Marketing Report: Costa Coffee Expansion in Brazil by AMS Limited

This report analyzes the marketing strategies for AMS Limited's expansion of Costa Coffee in Brazil. It begins with an executive summary and introduction, outlining the report's objectives, which include a macro environmental analysis using PESTLE to identify opportunities and threats. The report then critically assesses three modes of market entry, recommending product development as the most suitable strategy. It applies concepts of market segmentation and targeting to evaluate the potential target market, emphasizing the importance of understanding consumer preferences in Brazil. Finally, the report applies Porter's generic strategy to discuss competitive advantage, concluding with a summary of key findings and recommendations for successful market entry and expansion. The report highlights opportunities related to the growing middle class and the importance of quality, while also acknowledging threats such as corruption and technological infrastructure limitations. The report emphasizes the importance of product development to meet customer needs and gain a competitive edge.

Marketing
Strategies

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................1
INTRODUCTION...........................................................................................................................1
1. Recommending product and services and providing macro environmental analysis with
possible opportunities and threats...............................................................................................1
2. Critically assessing three modes of market entry that could be suitable.................................3
3. Applying concepts of market segmentation and targeting and evaluating potential target
market..........................................................................................................................................5
4. Applying Porters generic strategy and explaining about competitive advantage that has
been gained by adopting it..........................................................................................................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

EXECUTIVE SUMMARY
The whole report is based on analysing the factors that affects the business of AMS
limited in terms of expansion of Costa coffee in Brazil to a large extent. Further, the company
have adopted some strategies that helps them in expansion and diversification of business that
later leads in achieving huge profit.
INTRODUCTION
The term marketing strategy refers to that section of the business plan where the overall
game plan in order to find customers and clients are outlined (Alon, Jaffe, Prange and Vianelli,
2016). Thus, the main strategy is to maintain the position of market by maintaining the
customers that are existed and also capture new ones. The main aim is to maintain the profit by
controlling cost of a product. In the following report, AMS limited has been taken into
consideration. This company desires to expand their business in Brazil. Further, this repost helps
the company to find out the factors that may affect the business and also overcoming them with
various process and strategies.
In addition to this, this report also highlights on Porters generic strategy that will help
AMS limited to analyse competitive advantage in Brazil.
1. Recommending product and services and providing macro environmental analysis with
possible opportunities and threats.
Pestle analysis of Brazil.
Brazil is one of the country that is largest among both south America and Latin America
(Assunção, Gandour and Rocha, 2015). It occupies the landmass of half of the continents. It is
fifth largest and fifth most populous country in the whole world. Therefore, Ashanti marketing
solutions limited wants to expand their market of costa coffee in Brazil. The cited company has
to analyse the external factors that may affect their business. Thus, this analysis has been done
with help of Pestle analysis tool. This is a framework that is used in order to monitor the outer
environment that affects the internal process of business to a large extent. However, it includes
following-
 Political factor- Brazil has proactive and stable government. There is even lack of
political instability in country. The major issue that comes forward is corruption. This has
affected Brazil in worse manner. If AMS limited will have to expand their business in
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Brazil, they will have to make payments to representatives of government and also to the
officials. Hence, in terms of corruption, Brazil rank 72 out of 180 countries.
Illustration 1: PESTLE analysis of Brazil
(Source: Scanning the Environment: PESTEL Analysis, 2016)
 Economic factor- The potential growth of Brazil is high in extreme manner. The gap is
reducing between middle class people and rich people. In addition to this, the central has
also reduced devaluation of currency and brought inflation under control successfully.
Thus, if cited company wish to expand their business of costa coffee their exports will be
affected because the currency of Brazil is considered as overvalued. The corporate tax
has also been set at 15% and there are lack of incentives in terms of leaving profit in
Brazil. The tax rates of the cited country are high as compared to any other countries.
 Social factor- In Brazil, 20% of population lives under poverty line so there is economic
inequality. Thus, if class distribution is considered, it has been found that there are
increased number of wealthy citizens and people of huge segment that has minimum
incomes. But, it has also been analysed that in terms of fashion, Brazilians are up to date
and are also modern as compared to whole world. They select expensive and luxurious
products for themselves. So, if AMS limited desire to expand their business in Brazil,
they will have to take care of their products they are willing to offer in terms of taste,
preferences and physical evidence along with quality.
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 Technological factor- Brazil possess weaker section of technological infrastructure and
also investment as compared to US or Russia. But they have tried to push their
development of technology centres all over the country with the efforts they have put.
Brazil is constantly improving in IT sector and also ranks 53rd in the whole world.
 Legal factors- the legal system of Brazil is codified and laws are issued by Federal
Government, states and municipalities. The force of law in Brazil is not bearable by legal
precedents even though their role is essential in making decisions in specific court.
 Environmental factors- Environmental factors are identified as elements that impacts
the growth of the country. Thus, operations and survival is also affected. As compared to
other countries, Brazil produces enormous amounts of solid waste and rubbish. Such type
of waste poisons soil, air and water that creates quandary about what has to be done. Air
pollution has also increased in cited country. Thus, as per the boom in the numbers of
environmental factors that affect business, AMS limited were forced to expand their
business with little regard of their environmental responsibility.
Thus, from above analysis of Pestle that concluded about the factors that affects the business, the
opportunities and threats has been derived for AMS limited in order to expand their business of
costa coffee.
Opportunities- As the gap between middle class people and rich people are decreasing, it
acts as the great opportunities for the cited company to expand and diversify their business in
Brazil. They can consume higher prices for the products they are offering as the customers are
quality conscious rather than price in Brazil.
Threats- corruption is the major threat for the cited company in terms of introducing
costa coffee in Brazil as it has affected the country in extreme manner. The technological
infrastructure is extreme poor as compared to other countries. Thus, this will affect business as
today's generation prefer buying online and believes in comparing products before buying them.
The environment of Brazil will also affect the business of AMS limited, as there are high rate of
pollution that may affect the product.
2. Critically assessing three modes of market entry that could be suitable.
Market entry options
Market entry strategy is a distribution and delivery methods that has been planned in
order to provide goods and services to new target market (Dawes, 2018). Thus, it is also referred
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to as creation, establishment and managing contracts in a foreign country. Thus, the modes of
market entry has been discussed with help of Ansoffs matrix in below context-
Illustration 2: Ansoffs matrix
(Source: Ansoff’s Matrix, 2016)
 Market Penetration- In this strategy AMS limited must try to grow with help of the
offers that is existed in the market. They must also try in increasing their market share.
Therefore, it is achieved with help of selling more products and services to the
established customers or finding out new and potential customers. Further, all these
elements can be accomplished by decreasing the price of the product in-spite of high
quality products, increasing support of promotion and distribution, Acquisitions
competition in the market and also purification of the moderate products.
 Market Development- in this strategy, the firm tries in order to expand their market with
help of existing offers. Thus, it can be accomplished by determining different segments
of customers, analysing new areas of Brazil and also analysing the market of Brazil.
 Product Development- in this strategy, the cited company tries to develop new and
innovate products that may attract large number of customers towards them. This will
help AMS limited in order to achieve high volume of growth. This innovative products
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will be obtained by investing in research and development of additional products, having
joint development with ownership of another company that needs access in distribution of
firms and channels.
 Diversification- if cited company follows this strategy, they will have to market share by
introducing new products in new markets. In this the market and product development is
required so it is termed as the most risky one.
 Strategic alliances- this strategy is termed as an agreement between parties that will help
them in pursuing set of agreed on objectives that will be required while independently
running organisations in Brazil.
 Mergers and Acquisitions- this is the vital step that may help the cited company to
successfully expand their business. This will help in adding new services. This will lead
in achieving strategic resources that develops competitive advantage for emerging their
market firms.
 FDIs- Foreign direct investment is also the mode of entry in foreign markets. They can
invest directly in foreign markets by merging and acquisitions and also investing in joint
venture that has been located in the foreign market. AMS limited can also invest directly
in the construction of facilities in Brazil.
As per the above analysis of market entry modes, the best one to be selected by AMS limited is
Product development. The cited company must develop or produce the product as per the
requirement of the customers in the Brazil. The product that is manufactured must meet the
desires and they must feel satisfied.
They must also promote their products accordingly. Further, the customers of Brazil are
quality conscious, so the cited company must produce good quality that attracts huge volume of
customers. This strategy will also help them in researching the products that are already available
in Brazil and accordingly produce the goods. In addition to this, it will also lead in promoting
that product in unique and innovative way that is absolutely different as compared to competitors
in Brazil. Later, customers will attract the products that is attractive and unique and company
will achieve long term profitability.
3. Applying concepts of market segmentation and targeting and evaluating potential target
market.
Market segmentation
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The term Market segmentation is defined as process that helps in dividing a market that
contains the potential customers and is divided into groups (de Oliveira, Huertas and Lin, 2016).
This division is basically based on different characteristics. The segments that are created are
later composed with customers that response to marketing strategy and also share their traits and
interest in a similar way. It has been assumed in this that different segments of market requires
different marketing programs that includes various offers, prices, promotion, distribution and
many more. Thus, AMS limited must segment the market of Brazil accordingly that will allow
the company to find more accurate and target potential customers. This segmentation will help
them in taking their target customers away from that of competitors those who lacked in
satisfying their requirements of the targeted segment of market. This segmentation must be based
on the common characteristics as serving of coffee, quality and many other similar factors that is
desired by the population of Brazil. Thus, taking all these factors into consideration, the
enterprise must produce the way in which they can apply these and make their brand successful.
They must then promote their promote in the market. Through this promotion, they can easily
analyse the potential customers that are willing to have such types.
Market Targeting
Targeting is defined as that market, where consumers are likely in order to have need for
its product (Déchamp, Breitler, Leroy and Etienne, 2015). The segments that is grouped by the
cited company which they want to serve their products are known are targeting. The company
must identify the market segments in specific manner that has larger audience and target that
market. They must attract customers with the help of campaigns and advertisement. Further, this
process of targeting will help the company to get high value for their investment in advertising.
AMS limited must offer their sample of coffee to the targeted customers that will help them in
analysing the actual quality and attracting towards it without hesitation.
Market Positioning
The term market positioning refers to as consumers perception towards the brand or
product in relation to competing brands or products (Evans, 2018). Further, it refers to process
that helps in establishing the image of the brand and also its identity of their product that leads
consumers to perceive in certain way. This strategy of positioning considers strengths and
weakness of the AMS limited along with needs of market and customers. It also considers about
the competitors position. The main aim of this process is to highlight specific areas where the
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cited company have to expand their business in terms of costa coffee and beats the competition
over there.
4. Applying Porters generic strategy and explaining about competitive advantage that has been
gained by adopting it.
Porters generic strategy
This strategy will help AMS limited in order to find way that leads in pursuing
competitive advantage across the market scope that has been chosen as Brazil (Filippov, 2017).
There are various types of strategies. Thus, company chooses one that helps in selecting market
segments. This helps in reflecting the choice that has been made in terms of competitive
advantage and scope. Further, the generic strategy of Porter has been discussed as per below
context-
Illustration 3: Porters generic strategy
(Source: Porter’s Generic Strategies, 2015)
Cost leadership strategy
This generic strategy is called mainly for being low cost producer in industry for given
level of quality (Frank, Cortimiglia, Ribeiro and de Oliveira, 2016). AMS limited later has to sell
the products that has been produced by the company as costa coffee at average price of industries
in order to earn higher profit as compared to competitors or below the average price in order to
gain market share. Thus, in price war event, AMS maintains profitability and competitors suffers
heavy loss. This strategy of cost leadership targets market that are broader. Further, the other
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ways in which the cited company can enjoy advantage of cost with help of improving
efficiencies of process, gaining access in unique way to a larger source of lower cost materials,
making optimal outsourcing and vertical integration decisions and avoiding the costs altogether.
If AMS limited will be unable to lower the cost of the product by amount that is same, then the
firm will have ability in order to sustain a competitive advantage that is actually based on cost
leadership (Nguyen, 2016). Thus, AMS must have following strengths that are internally as are-
 They must have access to the capital that is required in order to investment in production
assets significantly.
 They must also have skills in terms of designing products for efficient manufacturing.
Example- the component count must be small that shortens the process of assembly.
 They must have experts of high level in terms of manufacturing process engineering.
 They should also have efficient channels of distribution.
Differentiation strategy
This strategy is called up where company should develop products and services that
mainly offers in the market the unique and creative presentation as compared to other business in
Brazil (Fujiwara, 2015). The products that are offered by AMS limited must be valued and
perceived by customers in different way from offered by others. Thus, the value that will be
added by the enterprise to make them the most unique and innovative product will lead the
enterprise in achieving premium price for it. It has been hoped by the AMS limited that the cost
of product that has been offered in unique way will be overcome with help of premium pricing.
The cited firm will be able to pass along the costs to the customers that are potential and cannot
find substitutes products easily. Thus, offer different and unique products by using differentiation
strategy the quoted enterprise must have following internal strengths-
 The company must have access in order to lead towards scientific research.
 They must also have highly skilled and product development team in high number.
 The sales team that are involved in the company must be strong and must also have
ability of communicate about perceived strengths of product.
 Corporate the reputation for the quality and innovation.
Thus, the risk that has been associated with this type of differentiation strategy includes imitation
by competitors and also change in taste of the customers. Furthermore, pursuing focus strategy
will help in achieving even higher differentiation in market of Brazil.
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Focus strategy-
This strategy concentrates on narrow segments and inside that it attempts for trying to
achieve cost advantage or differentiation (Gurcaylilar-Yenidogan and Aksoy, 2018). Thus, need
for group can be serviced in better and smooth way with help of focus strategy. This strategy if
used by AMS strategy will help them in enjoying high degree of customer loyalty. As having
narrow focus on market, firms that adopts this strategy has lack of bargaining power with
suppliers. If the cited company got success in focusing strategy that they will be able to tailor
broad range of product. Thus, it includes some risk that has been described as below-
 It includes Imitation and changes in target segments of market that is Brazil.
 It may be easy for the cost leader of the broad market in order to compete directly by
adapting products.
 Other may be able in order of carving out sub segments that helps in serving better.
Thus, from the about framework, it has been analysed that the best strategy for AMS limited to
adopt is focus strategy (Mendes, 2014). This strategy will be helpful for the cited firm because it
finds the way that leads the company towards attracting targeted customers. It also helps in
analysing both cost advantage and differentiation advantage. Therefore, the two strategies that is
cost leadership and differentiation helps in finding particular target rather than analysing every
target segments. Thus, adopting focus strategy will help in bringing success to AMS limited in
order to expand their market of costa coffee in Brazil.
CONCLUSION
Thus, from above report it has been concluded that AMS limited will have to undergo
many challenges to expand their business in Brazil in terms of costa coffee. Thus, to make
smooth expansion they undertook pestle analysis that helped them in order to find the
environmental factors that affect business and accordingly produce the products or services.
Furthermore, market segmentation and targeting has also been evaluated that helped the
cited company to find the target market and later expand and diversify their business
accordingly. In addition to this, this assignment also highlights on various strategies that will
help in analysing the competitive advantage in Brazil that will later lead in achieving long term
success and higher brand image.
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REFERENCES
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Online
Scanning the Environment: PESTEL Analysis. 2016. [Online] Available through:
<https://www.business-to-you.com/scanning-the-environment-pestel-analysis/>
Ansoff’s Matrix. 2016. [Online] Available through:
<https://thecimastudent.com/2016/11/16/cima-e2-ansoffs-matrix/>
Porter’s Generic Strategies. 2015. [Online] Available through:
<http://drvidyahattangadi.com/porters-generic-strategies/>
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