Therefore the price is relatively high in comparison to smaller coffee shops. People, regardless of different ages, ethnicity and income, are welcomed to enjoy Krispy Kreme. In Costa Rica, Dragusanu et al. WebAll of the machines were turned into Costa Coffee machines and as a result, the change in brand immediately led to sales jumping up around 20% (Strategic Management, pg69). However, Costa Coffee also focuses on the affordability of its coffee. Descriptive statistics of national and international prices. It has been noted that these phenomena are clearly present in the coffee sector, as well as in other strategic activities dependent on absolute advantages linked to natural resources, such as soil productivity or climate. Figure 1. May I ask what country you are referring to? Product design is significant because it helps the organization in differentiating its products. Costa Coffee is one of the most popular coffee chain outlets globally. Differentiation is when a company provides different offerings to suit different customer wants, which in turn allows them to create a competitive advantage. Therefore, measuring the specific productivity of the employees becomes a challenge. It works with coffee-growing communities around the world to source high-quality coffee beans. This law is intended to solve the market failures due to this information gap and to establish equitable relationships between mills and growers in such a way that the price that mills pay for coffee berries must be based on the international prices they get. (COCAFE, 2019) and the cooperatives themselves. Coca-Cola just purchased British coffee-shop chain Costa Coffee for $5.1 billion. Within the value chain, coffee mills (agro-industrialists) are usually the ones that export the coffee and deal with international buyers. The most important marketing strategy followed by the company is to get word of mouth publicity from its customers as the brand Costa coffee not just provides coffee but also the experience. Costa coffee also focuses on digital media to promote its campaigns and connect to its customers. It, therefore, produces coffee that is affordable to virtually every class of people in its market niche. We address the following questions: (i) What are the main drivers of coffee prices in Costa Rica? It is well-established that international markets are crucial in determining the domestic prices of commodity products, especially in small countries with open economies (Igami, Reference Igami2015). Moreover, the coffee culture is still new to the developing nations and in the developed nations there is a lot of competitions between the local, national, and international players. "Costa Coffee Company Analysis." a Breusch-Pagan Lagrange Multiplier Tests. It produces in high volumes. The company needs to keep a close relationship with the customers to get first hand feedback from them. 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. Search this website. 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. Your privacy is extremely important to us. London, UK: Pearson Education. 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. The promotional and advertising strategy in the Costa Coffee marketing strategy is as follows: Costa coffee is a premium brand which does not rely much on advertisement on TV, print media etc. It has banked on innovation to help it develop its products accordingly. (Reference Varangis, Siegel, Giovannucci and Lewin2003), Pelupessy and Daz (Reference Pelupessy and Daz2008), and Samper (Reference Samper2010). The Starbucks Marketing Strategy has helped their brand reach epic heights thanks to their out-of-the-box campaigns and unmatchable commitment towards keeping their quality and A company needs quality assurance to be able to continuously produce high quality goods. On the other hand, the goals of the organization are an integral part of its strategic management. However, a fully fledged profitability analysis of OC should also account for the fact that organic production entails some reductions in productivity per hectare. It operates in more than 2100 UK restaurants and over 1200 outlets are spread overseas. Starbucks and Costa Coffee are long-term competitors in the coffee market however, recently they have implemented new marketing tactics. In this regard, Naranjo et al. Adelaide, Australia: South-Western Cengage Learning. These new consumers may then try other drinks and products if the brand-swap encourages variety-seeking buying behaviour. Forecasting can either be qualitative or qualitative. Costa Coffee is a British coffeehouse chain with headquarters in Dunstable, England. Below is the pricing strategy in Costa Coffee marketing strategy: Costa Coffee has a diverse price offering in its marketing mix, though it is influenced by competition and is slightly premium. WebCostas new marketing strategy has been implemented to demonstrate to the public that Costa is the only brand with real coffee authority; they source, store, blend, roast, grind Costa Coffee is an organization that is highly ranked in its industry globally. The Nationally Appropriate Mitigation Actions (NAMA) program has been adopted by the Costa Rican Government as a way to reach CN at the national level by 2050. Evidence from Jinotega, Nicaragua. 2020. More specifically, we consider two particularly relevant certifications, which are Fairtrade mills and organic coffee. The employees of Costa coffee are trained to follow a highly professional and polite behavior with its customers. It faces competitors who strive to acquire a large share of the market. The Costa way. Coca Feature Flags: { The Coca Cola company purchased the brand from Whitebread company for $5 billion in 2019. These companies are often vertically integrated, in the sense that different stages in the production process take place in a single firm, and/or are horizontally integrated, insofar as they establish the same or similar production processes in different locations, mainly to gain market access or because of tariffs and transportation costs (Borga and Zeile, Reference Borga and Zeile2004). The main brand that the company serves in its stores is known as Mocha Italia. Alternative activities such as ecotourism and rural tourism could also be encouraged and incentivized, not only as a complement to coffee production, but also as a means to promote the care of nature and local culture (Heyne and Vargas-Camacho, Reference Heyne, Vargas-Camacho, Azara, Michopoulou, Niccolini, Taff and Clarke2018; Howitt and Mason, Reference Howitt and Mason2018). In fact, the reverse was true: on average, they reported around 11 per cent less than non-certified mills, ceteris paribus (coefficient 9). Such institutions should undertake and improve strategies of market research and adaptation to low coffee prices such as adequate price forecasting systems. Section 4 presents and discusses our findings, and section 5 gathers the main policy implications. San Francisco, CA: Jossey-Bass. It has positioned itself on the product basis, where it ensures that quality wise every cup of coffee leaves a lasting impression on the customer. Annual average prices of coffee berries reported by mills in US$ per bushel from 20072008 to 20152016 coffee harvests.Note: Each gray dot represents the annual average price reported by a buyer. 5. The Wooldridge test and the Wald test reveal the presence of autocorrelation and heteroscedasticity in our data. Table 1 shows basic statistical information about the domestic price and the international price. WebThrough differentiation generic strategy, Costa Coffee B Project Marlow positions its product offerings in a way to stand out and be different from the available alternatives. The Costa Coffee acquisition marks a major step forward in both of those categories. Costa Rica. Regarding the specific environmental differentiation strategies that we have focused on, we find that organic production tends to get higher prices, while FT mills do not report having paid higher annual average prices, which suggests the necessity of further research for a fully fledged analysis of coffee differentiation strategies. The last process is of paying bills for the products. No. Overall, one cannot really call one strategy more successful than the other. 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. Employees of Costa coffee also interact with customers in regional language along with English as their main language to make its customer feel more comfortable and friendly. However, the fact that FT mills do not report higher average prices should not lead one to the conclusion that there is no scope for this certification. US Dollar Cents per pound. Costa Coffee clearly aim to maximise their profits; Starbucks aim to develop their brand around quality. Costa Coffee has its long term projections and the goals that it needs to achieve in the long run. Despite this law, it has been observed that coffee mills report quite different annual average prices (see figure 1). ensure the integrity of our platform while keeping your private information safe. Like some previous studies, we focus on the prices that coffee growers receive, i.e., the first link in the coffee value chain (see, e.g., Wollni and Zeller, Reference Wollni and Zeller2007; Pelupessy and Daz, Reference Pelupessy and Daz2008; Samper, Reference Samper2010). WebExpanding the coffee shop in France can achieve a positive income and profitability becoming a recognized internationally brand of coffee shop as Costa or Starbucks. WebThrough differentiation generic strategy, Costa Coffee B Project Marlow positions its product offerings in a way to stand out and be different from the available alternatives. We built an unbalanced panel data set from 2008 to 2016 with information about annual average coffee prices paid by mills in Costa Rica and a set of variables that are expected to have an impact on such prices. Marketing Strategy of Nescafe - Nescafe Marketing Strategy. You can use them for inspiration, an insight into a particular topic, a handy source of reference, or even just as a template of a certain type of paper. Starbucks is by far the largest coffee chain in the US, retaining a 40% share of the total coffee shop market with 14,875 outlets and adding 585 net new stores over the last 12 months. The reason is that, in a highly competitive global coffee market, quality coffees are increasingly in demand and high-quality coffee can receive better prices than FT certified coffee. Furthermore, Pelupessy and Daz (Reference Pelupessy and Daz2008), Sick (Reference Sick2008), Rettberg (Reference Rettberg2017) and Prasad (Reference Prasad2019) have reported that low international coffee prices also entail higher levels of unemployment, poverty, migration, violence and corruption in coffee-producing regions. As the company continues to predict and anticipate more growth, it also plans for its capacity expansion. Coffee bars have 5% penetration in India which itself portrays the opportunity lying ahead. 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. Does Fair Trade Coffee Help the Poor? The products of the company are standardized, but not to perfection, as they can be altered based on customer needs (Barney & Hesterly, 2010). Source: Authors' elaboration based on data from ICAFE (2020). Organic is a characteristic of coffee and its production process. 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). Selective targeting strategy is used by the Costa coffee as being present in 29 nations which are geographically separated, following selective strategy is helping the company in catering to the needs of the customers and introducing new products accordingly. Since coffee price is sensitive to some variables that are beyond the control of small growers, such as the fluctuations in the international prices, the intervention of public institutions can be crucial. https://core.ac.uk/download/pdf/58825562.pdf, How Is Costa Coffee Differentiation Strategy, https://www.gopromotional.co.uk/blog/how-to-identify-market-segments-and-select-target-markets/, https://core.ac.uk/download/pdf/58825562.pdf, What Are The Three Main Areas Of Hospitality Management, What Organization Gives The Most To Charity. COSTA Coffee. 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). First, it operates over 1750 outlets in the United Kingdom. Among such forces, we identify three groups. This is a much more effective and affordable way to reach your customers and generate business. In other words, there is a possibility of the company recording dismal performance, even when some employees have excelled in their units. In order to guarantee the positioning of quality coffee from Costa Rica in general, and from the regions with the highest altitude in particular, the regulatory entity (ICAFE) may promote the Protected Designation of Origin that will allow the main brands of Costa Rican coffee to maintain and widen their position in international markets. Some of the ice blended products offered by costa coffee are: coffee cream, Mocha cream Frostino, Lemonade etc. We also conclude that prices are positively affected by variables directly related to the quality of coffee but not easily controlled by growers, such as higher altitude (e.g., Tarraz region) and larger yields. Likewise, Wollni and Zeller (Reference Wollni and Zeller2007) found that farmers participating in the specialty coffee segment in three coffee regions of Costa Rica received higher prices than those participating in conventional channels. However, there are also intrinsic conditions of the farm, such as adequate fertilization of plantations, that can increase the agroindustry yield of green coffee (weight of coffee seeds). Table 3. Browse marketing strategy and 4Ps analysis of more brands similar to Costa Coffee. In the agricultural sector, some special focus has been given to coffee and livestock (ngel-Valds and Pintor-Pirzkall, Reference ngel-Valds and Pintor-Pirzkall2017; Birkenberg and Birner, Reference Birkenberg and Birner2018). Costa coffee always believes that price is secondary for any customer and focuses on delivering good quality products. Marketing Mix Strategy is the combination of 4P. It is a fully owned subsidiary of a company known as Whitbread, which it fully controls. Close this message to accept cookies or find out how to manage your cookie settings. Farmers may be willing to accept a lower but earlier payment rather than a higher but later payment. The third group has to do with differentiation strategies that farmers can use to put them in a better position, mainly by adopting social and environmental certifications and programs. Since in our panel data set some variables, such as coffee type, multinational company, and production regions, are constant in the same group, this is an additional argument to prefer the RE model. The level of competition is expected to increase in the future. Therefore, quality becomes a very significant factor. We focus on two environmental certifications that we consider to be particularly relevant in the Costa Rican coffee sector: FT and OC. However, the coffee brand should implement Focus These are position for convenience railways, for instance, are littered with these machines where busy customers can quickly grab a cup of coffee. However, previous analyses focus on the influence of individual variables such as quality, environmental certifications, or regional differences in coffee prices. Required fields are marked *. Costa Coffee operates in an industry that is highly competitive. The management of Costa Coffee is also composed of highly skilled personnel, which further increases the level of quality assurance. Although I am not a drinker of coffee myself, I thought that Starbucks and Costa are considered to be equally good in terms of quality. Descriptive statistics of national and international prices, Regression results of some determinants of coffee berry price in Costa Rica, Q11: Aggregate Supply and Demand Analysis Prices, Q13: Agricultural Markets and Marketing Cooperatives Agribusiness, C23: Panel Data Models Spatio-temporal Models, http://creativecommons.org/licenses/by/4.0/, https://www.bccr.fi.cr/seccion-indicadores-economicos/indicadores-econmicos, https://ec.europa.eu/clima/policies/strategies/2050_en, https://agritrop.cirad.fr/556445/1/document_556445.pdf, http://www.flocert.net/fairtrade-services/fairtrade-certification/fairtrade-customer-search/, https://cgspace.cgiar.org/bitstream/handle/10568/73326/CostaRica.pdf?sequence=1, http://www.icafe.cr/sector-cafetalero/bolsa-de-new-york/, http://www.icafe.cr/sector-cafetalero/liquidacion-final-beneficio/, http://www.ico.org/new_historical.asp?section=Statistics, https://www.bbc.com/news/world-us-canada-48631129, https://doi.org/10.1080/09640568.2021.1950658.
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