Starbucks Vs Costa

Topics: Coffee, Starbucks, Marketing Pages: 5 (1310 words) Published: December 29, 2014


Coffee Industry in the UK: Comparison of the Marketing
Strategies of Starbucks and Costa
by
Ahmed Fayih G ALOTAIBI

Table of Contents
1.0Introduction3
1.1Aims & Objectives3
2.0Literature Review4
3.0Research Question5
4.0 Bibliography5

1.0 Introduction

Costa and Starbucks represent two prominent brands in UK coffee market. UK consumers are embracing the growing coffee culture and show their love of coffee, enabling the sector to outperform the wider retail market, which in contrast, has grown at a slower pace of 1 – 2 % during 4-5 years (hospitality and catering news, 2013). Part of this consumer segment is targeted by Costa with its increased number of restaurants across the UK and part of it is targeted by Starbucks across the UK on the basis of quality provision of products and services through its restaurants which although are lesser in number than Costa but still are performing better in terms of revenue generation. This is discussed further below in the literature review section. Besides, Costa is focusing on targeting the market on the basis of speedy provision of services. In this regard it acquired Coffee Nation and established kiosks whereby customers were given services on a speedy basis. Starbucks on the other hand established itself as a standard oriented brand where quality overtakes the speed. Starbucks tend to appear as better despite being lesser in number. Thus even though both the brands are providing more or less same type of services and menus of both the brands are similar as well, their marketing strategies distinguish them from one another and the way they are targeting customers. Therefore, this paper proposes research into the efficacy of the marketing strategies adopted by Starbucks as compared to that of Costa. In this regard four models to review the strategies shall be utilized. This includes SWOT analysis and Marketing Mix of 4P’s. SWOT model will help in understanding the business environment and 4P’s will be helpful in determining the efficacy of the respective marketing strategies of the companies as well as the impact of business environment factors on the efficacy of marketing strategies. The comparison between the strategies of both companies will then be drawn. 1.1 Aims & Objectives

The aim of the proposed research is to draw a comparison between and analyze the marketing strategies utilized by Starbucks and Costa respectively. The objectives of the proposed research are as follows:

1) To highlight the UK coffee industry
2) To analyze the business environment with regards to British coffee industry 3) To compare the marketing strategy of Starbucks with that of Costa 4) To determine the efficacy of the marketing strategies utilized by Starbucks and Cost 5) To determine which strategy is being relied upon by each company for gaining market share 6) To analyze the impact of business environment factors on the marketing strategies of the both companies 2.0 Literature Review

In UK the coffee houses started to become popular in the middle of 17th century. The first coffee house in UK was established in Oxford in the year 1650 (Cowan, 2005). Starbucks entered in the British market in the year 1998 with the initial investment of $83 million (The New York Times, 1999). The coffee chain shops witnessed boom in the 21st century with other chains coming into the market and opening multitude of chains. Resultantly, there are more than fourteen thousand coffee shops in UK alone in which the top twelve brands account for more than three thousand shops (Keynote, 2012). Starbucks and Costa are the leading brands in this group. These twelve brands have more than 20% of the market share in Britain. The figure may rise as the larger brands utilize merger & acquisition strategy to gain more market share. Amongst these brands, Costa and Starbucks hold 66.6% of the market share....

Bibliography: Blatchford, J. (2011). Costa Coffee vs Starbucks – Differentiation. Available: http://manifestedmarketing.com/2011/03/07/costa-coffee-vs-starbucks-differentiation/
Cowan, Brian William (2005): The Social Life of Coffee: The Emergence of British Coffee House. New Heaven: Yale University Press
Keynote (2012) Coffee & Sandwich Shops: Market Assessment 2012 Available at: http://www.keynote.co.uk.ezp1.bath.ac.uk/market-intelligence/view/product/10512/coffee-%26-sandwich-shops?highlight=coffee+%26+sandwich&utm_source=kn.r
Poulter, Sean (2014): Costa opens three outlets a week as it taps into growing coffee shop culture and backlash against US rival Starbucks. Available at: http://www.dailymail.co.uk/news/article-2616060/Costa-opens-three-outlets-week-taps-growing-coffee-shop-culture-backlash-against-US-rival-Starbucks.html
Starbucks (2014): Starbucks Commitment to the UK. Available at: http://www.starbucks.co.uk/our-commitment
The New York Times (1999): McDonald’s Corp. Betting that Coffee is Britain’s Cup of Tea. Available at: http://www.nytimes.com/1999/03/28/world/mcdonald-s-corp-betting-that-coffee-is-britain-s-cup-of-tea.html
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