Marketing Plan Of Costa

THE ITALIAN COFFEE MASTERS

TABLE OF CONTENTS Letter Of Transmital……………………………………………. 3 Executive Summary…………………………………………….. 5 The Costa Story…………………………………………………. 6 The Perfect Cup…………………………………………………. 7 Mission…………………………………………………………… 8 Vision…………………………………………………………….. 8 Business Portfolio……………………………………………….. 8 Marketing Objectives…………………………………………….10 Target Market…………………………………………………….11 Market Segmentation……………………………………...11 Market Targeting…………………………………………..12 Market Definition………………………………………….12 Economic Profile………………………………………12 Age Demographics…………………………………….12 Market Positioning……………………………………………….14 Market Mix………………………………………………………..14 Product………………………………………………………14 Price………………………………………………………….17 Locale………………………………………………………...17 Promotion……………………………………………………18 Market Demand/Opportunity Measurement………………….18 Growth Share Matrix/GE Approach……………………...18 Market Attractiveness………………………………………19 Business Strengths…………………………………………..19 Projected Sales in Pakistan………………………………………..20 Budget Forecasts…………………………………………………...22 Strategic Planning………………………………………………….23 Future Promotion and Expansion Plans…………………………24 Analysis……………………………………………………………...25 Recommendations…………………………………………………..26

EXECUTIVE SUMMARY This report strives to outline the strategic and marketing approach to be undertaken for the current year by the “ Multinational conglomerate

COFFEE” a chain- part of a UK- based Family.

PLC is The UK’s leading Hospitality Company with franchises all over the world. Their business encompasses Hotels, Restaurants [Household names like TGI Friday], Health and Fitness plus Other Businesses. The contents of this report include market segmentation, positioning and targeting along with the growth opportunities. Marketing and promotion strategies and the Sales and Budget Forecasts for the next Five years plus the Profit and Loss estimation for this period are also included.

Marketing Report

The

Story

Bruno & Sergio Costa set up their famous coffee roastery in Lambeth, London in 1971, supplying local caterers and Italian coffee shops with an exciting coffee, slow-roasted the Italian way. People couldn’t get enough of it and by 1978 the first Costa espresso bar opened in Vauxhall Bridge Road in London. To this day we still use the same method of slow-roasting our coffee beans, serving the brothers’ authentic blend of 6 Arabica beans to 1 Robusta in 500 coffee shops all over the world. To serve the best coffee in the true Italian style, we focus on quality control at every stage of the coffee making process from bean to cup. Unlike any other coffee company in the UK, we have our own roastery to ensure our unique blend is perfect every time.

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The Perfect Cup Some people would call our pursuit of the perfect cup of coffee an obsession. We don’t care- because nothing less will do. Our Italian Masters spend their lives selecting the finest beans & roasting them to perfection. To prepare our coffee with any less care & attention to detail would be sacrilege. Our baristas are trained (even indoctrinated) in the Four Ms.

Miscela Blend: Costa has a unique blend we call the Mocha Italia

Macinatura: Grind: Every cup of Costa is made from freshly ground beans; ground to the exact consistency to ensuring perfect extraction of flavors & aroma. We use the Ferrari of grinders-the Mazzer–to ensure the “Perfect Cup”

Macchina: Machine: Costa shops use specially designed Italian

espresso machines. They have been tuned & perfected over the last twenty years to achieve high volumes of perfect espresso [the heart of every coffee drink]

Manna: Hand: the skill of the Barista influences the “Perfect Cup” So they undergo extensive & intensive training at our Coffee Academy to reach the excellence that’s Costa

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VISION: Our vision is to be the best hospitality company that there is - a family of related hotel, restaurant and leisure club brands recognized by our people, guests and investors as leaders in each market in which we operate.

MISSION: “To serve the best coffee in the true Italian style.”

BUSINESS PORTFOLIO: Costa Coffee is a part of the Whitbread, family of brands, which is in the business of providing hospitality in one shape or form. They operate the number one brand in the UK and around the world. Together, they welcome with a smile more than 10 million customers a month. Costa Coffee is the leading force in the world coffee market. The brand is reputed renowned and preferred. In the year 2004 Costa netted a turnover of £ 1,043.7 million

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MARKETING OBJECTIVES:

•

Growing the profitability, scale and market share in the Pakistani market;

•

Developing new products that have the potential to reach significant scale;

•

Managing our business so that shareholder value is added by each of our activities;

•

Ensuring that brand is a leader in its field for customer service;

•

Working to meet our responsibilities to the wider stakeholders in our business, including commercial partners and the communities in which our brands operate.

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TARGET MARKET Coffee strives to appeal to all ages. Young and Mature, all consumers are bound to be satisfied by their array of choices. The menu is designed specifically to cater to different preferences and the quality of their coffee satisfies the most discerning of tastes. Coffee continues to satisfy consumers all over the world.

Market Segmentation: For the purpose of defining the target market, the following market segments were established after researching the restaurant and cafe-going consumers and the clientele of already established competitors. Economic Profile:

Middle Class Upper Middle Class Privileged Class

Age Groups:

Teenagers Young Adults Adults Mature

16 - 19 years 18 - 25 years 25 – 50 years 50 and above

Professional Classification: Students Young Professionals Mature Professionals Retired Marital and Familial Status: Single Single with Dependants Married Married with Children Married with Dependants Ethnic and/or Religious Classification: Christen, Muslim, Hindu Other Asian, Caucasian, African American, LatinAmerican, European

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Market Targeting: While evaluating their consumer market the conclusion was that the ideal consumer’s economic profile will be • •

Upper Middle Class Privileged Class

While the age demographics will be: • • • •

Students and Youngsters Professionals Families Mature Consumers

Gender and Ethnic/Religious Background was researched to have minimal or no effect on the choices concerning coffee made by consumers and their patronage of coffee houses.

Market Definition: Economic Profile: To achieve the vision of “To serve the best coffee in the true Italian style.” they will continue using the same method of slow-roasting coffee beans that is unique to to this day. The focus will be on quality control at every stage of the coffee making process from bean to cup. Unlike any other coffee company in the UK, has its own roastery to ensure their unique blend is perfect every time. They say, when you order a cup of coffee today, it is still made skillfully by hand rather than by the automated coffee machines used by major competitors.

Age Demographics: •

Students and Youngsters i.e. young men and women in the age bracket of 16-24

years are estimated to form 30% of the target market. This group will patronize for the ambiance and the prestige as well as the delicious menu. Due to

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Marketing Report the burgeoning “Coffee Culture” in Pakistan, the youth is flocking towards coffee houses and cafes as their latest ‘Watering Holes’. The international presence, reputation of luxury and the image of class associated with is bound to attract this group and make them a significant fraction of s potential clients.

•

Professionals belonging to all careers and in the age bracket of 24 – 45 years are anticipated to form 45% of the future clientele. These will be up and coming, dynamic persons who will appreciate the mouth-watering menu, expeditious service and serious atmosphere. is the ideal environment for efficient lunches and meetings from casual to semi formal to formal.

•

Families:

•

Mature Consumers: Their mission is to provide excellent Italian coffee to

’s menu caters to a variety of tastes and aims to satisfy all kinds of customers. Though a lesser percentage than Students and Professionals, we hope that consumers with families will make up 10% of the potential patrons. s wide array of scrumptious choices is designed to draw consumers of all ages: the melt-in-your-mouth, luscious desserts will without doubt make children love them while their parents can also enjoy the unique, delicious coffee; Making a complete family experience.

consumers worldwide; their trade mark is the exceptional quality and first class flavor. Who better than a matured, experienced veteran with discerning taste to appreciate the finer points of ? The management hopes that Matured Consumers will comprise 15% of the potential clientele.

Market Segmentation

Students and Younsters, 30%

Professionals, 45%

Mature Families, 10% Consumers, 15% 11

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MARKET POSITIONING: The positioning strategy to be employed by is in keeping with their global positioning- i.e. they are the ITALIAN COFFEE MASTERS The quality of their coffee is better than the competitors- it tastes better; it is more hygienic and totally unique. The image of is that it has the BEST and most UNIQUE coffee. The secondary or underlying positions of - globally and for the upcoming market in Pakistan are the Highest Standard of Luxury, The Best Service and a Reputation For Excellence.

THE ITALIAN COFFEE MASTERS Their tag line, as mentioned above, communicates their position as the preeminent in the business to the masses. This certainly magnetizes more and more people to come over to .

MARKETING MIX: Product: Brand Name: Their brand name is their signature. The name of signifies luxury, excellence and perfection all over the world. In today’s market environment, along with quality, Image and Status are also all important. The quality and excellence that is has made this brand name a trademark that is recognized and pursued.

Image/Theme: Luxury and Comfort The image of is luxury. The theme has been designed specifically with the consumers in mind. The emphasis is on luxury and comfort- with style. The ambiance 12

Marketing Report provided is trendy as well as soothing. The sobriety of invites consumers to spend a pleasant time with their company without the tacky flash and glitter.

Color Scheme The theme of , from the brand logo, the color scheme of the premises, to the entire feel of our business is warm tones & relaxing colors. The dominant color in the logo and the premises of is brown with touches of black, white & green. The color theme is chosen for relaxation & comfort as well as being upbeat & trendy.

Service: s reputation for excellence applies not only for the exceptional coffee but also the insistence on perfect service. Recruiting and retaining highly motivated and talented people is essential and great emphasis is placed on improving the skills, expertise and performance of our people through award-winning, industry-leading training and developing programs.

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Product variety: Here's our core coffee range, so you can work out what you fancy.

Single Shot Chocolate

Double Shot Ristretto

Espresso

Short, strong, sweet and black: just what you need to start the day and perfect after a meal.

Steamed Milk Frothed Milk

Americano

Espresso with hot water: a longer coffee with an espresso taste.

Cappuccino

Espresso Doppio

Espresso topped with steamed, frothed milk and a sprinkling of chocolate: breakfast coffee you can enjoy all day.

A double shot of espresso: twice the strength for an extra kick.

Ristretto

Caffè Latte

A very short espresso: The ultimate strength shot.

Espresso with steamed milk: plenty of milk and lots of flavour.

Mocha Macchiato

Espresso with a dash of frothed milk: A smoother flavour with all the taste.

Espresso with chocolate, topped with steamed, frothed milk and a sprinkling of chocolate: spoil yourself with the ultimate coffee indulgence.

As well as offering the finest coffee, Costa has a wide range of alternatives including hot chocolate, teas and infusions, iced coffees & frescato. See our full in store menu for more details.

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Prices: Coffee is internationally renowned for is unique blend of Italian Coffee, firstrate service, Highest regard for quality and a determination to provide the best handmade coffee for the most discerning consumers worldwide. The consumers appreciate these efforts and are loyal to. They will value s commitment to their satisfaction and realize that luxury comes at a cost. A cost that will not deter them from pursuing the excellence of the coffee at . The prices of all the products are comparatively higher at . But this is offset by the outstanding quality and discerning tastes at . One of the reasons for choosing the privileged and higher middle classes in the target market is the prices.

Our Locale / Setting: Our first ventures in Pakistan are greatly anticipated and we intend to meet and go beyond these expectations.

Location: After thorough research, and competitive analysis the perfect locations in terms of exposure, accessibility and competitive edge have been acquired. Karachi, due to its metropolitan way of life and culture and ideal market potential was chosen to be the launch pad for initiation into the Pakistani market. A prime location at main Zamzama had been renovated, designed and revamped according to the standard of franchises worldwide. Other selected locations also include Bahadrabad and Sea View at Karachi. plans to move to other cities of the country as well. All future locations of outlets in Pakistan will be required to be the most conveniently located at the hub of cultural activity and possess the best competitive advantage. The inventory and easy transport facilities have also been a part of the deciding factors while choosing the appropriate locale.

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Promotion: The promotional strategy for the Launch of in Pakistan has been mostly low key. Though it is a coffee house and the coffee house culture is building up as an upcoming trend in Pakistan, a lot of advertising is unnecessary. This is so because ’s brand name is enough for them to muster the required target market. Most of the awareness will be through the word of mouth of people amongst the masses. Hence the reputation is more that counts.

MARKET DEMAND / OPPORTUNITY MEASUREMENT Before expanding into any market, its opportunities and risks have to be analyzed. Smart Business is to venture into markets that have opportunity for profit maximization. The attractiveness of any market depends on the certain factors that have to be duly considered before launching any new project and even after launching it to continue a balanced growth of the market share:

Growth Share Matrix/GE Approach The decision to expand to any new markets depends largely on the market attractiveness and the Business Strength.

Market Attractiveness Factors Overall Market Size Annual Market Growth Rate Competitive Intensity Technological Requirements Inflationary Vulnerability

Business Strength

Rate

Factors

3.5

Market Share Growth

3.75

Product Quality

3

Rate 4.5 5

Brand Reputation

4.5

2.5

Distribution Channel

3.5

4.5

Promotional Effectiveness

4.5

Productive Efficiency

4

Managerial Personnel

3.5

Market Attractiveness 16

Marketing Report As the above table indicates, the attractiveness of the Pakistani Market for Coffee is slightly above average. The escalating Coffee Culture and the increase of Coffee drinkers in Pakistan show a healthy growth rate. The Technological Requirements for this particular venture in Pakistan are not too burdensome, considering the nature of the enterprise, the standard of the target market and the possession of advanced technology by coffee. Although the Inflationary pressure does tend to increase and is unstable, the nature of the targeted market segments remains almost unaffected. Contracts with the suppliers, transporters and employees and other damage-control measure also protect the enterprise from serious danger. Thus the overall Market Attractiveness is above average and suitable of entry.

Business Strength Coffee is an established, internationally well-known and successful member of the Whitbread Family. The quality of its product is unquestionably the best. In fact, is renowned as “THE ITALIAN COFFEE MASTERS” The Product Quality of speaks for itself through international success, recognition & awards. The global reputation & Market Share of its Brand Name is increasing at rapid pace, with outlets in the UK, Europe, Middle East, India & now Pakistan, plus deals to launch in Poland, Romania and Bulgaria. In keeping with the reputation for excellence, intends to employ the best of the available resources in Pakistan which includes the best available Production, Promotion and Distribution team. The Whitbread Family, including also has a global reputation for employee recruitment, training and retention which they uphold in Pakistan.

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Business Strength High

Medium

Low

High Medium

Low Thus the Business Strength is considered exceptional and the overall position is ideal for expansion into the Pakistani market.

PROJECTED SALES IN PAKISTAN 100%

Growth [Sales, Market Share]

97% 89%

Current Market Position 0

Dec Jan May Sept 2006 2007 ’07 ’07

Dec ‘07

Time Line [Year 2006-2007]

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Marketing Report The projected sales of Costa during its first six months are anticipated to rise swiftly to almost 97%. The increasing trend of the market, occasions like Christmas, New Year and the arrival of the winter season- along with winter vacations, and the novelty of a new international brand of our repute and of course our excellent product are likely to boost sales rapidly. At the peak, in approximately May, interest is expected to ebb due to the ending of the winter and vacation season, familiarity with the brand and its product. The one time visitors are likely to cease to visit the outlet and the established clientele is expected to remain. Thus a slight dip in sales to almost 87% is forecasted. Around September onwards, a steady incline in sales is anticipated as a result of increasing market size and market share, promotions, product diversification etc. These projected sales figures are very attractive and prove expansion into the new market to be ideal. Along with this analysis, the sales forecast with respect to the individual target markets are also very promising;

Millions

Market 2006 2007 2008 Total Students & Youngsters Rs. 2,000,000 Rs. 2,300,000 Rs. 6,300,000 Rs. 10,600,000 Mature Consumers Rs. 755,000 Rs. 780,000 Rs. 1,280,000 Rs. 2,815,000 Families Rs. 970,000 Rs. 985,000 Rs. 1,720,000 Rs. 3,675,000 Professionals Rs. 1,775,000 Rs. 3,275,000 Rs. 9,200,000 Rs. 14,250,000 Totals Rs. 5,500,000 Rs. 7,340,000 Rs. 18,500,000 Rs. 31,340,000

10 Youngsters

8 6

Mature Consumers

4

Families

2

Professionals

0 to the graph it can be seen that the market share of the students and According youngsters and 2006the professionals 2007 2008is expected to rise way more than the others. This is so because the youth is more inclined towards the upcoming new trends in town and are

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Marketing Report prone to adopt the changes in society. Since the coffee culture is a new trend mounting in Pakistan, the adolescents are apt towards it. As for the professionals, the relatively soothing and peaceful ambience of the coffee house and the easily approachable vicinities tend to be an advantage for business meetings and otherwise. Professionally, media has also approached Costa for filming various programs. This has added to the standing of Costa Coffee and has significantly increased the responsiveness of the civics.

BUDGET FORECASTS: The forecasted budget for the upcoming two years is as follows;

Millions

TYPE Accommodation Training Transportation Fixtures Total

CURRENT Rs. 2,000,000 Rs. 1,500,000 Rs. 250,000 Rs. 2,000,000 Rs. 5,750,000

2007 Rs. 500,000 Rs. 350,000 Rs. 850,000

2008 Rs. 5,000,000 Rs. 4,000,000 Rs. 1,000,000 Rs. 7,000,000 Rs. 17,000,000

Total Rs. 7,000,000 Rs. 6,000,000 Rs. 1,600,000 Rs. 9,000,000 Rs. 23,600,000

8 7 6 Accommodation Training Transportation Fixtures

5 4 3 2 1 0 Current

2007

2008

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STRATEGIC PLANNING The Current Market Position according to the GE Matrix and the projected sales figures lead to conclude that an INTENSIVE GROWTH STRATEGY should be employed. By applying the situation to the ANSOFF PRODUCT/ MARKET EXPANSION GRID:

CURRENT PRODUCTS CURRENT MARKETS

NEW MARKETS

1. Market Penetration Strategy

2. Market Development Strategy

NEW PRODUCTS 3. Product Development Strategy

4. Diversification Strategy

The combination of an existing and well-established Business in excellent Strength and entry into a new Attractive Market, plus an ideal growth forecast suggests the adoption of a MARKET DEVELOPMENT STRATEGY; whereby, the interest of a previously unexplored environment should be aroused in . Expansion into this new market will require a launch of new outlets, brand recognition, establishment of clientele and production and distribution channels. Plus, establishment of local management and employees.

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FUTURE PROMOTION AND EXPANSION PLANS: Costa will be launching more branches all over Pakistan after developing an even firmer hold on the local Karachi market. The expansion has been planned for the next year that is 2008. the next targets will include Lahore and Islamabad. For that purpose again the launch will not be very extravagant, but the already established repute in the metropolitan of Karachi and the attachment of TV programs and stars will do the required marketing. Ads will be published in the leading newspapers and some bill board advertising will also be done. But over all it will be low key marketing activity. Allocated budgets mentioned earlier have been allotted keeping the expansion in mind.

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ANALYSIS: The findings above notify that Costa has very strong market intensification potential. We can observe that Costa has exceptional sales all through its first year after entering the Pakistani market. The rationale following this is the unique taste and the highly reputed image of Costa in the European markets. The word of mouth only has played a significant role in their success. The cash inflows are projected to increase much this year and in the next year with the development plans. After expansion Costa will be able to establish a firm and strong foothold in all the major markets of Pakistan. Since the targeted market segments include only the higher middle and elite classes, therefore the venture is even more successful. The sales forecasts give you an idea about the market share of students and youngsters and the professionals increasing spectacularly over the span of these three years. This is due to the quick adaptation by our youth and their fondness towards the new trends. The professionals on the other hand, always seem to be in the hunt for calming and serene locations to carry out unofficial or official business meetings. Costa has proved to be a first-rate spot for the purpose, as the sales figures suggest. Apart from this the professional sales with relation to media will also increase since there is a very strong showbiz industry in Lahore. From the beginning a number of TV channels have already started airing their programs art Costa. Hence this would certainly increase the revenue generation. Summing up, we can say that Costa has entered and has maintained an excellent marketing strategy inviting the customers and providing them services that will create a niche of Costa in the Pakistani market very soon.

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RECOMMENDATIONS:   

The sales forecast of Costa are very promising but the franchise has not adopted any above or below the line promotional methods. This should be considered. Costa should adopt some low key promotional strategies. They can go for advertising through bill boards or giving out brochures.

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