the same period, including 72 openings and 25 closures. slowdown Costa Express/Coffee Nation units increased from 877 in knock against 2011 to 934 in September 2011, taking account of 79 openings and 22 closures. These units are partnered with service station operators such as Moto, Esso and Welcome Break, retailers like Tesco and The Co-Operative and foodservice group Compass (Mintel 2012). In a market with low loyalty levels, advertising and promotion is important in keeping dirts in the forefront of consumersminds. Costa Coffee looked to sustain an emotional response among consumers with the marketing supporting its launch of Costa Light variant in autumn 2011 through an advertising campaign that used slogans such as All the love, none of the handles and free feel good in every cup (Mintel 2012) Customers were also further to see the lighter side of life with its Costa Light drollery Challenge contest. Costas aim was to showcase up-and-coming comedians by asking them to submit a one-minute film via its website.A public voting then saw the top ten entries from five regions go through to a further round to be judged during one-off events across the UK, with the campaign last culminating in two regional winners performing at The Comedy Store, London (Mintel 2012). Costa Coffees distri unlession system is broad with a balanced portfolio across high streets, retail parks, concessions, airports, rail and other blend hubs as well as an increasing number of stores in new locations such as universities and hospitals. Innovative distribution channels, such as Costa Express and Drive Thru are developed.They depart extend the brands reach and increase accessibility for the customer (Whitbread, 2010). 7 8 The Marketing Profession Andy Harrison, chief executive of Whitbread said that popping out for a coffee has become a firm fixture of peoples lives. Coffee cu ltivation has grown massively over the last five to 10 years people have a real demand for quality coffee and a choice of different coffees, he said. When I was kid everyone wanted a Nescafe that has definitely changed. (The Guardian 2011). 8. Pricing strategyCosta Coffee is a well-known, high valued and trusted cafeteria all over the world. They offer wide range of high qualitative coffee drinks and food, excellent operate and relaxing atmosphere. Costa relies on their superiorities and offer comparatively higher prices because they have realized that the luxury comes with the price. Costa Coffee offers two sizes of drinks average and large and the price difference between them is not significant. In this way they abet their customers to buy the bigger size, because the amount of the drink is bigger and is on around the same price as the medium one.But even the medium size of cappuccino is served in a cup with the size of soup bowl, so Costa Coffee has a reason to charge a relatively higher price because of the value they give, even though in most cases customers do not need such a big amount of drink although they have to pay for it. In this way, Costa is able to sell cheaper coffee to regular customers, who are aware of the amount of the drink (with stretch demand) and sell more expensive coffee to infrequent visitors, therefore the cafeteria makes big profit from each cup of coffee.This is the corporate strategy and how Costa ready a way to charge comparatively higher prices than most of their competitors. This strategy has some disadvantages and threats such as the present credit crunch, which might attain the sales and the budget of Costa Coffee as they target fondness and upper middle class, therefore in the time of recession customers whitethorn prefer some of the cheaper competitors. 9.Pricing strategy that we will adopt competition based pricing strategy One of the biggest advantages of the ambition based pricing strategy is that in t he same time you are focused on your business and objectives and on the competitions strategies. Once you understand what the competition is doing, you have the chance to do everything better and to gain a combative advantage (Jobber 2008), therefore to increase the number of customers and to gain bigger market assign.There are three types on competition based pricing methods Price your product the same as the competitor Set your price to increase customer base Seek larger market share through price Compared to Costa Coffee we are fairly new to the market so it would be more appropriate for BESO to adopt the rival based pricing as a strategy that will allow us to grow fast as competitive brand. In gear up to achieve biggest results we will match/mix the three competition-based pricing methods.BESO will offer similar products as/like the Costas products but on lower prices, therefore BESOs market department mustiness always be aware of what the competition is offering in ord er to provide better value for money. In this way BESO will has the chance to outline its advantages as comparing similar products as those of the competition but on lower prices (even pence). Once customers understand our priorities they will use to come to BESO as a place, which offers better value for money, 8 9 The Marketing Professiontherefore we will increase our market share (Palmer and Hartley 2006). In terms of increasing customer base, the process is similar to market penetration, we have to select a price that will beat the competition and doing that we will motivate customer to notice our products and to make a purchase decision. Market penetration pricing works well in the introduction floor of the product life cycle and in a passing competitive market, as you increase the production some of your costs will decrease. During the following(a) stages of the product life cycle the price can be increased (Jobber 2010).The easiest way to increase the market share of BESO is to select prices that will suck up and hold as many customers as possible (depend on target). It is recommended to adopt the Market share pricing after the business achieved market penetration, because they are linked as the market share happens when large volume of products are sold. So it is better if things happen step by step. And finally the market share is calculated by dividing the amount of each company sells out of the total market and in this way the market leader is determined.9. 1. Disadvantages of Competition based pricing There is a danger to ignore your own production cost if you focus too closely on the competitors prices. It takes more time to research and update competitors information. Competitors also can copy whatever price you select. 10. Customer service Loyalty is particularly low in the coffee shop market, making customer retention a paint area of improvement tone ending forward (Mintel 2012). At the start of 2012 Costa Coffee launched the Just Ho w Do You Like Yours? campaign.It aims to highlight the customizable elements of its products, a fundamental differentiator to its lower-priced non- extraist competitors such as EAT and Pret A Manger. A fall out pricing strategy was also included in order to solicitation to consumers sense of value for money. For example, customers can now add an free shot of espresso or sugar-free syrup shots to their drinks for 35p per unit. Also, in 2011 Costa Coffee launched giving cards (Mintel 2012). Although consumers state that convenient location is more important to them than the brand of coffee chain, operators can still capture consumers attention through qualities other than price.For example, two in three users think that quality is the most important decision-making factor when choosing where to buy hot drinks, whilst nearly half disagree that they usually choose the cheapest venue. However, with so many brands trading off of a quality positioning, operators have to ensure that they are differentiating themselves on additional levels, hence the trend towards lifestyle branding in the wider eating out market (Mintel 2012). Costa Coffees reputation for excellence applies not only for the especial(a) coffee but also the insistence on perfect service.Recruiting and retaining highly motivated and talented people is essential and great emphasis is primed(p) on improving the skills, expertise and 9 10 The Marketing Profession performance of our people through award winning, industry-leading training and developing programs (Mintel 2012). 11. Costa Coffees attitude towards environmental issues Consumers are extremely wakeful about environmental issues, trying to buy environmentally friendly food and drinks. Most of the customers feel that it is their duty to save the environment in order to live healthier.That is why most companies are under a mickle of pressure to change their attitude towards the environment most often link up to greener, packaging solutions , recycling and many others. Costa Coffee is the first UK coffee chain buying beans from Rainforest Alliance Certified farms. From October last year, nearly 100% of the coffee beans for Mocha Italia blend are from certified sustainable farms. Costa Coffee is also a member of UK Paper cupful Recycling Committee, their cups are made from sustainable sources and thats saves about 1,100 trees a year.The ingredients from which the cups are made of are all from iconic recyclable secular and are made using only certified sustainable pulp. veggie Costa Coffee is also concerned about its coffee-growers and in 2006 it registered a Costa Foundation, dealing with the improvement of the welfare of coffee-growing places like Colombia, Costa Rica, Ethiopia, Guatemala, Uganda and Vietnam. Costa Coffee is also a partner with Cafechurch network, supporting local community. The makeup deals with environmental issues, fair trade, divorce and stress problems and others.People are odour well, being part of a great atmosphere, live music, good communication, and a lot of interviews, having the probability to understand more about the Costa Coffee Foundations. 12. The competitors CSR activity Costa Coffee is not achieving fundamental standard of Corporate Social Responsibility (CSR). The coffee company does not give a specific entropy for the carbon footprint. Its environmental data is part of the environmental data of its parent company-Whitbread. 13. What is your attitude to CSR/environmental issues going to be?The aims that Costa Coffee manages to do are quite a lot. Some of the first ones are Developing Costa Coffees energy & environmental strategy. Managing carbon reporting and ensuring compliance for CRC. Maintaining the ISO50001 system. Working with makers waste contractors and NGO to improve takeaway cup recycling. 10 11 The Marketing Profession Developing Costa Good together CR programme . By 2012/13 Costa Coffee aims to help 15, 000, providing them access t o education. That target will help to bring together the communities, destiny adults to find jobs and trades.The coffee chain aim is to raise ? 750,000 alone during 2012/13. Costa Coffee will try to dedicate Energy & Environment motorbus in Costa Coffee. That will be useful, trying to insure more control and to organize the best structured plan for the company. Costas cardboard cups are not recyclable, even though the cardboard can be recycled. The other ingredient in the cardboard cups, the ink and the glue, cannot be recycled. The target environmental plan of Costa Coffee is to use vegetable ink and degradable glue on its cups.Costa Coffee is raising money to build schools in regions where a lot of coffee farms take place. There are already 22 schools in developing countries. That makes a big difference for a lot of young people who have the opportunity to study. Costa Foundation is also taking care for the supplement of special healthy nutritious meals and laptops for the child ren. 14. Conclusion Based on the researches and analysis that have been done BESO has a great potential to use Costas disadvantages and to convert them into our opportunities for prosperity.Offering similar products as those of Costa Coffee but on lower prices and in the same time launching our own products (BESOs cupcakes) is a good strategy to gain a competitive advantage. Slight changes in the interior design of our cafeteria would be refreshing and a good way to attract new customers. Furthermore increasing our advertising activities would be an opportunity to remind our customers and in the same time to inform our new potential customers about BESOs fantastic services and great value for money. 15.References Baker S. (2003), New Consumer Marketing, West Sussex, John Wiley & Sons Ltd Cooper D., Schindler P.(2011), line of products Research Methods, New York, McGraw Hill program line Economics Help (2008), Costa Coffee UK and Sales Techniques. addressable at http//econ. ec onomicshelp. org/2008/08/costa-coffee-uk-and-sales-techniques. html Accessed twentieth March 2012.Government of Alberta (2012), Methods to Price Your Products. Available at http//www1. agric. gov. ab. ca/$department/deptdocs. nsf/all/agdex1133competition Accessed 20th March 2012 Jobber D. (2010), Principles and Practice of Marketing, London, McGraw Hill Education 11 12.The Marketing Profession Kotler P. , Armstrong G. (2006), Principles of Marketing, The United States of America, Library of Congress Cataloging-in-Publication information LinkedIn (2011), Costa Coffee Energy and Environment Manager at Whitbread. 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