A Comparative Analysis of

Starbucks Vs Costa Coffee

Fundamentals of Management| 2021-24

Group 2 Members:
Ashok Kumar Ponniah (12A)
Divyanshu Singh (18A)
Kajal Yadav (27A)
Krishna Kumar (29A)
Kshitij Dhamija (30A)
Nikhil Mujoo (47A)
 Table of Content

Prelude

1. Introduction

2. History and Management outlook

2.1 Starbucks

2.2 Costa Coffee

3. Indian Coffee Industry

3.1 Indian Café Chain Market

4. Organizational Structure

5. PESTEL

6. Managerial Decision making amid Competition

7. Porter’s Five Forces

8. SWOT

9. Segmentation

10. Leading and controlling – Product, Price, Place, Promotion

11. Conclusion

12. Reference

FOM Group - 2 | A Comparative Analysis of Starbucks Vs Costa Coffee 2

Prelude:

The story of 2 Companies during the pandemic,

Costa closed nearly all 2,700 of its UK stores for six weeks during the pandemic.

Throughout the pandemic, Costa has taken decisive action to provide, where possible, financial support
and to look after team members. While stores were closed, all team members were put on the furlough
scheme helpfully provided by the Government, with their salary topped up by Costa to 100% for 12 weeks.
When reviewing roles within stores, a number of options were reviewed prior to making the difficult
decision to launch today’s consultation. Costa has made significant investments in safely accelerating the
re-opening of stores, ensuring they are safe for customers and team members and made the difficult
decision to freeze all pay increases within the Support Centre and cut all non-essential expenditure.

Unfortunately, despite making these changes, Costa must take additional action, including announcing
today’s consultation, which puts 1,650 roles at risk of redundancy. Costa will seek to find those at-risk
alternative roles within the business where possible, and for those leaving the business, support will be
provided to help with the transition to new employment.

Neil Lake, Managing Director for Costa Coffee UK and Ireland said:

“Today’s announcement to our store teams was an extremely difficult decision to make. Our baristas are
the heart of the Costa business and I am truly sorry that many now face uncertainty following today’s
news.

“We have had to make these difficult decisions to protect the business and ensure we safeguard as many
jobs as possible for our 16,000 team members, whilst emerging stronger ready for future growth.

“As a proud member of the UK high street, we remain committed to the role Costa plays in supporting the
economic recovery of the country, but today I want to say a huge thank you to all of our team members
that are affected by this announcement and we will be supporting you throughout this process.”

In contrast,

Starbucks CEO Kevin Johnson dubbed this stage in the COVID-19 recovery, the “Great Human
Reconnection.” And it bears similarities to the “third-place,” social-forward positioning the java chain built
an 18,000-unit empire on. But the Starbucks waiting on the backside of a global pandemic won’t be the
same brand from 18 months ago.

While “human connection is the very foundation of the Starbucks experience,” Johnson said Tuesday, how
Starbucks reaches and courts guests has progressed years in a matter of months.

FOM Group - 2 | A Comparative Analysis of Starbucks Vs Costa Coffee 3

Its ability to drive frequency opened up; Starbucks can meet customers where they need to be, Johnson
said, in ways it couldn’t pre-virus. Definitely not at this scale.

And the result was record-busting results across the board in Q3, despite mobility restrictions still
impacting markets, industrywide pressure in pockets of the supply chain, and Starbucks’ in-store cafe
seating not yet fully reopened.

The brand posted Q3 year-over-year revenue growth of 78 percent, up to $7.5 billion—a figure the chain
has never reached. Just in the U.S., revenues lifted 92 percent to $5.4 billion (from $2.8 billion Q3 2020) as
corporate same-store sales jumped 84 percent off the COVID floor this time last year.

Yet even pulled back to offer a clearer view (same-store sales fell 40 percent in the U.S. in the prior-year
period), Starbucks’ two-year comp grew 10 percent. Transactions rose 82 percent this quarter compared
to last year’s negative 53 percent drop, while ticket continues to hike as larger orders edge out solo trips,
up 1 percent versus a 27 percent leap in Q3 2020.

Although it can prove murky trying to decipher financials in a COVID vacuum, there are underlying trends
fueling Starbucks’ optimism going forward.

For one, internal research, Johnson said, showed Starbucks gained “meaningful market share in the U.S.”
in Q3, “and the momentum we have created is sustainable.”

Starbucks’ competitive share is the highest this year it’s ever been in the away-from-home coffee and tea
category, Johnson added.

1. Introduction:
For centuries, coffee has played a far more important role in the world than most people realize. Of
course, it’s one of the most popular beverages in disparate cultures around the globe. Coffee is also a
valued commodity and a central element in the economies of many countries; indeed, as the primary
agricultural export in dozens of regions across the Equatorial Belt, coffee provides a living for millions of
people involved in its cultivation, processing and distribution. Furthermore, coffee has a history rich with
intrigue and amusing stories and a cultural tradition that ranges from the Ottoman Empire to modern
American coffee houses. Coffee has launched financial dynasties, fomented revolutions and started nearly
as many mornings as the sunrise. To fully understand the allure of coffee, you have to look at it through a
variety of lenses.

The coffee shop industry in the U.S. includes 20,000 stores with combined annual revenue of about $11
billion. Major companies include Starbucks, Dunkin’ Donuts, Caribou, Coffee Bean and Tea Leaf, and

FOM Group - 2 | A Comparative Analysis of Starbucks Vs Costa Coffee 4

Diedrich (Gloria Jean’s). The industry is highly concentrated at the top and fragmented at the bottom: the
top 50 companies have over 70 percent of industry sales.

Coffee is one of the world’s largest commodities. The top green coffee producing countries are Brazil,
Colombia, and Vietnam. Many grower countries are small, poor developing nations that depend on coffee
to sustain local economies. The U.S. is the world’s largest importer of green coffee beans and the largest
consumer of coffee. With the exception of Hawaii and Puerto Rico, the United States’ climate cannot
support coffee trees.

Major products sold by coffee shops include beverages as well as complimentary food items. Beverages
include brewed coffee and tea; espresso drinks (cappuccinos, cafe lattes); cold blended beverages; bottled
water; soft drinks; and juices. Food products include pastries, bakery items, desserts, sandwiches, and
candy. Many coffee shops sell whole or ground coffee beans for home consumption. Some coffee shops
sell coffee or espresso-making equipment, grinders, mugs, and other accessories. Most coffee shops serve
high-quality, premium coffee known as specialty coffee.

In the last five years, the coffee brewing industry has seen so much activity in terms of massive changes in
the landscape of coffee brewing companies. These changes range from mergers and acquisitions to
changing consumer tastes and finally, to different branding strategies. These activities are expected to
continue over the course of the next ten years.

2. History & Management outlook

Starbucks:
Mission Statement:
“To inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.”

Starbucks, American company that is the largest coffeehouse chain in the world. Its headquarters are in
Seattle, Washington. Starbucks was founded by Jerry Baldwin, Gordon Bowker, and Zev Siegl, opening its
first store in 1971 near the historic Pike Place Market in Seattle. The three Starbucks founders had two
things in common: they were all coming from academia, and they all loved coffee and tea. They invested

FOM Group - 2 | A Comparative Analysis of Starbucks Vs Costa Coffee 5

and borrowed some money to open the first store in Seattle and named it “Starbucks” after the first mate,
Starbuck, in Herman Melville’s classic novel Moby Dick.

Fig 1: Original Starbucks Logo Fig 2: The original Starbucks Coffee shop at 1912 Pike
Place in Seattle, Washington.
By the early 1980s Starbucks had opened four stores in Seattle that stood out from the competitors with
their top-quality fresh-roasted coffees. In 1980 Siegl decided to pursue other interests and left the two
remaining partners. Over the course of the 1990s and early 2000s, Schultz grew the business into a
massive organization, opening thousands of stores in the US and around the world.

By 2010, it had nearly 17,000 stores in total, that figure has grown to over 28,000 stores worldwide, which
generated $22.4 billion in total net revenues in 2017.
The world’s largest Starbucks, a Starbucks Reserve Roastery, opened in Chicago in 2019. In 2021 Starbucks
had a presence in dozens of countries around the globe and operated over 32,000 stores.

Costa Coffee

Costa Coffee is a British coffeehouse chain with headquarters in Dunstable, England founded in 1971 by
Italian brothers Sergio and Bruno Costa, as a wholesale operation supplying roasted coffee to caterers and
specialist Italian coffee shops. Since 1995 it has been a subsidiary of, the Whitbread Company, since when
the company has grown to over 1700 stores in the UK and abroad.

FOM Group - 2 | A Comparative Analysis of Starbucks Vs Costa Coffee 6

It was acquired by Whitbread in 1995, sold in 2019 to The Coca-Cola Company in a deal worth £3.9bn, and
has grown to 3,401 stores across 31 countries and 18,412 employees. The business has 2,121 UK
restaurants, over 6,000 Costa Express vending facilities and a further 1,280 outlets overseas, including 460
in China.

Coca-Cola acquired Costa from parent company Whitbread PLC for US$5.1 billion on 3 January 2019,
providing a coffee platform across parts of Europe, Asia Pacific, the Middle East, and Africa. Costa is the
second largest coffeehouse chain in the world, and the largest in the UK.

Fig 3: Costa Coffee shop in Vauxhall Bridge Road in 1981

FOM Group - 2 | A Comparative Analysis of Starbucks Vs Costa Coffee 7

 “THE PERFECT CUP” IN FOUR “M”

1. Miscela (the blend):

Blend: Costa has a unique blend we call the Mocha Italia
2. Macinatura (the grinder):
Grind: Every cup of Costa is made from freshly ground beans; ground to the exact consistency to ensuring
perfect extraction of flavors & aroma. We use the Ferrari of grinders-the Mazzer–to ensure the “Perfect
Cup”
3. Macchina (the machine):
Machine: Costa shops use specially designed Italian espresso machines. They have been tuned &
perfected over the last twenty years to achieve high volumes of perfect espresso [the heart of every
coffee drink]
4. Manna (the hand):
Hand: the skill of the Barista influences the “Perfect Cup” So they undergo extensive & intensive training
at our Coffee Academy to reach the excellence that’s Costa

FOM Group - 2 | A Comparative Analysis of Starbucks Vs Costa Coffee 8

 Fig 4: “THE PERFECT CUP” IN FOUR “M”
3. Indian Coffee Industry
In India, coffee is traditionally grown in the Western Ghats spread over Karnataka, Kerala and Tamil Nadu.
Coffee cultivation is also being expanding rapidly in the nontraditional areas of AP and Odisha as well as in
the North East states. Coffee is predominantly an export-oriented commodity and 65% to 70% of coffee
produced in the country is exported while the rest is consumed within the country. Indian coffee industry
earns a foreign exchange to the tune of about Rs.4000 Crores. Indian coffee has created a niche for itself
in the international market and the Indian Coffees are earning high premium, particularly Indian Robusta
which is highly preferred for its good blending quality. Arabica Coffee from India is also well received in
the international market. Coffee is an export product with low import intensity and high employment
content. This is evident from the fact that more than six lakh persons are directly employed and an equal
number of individuals get indirect employment from this sector.

The two main varieties of coffee viz., Arabica and Robusta are grown in India. Arabica is mild coffee, but
the beans being more aromatic, it has higher market value compared to Robusta beans. On the other
hand Robusta has more strength and is, therefore, used in making various blends. Arabica is grown in

FOM Group - 2 | A Comparative Analysis of Starbucks Vs Costa Coffee 9

 higher altitudes than Robusta. The cool and equable temperature, ranging between 15 degree Celsius to
25 degree Celsius, is suitable for Arabica while for Robusta, hot and humid climate with temperature
ranging from 20 degree Celsius to 30 degree Celsius is suitable. Arabica requires more care & nurture and
is more suitable for large holdings whereas Robusta is suitable irrespective of size of the farm. The harvest
of Arabica takes place between November to January, while for Robusta it is December to February.
Arabica is susceptible to pests & diseases such as White Stem Borer, leaf rust etc., and requires more
shade than Robusta.

Key Markets and Export Destinations

 India is the third-largest producer and exporter of coffee in Asia, and the sixth-largest producer and fifth-
largest exporter of coffee in the world.
 The country accounts for 3.14% (2019-20) of the global coffee production.
 The coffee production stood at 299,300 million tonnes (MT) during 2019-20P.
 The coffee production during 2020-21 is estimated at 342,000 million tonnes (MT).

Export of Coffee from India

 The total coffee export was US$ 377.65 million in April 2021 to August 2021 and for August 2021 it was
US$ 76.71 million.
 In FY21, the total coffee export accounted for US$ 719.50 million and for March 2021 it was
US$ 97.41million.
 Of the total coffee produced in India, 70% is exported and 30% is consumed domestically.

a. Indian Café Chain Market

As India is the world’s 10th fastest and growing business sector presently for coffee and tea retain chains,
acclaim of Rs.2,570 crore in 2018. The bistro chain broadcast, driven by Cafe Coffee Day and Tata
Starbucks, is in addition one of the fastest developing categorization in the customer nourishment
administration industry, which assessed to become 6.9% every year to Rs 4,540 crore by 2023 in worth
deals at steady costs selective of expansion/inflation.

FOM Group - 2 | A Comparative Analysis of Starbucks Vs Costa Coffee 10

"Master coffee houses advance to youngsters, particularly in huge urban communities, as they offer high
quality espresso, yet additionally free Wi-Fi and a friendly environment," according to the report.
"Customers frequenting café in India are essentially 18-35 years of age which contains the nation's
essential working power with higher discretionary cashflow and quick paced lives."

Euromonitor International said in report that the standpoint for both autonomous and affixed cafe and
authority espresso and cafes stayed solid on the back of steady development and more extensive
advertising. A few items, for example, cool mix espresso, are showing uncommon development. "One
territory with solid long-haul development prospects is tea, which has generally for the most part been
expended at home.

FOM Group - 2 | A Comparative Analysis of Starbucks Vs Costa Coffee 11

 Fig 6: Number of organized cafe chains across India
4. Organizational Structure
Starbucks has a matrix organizational structure, which is a hybrid mixture of different features from the
basic types of organizational structure. In this case, the structural design involves intersections among
various components of the business. For example, the company’s product-based divisions intersect with
functional groups and geographic divisions, which in turn intersect with other parts of the
organization.

Fig 7: Company Hierarchy of Starbucks

FOM Group - 2 | A Comparative Analysis of Starbucks Vs Costa Coffee 12

 Fig 8: Organizational Structure of Costa Coffee
5. PESTEL
A PESTEL analysis is an acronym for a tool used to identify the macro (external) forces facing an
organization. The letters stand for Political, Economic, Social, Technological, Environmental and Legal.
Political Coffee beans are grown in developing countries. Discussions about
work conditions, child labor.
Also political influence by tariffs and taxes.
Economic The key business challenges for the industry firmly relate to the
induced economic recession from COVID-19, as footfall reduces, and
consumers become much more cautious with their discretionary
spend due to the increased unemployment and personal debt.
Social/cultural People spent more and more money on coffee. Customers do not
only go to coffee shops to drink a coffee but also to sit down, and
relax.
Technological Better and cheaper coffee machines are available for home usage
(Senseo).
Environment As raise of environmental awareness, coffee companies have to be
concerned about the way their coffee beans are produced, the way
they design their supply chain and the way they prepare and sell their
products.
Legal See political

FOM Group - 2 | A Comparative Analysis of Starbucks Vs Costa Coffee 13

6. Managerial decision making & Competition Perceptual Map
Perceptual mapping is a diagrammatic technique used by marketers in an attempt to visually display the
perceptions of customers or potential customers. Typically, the position of a product, product line, brand,
or company is displayed relative to their competition. Some perceptual maps use different size circles to
indicate the sales volume or market share of the various competing products.

Fig 7: Competition Perceptual Map for Café In India

7. Porter's Five Forces
Porter's Five Forces is a model that identifies and analyzes five competitive forces that shape every
industry and helps determine an industry's weaknesses and strengths. The Five Forces model is named
after Harvard Business School professor, Michael E. Porter. The five forces are frequently used to measure
competition intensity, attractiveness, and profitability of an industry or market.
Porter's five forces are:
1. Competition in the industry
2. Potential of new entrants into the industry
3. Power of suppliers
4. Power of customers
5. Threat of substitute products

FOM Group - 2 | A Comparative Analysis of Starbucks Vs Costa Coffee 14

 Fig 8: Porter's Five Forces Analysis
i. Competition within the Coffee Shop Industry: Strong competition within the industry for new customers,
premium locations, etc. but overall the industry is saturated, settled and stable which allows almost all of
the competitors to yield very good margins (40 to 60 percent)

ii. Substitutes in the Coffee Industry: Very strong power of substitute products as especially young people
might prefer other products, such as beer, cigarettes or soda

iii. Barriers to Entry in the Coffee Industry: Small barriers to entry for small regional chains / cafés, but their
expansion is relatively slow due to the increasing speed of the expansion of the major players. High
barriers to entry into the industry for big players due to high industry concentration on top, huge brand
recognition of major brands and high up-front investments are needed

iv. Power of Suppliers in the Coffee Industry: Very limited power of suppliers as they depend on producer’s
help and sell a commodity.

v. Power of Customers in the Coffee Industry: Very strong power of customers as coffee shops depend on
word of mouth and customer retention Furthermore a customer’s opinion, preferences and shopping
habits can be influenced easily which creates a big threat for the companies.

FOM Group - 2 | A Comparative Analysis of Starbucks Vs Costa Coffee 15

8. SWOT Analysis
8.1 SWOT Analysis of Starbucks

8.2 SWOT Analysis of Costa Coffee

FOM Group - 2 | A Comparative Analysis of Starbucks Vs Costa Coffee 16

 9. Market Segmentation
Market segmentation is a vital marketing strategy for any company. Its aim is to identify and delineate
market segments which would become targets for the company’s marketing plan (Kotler 2016). It is not
only using demographic segmentation in terms of gender, income, age and ethnic background but also
employs geographic segmentation drawing upon country or region of the world and its market size in that
specific region and climate.

a. Starbucks Market Segmentation

i. The demographic segmentation by Starbucks is between 25 and 40 years of age with high incomes, the
second target group is 18 to 24 year of age and belongs to richer families. Mostly Starbucks customers
belong to the Generation Y which was born between 1977 and 2000 (Fromm 2014).
ii. Psychographic segmentation shows that customers belong to the upper-middle class and well-off
customers who were educated (Rafii, 2013).
iii. Starbucks has also segmented its markets by demographically and geographically selecting the store
location with educated and coffee lovers.

b. Costa Coffee Market Segmentation

i. Demographic segmentation divides markets into segments by population characteristics. Three main
demographic factors that Costa Coffee used are age group, social class, and professional level. By dividing
the potential customers into age groups, Costa Coffee can adjust the flavour and choices of coffee
accordingly. For instance, teenagers might prefer hot chocolate rather than espresso, as they normally
have a preference of sweet-tasting beverages. On the other hand, adults might prefer drinks with more
caffeine since caffeine acts as stimulant and keeps them alert at work.
ii. Behavioural segmentation is by far the most important type of consumer segmentation due to the fact
that it is more closely related to consumer need. Costa Coffee can segment the market based on people’s
different coffee preferences.
iii. Furthermore, Costa Coffee has identified what made the customers buy the coffee, some might look for a
place to relax and others might want to ‘grab and go’. In this way, Costa Coffee can try to satisfy the
customers’ needs (e.g. by improving the interior design of the shop).

FOM Group - 2 | A Comparative Analysis of Starbucks Vs Costa Coffee 17

 10. Marketing Mix (4Ps) – Product, Price, Place, Promotion
Marketing Strategy of Starbucks and Costa Coffee analyses the brand with the marketing mix framework
which covers the 4Ps (Product, Price, Place, and Promotion). Marketing strategy helps the brand/company
to position itself competitively in the market and achieve its business goals & objectives.

Let us start the Marketing Strategy & Mix to understand its product, pricing, advertising & distribution
strategies:

i. Product Strategy:
Starbucks’ specialty is coffee, it has entered various other product categories in its marketing mix to
attract all kinds of customers. Starbucks outlets serve whole-bean coffee, hot and cold drinks,
microground instant coffee known as VIA, whole-bean coffee, caffe latte, La Boulange pastries, espresso,
full- and loose-leaf teas which includes Teavana tea products, Frappuccino beverages, Evolution Fresh
juices and snacks such as chips and crackers; seasonal or specific to store locality products like Pumpkin
Spice Latte. Many Starbucks stores sell hot and cold sandwiches, pre-packaged food items and drinkware
like tumblers and mugs; some "Starbucks Evenings" outlets offer wine, beer, appetizers. Starbucks-brand
ice cream, coffee and seal bottled cold coffee drinks are sold at selected grocery stores as well.

Costa Coffee sells coffee, beverages & snacks as its main product offering in its marketing mix. The
company offers a lot of variants and flavours in coffee. Most famous offering of Costa coffee are:
Cappuccino, Latte, Flat white, Americano, Mocha, Expresso etc. Some of the ice blended products offered
by costa coffee are: coffee cream, Mocha cream Frostino, Lemonade etc. 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.

FOM Group - 2 | A Comparative Analysis of Starbucks Vs Costa Coffee 18

ii. Pricing Strategy
Starbucks is clearly a premium priced coffee seller. The price is generally high because the focus is not
only to provide high quality coffee, but it’s the ambience & experience which is of high value. To maintain
competition, Starbucks started with a low-cost range at few outlets and to cater the customers who
couldn’t be attracted by its high prices. The packaged products are also available at grocery stores which
are comparatively cheaper than the normal outlet products and easily available to everyone. Starbucks
not only follows competitive pricing in its marketing mix but also relative pricing strategies. The drinks at
Starbucks are also available in various sizes as per the need and requirement of every customer with
minute variations like demi, short, mini, tall, grande, venti and trenta.

Costa Coffee has a diverse price offering in its marketing mix, though it is influenced by competition and is
slightly premium. The company provides two variants in its beverages like small and large. Costa coffee
also sells it coffee vending machine under brand Costa express. The price of this vending machine is
competitive as compared to its other competitors like Starbucks, Cafe Coffee Day. The price of coffee also
varies according to the supplement added to coffee like extra chocolate, cream etc.

iii. Place & Distribution Strategy

Starbucks is present more than 70 countries in Africa, North America, Oceania, South America, Asia and
Europe. Starbucks had approx. 5000 licensed locations. Maximum outlets are available in USA. With the
growth on ecommerce & online deliveries, the brand has managed to increase its reach & sales.

Costa Coffee operates in nearly 3000 outlets spread over 30 countries. It operates in more than 2100 UK
restaurants and over 1200 outlets are spread overseas. Costa coffee outlets are mainly targeted at upper
middle class and rich people. Its outlets can be found mainly in shopping malls, airport etc. where there is
high footfall. Costa coffee also modifies its menu according to the country in which it operates to gain
more customer base. The Costa Coffee website also allows its users to place orders online which can be
delivered via a delivery partner in that region.

iv. Promotion & Advertising Strategy

FOM Group - 2 | A Comparative Analysis of Starbucks Vs Costa Coffee 19

 Starbucks is a top of the mind brand through various activities and initiatives. Starbucks focuses on brand
promotion in its marketing mix through channels like online, TV, print ads etc. Apart from this Starbucks
has made use the best use of technology for promotions like the “tweet-a-coffee” campaign in 2013,
feedback system through “My Starbucks Idea”, loyalty program and gift cards with free wifi, zero charges
for selected coffee and milk options, etc., farmer euity practices to inform them the right whole seller
prices, Starbucks prepaid cards, mobile apps, content series “Upstanders” for podcasts, story-telling, etc.,
table top power mats for charging, bar codes for cashless payments, etc. Increases customer’s interest
and attracts them more.

Costa Coffee is a premium brand which does not rely much on advertisement on TV, print media etc. 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. Also as a part of its
promotional strategy of new products the company provides free samples to its customers to get the
review about product and increase it purchase intention. Costa coffee also focuses on digital media to
promote its campaigns and connect to its customers. The company also runs a loyalty program as Costa
Coffee Club which allows its frequent customers to get discount on products and earn points on purchase
of products from any Costa Coffee outlet. Also Costa Coffee uses its logo on the cups that are served to
the customers.

11. Managerial Control:

 Inside the competition frame, each company has independent and singular terms of innovation and
expansion plans. Cause in business world each firm search for increase the revenues and expand further,
and the way varies depending on company goals and visions. In addition about the expansion plans, the
both companies are looking to expand in China market, it’s a common top goal from them for the future.
So, the next efforts and focus will be targeting China market due to its population that is about 1,4 B
people (Forbes, 2019) (QSRMedia Asia, 2018), which means a lot of opportunities and revenues. There are
innovation plans which are described on effective strategies and tactics the follow to lead the world
market. And here, are two of some innovation plans that are used by Starbucks and Costa Coffee:
 Investing in new techs (Robotics) Starbucks: Due to the increasing of labours problems such as the
availability, cost or even the speed, it becomes necessary to find alternative solutions with high

FOM Group - 2 | A Comparative Analysis of Starbucks Vs Costa Coffee 20

 performance at a low-cost. Starbucks found a way to invest new techs to covers the weakness sides on its
business that caused by the human labour(Foodservice Consultants Society International, 2019
 Investing in the future — Starbucks : With an investment fund that it did . And it is in order to update their
stores space, due to the increasing of customer power purchasing (Foodservice Consultants Society
International, 2019).
 Costa Collect — Costa Coffee: This is the most creative option has a coffee shop ever made on which it
allows you to an advanced payment at store from your phone , avoiding with it queue (Hanbury, 2018)
 Costa’s Eco Pod : Costa has launched it first eco coffee shop that is friendly to the environment . It’s
special building that was built with innovative energy saving tech(The Coffee Shop Innovation Expo, n.d.).

12. Conclusion
 Based on the analysis above we conclude that the coffee shop industry is a very attractive market (high
margins, growing demand) for the companies that are already established, such as Cafe Coffee Day, Tata
Starbucks, Costa Cofee or Dunkin’ Donuts, however, smaller independent companies may not be able to
compete significantly.
 Costa Coffee has been able to remain one of UK's leading coffee brewing companies for more than a
century now primarily because of the execution of the company‟s branding and positioning strategies to
perfection.
 Add to the mix the company‟s dedication to high quality of service and the formula for success is at hand.
 Moreover, the utilization of the appropriate knowledge management tools is necessary for their products
to reach out to people even in different cultures. However, certain points have to be taken into
consideration by Costa Coffee regarding knowledge management tools.
 Since their income is relatively higher than most coffee brewing companies, the time for implementation
of their chosen knowledge management tools would take longer than usual, aside from being expensive.
 But since the goal of Costa Coffee is towards a long-term dominance and stability in the brewing industry,
then the pursuit of these promotional campaigns will be beneficial for the company in the long run.
 Starbucks has appealed to such a wide target market, it seems every product introduced will be an instant
success (sodas, teas, ice creams, pastries).
 As the most innovative company, it‟s no surprise that the new technological addition, the Starbucks Card,
boosted sales and helped growth during a time when the economy was struggling.
FOM Group - 2 | A Comparative Analysis of Starbucks Vs Costa Coffee 21
 “Starbucks went back to basics, and they‟ve approached the basics with a science and intensity that no
one has ever done before.”

13. References
1. Introduction To Coffee
https://www.blackoutcoffee.com/blogs/the-reading-room/introduction-to-coffee
2. Coffee Shop Industry - A Strategic Analysis
https://www.grin.com/document/111348
3. History of Starbucks
https://coffee.org/pages/history-of-starbucks
4. Starbucks
https://www.britannica.com/topic/Starbucks
5. Costa Coffee
https://en.wikipedia.org/wiki/Costa_Coffee
6. Our history
https://www.costa.co.uk/behind-the-beans/our-story/history
7. Costa Coffee
https://coffee.fandom.com/wiki/Costa_Coffee
8. About The Coffee Board
https://www.indiacoffee.org/about-us.html
9. Coffee Industry And Exports
https://www.ibef.org/exports/coffee-industry-in-india.aspx
10. Indian cafe chain market will reach Rs 4,540cr by 2023
https://www.ibef.org/news/indian-cafe-chain-market-will-reach-rs-4540cr-by-2023
11. Café Coffee Day
https://harrisonanastasio.files.wordpress.com/2017/03/cafe-coffee-day.pdf
12. Starbucks Market Segmentation and Targeting
https://www.ijbmi.org/papers/Vol(7)5/Version-1/F0705014445.pdf
13. An Analysis Of Coste Coffees Marketing Marketing Essay
https://www.ukessays.com/essays/marketing/an-analysis-of-costa-coffees-marketing-marketing-
essay.php
14. Starbucks Marketing Strategy & Marketing Mix (4Ps)
https://www.mbaskool.com/marketing-mix/services/17140-starbucks.html
15. Costa Coffee Marketing Strategy & Marketing Mix (4Ps)
https://www.mbaskool.com/marketing-mix/services/17119-costa-coffee.html

FOM Group - 2 | A Comparative Analysis of Starbucks Vs Costa Coffee 22