An Analysis Of Coste Coffees Marketing Marketing Essay

2. Analyse the Company case’s Marketing; and then reflect on how it compares to the marketing of one of the Company’s Competitors (50% marks):

In the first part of the essay, I am going to use market segmentation, targeting and positioning to analyse Costa coffee’s marketing. In the light of the global recession in 2008, the competition within the coffee industry has become fiercer than before, Costa Coffee financial reports looked very promising with rising growth whilst Starbucks experienced hard times. (Café Business 2009) Different marketing strategy of the two companies would be reflected later in this essay.

Segmentation

Demographic segmentation divides markets into segments by population characteristics. Three main demographic factors that Costa Coffee used are age group, social class, and professional level. By dividing the potential customers into age groups, Costa Coffee can adjust the flavour and choices of coffee accordingly. For instance, teenagers might prefer hot chocolate rather than espresso, as they normally have a preference of sweet-tasting beverages. On the other hand, adults might prefer drinks with more caffeine since caffeine acts as stimulant and keeps them alert at work. (Ferrell & Hartline 2008, pp.172-173)

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From social variables, Costa Coffee can know more about what products customers are looking for. This is due to the fact that they suggest the customers’ level of income which in turn affects their ability to buy. For example, the privileged class would spend more on coffee than the middle class each month. In this way, Costa Coffee can adjust the prices accordingly (Dibb, Simkin, Pride & Ferrell 2006, pp. 229-232)

Behavioural segmentation is by far the most important type of consumer segmentation due to the fact that it is more closely related to consumer need. (Ferrell & Hartline 2008, p.172) Costa Coffee can segment the market based on people’s different coffee preferences. According to the Costa Coffee’s marketing director, Jim Slater, he found out that there are “people who find latte too weak and cappuccinos too frothy, and do not want the strong flavour of an espresso or black Americano.” (Reynolds 2010, p.2) Furthermore, Costa Coffee has identified what made the customers buy the coffee, some might look for a place to relax and others might want to ‘grab and go’. In this way, Costa Coffee can try to satisfy the customers’ needs (e.g. by improving the interior design of the shop) (Whitbread 2010, p.14)

Targeting

Once identified the segments, the firm can starts the targeting process. Costa Coffee caters for all the segments and does not use the concentrated strategy (i.e. concentrating on just one segment) as it is too risky. It uses differentiated strategy, developing different market mix for different segments. (Bradley 2005, pp. 30, 208)

Launching Flat white in January 2010 was no doubt a way for Costa Coffee to target their customers who are looking for coffee other than latte and espresso. In just one month, flat white has already accounted for 7.5% of the sales. (Reynolds 2010, p.2)

When dividing its market into segments, Costa Coffee believes that targeting the upper classes would be most profitable. The brand name symbolises luxurious and excellence, thus these classes are willing to pay more for a cup of coffee. (Whitbread 2010, p.15)

Positioning:

In terms of positioning, Costa Coffee launched its first TV advertising campaign in order to position the product in customers’ minds and give them an image of the company. The advert was about monkeys playing with the coffee machines and attempting to create the perfect coffee. (Reynolds 2010, p.3) The advert ended with a Costa barista trying to hand make a perfect cup of coffee, showing that it can only be created by barista who are highly skilled and passionate about coffee.< http://www.marketingweek.co.uk/disciplines/advertising/news/costa-coffee-unveils-first-tv-ad/3019030.article > The message behind the TV advertisement was to prove the supremacy of Costa Coffee’s products. According to Reynolds (2010), Costa Coffee is going to express the idea that it is trying to save everyone from the normal coffee into the TV advert.

Reflect

Unlike Costa Coffee, what Starbucks trying to sell is not only coffee, but also the ‘Starbucks’ experience’. Starbucks believes creating a cosy, relaxing atmosphere would be a key driver of success. To many customers, coffee is a treat after a stressful day. It targets particularly at young adults, who look for places to unwind. (Michelli 2007, pp.49-51) According to the Mintel report on coffee in February 2010, the 16-34 year old age group are more likely to make their own coffee at home (Mintel International Group Limited, 2010). Starbucks coffee has successfully launched an online store, so that the customers would be able to purchase coffee beans online. (Gia 2009, pp.10-11)

Both Costa Coffee and Starbucks monitor their coffee quality standard carefully despite Starbucks’ main focus is on the ‘Starbucks’ experience’. Starbucks do that by researching constantly and developing new technologies in order to improve the roasting processes and thus the quality of coffee. (Michelli 2007, pp 58-64) Costa Coffee adopted a similar strategy and also widened the range of product sold. Moreover, both of the companies target their customers in a similar way. They both launch coffee club cards, which enable them to track their customers’ consumption pattern and thus improve their strategy on targeting their customers.

However, after recession, it is evident that Costa Coffee did well than Starbucks. Some experts believe that Starbucks’ decision to align with McDonalds was the one to be blamed. The reason behind is that McDonalds offer low quality coffee which in turns adversely affected the ‘Starbucks’ experience’ that Starbucks has been trying to established. (Café Business, 2009)

To sum up,

‘Reflect’ means digest, mull over, think aloud about the key marketing

features of the company case with the marketing of a key competitor. E.g.

with M&S we could have compared it with Next, or george at Asda .

You could frame your reflection by asking questions or perhaps review how

strong relatively the 2 companies’ brands are, for example.

http://books.google.com.hk/books?id=beBNXXZbEEoC&pg=PA170&dq=starbucks,+segmentation&hl=en&ei=JjokTaXpFIemcMeW-H8&sa=X&oi=book_result&ct=result&resnum=2&ved=0CCsQ6AEwAQ#v=onepage&q=starbucks%2C%20segmentation&f=false

http://books.google.com.hk/books?id=QDaax4mFMpcC&pg=PA28&dq=starbucks,+segmentation&hl=en&ei=JjokTaXpFIemcMeW-H8&sa=X&oi=book_result&ct=result&resnum=1&ved=0CCYQ6AEwAA#v=onepage&q=starbucks%2C%20segmentation&f=false

http://www.independent.co.uk/news/uk/this-britain/coffee-chains-turnover-set-to-double-582227.html

http://www.google.com.hk/search?tbs=bks%3A1&tbo=1&hl=en&q=starbucks+segmentation

http://www.economicshelp.org/blog/economics/is-the-price-of-a-starbucks-a-rip-off/