Role of Marketing
Marketing refers to an activity an organization commences to promote the selling and buying of the service and product. Marketing contains selling, delivering, & advertising products to the users and another business.
Marketing is mainly responsible for managing & selecting the vendors & agencies who produce or generate marketing materials and deliver marketing support. These might contain ad agencies, specialists, PR agencies, print vendors, and web providers. Marketers makes use of a mass communication frameworks like advertising, promotion, event, event marketing, & PR in order to promote the products wide and far. Furthermore, PR programmes develop & protect the company’s product & image. In media technology, revolutions have made marketing attractive (Dangelico and Vocalelli 2017).
As per the British Coffee Association, in the United Kingdom, around 95millions cups of coffee are being drunk. Cafes & coffee shops are the part of QSR (Quick Service Restaurant) marketplace in the United Kingdom, together with the sandwich and bakery shops. They mainly provide coffees but most other shops also propose different items such as baked goods, small meals, snacks, and tea. Over the past few years, there has a rising trend in the coffee shops running in the UK, containing non-specialists and independent operators and branded chains (Faria and Ferreira 2021). In 2020, approximately 10.5million people utilized local coffee shops, as compared to around 20million who utilized Costa Coffee.
Costa Coffee is a coffeehouse chain which was headquartered in Dunstable, England. The company was established in the year 1971 by Sergio Costa and Bruno Costa as an extensive operation providing roasted coffee to professional Italian coffee shops and caterers. The company has around 2,121 UK restaurants, around 6,000 Costa Express selling facilities & 1280 outlets overseas, containing 460 in China. It is considered to be the second-greatest coffeehouse chain around all over the world, & the greatest in the United Kingdom.
Costa Coffee is considered to be premium brand which are not dependent much on print media and advertisement on TV (Branco and Kobakova 2018). The most important and significant marketing strategy which is being followed by the group is to obtain word of mouth advertising from its customers or clients as a brand Costa Coffee. It not only just delivers the coffee but it also makes such experiences.
PESTLE Analysis
PESTLE Analysis refers to a framework which is quite imperative for businesses, as it assists in understanding the marketing dynamics and enhance its business continuously. The following PESTLE Analysis of Costa Coffee are discussed and mentioned below:
Industry Background
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Factor |
Impact |
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Political
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It is considered to be a leading coffee chain brand around all over the world. |
The political decisions influence on the company varies from one country to another country. Thus, it operates and runs its business in around 32 countries & has to obey all the rules and regulations set by the government. |
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Economic
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The company thrives or succeeds on business worldwide with numerous economic policies (Genoveva and Siam 2017). |
Thus, in developing countries, an economic growth opens up an opportunity or chance for Costa to increase its net revenue and expand its market considerably. In China, the company is performing well which is planning to open up more 1200 stores by the end of 2022. |
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Social
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The social trends modify rapidly which influences the company’s business. It may be either alterations in the people’s income or due to changes in the preferences. |
Thus, it would provide both threat and opportunity for the company. People in India and China started favouring going out for coffee, food, and snacks. This generates opportunity for the company to develop its customer base. |
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Technological
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Globally, the companies are investing millions of dollars in order to stay technological advanced. |
Costa UK is also trying to keep itself updated technologically. Hence, it is spending in technology in order to manage their payroll and HR processes (Abril and Rodriguez-Cánovas 2016). It is also using “Ceridian’s Dayforce Workforces Management Technology” in order to plan employee scheduling to provide timely and accurate payment. |
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Environmental
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With an intensifying awareness of individual of a climate change, it turns out be an enormous responsibility of companies in order to deliver services and products which are maintainable in one way. |
The company has also determined to be a part of this and has determined that it would recycle the similar volume or proportion of cups utilized by its clients annually. |
The following Porters Five Forces Model of Costa UK are discussed and mentioned below:
- Competitive Rivalry:Despite of having an increment of 5%, still the market is confronting a fierce competition because of the presence of numerous competitors. Players that are contesting internationally and, in the coffee, sector received with huge financial strength impersonating an intense level of competition.
- Bargaining Power of Buyers:In this coffee industry, the buyer’s bargaining power is high because of a presence of numerous coffee suppliers without having any extreme differentiation. Thus, customers do have loyalty concerning brands but on the other hand loyalty is not fervent and the customers switching behaviour in this industry is high with no or low switching cost.
- Bargaining Power of Suppliers:In this coffee industry, the supplier’s bargaining power is low because the firms are strong & they have various suppliers to purchase from. Hence, many firms have the opportunity to purchase from various suppliers which places the firms in a dominant position.
- Threat of New Entrants:In the coffee industry, the threat of new entrants is high as the number of obstacles for a market entry is quite low. Hence, even the obstacles that exists in the industry are not difficult & they are simply possible to remove which is the primary reason for simple entry to the entire market. The 5% growth further appeals the new entrants & comforts the circumstance for the new entrants in the industry making threats quite high.
- Threat of Substitutes:Due to an accessibility of numerous alternatives, the threat of substitutes is high. There is an increment in the number of substitutes which is a threat for the coffee industry. In many other countries, tea is preferred over coffee & coffee is grasped as a regular drink.
SWOT Analysis is a management tool which allows the brand like Costa UK to benchmark its performance and business in comparison to the competitors (Liu et al. 2017). The following SWOT Analysis of Costa Coffee are discussed and mentioned below:
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Strengths
Costa Coffee is considered to be the second greatest coffee chain around all over the world. It has an attendance in around 31 countries & is mainly known for its popular taste of coffee. The company has 3401 stores and 2121 UK restaurants, around 6,000 Costa Express selling facilities & an additional 1,280 markets overseas.
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Weaknesses
There is a huge gap between the first ranked and second ranked in the coffee sector. Starbucks has around 2400 outlets and on the other hand, Costa Coffee has around 4-5000 outlets. Therefore, this gap demonstrates that the company has a huge ground to cover. The company evidently has an extremely high concentration or focus in its ground (Europe and UK), but it has very few presences in the other countries.
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Opportunities
The company must expand their operations in many more countries. It has almost 50% of its dignity in the United Kingdom. Currently, the company has its presence in around 31 countries whereas on the other hand, Starbucks has in almost 70 countries. Hence, expansion is quite important for the Costa Coffee. In addition, forming strategic alliances or acquisitions with other coffee firms may assist in boosting the business for the company. |
Threats
The Starbucks dominance is considered to be a great threat against the company as the brand is not enabling Costa Coffee to resolve & is expanding extremely aggressively. Moreover, there are various regional factors and regional players in the Coffee’s sale. The United Kingdom itself has an enormous consumption of coffee vs tea and so does China and India (Maamoun 2019). |
Costa Coffee’s marketing mix analyses or examines the brand through marketing mix agenda which covers 4P’s of marketing strategy. There are numerous marketing strategies such as production innovation, promotion planning, & pricing approach (Panwar and Patra 2017). Hence, the marketing strategy of Costa Coffee assist brand or company in positioning itself relatively in the industry and accomplish its business objectives & goals.
- Product:The company sells beverages, snacks, and coffee as its primary products proposing in its marketing mix. Costa Coffee offers a variety of favours and variants in coffee. Most popular offering of the company are: Latte, Flat white, Expresso, Americono, Cappuccino, and Mocha. Some of the products (ice-blended) offered by the company are Mocha Cream Frostino, Coffee Cream, and Lemonde.
- Price:The company has a varied price proposing in its marketing strategy, though it is impacted by competition & is slightly premium. Thus, the products proposed by Costa are valued at premium variety due to its high quality and brand value. The company always thinks that the price is secondary and mainly concentrates on providing good quality products. Costa Coffee delivers two alternatives in its beverages such as coffee vending machine.
- Place:The company operates and runs its business in around 3000 markets spread in 30 countries. Thus, it almost operates in 2100 UK restaurants & in 1200 markets are spread overseas. The outlets of Costa Coffee are especially targeted at rich people and upper middle-class people. Its outlets may also be found in shopping malls and airport where there is a quite high footfall.
- Promotion:Costa Coffee is considered to be a premium and superior brand which mainly does not rely on the advertisement on television and print media (Rajavi, Kushwaha and Steenkamp 2019). The most significant marketing strategy followed by the group is to “obtain word of mouth PR from its clients” as the brand the company not only delivers coffee but is feel the experience. Furthermore, it also operates a loyalty program which enables its frequent clients to receive discounts on the products and generate points on an acquisition of products from any outlet.
- People:Millions of people function with the company everyday who are essential to delivering customers with a brilliant coffee experience. Thus, Costa Coffee understands efficiently and rewards co-workers appropriately. For instance, it announced in FY21 that it will intensify the pay by around 5% for the people who are working at its warehouses across the United Kingdom.
- Process:The company has particular steps that employees should take while handling or managing orders. Likewise, customers must go through specific steps while ordering their choices through app of the company or maybe online delivery platforms.
As the nation’s preferred coffee shop brand, the company aims to update its system in order to make it a loyal application amongst its spectators of 6million app users. Thus, M&C Saatchi functioned closely with the company in order to generate the proposition with an input from a selected group of around 17,000 users, curating its advantages to assure that they consider what customers loves the most with respect to the brand. Thus, the company notices the coffee professionals shift from the scheme of “point-based loyalty”. Members might obtain a free drink or beverages of their preference after buying eight coffees, and being a part of ongoing sustainability endeavours, the company is proposing a free beverage to anyone who utilizes a reusable cup in order to buy just 4 drinks until March, 2022. Moreover, the members may also select any cake for free and enjoying a crowd of other exclusive treats and rewards.
Conclusion
Based on the above discussion, it can be concluded that marketing is quite important as it enables the businesses to handle or maintain present and long-lasting relationships with their spectators. The marketing concept is dynamic and has altered altogether with the time passage. Such modifications have far reached influences on distribution and production. With a quick change in preference and taste of people, ultimately marketing comes up with the similar strategy.
References
Abril, C. and Rodriguez-Cánovas, B., 2016. Marketing mix effects on private labels brand equity. European Journal of Management and Business Economics, 25(3), pp.168-175.
Branco, M. and Kobakova, D., 2018. Turning a commodity into an experience: the “sweetest spot” in the coffee shop. Innovative Marketing, 14(4), p.46.
Dangelico, R.M. and Vocalelli, D., 2017. “Green Marketing”: An analysis of definitions, strategy steps, and tools through a systematic review of the literature. Journal of Cleaner production, 165, pp.1263-1279.
Faria, S. and Ferreira, P., 2021. From the 4 PS to 5 PS: prompt, a new element for the Marketing mix: a specific analysis of the coffee market: the Portuguese market. In Eurasian Business Perspectives (pp. 307-320). Springer, Cham.
Genoveva, G. and Siam, S.T., 2017. Analysis of Marketing Strategy and Competitive Advantage. International Journal of Economic Perspectives, 11(1).
Liu, Y., Li, K.J., Chen, H. and Balachander, S., 2017. The effects of products’ aesthetic design on demand and marketing-mix effectiveness: The role of segment prototypicality and brand consistency. Journal of Marketing, 81(1), pp.83-102.
Maamoun, A., 2019. COFFEE-INFUSED COKE? YES PLEASE!. Global Journal of Business Pedagogy Volume, 3(3).
Maamoun, A., 2020. Coca-Cola Brews a Hot Acquisition: Costa Coffee. SAGE Publications: SAGE Business Cases Originals.
Panwar, D. and Patra, S., 2017. Study on product positioning efforts of multinational fast food chain in India-An exploration. Asian Journal of Research in Business Economics and Management, 7(7), pp.120-134.
Rajavi, K., Kushwaha, T. and Steenkamp, J.B.E., 2019. A Multicategory, Multicountry Investigation of Sensitivity of Consumers’ Trust in Brands to Marketing-Mix Activities. Journal of Consumer Research.
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