Marketing Plan For Costa Cofee

(PROJECT----------------SEMESTER FALL-2019)

SUBMISSION DATE (May 31 ,2019)

BY

Syeda Zahra Bano (18201513-011)

COURSE TITLE

Introduction to Business Management

COURSE CODE

MGT-101

SUBMITTED TO

Muhammad Danish Habib

DGREE PROGRAM/SECTION

BS STATS -2nd

DEPARTMENT OF STATISTICS

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Marketing Plan
for
Costa Coffee

Summary
Currently, coffee is the most popular drink in the world, consuming more than 400 billion cups of coffee
a year, and coffee is the world's second-largest trading product after oil in terms of volume. In the coffee
market, Costa Coffee was established in 1971 and is now Britain's oldest and the world's top 5 coffee
chain. This paper makes a macro and micro analysis of the industry environment by means of PESTEL
and Porter's Five-Forces model, and make the market segmentation, targeting and positioning for Costa
Coffee. According to TOWS model analysis, Costa Coffee has two goals in the UK market, one is to
expand the product category, and the other is to seize the foreign student market. In the meantime,
according to the Marketing Mix theory, developed a marketing strategy. Finally, it is suggested that the
company can establish a database system, which can make more accurate strategy through data collecting
and analyzing, and play a role in supervision and management.(Source: Costa, 2017)

Introduction
Coffee originated in the 1880s and was produced in Australia (Peasley & Johns, 1990). Nowadays coffee
is becoming an essential part of daily life, and this article analyzes and sets up marketing strategies for the
Costa Coffee, which is one of the best coffee brands in the UK. The number of coffee-shop in UK
(2016).(Source: BloomBerg, 2016)
Costa coffee is the biggest coffee-chain in UK which is a part of Whitbread UK with about 2000
restaurants in UK with and over 6000 vending facilities and 3400 stores worldwide. The major competitors
of Costa in UK include Starbucks, Nero and Coffee Republic.

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Vision Statement
Our vision is to be the best hospitality company that there is - a family of related hotel, restaurant and
leisure club brands recognized by our people, guests and investors as leaders in each market in which we
operate.

Mission Statement
Our mission has always been to save the world from mediocre coffee. Back in 1971 most people thought
this was a noble yet hopelessly unachievable task. But every cup of our Mocha Italia blend created since
then has helped us in our quest. Now we're the nation's favourite coffee shop, and yet another step closer
to a world where bland, average coffee is consigned to history. Want to find out more? How could you
resist?

Marketing objectives
 Growing the profitability, scale and market share in the Pakistani market;
 Developing new products that have the potential to reach significant scale;
 Managing our business so that shareholder value is added by each of our activities;
 Ensuring that brand is a leader in its field for customer service;
 Working to meet our responsibilities to the wider stakeholders in our business, including
commercial partners and the communities in which our brands operate.

Market Targeting:
While evaluating their consumer market the conclusion was that the ideal consumer’s economic profile
will be
 Upper Middle Class
 Privileged Class
While the age demographics will be:
 Mature Students and Youngsters
 Professionals
 Families
 Consumers
Gender and Ethnic/Religious Background was researched to have minimal or no effect on the choices
concerning coffee made by consumers and their patronage of coffee houses.

PESTEL Analysis
1.Political
The political transformation of UK government in 2010 brought differences in the policies including the
taxation regulation. The Value Added Tax(VAT) rate was increased from 17.5% in 2011 to 20% in 2014

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(Costa Coffee, 2015). This has notably risen the price of the Costa products. However, higher VAT usually
means lower sales numbers.
Regional integration is a global trend nowadays and also an opportunity for Costa's expansion. Also, most
governments around the world are upgrading infrastructure, which creates the good chances for Costa to
enter new markets. Although the focus of this paper is mainly the UK market, the regional integration is
still an important factor that Costa need to take into consideration.

2.Economic
The unemployment is always a dilemma in Europe, the buying power of the people is limited. When the
unemployment rate is high, people will spend less money on non-essential products and it is not a good
message for the coffee industry.
The economy started to recover in 2010, but the VAT rate and the inflation rate at that time boost the price
of commodities.
In response to this situation, Costa Coffee had to reduce the cost during the economic crisis in order to
retain the customers and maintain the market share. But Costa has to pay enough attention to the quality
of the products (Liang and Wu 2012).

3.Sociocultural
The growing living standard raises the demand for high-quality products from Costa. The organisation
has to maintain the quality and increase the variety of products and services.
With the increase in white collar jobs and IT jobs, coffee shops are also considered as a place of non-
official meetings due to its environment. Also, the decrease in alcohol consumption heightened the sales
of coffee in the UK (Liang and Wu 2012).

4.Technological
Though coffee is not a high-tech industry, technology is still a significant factor. With the implementation
of technology, Costa creates competitive edges in productivity and efficiency in its coffee brewing
department. Costa has also started to use technology in the management with new Electronic Point Of
Sales (EPOS) system (Mukerji, 2010), and improved its selling strategy with e-commerce methods.

5.Environmental
It is necessary for Costa to focus on the eco-environment. Costa should focus on the long-term sustainable
development plan.
The company has made a lot of effort to protect the environment.
Costa’s paper cups come from the sustainable wood pulp from forests in northern Europe. Their smart
coffee machines will go to sleep when they’re not needed, which helps towards reducing the carbon
emissions. In 2012 Costa coffee was given the first international environmental accreditation for any
Coffee Roastery (Costa, 2017).

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6.Legal
Costa has always followed the patterns of business regulations and works on the improvement of security
and well-being of employees and consumers.
Costa also signed with Food Standard Agency (FSA) to guarantee that they produce healthy food
(Whitbread, 2016).

Marketing mix for Costa Cofee

1. Promotion
In terms of promotion, Costa can consider a membership system, and the more money people have in their
member cards, the more discounts they will receive. Promotions can also be made according to seasons
and festivals, such as Christmas packages at Christmas time.

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2. Price
According to the previous analysis, people's loyalty to the brand is much higher than the price sensitivity,
so there is no need to fight price war for market share. At the same time, refer to the consumers'
psychology, cheap things often mean low quality (Albarracin et al. 2004).

3. Product
According to the last section, Costa is recommended pay more attention to the overseas student market.
As a result, the fresh menu needs to be designed, more different products should be delivered. The
company should make research to identify the target customers’ preference and create various kind of
drinks to cater them.
For example, the overseas student from Malaysia, India, Indonesia may like cold drinks because of the
climate in their home country. So it is a good idea to offer ice-coffee and other beverages like ice-tea and
ice-juice at the coffee shops especially the ones near the university houses.
(Ice-coffee)
Different product of costa cofee

Single Shot Double Shot Steamed Milk

Chocolate Ristretto Frothed Milk

Espresso Americano
Short, strong, sweet and black: just what you need Espresso with hot water: a longer coffee
to start the day and perfect after a meal. with an espresso taste.

Espresso Doppio Cappuccino

Espresso topped with steamed, frothed milk
A double shot of espresso: twice the strength for an
and a sprinkling of chocolate: breakfast
extra kick.
coffee you can enjoy all day.

Ristretto Caffè Latte

Espresso with steamed milk: plenty of milk
A very short espresso: The ultimate strength shot.
and lots of flavour.

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Macchiato
Espresso with a dash of frothed milk: A smoother
flavour with all the taste.
Mocha
Espresso with chocolate, topped with
steamed, frothed milk and a sprinkling of
chocolate: spoil yourself with the ultimate
coffee indulgence.

4. Place
Costa is recommended to seek more strategic alliance and establish a long-term relation with other
cooperations, like gas stations on the highways, bookshops, brand stores, hotels, and also hospitals. Costa's
strategic alliance is mainly a combination of different industries (Reinecke et al. 2012), which emphasizes
the complementarity and coordination between industries in its international operation and development.
With the increase in white collar jobs and IT jobs, coffee shops are also considered as a place of non-
official meeting due to its environment. With the change in trend, Costa moved in partnership with the
bookshops to adapt to the social change and that has contributed to the increase in the sales of both Costa
and bookshops.
It is worth emphasizing that while Costa is particular about enjoying the service in the store, if it wants to
expand the traffic hub business, it might as well try out the outside business. Customers at transportation
hubs often wait for planes or trains to take time off causing having no time to appreciate the coffee shop
environment.

Market Segmentation
For the purpose of defining the target market, the following market segments were established after
researching the restaurant and cafe-going consumers and the clientele of already established competitors.

Economic Profile:
 Middle Class
 Upper Middle Class
 Privileged Class

Age Groups:
 Teenagers 16 - 19 years
 Young Adults 18 - 25 years
 Adults 25 – 50 years
 Mature 50 and above

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Professional Classification:
 Students
 Young Professionals
 Mature Professionals
 Retired

Marital and Familial Status:

 Single
 Single with Dependants
 Married
 Married with Children
 Married with Dependants

Ethnic and/or Religious Classification:

 Christen,Muslim,Hindu Other
 Asian, Caucasian, African American, Latin-American, European

Control and Evaluation

For the above marketing strategy, Costa coffee can build a database of customer management, which is a
very simple and practical way to manage customers in the big data era. The database will record the basic
information of customers, the preference of coffee, and Suggestions on the brand. The establishment of
the system can be very good analysis customer demand, and out of the database, data analysis, for
example, may find that some customers will come three times a week, always choose the same taste of
coffee, some customers will only when promotional discounts will visit. Can also according to certain big
customers to establish a separate file management, such as for a university can build a back-end data
system alone, the administrator can through the network be the latest product information and promotional
schemes such as targeted delivery to customers. The customer can evaluate and advise the service
according to his condition after enjoying the service. The company can also refer to these customers'
Suggestions to improve the product and service quality.

Conclusion
Overall, Costa coffee has done well in the UK and is well received. As can be seen from the above analysis,
the UK market still has great potential to be created. In order to meet the requirements of more people,
Costa can consider the product more bidding, developed more taste and style of the coffee, also can
produce more well-made with coffee as the theme of related products. To expand market share, although
has held the British market first, the market share of international students is very small, can be in this
part of the group making the personalized marketing plan. At the same time strengthen the brand added
value propaganda, keep and enlarge own advantage.

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The findings above notify that Costa has very strong market intensification potential. We can observe that
Costa has exceptional sales all through its first year after entering the Pakistani market. The rationale
following this is the unique taste and the highly reputed image of Costa in the European markets. The
word of mouth only has played a significant role in their success.

The cash inflows are projected to increase much this year and in the next year with the development plans.
After expansion Costa will be able to establish a firm and strong foothold in all the major markets of
Pakistan. Since the targeted market segments include only the higher middle and elite classes, therefore
the venture is even more successful. The sales forecasts give you an idea about the market share of students
and youngsters and the professionals increasing spectacularly over the span of these three years. This is
due to the quick adaptation by our youth and their fondness towards the new trends.

The professionals on the other hand, always seem to be in the hunt for calming and serene locations to
carry out unofficial or official business meetings. Costa has proved to be a first-rate spot for the purpose,
as the sales figures suggest. Apart from this the professional sales with relation to media will also increase
since there is a very strong showbiz industry in Lahore. From the beginning a number of TV channels
have already started airing their programs art Costa. Hence this would certainly increase the revenue
generation.
Summing up, we can say that Costa has entered and has maintained an excellent marketing strategy
inviting the customers and providing them services that will create a niche of Costa in the Pakistani market
very soon.

*****END*****

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