Strategic Marketing for Costa Coffee in Kenya

This report discusses the strategic marketing approach for Costa Coffee to enter the Kenyan market, including PESTEL analysis, market entry options, market segmentation, and Porter's generic strategy.

STRATEGIC MARKETING

Executive Summary
This report is depending on strategic marketing that assists entity in boosting its business
entirely in new market. In context of Costa Coffee, it is an international company provides
roasted coffee to its client and must start is business in Kenya. It is necessary for company to
assess external environmental in order to grab opportunities as well as minimize threat at
marketplace. In assistance of this, market entry strategies are important to analyse to take entry
in Kenya market. Apart from this, market segmentation is used for dividing market into different
segments. Moreover, Porter generic strategies are used for taking effective decision within
business organisation.

Table of Contents
INTRODUCTION...........................................................................................................................1
PESTEL analysis of Kenya..............................................................................................................1
Market entry options........................................................................................................................3
Market Segmentation.......................................................................................................................4
Porter's Generic Strategy.................................................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................9
Appendix........................................................................................................................................10

INTRODUCTION
Strategic marketing is described as a process in which it is necessary for firm to boost its
business in entirely new market. Through this, they get an idea regarding competition level, taste
& preferences of customer, technology and many more. In addition to this, it is vital for business
firm to identify risk that is occurring in any area at marketplace. Apart from this, it is evaluated
that expanding of business also generates risk with it. This report is undertaken on Costa Coffee.
It is the international coffee house which is located in UK. There are around £1.167 billion
income is generated in 2016. They focus on providing roasted coffee to its client across the
globe. Beside from this, there are thousands of stores in more than 30 countries and mostly store
are situated in UK. It is important for business firm to do PESTLE analysis for boosting their
business around the world. And also identify market entry option in order to grab opportunities.
Market segmentation & Porter’s generic strategy helps in taking effective decision which will be
advantageous for business organisation (Burgess and Munn, 2017).
PESTEL analysis of Kenya
Kenya is determined as an underdeveloped nation-state of Africa. In addition to this, it is
the biggest growing economy of Africa. Therefore, there are different kind of opportunities
arises which can be gripped by business firm such as Costa Coffee and many more. Therefore,
the main focus is to boost its business that helps in increasing profit as well as revenue at
marketplace. Thus, it is necessary to consider that entire factor which imposes direct impact on
expanding the organisation. There are different external environment factor which is going to be
mentioned below:
Political Environment: Kenya is determined as a self-governing country whose premier
can rule the country for 5 years as well as not exceed than that. Therefore, this nation comply a
powerful isolationist disposition since the year of 2002. After that, Kenya is regularly trying to
enhance entire cash, investment as well as other cash flows (Chandran and Bhattacharya, 2019).
The main aim is to create it legally strong and provide the opportunities to individual person who
start their business activities and operations of its organisation successfully. In addition to this,
there are different law must be followed for protecting employment, compensation of worker,
labour as well as wages of business firm. Therefore, it is important for Costa Coffee to recognize
1

the culture and background in an effective manner before starting their business Kenya market.
Otherwise, without understanding the culture at nation in which they want to operate its business.
It is difficult for Costa coffee to achieve leading position at marketplace. Thus it imposes
negative impact on productivity as well as profitability of company.
Economic Environment: It is evaluated that economy of Kenya is totally based on free
up trading system. In addition to this, there is different type of public company that influences
the economic situation of country (Direction, 2018). According to this indexing, it has been
analysed that Kenya is 147th around the nation. And also there are some sectors such as
industrial, agricultural and many more that influences economy of country. Therefore, it is
necessary for supervisor of Costa Coffee to know the economic situation of Kenya and after that
fix the charges for products as well as services which is marketing by them. It enforces positive
influences on mind-set of customer. As it offer superior quality products and services of
customer at affordable cost. Thus, it imposes adverse impact on activities and functions of
business organisation.
Social Environment: Kenya is underdeveloped country and the people lived there are
under poverty line. Thus, it is easy for HR Manager to hire competent and talented staffs in order
to perform business activities and functions in an effective manner. And also, they implement
latest technology for satisfying the changing need of customer. It imposes positive impact on
productivity as well as profitability of business organisation (Percy, 2016)
Technological Factor: From years ago, Kenya acquired help from government of India
for achieving progression in IT industry which assists them in bring business person from foreign
country which imposes favourable influences on economic growth of organisation. Therefore,
they focus on introducing e-government so that they can put trust of person live in society. In
addition to this, there is absence of telecommunication services through which it is not possible
for manager to communicate with its team member in an effective manner thus it imposes
adverse impact on performance level of business organisation.
Environmental Factor: In environmental factor, there are different factor such as
culture, tourism, taste and preferences of person that must be understand in an appropriate
manner by Costa Coffee. In addition to this, it is important for business firm to assess need and
wants of consumer in order to launch a new product in the market. It helps them in increasing
2

productivity as well as profitability of business organisation. Thus, it imposes positive impact on
success and growth of firm.
Legal Factor: The rules and regulation which is followed by government of Kenya
which is alike to Britain. It imposes positive impact on performance of business organisation.
They do not change their policies and provide superior quality services to its customer in order to
satisfy them (Hassan and Dadwal, 2018).
Opportunities and Threats to Costa Coffee in Kenyan market:
Costa Coffee achieves leading position in order to serve coffee around the globe. Thus, it
helps them in attracting ample of person live in Kenya. In addition to this, the worker is low-
priced that boost the profitability level within marketplace. Apart from this, there are different
type of coffee shops which is similar to Costa Coffee that arises competition level at
marketplace. And it enforces both favourable and adverse impact on productivity as well as
profitability of business organisation.
Market entry options
In present time, it is necessary for business firm to assess foreign market in order to
launch innovative product before outside people. It helps them providing superior quality
services to its customer in order to satisfy them. In addition to this, it is also important to know
market entry option for achieving target in an appropriate manner. Through this, the organisation
can achieve benefits such as boosting profit, optimum utilisation of resources, expanding
goodwill and many more. There are different strategies which are adopted by management team
of Costa Coffee which is going to be mentioned below:
Licensing: Licensing is the process which adopted by business firm in providing
permission to another company for manufacturing product and services at definite payment. The
main motive of Costa Coffee is to expand its business through licensing patents, copyrights as
well as trademarks and many more. The main motive of business firm is earned more and more
profit and sales within business organisation. It helps in boosting brand image and goodwill of
company in front of customer at marketplace. It enforces positive influence on success and
growth of company (Hill, 2017).
Franchising: This process is adopted by that business firm which is large as well as
creating more and more revenue. Franchisee signifies when an individual person takes license
from the business firm for opening store as well as showroom by its name for marketing products
3

prepared by them. These includes person which have high brand image and reputation in the
market. The main advantage can be proceed from individual person that he/she has an idea
regarding trends as well as fashion that helps them in making modification when needed for
achieving benefits at marketplace. In addition to this, Costa Coffee comply traditional heritage of
Britain across the globe in order to gain profit by satisfying the demand of customer. Sometime,
there is a change in need of customer too frequently thus it imposes adverse impact on success
and growth of business organisation can be considered as a drawback for company (Reynolds,
2019).
Acquisition: Costa coffee purchase a business firm which is well-known in Kenya
market and launch a product in that market by putting the title of that organisation which is
already exist in order to serve better services to its customer. It helps them in achieving benefits
by marketing high quality coffee to its customer for gaining competitive advantage over rival
firm at marketplace. On the other hand, it is necessary to understand the laws as well as
legislation of Kenyan market otherwise it imposes negative impact on success and growth of
organisation (Hollensen, 2019).
Market Segmentation
Market segmentation is the process to determine how an organization differentiates its
customers into different groups based on various characteristics such as income, age, personality
traits or behaviour. This segmentation later can be used to optimize products basis to the
customers. Also in order to increase sales of products business firms can set their targets with the
help of Market segmentation. In order to expand business internationally it is proper time
management is essential. At its core, market segmentation is the process of differentiating the
potential market into various groups on the basis of demographics, needs, priorities, common
interests, and other behavioural criteria’s which are used to better understand the target market.
In context to Costa Coffee, they can hit their target markets and customers by setting up a team
having similar skills. With this, targets can be accomplished in small period of time. Also it is
essential for Costa coffee to do segmentation of market so that appropriate decision for
them .along with this, it has been studied that there are various ways for market segmentation
which should be kept in mind these are as below:
Geographical Segmentation: geographical segmentation differentiates customer groups
based on geographical boundaries. Customer’s needs, preferences, and interests differs basis
4

their geographies, proper understanding of climates and geographic regions of customer helps in
determining where to expand your business. In context to Costa coffee they can adopt this kind
of segmentation basis geographical areas. They should focus more on the region that are more
populated so that they can have more profitability and expenses can be reduced. Efforts can be
done by Costa coffee in order to ascertain geographical information of the target market. They
should understand customer perception and needs so that modifications in their products can be
made accordingly in order to enhance sale of good and improve brand image and target selected
areas and maximize profits (Ruiz-Alba, 2016).
Demographic Segmentation: Demographic segmentation refers to sorting a market basis
its demographic elements such as education, age, income, family size, gender, nationality,
occupation etc. it is one of the most commonly used forms of segmentation because the products
we buy, how we use them, and how much we are willing to spend for them is most often based
on demographic elements. Such segmentation is generally used by the companies before the
launch of their products in a new market. In reference with Costa Coffee, there are various
factors through which they can take initiatives. Such are: age, income, family size, economic
status, living standards and so on. Proper analysis of such factors can help target potential
customers and generate profits at maximum level.
Behavioural Segmentation: Behavioural segmentation differentiates the market by
behaviours and decision-making patterns such as lifestyle, purchase, consumption, and usage.
For example, a young buyer may tend to purchase body wash, while a person from older
consumer group may lean towards soap bars. Segmenting markets based on purchase behaviours
helps marketers to develop a more targeted approach. In context to Costa Coffee they should
properly analyse the factors like lifestyle, consumption and behaviour of the target customer and
introduce their products and services accordingly so that maximum customers can be satisfied
and help generate profits as well as goodwill of the firm. Thus understanding the behavioural
segmentation is essential for the company to satisfy the customer and enhance the brand value
(Sahaf, 2019).
Psychographic Segmentation: Psychographic segmentation makes understand the
psychological aspects of consumer behaviour by differentiating markets according to lifestyle,
5

opinions, values, and interests of the consumers. In reference to Costa Coffee they can collect
and analyse all details related to lifestyle of the customers, their opinions and interests and
improve their products and services accordingly in order to enhance sales of their products.
Nature of market segmentation: In order to achieve desired goals and get success it is
essential for Costa Coffee to identify the risks involved in launching its products and services in
Kenya. Also the Costa Coffee needs to analyse the market effectively by using various
segmentations techniques. And to satisfy their consumers and establish their brand name plans
should be made in which company first needs to analyse the market and identify the needs of the
target buyers, make necessary changes and launch their product (Tomczak, Reinecke and Kuss,
2018).
Porter's Generic Strategy
This kind of strategy is adopted by business firm for boosting its profitability level in order
to gain competitive advantage over rival firm at marketplace. This model is founded by Michael
Porter in the year of 1980. The main motive of Costa Coffee is to achieve leading position within
market. Thus, it helps business firm to build positive brand image to launch a product in entirely
in new area. There are several strategies which is going to be mentioned below:
Cost leadership Strategy: Costa Coffee can launch the product and services at affordable
cost in order to achieve competitive benefit over rival firm in Kenyan market. The economic
situation of this nation is not too strong thus it is vital for Costa Coffee to discover the areas in
which are necessary to decrease the price of products as well as services. In addition to this, it is
necessary for Costa Coffee in order to introduce products and services at minimal cost. It helps
them in attracting large number of customer at marketplace. Along with this, it is vital for
business firm to implement advanced technology in order to offer superior quality products and
services to its customer at fewer prices in order to gain competitive advantage over rival firm at
marketplace (Mathur and Agarwal, 2017).
Differentiation Strategy: In differentiation strategy, it is important for business organisation
to maintain superior quality products and services in order to serve buyer in better way. In
addition to this, it is vital for firm to differentiate their products and services for achieving target
in proper manner in order to gain competitive advantage over rival firm at marketplace. It is vital
for Costa Coffee to assess the demands of buyer continuously so that alteration is possible in
better way. It helps in attracting large number of customer across the globe.
6

Focus Strategy: This kind of strategies is needed to achieve the target in an appropriate
manner for achieving competitive benefits at marketplace. It is necessary to analyse the need and
wants of customer in order to manufacture roasted coffee in order to serve the client in better
way. In addition to this, Costa Coffee adopted marketing mix for boosting sales as well as
profitability level at marketplace (Paulovčáková, 2016).
CONCLUSION
From the basis of above mentioned report, it has been analysed that strategic marketing can
help business firm for improving sales in order to gain competitive benefits over rival firm at
marketplace. There are different factor which is used in dividing the market across the segment
within business organisation. Beside from this, Costa Coffee assesses the need and wants of
customer in order to serve them in an effective manner. There are different tools such as
Franchising, licensing as well as direct exporting in order to reach the product at marketplace. At
last, PESTLE analysis is adopted to assess external environmental factor before launching a
products and services at marketplace. The main motive of business firm is to earn more and more
profit within business organisation. It helps in boosting its brand image as well as reputation of
company in front of customer at marketplace.
7

REFERENCES
Books and Journals
Burgess, B. and Munn, D., 2017. A Practitioner's Guide to Account-based Marketing:
Accelerating Growth in Strategic Accounts. Kogan Page Publishers.
Chandran, C. and Bhattacharya, P., 2019. Hotel’s best practices as strategic drivers for
environmental sustainability and green marketing. Journal of Global Scholars of Marketing
Science, 29(2), pp.218-233.
Direction, S., 2018. Raising the effectiveness of strategic marketing: Why firms must consider
the operating environment.
Hassan, A. and Dadwal, S.S., 2018. Search Engine Marketing: An Outlining of
Conceptualization and Strategic Application. In Digital Marketing and Consumer Engagement:
Concepts, Methodologies, Tools, and Applications (pp. 843-858). IGI Global.
Hill, T., 2017. Manufacturing strategy: the strategic management of the manufacturing function.
Macmillan International Higher Education.
Hollensen, S., 2019. Marketing management: A relationship approach. Pearson Education.
Homburg, C., Jozić, D. and Kuehnl, C., 2017. Customer experience management: toward
implementing an evolving marketing concept. Journal of the Academy of Marketing
Science, 45(3), pp.377-401.
Mathur, P. and Agarwal, P., 2017. Marketing of Microfinance for Rural Women: Evidences from
Rajasthan. In Strategic Marketing Management and Tactics in the Service Industry (pp. 153-
184). IGI Global.
Paulovčáková, L., 2016. Marketing: přístup k marketingovému řízení. Univerzita Jana Amose
Komenského Praha.
Percy, L., 2016. Strategic advertising management. Oxford University Press.
Reynolds, T.J., 2019. STRATEGIC MARKETING IMPERATIVES AND
INSIGHTS. Consumer Social Values, p.12.
Ruiz-Alba, J., 2016. Twitter Account with students: Strategic Marketing.
Sahaf, M.A., 2019. Strategic marketing: making decisions for strategic advantage. PHI Learning
Pvt. Ltd..
Tomczak, T., Reinecke, S. and Kuss, A., 2018. Market-oriented corporate planning. In Strategic
Marketing (pp. 49-95). Springer Gabler, Wiesbaden.
8

Appendix
PESTEL analysis of Kenya
Factors Description
Political Factor  The main motive of this is to maintain it legally sturdy and
offer opportunities to individual person who willing to start
their business successfully.
 It is necessary for Costa Coffee to assess the heritage as well
regulation of staffs before launching product in market of
Kenya.
Economical Factor  It is necessary for manager of Costa Coffee to identify economic
situation of Kenya market as well as fix the charges of goods and
services accordingly.
Social Factor  It is important for Costa Coffee to implement advanced
technology in order to better serve their customer at
marketplace.
 Herein, it is must for business firm to adopt latest tools as well
as technique for offering better quality roasted coffee to the
person of Kenya market at affordable cost.
Technological Factor  Herein, the business firm start services such as e-government
in order to put trust of the person of Kenya market.
 There is absence of telecommunication services through
which it is not possible for manager to communicate with its
team member in an effective manner.
Environmental Factor  There are different factor such as culture, tourism, taste and
preferences of person that must be understand in an
appropriate manner in order to better serve the customer in
Kenya market.
Legal Factor  The rules and regulation which is followed by government of
9

Kenya which is alike to Britain.
 They do not change their policies and provide superior quality
services to its customer in order to satisfy them.
10