Marketing Audit of Costa Coffee

This report provides a comprehensive marketing audit of Costa Coffee, including its market environment, competitors analysis, customer segmentation, and introduction of a new product. It analyzes the strengths, weaknesses, opportunities, and threats of Costa Coffee and discusses its product strategy.

Marketing
Communications
Student name:
Company: Costa Coffee
Word count: 2041

Table of Contents
MAIN BODY ..................................................................................................................................3
Introduction to market.................................................................................................................3
PESTLE analysis of Costa Coffee..............................................................................................3
Competitors analysis and Marketing Mix of Costa Coffee.........................................................5
Analysis of customers of Costa Coffee.......................................................................................6
Introduction of new product or service.......................................................................................8
CONCLUSION ...............................................................................................................................9
REFERCNCES..............................................................................................................................10

INTRODUCTION
Marketing audit is a systematic analysis, evaluation and interpretation of the business
environment. In this analysis both internal and external elements which can enhance the
marketing practices of the company are evaluated. According to the marketing audit results the
company make there plan of actions for better marketing performance and attaining objectives
effectively. Various tools like PESTLE and SWOT analysis and STP are used for conducting
marketing audit as it a very essential task for every organisation to perform. It enables
organisation to examine potential problems and explore marketing opportunities and proposing
measure to improve the marketing strategies of entity. For this report, Costa coffee is chosen to
perform various actions and market analysis. Costa coffee was founded in 1971 by Costa family,
as a wholesale operation. They use to supply roasted coffee beans to Italian coffee shops and
caterers. Company has its headquarters in Dunstable, England but serves to worldwide
customers. Mission of organisation is to save the world from consuming mediocre coffee which
is of very moderate quality. Company wants to serves the best quality of coffee to the world and
with aim Costa Coffee was developed. The unique selling point of Costa Coffee is they
customize orders of their guests on their request without charging them extra.(Alias and Othman,
2019)
MAIN BODY
Introduction to market
Market is a place in which an organisation offer its products and services in order to earn
profitability and success. By considering the costa coffee, its market is growing at a CAGR of
5.5% at the forecast period. As it is one of the favourite beverage and the major source of the
coffee for the daily routine of the people. In order to target its market is South America as it is
largest producer of coffee in the world and offer its product at world wide such as Germany,
Italy, France, Spain are the dominating coffee consumers. The current trend is used by the
company is the electric coffee jar (E-Jars) as it helps the customers in order to attract them and
helps in increasing its sales in the market. (Chitty, D'Alessandro and Gray, 2019)
PESTLE analysis of Costa Coffee
The Market Environment

Political  Tax rates in UK are rising, due to which cost of production is
increasing along with it Costa Coffee had to raise the prices of their
products too.
 High prices resulted in decreased sales for Costa Coffee as they do
not compromise in quality of coffee beans they use in preparation of
coffee and serving to their customers. Prices rise due to rise in tax
rates and other related policies. (Hassan, 2019)
Economic  Europe's economy is currently very weak and due to which both
food and non-food retailers are suffering, that includes Costa
Coffee.
 Purchasing power of public is reducing which leads to less
consumption of coffee and saving their money for other needs. This
has direct effects on the sales of Costa Coffee. (Jaya and Susanti,
2019)
Socio-cultural  The preferences of people in UK is changing and always ask for
high quality of coffee beans to be used for preparation of their order
which is a favourable factor for Costa Coffee. As the company
focuses and aim on providing best quality services and products.
 In UK, people not only drink coffee when they need it, coffee is a
part of their culture and style which is an advantage for Costa
Coffee. (Lloyd, 2019)
Technological  Costa Coffee improved their operations and introduced new
technologies in their stores with development of new and better
technology.
 They have increased the comfort and ease of people developing an
online application by which they can locate the store and surf
through the menu of Costa Coffee. (Porcu and et. al., 2019)
Environmental  Company concentrated on this factor and for which they have
introduced environment friendly packages.
 The beans they use are roasted by themselves in London, where they
have strict quality control systems which are developed according to

the environment, causing no harm to it.(Soundar, 2019)
Legal  Costa Coffee has provided safe and healthy environment to the
employees working in their shops. They believe in building family
in Costa Coffee.
 Costa have signed up with FSA (Food Standard Agency) for making
sure that they provide healthy and safe products around the world to
each and every guest. (Strycharz and et., al., 2019)
Key drivers of change:
All the external factors discussed above can work as drivers to change but for Costa
Coffee the most influencing elements are economical and technological. Europe's economy is on
downfall due to initiation of BREXIT and this has impacted Costa Coffee too. There sales
reduced due to increased prices. Company can change some of its policies for managing their
cost by which they can handle production cost and their prices. This will help in retaining
existing customers and attracting more guests. Technology is changing regularly and new
innovative machines are coming in with latest techniques. This is another area where company
has to bring change frequently to be updates and to keep the balance between ease of employees
and consumers.(Syvolovska and et. al., 2019)
Competitors analysis and Marketing Mix of Costa Coffee
Main Competitors
Costa Coffee is a UK brand serving to wide range of consumers which is why they have
lot of competitor around the world. The biggest competitors of Costa Coffee currently are
Starbucks and Caff'e Nero. Starbucks was established in 1971 the same year as of Costa Coffee
and it is a public company serving again to worldwide consumers. Caff'e Nero is another
competitor of Costa Coffee which was founded in 1997, grown internationally and called as
Europe's largest independent coffee house group. (Zatwarnicka-Madura and et., al., 2019)
Marketing Mix Costa Coffee Starbucks Caff'e Nero
Product Main product offering
of Costa is there
different styles of
coffees. (Lipschultz,
2017)
Offering premium
products to consumer
and an unforgettable
experience.
It offers updated
products to its
customers due to
regular changing
preferences and taste.
Price Costa Coffee offers
diverse prices in
The prices Starbucks
charge are high as they
Caff'e Nero has very
reasonable prices.

according to the
market they are
dealing in and slightly
premium from their
others.
target higher class
people. They have
premium pricing
policy.
Place It uses diverse
distributing strategy,
targeting upper middle
class and rich people.
They uses direct supply
chain serving to guests
themselves. (Deepak
and Jeyakumar, 2019)
The company is
using diversifying
distributing channel.
Promotion Costa Coffee uses
various means and for
promotion of any new
product the company
give away free
samples.
Starbucks do not invest
lot of money in
promotions. But uses
social media
applications for
promotions.
The best mean for
promotion Caff'e
Nero is using is
advertisements.
(Ottman, 2017)
Physical Evidence The outlets or
restaurants act as
physical evidence
along with its brand
merchandise. (Pinto
and Yagnik, 2017)
Outlets and restaurants
of company plays the
role of evidence for it.
The interior and
ambiance company is
having in their stores
act as physical
evidence as people
get too attracted
towards it.
Process It follows regular
procedure as other
restaurants, providing
sitting areas and
serving customers.
Long queues is not in
culture of Starbucks,
they follow efficient
command line serving
all the customers.
(Fichnová,
Wojciechowski and
Mikuláš, 2017)
Objectives is to
capture 5% market
and for that they
focus on giving
excellent customer
services.
People Employees are trained
to follow highly
professional and polite
behaviour while
serving and dealing
with customers.
The company make
sure to train their
employees in both soft
and hard skills.
Employees of
restaurants offer top
quality service to
guests. (Atwal and
Williams, 2017)
Strengths and Weaknesses
Starbucks Caff'e Nero
Strengths  Strong image in
market
 Rapid growth
Weaknesses  High prices and
imitable products.
 Dependency on
one supplier

Analysis of customers of Costa Coffee
Segmentation of market
Characteristics
/
Segments
Higher class Upper middle and
Middle class
Lower class
Concentrate on This segment of
population
concentrates just on
fulfilling their desires.
They focuses on
fulfilling their needs
with appropriate prices.
(Lidstone and
MacLennan, 2017)
Population is more
concerned about prices
and they require
products in very low
prices.
Attracts Higher class people
gets attracted to new
and innovative goods.
This segment
population also gets
attracted by new
products but which
satisfy their cost.
People of lower
segment just wants to
satisfy their needs in
least amount and the
products with very low
price attracts them.
Target market comparison of Costa and its competitors
Companies Higher class Upper middle and
Middle class
Lower class
Costa Coffee Costa Coffee targeted
higher segments due to
costs involved in their
operations. Lower
class segments can not
afford such over the
broad cost beverages.
(Dong and Li, 2018)
Costa Coffee also
attract upper middle
class families and
people for surviving and
growth purpose.
-
Starbucks Company always
targeted higher
segments as this is
where they wants to
differentiate attracting
elite crowd.
Initially, Starbucks only
concentration was on
higher section but
eventually as market
condition changed and
purchasing power of
people increased. Upper
middle class customers
also got attracted
towards Starbucks
products and there
innovative ideas.
(Mikeska and et. al.,
2017)
-
Caff'e Nero - Entity was just
developed and still
developing, but their
aim was always to serve
-

medium class society as
the market was not
having that much
competitor for this
targeted population.
Eventually upper
middle class section
also got the attention of
Caff'e Nero as the
company was having
great operations and
growing faster.
Currently consumers of Costa Coffee are those who enjoy coffee and require it on daily basis
also some guests are those for whom its part of their society and culture. The guests are mostly
elite class or upper middle class as premium pricing strategy is adopted by Costa Coffee. The
most influencing components which attracts these guest is the quality and taste of the products of
Costa Coffee products.(Duffett and et. al., 2019)
Introduction of new product or service
Audit of Costa Coffee
Strengths Weaknesses
 The image of the company is its biggest
strength and enables them to have great
goodwill worldwide.
 Another, strength of Costa Coffee is the
quality they offer to their guests. They
play in market with their quality and
strong customer service.(Ozuem and
Azemi, 2017)
 High concentration on UK market as it
is Costa Coffee's home ground, but its
has very low presence in other markets.
 Prices of Costa Coffee are really high
which sometime works as weakness for
the entity.
Opportunities Threats
 Expansion is an opportunity which
Costa Coffee can explore by
globalization.
 Due to consistently increasing
competition Costa Coffee value is
decreasing.

 Pull strategies can be used to attract
more customers rather than going to
them. This strategy is used by
Starbucks which made them successful.
 Increasing competition is always a
threat for every company and same is
the case with Costa Coffee.
New product
Costa Coffee is exploring its opportunities and according to it they have introduces new
containers which is electronic and works as a coffee mug. In these jars people can keep their
coffee warm or cold the way they wants it. It has unique feature of temperature control by which
customers can have coffee on whichever temperature they want. Another, feature of these coffee
jars is these can be operated by just downloading an applications in the smartphones. The name
of it is E-Jar's. (Kennedy, Kemper and Parsons, 2018)
Product strategy
Costa Coffee promotes innovation and use of technology and keeping that in mind
company have introduced E-Jars. These containers are digitally operated and innovative as in
today's world people want ease and comfort they need instant coffee to manage their life.
CONCLUSION
From the above report it is concluded that the marketing is important is in order to
exchange variety of products and services. To carry out the marketing activities, communications
skills are important because it helps in promoting and advertising of the offered products and
services. The report is describes that process of market audit and also used the marketing tools
and also discuss the importance of conducting the market audit. Moreover, also analyse the size
and growth of the market and for this PESTLE and SWOT analysis is used in order to analyse
the internal and external factors and marketing mix is done for the launch of new product.

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