Starbucks and Costa Coffee: Marketing Assignment

Introduction

In this report we will be analyzing two companies in the same business from two different countries through their Marketing Environment Analysis (PESTLE), Segmentation, Targeting and Positioning Strategies (STP), and Marketing Mix (the four Ps: Product, Price, Place, Promotion). The companies to be evaluated are Starbucks and Costa Coffee.

Background

Starbucks

Starbucks is a multibillion dollar company based in the USA that produces coffee and a serene atmosphere in its various coffeehouses to drink them in. It stands as an international coffee heavy weight carving out a niche for itself in the year nineteen seventy-one.

Co-founded by three partners, namely Zev Siegel, Gordon Bowker and Jerry Baldwin, the company started as a simple dream to share the founders’ love of coffee with the world, albeit at the time only open in a tourist area in Seattle called Pikes Place Market. Nineteen eighty however, marked a special milestone in Starbuck’s history. It was in that year that Howard Schultz joined the company and ever since it has never been the same.

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Following a trip to Italy where he fell in love with the ambiance and style of the coffee bars there, Schultz set off to open his own coffee chain before coming back and finally formally acquiring Starbucks in the year nineteen eighty-seven to further his dream of changing the world, one cup of coffee at a time.

Costa Coffee

Costa Coffee is the number one coffee company in the whole of the UK and a multinational billion-dollar business worldwide.

It all started with two brothers, Sergio and Bruno Costa, Italians who moved straight from Parma, Italy to England in the United Kingdom in the nineteen sixties. Producing their first bag of roasted coffee in the year nineteen seventy-one, the Costa brothers began supplying their coffee first to nearby caterers and later to small time delis. The blend they created, Mocha Italia, would serve as their signature brand when they opened their first store in Vauxhall Bridge Road located in London, England. In the year nineteen eighty-five, Bruno’s part of the company was bought out by his brother Sergio Costa. From their small start they grew to have 41 stores in the whole of the United Kingdom, before being acquired by the biggest coffee shop and hotel company in the UK in 1995. Fourteen years later Costa opened its one thousandth store in the capital city of Wales, Cardiff. They made another milestone victory by acquiring “Coffee Heaven” in the year two thousand nine for a reported thirty-six million pounds increasing its store count by seventy-nine. Following a deal on third January two thousand nineteen, Costa Coffee is now under the ownership of The Coca Cola Company after being sold for a reported three point nine billion pounds.

Marketing Environment Analysis (PESTLE)

We will now analyze the two companies on the basis of their external or macro-environmental factors, those being, Political, Economic, Social, Technological, Legal and Environmental. These factors play a very important role in telling us what challenges and opportunities the company faces from these uncontrollable factors.

PESTLE Analysis of Starbucks

We shall now see how Starbucks is affected by its external factors:

Political

Starbucks receives its raw coffee from a number of nations across the globe, primarily South American and African nations that have rich soil fertile enough to grow coffee beans in. Starbucks, being based in the USA, thus needs to be careful about the policies and Fair Trade practices when importing these raw materials from these foreign countries so as not to call bad press from ministers and politicians in the American and foreign governments. Strict regulatory measures must also be followed when operating inside the United States of America to avoid admonishment by government authorities.

Economic

The world is still facing a bit of an economic slump. This has caused many nations to face financial troubles over the years and therefore affected their purchasing power. Starbucks prides itself on being an up-end coffee brand and with their up-end products come their up-end prices as well. Consumers are now looking for other refreshment options to cure their need for coffee as they cannot always afford high priced cups from Starbucks. All is not lost however as consumers still crave coffee, just not at the current market price. There is still time for Starbucks to adapt to the change and rally back their fleeing consumer base. This does not however free it from the impending threats of rising running and employment costs that decrease the inflow of money.

Social

The debate between higher quality and fewer consumers against lower quality and more consumers still rages on to this day. This is however a very delicate balance to maintain. Starbucks being the leading coffee brand in the world aims to expand to all classes of citizens regardless of their income to create brand awareness and inspire a new generation of coffee lovers in order to increase profits. It must do so while maintaining their signature high quality. Starbucks must also keep in mind that a significant portion of their customers are sustainability enthusiasts that care about how Starbucks treats the environment while producing their coffee and also while disposing of it. This is important as it challenges the morals of the company and shows its true character in the race to make the Earth an ecologically sound planet. The company must also be aware of the changing demographic they are catering to as a large part of their consumer base goes into retirement each year. Changing their focus to the youth of this generation that can afford to spend on quality coffee and marketing their products to them should be their primary concern.