This paper aims at sketching the strategic selling attack of “ Costa Coffee ” for come ining a new market. Costa Coffee is the British portion or retail gross revenues of Whitbread Family.
Whitbread is a British Multinational Company and it has franchises worldwide. Whitbread includes Hotels, Restaurants [ Household names like TGI Friday ] , Health and Fitness plus Other Businesss.
The contents of this paper include the selling scheme of Costa Coffee and its enlargement programs in China.
Introduction – The Narrative
The history of Costa Coffee began in a mountain town outside the part of Parma, where there was the house of Costa household.
In the late 60 ‘s, the Italian brothers Bruno and Sergio Costa, hungry for success, traveled to England, seeking an chance for professional promotion. By geting at that place, they found how simple the English java market was. Motivated by their Italian background and Sergio ‘s accomplishments in the roasting of java beans, they decided to return to Milan to enrich their cognition and technique in Italian java stores. In 1971, upon their return to London, they bought a three-story edifice in Lambeth, where they set up their ain java store.
In the beginning, the Costa brothers worked as manufacturers and jobbers and were providing high-class eating houses and forte shops. Soon, they built their repute for their dedication to first-class quality of their merchandise. However, in 1978 they had to happen some employment for their married womans in order non to interfere in their concern. Therefore, they decided to make their first java dress shop in Vauxhall Bridge Road, London, and assigned its direction to their married womans.
This thought experienced enormous success, and led the brothers to the enlargement of Costa java dress shops and present their direction to relations and friends. Since the gap twenty-four hours of the first shop to day of the month, the same traditional method of slow roasting ( 18-22 proceedingss ) of java beans is used, offering the delightful and fragrant blend ”Mocha Italia ” , from 6 Arabica beans and 1 Robusta. Listen
Dictionary – Position detailed dictionary
Today, Costa Coffee owns 500 stores worldwide. Costa Coffee believes in its employees ‘ accomplishments hence, it provides intensive employee preparation at the Cost Coffee Academy.
Costa Coffee vision is to supply the best cordial reception to its clients since its scope of cordial reception merchandises range includes eating houses, hotels and leisure nines.
“ To function the best java in the true Italian manner. ”
Costa Coffee has built an matchless repute for java excellence, and this is achieved by to the full commanding the procedure, from crop and choice of java beans, from the roasting of the Italian master, the pick of engines and conformity with the processs of industry of drinks, guaranting this manner that clients can bask the same first-class quality java at any of Costa Coffee in the universe.
The drinks are served in 3 different sizes Primo, Medio and Massimo, and the client can take between the alone blend of Mocha Italia, or decaf, whole or skim milk and add an excess dosage of espresso, flavored sirup, pick, confect or cocoa.
There are 15 factors that are combined and assist to make the perfect Costa java. In add-on, in every shop worldwide regular controls take topographic point, which guarantee consistence and care of quality. Every Costa Coffee has a Barista Maestro ( java expert ) responsible for keeping the excellence of the drinks served.
COSTA COFFEE AND STARBUCKS:
Starbucks is the largest rival of Costa Coffee. Starbucks is the leader in the java store market. Its international presence is in 50 states. On the other manus, Costa Coffee, is the 3rd biggest java specializer in the market with stores in 25 states.
Both companies have an first-class fiscal public presentation up to 2005 but in 2008 there was a lessening in gross and operating net income as a consequence of the planetary economic recession.
However, in 2009. Starbucks has an improving in cost construction and therefore its liquidness is better than Costa Coffee since it has managed to pay its short term debts.
A cardinal factor for both companies is globalization since most taking participants in the foodservice market expand their operations in other states. So the future success of Costa Coffee will be based on its operations outside the UK. The same applies for Starbucks.
THE CHOICE OF CHINA:
China is one of the biggest economic forces in the universe. Its domestic market is larger so there is a batch of possible for transnational concerns.
Its mean GDP growing rate is more than 10 % despite the planetary economic crisis ( 10.9 % last one-fourth 2009 ) ( BBC China economic system 2009 ) .
International fiscal analysts believe that the growing of the Chinese economic system will go on. Sing the java industry in China, it should be noticed that competition is rather intense but gross revenues in coffeehouse has grown by 8 % to RMB36billion ( over ?3,487million ) .
It should besides be noticed that in 2009 java stores ironss had a growing of 22 % ( Euromonitor International August 2009, Cafes/bars – China ) .
However, the Chinese market for many international companies is considered a tough market since it is hard to understand local civilization and customeCNY.
Therefore, many companies pursue joint ventures and strategic confederations in order to make concern in China.
In 1998, Starbucks entered China and it has 180 java stores. In 2006, Costa Coffee entered China in a different manner i.e. through a joint venture with Yueda Group which is based in Jiangsu Province. This was done because a local spouse knows the market better so market incursion for the new entrant is easier. However, this besides means that Costa Coffee is to a great extent dependent on Yueda.
Costa Coffee has a strong Italian aura that aims at pulling the Chinese market. Affluent Chinese clients want to savor a java that is represented by a planetary trade name name. So far, Starbucks has been rather successful in this country.
The hazard is that by being a spouse with Yueda, the trade name will be customized excessively much therefore, Costa will lose its competitory advantage which is the Italian aura.
Starbucks has really aggressive enlargement program in China. The important point is if Costa Coffee will keep its trade name kernel and will non be customized. In this instance, Costa Coffee will be a strong rival to Starbucks.
Future trends – Scheme
The chief issue for chained java stores is to make a alone experience that can non be easy copied.
The consumers want to bask their java in a nice environment. The java store infinite should be comfy with an ambiente that will be ask foring so the consumers will return to the store once more.
Peoples will desire to populate the espresso experience at place so the gross revenues of equipment and java will increase every bit good as the demand for better and higher quality of java and drinks in java stores.
Corporate societal duty is another issue that chained java stores should take attention on. They have to turn out that they implement ethical patterns.
Sing selling, research workers predict that chained java stores will utilize nomadic apps and have societal networking tools in the really close hereafter.
COSTA COFFEE – Financial Data
Employee turnover: ?263.8m ( 2008: ?216.3m )
Operating net income before exceeding points: ?22.7m ( 2008: ?20.8m )
Number of mercantile establishments: 881 in the UK, 407 overseas
Entire Revenue ? ( m )
“ Our mark for Premier Inn during 2009/10 is to present about 2,000 new suites in the UK and overseas. We have a strong grapevine of secured sites and will go on to develop a land bank. Internationally, our first hotel opened in Dubai during 2008 and we will construct on this place, meaning to open a farther two hotels in the Emirates plus one in India.
We plan to open around 100 new Costa mercantile establishments in the UK in 2009/10. We will capitalize on our strong Costa trade name by concentrating on new locations, every bit good as countries where we can replace bing operators, such as in supermarkets, infirmaries and leisure installations. Costa will besides go on to beef up its place across international markets, adding 100 net new shops in the twelvemonth in front ” .
Enter Greek market and develop a important market portion ;
Increase merchandise portfolio by new high quality merchandises ;
Bring more value to stockholders ;
Be a leader in its field for client service ;
Develop confederations with commercial spouses and the communities in which Costa Coffee stores operate.
Costa Coffee offers a broad scope of merchandises suited for all consumeCNY. So far, java in China is consumed in large metropoliss ( Beijing, Shanghai, Guangzhou ) .
Coffee manufacturers have targeted immature professionals since they are the most westernized, flush and open-minded. However, they see it as something that is in manner instead than a regular wont.
Another mark group for java ingestion are returnees i.e. Chinese that studied in Western states and come back to China. They are besides flush and they are accustomed to sing java stores.
Ex- raps are another mark group. China ‘s economic growing has attracted a batch of investings from foreign companies. Ex-pats are used to imbibe java and their figure additions every twelvemonth. It has been estimated that business communities from Hong Kong and Taiwan every bit good as Westerners amount to 30 % of clients at transnational chained java stores as Starbucks.
The above client base has been rather saturated so there is a demand to increase client base.
However, java is considered a luxury good and the mean Chinese can non pay for a cup of java. The mean Chinese one-year income is RMB 8000 yuan whereas a little cup of Starbucks java costs RMS 12 kwai ( $ 1.5 which is the same monetary value as in USA ) . In the large metropoliss the mean one-year income is higher nevertheless it is still hard for person to devour a cup of java.
If java still goes on being considered as a luxury good, it will go on the same thing as in Japan i.e. it will take China more than 90 old ages to do java popular.
Based on the above the following market sections were defined:
Young / Mature professionals
Upper Middle Class
Bus subdivision and train/airplane riders
Costa Coffee will follow Market Development scheme and the ground for taking this scheme will be explained below:
1. Market Penetration Strategy
3. Merchandise Development Strategy
2. Market Development Strategy
A aˆˆaˆˆCoffee is considered a luxury good. This misperception hinders concerns in placing client groups and implement selling schemes. This misperception besides hinders the bulk of the population to acquire acquainted with java.
The same happened in Japan, where java was besides considered as a luxury drink with unreasonably high monetary values. It has taken about 90 old ages for Japan to acquire acquainted with java and still per capita java ingestion is rather low. This makes things worse since Japan sets the tendency for Taiwan and South Korea.
A aˆˆaˆˆIn China java stores unfastened every twenty-four hours in metropoliss like Beijing and Shanghai. However, the mean Chinese can non afford a cup of java everyday.
Multinational java companies have faced troubles in developing the Chinese java market. Although they know how to perforate mature markets but they see that they have trouble in immature java markets. These companies need to understand better China and its people. Without understanding them all selling runs will be in vain. A characteristic illustration is the marketing run of Nestle which was aiming at the “ immature in-between category Chinese ” although in world this category does non be or even if it existed they would non be heavy java drinkeCNY.
Starbucks has increased awareness but it needs a different scheme for the Chinese market. Merely KFC has been quiet successful. Starbucks success can non be considered as sustainable since it was based on direction, fiscal power and trade name name whereas the Chinese market needs entrepreneurship to progress it and this is what Costa Coffee is be aftering to make.
Coffee has been promoted by the Chinese authorities through festivals and manner awards nevertheless these strengthened the misperception of java being a luxury good.
Local java stores add excessively many side things such as nutrient, liquors etc. Therefore, they dilute the thought of java.
Coffee is a merchandise that does non ache wellness, stimulates the encephalon and it is habit-forming. Based on researches person who has drunk java three times a hebdomad for two months in the row is addicted to coffee. Brain stimulation is of import for personal wealth and intelligence. Coffee became popular because java stores were focused at doing the client accustomed with java. When people get accustomed so the market develops at an highly fact gait.
The java store is of import for this development and a java store can be a sitting topographic point or java bases and carts. It is of import to do people imbibe java and so offer them ground java.
Many companies have found as an alibi the fact that tea is dominant in China and there is no topographic point for java in a tea dominant state. However, there are no major tea companies that can vie international java giants nor is there a specific publicity to protect tea. On the contrary local society support the development of java houses and it is non negative to coffee.
Costa Coffee will concentrate on doing people imbibe more java. Its new java stores will be around countries where people gather such as Universities, Stationss and office edifices etc. This can be the best publicity since if one group of people becomes loyal to coffee so it will act upon other consumer groups. Costa Coffee will concentrate specifically on these people and its publicities will be mensurable and specific.
Coffee has an unbeatable image in China and it is known to everyone. Costa Coffee will be based on the speedy service eating house ( QSR ) construct. QSR is based on the thought of offering “ inexpensive, clean and good nutrient ” and its intent is to sell to a wider scope of population. Costa Coffee plans to follow this construct. Coffee has a high net income border but nutrient is what attracts people to the java store. Costa Coffee already offers more merchandises than java ; nevertheless it should be after to add more bites that are better suited to local clients and a cheaper but good quality filter java for taking off. Many local Chinese java stores offer nutrient nevertheless, they have non formulated a scheme so they can non be considered as possible competitoCNY. So far in these stores the eating house is separated form the java house something that it is non the instance of Costa Coffee. In the following two old ages the purpose is to present new merchandise lines that will be offered at low-cost monetary values for the mean Chinese consumer. It should be noticed that this does non intend monetary value cutting since this will ache Costa Coffee ‘s trade name name.
The location of the new java stores is besides an of import portion of Costa Coffee scheme. Up today, the java stores were opened at locations where population is heavy and the income is high. As a consequence, the rental monetary values are rather high. Therefore, Costa Coffee is be aftering to open new stores at coach Stationss and other busy intersections where rents are lower and the traffic is large.
The selling scheme that will be followed to China is of import since it influences neighbouring provinces such as South Korea which is besides a new java devouring state. If the theoretical account of extremely expensive java will be followed so the effects will be similar to Taiwan and Hong Kong where there is a negative tendency in java growing.
A A A aˆˆA aˆˆaˆˆA
Established trade name name worldwide
Expensive monetary values for the norm
Wide scope of merchandises
Starbuck ‘s dominant place in the
Third – ranked java store concatenation in the
Coffee is considered a luxury good
Know how of Yuda ( local spouse )
Tea is the day-to-day drink of the norm
Large market possible – a batch of Chinese
Consumers that do non imbibe java
Dead java growing due to high
Unbeatable image of java
Possible selling enforcement of tea
No rivals are located at coach
Political – China has a stable political environment that welcomes foreign direct investings.
Economic – The Chinese economic growing is impressive ( 10 % per annum ) .
Social – Although the income of the mean Chinese consumer is low, there is a turning in-between category -190 million urban families, or 29 % . Harmonizing to McKinsey, in-between category is expected to spread out to 75 % ( 372 million ) , by 2025 ( D’Altorio 2011 ) .
Technological – New java machines are produced so doing java at place is easier.
Environmental – There is a tendency in bring forthing organic java.
Legal – There are no legal issues involved.
The positioning scheme of Costa Coffee will be in line with its international scheme i.e. THE ITALIAN COFFEE MASTERS. The competitory advantage of Costa Coffee is the quality of their java. The image of the company is that is has a UNIQUE java.
Another placement of Costa Coffee is that this first-class java quality can be offered with low-cost monetary values ( launch of the new take away filter java ) .
THE ITALIAN COFFEE MASTERS
This is the tag line that will pass on the Italian aura of Costa Coffee to the mass audience. Since Chinese consumers perceive good the Italian ambiance it is expected that it will pull more people to Costa Coffee.
Costa Coffee is a good established trade name that signifies luxury, flawlessness and excellence. Chinese consumers prefer established trade name names.
Costa Coffee is related to luxury. The java stores atmosphere is voguish and comfy. Customers will hold a nice clip in a brassy environment. However, this luxury image should be smartly related with the new, low-cost, take away filter java. The message that will be transmitted is “ luxury can be low-cost and can be taken with you ” .
Costa Coffee ‘s stores are in warm tones holding brown as the chief colour. Other colourss that are used are green, black and white. The intent of this colour choice is the creative activity of a comfy and voguish ambiance.
Apart from java, Costa has a repute of first-class service. Hiring and retaining talented employees and develop them consequently is a strategic end of the company.
A short, strong and black java, with no milk.
A dual espresso shooting. For those who like it strong.
An excess short java, even shorter than an espresso, with an even stronger spirit.
Espresso topped with merely a elan of milk. Yum.
Coffee, blending shootings of espresso with hot H2O. Add milk if you like.
A rich, full-flavoured java with a velvety, smooth texture. Each Flat White is hand-finished with a typical form.
Coffee uniting espresso with steamed, bubbling milk. Chocolate on top if you have a sweet tooth.
Coffee made with steamed milk. Not every bit strong as a cappuccino, but merely every bit good.
Espresso with hot cocoa, topped with steamed, frothed milk.
( Beginning: Costa Coffee 2010 )
Costa Coffee merchandises assortment includes iced tea and javas every bit good as bars, pastries, Panini and sandwiches.
Costa Coffee monetary values are by and large higher than other java stores. High monetary values are related to the outstanding quality and gustatory sensation of Costa Coffee. Therefore, the traditional client groups of Costa Coffee are high and in-between categories. Costa Coffee believes that a decrease in its monetary values will harm its trade name name. However, it wants to increase its Chinese client base so it will offer a filter java for takeout at low-cost monetary values. Chinese in-between category growing rate is important, it will make 372 million by 2025, it is a societal category that can non be neglected. Therefore, Costa Coffee is be aftering in the following three old ages to offer its merchandises at low-cost monetary values for the Chinese in-between category without harming its trade name name.
Locale / Setting:
The following Costa Coffee stores will be at busy intersections e.g. coach, train Stationss and at countries where office edifices and Universities are located. It will concentrate once more on the large metropoliss like Shanghai and Beijing. The purpose for the following three twelvemonth is to hold 30 new java stores at both metropoliss.
Costa Coffee will non make a batch of advertisement since its trade name name is recognized. However, there will be particular gross revenues publicities at its new stores for the new filter java that can be taken off. Costa Coffee is based on word of oral cavity advertisement since repute is really of import.
It is of import to mensurate the market before establishing new merchandises and stores. It is besides of import to mensurate the market after the launch of the new merchandises / stores so as to see their effects and derive a larger market portion.
Growth Share Matrix
There are two factors that are of import for the enlargement to new markets and these are: market attraction and the Business Strength.
Overall Market Size
70 % addition ( 2004-2012 )
Annual Market Growth Rate
As it is seen above, the attraction of the Chinese market is really high. The one-year growing rate of the java market is high. There are no important technological demands since Costa Coffee already possesses advanced engineering.
Inflation is rather high and it seems that it will increase in the close hereafter, nevertheless the targeted market groups remain unaffected ( turning Chinese in-between category ) . Partnership with Yuda will protect Costa Coffee from any possible dangers.
Therefore, the Chinese market is really attractive and suited for java stores enlargement.
Costa Coffee is portion of the well-known Whitbread Family. The quality of Costa Coffee is unquestionable. Costa Coffee owns more than 500 shops worldwide. Its mercantile establishments are in Europe, UK, Middle East, India, Pakistan and China.
In order to keep its first-class repute, Costa Coffee will go on its policy of recruiting, preparation and retaining the best available employees in China.
High Medium Low
Costa Coffee ‘s Business Strength is high and the overall place is ideal for farther enlargement into the Chinese market.
Projected Gross saless in CHINA
Costa Coffee projected gross revenues are expected to lift to about 97 % in 2012 and this is due to the launch of the new takeout filter java and the new stores at the busy intersections.
This rate is expected to decelerate down ( 87 % ) in 2013 and this is because the one clip visitants are expected to discontinue to see the java stores and the bing client base is expected to stay.
An extended selling publicity through electronic mails, client nines, societal media etc. is expected to increase market portion.
The above Numberss are really impressive and enlargement seems ideals.
Gross saless prognosiss per client groups are besides really promising. :
Students & A ; Childs
Ex raps and returnees
Harmonizing to the above tabular array it can be seen that professionals is a group that has a batch of possible. This is because the Chinese in-between category is lifting and the java civilization is mounting excessively. Another ground for the addition in gross revenues in professionals is due to the location of the new java stores. There will be located in busy intersections where there are many office edifices.
Newspapers and other electronic media have approached Costa Coffee and assorted interviews and plans have been made which encouragement Costa Coffee ‘s repute even more.
The forecasted budget for the approaching three old ages is as follows ;
Future publicity and enlargement programs:
Costa Coffee will be establishing more java stores in the major metropoliss of China ( Beijing and Shangkai ) but the programs are to spread out all over China after holding created a considerable market portion in the above metropoliss. The enlargement has been planned for the following twelvemonth that is 2012. In the following two old ages the following metropoliss where new java stores will be located will include Guangzhou and Shenzhen.
Costa Coffee is non in favour of excessive launching runs. It supports the usage of electronic and societal media every bit good as corporate societal duty programmes and actions. It besides believes in the right location of its stores. So, the selling activity will be low except the postings that will be in the stores, as gross revenues publicity, publicizing the new takeout filter java.
Costa Coffee has a batch of potency for farther escalating its enlargement attempts in China. It already possesses a important market portion in the Chinese market. The ground behind it is the unbeatable image of Costa Coffee and the advertizement ( word of oral cavity ) done by people who have visited its mercantile establishments.
Gross saless are expected to lift in the undermentioned old ages and they are expected to lift even more in the forthcoming old ages since Costa Coffee is concentrating on the lifting Chinese in-between category.
Students and childs in general put the new tendencies so their influence in increasing java ingestion and sing java stores is of outermost importance. By farther utilizing societal media, Costa Coffee is expected to increase its market portion in this group.
Professionals ever seek quiet topographic point to make their functionary or unofficial meetings. Costa Coffee is an ideal topographic point to make these meetings. Apart from that, Costa Coffee ‘s activation in societal media will surely increase its future gross.
In decision, it can be said that Costa Coffee has so far implemented an first-class selling scheme and the new run that it will establish for the takeout filter java every bit good as the location of its new stores will assist it increase its gross revenues and addition sustainable competitory advantage.
Gross saless Numberss are really promising nevertheless the local spouse should follow all the below the line activities mentioned.
Costa Coffee should go on with low promotional schemes.
Apart from postings inside the mercantile establishments, Costa Coffee should see the usage of measure boards at the busy intersections.