Marketing Report: Costa Coffee's Strategies, STP, and Environment

This report provides a comprehensive marketing analysis of Costa Coffee, examining its introduction, current marketing strategies, and the micro and macro environments in which it operates. It delves into the company's segmentation, targeting, and positioning (STP) tools, evaluating their implementation and the company's strengths and weaknesses. The report also explores relevant marketing concepts, market research methodologies, and the application of the seven elements of the marketing mix. Furthermore, it incorporates PESTLE and SWOT analyses to assess the external and internal factors influencing Costa Coffee. The report recommends the use of STP to improve performance, guide strategic planning, and refine marketing tactics. The analysis covers competitive strategies, literature review of the current market scenario, market research, and organizational structure. The report also analyzes the company's competitive advantages using Porter's Five Forces model. Finally, it compares digital and traditional marketing approaches and discusses the evolving dynamics of the coffee market.

Marketing

EXECUTIVE SUMMARY
Present report is based upon marketing analysis of Costa Coffee in which its
whole introduction an its current marketing strategies used by company and determine
micro and macro environment. Its segmentation, targeting and positioning tools used
and how it implement and strength and weaknesses of company. Apart from that two
marketing concept and market research in this study is being study and seven element
of marketing mix is used. It is recommended that Costa Coffee can use segmentation,
targeting and positioning which is also known as STP, to improve its performance and
identify its overall operations and assist in planning and designing the marketing
strategies and tactics.

Table of Contents
EXECUTIVE SUMMARY...................................................................................................2
INTRODUCTION...............................................................................................................1
MAIN BODY.......................................................................................................................1
Evaluating competitive strategies and advantages of company....................................1
Literature review of present market scenario.................................................................5
Determining market research of company.....................................................................6
Analysing and study of organisation..............................................................................6
CONCLUSION...................................................................................................................7
RECOMMENDATION........................................................................................................8
REFERENCES..................................................................................................................9
Appendices......................................................................................................................10
Reflective Statement....................................................................................................10

INTRODUCTION
Marketing is refers to advertising and promoting of an particular product and
services to influence the costumer to buy and spreading the awareness in the market. It
include many activities and it is wider term ad must be perform in proper and adequate
manner to increase the sales and growth (Alalwan and et.al., 2017).In this report the
company is Costa Coffee is U.K based organisation is a subsidiary of the Coca-Cola
headquartered in Dunstable, England. In this market research its brief background and
history and its marketing strategy, external environment and Segmentation, Targeting
and positioning is being discuss. Determining the market research and type of data
collection and its techniques and differences of digital marketing or contemporary and
traditional marketing is studied. Apart from that SWOT analysis and PESTLE of
company and its impact on elements of marketing mix is evaluated.
MAIN BODY
Evaluating competitive strategies and advantages of company
Costa coffee is UK based famous Coffee house chain in subsidiary of Coca cola
Company, headquartered in Dunstable, England. It is founded in London in 1971 and
acquired by Whitbread in 1995 and sold in 2019 to The Coca Cola Company and has
grown to 3401 stores across 31 countries and around 18000 employees (Chaffey and
Smith, 2017). This sells certain coffee products such as Hot drinks, Cold drinks, snacks
and sweet include chocolate bars and wafers and cakes and pastries and more
products.
Marketing strategy- Costa coffee is well known coffee brand in UK and across
the world and build its brand image has strong image in media that help the company in
increasing the sales. It include CSR activities that build Costa Foundation that enhance
the coffee growing communities and across the world. Company has adopt some
marketing strategies and tactics that include certain models such as Porters model,
SWOT, STP and PESTLE tools to determine its compensative advantages and
strategies to develop its growth progress and sustain in market. PESTLE Analysis-
This help to analyse the various factors like political, economical, social, technological,

legal and environmental that influence the brand of organisation. It is framework which
assist the Costa coffee to understand the market dynamic.
 Political Factors- This refers to political stability in particular country and policies
and tax rate prevail in country. Costa coffee is leading coffee brand across the
world and its impact of decision differ from country and country. This operates in
32 countries and dependency on country's decision is more and has to follow
rules set by country (Deepak and Jeyakumar, 2019). If government is
cooperative and impose less tax, than it will be less restrictions. If not, then it
might create problem for them.
 Economical Factors- This refers to economical condition of country, inflation
rate, employment rate and growth of nation that impact the profit and unction of
company. As Costa Coffee is operating its business in many countries and it will
open new opportunities for organisation to grow more when there is developing
nation. Like in china, the income per capita is increasing their so Costa Coffee
has decided to open more store there by 2022.
 Social Factor- It refers to social behaviour, taste and preferences of costumer in
particular nation and how it impact the growth of company. This factor directly
impact the business of Costa Coffee and bring out both threat and opportunities
for company. As in developing nation, income standard is rising that will good for
company and on the other hand increasing in awareness of health conscious
among people will be new threat for company.
 Technological Factor- This factor refers to technological changes and new
innovation and the way it influence the business of particular company. As, Costa
Coffee has sufficient amount of capital to invest and it also focuses on coming up
with new technology like recently it adopted Ceridian's Dayforce Workforce
Management Technology to handle staff and timely delivery of payment to
employees.
 Legal Factor- This factor concern with legal framework, law and judicial bodies
exist in country. As, it has big brand image and where it operates must follow all
rules and regulation of nation to avoid any future uncertainties. In Costs Coffee it
is alleged that employees were not treated its employees fairly and equally.

 Environmental Factor- It refers to building sense of responsibility towards social
and maintaining the sustainable and development of environment. As, it is duty of
every company to increase the awareness of people about climate change and
due to this company has taken decided to to be part of saving environment. By,
recycling the coffee cups from costumer and stop wasting them.
Porters analysis of company- It basically concern with tool that used in identify the
competitive force and determine industry's weakness and strength. This analysis used
by Costa Coffee in following manner-
 Competition rivalry- It termed as intensity of competition prevailing in market
and effect the company's performance and stability (Eckhardt, and et.al., 2019).
As in coffee beverage industry there are so many competitive rivalry with strong
position in market that makes very tough competition environment for Costa
Coffee. There are some leading brand like Starbucks, Tom Horton, Lavazza,
Panera bread and many others who build and maintain their sustainability very
strongly. So, there is high competition rivalry exist in this industry.
 Bargaining power of Buyers- It concern with frequency of buyers switching
their brand from to another. In this coffee industry there is high bargaining power
of costumer due to presence of large number of companies in market. Costumer
do have loyalty and many times not that influence the behaviour of customer in
the market (Martin and Murphy, 2017). So, this force is strong towards the Costa
Coffee.
 Bargaining power of Suppliers- This decides the suppliers choice and it power
in market. In this industry there is low power of supplier due to presence of many
efficient supplier in industry and also Costa Coffee is enjoying the dominant
position in market that make easy to make contact with numerous other
suppliers.
 Threat of substitute- This refers to availability of substitute in market of that
particular product. So, there is always high threat of substitute in market as there
are variety of different beverages and most importantly tea is major threat for
company.

 Entry of new entrants- This termed as threat and barriers for new entry and its
impact on existing companies. In this coffee industry entry of new entrants is
easy as there is no complexities were in this market. So, there is high threat for
Cost Coffee because of low hurdles and easy to step in market makes this
difficult for company.
Swot analysis: This refers to determining the internal and external factors within the
organisation to evaluate the planning and marketing strategies.
Strength:
 Costa coffee is the second largest chain of coffee in the world. This coffee brand
is present in 31 countries and known for the good taste coffee.
 Costa coffee has the largest chain and the market share in the UK since 2007
and have the premium image in mind of customers.
Weakness:
 Costa coffee needs more expansion as the competitors of costa coffee like
Starbucks has its presence in 70 countries while costa coffee is present in 31
countries only.
 Costa coffee sold at higher price in comparison to the Starbucks coffee which
make the customer to shift to Starbucks.
Opportunities:
 Costa coffee has its boom because of the expansion the company has tie up with
the corporate houses for its vending machine which may increase the production.
 Costa coffee should use the pull strategies to attract the more customers so that
they can earn the benefits in the future (Kotler, Kartajaya and Setiawan, 2016).
 Costa coffee can set up the strategic alliances where the chain are made and
can sell the coffee their when helps in increasing its brand and growth in the near
future.
Threat:
 Starbucks is the major threat of the costa coffee as this brand dose not allowed
to expand and settle the costa very easily.
 Brand value is also the biggest threat of Costa Coffee as its advertising and
marketing techniques are very poor in comparison to its competitors.

STP: This is important tool that help the company to determine its targeted and
segmented market where organisation can formulate its strategies and planning.
Segmentation:
 The white-collar workers and the person with the good image prefer the coffee so
that they can show their identity in front of others (Mothersbaugh, Hawkin and
Kleiser, 2019).
 People want to improve their quality of life they can prefer to have the costa
coffee
 It is the mix of the geographic and the demographic area which help in satisfying
the needs of the customer in the most productive ways.
Targeting:
 Upper middle class and privileged class people prefer the costa coffee so that
they can show their brand image and show their class in-front of the others and
because of the price they can only purchase the coffee.
 Coffee shop can be used as a social gathering for the youngsters such as friends
and business gathering they prefer to go these coffee shops because of good
environment which make easy to work (Morgan and et.al., 2019).
 Costa coffee is introducing the new products to satisfy the needs of the target
customers and make them attract with the brand and can earn the profit.
Positioning:
 Costa coffee is the worlds Italian master coffee preferred by the people in the
area and the places where it can served easily.
 It has higher standard of coffee and the services provided by the costa coffee is
best enough by which people have no issues regarding the quality and can
purchase them easily.
Sometimes people has psychological role like they drink the coffee once in a month but
have a level of satisfaction.
Literature review of present market scenario
According to Giraldo Oliveros and Esparragoza, (2016), in the current scenario of
market there are many changes and methods has come in the world of marketing that

bring major differences in the operation and strategies of companies around the world.
Recent new changes in world of marketing is being Digitalisation of various methods
and process. The concept of marketing has change little bit due to coming of new tools
and method such as marketing through website, search engine and mobile apps. These
are tools which are mostly used by many organisation to promote their brands an value.
In the views of Gummesson, (2017), Contemporary/Digital Marketing refers to
present marketing method that prevails in the market. It is different from the previous
marketing method and now it focuses on costumer needs and requirement rather than
their brand and sales growth as now they believe that first, costumer need to be
satisfied and happy with the goods and services they are provided. Companies are now
interacting with its consumer and try to build long term relationship, so it will be
beneficial for company in long term. Costa coffee has successfully manage to
implement this as it is import an for them to give competition to other big organisation by
increasing it online presence and promotion on social media platforms.
According to Gupta and Nair, (2020), traditional marketing is concern with
making concept that used to prevail in marketing that include one to one communication
with costumer and focus only on increasing the sakes and growth of company rather
than focusing on the needs and requirement of buyer. They are marketing through T.V,
Radio and Billboards and other sources. Costa Coffee is also used this and even now it
is available in physical channel to promote its brand in UK and other countries.
In the views of Hanssens and Pauwels, (2016), contemporary marketing is
mostly use by companies to promote their business and it is cost effective and does not
require much money and efforts while doing this. This made easy for small organisation
as well to do advertising and marketing on digital platform as this only concern with
promoting their brand digitally. Traditional marketing is advertising practice that used to
conduct few years back and even now it exist in marketing world. To do this it require
huge capital, time and various resources for successfully complete this marketing
method, so it become difficult for small businessman to pursue this and compete with
big players due to lack of resources.

Determining market research of company
In conducting market research it involve two types of data collections methods
which are Qualitative research and Quantitative research. Qualitative research also
called Secondary research that consist collection of non- numerical data to determine
the concept, approaches that helpful in gaining useful insight of facts and assist in
coming up with new idea about research. Quantitative research consist statistical,
mathematical and other techniques that require numerical analysis of given situation
(Kannan, 2017). In this market research of Costa Coffee, Qualitative research is used to
identify the competitive and various marketing strategies as it involves observation,
focus group, secondary research of problem. While doing this research texts, photos,
video are benefit and used in while making proper examinations of study. Analysis
techniques comes in the use to solved long term and specific problems and there are
certain techniques that used in business. These are Regression analysis, Grouping
Methods and Multiple Equations Models that helps in determine relationship between
variables.
Analysing and study of organisation
From the above report of market research of Costa Coffee various marketing
strategies, external and internal competitive advantages and its segmentation, targeting
and positioning of company has been done such as PESTLE, Porters model and used
secondary research method while doing conducting this study. Other than that
competitors advantages and SWOT analysis has done and there are some marketing
mix element that used by companies in following ways-
 Product- This is important element that decides success and failure of company
as this is what they offered to costumer. Costa coffee has used product portfolio
that include wide variety of Costa Coffee such as Cappuccino, Latte, Flat white,
Americano and many more that attract large costumer and famous among
costumer.
 Price- This cost incurred by costumer to consume the product which is set by
company and proper pricing strategies will help in profit. Costa coffee is using
slightly premium pricing strategies. To provide high quality product will attract the

costumer as company is focusing on delivering premium range and brand to
them.
 Promotions- This is necessary factor that every company follows to advertising.
Costa Coffee does not rely on T.V, Magazines and any other print media, they
believe in word of mouth publicity from costumer and use certain digital media
platform to interact with them. It is necessary for company to use this as much as
possible to spread the awareness.
 Process- It refers to operational process used in organisation. Costa Coffee is
using effective sitting arrangements and maintaining good relations with its loyal
costumer (INDONESIA, 2018). In some outlet they are offered self service
counter and use wide range of mechanism payment process.
 People- This refers to human resources in organisation. Costa Coffee focuses
on costumer and its employee and trained to follow highly professional behaviour
towards costumer and treat every costumer with politely and give best
experience to them.
 Physical Evidence- This is elements states physical appearances of company.
Costa coffee has almost 3000 outlets across the 31 countries (Kamps and
Schetter, 2018). Major outlet were in UK where 2100 outlet established there. So,
Company has efficient physical stores to increase their profit and brand
awareness.
 Place- This consist to distribution strategies used by organisation to deliver its
products. Costa Coffee is spreading in all over the world and operate in more
than 2100 UK restaurants. Its outlets founded mainly in shopping malls, airports
and high footfall places where it can grab large costumer base.
CONCLUSION
From the above report it is concluded that Marketing is essential tool used by
every company to promote its product and services. In this report discussed about brief
introduction of organisation and its internal and external environment factors and its
competitive strategies has been discussed that include some methods such as
PESTLE, SWOT, Porters model and STP of company. Apart from that market research
and data collection of data collection used in this study is studied. Concept of traditional

and digital marketing in current scenario and their comparisons has done and from
following findings some marketing mix element followed by firm has discussed.
RECOMMENDATION
It is recommended that company might use segmentation, targeting and
positioning model in its operational activities and while formulating any strategies and
plan this is most useful tool that company must consider. As, it helps in determining
targeted costumer to whom organisation is making their products and segmenting it on
the basis of demographic, geographical and behavioural and positioning its products to
targeted costumer.