Marketing plan for Costa Coffee

This marketing plan for Costa Coffee includes objectives, strategies, BCG Growth Matrix, and marketing mix strategy. The report suggests investing in star products, analyzing question mark products, maintaining cash cow products, and divesting dog products. The marketing mix strategy includes product, pricing, place, and promotion strategies.

Marketing plan for
Costa Coffee

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK ..............................................................................................................................................3
Objectives of Marketing plan of Costa Coffee...........................................................................3
Development of Marketing Strategy using Ansoff Matrix.........................................................3
Marketing Mix Strategy..............................................................................................................5
BCG Growth Matrix...................................................................................................................6
Customer Driven Strategy for Costa Coffee using STPD Analysis............................................7
CONCLUSION ...............................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
A marketing plan refers to the advertising strategy that the business executes so as to
make effective sale of its products and services. It facilitates the company in determining the
target market , and how to reach the target audience, the prices at which the products should be
sold etc.(Aravind and Sridhar, 2021). The following report is based on the development of
marketing plan for a Coffee house chain i.e. Costa coffee that is serving worldwide and is
headquartered in Bedfordshire, England. It deals in the products like coffee, tea, sandwiches,
iced drinks and sweet snacks. The report is in continuation of the Assessment 1 and will cover
the objectives of marketing plan identified by assessment 1. The report will develop the market
strategy using Ansoff matrix and will also describe the marketing mix strategy of Costa coffee.
Further, it will also cover the BCG growth matrix and Customer driven strategy through STPD
analysis.
TASK
Objectives of Marketing plan of Costa Coffee
 To develop the suitable strategies for appropriate marketing mix of the company.
 To recommend a suitable and appropriate market development strategy with the analysis
of business environment and with the growth analysis using the Ansoff Growth matrix.
 To provide the Product investment or divestment analysis by using BCG growth matrix
(Jallow, 2021).
 To provide valid recommendations for the growth measures and marketing strategies.
 To provide justifications ion the suggestions by the industrial examples that the company
operates in with the accurate authenticity.
Development of Marketing Strategy using Ansoff Matrix
Ansoff matrix is a business framework that facilitates the businesses in analysing the
growth strategies. This matrix is used by the businesses to measure the suitability and
appropriateness of growth strategies that leverage the existing products as well as markets and
new products & markets as well. The matrix also analyses the risks associated with each growth
strategy (Dziurski, 2021). In context with Costa coffee, the following are the growth strategies
that it can choose from to develop an appropriate marketing plan -

 Market Penetration Strategy – This strategy states to sell the existing products in the
existing market that the company is familiar with. This is the least risky strategy as it
does not involve any new market where the company needs to establish the brand from
the scratch. For adopting this strategy, business needs to increase marketing and
distribution efforts, decrease the prices for attracting new customers for its existing
products. Costa Coffee's existing products include the coffee ranges like Dark roast,
Colombian Decaf and Light roast etc. that have seen a good sale in the existing market
with other products like iced drinks, sandwiches and sweet snacks etc. In the existing
market i.e. UK, the company has almost 2400 stores. This proves that the company has
already penetrated the existing market over its competitors, so it does not require to adopt
this strategy further.
 Product Development Strategy – This strategy states to introduce new products in the
existing market. It is adopted by the company to increase the customer base by
introducing new products in the existing market (Reyes-Mercado, 2021). For adopting
this strategy, the company needs to invest enough amount in research and development
for new product introduction according to the demands of customers in the existing
market, it needs to create a new offering after proper market analysis. Costa Coffee needs
to introduce the energiser enamel latte with oat drink, an extra composition of Vitamin
M12 and Zinc and power hazelnut latte with almond drinks as it is the demand of existing
market customers. It is also partnering with Marks and Spencer to introduce innovative
products with its coffees with M&S foods.
 Market Development Strategy – This growth strategy focuses on introducing the existing
products of company in the new markets. It is also a risky strategy as the firm is
introducing its existing products in the new markets. It does not need massive
investments in research & development or product development. It mainly focuses on
leveraging the existing products and introduce them in the different markets. Its
approaches may include to cater to the various customers' segments, entering in a new
domestic market or in a new foreign market i.e. either the regional expansion or
international expansion. In context with Costa Coffee, it had entered the US market
through geographic specification. The coffee shop has nearly 3800 locations worldwide
including India, China, Morocco, Spain, US, UK etc. It had also opened its 52 automated

coffee kiosks across US and converted its brand to 'Costa Coffee Barista not Brand'. It
has already a huge presence worldwide so it does not require to adopt this strategy. When
in the year 2017, costa coffee started to deliver coffee via drones, it got a huge attention
from the customers of other countries as well, as a result of which it got expanded into
Basildon, Essex with the roastery with an investment of approx £38 million that increased
its annual coffee-roasting capacity from 11000- 45000 tonnes. The company has captured
the vegan food market as per the demand of its health conscious and sustainable
customers such as the company has started to offer the vegan drinks like Latte with
additional B12 powder and as of June 2021, it has also captured a new range in vegan
market i.e. The Golden caramel range (Guide to vegan drinks at costa coffee UK, 2022).
As Costa Coffee also offers the sandwich products, it must follow the strategy of
Pret A Manger that is an international sandwich shop in UK operating in more than 450
shops in various countries like China, US, UK, Germany, UAE etc. with its coffee, soup
and sandwich products. Its strategy include to sell good natural food free from obscure
chemicals and other additives and also uses natural ingredients in the products. It is also
taking steps for vegan options for the products like brownies and macaroni, cheese etc.
So, Costa coffee must also adopt this strategy for its sandwich shops by offering fresh
sandwiches of which the ingredients or materials are procured from the selected suppliers
that Pret also procures from. It will provide the company an opportunity to offer its
existing products i.e. sandwich in the new markets like Switzerland, Hong Kong,
Denmark etc. that Pret A manger has also shops in.
 Diversification Strategy – It is the most risky strategy as it focuses on the introduction of
new products in the new markets which requires the development of both the product and
the market. It may include related diversification or unrelated diversification (Polfuß,
2021). If Costa Coffee adopts related diversification strategy, it could use collaborations
with businesses like coffee beans in USA that will help the firm to establish connection
with small-time coffee producer. For entering the new market with the new products , it
can capture the new markets by offering the products like mugs, coffee flask, etc. The
Coffee shop has an opportunity to expand the business and introduce the above new
products in Canada that is a dynamic, desirable and thriving country with an established

coffee culture. But the company must not adopt this strategy as it is the most risky
strategy that may have negative impact on the market plan of Costa Coffee.
Recommendation – It is recommended to Costa Coffee to adopt Product development strategy
and introduce new products i.e. the energiser enamel latte with oat drink, an extra composition
of Vitamin M12 & Zinc and power hazelnut latte with almond drinks in the existing market as it
will further increase the customer base of company in the existing market that will help the
coffee shop to increase its customer base on a global basis as well.
Marketing Mix Strategy
Marketing mix refers to the set of marketing tools that the business uses to attain the
marketing objectives in its target market. It is a tool for determining marketing strategies that
include different area of a comprehensive marketing plan (Shoham, 2021). It includes the 4 Ps
of marketing that are explained below. In context with Costa Coffee, its marketing mix strategy
is explained hereunder -
 Product strategy – Costa Coffee strives to differentiate its product range from the
competitors in the market. Its product strategy has been very effective in attracting new
customers and in retaining the old customers as well. The main product of Costa Coffee
is Coffee but the firm includes in its products range, other varieties of products as well
such as special drinks , cold drinks, hot chocolate, cold coffee, ice blends, sandwiches,
etc. This firm puts more emphasis on the pull strategy rather than on push strategy. The
most famous offerings of this coffee shop include cappuccino, latte, flat white,
Americano, Expresso etc. (Marketing Mix of Costa Coffee, 2022). But the company needs
to consider other factors as well to attract the customers rather than the product only.
Such as it must consider corporate social responsibility and sustainability regarding food
waste to develop brand loyalty.
 Pricing Strategy – Costa Coffee adopts diverse price offering in its pricing strategy of
marketing mix. It prices its products at premium prices due to the high quality products
and brand value as well. It puts more emphasis on quality of products and considers price
as a secondary thing. The firm also sells coffee vending machines with competitive prices
as compared to its major competitors like Starbucks and Cafe Coffee day. As compared
to the Starbucks and Cafe Coffee Day, Costa Coffee offers its coffee at high prices due to
the premium quality. Although the quality does not differ much from that of its

competitors, but the company offers all categories of its Hot Coffee at above Rs.200
while Starbucks prices its hot coffee at Rs.80 to Rs. 165 and CCD offers at about Rs.80
(Costa Coffee Menu and Prices in India, 2022). The prices of its coffee differ according
to the supplement added to the coffee such as cream, extra chocolate etc. The most
differing priced products of the firm include Cappuccino, Americano Black, Mocha etc.
 Place Strategy – Costa coffee sells its products through online as well as offline modes.
The company has its own website i.e. www.costa.co.uk through which it takes orders and
deliver the products through delivery partner in a particular region. Physically, the coffee
shop has nearly 3800 locations in more than 30 countries. Its outlets mainly target at
high-income group people. Its stores can be seen in the shopping malls , airports etc. The
firm keeps on changing its menu according to the customer demand of different countries
or locations.
 Promotion strategy – Costa Coffee puts more emphasis on word of mouth publicity of its
products and also provides free samples to the customers for getting review about its
products as part of its promotion strategy. It organises digital media campaigns to
develop strong interaction with the customers. One of its promotional campaigns include
ShakeupSummer that promoted the cold coffee products of the company. It must increase
the promotions through social media marketing campaigns and must use the data
analytics and predictive scorecards to evaluate the UK customer segments (Rajabzadeh
and Hosseini, 2021).
BCG Growth Matrix
It is a tool that is used to evaluate the existing state of product range of the firm. It
facilitates the company in determining which products are to be kept, sold or invested in
(Czinkota and et. al., 2021). it contains the 4 product categories according to their market growth
and relative market share that are explained below in context with Costa Coffee -
Stars
(Espresso, Mocha)
Question Mark
(Flat White, Hot Meals,
Sandwiches)
Cash Cows
(Americano, Smooth magic
Dogs
(Corto, Latte)

Cappuccino)
 Stars – They signify those products that ensure high market growth and have high market
share. These products should be invested more in as they generate high income and
consume massive cash of company. Expresso and Mocha of Costa coffee are categorised
as stars according to their high market growth.
 Question Marks – These denote those products that have high growth rate but low market
share (Whitler, 2021). They can be seen in the upper right portion of the grid. They
should be analysed regarding whether to maintain them or divest. Flat white product of
Costa coffee is categorised as Question mark that the company must properly analyse
whether to divest it or maintain in the coffee shops. Apart from this, hot meals offered by
costa coffee did also not get much popularity despite having high growth rate that led to
decreased market share as there are many other famous restaurants offering hot meals.
So, the coffee shop has an option to divest this food category due to its low market share.
The coffee shop is also taking steps to maintain sandwiches with the help of Marks and
Spencer as the company is providing sandwiches and hot food in more than 2500 costa
coffee stores.
 Cash Cows – These products have low growth areas but their relative market share is
high. Americano and smooth magic cappuccino are considered as cash cows in context
with Costa Coffee. As compared to the Espresso and Mocha , they are the general
products that can be maintained in the market to make them stars by increasing their
growth rate.
 Dogs – These products have low market share and low market growth and should be
liquidated, repositioned or divested (Vaslavskaya and Vaslavskiy, 2021). The products
Corto and Latte of this firm are facing poor customer reviews and low product sales. So
costa coffee must divest these products fro its product range.
So, according to the BCG analysis, it is recommended to Costa coffee to introduce innovative
products as recommended in the product development strategy above to attract the new customer
segments by extending the product range but the company must invest more in stars i.e. Expresso
and Mocha and should divest corto and latte.

Customer Driven Strategy for Costa Coffee using STPD Analysis
STPD stands for Segmentation, targetting, positioning and differentiation. It helps the
businesses in positioning the product or service to the target groups of customers. It facilitates in
determining target customer segments and target audience (Kaufmann and et. al., 2022). In
context with Costa Coffee, its STPD analysis is explained below -
 Segmentation
Persona 1 : Millennials
Age 25-40 years
Income £30000-40000
Preferences Leisure facilities like decorations and fine dinings with wide
variety of products such as coffee products, cappuccinos etc. ;
preference for vending machines.
Value proposition Volcania rich and Soya rich lattes create value proposition for
the millennials by giving them fresh start to the days and health
conscious options to consume coffee.
Persona 2 : Generation Z
Age 9-24 years
Income £25000-30000
Preferences This generation is more IT savvy and prefer digital devices to
view menu , payment options like digital payment apps via QR
code scanning etc. (Akenroye and et. al., 2021).
Value proposition Arabica Costa Rican Coffee also serves as an energised drink
for study oriented youngsters and Green mountain variety
provides refreshments to youngsters and thereby creates value
proposition for them.

 Targetting - Costa coffee must target the audience of university and college students and
office individuals as they prefer to visit a coffee shop for refreshments and access them
around their premises. It must strategically plan their branch offices to make the
customers aged between 25-39 access the coffee shops. It must maintain effective staff
management as millennials prefer nice conversation with coffee chain staff that also adds
value to their experience (Marketing Strategy of Costa Coffee, 2022). As per the product
development strategy of oat latte with vitamin C and zinc , it must target millennials due
to their health conscious behaviour that matches with its newly introduced products.
 Positioning – Costa Coffee must position its brand as a health conscious brand that is
introducing the innovative healthy products such as energised drinks, oat latte, vitamin c
and zinc etc. It must position its high quality and premium price products in a
differentiated manner. It must position its brand in a way to attract its target customers
i.e. millennials and youngsters. The coffee shop puts more emphasis on demonstrating
quality of its coffee and other products like sandwiches in positioning so as to get
competitive advantage globally. For its sandwich shops, it can adopt the strategy of Pret
as Pret positions its products on the basis of serving natural food like E numbers in its
bread i.e. the company's watermarks. So, Costa coffee can also use its watermark while
offering its sandwiches.
 Differentiation – Costa Coffee must strive to add differentiation to its products as
compared to its major competitors like Starbucks, cafe Coffee Day etc. The similar
products of the company with its competitors include Cappuccino and Latte that it must
add differentiation on to get competitive advantage. As part of its differentiation
strategy, it can join coffee bean, US to differentiate Soya milk coffee, Almond shakes etc.
CONCLUSION
The above report has dealt with the deep analysis of Costa Coffee regarding its marketing
strategy and marketing plan as well. The product development growth strategy has been
recommended to Costa Coffee by using the Ansoff share matrix of growth analysis. The
discussions regarding maintenance, holding , selling or divestment of the products have been
done by using BCG growth matrix framework. The marketing mix strategy for developing an
appropriate marketing plan has also been dealt with in the report. Its target customers and
positioning has also been discussed by STPD analysis. The firm has seen the issues regarding

product development that has been recommended in the above report by using different
frameworks.
REFERENCES
Books and Journals
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Marketing PlansAbstract: Brand extension is a popular practice among marketers for
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