Principles of Marketing: A Case Study of Costa Coffee's Practices

This report provides an overview of Costa Coffee's marketing principles and practices, beginning with a brief introduction to marketing and the company itself. It delves into a detailed STP (Segmentation, Targeting, and Positioning) analysis, examining how Costa Coffee segments its market demographically, behaviorally, and psychologically, and how it targets specific age groups. The report further explores Costa Coffee's marketing mix, focusing on its product offerings, pricing strategies, distribution channels (place), and promotional activities, highlighting the importance of each element in sustaining market share. Finally, it discusses the methods Costa Coffee uses to evaluate the effectiveness of its marketing efforts, emphasizing the use of KPIs and social media analysis to improve strategies. The report concludes with recommendations for enhancing marketing strategies. Desklib provides access to this and other solved assignments to support student learning.

Principles and Practices
of Marketing PPM

Table of Contents
INTRODUCTION .............................................................................................................................3
Overview of the chosen organization ...........................................................................................3
STP analysis of chosen organization.............................................................................................3
Marketing mix of chosen organisation..........................................................................................5
Methods, through which respective organization evaluate the effeteness of their marketing
efforts.............................................................................................................................................7
Recommendation ..........................................................................................................................9
CONCLUSION ...............................................................................................................................10
REFERENCES.................................................................................................................................11

INTRODUCTION
Marketing is that form of communication in which a business communicate with its
customers with the motive to sale company's product and services to them. It is mainly concern
with the transfer of product's ownership from the producer to customers (Zhang, Yang and Qi,
2022). Marketing is everywhere, mostly task or project an organization do are linked with the
marketing. It deals with the customers to satisfy them at a profit. Twofold goals of the marketing
is to attract more new customers by providing them a superiors value products and keep the
current customers by delivering a satisfaction. Main purpose of the marketing is to earn revenue
for a brand company. The marketing professional and their team accomplish this through an
execution of their strategic digital activities that drive qualified leads, sales and traffic, in a direct
collaboration with sales team (Chen, Rao and Liao, 2018). The company chosen in this report is
Costa Coffee which is established in 1971 in London. It is a British coffeehouse chain with its
headquarter in the Dunstable, England. This report will be based on organizational positioning,
marketing mix of concerned organization and way in which company evaluate the effectiveness of
their marketing efforts.
Overview of the chosen organization
Costa Coffee is founded by the Italian brothers Bruno and Sergio Costa in London during
1971. it is UK's favorite coffee shop and it has been awarded as ' Best Branded Coffee Shop Chain
in UK and Ireland” by Allegra Strategies for the five years running. This British Coffeehouses
offered its services in world wide. This cafe has an experience of around 50 years to craft the
fitness quality coffee. This cafe has around 3883 stores at global level. It is very famous drink in
the world, more than 4000 billion of cup of coffee are consumed annually. This cafe is very
popular as it collect coffee beans from the across the world that make this cafe more famous.
STP analysis of chosen organization
The STP analysis is stand for segmentation, targeting and positioning. It is process of
combining three different marketing approaches into a single model. STP create the market
segmentation, targeting, selected segments and adjusting the service or product position
accordingly (Donohoe, McGill and Outslay, 2019). Combination of all these three element play a

crucial role to identifying a profitable segmentation and help the company to enhance
effectiveness of their quality product. In relation to the Costa Coffee, its STP analysis is discussed
below:
Segmentation- It is an assignment of the characteristics to organizational entire customer base
and then separating them into various audiences based on the data acquired (Stofkova, and
Sukalova, 2020). It include the four types o the segmentation which are mentioned below:
 Demographic- It is based on the gender, occupation, age. etc.
 Geographic- It is based on the country, region, state, location and many more.
 Psycho graphic- It is based on the factors such as hobbies, habits, activities, lifestyle and
other etc.
 Behavioral- It is based on the whey, how and how frequently the users interact with
company's website, store or apps.
Costa coffee has segmented its market based on demographic, behavioral and psychological bases.
In demographic this cafe has segment its market on the basis of age. In behavioral, as it focus on
consumer's social behavior in which people want an environment of a cafe. Secondly in
psychological, respective cafe observed that is customer's income is not so high, then occasionally
drinking coffee will give them a sense of level.
Targeting- In this, organization find out most valuable segmentation. There are different
approaches and data that support targeting (Fotaki, Lioukas and Voudouris, 2020). There are
certain points that can help the company to find an ideal segments. These points are mentioned
below:
 Profitability- It may difficult to calculate the profitability, but taking the customer
lifetime value into account and other data is an effective way to predict the segment
profitability.
 Size- A larger segment will facilitate more growth potential in the organization.
 Reach ability- It is another essential data point. Usually, the customer acquisition cost
hedged against the profitability metrics is an effective way to reach at the conclusion.
In this, Costa coffee has decided to target target audience between the age of 18 to 45 for both
the male and female. They target this segment because product itself is an ideal for adults.

Positioning- Main motive of the positioning is to connect with customers on personal level
(Freire, Quevedo-Silva and Scrivano, 2018). During positioning is taken into account, there are
some important factors which are need to be considered. These factors are mentioned below:
 Symbolic positioning- It is also knows as the lifestyle positioning. An organization can
figure out the symbolic positioning by focusing on what type of image is being projected.
 Functional positioning- In this, in include the particular problems or issues company
product contain ad solve them to make their lives easier.
 Experimental positioning- It is about to that emotion and experience which is provided
by the company's product to their customers.
In relation to Costa coffee, its positioning strategy is in line as per their global strategy, quality of
its coffee and the other product make enable the company to gain competitive advantages. It
believe that only price is not priority, the customers satisfaction is also very essential. So this cafe
provide them a good quality coffee that make customer's happy and feel satisfying.
Marketing mix of chosen organisation
The marketing mix is an instrument or tactics which is used by business organisation to
promote their product and services within market and then sell them. It is about the the positioning
a product and deciding it for selling at right place, right price and with time (Gunawan, 2020).
Company's product will then be sold as per organisational marketing strategies. Component of
marketing mix mainly include four Ps such as product, place, price and promotion. In business
industry, marketing managers plan the marketing strategies by taken into account all 4Ps. In
context of Costa coffee, its 4Ps are mentioned below
 Product- In marketing mix product is most essential element because marketing strategy
of an organisation dependent on the customer's liking or loving their products. Product can
be tangible or intangible as it may be in a form of the services and goods (Loewen,
Baimoukhametova and Bains, 2020). Company's product should create an effective impact
on the customer's mind. In relation to the Costa coffee, it offer wide range of the products
and services that satisfy the desire and needs of customers. Main product of this cafe is
coffee, but its also serve many other products including hot chocolate, teas and many
more. Costa coffee has products suitable for vegans and vegetarian and several item are
peanut, gluten and nut free. This cafe import the coffee beans from across the world so that

customers can get variety of flavors. This cafe offer a good quality of its products.
Nevertheless is is identified that reviews online have shown the customers mixed feeling
for its products or services with several being happy while some other branding few its
items and services as poor. This cafe need to research for identifying the preference of
target customers and create different types of drink for catering them.
 Price- It is very essential element of marketing mix. Price of a commodity is basically is
that amount which a customer ready to pay to enjoy it. In marketing plan, price is most
critical component as it dictates organizational survival and profit. While determining the
product's price, company need to keep in mind the list price, discount, location,
competitor's price, term of sale and other things (Langaro and Martins, 2020). In relation
to Costa coffee, it understand that the price is secondary for the customers so the cafe
mainly focus on to deliver a good quality product to its customers. It provide two different
variants in their beverages like large and small. Prices is also a directly proportional to
quality ordered. The respective cafe take an accurate approach to the pricing. This cafe
understand its brand values and put a lot of the thoughts in to how they prices company's
product. Costa coffee believe in the premium pricing strategy. This cafe charge a high
price for its coffee or other product rather than its competitors. Some analyst analyzed that
this cafe offer a low priced option to those customers, who can not afford such high end
coffee and other expensive options that cater to individual with the more disposable
income. Costa coffee lower its price strategically during certain times when they want to
market or promote the sales.
 Place- It is an important part of marking mix strategy. A company should distribute and
position their product at a place that is accessible by customers very easily (Lyu, and et.
al., 2020). In context of Costa coffee, its has maintained a fantastic presence of its brand
within Britain as it has over 1000 stores there. In India its has limited stores. Its strategic
alliance is a combination of the different industries that emphasize the coordination and
complementary between the industries in its international development and operation. It
has moved in a partnership with bookshops in order to adapt the social changes which
contribute in increasing its sales of both the bookshop and Costa. The respective cafe has
around 10000 smart cafe machines and 4000 stores across the world. Its distribution
strategy involve the opening stores in a very populated area that have a good transport link.

It also offer a convenient access to its customers who looks for a quick cup of the coffee.
Costa coffee has made it facilitate for customers to select their nearest and favorite stores
where that get prepared items. This practice of Costa coffee is very convenient for those
customers who are very busy and have limited time.
 Promotion- The marking communication is a process that aid the organization to publicize
their product and its benefits to the audience. Promotion is very essential and expensive
element of the marketing mix that make enable a company to grab the customer's attention
and influence them to purchase or buy their product (Mahrinasari and Pandjaitan, 2020).
Marketers uses the promotional tactics for promoting their product or services and reach
out the the target audience. Promotional might include the direct marketing, personal
branding, promotion, sales and advertising. Costa coffee uses effective communication
instruments that convey company's good brand image. It has adopted a wide range of the
different promotional instruments or techniques that help them to attract more customers.
This cafe also provide a loyalty program to its customers in which it rewards the its
customers by offering them free coffee in their store once their have purchased 8 drinks.
The Costa coffee advertise its product through social media and television.
From this analysis , it is analyzed that marketing mix play an important role in Costa Coffee's
organizational activities. By using this matrix, respective cafe become able to sustain their market
share for a long time period.
Methods, through which respective organization evaluate the effeteness of their marketing efforts
Marking effectiveness is measured by that how an organization marketing strategies help
the company to increase their revenue and decrease cost of the customer's acquisition (Normann
and Sanders, 2019). It is very essential for the organization to measure the effeteness of their
marketing efforts as it help them to improve their strategies and other marketing activities.
Effectiveness of the marketing efforts can be measured by different tools such as KPI, social
media, bench marking and many more. Revenue is considered as a direct outcome of the
marketing efforts that provide a clear and high level insights into the successful business efforts.
In context of the Costa Coffee, it uses different ways to measure its marketing efforts. These stool
are mentioned below:

 KPI- This term is stand for Key performance indicator that is a quantifiable measure of the
performance over time for a particular objectives (POPOVIC, 2020). KPI is an important
tool to ensure that teams are supporting and making efforts in order to accomplish the
organizational goals. In relation to Costa Coffee, it uses the KPI as it keep its workforce
aligned with each other and it also keep the teams moving in same direction. This methods
give the cafe a realistic look at organizational health, from risk element to the financial
indicator. Through KPI Costa Coffee see its failures and success so they can do more
effective working. It make sure that everyone in organization will provide value with the
key performance indicator that aid employees to track their success or progress and help
the managers to move things along.
 Social media analytic- For organizations, it generate high revenue and leas the generation
that is straightforward to measure effectiveness of company's efforts. It make easy for the
companies to track numbers of the inquires and lead through the content on social media
platform. Company's engagement is tracked by shares, posts, comment and follower count
(Sellitto, 2018). In relation to the Costa Coffee, it uses the social media to measure the
effectiveness of its efforts. They track their performance through social media platforms as
they observe the comments, likes, share and reviews of customers that help them to get
know that what the audience think about their product how much their are liking
company's services. This cafe post their new launch on social media and then observe
customer's reaction by their comments and likes. This cafe receive customer's feedback
through online platform such as Facebook, Instagram, twitter and many more. The social
media help the company to generate new leads. In this, cafe get to know about customer's
complaints and solve them by making efforts. Thus, the social media is an e4ffetvie tool to
measure the organizational efforts.
 Bench-marking- This process is used by the business organization to measure the
progress of their employees and business against their competitors. It refers to the setting
up of certain particular standard and goals of the organization that leads to sustain their
productivity, mission and vision for along time period (Singh, Chandani and Bhatia,
2020). In relation to the Costa Coffee, this cafe uses this instrument to accomplish
competitive advantages within the market for long term. By using this methods effectively,
company gain some other benefits that help them to understand the customers desires and

needs. It help to met the customer's requirement effectively. Benchmark help the Costa
Coffee to enhance their efficiency and effectiveness by allowing them to identify their
potential ares of the improvement internally. By performing benchmarks on regular basis,
company become able to set a clear business goals for their organization. Through
benchmark, Costa Coffee discover the new opportunities in order to enhance their growth
and success by increasing their business sales performance.
Recommendation
From this discussion it is recommended to the Costa Coffee that the cafe should use KPI
system as it is an effective method of measuring the effectiveness of their marketing efforts. By
using this technique Costa Coffee become able to perform smoothly and effectively. It will
measure the organizational health in term of financial revenue. Through this tool, company solve
their problems and tackle the opportunities that enhance their effectiveness. So this tool is
suggested an effective instrument for the respective cafe.

CONCLUSION
From the above report it is concluded that marketing play an important role in every
business organisation as it help them to attract new customers. Through marketing, a company
positioning itself in a different way in the market. In marketing a company perform different
practices. Firstly an organisation divide their target audience on the basis some specific criteria
them provide them a competitive advantages along with profit. It is an essential action as company
manufacturing and other services depend don their segmented market area. To fulfil the customer's
demand organisation need to formulate such strategy that help them to identify that what product
they need to offer and what price the customers will be willing to pay. For this an organisation
perform the analysis of marketing mix. In this company explain about their offering and then set a
price which their target segment ready to pay and generate enough revenue or profit for the
company. In this the company promote their product by different way including advertising, social
media and other etc. To perform the practises effectively, organisation uses different tools to
measure their progress that enhance effectiveness of their marketing efforts. So it is analysed that
marketing is very essential for a business to survive in the market effectively and efficiently.

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