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STARBUCKS / COSTA COFFEE: Marketing analysis of two leading brands in the coffee shop market

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Academic Year: 2008 / 2009 Semester 1/ Semester 2 Module code: MK1016 Module title: Marketing Principles Subject Area: Marketing Module Leader: William Mott Assessment: Group Presentation Weighting: 50 % STARBUCKS / COSTA COFFEE Marketing analysis of two leading brands in the coffee shop market MALLET Magali POUMAROUX Aur´┐Żlia VEILLE Julianne I. INTRODUCTION.......................................................................................3 A. WHEN AND WHY DO PEOPLE GO TO COFFEE SHOPS? 3 B. HISTORICAL BACKGROUND STARBUCKS 3 C. HISTORICAL BACKGROUND COSTA COFFEE 4 II.CONTROLLABLE.....................................................................................4 A. 4 P STARBUCKS 4 1) PRODUCT 4 2) PRICE 5 3) PLACE 6 4) PROMOTION 6 B. 4 P COSTA COFFEE 6 1) PRODUCT 6 2) PRICE 7 3) PLACE 7 4) PROMOTION 8 III. UNCONTROLLABLE...............................................................................9 A. PEEST ANALYSIS 9 1) POLITICAL AND LEGAL FORCES 9 2) ECONOMICAL FORCES 10 3) ECOLOGICAL AND PHYSICAL FORCES 11 4) SOCIAL AND CULTURAL FORCES 12 5) TECHNOLOGICAL FORCES 15 B. COMPETITORS 16 1) THE COFFEE SHOPS 17 2) STORE CATERING 18 3) PUBS 19 IV. SWOT ANALYSIS.................................................................................19 A. STARBUCKS 19 B. COSTA COFFEE 21 V. MARKET SEGMENTATION......................................................................24 A. CONSUMER SEGMENTATION 24 1) BEHAVIOURAL 24 2) PSYCHOGRAPHIC 25 3) PROFILE 25 VI. CONCLUSION.......................................................................................26 BIBLIOGRAPHY A. BOOKS 27 B. INTERNET WEBSITES 27 I. INTRODUCTION A. When and why do people go to coffee shops? Most of the time, people visit coffee shops while they are travelling or shopping. That's why coffee shops are well placed to respond to this need (high street centres, airports, railway stations...). The branded coffee shops are very popular. It's a good place to meet friends in a relaxing atmosphere with comfortable seating. The most popular sentiment expressed by people is however that the coffee served in branded coffee shops is expensive. So why do people still go to these coffee shops? First because people like coffee. And second because they like going to a place where they can just sit and talk and have a drink. Coffee shops have an up-market image which appeals to a certain part of the population. ...read more.


People from these socio-economic categories like the coffee shops environment and the choice and variety of flavours of coffee. Between 2001 and 2005 there was an increase in these categories, with the number of AB rising by 5%. The A, B, C1 categories count for 54% of the adult population visiting a coffee shop. This is due to an increase in the number of higher education graduates with a move towards more managerial roles and away from manual work. At the same time, there was a decrease in the percentage of those in the C2, D and E categories. III. Cultural forces i) Attitude to health Many studies have been conducted on caffeine effects and some of them want to warn consumers. Even if caffeine has stimulating effects on our body ( diminution of fatigue), drinking coffee has been linked with insomnia, stomach problems, heart disease, high blood pressure and miscarriage but the real effect on human's health is still being debated. In order to help solve the obesity problem in the UK, the FSA (Food Standards Agency) introduced a legislation which makes it compulsory for all food and drinks sellers to provide the calorie content of any product they offer. This is why companies have to now show nutritional information. As many of the coffee shops products have a high calorie content, this is likely to affect sales. ii) Subculture The UK is said to be a huge tea consumer, with its tea-time and Earl Grey, but coffee shops managed to reverse the tendency. Nowadays English people drink coffee as well as tea. Coffee shops are trying to encourage this in countries like China or India. 5) Technological forces I. Starbucks - Starbucks followed the advances in technology offering new payment methods Starbucks installed a system of prepaid cards, The Starbucks Card, which allows the customers to pay their drink without cash. Cards are accepted in all the US stores and in almost all the Starbucks stores in Australia, the UK and Hong Kong. ...read more.


2) Psychographic o Lifestyle: Customers, who tend to have an expensive style, want the best brand. There are different kinds of people going to coffee shops: people who work and have no time to have breakfast, people who just want to have a good time in an enjoyable place, thus people who just like the coffee shops environment and the choice and variety of flavours of coffee and who move with the times. o Personality: people who like to have a social life. 3) Profile o Demographic: Coffee shops succeeded to establish themselves as something which cannot be ignored. o Socio-economic: Coffee shops are used by those in the A, B and C1 socio-economic categories and these are also the groups most likely to have a positive attitude toward coffee shops o Geographic: Starbucks is the leading brand in the US market and Costa Coffee is the leading brand in the UK market. VI. CONCLUSION Starbucks and Costa Coffee are two coffee brands which success rest on a firm foundation. They have a lot of common characteristics although they are not implanted in the same geographic areas and if at first, they were based in countries with different cultures. In order to develop themselves and have a world-wide thinking, they had to put aside their specificities. As many external elements can encourage firms to change their behaviours, they have to be aware and responsive of their surrounded world. These elements are important if the firms wants to keep their market shares and do not lose it in favour of the competition. For these two well-ranked and developed brands it is hard to find new innovation, but it is even harder to remain a brand leading company. The kind of people they target is widespread which means they cover a large range of customers. Their implantation is worldwide as well as their customers. Considering the ongoing economic situation, there is no way to know how this crisis will evolve in the future. A firm such as Starbucks which is mostly based in the US has to be vigilant. ...read more.

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