These data have been widely used by other researchers (see, e.g., Mosheim, Reference Mosheim2002; Blackman and Naranjo, Reference Blackman and Naranjo2012; Babin, Reference Babin2015; Naranjo et al., Reference Naranjo, Pieters and Alpzar2019, Dragusanu et al., Reference Dragusanu, Montero and Nunn2021; among others). Traditionally, most Costa Rican growers and coffee mills follow a low-cost production approach. It offers coffee that is unique from what is offered by most of its competitors. Our study confirms that coffee prices, which are key for growers' profitability in developing regions, depend on the one hand, on a set of external variables that are beyond the control of farmers but, on the other hand, on their differentiation strategies. FT refers to social and environmental standards adopted by the coffee cooperatives and mills as well as growers. J.A. They have decided to lengthen their product line by using an upward stretch, where high quality and more expensive items are introduced: the company is introducing coffee made using rare, luxurious coffee beans. 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. They also need to offer products beyond the expectations of customers. It is an industry whose entry is not very complicated, thus many companies with similar products can join. For your business to thrive you need to know who your customer is. The company listens to what the customers need and responds to that. The mission of Costa Coffee is to produce the best coffee in the world and become the best/ leading coffee business (Costa Coffee, 2014). Every business organization should have its goals and objectives, both for short term and for long term survival. Despite the level of competition in the industry, Costa Coffee has been able to establish itself as a force and it is ranked second globally in terms of performance and size. According to Castro et al. Being the experienced brand with strong foothold, the company uses differentiation as a tool to reduce the pressure by other brands. Despite what one might expect, empirical results regarding the effect of FT on price are mixed. The Nationally Appropriate Mitigation Actions (NAMA) program has been adopted by the Costa Rican Government as a way to reach CN at the national level by 2050. We structure our discussion according to external variables, intrinsic quality variables and differentiation strategies available for growers. 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. Differentiationstrategiesincoffeefarms: Major part of Costa Coffee business is established in UK with 2100 outlet established there. (Reference Castro, Montes and Raine2004), in Central America coffee production supports 291,000 farmers and provides around 1 million seasonal jobs. The Costa Coffee is regarded as one of the globe's pioneering coffee companies, and its brand is well-known and favored. (Reference Jena, Stellmacher and Grote2015) show that FT certification does not necessarily imply better prices for coffee growers (see also Bacon, Reference Bacon2005; Haight, Reference Haight2007; Weber, Reference Weber2007; Omidvar and Giannakas, Reference Omidvar and Giannakas2015). Costa Coffee Marketing Strategy comprises of not only its Marketing Mix, but also segmentation, targeting, positoning, competition and analysis like SWOT. Costa Coffee clearly aim to maximise their profits; Starbucks aim to develop their brand around quality. (2020) 'Costa Coffee Company Analysis'. (2020, March 27). The value added by the uniqueness of the product may allow the firm to charge a premium price for it. In the latter group, we focus on two cases that are particularly relevant in the Costa Rican coffee sector: Fairtrade (FT), which is a company certification, and organic coffee (OC), which is a product certification linked to coffee quality and the technology used to produce it. WebCosta Coffee A proposal to build the next generation self-serve Espresso Bars ability to use the differentiation generic growth strategy supports the product development process Therefore, the OC certification is exclusively awarded at the farm level. Costa Coffee is one of the most popular coffee chain outlets globally. b The Non-Fair-Trade Producer that bought non-organic coffee (NftpNocof) is the point of comparison of cross effects. Therefore, quality becomes a very significant factor. In Costa Rica, coffee production is an important economic activity for many rural cantons (Pelupessy and Daz, 2008 ), where primary production is mostly carried This law is intended to solve the market failures due to this information gap and to establish equitable relationships between mills and growers in such a way that the price that mills pay for coffee berries must be based on the international prices they get. A five-year extension of the partnership was announced in August 2021. View all Google Scholar citations "Costa Coffee Company Analysis." Nominal coffee prices. Within environmental certifications, organic production practices seem to have a significant positive effect on the price while, on the other hand, FT mills have not reported higher average annual prices than non-certified ones. Costa Coffee has more than 3000 stores worldwide in over 30 countries. The coffeehouse was set up in 1971 by the Costa brothers, Sergio and Bruno. The company has been fair enough on constraint management. In this regard, Naranjo et al. 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. It works with coffee-growing communities around the world to source high-quality coffee beans. Costa Coffee has been a leader in product development (Costa, 2013). Each outlet of Costa Coffee has very nice sitting arrangement. The company offers a lot of variants and flavours in coffee. Regression results of some determinants of coffee berry price in Costa Rica. Retrieved from https://ivypanda.com/essays/costa-coffee-company-analysis/. Barney, J. "Costa Coffee Company Analysis." The companies are not associated with MBA Skool in any way. Finally, our conclusions are summarized in section 6, along with some suggestions for future research. 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. 2 To discard that ftp is an endogenous variable, we have run the endogeneity test proposed by Baum et al. Table 2 shows the definition and the main statistics of each variable. Valenciano-Salazar acknowledges support from the Scholarship Department of the National University of Costa Rica (grant JB-C-1106-2016). 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. Founded in 1971 by the Italian brothers Costa Coffee has emerged as a leading coffee chain in the world with 3000+ coffee shops and 4200+ Costa express self-service units globally. The case of coffee marketing in Costa Rica, Producer price and price transmission in a deregulated Ethiopian coffee market, Agricultural Economics Research, Policy and Practice in Southern Africa. Published online by Cambridge University Press: UK chain Costa has been ranked the worlds second strongest brand in the restaurant sector, overtaking US rival Starbucks. (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). Selective targeting strategy is used by the Costa coffee as being present in 29 nations which are geographically separated, following selective strategy is helping the company in catering to the needs of the customers and introducing new products accordingly. Observations per group: average=5.7, minimum=2, maximum=9. a The Central Valley and Tres Ros Regions, variable cvtrpai (r)t is omitted. Coca-Cola acquired the worlds second largest coffee chain, Costa Coffee, in 2019. It seems relevant to assess the effectiveness of these strategies as compared to more traditional variables such as production costs and productivity. This is a much more effective and affordable way to reach your customers and generate business. Founded in London in 1971 by brothers Bruno and Sergio Costa, Costa Coffee is now the worlds second-largest coffeehouse chain behind Starbucks. Does Fair Trade Coffee Help the Poor? Section 2 presents the conceptual framework and the hypotheses to be tested, and section 3 explains the methodological aspects, including the econometric approach, the variables considered, and the data sources used. The company also sells some of its merchandise like its branded cups to its customer. 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. Table 1 shows basic statistical information about the domestic price and the international price. However, previous analyses focus on the influence of individual variables such as quality, environmental certifications, or regional differences in coffee prices. 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. 5. Costa Coffee is an organization that values quality production, as this is what will contribute to customer satisfaction. Nominal coffee prices. Companies in this industry have to face the entry and exit barriers as infrastructure and branding cost are involved in the setup of the company and if the business is unable to attract customers then its just the loss for the franchise owner. Starbucks and Costa Coffee are long-term competitors in the coffee market however, recently they have implemented new marketing tactics. WebMarketing Mix of Costa Coffee is the research topic for emphasizing on the marketing strategies developed by the firm. Overall, one cannot really call one strategy more successful than the other. Strategic management and business policy: Toward global sustainability. Secondly, we cannot reject our first hypothesis (H1) regarding the coffee berry prices reported by multinationals. (Reference Donnet, Weatherspoon and Hoehn2008) estimated a hedonic pricing function using data from e-auctions in Central and South America and found that market clearing prices are influenced by sensory characteristics and reputation, including third-party quality rankings, country of origin, coffee variety, and quantity. Marketing mix Here is the Marketing mix of Costa Coffee. 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. They should focus on continuous improvement on their products and performance. Many of its products are not considered healthy by some customers. In addition to expansion, Costa Coffee also focuses on innovation and differentiation as key components of its global strategy. Regarding coffee growers' strategies, it is important that they become fully aware of the expected responses of prices with respect to different factors and which of those factors are under their control or not. Also Costa Coffee uses its logo on the cups that are served to the customers. For the Mexican coffee market, see also (Weber, Reference Weber2011).