Advertising Promotion and Other Aspects of Integrated Marketing Communications - Case Study Example

Executive Summary Costa Coffee was founded by Bruno and Sergio Costa in London in 1971 and later acquired by Whitbread in 1995. There are currently 85 stores in UAE. The product mix include Single Shot, Frothed Milk, Ristretto, double shot and steamed milk ranging from Macchiatto, Caffe Late, Cappuccino, Americano, Espresso to Mocha. Its services have high reputation level for excellence. Costa coffee’s brand name stands for luxury, excellence and perfection worldwide. It has a marketing department that builds marketing strategies for Costa coffee. Its strengths include high quality service, wide product variety, high reputation level for quality and brand visibility. Its weaknesses are high prices while opportunities include continual expansion, wide target market, and formation of strategic alliances. Threats include change in policy, competition, disruption of coffee beans supplies, and rise in dairy products and coffee beans prices. The target market for Costa coffee is middle class and privileged class who have disposable money they can spend. Promotion activities for UAE market include sales promotion and advertising through television, internet, newspapers and magazines. Contents Executive Summary 1 Overview of the Company 3 Product Strategy 8 Marketing Opportunities 9 Promotion Strategies 13 Promotional Plan Suitable for UAE 16 Distribution Strategies 19 Conclusion 20 References 20 Appendices 22 Overview of the Company Overview of Costa Coffee Costa coffee is the fastest growing coffee shop chain with its headquarters in Dunstable, United Kingdom. It was founded by the brothers Bruno and Sergio Costa in London in 1971 supplying roasted coffee to Italian coffee shops and caterers. Whitbread later acquired it in 1995 which saw its growth to 1700 stores in over thirty countries. . Its first international store was opened in UAE in 1999 and has now grown to 85 stores in the Emirates (Costa Coffee, 2014). Service Besides exceptional coffee provided by Costa its reputation for excellence service is also shown. It recruits and retains people who are highly talented and motivated, and keeps on improving their performance, expertise and skills through training and developing programs. Product Mix Cost has a wide range of its coffee products that customers can choose from. The main ones include steamed milk, Ristretto, Single Shot, Frothed milk and Single Shot. Product Description Espresso Doppio A double shot of espresso Macchiato Espresso with frothed milk, has all tastes and smooth flavor. Caffè Latte Espresso with plenty of mil and lots of flavor (steamed milk) Ristretto Very short espresso Strength shot Americano Espresso with hot water Espresso Sweet, strong, short and black, What is needed to start the day and after a meal Cappuccino Espresso topped with frothed, steamed milk and sprinkled chocolate, Can be enjoyed all day Mocha Espresso topped with steamed, frothed milk, and sprinkling of chocolate. Other alternatives for Costa coffee are hot teas, chocolate and infusions, frescato and iced coffees (Costa Coffee, 2014). The Brand The name ‘Costa’ stands for perfection, luxury and excellence. The name of the brand is thus a signature of the company. The premises and logo are also in warm tones while they have pleasant and warm atmosphere. Status, image and quality are important in the market environment today. Quality and excellence has made Costa Coffee brand a pursued and recognized trademark. Costa also shows an image of luxury and comfort with style. This is portrayed in the provided ambiance and soothing environment. Marketing Orientation Costa Coffee satisfies customer needs by reacting to what they want. Whatever the decisions are taken are always based on wants and needs of customers. Customers require better quality products and services in variety. With different emerging methods on making coffee Costa has stuck to its traditional coffee brewing that customers have always preferred. It has introduced other product alternatives like soft drinks, hot teas and chocolates to attract customer who do not prefer coffee but would like to be part of Costa. Costa Coffee Marketing Department The marketing team of Costa Coffee consists of over 200 people including senior designers, product managers, shopper marketing managers, group digital marketing managers, and brand managers among others. They develop strategies for both the stores and digital space including product campaigns and digital campaigns such as social media and promotions. Other duties of the marketing department include: Analyzing competition regularly Ensuring that products focus on the target customer Creating and promoting the brand Creating new markets for products. Analyzing Costa’s ability and develop strategies that fall within the abilities. SWOT ANALYSIS Strengths, Weaknesses, Opportunities and Threats. Strengths Brand visibility and super brand name High reputation for quality with value for money Wide product variety High quality service Weaknesses High prices-dismissing other social classes Opportunities Widen the target market Form strategic alliances, take over or merge Continual expansion Threats Rising prices of dairy products and coffee beans Disruption of supply Increased competition from coffeehouse chains and local cafes. Change in policy Strength The brand name of the company is a selling point. It is portrayed in the excellence of products and services provided. The coffee quality is very high as only Costa Mocha Italia; a type of coffee bean is used. There is also special equipment used for making coffee. Though not all kinds of drinks, normal coffees, and ice are provided food is available. The service provided at Costa are fast as there are always polite baristas who are willingly to help customers with suggestion on what new thing to try. Weaknesses Costa stores are mostly located in places like malls and airports, therefore preventing people in other areas from enjoying the everyday Costa experience. This results from the identified target market as young high income earners from privileged class, upper middle class and middle class. Opportunities Costa can expand its market share by providing cheaper but high quality coffee for lower classes. Costa can also merge with well-known coffee companies like Starbucks or form alliances with other coffee stores. By moving to Eastern countries the company could expand to more internationally in a bid to have more customers. Threats If the price for coffee beans and dairy products rises Costa will be forced to raise the price for their coffee resulting into few people being able to afford. Government policy especially on customs could affect their business especially the policy of not importing special coffee beans. Political conflicts between nation governments could force the shutdown of some Costa stores. Product Strategy Product Definition Costa Coffee core product is hot, rich and delicious coffee. The actual product is coffee. The Augmented product is after-sales service including connections of wireless in all stores where everyone can surf internet as they enjoy their drink. The atmosphere of Costa stores is comfortable and relaxing with good lighting, decorations and music. Its high reputation for excellence service makes a customer feel satisfied and comfortable. Customers are also provided with electronic devices to charge their phones and laptops. There are also different types of chairs and tables that are designed for different purposes of customers. Those who need to complete their homework could chose tables and chairs while those who need relaxing can use the sofa. Product Lifecycle There no sufficient coffee beans supplies in UAE to allow coffee to reach maturity stage of its life cycle. If there are no extension strategies it is likely to move from introduction to decline. Stretching upward through product development builds high quality reputation which provides long-term revenue (customer loyalty). Brand Equity and Development Strategy The name of the product brand is its signature as the name Costa signifies perfection, excellence and luxury worldwide. Costa’s image is luxury and its theme of warmth and relaxation is portrayed in its logo, color scheme of its premises and the entire feel of Costa. Cost has high quality service level reputation for excellence applied on both the coffee and service. Marketing Opportunities Target Market Costa coffee appeals to people of all ages. The menu is designed to satisfy each customer’s taste. Market Segmenting The following market segments were developed after researching café-going consumers, the stores and competitors clientele. Age group Teenagers aged 16-19 years, Young Adults (18-25), Adults (25-50) and Mature (50 and above) Economic Profile Middle Class, Upper Middle class and priviledged class Professionals Students, young professionals, mature professionals,retired Marital and familial status Single, single with dependants, married, married with children, married with dependants Ethic/Religious All types of races and religions Market Target After evaluation of the consumer market the target market that was settled to was one with economic profile of upper middle class and priviledged class, and the age demographics to be professionals, families, students and youngsters, and mature consumers. Situational Analysis Marketing Analysis A large percentage of the population in UAE and the world as a whole prefer coffee as a beverage. The ever growing preference for coffee and increased market for the business is shown by the industry’s rapid growth. Costa coffee has been the market leader in the industry with major market share. Market Environment In future there are higher prices to be experienced by Costa Coffee. All key market players are affected by coffee prices, development and expansion techniques and technological advancement. Consumer analysis The main target customers of Costa coffee are coffee lovers from all age groups. The development of Costa Coffee products has taken places to main the original taste in order to retain the current customers as well as attract new ones. The current market composes of customers from local and International Square who have a passion for coffee brewed traditionally and high quality services offered by Costa Coffee. Competitor Analysis The strongest competitor to Costa Coffee is Starbucks coffee which has a substantial market share. Though the largest market share belongs to Costa Coffee the difference is marginal compared to Starbucks. Therefore, neither of the key players determines consumer influence and product price but the market forces do. Growth Opportunities The growth opportunity for Costa Coffee analyzed by Ansoff Matrix. Existing Products New Products Existing Markets Market penetration Product development New Marketing Market development Diversification Marketing Penetration When Costa Coffee enters existing markets with its existing coffee products it will have to raise customer awareness for its services and products, reduce price or increase promotion to increase its market share. Product Development Costa Coffee can also develop new products and sell to the existing market. To achieve this it will have to implement customer loyalty programs. It is easier for a current customer to buy Costa’s new products because of the trust and the experience they have had before. Therefore they perceive the new product to be as good as earlier products. Market Development Costa Coffee can also develop existing products and sell to new markets. If the products have been successful in the present market then Costa can venture out to new markets to popularize its products as well as increase sales. Diversification Costa Coffee can also decide to introduce new products and sell to new markets. Currently Costa’s target market is middle class and priviledged class. It could develop a new coffee product that could reach low class customers. This is however a risky strategy for Costa because it has no experience in expanding to outside its core activities. The company will however bear with new product development costs. Promotion Strategies Costa Coffee products must be positioned strategically by emphasizing on quality other than prices. The quality of Costa coffee products in the market remains at a high standards. The promotion mix adopted to achieve this is advertisements, sales promotion, personal selling, direct marketing and public relation To position the products of Costa coffee strategically, the approach to be used should focus on the emphasis on the quality of its products instead of the prices. It is evident that the quality of the products of Costa coffee remains at a high standard throughout the market. The mix adopted in the attainment of this includes the use of advertisements, sales promotion, personal selling, and public relations. 1. Sales promotion Sales promotion is allocated half the budget as it plays a key role. Promotional activities and discount provision are effective marketing methods in engaging the target audience (Kaser, 2012). Costa’s brand awareness and sales will increase through practical marketing which provides customers with an opportunity of expressing their emotions as well as interact with the brand. Discount programs will be provided at stores located where a large target group population is. This method attracts customers by providing them with incentives thus increasing short term sales. However, sales promotion is not an ideal method for attaining long term objectives (Shah, 2009). 2. Advertisement This involves a form of media communication that is paid and non-personal (Lamb, Hair, & McDaniel, 2008). By using advertisement Costa coffee will build its brand image and pass the important information to its target audience. However, the major limitation of advertisement is that it is one way communication and its expenses are very high. It does not foster good relationship with customers by allowing them to provide feedback (Lamb, 2009). 3. Personal Selling This is using personal interactions to foster good relationship with the customers (Cant & Van Heerden, 2000). It is a method that Costa Coffee can use to represent a long-term commitment to the customers and enhance feedback. However, of all promotion methods personal selling is the most expensive (Koekemoer, 2004). 4. Public Relations This is a form of promotion strategy that is more believable as it supports the company’s credibility (Reddi, 2009). Its approach includes promotions, features, news stories and sponsorships. This method yields desirable results and is less expensive (Henslowe, 2003). 5. Direct Marketing This is a form of promotion that allows a company to communicate directly to the customer (Nash, 2000). Costa coffee can achieve this by advertising through email, online display ads, flyer distribution, television commercials, outdoor advertising, consumer websites, promotional letters and newspaper or magazines, among others. This method is preferred by marketers because it provides positive and measurable results. If Costa Café sends out an email to 200 email addresses and 50% respond the company can confidently say they had 25% response rate. However, if not done careful some efforts of direct marketing in using a certain media can generate poor results , either due to poor message execution or poor strategy (Kitchen & Pelsmacker, 2004). Promotional Plan Suitable for UAE Advertising Newspaper Newspaper will be used to reach a large population of the target audience (Green, 2011). The newspapers in UAE with a wide readership are Gulfnews, Gulf Manorama, Emaratalyoud, Khaleej Times, and Eliltihad. This will be used to run any available promotions like discounts of Costa coffee products or create awareness. Ads will be placed at the back page or front page of the newspaper for easy visibility. For online newspaper placement of a banner on the main page will be done for visibility. This aims at creating customer desire as the ads portray their needs, desires and emotions and benefits for the product in response to those needs. Television By increasing awareness of Costa Coffee products through TV commercials potential customers may get interested in gaining more information. The target market in UAE watch particular television programs which will be identified for advertisement in order to reach them directly. Television commercials are memorable as they accompanied sound, picture and motion (Andrews & Shimp, 2013). Magazines The use of magazines for advertisement will enable Costa Coffee to reach its target audience in order to pass product information, create awareness and increase sells. Advertisements will be place in magazines such as Ahlan, Middle East Economic Digest, AhlanLive, Masala and Al Sada (w3newspapers, 2014). These magazines have a wider readership and circulation that would reach a large population of the target market. Internet Internet is among the top marketing strategies capturing the attention of consumers in UAE. Marketing and lead generation on internet is potential in UAE as there are over three million internet users in UAE. 56% of UAE internet users’ research online for information on the products they are interested in. 46% was reported to base their product and service choice on online reviews. It is also reported that social media networks influence 46% if internet users in UAE. UAE has 2.3 million Facebook users of which 34% are female while 66% are male. The average time spent on Facebook is 25 minutes (Global Customer Acquisition, 2014). Costa will also use free news feeds related to the interests of its target market and include relevant promotional content. Facebook provides a report of performance ads with details like who clicked on the advertisements, sex, region, age and the number of clicks made (Facebook, 2014). This report will allow Costa Coffee to narrow further the range of market interests in its products, thus ensuring that no unnecessary costs are incurred in future. Certain websites that attract a large number of the target population will be used as a platform to place banner ads featuring the company logo and the message which is displayed in the results of search engines to build traffic. This is a cost-effective way to reach the target market. Youtube attracts over three hundred million users worldwide (Youtube, 2014). Costa Coffee can upload short videos of its services and products as well as advertisements to catch the attention of its target market. The videos can also show the demonstration of making the coffee to ignite the customer’s desire to try it. Google has introduced ‘AdWords’ for advertising in google and its affiliates in order to reach a wide population of the target market (Google, 2014). If an individual searches for the word ‘coffee in UAE’ the Costa Coffee advert would appear on top or right of the search engine results. Advertisements on Google reach over 80% internet users and Costa Coffee will be able to get qualified leads at a cheaper price resulting in increase in sales and ROI. Promotion Plan   Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Newspaper                         Website                         Magazines                         Internet Ads                         Television                         Allocation of Budget Distribution Strategies After a competitive analysis and thorough research Costa Coffee found the best location in terms of competitive edge, accessibility and exposure. The appropriate locations were also chosen based on easy transport and inventory. City selection was based on sizeable population of families, students, and executives, high disposable income with individuals looking for new ways of meeting their leisure needs, rapid socio-economic development, and high level organized retail activity. Customer visit any Costa store where they are served their favourite coffee. For those who are too busy to visit the store they can call or visit Costa website, and choose their nearest store under locator to order for coffee delivery (Costa Coffee, 2014). Conclusion Costa Coffee has a strong potential of expanding its market share in UAE. This is observed at the rate at which it is opening new stores which are currently 85. Its exceptional coffee and high reputation level for excellence service will create increased sales through word of mouth. After expansion Costa coffee will be firmly established in all major markets. Though it is successful in its target market as middle and priviledged classes its success will become more. Costa will maintain its marketing strategy of attracting customers by providing them with products and services that will create its niche in the market.   References Andrews, C., J & Shimp, T. (2013). Advertising Promotion and Other Aspects of Integrated Marketing Communications. Cengage Learning Cant, M., C & Van Heerden, C., H. (2000). Personal Selling. Juta and Company Ltd. Costa Coffee. (2014). A Drop of History in Every Cup. Retrieved on May 12, 2014 from http://www.costacoffee.ae/costa-coffee/the-costa-way/history/ Costa Coffe. (2014). Our Coffee. Retrieved on May 12, 2014 from http://www.costacoffee.ae/costa-coffee/our-coffee/ Costa Coffee. (2014). Coffee Perfection Delivered to You. Retrieved on May 12, 2014 from http://www.costacoffee.ae/costa-coffee/delivery/ Global Customer Acquisition. (2014). Lead Generation and Internet Marketing in UAE. Retrieved on May from http://www.mvfglobal.com/uae Google. (2014). Online Advertising with Google. 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