Marketing Report: I Say Coffee Company - UK Coffee Market Analysis

This report provides a comprehensive analysis of the UK coffee market, focusing on the 'I Say Coffee Company'. It begins with an introduction to marketing and its core principles, then delves into the identification of specific market areas and consumer segments within the UK coffee industry. The report uses SWOT and PESTEL analyses to assess the strengths, weaknesses, opportunities, and threats, as well as the political, economic, social, technological, environmental, and legal factors impacting the company. A competitor matrix is included to compare 'I Say Coffee Company' with major players like Costa and Starbucks. The report also examines the 7Ps marketing mix model and concludes with recommendations for the company's market strategy.

INTRODUCTION TO
MARKETING

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Identify specific market area for product....................................................................................1
TASK 2............................................................................................................................................7
Examine consumer segment........................................................................................................7
TASK 3............................................................................................................................................9
7Ps Marketing mix model...........................................................................................................9
CONCLUSION .............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
Marketing refers to that process in which people exchange various goods and services to
the customers. It is an activity which set whole association or institutions for creating, delivering,
communicating and exchange offering which have some value for buyers, partners, clients and
social group at mass area. Marketing also used for satisfy customers demand and wants in
effective manner. It include various sources which assist in promoting different of company
products and services such as advertisement, templates, distribution, selling, online marketing
etc. This will support in building strong relationship with potential customers (Palmer, 2012).
The process of marketing help in placing specific product at right place that include brand
management, design of products, advertising, distribution and selling. This report is based on “I
Say, Coffee Company” which is coffee firm and it is situated in UK. The main motive of this
report is to identify major factors that will directly impact on organisation and also analyse
SWOT and PESTLE analysis. IT is also necessary to identify consumer segments which occurs
in the market. There are different market segments such as socio-demographic, Psycho-graphic
and behavioural which assist in covering whole market area.
TASK 1
Identify specific market area for product
Marketing is the process of publicizing and selling a commodity or service through
various medium of communication conveying the purpose and need of the same to its end user.
Marketing is not a one time activity but it is a continuous process which has to be followed over
regular interval so as to create and continuous demand for it. Its core purpose is to attract new
customers, satisfy them and convert them into loyal customers. The essential link through which
good produced at one place is sold all over the globe through a continuous demand is
“Marketing”. This is because if the want is not created by promoting the product or service there
will be no demand for the commodity produced and hence no sales.
Over the past decade there has been a drastic shift in the demand of coffee in Britain and
Europe (Levens, 2010). This has provoked the coffee makers to shift their interest in this market
and expand demographically all over the continent. This is the reason that big coffee players like
costa and Starbucks have increased their shops from approx. 658 in 2010 to 2121 in 2017 (Costa)
and form approx. 595 in 2010 to 868 store in 2017(Starbucks). Costa sill being the biggest coffee
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brand in UK. However other coffee shops like Caffe Nero and wild cafe bean have also
increased their number of shop. Naturally, this growth is a result of the market demand by
regular coffee drinkers. Research show that major coffee buyers are in the age group 16 -34 with
81% consuming it. About 1.8 billion of coffee cups are sold every year in UK. Due to its
increasing demand the UK coffee market sales is estimated to increase further by 27% i.e. from
3.4 billion at present to 4.3 billion Pounds. This has given rise to new and small coffee producer
to expand and open more number of stores all over UK. Adding of more coffee shop will give
rise to severe competition in terms of range of products available, price, service, offers etc.
Research also shows that almost 51% of these coffee consumers prefer to have hot drinks at
their place rather than outside their home (Babin and Zikmund, 2015). Hence shop owners are
required to increase their range of take away drinks and also concentrate on packing and serving
cups related to it so the consumers can have the feel of drinking it outside while having it at their
home.
SWOT Analysis of UK Coffee Market:
SWOT stands for S-Strength, W- Weakness, O-Opportunities and T- Threat. SWOT
Analysis can be done for any company, product, service provided, and person. Ideally strength
should exceed the weakness, and there should be more more of opportunities available to expand
and grow than its internal and external threat. Its basically done to understand a different view
point on which the SWOT is performed.
Here we are performing SWOT analysis on UK coffee market to understand the various
factors of market before launching a new brand of coffee.
Strength:
1. Fastest growing sector of UK market. About 1.7 billion cups of coffee is sold every year
which is expected to rise drastically in near future.
2. Large number of consumer are in the age group 16-34 which creates a demand to serve
coffee in pubs, canteen, offices etc. Coffee is seen as a youngsters drink and is assumed
cool to have coffee over tea.
3. Big retailers like COSTA and Starbucks making huge profits. Around 16000 outlets of
coffee shops in UK with a turnover of 6 billion pounds per year.
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4. Drinking coffee has become a habit and fashion. The nice and soothing aroma of coffee
relaxes mind and soul and thus is a great start to every morning. This feature of coffee
makes a person crave for it more and more and thus becomes a habit.
5. Health benefits of coffee like reducing chances of cancer, increasing metabolic rate,
reduces type 2 diabetes , less chances of stroke, help in weight loss have also given a
push in its demand.
Weakness:1. Consumers prefer to drink in their home rather than having it in the cafeteria. This
reduces the demand for other range of pastries and snacks .2. Though its popular hot drink among the youth a large section of other age group still
continues to prefer drinking Tea over a cup of coffee.3. Rise in price of coffee beans and consumers demanding freshly grinned beans as per their
requirement.
Opportunities:
1. With the market being estimated to continue rising in near future there is vast scope for
"I Say Coffee Company" and existing coffee sellers to expand and grow in future.
2. Green coffee is proved to be the best in weight loss (Bhattacharya, 2010). This has
created a demand for a new hot drink in its range and hence even those who are health
conscious are now attracted to coffee shops.
3. Kiosk, drive-thru and carts are attracting more consumers than coffee shop because of it
give customer on the go convenience. This means there are more chances of growth for
lower investment to set up a coffee store.
Threats:
1. Coffee trees cant bare extreme climatic conditions. Thus, climatic conditions play a very
important role in amount of coffee produced and thus affects its prices. Higher coffee
beans price will also increase price per cup of coffee and hence, decreasing its demand.
2. As its booming sector there is a constant threat of competition from new entrants in the
industry thus affecting the demand and supply of it.
3. The price of per cup of coffee majorly depends on many factors like price of dairy
products, sugar, sugar substitutes, serving cup . The prices of so many products cannot be
predicted and this can have a major impact on the entire coffee industry.
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All the above factors bring us to a conclusion that no matter how alluring the estimated
sales in the coffee industry is but its big players like COSTA and Starbucks is a severe threat for
“I Say Coffee Company” in the market. Hence a detailed study and research of the market is
recommended in areas of project plan, promotions, point of sale, target mar get, competitors,
expenses.
PESTEL Analysis:It is a tool used by market analyst to analyse various external factors that has
a direct impact on the products growth (Atwal and Williams, 2017). The various external factors
are Political, Economical, Social, Technological, Environmental and Legal.
Political: All the government laws for trading, taxes applicable, trade restrictions, labour
laws, are considered as political factors. UK coffee industry has seen approx 7.2% growth rate
which have attracted the investors towards it. Though there are low barrier for entry in the
industry but "I Say Coffee Company" still face the problem to survive in this over competitive
market. The political challenges that "I Say Coffee Company" will face are:pricing regulation,
environmental laws, employment laws, property act, companies act, trade limitations,. As its is a
rapidly growing industry there is a lot of government intervention related to selling of coffee.
Economical:The factors that affects the economic growth are inflation rate, GDP,
exchange rate. Economic factors determine the purchasing power of consumer and the cost of
per cup of coffee. If the inflation rate or exchange rate is high the cost of per coffee will increase
and thus decrease the buying power of consumer resulting in less demand and thus affecting the
sales and turnover.
Social:Social factors play a very important role while introducing a product in foreign
market. The age distribution , choice, education, health conscious, class structure, attitude
influences demand for coffee. When researchers proved that coffee reduces type 2 diabetes,
heart attack, cancer the demand for coffee increased even in older section of society whereas a
large group of weight conscious youngsters decrease the demand for coffee and shift to healtier
options like green Tea, herbal Tea, energy drinks, low cal drinks.
Technological:It includes research and development, technology used to produce and
process the product, production level, innovations etc. The use of technology have a great impact
on the production quantity and thus affects the price of commodity. Now a days consumers
demand for freshly grinned coffee is increasing as compared to packed once and hence they are
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more prone to buy coffee from a coffee shop rather than shopping market. “I Say Coffee
Company”owners can also provide free Wi-Fi service attract its customers.
Environmental:It includes various aspects like change in weather and climate. These
factors immensely affect coffee plantation as coffee cannot grow in extreme climatic conditions.
If the climate is too hot or too cold the amount of coffee produced will decrease which in turn
will increase the price per coffee cup.
Legal:It includes consumer law, health laws, employment laws. These factors influence
how a firm operates and affects the demand and price of its product. If there are strict laws this
will act as entry barrier for new firms (Skålén and Hackley, 2011). As a result there will be less
competition and thus there are chances that the company might charge high for a cup or coffee.
Thus there are laws like fair trade coffee and certified coffee which assures fair price to
consumers.
Competitors Matrix:It is a tool that helps you to compare your firm and product to its
competitors in a more easy way. Its in form of a chart that enables to ma read it easily and gather
all the outcomes.
COSTA STAR
BUCKS
CAFFE
NERO
GREGS PRET A
MANGER
RUNNING SINCE 1971 1998 1987 1939 2017
PRICE IN GBP 1.8 2.45 1.5 2 1.3
PREFERRED LATTE,
EXPRESSO
EXPRESSO LATTE CAPPUCINO AMERICANO
PROMOTION
MARKET SHARE 56.00% 24.00% 12.00% 5.00% 3.00%
NUMBER OF
SHOPS
1200 860 400 150 20
TARGET AGE 16-34 16-34 16-40 15- 60 15-75
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CUSTOMER
LOYALTY
VERY
LOYAL
LOYAL NOT
LOYAL
NOT LOYAL NOT LOYAL
TASTE RICH,
PERFECT
PERFECTLY
BREWED
TOO
MUCH
WATERY
BELOW
NO AROMA PERFECT
TASTE
The above table states that around 80% is captured by market leaders like Costa and star bucks.
Hence there a very low scope of new entrant being surviving in the prevailing market. Moreover
their customer base is also very loyal and don't easily shift for other option. The reason for
customer being loyal is the perfect taste and rich aroma of coffee that they sell. Since they are in
the market for more than 40 years there is very little scope for “ I Say Coffee Company” to fit
into the UK market. On basis of above research “I Say Coffee Company” should consider a
franchise shop rather than opening a separate new shop. A franchise shop may incur less
investment and will at same time enjoy all the benefits of promotion and of being into a tie up
with big brand like Starbucks and Costa. It will also enjoy the goodwill of these brand which are
running over years in the market.
Boston Consulting Matrix:
The BCG matrix was Boston Consulting Group in 1970 with a view to help analyst to
study the various product lines that the company suns in market at present. This matrix allows a
company to manage its range of products by analysing relative market share to its industrial
growth. The BCG matrix is divided in four quadrants namely Question marks, star , cash Cows,
and dogs. He stated the the products that fall in cash Cows have a relatively large market share
but the growth in industry in very slow . These product are high yielding products I.e. they make
great profits and generate great return which can be used for other products. The products that
fall under Star have large market share in fast growing industry. These products also earns great
profits but as the market is rapidly growing they require constant promotional expenses as due to
its rapid growth it attracts many competitors.
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Question marks product are like problematic child they require a lot of attention as they
have small marker share and highly profitable market. They have high chances of becoming star
product when the acquire high market share . However, they can eventually also become cash
cows if the market grows slow . Hence they must be very carefully invested as the have high
potential of generating regular income. Products falling under dogs should be immediately
discontinued as they involve large amount of investment and don't earn any returns. The amount
invested in Dogs is waste which can be otherwise invested on stars or question marks. In
conclusion if “I Say Coffee Company” starts its individual business it will be identified as
Question marks because the market share it will be able to capture is very low as compared to
already established companies like Costa and Starbucks. But at the same time as coffee industry
in UK is a high growth industry in future it has great scope of becoming a star product with the
right amount of investment in the right direction. In will also be required to take care of the taste
of its product and introduce sum thing unique and new to become stars.
Ansoff matrix: It is a tool that help managers to apply various strategies for future
growth. Ansoff Matrix have four segments namely Market Penetration, Market Development,
Diversification and Product Development which is compared in different scenario of existing
market, new market, existing product and new product.
TASK 2
Examine consumer segment
Segmentation of consumer help in capturing large number of market place. Segmentation
of consumer help team of marketing for preparing budgets and develop the most effective
marketing strategies for reaching the large number of target consumers. In this segment, they can
not waste money for attracting potential buyers in an efficient manner. There are different ways
for segmenting large market for reaching the ideal customers for selling products and services.
This include demographic segmentation, socio graphic segmentation and behavioural
segmentation (Fullerton, 2010). “I Say, Coffee Company” will used these segments for identify
potential customers and also develop that products according to the demand and wants of desired
buyers in the large market place. These segments are discussed as follows: Psycho-graphic- It is one of the major segmentation which help in providing both
geographic and demographic segments of ideal customers. It will used for characterise
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the segmented areas which are less important than other. There are various psycho-
graphic segmentation on market principle that include belief, social class, lifestyle and
attribute. These types of customers are most importance for implementing both
geographic and demographic segmentation in different manner. This is necessary for
segments the market based on different areas whereas they are psycho-graphic and
marketers are try to analyse whole present and past customers information and data. This
will help in simply identify all customers for the specific goods and services. It also assist
in building strong relationship with large base of buyers. Company requires to encourage
customers for buying their products and services in large quantity. The major example of
psycho-graphic segmentation is to target those customers who are intended about budgets
report. They are those people who purchase always good quality products and incline to
be became confident consumers (Malhotra and Malhotra, 2012). The person who
purchase goods where they feel satisfied then it is the duty of seller is to provide
demanded goods which are fulfil buyers needs and wants. The segmentation of target
market assist in identify desired customers who have interested to purchase different
types of products and services. “I say coffee” company serve products in approximately
more than 5000 self controlled and there are more than in all over the 38 countries in the
UK. There are almost 1023 stores which is managed by their team in the UK market
place. The stock value of market is in 2013 is $51.64 billion and in 2012 they have
income value is approx. $13.22 billion. This is specialised coffee provider firm which is
situated in United kingdom. Behavioural- This segmentation is very close to the psycho-graphic segmentation which
is less practical for analysing demographic and geographic segmentation. This act will
practice in dividing different groups of customers according to their attributes,
characteristics, knowingness, feeling, happening, knowledge and buying pattern.
Segmentation of behavioural can be used in different ways. If these segmentation are
depends upon awareness, firm will send their trusted buyers by arranging campaign and
many other sources which help in attracting large number of customers towards firm
coffee shop. Marketing is important for doing gaining attention of domestic and
international customers (Molesworth, Scullion and Nixon, 2010).They easily attracted
towards high quality goods and services. “I say Coffee” company build strong
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relationship with buyers then they will provide them their choice commodities and
services. An organisation segmented the buyers during the time of occasion by this they
were mostly target those customers who have less price for purchasing these types of
products and services. In the season of holiday and graduation season they mainly cover
whole market place. This behavioural segmentation permit marketers to be more
corrective and also send messages for attracting large number of customers towards
different types of commodities.
 Socio demographic- It is the most important segmentation of customer which is based on
buyers choice, preferences, living standard, background and many other things. It is
mainly used in business to business markets. This includes size of firm, role, structure,
working timing for employees and some other. In this concept, company will search
potential buyers who interested to purchase their respective goods and services in
effectively (McKenzie-Mohr, 2011). “I Say coffee” target those customers who have high
standard of living and they can easily buying their enterprise goods. Socio demographic
segmentation is necessary for identify latest trends and fashions which help in attracting
large number of customer. They are cover that place where large number of customers
are attracted towards firm products and services in effective manner. s
The growth of different segmentation are increasing in today days. “I say, coffee
company” also enhancing their growth in large market segmentation and also attracts more
customers towards firm. Coffee shops are try to expand market growth by add some more
restaurants in the market. In UK, there is approx. 6.9% growth rate of coffee market. The annual
turnover rate is approx. 2.9 billion. Age group under 19 to 34 years are prefer coffee daily for
two or more times. In UK, there are almost 44% demand of coffee are continuously increased in
billions. In 2016, at the age of 18 to 24 years people consume coffee on regular basis and it
enhancing day by day by 45% from 33%.For consumption of coffee is became trends for young
generation people.
There are three segments which are explained in the above such as psycho-graphic, socio
demographic and behavioural segmentation (Sheth and Sisodia, 2015). These are important to
analyse by every firm because it gives accurate information and data of customers choice and
preferences in better manner. Behavioural segmentation help in identify the exact behaviour of
buyers towards specific goods and services and it assist in analysing demand of customers and
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on the basis of this wants, they will analyse the different consumers choice and taste of particular
products. The growth of firm will evaluate on the basis of quality of coffee and other drinking
items and also this will increasing customers number in the market. UK is the country of coffee
provider so that it is easy to attracting buyers towards these products. Cited firm will offer
branded coffee which assist in gaining attention of customers towards their goods.
TASK 3
7Ps Marketing mix model
Marketing is that process which help in promoting different types of products and
services in the large marketplace. The strategy of effective marketing is basically increasing sales
and growth ratio and also help in achieving targets and goals for the firm. This will included
various terms such as long term, short term and mid term which support in reaching goals and
objectives in effective manner. Product description- “I say coffee company” is differ from any other firm because it will
provide different types of products and services (Armstrong and et. al., 2011). There are
different forms of drinks which would be offered by company such as lattes, mochas,
cappuccinos etc. The firm requires to adopt latest techniques for making of innovative
goods which assist in enhancing company growth and success. Product description refers
to the design, shape, colour and features of the specific goods which will introduce by
firm for attracting their customers. They will present all information and data regarding
different types of products and services which were made by enterprise for gaining
attention of buyers. Brand image- It is the basic factor which build strong image of company products and
services and take top position in the market place. This is very important for enterprise is
to make their goods in different style which help in taking place at the top of the market.
They should develop innovative brand for attracting large number of customers. It is that
marketing strategy by which firm will increasing company growth and build great
reputation in the market location. If an organisation build good image of their product so
it is easy for customers is to identify demand goods and services. A strong image of
brand goods are directly affects the behaviour of buyers mind and also top products make
strong and clear image of goods towards potential buyers (Gbadamosi, 2013.). It will
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