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Running head: COSTA COFFEE NEW MARKET OPPORTUNITIES IN THE UAE 1

Costa Coffee New Market Opportunities in the UAE Name: Institutional affiliation

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Abstract This research is aimed at analyzing the Costa coffee brand as a brand and other related information concerning the brand giving key attention to the following aspects: organization that markets the brand, the marketing environment of the brand and the market segments in the UAE and also comes with a new strategy aimed at increasing the sales and penetration of the product into the new market. An analysis (which included a questionnaire session and a thorough market analysis of the product) was also carried out to have a better understanding of the consumer’s needs and wants, target markets of the product and future market opportunities for the brand. The of this report entails current market situation, market opportunity, marketing analysis, target market, market segmentation, market definition, market positioning, marketing mix, strategic planning of the Costa coffee brand Costa Coffee New Market Opportunities In The Uae Introduction Costa coffee is a British multinational coffeehouse company and entirely owned by Whitbread PLC, which is a is a multinational hotel, coffee shop and restaurant company headquartered in Unstable, united kingdom (Annual Report And Accounts, 2009/10).costa coffee opened its first international store at the aviation club in Dubai, UAE in 1999. 15 years later, the brand has expanded having over 79 stores operating in the emirates (History - Costa Coffee, 2014).A division of emirates group operates the Costa coffee .Costa coffee has a number of product lines in the UAE including Espresso -strong black coffee with no milk, Espresso doppiowhich double espresso shot, Ristretto-has a stronger taste as compared to espresso and also shorter, Macchiato –an espresso with a dash of milk toppings, Americano-consists of shots of milk mixed with hot water, milk can also be an addition, Cappuccino-made by combining

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Espresso with froth milk, Caffe- latte-coffee made with steamed milk. The company has also introduced a bunch of new products over the years including EspresIce cold Costa, flat white-, which is richer, than a latte. Creamier than a cappuccino, Costa light-an amalgamation of new skimmed exploit and the brand's autograph mocha Italia merge. It alsobaked goods, sandwiches and soft drinks. Costa coffee currently has a diverse market incorporating both young and old segments of the population. Costa coffee menu has a range of mouth-watering delicacies which mainly tend to attract mostly the young section of the population and caters for mature customer or mature part of the population who value the taste and quality of the coffee they brew (Altmann 2007). Marketing analysis Coffee is one of the most preferred beverages in UAE this preference also extends worldwide. The speedy development in the business shows that the favorite for coffee is increasingly mounting and the market for the production is rising too. By the close of 2010, Costa coffee is one of the market leaders in the business with the principal market share in the industry (Dhillon 2011). The closest competitor to the franchise being Starbucks in the UAE, which offers services that are at par with the services Costa coffee offers. Sales of Costa Coffee were up by 15.3% equating to 602.4 pounds in 2014.The table below gives a rough estimate of the market analysis based on the different customer needs and wants in the UAE.

CLIENT NEEDS/WANTS

PERCENTAGE

%take away drinks

61

%drink sales

67

COSTA COFFEE NEW MARKET OPPORTUNITIES IN THE UAE

%COFFEE SALES

62% OF DRINKS

%SWEET FOODS

57% OF FOODS

RATE FOOD CAPTURE

47

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Target market Costa coffee normally is not biased in its target market selection rather it tends to be diverse when in it comes to the customers different taste preference, age variance and economical variance. Costa coffee produces one of the best quality coffees which makes it to have a really big market share of the coffee industry (Khan 2011). Market segmentation The following are some of the market segments Costa coffee serves: based on age and professional variables: young / mature professionals, students, youngsters, mature age, based on economic profile: privileged class, middle class and upper middle class members of the society, ethnic and religious variables and lastly marital and family status and also in addition bus section, train and airplane passengers who normally prefer take-always. Economic profile: To realize its visualization of serving the unsurpassed coffee in the accurate Italian approach, The franchise has stuck to its traditional method of brewing coffee with its key interest is controlling the quality of brewing the coffee in each stage. Thus, it really appeals to the different economic classes as peer its quality

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Age demographics: When it comes to age demographic most of the youth whose age range from 16 -24-make atleast 30 % of the market. They are rather attracted by the delicious menus the serene ambience of the location. In addition, the environment also gives them a sense of luxury and a certain class, thus it is bound to attract them. Professionals: It has mainly composed of people in the age bracket of 24-30 this group makes about 45% of the firms market with the potential of still growing. The peaceful environment of the cafes attracts this group of customers and the wide range of products .They can hold formal to non-formal meetings in this joint Families: They make up about 10 % of the market share though low there should be aims to grow the numbers. The menu offered by Costa coffee is able to satisfy a variety of tastes thus can cater for the needs of all the family members from the parents to the children Mature consumers: this group tends to be attracted more by the quality of the products and their habitual traits/loyalty to the brand

MARKET SEGMENTATION MATURE AGE TEENAGERS AND STUDENTS

FAMILIES YOUNG PROFESSIONALS

15.00%

45.00%

10.00%

30.00%

Market positioning:

COSTA COFFEE NEW MARKET OPPORTUNITIES IN THE UAE The positioning strategy to be employed by is in keeping with their global positioningthey boast of the highest quality of coffee and when it comes to hygiene, they are still good at it. Marketing mix Product in the marketing mix of Costa coffee – though coffee is the main product of Costa coffee, the franchise also deals with products like cold drinks, supplementary foods, sandwiches among others. This is the most important of all the mix it employs this is because Costa coffee markets its products as per the customer liking. It lays emphasis on the pull approach of selling. Though it offers a variety of snacks in the outlet, they should increase the number of products offered to suit the needs of the local market in UAE since Around 25 percent of Costa Coffee customers are UAE nationals and expatriate Arabs (Lay, 2011),. It should also introduce new product lines at affordable prices this does not mean cutting the price since the main aim of a business is to make profit thus; it may hurt the company’s profitability. Its greatest rival Starbucks on the other hand has an enlarged product line ranging from special tea to hot chocolates, healthy organic sandwiches and foods to cater for vegetarians. It also produces high quality coffee served by trained staff making it a worthy competitor Price in the marketing mix of Costa coffee –due to its high quality service and hygiene Costa coffee employs premium pricing. Costa coffee believes in quality before pricing thus their main goal is to offer quality service with pricing coming in as the secondary goal. Due to its quality, high prices will not even deter the customers from buying their commodities (NPCS Team 2014). However, Costa coffees prices are relatively higher as compared to other coffee shops so the franchise. Should look for ways to reduce its prices but still offer quality services to attract other segments and increase their current market segment: group segments that may

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benefit may include students, lower middle class society, and youths among others. When it comes to price, Costa coffee is relatively expensive as compared to Starbucks Place in the marketing mix of Costa coffee –when it comes to place in the market mix Costa coffee has a great presence in the UAE boasting of over 80 stores in the past year. It has acquired one of the most advantageous locations .Costa coffees stalls can be found mainly in bus stations, airports and other premium locations. But it should come up with a strategy to increase the number of outlets: setting up new ones along busy intersections, in universities, next to office buildings to increase it currents market share : this is aimed at attracting the students, young professionals, mature customer who make up most of the customer base. Starbucks on the other hand has quality furniture, free wifi spots, children playing corner and also develops and builds their outlets in developing cities and non-high end cities Promotions in the marketing mix of Costa coffee – Costa coffee mostly really on word of mouth publicity to be able to capture its audience it rarely invests on advertisements and promotions of its services. Thus, it should invest more on its sales promotion and advertisement. On the other hand, Starbucks has intensified promotion strategies that include online or coffee ordering service for people who do not have time to go to the outlets; it also deals with product placement. Market opportunity A SWOT analysis should be done before a company ventures into a new environment profit maximization should be the key goal of a firm when entering a new market. The business strength and the attractiveness of the market plays a key role in decision of whether a business should come into into a new environment. deliberate set up (Shaw 2008).

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The marketplace situation of Costa coffee, in regard to the product expansion framework and the sales statistics leads to the conclusion that a concentrated development strategy should be adapted.

Applying this to the Ansoff product/ market expansion since the franchise has a mix o f an existing and well-established business with a strength rating of excellent thus entry into a new market suggests that the company employs market development strategy entry into this new market which will require: launch of new outlets, advertisement of the brand so as to gain recognition, acquire and establish efficiency production and supply lines in the UAE and establish a working local management accompanied with dedicated and qualified workers. Many people have the misconception that coffee is a luxury good this makes it hard for the business to identify customer segments and causes difficulty in implementing market strategies. This also reduces the business fan base Coffee is beneficial to the health and acts as a stimulant thus, most of the customers should be told about the health benefits of coffee Conclusion We can bring to a close that Costa Coffee has an extremely large marketplace potential in UAE. We have observed that it had a large number of sales over the past years in the UAE this is due to its high quality, hygiene and reputation in the UAE market. An expression statement,

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advertisement has played a major function to the business accomplishment. After expansion the Costa, coffee franchise is bound to capture more and more customers. The firms segments include the middle class and privileged people in the society making it an attractive and successful venture. The forecasts sales to the young youths are bound to grow over the coming years, this is due to their fondness to follow trends and be recognized to be of a certain class group. For the professionals Costa coffee offers good meeting points for formal and non-formal meetings. Recommendations: The forecast sales for Coastal coffee are projected to cultivate more in the coming time Below as some of the methods, franchise ought to adopt to increase its sales volumes: Costa is supposed to develop low budget promotion approaches. In addition, they should consider advertising through billboards. Posters, brochures and television adverts and should also open more branches for its operations. Demographic Questions 1) How frequently do you visit coffee shops? a) On daily basis b) On weekly basis c) Monthly basis d) Less than one time in a month 2) Which is your favorite Coffee shop and where is it situated? a) Tim Horton’s Al Majaz Waterfont b) Tim Horton’s JBR the Walk c) Tim Horton’s on Sheikh Zayed Road

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d) Park Central Dubai on Sheikh Zayed road 3) What drink do you like and order? a) Soft drink b) Tea c) Juice d) Wine 4) Do you have a preference for small, private owned coffee shops or large, national coffee shops? a) Private owned b) National Chain 5) If a coffee shop offers a discount to college students, will be motivated to go there? a) Yes b) No Questions about Costa Coffee 1) Which brand of coffee has the highest caffeine substance? Esp-resso coffee, Ristretto, or cappuccino? Conventionally people tend to think it is espresso coffee but this is not the truth. The quantity of caffeine depends on how it is prepared. The longer the brewing, the higher the caffeine content. 2) How do you differentiate between flat white and a cappuccino? a) There is a difference b) One cannot tell the difference

COSTA COFFEE NEW MARKET OPPORTUNITIES IN THE UAE The difference depends on the quantity of micro-foamed milk that is to be found on top of the coffee. An espresso coffee has a lot of bubbly milk on top unlike the cappuccino 3) Is there a simpler tip for adding flavor to coffee other than the basic sugar and cream? Yes or No To have a new taste sensation, you can do the following i)

Stir ground cinnamon

ii)

Use whipped cream

iii)

Use chocolate shavings

iv)

Use cocoa mix

4) What is the required temperatures fro making coffee? High, Low or Optimal temperatures. Optimal temperatures required is between 92-96 c 5) Which is the most proffered type of coffee? Roasted coffee or Ground decaffeinated coffee Well, people have different tastes but the Ground decaffeinated coffee is more proffered to majority of people. 6) What time of the day is best suited for consuming coffee? Mornig, Day Time or Evening? It is more recommendable to use coffee in cold weather and not an hour to when you going to sleep 7) Does coffee have any side effect? Yes, No, or Not Sure Yes, it makes one to stay for long without sleeping

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8) What brand of coffee do people prefer most? Local or imported Normally people have a preference for imported coffee since it is more refined 9) Can you say coffee is expensive to tea? Yes or No Generally it is, the price of coffee is quite high because of its caffeine and its market analysis 10) Who are the most coffee addicts in the world? Children, the aged, the youth or Adults and why? According to a study carried out, it is evident that the youths are the most affected in this scenario. This is because of its caffeine and the effects that it has Marketing analysis Questioner 1) What product of Costa Coffee do you want? i)

Drinks ( Juice, Tea and Wine)

ii)

Souvenir ( toys, cups, plates ,Saucers)

iii)

Meals (Rice,Steaks,Pasta and Wheat)

iv)

Others---------------------------------

2) What services would you anticipate? i)

Reading materials

ii)

An online store

iii)

Free Wi-Fi

iv)

Children play field

v)

Others ( If any other, please state )

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3) What is your preference in buying mugs or tumblers ( if given a discount for using your own cup) i)

Yes

ii)

No

iii)

I do not mind

4) How convenient is it to get to Costa Coffee point-of-sale? i)

Very near

ii)

Moderately easy

iii)

It is quite far

COSTA COFFEE NEW MARKET OPPORTUNITIES IN THE UAE References Altmann, M. (2007). Coffee Shop Industry-A Strategic Analysis. Dhillon, J. S. “Great Expectations but Nothing Fulfilled”–Indian Coffee House: A Case Study. Khan, G. M., & Uddin, S. J. (2011). Caribou Coffee enters the Middle East. International Journal of Entrepreneurship and Small Business, 14(3), 425-439. NPCS Team. (2014). Emerging Opportunities in Booming Indian Beer Industry (Why to Invest, Core Project Financials, Potential Buyers, Market Size & Analysis). NIIR PROJECT CONSULTANCY SERVICES. Shaw, J., & Onkvisit, S. (2008). International marketing: strategy and theory. Routledge.

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