I am a Digital Marketer and an Entrepreneur with 12 Years of experience in Business and Marketing. Second are some intrinsic characteristics that are related to coffee quality, but difficult or impossible to modify by coffee growers, such as altitude or the yield of coffee berries. Costa coffee produces coffee based on the needs of its customers. Table 2 shows the definition and the main statistics of each variable. Given this variability and the importance of prices for coffee growers, it seems relevant to ask what factors matter most in determining coffee prices and, ultimately, the profitability of this activity. Costa Coffee clearly aim to maximise their profits; Starbucks aim to develop their brand around quality. How much more do growers receive for fair trade-organic coffee? Knowing your customers will help you to target customers who are willing to pay for your product or service. WebCosta Coffee. 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. We also conclude that prices are positively affected by variables directly related to the quality of coffee but not easily controlled by growers, such as higher altitude (e.g., Tarraz region) and larger yields. The broad differentiation strategy concentrates on seeking to differentiate the company 's product offering from rivals ' in ways that will appeal to a broad spectrum of buyers. (iii) using natural substances for disease, pest and weed control, rather than synthetic pesticides and herbicides, (iv) minimizing the use of fossil fuels in the production process, and. A sound prediction strategy would involve continuous monitoring of international coffee prices, by studying the main stock exchanges and the use of statistical forecasting models. But the former seems to attract a younger customer, while the latter seems more popular with adults. As established by Costa Rica's Coffee Law number 2762, the price paid for coffee berries is established mainly based on prices for green coffee obtained in the national and international markets (incomes) minus processing and exporting costs. Intra-company sales can make the price lower since the company is, in some sense, paying to itself (or another company of the same group). WebMarketing Mix of Costa Coffee is the research topic for emphasizing on the marketing strategies developed by the firm. Samper (Reference Samper2010) claims that while growers in highlands tend to produce higher-quality coffee and earn significant price premiums, those in lower areas offer lower quality and focus on output volume instead. Founded in London in 1971 by brothers Bruno and Sergio Costa, Costa Coffee is now the worlds second-largest coffeehouse chain behind Starbucks. student. Public policy can also contribute to fostering and guaranteeing the success of agricultural diversification. Evidence From Costa Rica and Guatemala? We do not reject our third hypothesis either, since we find that coffee growers located in the Tarraz region (coefficient 7), have received a higher average price for their berries than that paid in the rest of the regions, as stated in hypothesis H3. Coefficient 4 refers to the Western Valley region, which is between 800 and 1,700 masl and yields Strictly Hard Bean, Good Hard Bean and Hard Bean coffees. Limited presence in the developed or developing nations is helping the company to remain focused on what they have and control its operational cost thereby increasing the profit. The employees are trained on how to handle customers and how they should conduct themselves when in the organization. Table 1 shows basic statistical information about the domestic price and the international price. For example, in a study of coffee production in the district of Agua Buena, Costa Rica; Babin (Reference Babin2015: 99) concluded that Fairtrade price premiums were inconsequential in providing support for smallholder resistance to land-use change out of coffee production. Note: Each gray dot represents the annual average price reported by a buyer. The brand has always had a strong focus on providing quality coffee and baked goods at an affordable price. Within the value chain, coffee mills (agro-industrialists) are usually the ones that export the coffee and deal with international buyers. Every business organization should have its goals and objectives, both for short term and for long term survival. To address these problems, we use the Panel Corrected Standard Errors and the Prais-Winsten estimator, which allows us to correct the problems of heteroscedasticity and autocorrelation following a first-order autoregressive process, even when the panel data is not balanced (Baltagi and Wu, Reference Baltagi and Wu1999; Freybote, Reference Freybote2016), as is the case in this study. Varangis, et al. However, the coffee brand should implement Focus Producing the best quality of coffee is the strategy that Costa Coffee employs. Costa Coffee also offers coffee machines under the brand Costa Express. Coffee, farming families, and fair trade in Costa Rica: new markets, same old problems? a Breusch-Pagan Lagrange Multiplier Tests. The Coca Cola company purchased the brand from Whitebread company for $5 billion in 2019. The European Union aims to be climate-neutral, which involves zero net greenhouse gas emissions, by 2050 (European Commission, 2021). In contrast, the adoption of agroecological practices such as shade-tree diversification reduced reliance on costly external inputs, which allowed adopting producers to keep land in coffee production at a significantly higher rate than non-adopters. The use of technology was a huge boost in the service portion of their vertical integration. They also need to keep up with the changes that occur in the business world, which means that they have to keep up with the change (Stevenson, 2011). It also contributes to operations management. New York, NY: McGraw-Hill Higher Education. Whitbread planned to list Costa as an independent publicly traded company which would have taken up to two years, but the company was under pressure from investors to turn its focus to its Premier Inn hotel operations. The average revenue per customer of Costa Coffee is much less than its competitors. Employees of Costa coffee also interact with customers in regional language along with English as their main language to make its customer feel more comfortable and friendly. This has made it a popular choice for budget-conscious consumers who are looking for a quick and tasty snack. Coffee farms located in Tarraz region are located from 1,100 to 1,900 masl and the coffee coming from this region is classified as SHB arabica by the Costa Rican Institute of Coffee (Arce and Linnemann, Reference Arce and Linnemann2010; Castro-Tanzi et al., Reference Castro-Tanzi, Dietsch, Urena, Vindas and Chandler2012), which leads us to expect that coffee produced in Tarraz is, on average, higher quality and thus is sold at higher prices, as we state in our next hypothesis: H3: Coffee growers located in the Tarraz production region obtain higher prices than in other production regions. This helps the management to be proactive in its decisions, thereby giving the organization an advantage (Stevenson, 2011). Total loading time: 0 The level of competition is expected to increase in the future. For Costa Coffee, the supplier value chain means the process of selecting origin of the coffee beans to create a cup of coffee, which they buy directly from the farmers. Like other commodities in developing countries, it has been shown that domestic coffee berry prices are strongly influenced by international prices (Worako et al., Reference Worako, van Schalkwyk, Alemu and Ayele2008; Mofya-Mukuka and Abdulai, Reference Mofya-Mukuka and Abdulai2013). Costa coffee follows a standard procedure as most of the big coffee houses around the world. Joshua Blatchford, author of Manifested Marketing, 07/03/2011. According to the Costa Rican Coffee Institute (ICAFE, 2017), 43,035 coffee growers, 246 coffee milling companies, 76 exporting firms and 65 roasting firms were operating in Costa Rica in 2017. (Reference Baum, Schaffer and Stillman2003) taking ftp lagged one period, the logarithm of the total domestic production of coffee berries and the logarithm of the world production of coffee berries as instruments. Business is my passion and i have established myself in multiple industries with a focus on sustainable growth. According to Castro 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. For your business to thrive you need to know who your customer is. Its brand of coffee has an Italian origin, which is a differentiation strategy. Some of the ice blended products offered by costa coffee are: coffee cream, Mocha cream Frostino, Lemonade etc. Costa coffee always believes that price is secondary for any customer and focuses on delivering good quality products. The benefit of upward stretching through product development, therefore, is clearly to develop a reputation for high-quality that generates long-term revenue. Costa Coffee serves coffee as the primary product in its promotional mix, with a wide variety of varieties and variations. COSTA Coffee. Data about the coffee berry yields and domestic coffee prices were taken from the website of the Costa Rican Coffee Institute (ICAFE, 2020). They also show that FT is associated with higher incomes and better social indicators for coffee farmers' families. George Mason University, European Union agri-food quality schemes for the protection and promotion of geographical indications and traditional specialities: an economic perspective, Econometric Methods with Applications in Business and Economics, Revitalizing rural communities in Costa Rica through sustainable tourism, Tourism, Health, Wellbeing and Protected Areas, Ecotourism and sustainable rural development in Prez Zeledn, Costa Rica, Journal of Rural and Community Development, Panel data analysis advantages and challenges, Market power in international commodity trade: the case of coffee, Inter-American Development Bank, USAID and The World Bank, The welfare implications of Brazil's coffee export price subsidies during the ICA. The pandemic impacted the sales as stores were shutdown, but were later opened for takeaways. The black dots represents the overall average across buyers.Source: Authors' elaboration based on data from ICAFE (2020). The resulting product is called green coffee or parchment coffee. In order to guarantee the positioning of quality coffee from Costa Rica in general, and from the regions with the highest altitude in particular, the regulatory entity (ICAFE) may promote the Protected Designation of Origin that will allow the main brands of Costa Rican coffee to maintain and widen their position in international markets. This information was complemented with data obtained from the websites of the Consortium of Coffee Cooperatives of Guanacaste and Montes de Oro, R.L. However, previous analyses focus on the influence of individual variables such as quality, environmental certifications, or regional differences in coffee prices. As far as we can tell, Costa Coffee are not currently trading in Russia, based on the following: On the 8th of March, 2022 Coca-Cola, who own Costa Coffee, released the following statement: ATLANTA, March 8, 2022 The Coca-Cola Company announced today that it is suspending its business in Russia. This is a much more effective and affordable way to reach your customers and generate business. They also found that e-auction coffee sales result in substantially higher prices than those obtained in conventional commodity markets. Hence, the firm wishes to rebrand these self-service points as Costa Express. Coffee consumption in globally is growing at the rate of 2%. May I ask what country you are referring to? But, even when the product is available, each customer willthe experience of watching a specially trained barista prepare their coffee which will take around 4 minutes for a single cup. https://core.ac.uk/download/pdf/58825562.pdf, How Is Costa Coffee Differentiation Strategy, https://www.gopromotional.co.uk/blog/how-to-identify-market-segments-and-select-target-markets/, https://core.ac.uk/download/pdf/58825562.pdf, What Are The Three Main Areas Of Hospitality Management, What Organization Gives The Most To Charity. Also the products offered by cafe are the physical evidence for this coffee house. A diverse economies case study of Tarraz coffee micro-mills, Los Santos Region, Costa Rica, New Zealand, The effects of fair trade on coffee growers: a framework and analysis, Upgrading of lowland coffee in Central America, Global markets, local conflict: violence in the Colombian coffee region after the breakdown of the international coffee agreement, The development impact of fair trade: from discourse to data, Benefits of regional food quality labels for Czech producers, Assessment of the effects of fair trade on smallholder producers in Costa Rica: a comparative study in the coffee sector, Costa Rica's response to the coffee crisis. Unbalanced Panel: years=9, n=2,415, groups=426. This is IvyPanda's free database of academic paper samples. Also, using a good strategy of marketing mix and identify the goals, aim long-term interests and be able develop a great social media stand. The company provides two variants in its beverages like small and large. The main brand that the company serves in its stores is known as Mocha Italia. Multinational companies (MCs) control value-added activities in several countries (Dunning and Lundan, Reference Dunning and Lundan2008). The company believes in giving wow moments to its customers with its main product coffee. The industrys growth was fueled by the lifestyle changes that were created by the Italian living. Whitbread is financially strong having properties/infrastructure to support Costa coffee. 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. However, there are also intrinsic conditions of the farm, such as adequate fertilization of plantations, that can increase the agroindustry yield of green coffee (weight of coffee seeds). Therefore, organizations need to keep up with the changes to remain in the competition. where uit is a random term and the rest of the variables are as previously defined in table 2. Costa Rica. It also means that the company has a wide variety of products that vary based on the cultures and the needs of the different countries in which it operates. Costa Coffee needs to keep on improving its quality of production. Costa coffee also focuses on digital media to promote its campaigns and connect to its customers. Strabucks is stuck with a bad reputation whilst Costa is now known as the better quality and friendly of the two. 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. This means that it has been able to observe quality production and able to satisfy its customers in the long run. 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 Evidently, a premium price tag will be used to cover these large labour expenses. The employees undergo training on a needs basis to put them into terms with the development (Wheelen & Hunger, 2012). Traditionally, most Costa Rican growers and coffee mills follow a low-cost production approach. (2020, March 27). Source: Authors' elaboration based on data from ICAFE (2020). 27 March. The company needs to keep a close relationship with the customers to get first hand feedback from them. Costa Coffee have used a relatively low-risk form of market development market penetration hybrid strategy. Nominal coffee prices. Your email address will not be published. It also went on to acquire Coffee Heaven for a reported amount of 36 million and then added about 79 outlets around Europe. It has been noted that these phenomena are clearly present in the coffee sector, as well as in other strategic activities dependent on absolute advantages linked to natural resources, such as soil productivity or climate. Costa Rica. Based on this empirical evidence, our next hypothesis is the following: H4: Organic coffee berries receive higher prices than non-organic berries. 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. March 27, 2020. https://ivypanda.com/essays/costa-coffee-company-analysis/. Currently, the main international references for coffee prices are the London International Financial Futures and Options Exchange, and especially the New York Stock Exchange (Jarvis, Reference Jarvis2012; Lukanima and Swaray, Reference Lukanima and Swaray2014). Costa coffee produces coffee based on the needs of its customers. The products offered by Costa coffee are priced at premium range because of its brand value and high quality. (ii) implementing soil conservation practices such as planting shade trees, planting cover crops and mulching. Marketing Strategy of Nescafe - Nescafe Marketing Strategy. What Is The Difference Between Product Management And Brand Management, Collaborate with Non-Competing Businesses, Flyer in the right places, to the right people, Grab their attention with promotional banners, Reach out to customers with feedback cards, Mix in offline marketing strategies such as promotions and local partnerships, Run a Facebook advertising campaign on social media. Some steps have already been taken in this respect. (Reference Lewin, Giovannucci and Varangis2004) state that OC growers obtain economic benefits, primarily because they can participate in a differentiated market and obtain better prices while safeguarding natural resources. It is a fully owned subsidiary of a company known as Whitbread, which it fully controls. Costa Coffee is a British coffeehouse chain with headquarters in Dunstable, England. Specifically, the former has been sold for an average price 29 per cent higher than the latter. WebThe findings presented that the brand positioning strategy of coffee shops in Turkey are significantly related to the quality of the factors, which Starbucks achieved and Costa The annual revenue of the company is around $1 billion. Therefore, the process designs help the company to produce products that are unique and specific to various customer needs. Likewise, Wollni and Zeller (Reference Wollni and Zeller2007) found that farmers participating in the specialty coffee segment in three coffee regions of Costa Rica received higher prices than those participating in conventional channels. Therefore, the batches are high because the company has many customers. Therefore, measuring the specific productivity of the employees becomes a challenge. The focus of our study is on the third group, which refers to differentiation strategies related to environmental certifications. (2020, March 27). In this group we include those variables that are related to coffee quality but are intrinsically given and not easily modified by growers. San Francisco, CA: Jossey-Bass. During the 20162017 harvest, 1.4 million 46-kg bags of green coffee were exported, representing US$288.3 million. Therefore the price is relatively high in comparison to smaller coffee shops. In Costa Rica, coffee production is an important economic activity for many rural cantons (Pelupessy and Daz, Reference Pelupessy and Daz2008), where primary production is mostly carried out by small farms. Obviously, the firm benefits from high-volume, low-margin sales: they are differentiating themselves based on speed. This article aims at assessing the main driving forces behind the prices paid to coffee farmers in Costa Rica. This helps it to maintain quality production. b The Non-Fair-Trade Producer that bought non-organic coffee (NftpNocof) is the point of comparison of cross effects. (Reference Varangis, Siegel, Giovannucci and Lewin2003), Pelupessy and Daz (Reference Pelupessy and Daz2008), and Samper (Reference Samper2010). (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). 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. The needs of customers also keep changing. This article has been researched & authored by the Content & Research Team. Therefore, if FT mills operate inefficiently, these expenses can overcome the FT price premium before it reaches coffee growers. Coffee price is, on the one hand, one of the most volatile among primary commodities (Lukanima and Swaray, Reference Lukanima and Swaray2014), and on the other hand, one of the most important determinants of profitability for all actors in the coffee value chain, especially for growers. However, the fact that FT mills do not report higher average prices should not lead one to the conclusion that there is no scope for this certification. The names and other brand information used in the Marketing Strategy & Mix section are properties of their respective companies. Barney, J. (2020) 'Costa Coffee Company Analysis'. Then in 1995 Costa was sold to Whitbread The Mocha Italia brand is constituted of the Arabica and Robusta coffee blends. Marketing Strategy of Costa Coffee analyzes the brand with the marketing mix framework which covers the 4Ps (Product, Price, Place, Promotion). As the company continues to predict and anticipate more growth, it also plans for its capacity expansion. As a result, the productivity of plantations falls, generating a double crisis for producers, as the effects of the price reductions are aggravated by those of lower productivity (Renard, Reference Renard2010; Eakin et al., Reference Eakin, Tucker, Castellanos, Daz-Porras, Barrera and Morales2013). Costa Coffee marketing strategy helps the brand/company to position itself competitively in the market and achieve its business goals & objectives. Therefore, all its strategies are geared towards producing the best quality of coffee. 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.
Melanie Paxson Cologuard Commercial,
Sirius Adopts Regulus Fanfiction,
Trilogy Nipomo Floor Plans,
Articles C