In general, it is not easy to measure the productivity of specific employees in the food industry. You are free to use it for research and reference purposes in order to write your own paper; however, you We will write a custom Research Paper on Costa Coffee Company Analysis specifically for you for only 11.00 9.35/page. (2020, March 27). Murray McGowan, Costa Express Managing Director, comments: We are delighted to extend our global presence with our launch in Canada, a dynamic, desirable and thriving country with an established coffee culture. Marketing mix Here is the Marketing mix of Costa Coffee. Two alternative lineal models were considered. Other products include tea, Costa ice, specialty drinks, and food. Contrary to our hypothesis H5, FT coffee millsFootnote 2 do not appear to have reported a higher annual average price for coffee berries than non-certified mills. In both respects I feel they will both achieve their aims. It offers coffee that is unique from what is offered by most of its competitors. Accordingly, we formulate the following hypothesis: H1: MCCs pay lower prices to coffee growers than other types of coffee mills. The company believes in giving wow moments to its customers with its main product coffee. Costa Coffee is an organization that is highly ranked in its industry globally. Market segmentation has several steps you need to follow: Find your customers according to what they need and want. Alternative activities such as ecotourism and rural tourism could also be encouraged and incentivized, not only as a complement to coffee production, but also as a means to promote the care of nature and local culture (Heyne and Vargas-Camacho, Reference Heyne, Vargas-Camacho, Azara, Michopoulou, Niccolini, Taff and Clarke2018; Howitt and Mason, Reference Howitt and Mason2018). 1. The content on MBA Skool has been created for educational & academic purpose only. Employee satisfaction is also important to Costas continued success. In all cases, the results of Hausman Tests and Breusch-Pagan Lagrange Multiplier Tests confirm that a General Least Square Estimator with an RE regression is the most appropriate model for estimating these equations, as shown in table 3. (Reference Varangis, Siegel, Giovannucci and Lewin2003), Pelupessy and Daz (Reference Pelupessy and Daz2008), and Samper (Reference Samper2010). They are able to produce high quality products. Business is my passion and i have established myself in multiple industries with a focus on sustainable growth. (Reference Hethcote, van Zonneveld, Solano, Mndez and Vsquez2016) studied a successful diversified system mixing coffee production with tomato and sweet pepper in a Turrialba coffee region of Costa Rica. WebCosta Coffee can differentiate itself from competitors by offering unique flavors, introducing new products, and focusing on the quality of its coffee. There are clearly benefits and drawbacks with both of their strategies. Coca-Cola just purchased British coffee-shop chain Costa Coffee for $5.1 billion. Likewise, Wollni and Zeller (Reference Wollni and Zeller2007) found that farmers participating in the specialty coffee segment in three coffee regions of Costa Rica received higher prices than those participating in conventional channels. Costa Coffee produces coffee based on the needs of its customers. This has been the major factor in its success. Overall, one cannot really call one strategy more successful than the other. The Costa Coffee is a UK based firm that has spread its wings worldwide. Therefore, FT certification can be one additional channel of coffee sales in international markets, which may complete the cooperatives' portfolio of clients, mainly when the world production rises. For instance, a company that is allocated in a well-populated area is likely to do better than one that is located in a scarcely populated area because the former has access to more potential customers. Therefore, measuring the specific productivity of the employees becomes a challenge. Similar objectives were set in various countries around the world (see Zou et al., Reference Zou, Xiong, Xue, Zheng, Ge, Wang, Jiang, Pan and Wu2021), including Costa Rica. Can coffee certification schemes increase incomes of smallholder farmers? Part of Whitbread Plc is the UKs leading Hospitality Company with franchises all over the world. This shows how its people strategy in its marketing mix has been important in its success. A customer of Costa coffee is millennial in the age group of 15-45 years who like to experience the innovative and blended beverages offered by Costa coffee. Annual average prices of coffee berries reported by mills in US$ per bushel from 20072008 to 20152016 coffee harvests. On the other hand, OC production is considered a key strategy for environmental purposes and for the sake of international market penetration (Blackman and Naranjo, Reference Blackman and Naranjo2012).Footnote 1. Also, the Costa Rican Coffee Institute and the Ministry of Agriculture have designed a strategy to reduce carbon emissions in the coffee sector. Nominal coffee prices. Render date: 2023-05-01T08:41:28.579Z The Wooldridge test and the Wald test reveal the presence of autocorrelation and heteroscedasticity in our data. Also the employees are very well trained in communication skills as they have to deal with variety of people. (Reference Varangis, Siegel, Giovannucci and Lewin2003) argued that roaster companies pay a premium for OC because final consumers are in turn willing to pay higher prices. Therefore, our study includes the international price as an important control variable. The It is important to bear in mind that our analyses are restricted to prices. Costa coffee outlets are mainly targeted at upper middle class and rich people. We sent an email to the cooperative managers to check the exact period during which they were certified, and the proportion of coffee sold in the FT market. Costa Coffee could only offer a faster service than Starbucks if it compromised its quality image; however, since fast-food outlets have an even worse We are concerned about the effect on price of coffee attributes, and especially those that can be strategically decided by growers. Most of the organizations that are operating in the industry are highly innovative, thereby increasing the magnitude of competition (Costa, 2013). The program helps the company to be precise in its predictions and reduce wastage of time and resources. 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. Evidence from Jinotega, Nicaragua. It is highly innovative, thus it continues to position itself for future competition. (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). Regression results of some determinants of coffee berry price in Costa Rica. Figure 1. Costa coffee uses a wide range of mechanism to process fee from customers like cash payment, online payment, credit/debit cards etc. 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. Some of the ice blended products offered by costa coffee are: coffee cream, Mocha cream Frostino, Lemonade etc. Unbalanced Panel: years=9, n=2,415, groups=426. 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. Unequally spaced panel data regressions with AR(1) disturbances, Fair trade/organic coffee, rural livelihoods, and the Agrarian Question: Southern Mexican coffee families in transition, Instrumental variables and GMM: estimation and testing, What to do (and not to do) with time-series cross-section data, The world's first carbon neutral coffee: lessons on certification and innovation from a pioneer case in Costa Rica, The potential of Carbon Neutral Labeling to engage coffee consumers in climate change mitigation, Does eco-certification have environmental benefits? This also happens to be the major factor why Costa Coffee has been able to thrive in Europe. The remainder of the paper has the following structure. 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. It faces competitors who strive to acquire a large share of the market. This is a complete contrast to Starbucks. Costa Coffee needs to keep on improving its quality of production. There are a number of process designs that a company can adopt. We identify three groups of variables that affect domestic coffee prices. 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. coffee prices Costa Rica differentiation strategies multinational companies panel data analysis quality JEL classification Q11: Aggregate Supply and Demand Concepts strategic management and competitive advantage, international edition. (COCAFE, 2019) and the cooperatives themselves. The Mocha Italia brand is constituted of the Arabica and Robusta coffee blends. Mercatus Center's Global Prosperity Initiative. There are clearly benefits and drawbacks with both of their strategies. (v) minimizing pollution during postharvest handling. The third group has to do with differentiation strategies that farmers can use to put them in a better position, mainly by adopting social and environmental certifications and programs. Knowing your customers will help you to target customers who are willing to pay for your product or service. Therefore the price is relatively high in comparison to smaller coffee shops. Nevertheless, the organic price premium compensates for these lower yields in such a way that, excluding organic certification costs, net income was similar for both groups. in the US. The company was acquired by Whitbread in the year 1995. Costa coffee has large product portfolio in the beverages segment which is helping the company to compete with the peer companies. They define the strategy that the organization is to employ. In this group we include those variables that are related to coffee quality but are intrinsically given and not easily modified by growers. 2 To discard that ftp is an endogenous variable, we have run the endogeneity test proposed by Baum et al. The most important marketing strategy followed by the company is to get word of mouth publicity from its customers as the brand Costa coffee not just provides coffee but also the experience. Regarding the specific environmental differentiation strategies that we have focused on, we find that organic production tends to get higher prices, while FT mills do not report having paid higher annual average prices, which suggests the necessity of further research for a fully fledged analysis of coffee differentiation strategies. First, the vertical integration strategy of MCCs allows them to merge the production, processing, and exporting links in the coffee value chain. Costa Coffee has its long term projections and the goals that it needs to achieve in the long run. Product design is significant because it helps the organization in differentiating its products. Quality production is crucial for the competitive advantage of an organization. On the other hand, the international green coffee price variable, IP, only varies with time, but not across the groups of the panel (therefore, IPi (rc)t=IPt). However, an increasing number of them are pursuing alternative strategies involving product differentiation, which include geographic indications of origin, gourmet and specialty, as well as environmental certifications such as: OC, FT, Eco-friendly or shade grown, among others (see, e.g., Lewin et al., Reference Lewin, Giovannucci and Varangis2004). Coffee production is also one of the most important activities in the rural regions of many developing countries as around 2025 million families in 51 nations depend on coffee production for their livelihoods (Castro et al., Reference Castro, Montes and Raine2004; Lewin et al., Reference Lewin, Giovannucci and Varangis2004; Prasad, Reference Prasad2019). Costa Coffee Marketing Strategy comprises of not only its Marketing Mix, but also segmentation, targeting, positoning, competition and analysis like SWOT. Like some previous studies, we focus on the prices that coffee growers receive, i.e., the first link in the coffee value chain (see, e.g., Wollni and Zeller, Reference Wollni and Zeller2007; Pelupessy and Daz, Reference Pelupessy and Daz2008; Samper, Reference Samper2010). Business organizations should be dynamic. WebMarketing Mix of Costa Coffee is the research topic for emphasizing on the marketing strategies developed by the firm. COSTA Coffee. Has data issue: false If we look at the second specification (see equation (2)), note that 13 > 11 and 12 is negative, which reveals that FT mills have reported lower average prices for both organic and conventional (non-organic) coffee berries than non-FT mills. The products are sold under various names, such as honeycomb crunch, snowman, Santa, Elf, and Rudolf, among others. Not only is competitive advantage vital for survival in the U.Ks saturated coffee market; but how a company goes about differing its products also provides plenty of scope for failure, as well as success. Coca This information was complemented with data obtained from the websites of the Consortium of Coffee Cooperatives of Guanacaste and Montes de Oro, R.L. It has positioned itself on the product basis, where it ensures that quality wise every cup of coffee leaves a lasting impression on the customer. Therefore, all its strategies are geared towards producing the best quality of coffee. Costa Coffee have used a relatively low-risk form of market development market penetration hybrid strategy. In fact, the reverse was true: on average, they reported around 11 per cent less than non-certified mills, ceteris paribus (coefficient 9). It also contributes to operations management. In what follows, we detail each of the factors under consideration. The black dots represents the overall average across buyers.Source: Authors' elaboration based on data from ICAFE (2020). 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. Costa coffee also sells its products to businesses and caterers for example the company sells its vending machines to corporate offices and colleges under the brand name of Costa express. In fact, it has employed a coffee taster by the name of Gennaro Pelliccia (Costa, 2013). Costa Coffee is the largest coffeehouse company in Britain and second largest coffee chain in the world. And, more specifically, (ii) What differentiation strategies used by coffee growers are more successful in obtaining better prices? Therefore, we expect these companies to pay lower prices. Many of its products are not considered healthy by some customers. The main brand that the company serves in its stores is known as Mocha Italia. It is an industry whose entry is not very complicated, thus many companies with similar products can join. Operations management: theory and practice (11th ed.). In the international market, the company is operating in over 30 countries and has about 1100 stores. In the agricultural sector, some special focus has been given to coffee and livestock (ngel-Valds and Pintor-Pirzkall, Reference ngel-Valds and Pintor-Pirzkall2017; Birkenberg and Birner, Reference Birkenberg and Birner2018). Costa Coffee Costa Coffee was founded by Italian brother Bruno and Sergio Costa in Lambeth London in 1971. In addition, the company should have equipment that is up to speed with the current technology, as this will help in product development and innovation (Ginter, Duncan & Swayne, 2013). Our results are displayed in table 4. This means that the company continues to get more customers. Its brand of coffee has an Italian origin, which is a differentiation strategy. 2020, ivypanda.com/essays/costa-coffee-company-analysis/. That way, it will be able to know what customers think should be added or should be excluded in the products in real time. After these adjustments, our effective panel consists of 426 groups (i(rc)t=1,,426) and 2,415 observations. Hence, the firm wishes to rebrand these self-service points as Costa Express. WebExpanding the coffee shop in France can achieve a positive income and profitability becoming a recognized internationally brand of coffee shop as Costa or Starbucks. The four Ps are product, price, place, and promotion. 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. The high product quality and design make the coffeehouse receive a number of awards. The reason is that, in a highly competitive global coffee market, quality coffees are increasingly in demand and high-quality coffee can receive better prices than FT certified coffee. This will be enabled by the fact that the company keeps data for its operations. Social capital and sustainable coffee certifications in Costa Rica, Small farmer cooperatives and voluntary coffee certifications: rewarding progressive farmers of engendering widespread change in Costa Rica, Where does your coffee dollar go? Why have a target market? The management of Costa Coffee is also composed of highly skilled personnel, which further increases the level of quality assurance. (2020, March 27). Descriptive statistics of national and international prices. In addition, it owns about 1100 outlets in the overseas countries (Costa, 2013). Coffee consumption in globally is growing at the rate of 2%. Marketing Strategy of Panasonic - Panasonic Marketing Strategy. Considering the FT objectives, as well as some of the empirical studies previously carried out in this area, the following hypothesis is posed: H5: FT-certified coffee mills pay higher prices (both for organic and non-organic berries) than non-certified mills. (Reference Naranjo, Pieters and Alpzar2019) point out insurance as a relevant channel to foster private investment, and also to reduce the vulnerability of coffee farmers to shocks. These business strategies, based on Costa Coffee marketing mix, help the brand succeed in the market. Therefore, organizations need to keep up with the changes to remain in the competition. Currently, ICAFE has a web page where current coffee prices on the New York Stock Exchange are reported (see, e.g., ICAFE, 2015) but no price forecasts are offered. Figure 2. We received complete answers from COCAFE and four other cooperatives. Wheelen, T. L., & Hunger, J. D. (2012). (2020) 'Costa Coffee Company Analysis'. Do farmers benefit from participating in specialty markets and cooperatives? J.A. (Reference Lyngbk, Muschler and Sinclair2001: 205) show that the average three-year productivity mean of organic farms was 22 per cent lower than that of conventional farms. Samper (Reference Samper2010) argued that quality and the use of organic production systems are positively related to better prices for coffee growers in Costa Rica. ensure the integrity of our platform while keeping your private information safe. (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. This is why it uses both qualitative and quantitative approaches in its forecasting. The size of Costa Coffee restaurants, on the other hand, is big enough to hold their customers comfortably. (Reference Dragusanu, Montero and Nunn2021) found that the FT certification is associated with a higher sale price and greater sales by coffee cooperatives. Pelupessy and Daz (Reference Pelupessy and Daz2008) concluded that the highest-quality coffees harvested in the highlands of Central America obtain better prices in international markets than coffee harvested in lowland areas, which tend to be of lower quality. However, previous analyses focus on the influence of individual variables such as quality, environmental certifications, or regional differences in coffee prices. These efforts are expected to be rewarded by higher prices in the market. Hill, C. W. L., & Jones, G. R. (2012). Setting up a small roastery in Fenchurch Street, they committed to crafting the finest quality coffee. We conclude that the null hypothesis (ftp is not an endogenous variable) cannot be rejected. Also its employees all over the world wear same color uniform which is deep black in color. Operations should be aimed at maintaining high quality of production, as this will give them a competitive advantage. Nominal coffee prices. The coffeehouse was set up in 1971 by the Costa brothers, Sergio and Bruno. 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. This article has been researched & authored by the Content & Research Team. Early adopters may have to wait up to a year for the next harvest! Moreover, the coffee culture is still new to the developing nations and in the developed nations there is a lot of competitions between the local, national, and international players. Pelupessy and Daz (Reference Pelupessy and Daz2008) argued that the optimal growing altitude in Central America is between 1,200 and 2,100m above sea level (masl). First, it operates over 1750 outlets in the United Kingdom. Weaknesses of Costa Coffee Costa Coffee is a premium brand. Mason, OH: Cengage Learning. McDonalds is also emerging as a competitor in the industry. Such an adoption prompted them to learn how to meet social and environmental standards widely required in the current world market, and to approach further programs and certifications (Ronchi, Reference Ronchi2002; Snider et al., Reference Snider, Afonso-Gallegos, Gutirrez and Sibelet2017a). The yield is related to the weight of the coffee seed and depends mainly on the conditions outside the farm, such as the climatic conditions and the altitude where the coffee is harvested. The company also sells some of its merchandise like its branded cups to its customer. It has banked on innovation to help it develop its products accordingly. It has the right equipment to handle the level of productivity it needs at any given time. Our conclusion is in keeping with the approach of Wollni and Zeller (Reference Wollni and Zeller2007), who used the altitude at which coffee is grown in Costa Rica as a proxy for quality and showed that coffee berries harvested in higher areas are sold mainly in specialty coffee markets, where they obtain higher prices. It has been mentioned that time series is the basis on which the company predicts its future performance, input, and output. Coca-Cola acquired the worlds second largest coffee chain, Costa Coffee, in 2019. Forecasting can either be qualitative or qualitative. San Francisco, CA: Jossey-Bass. Traditionally, most Costa Rican growers and coffee mills follow a low-cost production approach. Therefore, it has to possess some specific resources, both quantifiable and non-quantifiable. Hi, I am an MBA and the CEO of Marketing91. The prices are specified by buyer, type of coffee (including organic coffee) and coffee region. According to Castro et al. The business world today is highly dynamic, and so should the organizations and employees be. F.J. Andre acknowledges funding from the Spanish Ministry of Science and Innovation (project PID2019-105517RB-I00). Starbucks is undoubtedly one of the worlds most identifiable brands exhibiting an innovative and fresh approach to their brand and marketing strategy. It is involved in CSR activities and has set up Costa foundation to get associated with coffee-growing communities around the world. The market share by turnover of the company in 2012 stood at 44.1% that marks an increase of 3.7% from the previous year. 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. Whether it is a digital platform or social platform, Costa Coffee has the strong presence in the media which is helping the company in creating awareness and thereby increasing its sales.
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