Comparative Analysis: Caffe Nero and Costa Coffee Top Shop - Essay Example

COMPARATIVE ANALYSIS: CAFFE NERO AND COSTA COFFEE TOP SHOP al Affiliation Comparative Analysis: Caffe Nero and CostaCoffee Top Shop The demand for coffee in the European market has offered a large market to some of the leading international coffee brands. The food and beverages sector has also attracted competition from other global trademarks such as Starbucks and other multinational coffeehouses. However, the main players in the European coffee market include Caffe Nero and Costa Coffee Top shop, which are European based and have employed different marketing strategies to become the main competitors in the market. International trade and a potential market have led to the influx of American coffeehouses in Europe. Caffe Nero and Costa Coffee Top Shop European beverage ventures have had the need to analyse the market strategically and incorporate strategic policies for to promote high competitiveness and maintaining market position. Market strategies are implemented in a business with the aim of obtaining a competitive advantage over other firms in the same field of production (Arnold, Chadraba, and Springer, 2006). The strategies are either long-term or short-term depending on the market evaluation and trends. Most companies utilize marketing strategies to attain the set market and business objectives. Caffe Nero and Costa Coffee Top Shop coffee have integrated various marketing strategies to come up with a perfect market mix, which is based on the market size and consists of four principles namely the price, product, promotion, and place. The price includes the value of the product that has a major contribution to the size of the market. The two coffeehouses have made sure that their products have been priced according to the right standard in the European market. The price also varies depending on the market segment due to various variables. For example, Costa Coffee has more branches globally and sells it coffee at strategic prices due to the differences in the production costs. Additionally, the product price directly affects the sales revenue compared to the other marketing mix principles that incur the company costs. The success of the coffeehouses in the European market depends on the level of research on consumer taste and preferences (Richter, 2012). For example, one shop may sell its products at a higher price and still get more customers than the other selling at lower prices. The reason behind the differences is the price as a principle of the marketing mix. Additionally, differences in the price of products may cause variations depending on the market structure. For example, the American coffee companies may infiltrate the European market by coming up with price policies that suit the customers in the current market. The customer has to be price sensitive for the strategy to work. The European coffee market is based on a customer-loyalty basis because most of the coffeehouses have been in operation since the early 1970s. Subsequently, international companies may find it difficult to make new entries into the market. The product is also a principle in the marketing mix, which includes what the customer need in terms of preferences and choices. The marketing strategy includes a survey and research of the market based on the different segments. Costa coffee and Caffè Nero both compete in the coffee market; hence, require a different product approach in order to acquire more customers. The marketing executives are tasked to identify the customer taste and needs before the product is launched in the market. The brand further contributes to the product quality because most businesses, particularly in the food and beverages sector, are known for their brand name such as Costa coffee. Differentiation of the brand further acts as a competitive strategy (Paley, 2005). The place of service and its convenience also contributes to the right marketing mix. It includes the location of the firm and the supply of inputs and outputs. In the case of Costa coffee and Caffè Nero, they have strategically chosen the marketplaces based on different determinants including location and technological trends. Most of the coffee cafes have been located in tactical locations such as malls and supermarkets due to an increased flow of customers. However, the changing technological trends have also contributed to the flexibility of marketplaces. For example, the coffeehouses may sell their products in chosen places and offer delivery services. The flexibility rate of a company can also be used as a competitive strategy whereby the coffee house with the most flexible markets has an added advantage (Richter, 2012). For example, Costa Coffee has a ‘Costa at home option that helps the customer make orders from the comfort of their homes. The service is suitable for all individuals since it covers the sick and busy. Promotion as marketing mix component deals with the customer awareness and influence, which involves the use of communication skills to make the customer responsive to the changes in the product. Costa coffee and Caffè Nero conduct frequent research to make sure that their coffee brands are the best in the European market. Consequently, there are new brands that require to be introduced to the existing market. Promotions are vital in the search for new and existing markets. Costa coffee and Caffè Nero have come up with advertisements to ensure that they acquire more market share as compared to foreign coffee brands in the markets. Successful promotion depends on public relation and the use of effective communication skills during the activity. Viral advertising can be facilitated by the incorporation of online advertising. Technological advancements have improved the marketing strategies for most businesses. Caffè Nero has used online platforms such as social networks to present customers with the right preferences. Both companies have used the online platform to share feedbacks and conducting promotions without worrying about the customers locations. Potential clients become aware of the coffee companies’ brands through advertisements. Various factors determine the promotion process. For example, the coffeehouses depend on seasonal promotions due to the weather changes in the European market. The promotions tend to increase in cold weather unlike in the summer when people prefer cold drinks. The two firms monitor the promotional costs to ensure that they do not take a large part of the profit share. However, Caffè Nero has adopted the use of gift cards to customers to enhance customer satisfaction in contrary to Costa Coffee Top Shop. Market segmentation forms an important part of strategic marketing strategies that has been used by business organizations to increase the capacity of customers, which includes a situation where the market has been divided into various subsets depending on needs and priorities (McDonald and Dunbar, 2013). Caffe Nero and Costa Coffee have employed the strategy to comprehend different market trends and increase their market share. Caffe Nero has segmented its market based on the geographical aspects of its locations. The coffeehouse has its located its stores in locations affected by cold and summer weathers. The strategy is due to its beverage products that include hot coffee and cold drinks. The segmentation process can be through surveys and researches of the allocated regions. Costa Coffee, on the other hand, has its branches in more than 30 countries whose markets have been based on geographical segmentation. On the other hand, the Coffee Top Shop has also exercised demographic segmentation that includes the dividing of the market on variables such as gender, age, and occupation level (Doole and Lowe, 2008). Most of the stores are situated at regions with increased occupational levels where individuals are capable of purchasing the products. Both stores are U.K based and have most of the branches located in the urban areas. Behavioural and psychographic segmentation have also been exercised by both coffeehouses. For example, Costa Coffee has divided its market based on customer behaviour and attitude. It has located most of its stores in areas with a high level of customer loyalty due to its long time in operation. Customer loyalty and satisfaction has been due to its improved products and services at its stores. Cultural segmentation is also evident where both businesses are subject to a common European culture. However, the competition between the two firms arises based on appropriate division of the market into different sub-cultures (Paley, 2005). The division of the stores has also been employed in international markets to target the European cultures in the foreign markets. Tourists can enjoy the same brands of coffee when they visit other countries. Cost leadership is also a marketing strategy that has been incorporated by Caffe Nero and Costa Coffee on different aspects. It involves competition between the firms with the least operational costs (Bowman and Gatignon, 2010). Cost leadership depends on various determinants such as cumulative experience, size and the economies of scale. Costa coffee is one of the leading global coffee houses based on their capital accumulation and number of branches. Subsequently, Costa coffee can take advantage of the accumulated capital to offer customer preferences without operating on losses. The company uses accumulated capital for conducting research of new foreign markets and innovations that leads to an increase in the market share. Additionally, the company’s increased investments are used to cater for losses in the case of an economic recession such as the European economic depression. The growth rate of the Costa coffee shows increased profits from the European market in the past few years as seen below. However, the firm with the lowest operational costs is not always the leading competitor because other marketing factors contribute to the success of a firm such as customer service and employee satisfaction. Caffe Nero and Costa Coffee are close competitors in the food and beverage due to their unique marketing strategies market despite foreign firms’ competition. Remarkably, both companies’ strategies depend on the market environment in which as the business operates. The analysis shows different policies that have been implemented by the companies and their results based on profits and market share. Reference List Arnold, S., Chadraba, P. and Springer, R. 2006. Marketing Strategies for Central and Eastern Europe. Aldershot: Ashgate. Bowman, D. and Gatignon, H. 2010. Market response and marketing mix models. Boston: Now. Doole, I. and Lowe, R. 2008. International marketing strategy. London: Cengage Learning. McDonald, M. and Dunbar, I. 2013. Market segmentation. Chichester: John Wiley & Sons. Paley, N. 2005. The managers guide to competitive marketing strategies. London: Thorogood. Richter, T. 2012. International marketing mix management. Berlin: Logos-Verl. Read More