Costa Coffee Marketing Plan China Marketing Essay

costa burnt umber berry securities industrying Plan mainland china merchandise EssayThis cover aims at outlining the strategical merchandise approach of costa hot chocolate bean for take out into a spick-and-span commercialize . rib hot chocolate tree is the British stir or retail gross revenue of Whitbread Family.Whitbread is a British Multinational guild and it has franchises worldwide. Whitbread includes Hotels, Restaurants Household names like TGI Friday, Health and Fitness plus different workes.The circumscribe of this paper include the foodstuffing dodge of costa burnt umber tree and its elaboration plans in China.Introduction The StoryThe history of costa deep brown berry began in a mountain town outside the region of Parma, where on that point was the domicil of costa family.In the late 60s, the Italian br differents Bruno and Sergio costa, hungry for success, traveled to England, seek an opportunity for professional advancement. By arrivi ng at that place, they found how simple the English chocolate securities industry was. Motivated by their Italian back foothold and Sergios skills in the cook of hot chocolate beans, they decided to put across to Milan to enrich their realiseledge and technique in Italian burnt umber shops. In 1971, upon their return to London, they bought a terce-story building in Lambeth, where they set up their own hot chocolate shop.In the beginning, the rib brothers worked as producers and wholesalers and were supplying high-class restaurants and specialty stores. Soon, they built their reputation for their dedication to handsome superior of their product. However, in 1978 they had to find some employment for their wives in fix up not to interfere in their mintiness. in that locationfore, they decided to perform their first java boutique in Vauxhall Bridge Road, London, and assigned its circumspection to their wives.This idea undergo tremendous success, and led the brothers t o the intricacy of costa deep brown boutiques and award their management to relatives and friends. Since the opening day of the first store to date, the alike(p) traditional method acting of slow roasting (18-22 minutes) of java beans is used, offering the delicious and fragrant pass Mocha Italia, from 6 Arabica beans and 1 Robusta. ListenRead phonetically vocabulary View detailed dictionaryToday, costa drinking chocolate owns 500 shops worldwide. costa chocolate believes in its employees skills at that placefore, it provides intensive employee seting at the Cost drinking chocolate Academy.VISION costa umber bean vision is to provide the beat out hospitality to its clients since its range of hospitality products range includes restaurants, hotels and leisure clubs.MISSIONTo serve the best hot chocolate in the true Italian style.BUSINESS PORTFOLIOCosta drinking chocolate has built an unrivaled reputation for hot chocolate excellence, and this is achieved by fully arrogant the process, from harvest and selection of drinking chocolate beans, from the roasting of the Italian maestros, the choice of engines and configuration with the procedures of manufacture of drinkables, ensuring this way that guests tail assembly enthrall the same excellent forest drinking chocolate at whatsoever of Costa coffee berry bean in the world.The deglutitions argon served in 3 different sizes Primo, Medio and Massimo, and the customer brush aside choose amid the unique blend of Mocha Italia, or decaf, whole or plane milk and add an extra dose of espresso, flavored syrup, cream, croupdy or chocolate.There argon 15 factors that atomic number 18 combined and help to create the perfective Costa drinking chocolate. In addition, in e really store worldwide mending controls chance on place, which ensure consistency and maintenance of musical note. Every Costa drinking chocolate has a Barista Maestro ( chocolate expert) responsible for maintaining the excellence of the drinks served.COSTA cocoa AND STARBUCKSStarbucks is the largest enemy of Costa Coffee. Starbucks is the leader in the coffee shop market. Its international aim is in 50 countries. On the other hand, Costa Coffee, is the third biggest coffee specialist in the market with shops in 25 countries.Both companies require an excellent financial performance up to 2005 but in 2008 thither was a decrease in revenue and operating profit as a result of the global economic recession.However, in 2009. Starbucks has an improving in cost structure and therefore its liquidity is better than Costa Coffee since it has managed to pay its slight term debts.A key factor for some(prenominal) companies is globalization since most leading players in the foodservice market expand their operations in other countries. So the coming(prenominal) success of Costa Coffee go away be base on its operations outside the UK. The same applies for Starbucks..THE CHOICE OF CHINAChina is one of the biggest economic forces in the world. Its internal market is larger so there is a draw play of potence for multinational businesses.Its number GDP ontogenesis rate is more(prenominal) than 10% despite the global economic crisis (10.9% last quarter 2009) (BBC China economy 2009).International financial analysts believe that the growth of the Chinese economy bequeath traverse. Regarding the coffee industry in China, it should be noticed that competition is rather intense but sales in cafes has grown by 8% to RMB36billion (over 3,487million).It should also be noticed that in 2009 coffee shops chains had a growth of 22% (Euromonitor International August 2009,Cafs/bars China).However, the Chinese market for many international companies is considered a tough market since it is effortful to understand local culture and customeCNY.Therefore, many companies pursue joint games and strategic alliances in order to do business in China.In 1998, Starbucks entered China and i t has 180 coffee shops. In 2006, Costa Coffee entered China in a different way i.e. through a joint venture with Yueda Group which is based in Jiangsu Province. This was done because a local helper knows the market better so market penetration for the sensitive crank is easier. However, this also means that Costa Coffee is heavily dependent on Yueda.Costa Coffee has a pie-eyed Italian aura that aims at attracting the Chinese market. Affluent Chinese customers want to taste a coffee that is represented by a global brand name. So far, Starbucks has been quite successful in this ara.The risk is that by being a companion with Yueda, the brand leave tail assembly be customized as wholesome much therefore, Costa testament lose its competitive advantage which is the Italian aura.Starbucks has very aggressive expansion plan in China. The crucial point is if Costa Coffee will maintain its brand essence and will not be customized. In this shield, Costa Coffee will be a strong cont est to Starbucks.Future trends schemeThe main rationalize for chained coffee shops is to create a unique experience that cannot be easily copied.The consumers want to enjoy their coffee in a nice environment. The coffee shop berth should be comfortable with an ambiente that will be inviting so the consumers will return to the shop again.People will want to live the espresso experience at post so the sales of equipment and coffee will make up as hale as the demand for better and higher quality of coffee and beverages in coffee shops.Corporate social responsibility is another issue that chained coffee shops should take cargon on. They commit to prove that they mechanism ethical practices.Regarding marketing, researchers predict that chained coffee shops will use nimble apps and confine social ne tworking tools in the very near future.COSTA COFFEE Financial DataTurnover 263.8m (2008 216.3m)Operating profit before colossal items 22.7m (2008 20.8m)Number of outlets 881 in the UK, 407 overseasTotal Revenue (m)StrategyOur purport for Premier Inn during 2009/10 is to deliver around 2,000 hot board in the UK and overseas. We tolerate a strong pipe rake of secured sites and will touch to arm a land bank. Internationally, our first hotel opened in Dubai during 2008 and we will build on this position, intending to open a further two hotels in the Emirates plus one in India.We plan to open around atomic number 6 sassy Costa outlets in the UK in 2009/10. We will capitalise on our strong Costa brand by focusing on untried locations, as healthful as areas where we can replace endureing operators, much(prenominal) as in supermarkets, hospitals and leisure facilities. Costa will also continue to strengthen its position across international markets, adding 100 net sassy stores in the year ahead.MARKETING OBJECTIVESEnter Greek market and develop a significant market shareIncrease product portfolio by new high caliber productsBring more value to shareh oldersBe a leader in its field for customer service fuck off alliances with commercial partners and the communities in which Costa Coffee shops operate.TARGET MARKETCosta Coffee offers a wide range of products suitable for all consumeCNY. So far, coffee in China is consumed in big cities (Beijing, Shanghai, Guangzhou).Coffee producers have targeted young professionals since they are the most westernized, affluent and open-minded. However, they see it as something that is in fashion rather than a regular habit.another(prenominal) target classify for coffee consumption are returnees i.e. Chinese that studied in Hesperian countries and come back to China. They are also affluent and they are devoted to visit coffee shops.Ex- pats are another target group. Chinas economic growth has attracted a sess of investments from foreign companies. Ex-pats are used to drink coffee and their number adjoins every year. It has been estimated that businessmen from Hong Kong and Taiwan as well as W esterners amount to 30% of customers at multinational chained coffee shops as Starbucks.The higher up customer base has been quite saturated so there is a need to increase customer base.However, coffee is considered a lavishness good and the honest Chinese cannot pay for a cup of coffee. The mediocre Chinese annual income is RMB 8000 yuan whereas a small cup of Starbucks coffee costs RMS 12 yuan ($1.5 which is the same price as in USA). In the big cities the average annual income is higher however it is relieve difficult for someone to consume a cup of coffee.If coffee s tea leafdy goes on being considered as a sumptuosity good, it will evanesce the same thing as in Japan i.e. it will take China more than 90 years to make coffee popular.Market SegmentationBased on the above the following market segments were specifyYoung / Mature professionalsReturneesEx-patsStudentsMiddle manakinUpper Middle ClassSingleMarriedBus section and train/airplane passengersMarketing StrategyCos ta Coffee will follow Market evolution strategy and the reason for choosing this strategy will be explained down the stairs present-day(prenominal) refreshfulPRODUCTS PRODUCTS1. Market Penetration Strategy3. Product Development Strategy2. Market Development Strategy4. DiversificationStrategyCURRENT MARKETSNEW MARKETSCoffee is considered a luxury good. This misperception hinders businesses in identifying customer groups and implement marketing strategies. This misperception also hinders the majority of the population to get acquainted with coffee.The same happened in Japan, where coffee was also considered as a luxury beverage with immoderately high prices. It has taken almost 90 years for Japan to get acquainted with coffee and still per capita coffee consumption is quite low. This makes things worsened since Japan sets the trend for Taiwan and South Korea.In China coffee shops open every day in cities like Beijing and Shanghai. However, the average Chinese cannot afford a cup o f coffee everyday.Multinational coffee companies have faced difficulties in developing the Chinese coffee market. Although they know how to penetrate mature markets but they see that they have difficulty in immature coffee markets. These companies need to understand better China and its spate. Without fellow feeling them all marketing running plays will be in vain. A quality example is the marketing campaign of Nestle which was targeting at the young centerfield class Chinese although in reality this class does not exist or even if it existed they would not be heavy coffee drinkeCNY.Starbucks has increase awareness but it needs a different strategy for the Chinese market. Only KFC has been quiet successful. Starbucks success cannot be considered as sustainable since it was based on management, financial power and brand name whereas the Chinese market needs entrepreneurship to advance it and this is what Costa Coffee is think to do.Coffee has been promoted by the Chinese govern ment through festivals and fashion awards however these strengthened the misperception of coffee being a luxury good.Local coffee shops add too many side things such as food, spirits etc. Therefore, they turn off the idea of coffee.Coffee is a product that does not hurt health, stimulates the mentality and it is addictive. Based on researches someone who has drunk coffee three clock a week for two months in the row is addicted to coffee. genius stimulation is fundamental for personal wealth and intelligence. Coffee became popular because coffee shops were focused at making the customer accustomed with coffee. When flock get accustomed then the market develops at an extremely fact pace.The coffee shop is pregnant for this development and a coffee shop can be a seated place or coffee stands and carts. It is important to make people drink coffee and then offer them ground coffee.Many companies have found as an excuse the fact that tea is dominant in China and there is no place f or coffee in a tea dominant country. However, there are no major tea companies that can compete international coffee giants nor is there a specific promotion to protect tea. On the contrary local society support the development of coffee houses and it is not negative to coffee.Costa Coffee will focus on making people drink more coffee. Its new coffee shops will be around areas where people gather such as Universities, stations and office buildings etc. This can be the best promotion since if one group of people becomes unwavering to coffee then it will influence other consumer groups. Costa Coffee will focus specifically on these people and its promotions will be measurable and specific.Coffee has an unbeatable image in China and it is cognize to everyone. Costa Coffee will be based on the bustling service restaurant (QSR) concept. QSR is based on the idea of offering cheap, blank and good food and its purpose is to sell to a wider range of population. Costa Coffee plans to adop t this concept. Coffee has a high profit rim but food is what attracts people to the coffee shop. Costa Coffee already offers more products than coffee however it should plan to add more snacks that are better suited to local customers and a cheaper but good quality pick up coffee for taking away. Many local Chinese coffee shops offer food however, they have not formulated a strategy so they cannot be considered as potential competitoCNY. So far in these shops the restaurant is separated form the coffee house something that it is not the case of Costa Coffee. In the close two years the aim is to declare new product lines that will be offered at affordable prices for the average Chinese consumer. It should be noticed that this does not mean price teddy since this will hurt Costa Coffees brand name.The location of the new coffee shops is also an important part of Costa Coffee strategy. Up today, the coffee shops were opened at locations where population is dense and the income i s high. As a result, the letting prices are quite high. Therefore, Costa Coffee is planning to open new shops at bus stations and other bad-tempered intersections where rents are get off and the traffic is big.The marketing strategy that will be followed to China is important since it influences neighboring states such as South Korea which is also a new coffee consuming country. If the model of highly expensive coffee will be followed then the consequences will be similar to Taiwan and Hong Kong where there is a negative trend in coffee growth.SWOT abbreviationStrengthsWeaknessesEstablished brand name worldwideExpensive prices for the averageChinese consumerWide range of productsStarbucks dominant position in themarket deuce-ace ranked coffee shop chain in theworldCoffee is considered a luxury goodKnow how of Yuda (local partner)Tea is the daily beverage of the averageChineseOpportunitiesThreatsBig market potential a cumulation of ChineseConsumers that do not drink coffeeStag nant coffee growth due to highpricesUnbeatable image of coffee achievable marketing enforcement of teacompaniesNo competitors are set(p) at busintersectionsPESTEL ANALYSISPolitical China has a stable political environment that welcomes foreign direct investments.Economic The Chinese economic growth is amazing (10% per annum).Social Although the income of the average Chinese consumer is low, there is a growing put class -190 million urban households, or 29%. According to McKinsey, bosom class is expected to expand to 75% (372 million), by 2025 (DAltorio 2011).Technological tender coffee machines are produced so making coffee at home is easier.Environmental There is a trend in producing organic coffee. statutory There are no legal issues involved.MARKET POSITIONINGThe fix strategy of Costa Coffee will be in line with its international strategy i.e. THE Italian COFFEE MASTERS. The competitive advantage of Costa Coffee is the quality of their coffee. The image of the company is that is has a UNIQUE coffee.Another positioning of Costa Coffee is that this excellent coffee quality can be offered with affordable prices ( show of the new take away filter coffee).THE ITALIAN COFFEE MASTERSThis is the tag line that will communicate the Italian aura of Costa Coffee to the mass audience. Since Chinese consumers perceive well the Italian atmosphere it is expected that it will attract more people to Costa Coffee.MARKETING MIXProductBrand NameCosta Coffee is a well established brand that signifies luxury, perfection and excellence. Chinese consumers prefer established brand names.Image/ThemeLuxuryCosta Coffee is related to luxury. The coffee shops ambiance is trendy and comfortable. Customers will have a nice time in a flashy environment. However, this luxury image should be cleverly related with the new, affordable, take away filter coffee. The message that will be transmitted is luxury can be affordable and can be taken with you.Color SchemeCosta Coffees shops are in warm tones having brown as the main blazon. Other colors that are used are green, black and white. The purpose of this color selection is the creation of a comfortable and trendy atmosphere.Serviceaside from coffee, Costa has a reputation of excellent service. Hiring and retaining talented employees and train them then is a strategic goal of the company.Product varietyESPRESSOA short, strong and black coffee, with no milk.ESPRESSO DOPPIOA double espresso shot. For those who like it strong.RISTRETTOAn extra short coffee, even shorter than an espresso, with an even stronger flavour.MACCHIATOEspresso topped with just a dash of milk. Yum.AMERICANOCoffee, intermixture shots of espresso with hot water. Add milk if you like.FLAT WHITEA rich, full-flavoured coffee with a velvety, smooth texture. Each Flat White is hand-finished with a characteristic pattern.CAPPUCCINOCoffee combining espresso with steamed, frothy milk. Chocolate on top if you have a sweet tooth.CAFFE LATTECoffee do with steamed milk. not as strong as a cappuccino, but just as good.MOCHAEspresso with hot chocolate, topped with steamed, frothed milk.(Source Costa Coffee 2010)Costa Coffee products variety includes iced tea and coffees as well as cakes, pastries, Panini and sandwiches.PricesCosta Coffee prices are generally higher than other coffee shops. laid-back prices are related to the outstanding quality and taste of Costa Coffee. Therefore, the traditional customer groups of Costa Coffee are high and middle classes. Costa Coffee believes that a reduction in its prices will harm its brand name. However, it wants to increase its Chinese customer base so it will offer a filter coffee for takeaway at affordable prices. Chinese middle class growth rate is significant, it will reach 372 million by 2025, it is a social class that cannot be neglected. Therefore, Costa Coffee is planning in the next three years to offer its products at affordable prices for the Chinese middle class without ha rming its brand name.Locale / SettingThe next Costa Coffee shops will be at busy intersections e.g. bus, train stations and at areas where office buildings and Universities are regain. It will focus again on the big cities like Shanghai and Beijing. The aim for the next three year is to have 30 new coffee shops at both cities.PromotionCosta Coffee will not do a lot of advertising since its brand name is recognized. However, there will be special sales promotions at its new shops for the new filter coffee that can be taken away. Costa Coffee is based on word of mouth advertising since reputation is very important.MARKET essentialIt is important to measure the market before launching new products and shops. It is also important to measure the market after the launch of the new products / shops so as to see their effects and gain a larger market share.Growth Share MatrixThere are two factors that are important for the expansion to new markets and these are market attractiveness and the Business Strength.Market AttractivenessBusiness StrengthFactorsRateFactorsRate overall Market Size70% increase (2004-2012)Market Share5.0 one-year Market Growth Rate7.8Product Quality5 rivalrous Intensity4Brand Reputation4.5Technological Requirements2.5Distribution delight3.5Inflationary Vulnerability4.9Promotional Effectiveness4.5Productive Efficiency4Managerial Personnel3.5Market AttractivenessAs it is seen above, the attractiveness of the Chinese market is very high. The annual growth rate of the coffee market is high. There are no significant technological requirements since Costa Coffee already possesses advanced technology.Inflation is quite high and it seems that it will increase in the near future, however the targeted market groups remain unaffected (growing Chinese middle class). Partnership with Yuda will protect Costa Coffee from any possible dangers.Therefore, the Chinese market is very attractive and suitable for coffee shops expansion.Business StrengthCosta Coff ee is part of the well-known Whitbread Family. The quality of Costa Coffee is unquestionable. Costa Coffee owns more than 500 stores worldwide. Its outlets are in Europe, UK, Middle East, India, Pakistan and China.In order to maintain its excellent reputation, Costa Coffee will continue its policy of recruiting, training and retaining the best in stock(predicate) employees in China.Business StrengthHigh Medium LowHighMediumLowCosta Coffees Business Strength is high and the overall position is ideal for further expansion into the Chinese market.Projected gross sales in CHINACosta Coffee projected sales are expected to rise to almost 97% in 2012 and this is due to the launch of the new takeaway filter coffee and the new shops at the busy intersections.This rate is expected to slow down (87%) in 2013 and this is because the one time visitors are expected to cease to visit the coffee shops and the existing customer base is expected to remain.An extensive marketing promotion through em ails, customer clubs, social media etc. is expected to increase market share.The above amount are very impressive and expansion seems ideals.Sales forecasts per customer groups are also very promising.Market201220132014TotalStudents YoungstersCNY. 20,000,000CNY. 23,00,000CNY.6,300,000CNY 49,300,000Ex pats and returneesCNY 7,555,000CNY 7,000,000CNY. 12,800,000CNY. 27,355,000FamiliesCNY. 9,700,000CNY. 9,850,000CNY. 17,200,000CNY. 36,750,000ProfessionalsCNY. 17,750,000CNY. 32,750,000CNY. 92,000,000CNY. 142,500,000TotalsCNY. 55,005,000CNY. 72,600,000CNY. 128,300,000CNY. 255,905,000According to the above table it can be seen that professionals is a group that has a lot of potential. This is because the Chinese middle class is rising and the coffee culture is raise too. Another reason for the increase in sales in professionals is due to the location of the new coffee shops. There will be located in busy intersections where there are many office buildings.Newspapers and other electronic media have approached Costa Coffee and various interviews and programs have been made which boost Costa Coffees reputation even more.BUDGET FORECASTSThe forecasted budget for the forthcoming three years is as followsTYPE201220132014TotalAccommodationCNY. 2,000,000CNY. 5,000,000CNY. 7,000,000homeworkCNY. 1,500,000CNY. 500,000CNY. 4,000,000CNY. 6,000,000TransportationCNY. 250,000CNY. 350,000CNY. 1,000,000CNY. 1,600,000FixturesCNY. 2,000,000CNY. 7,000,000CNY. 9,000,000TotalCNY. 5,750,000CNY. 850,000CNY. 17,000,000CNY. 23,600,000Future promotion and expansion plansCosta Coffee will be launching more coffee shops in the major cities of China (Beijing and Shangkai) but the plans are to expand all over China after having created a considerable market share in the above cities. The expansion has been planned for the next year that is 2012. In the next two years the next cities where new coffee shops will be located will include Guangzhou and Shenzhen.Costa Coffee is not in esteem of extr avagant launching campaigns. It supports the use of electronic and social media as well as corporate social responsibility programmes and actions. It also believes in the justly location of its shops. So, the marketing activity will be low bar the posters that will be in the shops, as sales promotion, advertising the new takeaway filter coffee.ANALYSISCosta Coffee has a lot of potential for further intensifying its expansion efforts in China. It already possesses a significant market share in the Chinese market. The reason behind it is the unbeatable image of Costa Coffee and the advertisement (word of mouth) done by people who have visited its outlets.Sales are expected to rise in the following years and they are expected to rise even more in the forthcoming years since Costa Coffee is focusing on the rising Chinese middle class.Students and youngsters in general set the new trends so their influence in increasing coffee consumption and visiting coffee shops is of outmost importa nce. By further using social media, Costa Coffee is expected to increase its market share in this group.Professionals continuously seek quiet place to do their official or drumhead meetings. Costa Coffee is an ideal place to do these meetings. away from that, Costa Coffees activation in social media will certainly increase its future revenue.In conclusion, it can be said that Costa Coffee has so far implemented an excellent marketing strategy and the new campaign that it will launch for the takeaway filter coffee as well as the location of its new shops will help it increase its sales and gain sustainable competitive advantage.RECOMMENDATIONSSales numbers are very promising however the local partner should follow all the below the line activities mentioned.Costa Coffee should continue with low promotional strategies.Apart from posters inside the outlets, Costa Coffee should consider the use of bill boards at the busy intersections.