costa coffee differentiation strategy

Coffee growers who aim at being certified as OC must comply with a strict package of technological and environmental standards, including the following practices in their farms (Van der Vossen, Reference Van der Vossen2005; Blackman and Naranjo, Reference Blackman and Naranjo2012): (i) using composted organic matter rather than chemical fertilizer inputs. hasContentIssue false, This is an Open Access article, distributed under the terms of the Creative Commons Attribution licence (, Copyright The Author(s), 2022. The food industry is a big industry in the United Kingdom, which is ranked 5th among the best and most profitable industries (Costa, 2013). We are concerned about the effect on price of coffee attributes, and especially those that can be strategically decided by growers. For example, Mexican OC growers received, on average, 19 per cent more per kilogram than conventional growers in the period from 1995 to 2004 (Barham et al., Reference Barham, Callenes, Gitter, Lewis and Weber2011). FT refers to social and environmental standards adopted by the coffee cooperatives and mills as well as growers. This is being combined with other optimist approaches. March 27, 2020. https://ivypanda.com/essays/costa-coffee-company-analysis/. Employee satisfaction is also important to Costas continued success. } George Mason University, European Union agri-food quality schemes for the protection and promotion of geographical indications and traditional specialities: an economic perspective, Econometric Methods with Applications in Business and Economics, Revitalizing rural communities in Costa Rica through sustainable tourism, Tourism, Health, Wellbeing and Protected Areas, Ecotourism and sustainable rural development in Prez Zeledn, Costa Rica, Journal of Rural and Community Development, Panel data analysis advantages and challenges, Market power in international commodity trade: the case of coffee, Inter-American Development Bank, USAID and The World Bank, The welfare implications of Brazil's coffee export price subsidies during the ICA. Section 2 presents the conceptual framework and the hypotheses to be tested, and section 3 explains the methodological aspects, including the econometric approach, the variables considered, and the data sources used. Our study confirms that coffee prices, which are key for growers' profitability in developing regions, depend on the one hand, on a set of external variables that are beyond the control of farmers but, on the other hand, on their differentiation strategies. The company believes in giving wow moments to its customers with its main product coffee. Since there is not a unified source of FT-certified firms by year, we built this indicator from several sources. Limited presence in the developed or developing nations is helping the company to remain focused on what they have and control its operational cost thereby increasing the profit. The various products are designed based on the occasions and the time of the year, as well as customer needs. It appears your prediction was wrong. This enables the firm to continue to sell to business executives on their way to and from work, by offering speed, and then on their lunch-break, by offering premium priced cakes and sandwiches. 5. We find that organic coffee berries received higher prices, but Fairtrade mills report lower average prices than other, non-certified, buyers. The outlets of Costa Coffee are the physical evidence for the company. Its brand of coffee has an Italian origin, which is a differentiation strategy. Currently, ICAFE has a web page where current coffee prices on the New York Stock Exchange are reported (see, e.g., ICAFE, 2015) but no price forecasts are offered. Let us start the Costa Coffee Marketing Strategy & Mix to understand its product, pricing, advertising & distribution strategies: The product strategy and mix in Costa Coffee marketing strategy can be explained as follows: Costa Coffee is one of the most popular coffee chain outlets globally. They are able to produce high quality products. Costa Coffee Company Analysis. Coefficient 4 refers to the Western Valley region, which is between 800 and 1,700 masl and yields Strictly Hard Bean, Good Hard Bean and Hard Bean coffees. This institution provides the average annual prices paid to growers as reported by the coffee mills to the Costa Rican regulatory agency. The management should plan on such expansion. Costa Coffee clearly aim to maximise their profits; Starbucks aim to develop their brand around quality. This helps the management to be proactive in its decisions, thereby giving the organization an advantage (Stevenson, 2011). We address the following questions: (i) What are the main drivers of coffee prices in Costa Rica? Part of Whitbread Plc is the UKs leading Hospitality Company with franchises all over the world. On the other hand, the goals of the organization are an integral part of its strategic management. Costa coffee also sells it coffee vending machine under brand Costa express. Specifically, it creates a consignment mechanism in which prices paid to farmers by coffee mills must be a function of the seasonal average final price, production costs and processing yields (Asamblea Legislativa de Costa Rica, 1961; Adams and Ghaly, Reference Adams and Ghaly2007; Dragusanu et al., Reference Dragusanu, Montero and Nunn2021). This is done without compromising quality. Whitbread planned to list Costa as an independent publicly traded company which would have taken up to two years, but the company was under pressure from investors to turn its focus to its Premier Inn hotel operations. Marketing Strategy of Cafe Coffee (Reference Jena, Stellmacher and Grote2015) show that FT certification does not necessarily imply better prices for coffee growers (see also Bacon, Reference Bacon2005; Haight, Reference Haight2007; Weber, Reference Weber2007; Omidvar and Giannakas, Reference Omidvar and Giannakas2015). FT and OC have in common that both are differentiation strategies aimed at socially- and environmentally-aware consumers. Similar objectives were set in various countries around the world (see Zou et al., Reference Zou, Xiong, Xue, Zheng, Ge, Wang, Jiang, Pan and Wu2021), including Costa Rica. Unequally spaced panel data regressions with AR(1) disturbances, Fair trade/organic coffee, rural livelihoods, and the Agrarian Question: Southern Mexican coffee families in transition, Instrumental variables and GMM: estimation and testing, What to do (and not to do) with time-series cross-section data, The world's first carbon neutral coffee: lessons on certification and innovation from a pioneer case in Costa Rica, The potential of Carbon Neutral Labeling to engage coffee consumers in climate change mitigation, Does eco-certification have environmental benefits? The operations that an organization engages in are all geared towards achieving its goals. The annual revenue of the company is around $1 billion. Why have a target market? It faces competitors who strive to acquire a large share of the market. Costa Coffee (2014). Its implication is that the productivity needs to be increased over time (Hill & Jones, 2012). It faces competitors who strive to acquire a large share of the market. The coffee value chain is made up of coffee growers, coffee milling companies, exporting firms and roasting firms. Samper (Reference Samper2010) claims that while growers in highlands tend to produce higher-quality coffee and earn significant price premiums, those in lower areas offer lower quality and focus on output volume instead. Costa Coffee operates in an industry that is highly competitive. May I ask what country you are referring to? Whitbread is financially strong having properties/infrastructure to support Costa coffee. What Is The Difference Between Product Management And Brand Management, Collaborate with Non-Competing Businesses, Flyer in the right places, to the right people, Grab their attention with promotional banners, Reach out to customers with feedback cards, Mix in offline marketing strategies such as promotions and local partnerships, Run a Facebook advertising campaign on social media. The program helps the company to be precise in its predictions and reduce wastage of time and resources. Marketing Strategy of Costa Coffee - Costa Coffee In the international market, the company is operating in over 30 countries and has about 1100 stores. Price drops affect both short-term and long-term profitability for growers by discouraging investment in coffee plantations, making plots more vulnerable to pests and diseases (Avelino et al., Reference Avelino, Cristancho, Georgiou, Imbach, Aguilar, Bornemann, Lderach, Anzueto, Hruska and Morales2015). Companies in this industry have to face the entry and exit barriers as infrastructure and branding cost are involved in the setup of the company and if the business is unable to attract customers then its just the loss for the franchise owner. The company has developed a Its physical environment strategies involve providing excellent indoor seating, attractive dcor, and high-quality furniture. Whether it is a digital platform or social platform, Costa Coffee has the strong presence in the media which is helping the company in creating awareness and thereby increasing its sales. We can also arrive at some conclusions regarding public policy. Costa Coffee has recently decided to acquire Coffee Nation, the operator of nearly 1000 self-service coffee machines for 60 million. As established by Costa Rica's Coffee Law number 2762, the price paid for coffee berries is established mainly based on prices for green coffee obtained in the national and international markets (incomes) minus processing and exporting costs. Secondly, we cannot reject our first hypothesis (H1) regarding the coffee berry prices reported by multinationals. Confronting the coffee crisis: can fair trade, organic, and specialty coffees reduce small-scale farmer vulnerability in Northern Nicaragua? Accordingly, we formulate the following hypothesis: H1: MCCs pay lower prices to coffee growers than other types of coffee mills. Costa Coffee Marketing Plan Academic Research Bank There are clearly benefits and drawbacks with both of their strategies. Costa Coffee is an organization that values quality production, as this is what will contribute to customer satisfaction. Analyse their usage pattern, likes and dislikes, lifestyle, and demographic. This also happens to be the major factor why Costa Coffee has been able to thrive in Europe. We focus on two environmental certifications that we consider to be particularly relevant in the Costa Rican coffee sector: FT and OC. For example, in a study of coffee production in the district of Agua Buena, Costa Rica; Babin (Reference Babin2015: 99) concluded that Fairtrade price premiums were inconsequential in providing support for smallholder resistance to land-use change out of coffee production. Segmentation Demographic segmentation divides markets into Costa Coffee has been a leader in product development (Costa, 2013). Costa Coffee needs to keep on improving its quality of production. Customers will always be willing to get a quality product and realize as much value for their money as they can. UK chain Costa has been ranked the worlds second strongest brand in the restaurant sector, overtaking US rival Starbucks. Close this message to accept cookies or find out how to manage your cookie settings. They define the strategy that the organization is to employ. To address these problems, we use the Panel Corrected Standard Errors and the Prais-Winsten estimator, which allows us to correct the problems of heteroscedasticity and autocorrelation following a first-order autoregressive process, even when the panel data is not balanced (Baltagi and Wu, Reference Baltagi and Wu1999; Freybote, Reference Freybote2016), as is the case in this study. They also found that e-auction coffee sales result in substantially higher prices than those obtained in conventional commodity markets. Hill, C. W. L., & Jones, G. R. (2012). Table 3. To determine the most adequate approach, the pooled, fixed effects and random effects (RE) versions of the two specifications (equations (1) and (2)) were estimated. Coefficient 8 reveals that MCCs have paid, on average, 16.8 per cent less than other types of coffee mills. However, previous analyses focus on the influence of individual variables such as quality, environmental certifications, or regional differences in coffee prices. In other words, there is a possibility of the company recording dismal performance, even when some employees have excelled in their units. (2020) 'Costa Coffee Company Analysis'. FT was one of the first certifications adopted by coffee cooperatives in the early 1990s. In addition, the FT program is not only focused on prices. Within environmental certifications, organic production practices seem to have a significant positive effect on the price while, on the other hand, FT mills have not reported higher average annual prices than non-certified ones. Therefore, organizations need to keep up with the changes to remain in the competition. Costa Rica. These features encourage customer loyalty and increase customer spend. Costa Coffee Product design is significant because it helps the organization in differentiating its products. Starbucks and Costa Coffee are long-term competitors in the coffee market however, recently they have implemented new marketing tactics. The remainder of the paper has the following structure. Costa Coffee is regarded as one of the globe's pioneering coffee companies, and its brand is well-known and favored. The management of Costa Coffee is also composed of highly skilled personnel, which further increases the level of quality assurance. However, an increasing number of them are pursuing alternative strategies involving product differentiation, which include geographic indications of origin, gourmet and specialty, as well as environmental certifications such as: OC, FT, Eco-friendly or shade grown, among others (see, e.g., Lewin et al., Reference Lewin, Giovannucci and Varangis2004). Costa Coffee is the largest coffeehouse company in Britain and second largest coffee chain in the world. In fact, it has employed a coffee taster by the name of Gennaro Pelliccia (Costa, 2013). Therefore, quality They have decided to lengthen their product line by using an upward stretch, where high quality and more expensive items are introduced: the company is introducing coffee made using rare, luxurious coffee beans. As a part of its customer well-being process, it sources all its raw materials like coffee beans, tea leaves and many others from Rainforest Alliance Certified farms. In this regard, Blackman and Naranjo (Reference Blackman and Naranjo2012) found that organic certification in Costa Rica significantly reduced use of chemical pesticides, fertilizers, and herbicides and promoted the adoption of organic fertilizer. Our survey of cooperative managers reveals that the proportion of coffee sold in the FT market varies widely, ranging from cooperatives that were not able to sell anything in the FT market during the period covered in this study, to others that placed 67 per cent of their production in that market. In the latter group, we focus on two cases that are particularly relevant in the Costa Rican coffee sector: Fairtrade (FT), which is a company certification, and organic coffee (OC), which is a product certification linked to coffee quality and the technology used to produce it. After taking the order the employees make sure that the products asked by customers are made them available in minimum time and with high quality maintained. Since Tarraz is between 1,100 and 1,900masl, this variable can be interpreted, to some extent, as a proxy for altitude. MBA Skool is a Knowledge Resource for Management Students, Aspirants & Professionals. Hence, the firm wishes to rebrand these self-service points as Costa Express. They should focus on continuous improvement on their products and performance. But, even when the product is available, each customer willthe experience of watching a specially trained barista prepare their coffee which will take around 4 minutes for a single cup. WebCosta Coffee is very well known in UK and it was founded in 1971 in Italy by two Italian brothers: Sergio and Bruno Costa. Costa Coffee produces its own coffee and has owns its roastery. However, three main groups, which include middle class people, families with kids and working professionals, can be three target markets of Krispy Kreme. Following is the distribution strategy in the Costa Coffee marketing mix: Costa Coffee operates in nearly 3000 outlets spread over 30 countries. Also, the Costa Rican Coffee Institute and the Ministry of Agriculture have designed a strategy to reduce carbon emissions in the coffee sector. Costa Coffee is one of the most popular coffee chain outlets globally. Some of them are external to the control of the coffee growers, such as the international price of green coffee or the power of multinationals; others, such as the altitude where the coffee is harvested or the berries' yield, are related to coffee quality but difficult to modify by coffee growers.

St Patrick's Day Potluck Recipes, Carlton Leach Family, Army Dlc 1 Cheat, Articles C