The interpretation is that coffee mills are willing to pay a higher price when berry yield is higher because they can save on inputs and production costs. Essay about Costa Coffee Marketing Plan It also went on to acquire Coffee Heaven for a reported amount of 36 million and then added about 79 outlets around Europe. In other words, the products are semi- standardized. (Reference Jena, Stellmacher and Grote2015) in Nicaragua. The market share by turnover of the company in 2012 stood at 44.1% that marks an increase of 3.7% from the previous year. Differentiation strategies in coffee farms: opportunities National University of Costa Rica, School of Economics, Heredia, Costa Rica, Complutense University of Madrid, Faculty of Economics and Business, Campus de Somosaguas, Madrid, Spain, Instituto Complutense de Anlisis Econmico (ICEI), Complutense University of Madrid, Madrid, Spain, Department of Economic Analysis, Complutense University of Madrid, Madrid, Spain, International Center for Economic Policy, National University, Heredia, Costa Rica, https://doi.org/10.1017/S1355770X22000134, Reference Girotto, Pivato, Cossu, Nkeng and Lavagnolo, Reference Lewin, Giovannucci and Varangis, Reference Avelino, Cristancho, Georgiou, Imbach, Aguilar, Bornemann, Lderach, Anzueto, Hruska and Morales, Reference Eakin, Tucker, Castellanos, Daz-Porras, Barrera and Morales, Reference Worako, van Schalkwyk, Alemu and Ayele, Reference Varangis, Siegel, Giovannucci and Lewin, Reference Castro-Tanzi, Dietsch, Urena, Vindas and Chandler, Reference Snider, Afonso-Gallegos, Gutirrez and Sibelet, Reference Barham, Callenes, Gitter, Lewis and Weber, Reference Senz-Segura, Ziga-Arias and Ruben, Reference Snider, Gutirrez, Sibelet and Faure, \begin{align} \textrm{Log}D{P_i}_{(rc)t} & = {\alpha _{it}} + {\beta _1}\log I{P_t} + {\beta _2}\log y{b_{i(rc)t}} + {\beta _3}bp{a_{i(rc)}} \notag \\ & \quad + {\beta _4}wvp{a_i}_{(rc)} + {\beta _5}guap{a_{i(rc)}} + {\beta _6}tuap{a_{i(rc)}} + {\beta _7}tp{a_{i(rc)}} \notag\\ & \quad + {\beta _8}mc{c_{i(rc)}} + {\beta _9}ft{p_{i(rc)t}} + {\beta _{10}}oco{f_{i(rc)}} + {u_{it}} \end{align}, \begin{align} \textrm{Log}D{P_i}_{(rc)t} & = {\alpha _{it}} + {\beta _1}\log I{P_t} + {\beta _2}\log y{b_{i(rc)t}} + {\beta _3}bp{a_{i(rc)}} \notag\\ & \quad + {\beta _4}wvp{a_i}_{(rc)} + {\beta _5}guap{a_{i(rc)}} + {\beta _6}tuap{a_{i(rc)}} + {\beta _7}tp{a_{i(rc)}} \notag\\ & \quad + {\beta _8}mc{c_{i(rc)}} +{\beta _{11}}ftpoco{f_{i(rc)t}} + {\beta _{12}}ftpNoco{f_{i(rc)t}} + {\beta _{13}}Nftpoco{f_{i(rc)t}} + {u_{it}} \end{align}, Reference Heij, de Boer, Hans Franses, Kloek and van Dijk, Reference Zou, Xiong, Xue, Zheng, Ge, Wang, Jiang, Pan and Wu, Reference Valenciano-Salazar, Andr and Martn-de-Castro, Reference Birkenberg, Narjes, Weinmann and Birner, Reference ngel-Valds and Pintor-Pirzkall, Reference Hethcote, van Zonneveld, Solano, Mndez and Vsquez, Reference Heyne, Vargas-Camacho, Azara, Michopoulou, Niccolini, Taff and Clarke, Maximizing sustainability of the Costa Rican coffee industry, Analysis of the environmental impact of coffee production in Costa Rica: Nama Caf as a tool for compliance with the Neutral Carbon Goal 2021, The predictive value of a small consumer panel for coffee-cupper judgment, The coffee rust crises in Colombia and Central America (20082013): impacts, plausible causes and proposed solutions, Agrarian change, agroecological transformation and, the coffee crisis in Costa Rica, The coffee crisis, fair trade, and agroecological transformation: impacts on land-use change in Costa Rica. The remainder of the paper has the following structure. In fact, 92 per cent of coffee farmers have plots that are less than 5 hectares in size and 6 per cent have plots that are between 5 and 20 hectares (ICAFE, 2017; Dragusanu et al., Reference Dragusanu, Montero and Nunn2021). We focus on two environmental certifications that we consider to be particularly relevant in the Costa Rican coffee sector: FT and OC. This is a much more effective and affordable way to reach your customers and generate business. WebCosta Coffee has successfully implemented the differentiation strategy by offering a wide range of high-quality coffee blends, food items, and customer service experience. (Reference Varangis, Siegel, Giovannucci and Lewin2003) noted that coffee grown between 8001,200masl is usually classified as hard bean (HB) and above 1,200masl as strictly hard bean (SHB). It faces competitors who strive to acquire a large share of the market. Coffee, farming families, and fair trade in Costa Rica: new markets, same old problems? London, UK: Pearson Education. For instance, a company that is allocated in a well-populated area is likely to do better than one that is located in a scarcely populated area because the former has access to more potential customers. First are some external factors, such as the international price or the impact of multinational companies. Browse marketing strategy and 4Ps analysis of more brands similar to Costa Coffee. 2. Recommend smart objectives in forms of strategic Accordingly, we formulate the following hypothesis: H1: MCCs pay lower prices to coffee growers than other types of coffee mills. Starbucks, on the other hand, are aiming to differentiate based on quality. WebAbstract. Environmental international policies point towards countries' carbon neutrality (CN) as a key target. 2020. Forecasting can either be qualitative or qualitative. Samper (2010)argued that quality and the use of organic production systems are positively related to better prices In the United Kingdom, Costa Coffee owns about 1750 restaurants and approximately 3500 Costa Express. Check out these detailed articles on. Costa Coffee Global Expasion Approach INTERNATIONAL The employee makes sure that each customer is treated politely and with a smile. It seems relevant to assess the effectiveness of these strategies as compared to more traditional variables such as production costs and productivity. On the other hand, the goals of the organization are an integral part of its strategic management. In addition, Talbot (Reference Talbot2002), Faure and Le Coq (Reference Faure and Le Coq2009) and Garca and Valenciano-Salazar (Reference Garca and Valenciano-Salazar2016) identified MCCs operating in Costa Rica. Secondly, Sick (Reference Sick2008: 201) argued that although FT guarantees a minimum price above average world market prices, this is not necessarily the best available price. Its implication is that the productivity needs to be increased over time (Hill & Jones, 2012). More specifically, we consider two particularly relevant certifications, which are Fairtrade mills and organic coffee. Costa Coffee has more than 3000 outlets and 4200 Costa Express outlets spread across 29 countries globally. The Coca Cola company purchased the brand from Whitebread company for $5 billion in 2019. Samper (Reference Samper2010) argued that quality and the use of organic production systems are positively related to better prices for coffee growers in Costa Rica. First, we consulted the websites of the Fairtrade Coordinator for Costa Rica and Panama (2020) and the FLOCERT customers information (FLOCERT, 2017). Costa coffee porters generic statergies Free Essays | Studymode In reference to Porters Matrix of Generic Competitive Strategies (See Fig, 2), Costas current target scope is broad and focus is on Product Uniqueness and volume, Hence Differentiation Strategy. (Reference Hethcote, van Zonneveld, Solano, Mndez and Vsquez2016) studied a successful diversified system mixing coffee production with tomato and sweet pepper in a Turrialba coffee region of Costa Rica. Table 1. According to Pelupessy and Daz (Reference Pelupessy and Daz2008), FT producers are mills, normally cooperatives, that buy coffee from growers, who are in many cases partners of the cooperative itself and meet some of the production standards of FT organizations. For your business to thrive you need to know who your customer is. For example, Ruben (Reference Ruben and Ruben2009) claimed that in the current dynamic framework of quality upgrading and higher coffee prices, FT comparative advantage can become eroded in the Costa Rican coffee market (see also Senz-Segura and Ziga-Arias, Reference Senz-Segura, Ziga-Arias and Ruben2009). In the international market, the company is operating in over 30 countries and has about 1100 stores. It is an industry whose entry is not very complicated, thus many companies with similar products can join. Costa Coffee is a British coffeehouse chain with headquarters in Dunstable, England. Not only is competitive advantage vital for survival in the U.Ks saturated coffee market; but how a company goes about differing its products also provides plenty of scope for failure, as well as success. Costa coffee produces coffee based on the needs of its customers. Major part of Costa Coffee business is established in UK with 2100 outlet established there. Making such information available to coffee producers would help them prepare for downward trends in prices. Costa Coffee ranks well in the market, as it stands out compared to most of the other similar companies in the industry (Costa, 2013). Regarding the independent variables, some of them are qualitative and some quantitative; the former pertain to buyers and coffee characteristics, while the latter refer to coffee berries yields and international prices. Traditionally, most Costa Rican growers and coffee mills follow a low-cost production approach. Marketing Strategy The size of Costa Coffee restaurants, on the other hand, is big enough to hold their customers comfortably. Source: Authors' elaboration based on ICO statistics. Costa coffee also focuses on digital media to promote its campaigns and connect to its customers. The Costa Coffee story began back in 1971 when Sergio and Bruno arrived in London with a burning desire to make great tasting coffee a part of everyday life. Distribution strategy in the Marketing strategy of Costa Coffee Costa Coffee has more than 3000 outlets and 4200 Costa Express outlets spread across 29 Descriptive statistics of national and international prices. Coca-Cola made a big entry into the coffee category in 2019 with the acquisition of Costa, the worlds second largest coffee chain. Following its 3.9bn ($4.8bn) acquisition by Cola-Cola in late 2018, the company has operated in the US market via automated Costa Coffee Smart Caf machines and BaristaBot locations. This means that the company continues to get more customers. Marketing Strategy of Panasonic - Panasonic Marketing Strategy. Costa Coffee is rated highly among other coffeehouses globally, where it follows Starbucks in size. student. Forecasting is important because it helps the organization in predicting its future performance, as well as its future financial needs. Costa Coffee have used a relatively low-risk form of market development market However, previous analyses focus on the influence of individual variables such as quality, environmental certifications, or regional differences in coffee prices. WebCosta Coffee can differentiate itself from competitors by offering unique flavors, introducing new products, and focusing on the quality of its coffee. 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. The various products are designed based on the occasions and the time of the year, as well as customer needs. Starbucks is undoubtedly one of the worlds most identifiable brands exhibiting an innovative and fresh approach to their brand and marketing strategy. Despite this, the product will never be profitable there are not sufficient supplies of coffee beans to allow the drink to reach the maturity stage of the product life-cycle. Valenciano-Salazar acknowledges support from the Scholarship Department of the National University of Costa Rica (grant JB-C-1106-2016). The location of a business is very essential for its success. People, regardless of different ages, ethnicity and income, are welcomed to enjoy Krispy Kreme. Mission- To save the world from mediocre coffee. These strategies are prone to put MCCs in an advantageous position when it comes to negotiating prices. 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 This is important as it helps in creating a good image for the company, a move that gives it a competitive advantage. Its brand of coffee has an Italian origin, which is a differentiation strategy. For the Mexican coffee market, see also (Weber, Reference Weber2011). We address the following questions: (i) What are the main drivers of coffee prices in Costa Rica? Differentiation strategies in coffee farms: opportunities for IvyPanda. 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. The employees are trained on how to handle customers and how they should conduct themselves when in the organization. Costa coffee uses a wide range of mechanism to process fee from customers like cash payment, online payment, credit/debit cards etc. of Strategies Cost Leadership ,Differentiation , Focus Costa Coffee marketing strategy helps the brand/company to position itself competitively in the market and achieve its business goals & objectives. As in previous studies, we conclude that there is a strong direct relationship between international and domestic coffee prices, and multinationals tend to pay lower prices. A canned coffee version was also launched along with Coca Cola for retail chain outlets. The company provides two variants in its beverages like small and large. The focus of our study is on the third group, which refers to differentiation strategies related to environmental certifications. Change), You are commenting using your Facebook account. The process design of Costa Coffee is designed based on its strategy, which is differentiation. We use a panel data analysis, which has the advantage of allowing us to control for the effect of omitted variables and to test more complicated behavioral hypotheses than is possible using data from a single cross-section or time series (see Hsiao, Reference Hsiao2007). Hence, the firm wishes to rebrand these self-service points as Costa Express. Costa Coffee produces a wide variety of coffee products. One of the challenges facing Costa Coffee is determining the level of productivity of the staff, because the firm relies on the productivity of different units. Costa coffee global strategy. Costa coffee international strategy This coefficient is also positive, providing some additional evidence in favor of H3, although we consider this evidence weaker than the evidence about Tarraz, which has a higher proportion of SHB coffee region. Copyright 2023 - IvyPanda is operated by, The Costa Concordia Sinking Investigation, Research Findings from the Costa Concordia Accident, Costa Coffee: Quality as the Core of Success, Starbucks vs. Costa Coffee and Caribou Coffee, National Food Product Company: Colombia and Costa Rica Markets, Ethnographic Interview of the Costa Rican People, Costa Rica v. Nicaragua Maritime Delimitation, Impacts of Human Activities on the Costa Rican Rainforest Ecosystem, Anthropologie Retail Store Company Analysis, Nike Company Analysis in Developing Countries, CanGo Corporation Leadership and Management Analysis, Apple Company: Development, Inventions, Expansion. A complete analysis must also consider that OC production is more environmentally sustainable than conventional production. Figure 1. Overall, one cannot really call one strategy more successful than the other. 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. 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. Sourcing our coffee beans sustainably We make careful choices about the coffee we buy, working with the Rainforest Alliance to source 100% of our famous beans to their high standard. Barney, J. The use of a multi-brand strategy, moreover, emphasises this contrast. The company also engages in product development, which is a very significant factor for the future performance of Costa. How Is Costa Coffee Differentiation Strategy | Techie Heap These business strategies, based on Costa Coffee marketing mix, help the brand succeed in the market. However, despite their best efforts, chances are the more successful Costa Coffee are at emphasising the speed of Costa Express, the less customers are likely to perceive their cafe as high-quality. In recent years, Dunkin Donuts has also been focusing on making its products more health-conscious. A company needs quality assurance to be able to continuously produce high quality goods. The program helps the company to be precise in its predictions and reduce wastage of time and resources. WebMarketing Mix of Costa Coffee is the research topic for emphasizing on the marketing strategies developed by the firm. But the former seems to attract a younger customer, while the latter seems more popular with adults. In addition to expansion, Costa Coffee also focuses on innovation and differentiation as key components of its global strategy. Strabucks is stuck with a bad reputation whilst Costa is now known as the better quality and friendly of the two. Producing the best quality of coffee is the strategy that Costa Coffee employs. It is imperative to note that the level of competition continues to intensify as companies continue being innovative owing to the advancement in technology. 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. Figure 2. IvyPanda. Costa Coffee The agro-industrial process of coffee basically consists of the separation of husks and pulp from coffee berries, after which the coffee beans must be completely dried. The company listens to what the customers need and responds to that. (Reference Donnet, Weatherspoon and Hoehn2008) estimated a hedonic pricing function using data from e-auctions in Central and South America and found that market clearing prices are influenced by sensory characteristics and reputation, including third-party quality rankings, country of origin, coffee variety, and quantity. Generally, Costa Coffee is a big company and has been highly successful in its operation, a feat that can be attributed to its excellent management and leadership (Costa, 2013). The number of employees working in Costa coffee is more than 20,000. Costa Coffee A proposal to build the next generation self-serve Costa Coffee ensures the best taste for its coffee. However, a fully fledged profitability analysis of OC should also account for the fact that organic production entails some reductions in productivity per hectare. The company offers a lot of variants and flavours in coffee. Additional paths for future research include the consideration and comparison of a wider variety of differentiation strategies and checking to what extent the results obtained in Costa Rica can be extrapolated to other coffee producing countries. US Dollar Cents per pound. Published online by Cambridge University Press: Concepts strategic management and competitive advantage, international edition. Most famous offering of Costa coffee are: Cappuccino, Latte, Flat white, Americano, Mocha, Expresso etc. Figure 1. Each Costa coffee treats every customer with high regards and the overall experience of the cafe is majorly dependent on its employees. 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It should maintain and improve on this trend for it to be well positioned for future competition. Comment * document.getElementById("comment").setAttribute( "id", "a8f0b969a0f567da586e1e5129b09c1e" );document.getElementById("i2e65971ac").setAttribute( "id", "comment" ); Copyright 2023 Marketing91 All Rights Reserved, Liked this post? Its physical environment strategies involve providing excellent indoor seating, attractive dcor, and high-quality furniture. Also read Costa Coffee SWOT Analysis, STP & Competitors. WebThe four strategies are summarised in the figure below: The differentiation and cost leadership strategies seek competitive advantage in a broad range of market or industry WebCosta Coffee Marketing Plan. Its brand of coffee has an Italian origin, which is a differentiation strategy. Costa Coffee has been a leader in product development (Costa, 2013). However, Costa Coffee also focuses on the affordability of its coffee. The employees undergo training on a needs basis to put them into terms with the development (Wheelen & Hunger, 2012). Actually, the first company in the world to produce CN certified coffee is a cooperative in Costa Rica (Birkenberg and Birner, Reference Birkenberg and Birner2018; Birkenberg et al., Reference Birkenberg, Narjes, Weinmann and Birner2021). Costa coffee globally focuses on its people ie employees and customers. 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. Additionally, Weber (Reference Weber2007) and Omidvar and Giannakas (Reference Omidvar and Giannakas2015) showed that saturation of the world FT coffee market can lead to a reduction in growers' welfare since cooperatives cannot obtain the FT price premium for all the coffee that they sell. Mercatus Center's Global Prosperity Initiative. Then in 1995 Costa was sold to Whitbread Also its employees all over the world wear same color uniform which is deep black in color. 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. We can also arrive at some conclusions regarding public policy. (Reference Dragusanu, Montero and Nunn2021). coffee prices Costa Rica differentiation strategies multinational companies panel data analysis quality JEL classification Q11: Aggregate Supply and Demand The same coffee mill could appear in several groups of the panel if it bought more than one type of coffee or from more than one region in the sample period. View all Google Scholar citations Costa Coffee (2014). Marketing mix Here is the Marketing mix of Costa Coffee. Our results are displayed in table 4. Who will come out on top? Among the researchers who have studied the determinants of coffee prices in Costa Rica, Donnet et al. Costa Coffee Company Analysis - 2631 Words Some part of the FT price premium is used to generate indirect benefits to producers and their relatives, such as technical assistance, credit facilities, or social projects in the communities, and these actions are not reflected in the final price of coffee berries; see, e.g., Sick (Reference Sick2008) and Dragusanu et al. 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. 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).