Coffee shops essay free essay sample

This study includes two of the biggest coffee chains within UK. Their analysis regarding segmentation, targeting and positioning strategy is described below. Also there is an approach for their existing adverting, unique selling propositions, media consumption, consumer behaviour and external factors 1. Introduction The brand Costa Coffee is a leading UK high street coffee chain which was founded in 1971 and comprises (Costa, Costa Metro, Costa Express, and Proud to Serve Costa and Costa Drive Thru outlets). It also present a variety of outlet designs to accompany each of its formats, one is ‘Metro’ which suits the younger/urban consumers and the second one ‘Evolution’ which is aimed to more mature customers in provincial locations. Costa provides a wide range of coffee drinks ( such as espresso to Americano to macchiato and mocha) but not only drinks, it provides food items as well such as paninis, sandwiches, wraps, toasts, cakes, snacks, pastries and fresh fruit and yoghurt. (www. costa. co. uk) Starbucks entered the European market in May 1998 through its acquisition of 65 Seattle Coffee Company stores in the UK. The name and their logo come from aquatic terms, it was named after the first mate in Herman Melville’s Moby Dick and their logo is inspired by the sea featuring a twin-tailed siren from Greek mythology. It offers over 30 assortment and single-origin premium arabica coffees, as well as coffe based beverages and coffee such as: fresh-brewed coffee, hot and ices espresso, coffee and non-coffee blended beverages, Vivano smoothies and Tazo teas). It also provides fresh food such as: pastries, sandwiches, salads, oatmeal, yogurt parfaits and fruit cups. (www. starbucks. co. uk) 2. Segmentation, targeting and positioning 2. 1. Starbuckss and Costas segmentation Regarding the packaging, Starbucks products offer FlavorLock technology, which is used to release the carbon dioxide through a one-way valve, without allowing oxygen in. 76% of consumers would like to see on their favourite brand that can stock their promotional products which can stay fresh for several months, which Starbucks is emphasising this approach which is appealing to consumers. Starbucks has a wide range of products such as: Bottle Drinks which can take away wherever you go, Brewed Tea which is made from the world’s most delicious teas and botanicals, Chocolate Beverages which is catalogued as â€Å"Luxurious hot chocolate for the sophisticated palate†, Espresso Beverages which include: lattes, cappuccinos, macchiato, mochas and more, Filter Coffee which is artfully roasted and brewed fresh all day long, every day and Frappuccino Blended Beverages which can help consumers to cool down with one of their icy blended beverages. The majority of the products can be enjoyed in every time of a day, except for coffee which is most likely to drink in the morning. Costa, for example has decided to change the actual packaging for their products, the new packaging has been designed to use fewer resources, saving over 18 tonnes of paper annually, which also creates an appeal for consumers by showing the concern about the environment. Both of the brands are using different methods to satisfy consumer’s needs. Costa also provide a wide range of products, compared with Starbucks which provides products for breakfast and lunch and Costa has products based more on breakfast shows that their target is different. Both have similar products to offer, Costas range of products such as: Coffees which they consider that after 40 years of experience are made from the finest beans and techniques to ensure that every cup makes the grade. Mocha Hot Chocolate, Speciality Drinks, a wide range of tea (Everyday tea, Decaffeinated tea, Earl tea, Long Jing Green Tea, Gingersnap Peach tea) which also shows how Costas tea tailor towards culture needs and preferences (refer to. ), Costa Ice, Food more oriented on breakfast, the brand is providing an easy and quick way to grab a great-tasting coffer from their touch-screen machines which uses fresh milk and fresh Costa beans to make they costumers that will always enjoy a great Costa taste. 2. 2. Starbucks’s and Costa’s targeting Costa outperforms other brands in this market with an influence came from its Whitebread parentage. However, alongside this visibility is satisfaction, which has an influence over the commitment and usage. On the other hand, Starbucks’ brand is affected by perceptions of ethicality, which has an impact on the way that people see the brand. As a result, trust in brand has been eroded. While there are many consumers who see Starbuck’s brand ethical because of its fair trade and environmental credential, people over 35 years old are more likely to think of it as unethical which has an influence on momentum and commitment levels. Costa has launched two new concept stores in central London targeting urban markets but in the same time targeting different segments. The first store is a metropolitan themed store located in Great Portland street which aims to attract a younger crowd, while the other is a refurbished in Farringdon with a ‘fast service’ air which aims to attract business people on the move. The following figure shows that Costa and Starbucks are the most desirable brands on the market, Costa being situated on the first position. The number of people who avoid Starbucks brand is due to the concerns that consumer have, also is contributing to make Starbucks the most divisive within coffee brands. This brand also present a higher avoidance from consumers over 55 years old compared with other brands. Targeting strategy that Starbucks coffee chai has approached is differentiated one. They offer a wide and varied of separate marketing mixes in order to aim different products at segments. For example they offer â€Å"Grab and go† which is targeting young professionals mostly and a wide range of cold drinks having different flavours aimed to teens. Allowing them to offer more products to more than one segment represent a greater satisfaction of needs for separate customer groups at the same time which will make the business to have an increase in their growth. Costa also adopts the same targeting strategy as Starbucks. They offer the service called â€Å"Costa at Home† aiming to target the busy working class who would like to have their favourite brand at home in case that they cannot have a visit at one of their stores. They also provide a fast way to have their brand with â€Å"Costa Express† service aiming consumers that are always on the go, providing fresh milk and fresh Costa beans and one way to prove this is that nine out of ten coffee lovers would recommend â€Å"Costa Express† service to their friends. 2. 3. Starbucks’s and Costa’s positioning. â€Å"Positioning is the act of the designing the company’s offering and image so that they occupy a meaningful and distinctive competitive position in the target customer’s mind. † (Kotler, 2006) Position for Starbucks is situated in a high market in both terms regarding price and quality. Their high quality for all of the products and together with their great service, Starbucks have made strong allowances to ensure that their positioning have a high price justified in the market place which is not making their consumers to be intimidate. Considering Costa’s products which are making their products to be easier available for consumers compared with Starbucks, shows that they have a stronger position. The table below shows a small selection of coffee products prices that are very current in this year and helps us to see the pricing positioning strategy that Costa and Starbucks have. Caffee Nero is also part of this table due to the fact that is situated along those two brands as the leading chains in UK. 3. Starbucks’s and Costa’s existing advertising. Existing Advertising: Starbucks Starbucks Origin Espresso This advert is shown on Starbucks. co. uk, they plan to share great coffee and help their customers to discover new tastes. Throughout this year they will share different Origin Espresso, every type of this coffee will be as a limited edition. They are making their customers to try their new product which considered being â€Å"soft and velvety† which also comes along with the softness of the cocoa and the velvety and sweet taste of the citrus. Vanilla Spice Latte Chai Tea Latte Valentine’s Day Advertising Existing Advertising: Costa Christmas Advertising Costa Ice Costa at Home 4. Starbucks’s and Costa’s USP. Starbucks’s USP Their mission is to inspire and nurture the human spirit: â€Å"one person, one cup and one neighbourhood as a time. † They state that it has and it will always be about quality representing one of the strongest USP of Starbucks brand; The process until the order is served represent an extensive way of preparing it. Another USP that Starbucks provide are a set of technologies and marketing initiatives making a more innovative feel among consumers. Every Monday, Starbucks have free iTunes download session and they have another interesting strategy when ordering costumers name are written on their cups. Costa’s USP Being the only coffee shop in the world that source 100% of their beans from farms certified by the Rainforest Alliance, which means that all the farms that produce their coffee use sustainable practices and are annually audited to ensure they continue to do the same practices. This represents one of Costa’s USP. Another USP of the brand is the Italian heritage, as they say â€Å"The perfect cup† in four â€Å"M† (Miscela: which is a unique blend that they call Mocha Italia, Macinatura: they tend to compare the way to grind the beans with the Italian Ferrari engine Macchina: they use special Italian espresso machines and Manna: the usage of Barista skills that are learnt in their Coffee Academy including extensive intensive training in order to reach excellence. ) 5. Starbucks’s and Costa’s Media Consumption. Starbucks’s media consumption In September 2012 Starbucks launched an online shopping site introducing at the same time its Verismo coffee machine for sale in the UK. They also launched an Android all in July 2012 in order to extend its pay-by-mobile app offering. It consists in using PayPal technology to allow their costumers to pay via their smartphones. They created a campaign that aims to promote the purchase at the beginning of the working week, so they’ve created the Mondays-only promotions such as latte coffees being discounted to 1. 50 pounds before 11am. Also, the have created a campaign, featuring the slogan â€Å"Monday Can be Great†, where some event and inventions were highlighted such as: the first steps on the moon, the launch of Big Ben and the UK’s first cinema and weather forecast. Alongside the campaign, a TV spot was included, along with print, outdoor, online and in-store advertising. Costa’s media consumption In collaboration with Rainforest Alliance, Costa has launched â€Å"Costa for Schools† which involved an online educational pack to help teachers and secondary schools students (aged 11-14) all over UK to gain more knowledge about the coffee trade such as communities and economies in coffee-growing countries. Using social media (Facebook), Costa attempted to increase consumer interaction in January 2013 by lauching â€Å"Costa Snap of the Week† which asks fans to post a picture of their favourite Costa Moments on the online wall. Also, by using Facebook, they launched an app in August 2012 for its Coffee Club members where the app provided costumers direct access to their accounts from within Facebook. When is first launched, Costa gave away 10 million loyalty points on Facebook as part of a promotional drive. In October 2012, Costa launched a major new TV campaign. It was an ad regarding the one-minute ‘Costa Coffee Lovers’ featuring the slogan ‘At Costa we put our heart and soul into everything we do. You can feel it in every cup. ’ The campaign was sustained by print and in-store marketing. They also created a satisfaction for their costumers which were encouraged to make their own version of the song which appeared in the ad and post it on the Costa’s Facebook page. 6. Starbucks’s and Costa’s Consumer Behaviour theory. Decision Making Unit (DMU): The following table shows the factors that are involved in decision making unit applying for both brands. Initiator Adverts, family and friends Influencer Adverts, friends, family and stores in general Financer Parents, person themselves (dependent on the target market) Buyer Parents, person themselves (dependent on the target market) User Target audiences The elements showed above are the same for both brands as they offer quite similar products and services. Decision Making Process (DMP): Compared with DMU, this step is more complicated due to levels of involvements and different target markets. Need recognition/problem awareness Problem recognition starts when taking the decision on what to choose because both brands offer a wide range of products. Also they offer food products. Information Research Consumers showed earlier that they do not prefer a certain brand when it comes to take a decision when choosing a coffee. But information research can vary, if an impulse purchase appears, the consumer is more likely to be brand loyal, and therefore information research will be short. On the other hand, if it is a high involvement, such as consumers who pay attention into their calories the information research will be high. Evaluation of alternatives Evaluation of alternatives can vary and depends on the consumer’s needs and what the brand can offer. If a consumer is looking for a Italian made coffee they will point for Costa. Purchase There is a two way to pay for the products. One way to pay is done in store and the other way can be done from consumers’ smartphones, the second way of payment can be done online as well. Post purchase The last step from this process cannot say that unplanned purchases would be regrettable for consumers and they will be more likely to repeat the purchase. 7. Starbucks’s and Costa’s External Factors. PESTEL Power: For both brands we can use the same factors due to the similar products that they offer to their customers. Political Coffee beans are grown in developing countries. There are discussions regarding work conditions and also political influences which come from tariffs and taxes. Economic Due to the economic recession from 2008 consumers tend to be more cautious with their expenses. Therefore, both brands must take into consideration their prices. Social/cultural People tend to spend more and more money on coffee (UK: 738m pounds). When customers are visiting one of the stores they do not only buy a coffee, they also chose to take a sit and relax. Technological Machines are available for home usage presenting a low price and good quality. Environment Regarding awareness for environment, both coffee brand have to be concerned about their way of how coffee beans are produced, the way they design their supply chain and regarding the way they prepare and sell their products. Legal This factor is related to Political.