costa coffee differentiation strategy

Reputation for high quality coffee. Measuring Productivity Turnover in 2010/11 was up 11. Their goal was to provide a premium alternative to the low-end instant coffee that was The purpose of this paper is to analyze Cutbacks business strategy, customer value proposition, company's operations and the risks to financial results and reporting in the short term. Promotion Promotion Costa Coffee Promotion Starbucks Brand name is enough to muster the Fair trade and Green Coffee required target market. Differentiation is another most commonly used generic strategy to build a competitive advantage. Selective targeting strategy is used by the Costa coffee as being present in 29 nations which are geographically separated, following selective strategy is helping the company in catering to the needs of the customers and introducing new products accordingly. Big gap between 1st and 2nd There is a big gap between the 1st ranked in the coffee industry vs the second ranker. Starbucks has 2400- outlets across the world whereas Costa Coffee is around 4-5000 outlets. Starbucks stores are effectively positioned as a third place away from home and work, where people can spend time in a relaxed and comfortable environment with their friends or alone. Therefore, for Costa Coffee to position itself and become associated with this elite is a benefit, particularly when consumers are positioning it against proud-American, Starbucks, in their minds. (Bradley 2005, pp. It sells a variety of sparkling and still beverages. The company has over 4,000 stores and 9,000 vending machines across 32 markets. in the US. This results in greater revenue for Costa Coffee B Project Marlow. BUSINESS LEVEL STRATEGY Costa Coffee competes within its industry by using differentiation as their business level strategy. Expanding in various consumer markets with a higher youth population who has a high purchasing power can be an opportunity for the company. Starbucks has about 182,000 employees across 19,767 company Costa Coffee, Tim Hortons etc. Revenue in hotels and restaurants up 10. According to the VRIO Analysis of Costa Coffee B Project Marlow, its patents are a valuable resource as these allow the firm to sell its products without competitive interference. A huge line of company products are offered in the company that gives the focus and differentiation strategy of the company. 1. The department is a unique part of the companys business-level strategies, which helps McDonalds to increase profits and apply a diversification strategy in order to satisfy the needs of its customers. Brand values and their effect on brand choice Functional value the utility perceived from the brands functional capability. It has over 4,000 store locations worldwide. Change a life today. Rating. Charity Most of the awareness will be through Product placement the word of mouth of people amongst Cross selling the masses. Functional needs vs. With your help a donation today can change a child's life and make a huge difference to the communities they're a part of. 3. Thus, this gap in itself shows that Costa coffee has a large ground to cover. S.W.O.T. There are several marketing strategies like product innovation, pricing approach, promotion planning etc. High level of international presence the 2 nd largest coffee chain globally with 3,401 stores across 31 countries. retailer of specialty coffee around world. In just one month, flat white has already accounted for 7.5% of the sales. 8m in 10/11. The domestic market, which currently stands at an estimated Rs 1,100 crore, is dominated by outlets like Cafe Coffee Day, Baristas, Costa Coffee, Coffee World, Lavasa, Coffee Bean & Tea Leaf. The author of this theory suggests that firm must be valuable, rare, imperfectly imitable and perfectly non sustainable. Transcript. Clarity of message 19 5. The pragmatic research was passed out at one of the primary coffee shop chains that are Starbucks and Costa Coffee. In 1980, in his book, Competitive Strategy; Techniques for Analysing Industries and Competitors, Michael Porter proposed three alternatives, which businesses across all industries adopt as a means of creating a competitive advantage. Costa Coffee is a multinational coffee brand owned by The Coca Cola company. April 1, 2017. Costas reputation for excellence Higher product variety and quality applies not only for the exceptional coffee but also the insistence on perfect Higher product variety and quality service. Largest coffee chain in the UK with 1,357 high street stores, 1,032 franchise stores and 7,100 Express machines [1] 3. Categories. STEP 7: VRIO Analysis of Costa Coffee: case study solutions. Vrio analysis for Costa Coffee case study identified the four main attributes which helps the organization to gain a competitive advantages. 2. A portfolio business that generates operating cash flows over and above internal requirements, thereby providing financial resources that may be used to finance new acquisitions, fund share buyback programs, or pay dividends is commonly called a. cash cow. Costa Coffee Marketing Strategy & Marketing Mix (4Ps) Marketing Strategy of Costa Coffee analyses the brand with the marketing mix framework which covers the 4Ps (Product, Price, Place, Promotion). Starbucks uses market development as its secondary strategy for intensive growth. January 2018 . Costa Coffee has ambitious growth plans, with a vision to become the Worlds Most Loved Coffee company. Costa Coffee produces coffee based on the needs of its customers. The domestic market, which currently stands at an estimated Rs 1,100 crore, is dominated by outlets like Cafe Coffee Day, Baristas, Costa Coffee, Coffee World, Lavasa, Coffee Bean & Tea Leaf. 1. In 1998, Starbucks purchased the Seattle Coffee Company in the UK, which had 60 retail locations, and built the business to 300 shops. The Value Added Tax (VAT) rate was increased from 17.5% in 2011 to 20% in 2014 (Costa Coffee, 2015). Porter Five (5) Forces Analysis is a strategic management tool to analyze industry and understand the underlying levers of profitability in an industry. Costa invests heavily in targeting specific markets. The organization has focused on differentiation generic strategy in order to gain potential sales growth rate. Facilities are being expanded to cater for a wider selection of people. 2. Competitive Strategy Of Starbucks. Blue ocean strategy: introduction. Operational activities of this organization have established a better transportation system for the customers. Costa Coffee Differentiation. It uses differentiated strategy, developing different market mix for different segments. Step 2: Choose the competitive strategy (cost strategy vs. differentiation strategy) you think you should be following. prevalent coffee culture with which Starbucks products and atmosphere do not align. It has over 4,000 store locations worldwide. Companies often have a differentiated view on overall customer experiences. During the period of global economic recession 2009 Costa achieved a remarkable level with 60% profit increased and 23% revenue increased1. Its brand of coffee has an Italian origin, which is a differentiation strategy. The four strategies are summarised in the figure below: The differentiation and cost leadership strategies seek competitive advantage in a broad range of market or industry segments. One differentiation strategy the shop will use is the value proposition approach. They have several segments of consumers and offer a small but efficient range of products Costa Coffee A proposal to build the next generation self-serve Espresso Bar uses differentiation in combination with the cost leadership strategy to achieve growth objectives. In India, the per capita consumption of coffee is around 85 grams while it is six kgs. Costa Coffee vs Starbucks. I was enjoying a coffee at 9am this morning at Caffe Nero and had a thought about consumer spending in relation to coffee (amongst other products and services). Costa Coffee, CBTL and Gloria Jeans all use the differentiation strategy, where they hold that their products and services are fundamentally unique in comparison to their competitors (Griffin & Pustay, 2013). However, to a budding-marketer, Starbucks seems to be creating a more sustainable marketing strategy that will prove to be more competitive in the long-term. Through the power of education, the Costa Foundation aims to eradicate poverty in coffee-growing communities. Embed! The three generic strategies proposed by Porter were: Cost Leadership, Differentiation and Segmentation. Weaknesses in the SWOT analysis of Costa Coffee. 250m the year after the radical change in direction to ? Costa coffee was founded by Italian brothers Bruno and Sergio in 1971. Focus strategy (differentiation)28 CONCLUSION AND RECOMMENDATIONS29 REFERENCES32 Hospitality Industry: Costa Coffee Shop COMPANY ANALYSIS Executive Summary Costa Coffee is one of the most famous coffee chains in the UK. This strategy supports business growth by generating revenues in new markets or new market segments by offering the companys current product mix of food and beverages. I have chosen Costa Coffee as it currently is the market leader in terms of most coffee retail outlets in the United Kingdom as demonstrated on appendix 1. The Coca Cola Company follows a broad differentiation strategy. In 2010, it was voted as the nations favorite coffee shop. CrossComparison Costa coffee - Barclays through branding strategies, Costa delivers unique messages quality and sense of belonging to the brand (e.g. These business strategies, based on Costa Coffee Assets enabling Costa Coffees differentiation. Coffee consumption in India is growing at 6% per annum compared to the global 2% plus. Best Essays. Focus strategy (differentiation)28 CONCLUSION AND RECOMMENDATIONS29 REFERENCES32 Hospitality Industry: Costa Coffee Shop COMPANY ANALYSIS Executive Summary Costa Coffee is one of the most famous coffee chains in the UK. It generates 60% of its revenue and about 80% of its operating profit from outside the United States. Starbucks as a whole pursues the broad differentiation strategy, a kind of strategy that differentiates the companys product offerings from rivals with attributes that appeal to a wide array of buyers. Coffee bars have 5% penetration in India which itself portrays the opportunity lying ahead. Costa Coffee stores in the UK (L) and China (R). Competitive Analysis is defined as one of the critical parts which deal with identifying the key competitors of the companys product and services along with evaluating How It Works. The blue ocean strategy seeks to bring differentiation to organizations and brands like Costa Coffee B Project Marlow to create awareness and presence in a new market place and create demand amongst consumers. Strategic positioning 19 The Sister Project 19 6. In this industry there are many coffee shops all selling similar products as our diagram below shows. 218KB . Regional integration is a global trend nowadays and also an opportunity for Costa's expansion. Budgets. Overview. Acquisitions or forming strategic alliances with other coffee companies can help boost the business for Costa Coffee. Purpose of the Study To investigate the brand positioning strategies of coffee shops in Turkey, A comparative study Step 3: Analyze the competition and determine the industry standard. The company differentiation strategy should be associated with charging premium prices to the coffee and espresso products. Thus Costa Coffee is more interested in a pull strategy rather than a push strategy. April 28, 2021. Costa coffee brand audit. A non regular customer wouldn't find out about the small size and so would end up paying a higher price, but, an infrequent customer is likely to have a more inelastic demand and therefore doesn't mind paying the extra 40p. report for the promotional plan of hot and chocolate tea/coffee of costa coffee module name : managing finance and marketing in business module code : th600b1e submitted to : ohalleran eric, longart pedro submitted by : ratheesh viswanathan 21208850 reshmi prabhakaran usha devi 21205617 sukhwant kaur mann - 21207381 Product differentiation. Costa Coffee can implement the differentiation strategy by producing differentiated coffee and espresso product from what is currently offered to cushion the economic impacts of the novel COVID-19. Prices of Starbucks. It was founded in 1971 in Italy by two Italian brothers: Sergio and Bruno Costa. It is forecasted that the sales of Costa for 2012 to 2014 include 10, 10.70 and 11.20 million. Operating profit grew from 3188m in 99/00 to ? Emotional and Psychology needs. About us' About us; Terms and conditions; By contrast the differentiation focus and cost focus strategies are adopted in a narrow market or industry. Date. Competitive marketing strategy is described by Kotler and Armstrong (2012) as a strategy which positions company against competition giving it the strongest possible strategic advantage. Coca Cola is worlds leading soft drink maker and operates in more than 200 countries around the world. Costa Coffee is using a new strategy of emotion-led marketing to promote its new Costa Light drink (see right). Introduction Costa is Britains leading coffee chain in a highly competitive and growing market. It was founded in 1971 in Italy by two Italian brothers: Sergio and Bruno Costa. Matrix / Generic Strategy Options 6.2.1. 4. Accordingly, the coffee chain giant focuses on the quality of its products and customers pay premium prices for high quality. UK-based Costa Coffee is similarly expanding its current operations in China, with over 440 stores across the country. As mentioned earlier, the brand is well-known for its richly brewed coffee and a collection of premium teas. Price Because of its product varieties and quality Costa Coffee believes in premium pricing. Initially they were selling of whole bean coffee in one Seattle store and by the year 1982 the business had grown tremendously and has opened five stores selling the coffee beans, a roasting facility, and a wholesale business for local restaurants. 5%. This paper discusses Coca-Cola Company, a beverage industry leader, and it will focus on analyzing its business-level and corporate-level strategies. Step 1: Examine existing positioning of the company and its products and/or services in customers minds. It will use a compelling value proposition to inform customers that it offers the finest espresso coffee in the market. Make a donation. Costa Coffee Analysis and Strategy Differentiation 18 4.3. Coca-Cola is making a move into the hot beverage market with the acquisition of Costa for 3.9bn as it looks to diversity away from its core business of sugary drinks. The company has. The market development strategy implemented by Costa Coffee (Refer graphic N1) started in 2002 when they opened new geographical market in Dubai and Saudi Arabia, creating new market segment, adopting different price police to attract different customers. 1. The table below illustrates Costa Coffee SWOT analysis template. Starbucks business strategy can be classified as product differentiation. The latest entrant is Starbucks and with many more in the pipeline. A national UK survey by Market Force Information shows consumers rate Prt Manger and Greggs as providing the best coffee experiences, with overall customer loyalty scores of 55% and 40% respectively. Costa Coffee B Project Marlow uses differentiation generic approach to position its product offers to stand out and be distinct from the competition. Offering third-place experience. superior quality beverage products, packaging, high brand image Costa Coffee B Project Marlow has built a strong and loyal customer base via distinctiveness and cost leadership. Starbucks Competitive Analysis. The latest entrant is Starbucks and with many more in the pipeline. Costa Coffee vs Starbucks. report for the promotional plan of hot and chocolate tea/coffee of costa coffee module name : managing finance and marketing in business module code : th600b1e submitted to : ohalleran eric, longart pedro submitted by : ratheesh viswanathan 21208850 reshmi prabhakaran usha devi 21205617 sukhwant kaur mann - 21207381 Coca-Cola also faces stiff competition from a range of scaled rivals pivoting global growth strategies toward coffee shops and retail coffee channels, such as pods and capsules, especially on its home turf in the US. The associations are build with companions or relatives that helps in effective communication of Costa coffee marketing strategy. This allows it to compete with other businesses for the same market and still generate a profit. Nespresso and JDE (Caf GrandMre, LOr) are leaders in this market. Conditional value the perceived utility from a brand in a specific situation. No stone was left unturned in defining the new store experience, with the vision to align the whole experience with Costa Coffees brand personality traits of Courageous, Playful and Passionate. 6%. The management of AMT coffee has focused on these business-level strategies in order to gain potential competitive advantages over the competitors (Augen, 2008, p.73). Coffee Industry in the UK: Comparison of the Marketing Strategies of Starbucks and Costa by Ahmed Fayih G ALOTAIBI Table of Contents 1.0 Introduction 3 1.1 Aims & Objectives 3 2.0 Literature Review 4 3.0 Research Question 5 4.0 Bibliography 5 1.0 Introduction Costa and Starbucks represent two prominent brands in UK coffee market. Interestingly however, I recently discovered on a city-break to Warsaw that this association with Italy isnt a global strategy for Costa Coffee. Costa coffee is considered as one of the largest and the fastest growing chain of coffee shops in United Kingdom. As an established brand, the corporation leverages difference to limit competition. Targeting students, families and professionals alike. Overview. Growth in costa coffee saw a massive increase of 24. The other three are : Perfect Competition, Monopoly and, Oligopoly. The mission statement of Starbucks Company is to inspire and nurture the human spirit- one person, one cup, and one neighborhood at a time. The worlds best coffee brand has utilized quality-based differentiation to differentiate itself from rivals. Costa Coffees traditional store formats made it hard for them to tap into the urban commuters on-the-go needs. Some of the most popular ones include premium, loss leader, cost plus, and going-rate. The marketing strategy of the Costa Coffee depends on customers liking and loving their products. 4% in its operating profit for the financial year. Bibliography 20 1. Customer Loyalty. Place an order. This has notably risen the price of the Costa products. 2. There are a variety of pricing strategies available to organizations. Size. At the heart of a focused strategy is the ability to generate strong customer loyalty by tailoring your business to the f Marketing MIX 2. It will also discuss the companys significant competitor; PepsiCo, Inc. and provide a comparison of strategies at both levels. 7% and Costa saw an increase of 38. Starbucks is undoubtedly one of the worlds most identifiable brands exhibiting an innovative and fresh approach to their brand and marketing strategy. It will use a compelling value proposition to inform customers that it offers the finest espresso coffee in the market. Documents. Table Review and S.W.O.T. As to its targeted market, Starbucks has a very broad scope. A regular would know that you can get small size, which is cheaper. Interestingly however, I recently discovered on a city-break to Warsaw that this association with Italy isnt a global strategy for Costa Coffee. In both respects I feel they will both achieve their aims. The company was established in 1971 by Sergio and Bruno Costa and enhanced effectively in the production of Italian coffee by establishing different coffee shops globally (Costa 2014). Further, the budget for three years in million include accommodation expenses 525, 600 and 650 for 2012, 2013 and 2014. I have previously written about how Costa Coffee has chosen to compete with Starbucks by differentiating itself based on speed of service.