Explain a Costya’s 3 year marketing plan……………………..

Table of contents                                           Page

 

1. Executive summery                                            1
2. Table of contents                                                  2
3. Mission statement                                                3
4. Current marketing situations                          3

(internal and external audit)

1. SWOT analysis                                                       9
2. Objectives and issues                                       10
3. Marketing strategy                                           10
4. Marketing implementation                           13
5. Budgets                                                                 14
6. Controls                                                                14

 

Executive summery

            This report outlines marketing strategies and marketing approach to be taken   by Costa coffee for next 3 years commencing June 2012. Costa coffee is a UK based coffee distribution company with over 1300 outlets in UK and 700 chain stores spread across the globe.

The report analyses current internal and external market condition of the company. Various industry aspects have been audit to set the ground for effective competition within the industry.

External factors affecting the functioning of Costa Company in its efforts to be the world number one company in provision of coffee products have been audited to form the basis for the three years plan. these varies from legal constraints, fluctuating rates of interest, cultural values that hinder the consumption of coffee, world economic downtown as the factors hindering the business growth.

The company strengths and weaknesses have been highlighted as well opportunities and threats. The paper further states the objectives of the marketing plans which includes growing market share by 15% in the next three years, developing at least five new and high quality products per year, to provide the best quality coffee products for our customers to meet our responsibilities as the staff of Costa company and to increase shareholders value through marketing activities

In order to achieve these objectives, the paper outlines marketing strategies which include product development, market development, market penetration and marketing mix strategies. The plan implementation schedule, marketing budget and controls have been developed for this marketing plan.

The plan proposes review of the plan after every three months to ensure that the all marketing objectives are attained at the end of three years of this marketing plan. Any variations from the plan have to be explained and corrective measures tak

Mission statement

To be the world number one company in provision of best quality coffee products.

Current marketing situations

                  Costa coffee has big market in and out of UK. Currently company has the largest coffee chain in the UK and third biggest food and drink in the world with several chain stores in Britain. The company sales have been rising significantly over recent years past. Several new stores have been opened all over the world as the company expands to new regions.

                                                Internal audit

The market growth for Costa coffee has been on the rise as the company strives to penetrate into new markets of Asia, Latin America and Africa. The company has recorded significant increases in sales revenue and new outlets. The marketing strength has greatly relied on marketing research and insight.

 

                                    Labor force

Costa coffee boasts of experienced, able and loyal staff that also doubles up as customers. A large number of these staff works in marketing department.   Company staffs are motivated by throygh job promotion and transfers to company stores of their choice overseas, trainings and financial rewards for high achievers. (www.cim.co.uk/marketingresources).

The company has global insight manager responsible for international projects and customer service manager both reporting to insight manager. Costa coffee has relied on customer insight which helps the company in strategy formulation process. The company has a team of staff who knows how to respond to customers needs.

Finance

             The company has a firm financial base owing to its prosperous performance for the past many years. There has a significant increase in sales revenue and profits for company, for instance, it exhibited a 22.8% rise in sales in six months ending august 2011.

Costa coffee has enjoyed enormous growth over the years in terms of company size and sales.

Machinery and equipment

             The company has established stores in UK and other parts of the world. It has over 1,300 coffee outlets in the UK and over 300 spread across the globe. Machineries and equipment for coffee production and blending are off the highest standard. The company has brand baristas who make products by hand using Italian espresso machines hence making it impossible to be copied by rivals, (Shankar, 2008).

 

Marketing team

The company has got an organized, efficient and effective marketing department spread across the world. Marketing and sales staffs have built sound relationships with the customers, (Ryan, 2003).

Unlike in other firms, there exists smooth relationship between marketing and other departments. They believe that running the company business together drives success of their company. In Costa, all company staff plays a significant role in marketing the products of the company.

Company Products

            The company is currently in the hospitality industry offering a variety of coffee products customers across the globe. Costa is a brand signature for the company products known all over the world. It has differentiated its products into categories.

Costa coffee products are cakes and pastries common in UK markets and savoury snacking for the Indian market. Others include blueberry muffin, chocolate muffin, croissant and Panini being sold in every market and categorized as group A products.

The company has category B regional products which include haloumipanini. The company has plans to develop Chinese familiar flavoury products like Szechuan chicken Panini. There also exist group C products for individual markets such as Chinese moon cakes.

New Product Development

 The company recently launched loyalty scheme for its UK customers which has been successful. There are plans to launch similar loyalty in United Arab Emirates, china and other parts of Europe.

There are plans to launch several new products to cater for ever expanding global market. This will include a new drink called Costa light developed from a single shot of espresso and frothed with skimmed milk.

This product has fewer calories and is specifically developed for people who are watching their weight and those who don’t take drinks with much caffeine. Plans are also underway to develop brews that people can share.

Prior to Costa light innovation, the flat white launched last year has been cited as the   company’s main product innovation in history. It is a popular milky coffee style product common in Australia and New Zealand. Product innovations have boosted staff morale and made Costa products number in the world. They have significantly pushed up company sales revenue.

Pricing

Costa Company employs different pricing strategies in line with Reibstein, et al, (1984), based on competitors’ price, income of target market, market supply and demand, legal constraints, and company pricing objectives.

Penetration pricing have been employed to penetrate into new markets. Relatively low prices are charged for company products to especially in markets with high price elasticity. This has helped to increase the demand for the products.

Prestige pricing is being used markets with inelastic price elasticity of demand to maximize company products, (Reibstein, et al 1984).

Place

Company goods are produced in regional area. They are transported to company stores and shops where they are sold to customers. The company has well established distribution channels in all its markets to facilitate quick delivery of products.

Promotion

            Consumer insight lays the basis for company’s marketing promotion strategies.  Marketing communication has been well developed to enhance the floor of information from the field to the relevant departments.

Comparison ads have been used by the marketing team. For instance, claiming that cappuccino’s taste is preferred to those of rival company products. This however was challenged by starburcks.

TV adverts have been extensively used to promote company products. Direct marketing strategies are currently used where company sends e-mails to its Costa coffee club members.

Segmentation models are used by the company to best understand their customers. Different market promotion strategies are designed for different market segments. For instance, digital network is used to reach out to young through social networks and mobiles.

External audit

            Costa coffee has positioned itself as the leading brand of coffee in the world coffee market. It offers a variety of products for different segments of its customers. 

Customers

The company has managed to acquire large customer base in Uk and abroad.  Costa has segmented customers into various groups and developed products that suit each group. Their perception of company brand and loyalty has been achieved leading to the launch of loyalty cards for its loyal customers.

Costas customers have been segmented based on geographical regions they live and research has shown that customers’ needs varies with the regions and demographic segmentation based on population age.

Currently the company has developed products categories for different segments of its customers.  It has three categories of products with category A being the products sold in all company markets, B being regional based products and category C products for individual country.

Competition

            The biggest global competitor is Starburks which has been operating in massive Chinese market for over ten years now. In India, the number one regional competitor currently is Café Coffee Day which is also expanding into Europe. Its products are synonymous among the Indians.

Other competitors include quick service restaurant brands such as KFC, subway and McDonald McCare which is speedily growing in Europe. The above mentioned competitors are well established with sound financial base which gives a competitive advantage.

However, their product innovation abilities are too low to match those of Costa Company. Their market expansion and penetration have not been steadfast as compared to Costa coffee company.

Costa company has plans to develop new products that cannot be copied by rival firms and expand into new markets. The company has also categorized its products as away to increase its sales in existing and new markets.

Intensive market research is currently emphasized by the company which will help Costa coffee company developed products according to customers’ requirements. This will also inform the management on the best market promotion strategies to employ.

 

 

Cultural nature of the environment

Costa is a global company operating in different cultural background of china, Europe, India and US which have different beliefs and religions. These beliefs shape consumption and spending behaviors of people.

The company supplies different products to different geographical regions based on the preference. For instance, in India, the company is offering savuory snacks where they are more preferred, cakes and pastries in UK market.

In developing loyalty cards, different methods that suit different cultural environment have been proposed. For instance, in china where status is valued, ‘tiered’ system of rather than ‘point system’ have been proposed.

Research by the company has discovered that the customer in Uk is different from customers in other countries. The average consumer age of Costa coffee is 44 years in Uk and compared to 28 years in other parts of the world.

However, United Arab Emirates has the most similar market to that of Uk comprising mature consumers who drink coffee frequently. China and India have the most different market from that of Uk with young consumers of 25 years.

Takeaways are less than 10% in this market as coffee shops become the place to socialize. This variation in customers’ lifestyle across regions calls for different market promotion strategies.

The company  has adopted digital technology in marketing its products to different segments of its market. Internet technologies and mobile phones are common in reaching young customers. Direct mail to coffee club loyal members is used to communicate company products.

High technology is used in manufacturing and processing of Costa coffee products. The company has also invested heavily in its Information systems to help the speed flow of accurate information from the field to various departments and across departments for decision.

Marketing communications by use of media, company websites and blogs, use of social network like twitter and face book, use direct mail to respective customers and popular search engine like yahoo and Google sites.

Market economic condition

The present and target market for the Costa coffee products are people of different income levels. However recent economic downtown has lowered the peoples spending power across the globe and company has responded by offering low cost products to its customers.

However variation in rates of interest in current and target market have negatively affected the performance of Costa Company. However, measures were taken to caution the company against the risks of fluctuating exchange rates and inflation.

Political and legal landscape

            Stringent taxation laws in some countries have hindered the expansion of Costa Company. Laws relating licensing of foreign company and tedious bureaucracy in establishing company in target market have prevented the company to expand to some of target markets.

However, laws relating to copyright and patents have helped prevent copying and imitating company products. This is because Costa is known for its product innovativeness and these laws have protected the company from dangers of this menace. Excess regulation level such as quotas or tariffs has prevented export of company products to some countries especially outside European markets.

SWOT analysis

 

Strengths >Well diversified and differentiated products portfolio catering for different segments of customers >Adequate finance generated from company sales over the years >A well established market base in UK and other parts of the world >Qualified, dedicated, loyal and experienced staff in the coffee sector. >established, well coordinated and developed network of stores

weaknesses >competition  from established coffee chain stores and other companies selling beverages with adequate resources >Switching cost by the customers from their current beverage of choice >complex and bureaucratic company structure delays decision making processes, (Datamonitor. 2010). >

opportunities >Expanding and evolving global market will provide market for the company products and services >Favorable political environment and rule of law which provide a smooth environment for business to thrive. >technological advancement in the production and processing of coffee. >advent of social media network for marketing of products > Copyright and patents laws which have protected company products from copying and imitations

Threats >Cultural taboos and  restrictions militating against the use of foreign products in some nations >Stringent rules and laws regarding import of products in some countries. >Bureaucracies and prolonged procedures of opening business branches in some nations. >political instability and civil strife may hinder expansion program of the company >Weak global economic outlook as a result of global recession may significantly reduce the amount available tor vacations. > Differences in exchange rates and fluctuating rates of inflation

 

 

Objectives and issues

 

>To grow market share by 15% in the next three years

> To develop at least five new and high quality products per year

> To provide the best quality coffee products for our customers   

>To meet our responsibilities as the staff of Costa company

> To increase shareholders value through our activities

 

Marketing strategy

The company will use different marketing strategies to achieve its marketing objectives, (Köksal, 2007). The present market position of Costa coffee and expected sales and profits figures, leads to the use of intensive growth strategy, (Cilley, J 2011).

The Ansoff product/marketing expansion Grid will be employed in achieving the growth strategy, (Richardson, 2007). Market penetration, product development and market development strategies will be used to achieve three year objectives.

 

 

Existing product                    New product

Market penetration	Product development
Market development	Market diversification

Table 1. Ansoff matrix

Market penetration

The company through its marketing and sales team will seek to drastically increase its market share using different marketing strategies, (Douglas. 2011). We intend to win more customers in china, Pakistan, Europe and USA to gain dominance in the growing market.

The Costa marketing team will engage in more aggressive promotional campaign and revise pricing strategies in an effort to drive out competitors, (Comstock, 2010). The company will announce price reduction on its popular products, engage in moderate advertising and sales promotion and employ additional direct sales staff

The company has introduced loyalty schemes in Uk and there are plans to launch more loyalty schemes in other markets to increase usage of our products by existing customers. Plans are underway to launch loyalty schemes in china, UAE, Europe and America.

Market development strategy

Costa Company has elaborate plans to enter into new markets of Asia, Africa and Eastern Europe. In line with Varadarajan, (1983) findings, the company will open several new outlets in these regions, undertake brand recognition and promotion, establish distribution channels and clientele.

In year one, company has plans to launch ninety outlets in three Asian countries. The same number will be launched in year two in three Eastern Europe counties. In the third year, same numbers of outlets have been budgeted for in three African countries. Company has budgeted for required resources to implement these new projects.

Product development strategy

Costa has plans to attract more customers to its stores by launching several new products. The company has invested a lot in marketing research which informs the company on the needs of customers and develops products that meets the needs of customers, (Gutierrez, et al. 2011).

The market research team has a target of at least five new products each year. Some of the new products to launched are Costa light and brews that people can share and Flat white which is developed for low calories customers.

The firm will innovate products for different customer segments, (AbuJarad, 2010). Segmentation will be based on age, health status, income levels and geographical regions which have different tastes and preferences. Every innovation shall be underpinned to customer insight which will inform the kind of product to be developed.

Motivation and training have been emphasized with financial rewards for high performers, educational training for staff to motivate company staff to perform. Rapid staff promotions especially for young baristas to managerial level have greatly motivated them to perform, (Pleshko, 2008).

Market segmentation

The company has and will continue to segment its market into groups based on age, demographic status, economic status and geographical locations. This will inform the company on products preferred by a particular market segment.

 

Marketing mix strategies– 7p’s

Product: The company sells high quality coffee products to its customers and has managed to position Costa as its brand name which is recognized across the globe. Products are differentiated and packaged to suit various market segments, (Borden, 1964). For instance, the company has three categories of products.

            Product innovation has been on the rise in Costa Company in its efforts to satisfy current and potential customers. There are plans to launch fifteen more products in the next three years.

Price: various pricing strategies will be used which includes competive pricing to drive out competitors in existing markets, prestige pricing to maximize profits for the company. The company will charge relatively lower prices to win more customers in the current competitive markets where consumers are sensitive to price change, (Proctor, 2000).

Place: Costa firm has well established outlets, shops, experienced staff and efficient distribution channels in its current market which will used to market and sell current and new products to the new customers the company is targeting.

In the new markets, Costa will establish similar outlets, shops and employ new staff to market and sell its products. Ninety outlets will be set up each year for the three years in the new countries the company will be moving to and several staff will be employed to facilitate the company business.

Promotion: the company will in engage moderate advertisement because Costa brand is recognized across the globe, (Simon et al 1980). However aggressive promotional activities and use of direct sales will be undertaken in new markets it will be launching its products.

People: the company has experienced staff in existing markets which will be utilized in to expand company business in current markets, www.Learnmarketing.net. The company will recruit the right staff and train them to offer high quality service to clients.

The budget has been set aside for recruiting and training of staff in areas of customer service to enhance their interpersonal skills, service knowledge and aptitude. Various rewards will be provided to motivate employees.

Process: The Company has put in place excellent system that enhances quick and efficient delivery of products to its customers. It has good information system for quick decision making process and effective information flow between departments.

Physical Evidence: The Company has modern shops and stores in existing markets and similar ones will be established in the new target markets. The company restaurants and shops are attractive in color, clean, spacious and friendly environment.

 

 

Marketing implementation

 

 

Activity	Date/Frequency
Board approval for three year plan	By early April 2012
Recruit new staff	By mid April 2012
Train sales team	By early may 2012
Provide job description and tools to sales staff	By mid may
Acquire new stores and offices	By mid may
Move into new regions	By end of may
Hold an official launch	By early June
Advertise products and engage in sales promotion activities	By Mid June

Table 2. Marketing implementation schedule

The same schedule will be followed in the next two years of the marketing plan except board approval which will be approved once. Recruitment of new staff for new outlets in three new countries will be done. The stores will also be acquired in the new areas of growth.

Budgets forecasts in USD

<td va

Type	2012	2013	2014	Total
Recruitment	170, 0000	164, 500	156, 0000	490,500
Salaries	1, 200,000	2,100,000	3,325,000	6,625,000
Transport	654,000