Detailed Analysis of Costa Coffee's Service Marketing Environment

This report provides a detailed analysis of Costa Coffee's service marketing strategies and service environment. It begins with an introduction to service marketing and the importance of the service environment, followed by a background of Costa Coffee, its mission, and its position in the coffee shop industry. The report then explores the 7 Ps of services, analyzing Costa Coffee's product offerings, promotional activities, pricing strategies, and distribution channels, including its physical locations. The core of the report focuses on the service environment, examining physical evidence such as ambient conditions, spatial layout, functionality, and the impact of signs, symbols, and artifacts. It further delves into customer experiences and behaviors within Costa Coffee, including the application of the Mehrabian-Russell Stimulus-Response Model and Russell’s Model of Affect to understand how the service environment influences consumer emotions and behavior. Finally, the report assesses the service environment's role in supporting the company's positioning and provides recommendations for enhancing customer satisfaction and competitive advantage.

Service Marketing

SERVICE MARKETING 1
Introduction
Service environment is used as criteria in evaluating services by consumers. The company
provide the goods and services to the consumers which are evaluated by the consumers
(Chand, 2018). Each and every company wants to expand its business at the international
level by providing the effective services. In this report, Costa Coffee has been taken into
consideration to analyse its services in the market.
Good and Services
Good is an object which the consumer can touch or hold but service is an action that a person
does for someone else. It has been seen that the good is a tangible objects and service is an
action which can satisfy the wants of consumers.
Background of the company
Costa Coffee is a British multinational coffeehouse company which established in London.
The company has large number of experience as it was founded in 1971. It offers the roasted
coffee to caterers and specialist Italian coffee shops. It is the largest coffeehouse chain in the
UK and the second largest chain in the World. The company earns the high profit in the terms
of billions £1.167 billion (Costa, 2019a). In this report, the discussion is made on the service
environment of Costa Coffee. Service environment of Costa Coffee will be analysed with the
models. The service will be measured with the spatial layout and functionality of the café.
The result of experiment will also be discussed in this report. At the end of the report, the
recommendations will be given in order to satisfy the consumer.
Background to the market

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Cotsa coffee is operating under the Coffee shop industry. As per the statistic, it has been seen
that the UK is leading coffee shop chains in the United Kingdom. Coffee shops are also
competing with the restaurants in the limited services. It is evaluated that the consumers
drank about the 157.38 million 60 Kg bags of coffee in a day around the globe. Costa is
ranked at the highest number in UK with the 212 outlets.
Costa Coffee, McDonalds, Dunkin Donuts and Café Coffee Day are the main competitors of
the industry. The different flavours are demanded by the consumer as per the changing
behaviour of consumer. It is observed that the 70 percent of consumers drink at least two
cups of coffee in a day which reflects the high demand of consumer (Statista, 2018).

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Vision and Mission
The mission of the company is to save the world from mediocre coffee and the vision
statement of the company is to be recognised as the world largest coffee shop chain. The
company provides the unbeatable coffee experience to the customer in order to achieve the
success in the market. The company promise their customer to make the experience better for
them. The company take the competitive advantage by providing the quality of experience to
the consumer (Chase, 2006).
7 Ps of services
Product
Costa Coffee is the most popular café in the context of supply chain at the global stage. The
company have many products such as creamy latte, velvety flat white, classic Americano,
rich cortado, intense espresso and frothy cappuccino (Costa, 2019). It states that the company
provides the variety of products to the consumer as per the taste of consumer. It also offers
the supplementary products to the consumer in order to attract the large number of consumers
towards its services. Product is a main component of the company which helps to increase the
brand value of the product. The market strategy framed by the organization is based on the
demand of the consumer. It believes in giving the high quality of services to the consumer in
order to satisfy their demand.
Promotion

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(Source: Costa, 2019)
It has been seen that the Cost Coffee is a premium brand which does not relies on
advertisements on TV, print media and on many other platforms. It is observed that the
company has high experience in their business which states that it believes in mouth publicity
from its customer. The company not only provide the services to their customer but provide
the good experience. The company provides the sample at the time of launching the new
product in the market. It also focuses on the digital media as per the developing technology to
promote its campaigns and connect with the customers. The company also organised the
loyalty programs where it provides the discount to its customer on products and earns points
on purchase of any products of costa coffee (Costa, 2019). The famous campaign of costa
coffee is “Shake Up Summer” which promotes the cold coffee products of the company.
Price
Costa Coffee has the diverse price which influences the competitors to invest it. The
company offers the premium range to the consumer due to the high value of the brand in the
market. The company believes that the first preference of the customer is good quality and
the second preference is price. The company provides the two beverages to the consumers in
small and large size. The prices of the consumer are varying on the quantity offers by the

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company. The prices offer by the company is directly offers by the different product such as
vending machine. The company sell the vending machine on the higher prices which is
highly competitive with the other competitors such as Starbucks, café coffee day.
Place
It has been seen that the company is spread in 3300 outlets and spread over 31 countries. It
also operates in 2100 restaurants of UK. The company is growing rapidly, it also enter the
Indian market and expand its business at the large area. The company modify its product as
per the taste and demand of the country that is why it is growing continuously. The company

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also has 100 stores in 11 states of India which reflect that the target the right place for selling
the product.
Service Environment Measurement
Physical Evidence
The physical evidence includes the infrastructure of the café and the physical accessibility of
the company is as follows:
Ambient conditions –
Clean store-
The café is neat and clean in nature
Temperature in Store
It has been founded that the company has normal temperature which is comfortable for the
customers. The café provides the all facility to the consumer to make the good experience.
The café use the AC and heaters to maintain the temperature of the environment (Costa,
2019C).
Music Volume
The café also use the music to develop the happy environment so that the consumer will
attracted towards it.
Smell- The café use scents and other fragmented tools to attract the customer in order to stay
long time in the café.
Interior- It has been seen that the Café has good infrastructure in which the customer feel
comfortable to go with the friends, and families.

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Spatial layout and functionality
It refers the furnishing, counters, machinery and equipment’s of the café. The café has one
counter for billing. It designs the tables and chairs in this manner where the group of people
can easily seat. Machinery and equipment’s are used by the café in the background in order to
prepare the coffee. High qualified machines and equipment’s are used by the Costa Coffee to
maintain the quality of services (Statista, 2018).
Functionality- It states the functions which can achieve the goals and meets of the
consumers. The café serves the different variety of coffees with the different the snacks. It
also provides the extra services so that the customer is satisfy such as music.
Signs, symbols and artefacts
It is a fact that the first time customers will automatically draw the meaning of signs,
symbols, and artefacts in order to evaluate the service environment of the café. It is necessary
for the café to take the every step very careful and in the manner in which it can provide the
high satisfaction services to the consumer.
The café use the labels for giving the directions to the consumers related to the menu. The
café develop the attractive menu card for the consumers in which all the service is mentioned.
The café also use the cups to offers the services in which the Costa is mentioned. There are
all kind of explicit signs is there in the café which helps to communicate the code of conduct.
The café use the label outside the café with its name to direct the direction. It also uses the
entry and exit signs in the café which helps the customer to analyse the entry and exit way
(Bij, Khan, Ten Veen, De Bakker, and Verheij, 2016). Dim lights, the low volume songs and
table cloths are the sings of good services provided by the café. The size of desk and the
pictures on the walls help to analyse the services of the café. The company also use the
statues which reflect the entertainment sign of the café.

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Customer Experiences and Behaviour
Costa Coffee is the world largest coffee chain as well as the UK. The brand has high market
share in the market due to its high quality of services. The company provides the premium
and high quality of services of the consumers in order to satisfy the needs of consumer.
Consumers of the Costa Coffee always require the good environment in which they feel
comfortable and happy. The first preference of the consumers is always the goods
environment and services. They also analyse the services of the café by the behaviour of the
servants (Mokrysz, 2016).
As per the customer review, it has been seen that the experience of consumer is good. The
consumers are satisfied with the services of the café. The staffs of the café treat the consumer
with the high regards and patience. The communication skills of staff are the major part
which satisfies the consumer at the certain level. The environment develops by the café
makes the consumer happy with the different services such as soft music, images, dim lights
and others. According to the analysis of the consumer behaviour, the café found that it has to
use the large area where the more and more people can seat (Costa, 2019b). As per the
experience report of consumer, it has been seen that the company has to adopt the more
flavours to satisfy the demand of the consumers. As per the customer review, the consumer
gets the best experiences in the café in the terms of services (Business Insider, 2018).
Services cape
The overall atmosphere of the company is classified in the different parameters by using the
models:
Application of Course Models
Mehrabian-Russell Stimulus-Response Model

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This model is used to determine the effects of services on the behaviour of consumer. It
includes the physical environment, consciously, and the other components which directly
affect the consumer behaviour (Hossain, and Enam, 2017).
(Source: By author)
Russell’s Model of Affect
This model helps to understand the feelings in the services environment and also helps to
analyse the suggestions that emotional response to maintain the environment. According to
analysis, it is observed that the café has the pleasant in nature due to which the consumer feel
relax and reduce the stress. It also has the nature of arousing which states that the consumer
enjoy the services and excited. These four dimensions analyse the degree of satisfaction of
the consumer (The Guardian, 2012).
Store environment
Qualities: Best taste and
environment
Behaviour
Patience Approach
Mediating Emotions
Pleasure
Arousal

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Arousing
Excited
Distressing Happy
Clated
Unpleasant Pleasant
Serene
Sad Relaxed
Calm
Sleepy
(Source: By author)
Services provides by the company
Service Environment Analysis
Use of service environment for Supporting Positioning of Company
Service environment includes all the features of physical evidence of an organization that
contribute towards attracting customers and satisfying them in the target market. Service
environment of an organization includes tangible aspects of tangible communication along
with servicescape as well. Further, the service environment is also used as a standard to
evaluate the service provided to the consumers in the target market. Further, for the given
organization Costa Coffee provides a favourable service environment to the customers to

SERVICE MARKETING 11
effectively absorb service and attain satisfaction in the target market (Boo 2017). The service
environment of Costa provides an adequate sitting arrangement for the customers so that they
can sit and enjoy the products that they provide to them. Most of the people drink coffee to
relax and have some quality time, so the service environment of Costa Coffee provides a
soothing environment to the customers so that they can sit and relax while drinking coffee.
Costa Coffee is a place that has wide space for sitting, vibrant colours and pictures on the
wall and well-qualified staffs that provide efficient services to the customers in the market.
Lastly, the level of satisfaction of the customers drives the position of the company in the
target market. Such features of a service environment combine to form a differentiated
position of the company in the target market (Hong, Tam, and Yim 2016).
Ways in which Service Environment Add Value Proposition
The value proposition is a promise that an organization make to deliver adequate services to
customers in the target market. The value proposition of an organization is a belief of the
customers on the value of products and services offered to them. The value proposition of an
organization is uplifted using various resources inputted in the functions of the company.
Human resources, raw material, infrastructure etc. features combine together to provide a
value proposition to the customers of the company (Wakefield, and Blodgett 2016). The
service environment is the first thing that the customer comes in contact when they enter in
Costa Coffee. So, it can be said that the first thing with which they come in contact creates an
impression on them. So, positive service environment creates a positive impact on the minds
of customers that subsequently increases the value proposition as well. The service
environment combines the work of front staff and back staff employees to successfully
deliver the products and services to the customers in the coffee shop. Thus, in this way the
value proposition is added in the services of Costa Coffee (Lovelock, and Patterson 2015).