Marketing Essentials: Costa Coffee's Marketing Strategies

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Marketing Essentials
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Table of contents
Introduction...................................................................................................................... 3
LO1.................................................................................................................................. 4
LO2.................................................................................................................................. 7
LO3................................................................................................................................ 10
Conclusion..................................................................................................................... 13
Reference List................................................................................................................ 14
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Introduction
Organisations operating in the competitive market framework need to develop an
efficient marketing strategy and plan in order to retain their competitive advantage and
attract new consumers to their business institution. The performance of a company in
the market depends on the type of business activities they develop in order to gain
better profits through transactional activities. Marketing function is defined as the
methodical planning performed by organisations to develop their products according to
the target consumer demands and collect profits through transactional activities
(Armstrong et al., 2018).
The following study will observe the marketing function deployed by Costa Coffee UK
and recognise the role and interrelationship between marketing department and other
operational units within the institution. Established in 1971, Costa Coffee is the UK’s
leading coffee store and considered as the country’s favourite coffeehouse. The
organisation provides services to the UK residents across 2,121 stores located across
the country. Costa Coffee operates in the global business environment and collects
annual revenue of £1.2billion by maintaining the quality of their products and services
(Costa.co.uk, 2019).
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LO1
Key roles and responsibilities of the marketing function
Marketing process within an organisational framework can be defined as the method
implemented by the management to create, explore, and deliver value to the target
consumers by recognising and satisfying their demands (Baker, 2016). The nature of
marketing function for any business institution is observed through the performance of
the company in developing products and delivering them to their target demographic
efficiently. Marketing plays a significant role in determining the success of the
organisation in the competitive business scenario. The external environment of an
organisation provides the basic concept for the type of marketing function and tactic the
institution deploys in their operations for generating maximum profit.
The development in business context and environment for companies have modified the
purpose and functioning of the marketing department and its operational functions as
well. The major role and functions of marketing include the identification of opportunity
within the business environment, developing new products, attracting new consumers
and retaining them by developing their loyalty for the institution through deliverance of
quality products and services (Kotlermarketing.com, 2019).
Analyse the roles and responsibilities of marketing in the context of the
marketing environment
 The role of marketing within the business institution refers to the identification of
opportunity within the environment for the institution. This is performed by the
marketing department through a detailed external and internal analysis, which
identifies the scope of the organisation in the competitive scenario. Considering
the marketing department of Costa Coffee, it is observed that the marketing
department of the company has to do the necessary research regarding the
demands of the public in order for the company to develop products that would
garner profit. The marketing function provides the organisation with the scope of
understanding the needs and desires of the target consumers. The marketing
department employees seeks to identify the exact needs of the consumers
through market surveys and produce services and products as per the
requirements framed by the customers for generating necessary profits through
business interaction in the market sector.
 As per the findings developed by Kitchen and Moss (2016), it can be stated that
the major functions that shape the success of any business institution includes
marketing function and innovation. Costa Coffee’s marketing department plays a
significant role in generating necessary results from the market survey about the
demands of the target consumers. The marketing department of Costa Coffee
also observes the quality of the services and products are maintained within the
2,121 stores located within the UK as well as the across the global locations of
the institution.
 The framing of effective marketing plans and strategies is a major responsibility
of the marketing department of Costa Coffee as these activities enhance the
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operational success of the company in generating profits from their sales
activities. By developing a strategic marketing plan, the marketing department of
the organisation is able to provide the management with information regarding
the possible launch of a new product or service. The need for a strategic
marketing plan is beneficial for the successful launch of a new product or service
in the business environment for Costa Coffee, as it would allow the management
to develop ways for conducting business efficiently in the competitive market
scenario.
 The development of marketing mix within the marketing plan for the launch of a
new product is essential as it provides the organisation with the opportunity to
develop comprehensive plan regarding the tactics they would deploy for
increasing the sales of a new product. As opined by Krush et al. (2015), it can be
stated that strategic planning, market analysis, and marketing mix are the core
functions and responsibility of the marketing department for any operational
business including Costa Coffee.
Explain how roles and responsibilities of marketing relate to the wider
organisational context
The roles and responsibilities of marketing function affect the overall performance of an
organisation in the competitive market scenario. The activities of the marketing
department influence the functioning of the other departments within the business
framework of Costa Coffee. The market analysis conducted by the marketing
department provides information to the R&D department of the organisation in creating
better products as per the market demands. The results developed from the market
analysis by the marketing department allow the finance department and the sales
department to form relevant strategies regarding the business operations of Costa
Coffee. The organisation has multiple stores located in various areas across the country
thus the marketing department of the organisation needs to identify the specific
demands and situations of individual areas and form advertisements and marketing
plans. The business procedure of Costa Coffee functions efficiently as per the
information gathered by the marketing department. The sales department requires the
information from the marketing department for recognising the type of sales process
that the business institution must apply in order to succeed in the business scenario.
The accounts and finance department need the information developed by the
marketing department in order to identify the total expenditure and financial situation of
the company for developing new products and launching them in the business scenario.
The HR department of Costa Coffee needs the aid of the marketing department to
observe the type of skills necessary for the company to launch new services and
products in the competitive transactional environment. The marketing department
requires a synopsis of the internal environment of Costa Coffee to develop marketing
plans as the information related to existing resources and skills would enable the
organisation to perform efficiently in the market sector and generate profits through
transactional activities.
Thus, it is observed that the organisational framework of Costa Coffee or any business
institution functions according to the performance of the marketing department and the
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collaborative working between it and the other functional units of R&D, HR, sales and
finance department within the company (Feng et al., 2015). The relationship between
marketing department’s functions and the organisational success is because the duties
performed by the marketing department provide the other operational departments
within the institution with the necessary advantage of functioning successfully. The
collaboration and cooperation between all the functional departments within the
institution enhances the scope of the organisation in nurturing profit from transactional
activities.
Analyse the significance of the interrelationships between marketing and other
functional units
The interrelationship between the Finance department and the marketing department
provides Costa Coffee management with the opportunity to gain better results regarding
the sales and implementation of pricing strategy for the products. The marketing
department benefits from the collaborative working with the accounts department in
order to identify the various financial resources existing within the organisation.
Benefits of interrelated working of the marketing department and the finance
department of Costa Coffee can be observed in the strategic marketing and business
plan of the organisation. The marketing department frames specific prices for popular
products for gaining maximum profits. Regardless of the benefits, the interaction
between the marketing department and the finance department provides to the
organisation, there exists a major drawback for the business in this communication.
The pricing strategy and the calculation of profits may vary for the organisation in
different stores located in various regions. The popularity of certain product in a region
may not garner much sales and profits from a different store located in a different are or
a country.
The relationship of the marketing department and the HR department of the
organisation provides the business with the idea about the validity of the skilled
resource existing within the institution. It is beneficial for the marketing department for
the organisation as it allows the marketing department to frame relevant strategic
planning for the development of the new product. The benefits of this collaborative
functioning allow the marketing department and the HR department to recognise the
need for different skills within the institutional framework of Costa Coffee. This
relationship is disadvantageous as it reduces the efficiency of the organisation in
recruiting new employees and the executive management of the organisation needs to
deploy continuous training to their staff in order to maintain the skill level within the
existing workers (Esendemirli et al., 2015).
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LO2
Compare how organisations use the various elements of the 7Ps marketing mix in
the market planning process to achieve business objectives
The 7Ps of marketing mix is essential for understanding the market-planning tactic the
organisations in the competitive business industry apply in garnering profits and
enhancing their brand image. Marketing mix can be defined as the suitable combination
of influential factors that enable the organisations to control the purchasing decision of
the customer (Išoraitė, 2016). The following section will identify the ways Costa Coffee
and Starbucks UK apply their customised marketing mixes in order to achieve their
business objectives from the transactional procedures in the market sector.
Factors of Marketing mix Costa Coffee UK Starbucks UK
Product The organisation provides
the premium brand of
coffee that corresponds
with 1% of the purest
coffee beans acquired
from Ghana. The company
serves a wide variety of
cafe products to the
customers. Hot and cold
beverages along with
eatables such as wraps
and sandwiches are
available in the stores of
the company.
The global cafe provider to
the customers through a
variety of products that are
acquired from local coffee
beans producers. The
organisation provides hot
and cold beverages to their
customers. The stores also
provide tea as an essential
beverage to their
customers.
Price Costa Coffee provides
their customers quality
coffee and beverages at a
moderate price. Their
products range within the
price bracket of £2.4-2.65
and the consumers are
satisfied with the quantity
they gain at that price
(Uk.menuwithprice, 2019).
Starbucks on the other
hand provide a well-
defined product range to
the customers. However,
the price of the same is
slightly on the higher side
with an average serving of
coffee costing of just over
4 GBP (Uk.menuwithprice,
2019).
Place As of the end of 2018, the
organization has about
3821 units that serve
coffee as well as additional
beverages and snacks to
the customer. The target
market for the same
includes all classes of
The organization has
about 901 stores in the UK
that serves the same
quality and the quantity of
the product (Starbucks
Coffee Company, 2019).
The target market of the
same however remains the
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customers, as the average
price of the products is low
in quantum.
middle income and upper
middle-income groups as
the average price of the
products are in the
premium range.
Promotion Sales promotion of the
organization is carried out
through hampers and
development of new
products.
However, for Starbucks,
the same is associated
with creation of
personalized account of
the user. It additionally
includes development of
rewards, cards, and
discounts with the use of
such cards.
People The working culture of the
organization is associated
with high degree of
automation and extensive
use of software for the
conduction of the
business. Additionally, the
employees of the
organization mostly
provide a positive
feedback to the
management regarding
training and additional
benefits.
There is a stark difference
in the working culture of
the organization relative to
Costa Coffee due to the
origin of the two chains.
Repeatedly employees of
the organization have
complained about poor
management and
marketing of the products.
Additionally, the
management has received
multiple complaints of
racial discrimination of
customers by the staff.
Process In the segment of process,
the service provided by the
organization is directly
consumed. However, in
recent times, the
organization has been
mulling the venturing into
the e commerce market
with active sales of its
product in a door-to-door
business segment.
The services offered by the
organization are consumed
through two ways. The
customers execute first,
direct consumption of the
coffee items provided by
the organization. Second,
financial incentives and
rewards programs are
being developed by the
organization. These
services are consumed
with opening and
maintaining a premium
account with the
organization.
Physical evidence The physical environment Similarly, like Costa
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of the organization
includes direct interface
with the clients for the
development of the sales
and customer services
(Costacoffee.com.cy,
2019). Additional services
and comfort includes
sitting arrangements. In
some units, a free Wi-Fi is
available post purchasing
a product from the store.
Coffee, marketing the
physical environment is
associated with smart
techniques to boost up
sales. This includes state
of the art POS machine
and order machine with
normal comforts
associated with the
organization.
Table 1: Comparison of 7Ps of marketing mix between Costa Coffee and
Starbucks
(Source: Created by the learner)
Evaluate different tactics applied by organisations to demonstrate how business
objectives have been achieved
Costa Coffee has made a three-year plan to enhance their growth in United Kingdom
market and earn considerable profits. Therefore, they need to apply several strategies,
which will help in achieving the required growth and profitability to sustain in the UK
market. Even though, Costa Coffee can be considered is a national coffee shop, they
have measures to thrive considerable heights of success in the coffee industry of United
Kingdom (Huang and Wood, 2017). The main objectives of the company is to make a
lasting impression on the market and develop core competencies in achieving success
and growth. Moreover, the three-year plan consists of gaining product expansion in the
Middle East regions as well as China. The legacy of the company will be maintained by
spreading awareness by involving in social initiative from their Costa foundation
department.
The business strategy of the organization covers marketing of their products and
services according to customer demands and insights. They are using the positioning
strategy to earn competencies in the cutthroat market. The strategy also implements
rendering quality services and maintaining an integrated system with their stakeholders,
employees, investors and customers. Costa Coffee therefore has become one of the
leading coffee brands with a turnover of 1043.7 million pounds along with 10 million
customers thriving for their services and coffee (Statista, 2019).
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LO3
Produce and evaluate a detailed marketing plan
1.0 Executive summary
Costa Coffee is associated with development and sales of coffee products coupled with
sales of additional beverages and snacks in the sweet and salty category. The
concerned marketing plan is associated with the extensive market expansion in the
trade of selling coffee through coffee chains that provides additional beverages and
snacks.
The marketing plan would be characterized by the conduction of the promotions of the
product and aggressive targeting of the middle age individuals for opening and maintain
an account for availing multiple benefits. The working mechanism would be conducting
primary research by taking in customer details and preferences during the time of order
of a product. Additionally, marketing plan would include development of e commerce in
which coffee would be delivered to the residence of the individuals. Additional finances
for the conduction of the same would be available from the accounts of the organization,
as this process would be conducted over 3 years.
1.1 Mission and Vision
Since, from the time of inception of the organization, the vision of the organization has
been to provide high quality coffee for consumption by masses. With this, our vision has
been to develop a successful business venture by incorporating multiple modes of
market entry in multiple global markets.
Our mission has been always to save the global coffee lovers from consuming mediocre
coffee. However, post having a good market share in UK our mission has been slightly
altered. Currently, our mission and vision includes increasing the customer base of in
the UK with conduction of active market penetration using multiple available
technologies and personalized approach for brewing and selling of coffee.
1.2 Goal and objective
Our goals include having a market share from a current figure of 38% to a potential
figure of 60% all over UK. Hence, for meeting the mentioned goal, following are the
respective opportunities:
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 Generating sales volume of GBP 500000 post the conclusion of the next financial
year
 Increase the quantum of sales by as high as 40% during the first year with
additional 20% in the second year
 Develop an additional framework and system for acquiring customer preference
data and integrating the same into the personalized account of the individuals
 Reducing the operational cost of each unit coupled with reduction of stores to
boost sales revenue and conduct a home delivery of the coffee as well as the
non-liquid beverages.
2.0 Target markets
The target market for the same would be the middle-aged individual in the age bracket
of 25-40. Additionally, those individuals would be targeted who possesses high-end
smart phones or smart phones that would support the mobile application or opening of
the personalized account. Additionally, this would be because, competitors in the same
area have similar products, and one must achieve same level to exceed the competition
in market share and customer volume.
2.1Segmentation, targeting, positioning
The mentioned plan would be associated with two segments. In the retail customer
segment, it would be associated with the selling of the retail products to the customers
and pushing for opening of an account with the organization. In the wholesale segment,
the target market would be multiple corporate houses that have a large number of
employees. This would be because; UK is one of the groups of nations in which the
consumption of coffee is on the higher side.
1. Middle aged individuals: For the mentioned segment, the following would be the
offerings:
 Reduced price products on using loyalty points associate with the personalized
account
 Home delivery of non-liquid drinks such as sweet snacks and croissants with
gradual reduction in delivery charges depending upon regularity and quantum of
products so offered by the organization
2.2 Market segmentation strategy
Initial market segmentation would be associated with the demographic segment as well
as the behaviour segment. During the initial phases of implementation of the marketing
plan, mostly information would be gathered from various regular customers as well as
new customers. Post six months, the behaviour segment would be taken into
consideration and real time development of the account would be taken into
consideration for the integration of available data with the account and reducing lag time
and increasing sales.
2.3 Positioning
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The market positioning of the same would be initially associated with high quality and
high price. This would be because, upon active response from the prime customers, the
marketing plan could be implemented into the general masses.
2.3.1 Competitive force
Major competition for the organization is Starbucks, Greggs and others. However, in this
segment our product through the marketing plan would be able to ward off the stiff
competition provided by other organizations due to the extensive high number of stores
serving the customers relative to the competition.
2.3.2 Communication
We as an organization would communicate such developments though social media for
all segment of customers and through mobile based messaging services for existing
and prime customers. Some of the social media platforms that would be used are
Facebook, YouTube, Twitter, and other local social media handles. Additionally travel
bloggers would be roped in for the same.
Marketing mix decision (7P)
The marketing mix of Costa Coffee will be illustrated in this part, the company being a
developing organisation thriving for more success and global presence. They have
rendered good services until, and earned much revenue and profits, the marketing mix
will help in analysing the measures they need to take to sustain in the United Kingdom
market and expand their products.
Product: they provide good quality coffee, which is made from the coffee beans
exported from Ghana (Adeleke, 2019). They also provide accompaniments with their
coffee to enhance the taste of the coffee in their shop and give customer remarkable
experience.
Price: The Coffee shop provides coffee and accompaniments in near about reasonable
rates. They keep their price range within £ 2.4 to 2.6 so that the customers are
contended with their services and products.
Place: They have made their presence in United Kingdom and out of its geographical
boundaries by spreading more than 3000 stores. They provide all types of beverages
and accompaniments with their coffee and want to serve all levels of customers (Corts
and Martinez, 2017)
Promotion: they provide their sales advertisement through their websites and social
media, they also distribute pamphlets and hampers to promote their new offerings and
discounts in their products.
People: the billing system and the customer data are preserved by the automatic
software they have. The employees of the organisation serve well in an integrated work
culture.
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