THE ITALIAN COFFEE MASTERS

TABLE OF CONTENTS

Letter Of Transmital……………………………………………. 3
Executive Summary…………………………………………….. 5
The Costa Story…………………………………………………. 6
The Perfect Cup…………………………………………………. 7
Mission…………………………………………………………… 8
Vision…………………………………………………………….. 8
Business Portfolio……………………………………………….. 8
Marketing Objectives…………………………………………….10
Target Market…………………………………………………….11
Market Segmentation……………………………………...11
Market Targeting…………………………………………..12
Market Definition………………………………………….12
Economic Profile………………………………………12
Age Demographics…………………………………….12
Market Positioning……………………………………………….14
Market Mix………………………………………………………..14
Product………………………………………………………14
Price………………………………………………………….17
Locale………………………………………………………...17
Promotion……………………………………………………18
Market Demand/Opportunity Measurement………………….18
Growth Share Matrix/GE Approach……………………...18
Market Attractiveness………………………………………19
Business Strengths…………………………………………..19
Projected Sales in Pakistan………………………………………..20
Budget Forecasts…………………………………………………...22
Strategic Planning………………………………………………….23
Future Promotion and Expansion Plans…………………………24
Analysis……………………………………………………………...25
Recommendations…………………………………………………..26
EXECUTIVE SUMMARY

This report strives to outline the strategic and marketing approach to be undertaken for
the current year by the “ COFFEE” a chain- part of a UK- based
Multinational conglomerate Family.

PLC is The UK’s leading Hospitality Company with franchises all over the
world. Their business encompasses Hotels, Restaurants [Household names like TGI
Friday], Health and Fitness plus Other Businesses.

The contents of this report include market segmentation, positioning and targeting
along with the growth opportunities. Marketing and promotion strategies and the Sales
and Budget Forecasts for the next Five years plus the Profit and Loss estimation for this
period are also included.
 Marketing Report

The Story
Bruno & Sergio Costa set up their famous coffee
roastery in Lambeth, London in 1971, supplying
local caterers and Italian coffee shops with an
exciting coffee, slow-roasted the Italian way.
People couldn’t get enough of it and by 1978 the
first Costa espresso bar opened in Vauxhall
Bridge Road in London. To this day we still use
the same method of slow-roasting our coffee
beans, serving the brothers’ authentic blend of 6
Arabica beans to 1 Robusta in 500 coffee shops all
over the world.

To serve the best coffee in the true Italian style,

we focus on quality control at every stage of the
coffee making process from bean to cup. Unlike
any other coffee company in the UK, we have our
own roastery to ensure our unique blend is
perfect every time.

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The Perfect Cup

Some people would call our pursuit of the perfect cup of
coffee an obsession. We don’t care- because nothing less will
do. Our Italian Masters spend their lives selecting the finest
beans & roasting them to perfection. To prepare our coffee
with any less care & attention to detail would be sacrilege.

Our baristas are trained (even indoctrinated) in the Four Ms.

Miscela
Blend: Costa has a unique blend we call the Mocha Italia

Macinatura:
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”

Macchina:
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]

Manna:
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

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VISION:
Our vision is to be the best hospitality company that there is - a family of related hotel,
restaurant and leisure club brands recognized by our people, guests and investors as
leaders in each market in which we operate.

MISSION:
“To serve the best coffee in the true Italian style.”

BUSINESS PORTFOLIO:
Costa Coffee is a part of the Whitbread, family of brands, which is in the business of
providing hospitality in one shape or form. They operate the number one brand in the
UK and around the world. Together, they welcome with a smile more than 10 million
customers a month.

Costa Coffee is the leading force in the world coffee market. The brand is reputed
renowned and preferred. In the year 2004 Costa netted a turnover of £ 1,043.7 million

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MARKETING OBJECTIVES:

• Growing the profitability, scale and market share in the Pakistani market;

• Developing new products that have the potential to reach significant scale;

• Managing our business so that shareholder value is added by each of our

activities;

• Ensuring that brand is a leader in its field for customer service;

• Working to meet our responsibilities to the wider stakeholders in our business,

including commercial partners and the communities in which our brands
operate.

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TARGET MARKET

Coffee strives to appeal to all ages. Young and Mature, all consumers are
bound to be satisfied by their array of choices. The menu is designed specifically to
cater to different preferences and the quality of their coffee satisfies the most discerning
of tastes. Coffee continues to satisfy consumers all over the world.

Market Segmentation:
For the purpose of defining the target market, the following market segments were
established after researching the restaurant and cafe-going consumers and the clientele
of already established competitors.

Economic Profile: Middle Class

Upper Middle Class
Privileged Class

Age Groups: Teenagers 16 - 19 years

Young Adults 18 - 25 years
Adults 25 – 50 years
Mature 50 and above

Professional Classification: Students

Young Professionals
Mature Professionals
Retired

Marital and Familial Status: Single

Single with Dependants
Married
Married with Children
Married with Dependants

Ethnic and/or Religious Classification: Christen, Muslim, Hindu Other

Asian, Caucasian, African American, Latin-
American, European

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Market Targeting:
While evaluating their consumer market the conclusion was that the ideal consumer’s
economic profile will be

• Upper Middle Class

• Privileged Class

While the age demographics will be:

• Students and Youngsters

• Professionals
• Families
• Mature Consumers

Gender and Ethnic/Religious Background was researched to have minimal or no effect

on the choices concerning coffee made by consumers and their patronage of coffee
houses.

Market Definition:

Economic Profile:
To achieve the vision of “To serve the best coffee in the true Italian style.”
they will continue using the same method of slow-roasting coffee beans that is unique
to to this day. The focus will be on quality control at every stage of the coffee
making process from bean to cup. Unlike any other coffee company in the UK,
has its own roastery to ensure their unique blend is perfect every time. They
say, when you order a cup of coffee today, it is still made skillfully by hand
rather than by the automated coffee machines used by major competitors.

Age Demographics:

• Students and Youngsters i.e. young men and women in the age bracket of 16-24
years are estimated to form 30% of the target market. This group will patronize
for the ambiance and the prestige as well as the delicious menu. Due to

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the burgeoning “Coffee Culture” in Pakistan, the youth is flocking towards coffee
houses and cafes as their latest ‘Watering Holes’. The international presence,
reputation of luxury and the image of class associated with is bound to
attract this group and make them a significant fraction of s potential
clients.

• Professionals belonging to all careers and in the age bracket of 24 – 45 years are
anticipated to form 45% of the future clientele. These will be up and coming,
dynamic persons who will appreciate the mouth-watering menu, expeditious
service and serious atmosphere. is the ideal environment for efficient
lunches and meetings from casual to semi formal to formal.

• Families: ’s menu caters to a variety of tastes and aims to satisfy all

kinds of customers. Though a lesser percentage than Students and Professionals, we
hope that consumers with families will make up 10% of the potential patrons.
s wide array of scrumptious choices is designed to draw consumers of all
ages: the melt-in-your-mouth, luscious desserts will without doubt make children
love them while their parents can also enjoy the unique, delicious coffee; Making
a complete family experience.

• Mature Consumers: Their mission is to provide excellent Italian coffee to

consumers worldwide; their trade mark is the exceptional quality and first class
flavor. Who better than a matured, experienced veteran with discerning taste to
appreciate the finer points of ? The management hopes that Matured
Consumers will comprise 15% of the potential clientele.

Market Segmentation

Students and Professionals,

Younsters, 45%
30%

Mature
Families, 10%
Consumers,
15% 11
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MARKET POSITIONING:
The positioning strategy to be employed by is in keeping with their global
positioning- i.e. they are the ITALIAN COFFEE MASTERS

The quality of their coffee is better than the competitors- it tastes better; it is more
hygienic and totally unique. The image of is that it has the BEST and most
UNIQUE coffee.

The secondary or underlying positions of - globally and for the upcoming

market in Pakistan are the Highest Standard of Luxury, The Best Service and a
Reputation For Excellence.

THE ITALIAN COFFEE MASTERS

Their tag line, as mentioned above, communicates their position as the preeminent in
the business to the masses. This certainly magnetizes more and more people to come
over to .

MARKETING MIX:

Product:
Brand Name:
Their brand name is their signature. The name of signifies luxury, excellence
and perfection all over the world. In today’s market environment, along with quality,
Image and Status are also all important. The quality and excellence that is
has made this brand name a trademark that is recognized and pursued.

Image/Theme:

Luxury and Comfort

The image of is luxury. The theme has been designed specifically with the
consumers in mind. The emphasis is on luxury and comfort- with style. The ambiance

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provided is trendy as well as soothing. The sobriety of invites consumers to

spend a pleasant time with their company without the tacky flash and glitter.

Color Scheme
The theme of , from the brand logo, the color scheme of the premises, to the
entire feel of our business is warm tones & relaxing colors. The dominant color in the
logo and the premises of is brown with touches of black, white & green. The
color theme is chosen for relaxation & comfort as well as being upbeat & trendy.

Service:
s reputation for excellence applies not only for the exceptional coffee but also
the insistence on perfect service. Recruiting and retaining highly motivated and talented
people is essential and great emphasis is placed on improving the skills, expertise and
performance of our people through award-winning, industry-leading training and
developing programs.

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Product variety:

Here's our core coffee range, so you can work out what you fancy.

Single Shot Double Shot Steamed Milk

Chocolate Ristretto Frothed Milk

Espresso Americano
Short, strong, sweet and black: just what
Espresso with hot water: a longer
you need to start the day and perfect
coffee with an espresso taste.
after a meal.

Espresso Doppio
A double shot of espresso: twice the
strength for an extra kick.
Cappuccino
Espresso topped with steamed,
frothed milk and a sprinkling of
chocolate: breakfast coffee you can
enjoy all day.

Ristretto Caffè Latte

A very short espresso: The ultimate Espresso with steamed milk:
strength shot. plenty of milk and lots of flavour.

Mocha
Espresso with chocolate, topped
Macchiato
with steamed, frothed milk and a
Espresso with a dash of frothed milk: A
sprinkling of chocolate: spoil
smoother flavour with all the taste.
yourself with the ultimate coffee
indulgence.

As well as offering the finest coffee, Costa has a wide range of alternatives
including hot chocolate, teas and infusions, iced coffees & frescato. See our full in
store menu for more details.

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Prices:
Coffee is internationally renowned for is unique blend of Italian Coffee, first-
rate service, Highest regard for quality and a determination to provide the best
handmade coffee for the most discerning consumers worldwide.

The consumers appreciate these efforts and are loyal to. They will value s
commitment to their satisfaction and realize that luxury comes at a cost. A cost that will
not deter them from pursuing the excellence of the coffee at .

The prices of all the products are comparatively higher at . But this is offset
by the outstanding quality and discerning tastes at . One of the reasons for
choosing the privileged and higher middle classes in the target market is the prices.

Our Locale / Setting:

Our first ventures in Pakistan are greatly anticipated and we intend to meet and go
beyond these expectations.

Location:
After thorough research, and competitive analysis the perfect locations in terms of
exposure, accessibility and competitive edge have been acquired.

Karachi, due to its metropolitan way of life and culture and ideal market potential was
chosen to be the launch pad for initiation into the Pakistani market. A prime location at
main Zamzama had been renovated, designed and revamped according to the standard
of franchises worldwide.
Other selected locations also include Bahadrabad and Sea View at Karachi.
plans to move to other cities of the country as well. All future locations of
outlets in Pakistan will be required to be the most conveniently located at the hub of
cultural activity and possess the best competitive advantage.

The inventory and easy transport facilities have also been a part of the deciding factors
while choosing the appropriate locale.

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Promotion:
The promotional strategy for the Launch of in Pakistan has been mostly low
key. Though it is a coffee house and the coffee house culture is building up as an
upcoming trend in Pakistan, a lot of advertising is unnecessary. This is so because
’s brand name is enough for them to muster the required target market. Most
of the awareness will be through the word of mouth of people amongst the masses.
Hence the reputation is more that counts.

MARKET DEMAND / OPPORTUNITY MEASUREMENT

Before expanding into any market, its opportunities and risks have to be analyzed.
Smart Business is to venture into markets that have opportunity for profit
maximization. The attractiveness of any market depends on the certain factors that have
to be duly considered before launching any new project and even after launching it to
continue a balanced growth of the market share:

Growth Share Matrix/GE Approach

The decision to expand to any new markets depends largely on the market
attractiveness and the Business Strength.

Market Attractiveness Business Strength

Factors Rate Factors Rate

Overall Market Size 3.5 Market Share Growth 4.5

Annual Market Growth
3.75 Product Quality 5
Rate
Competitive Intensity 3 Brand Reputation 4.5
Technological
2.5 Distribution Channel 3.5
Requirements
Inflationary Vulnerability 4.5 Promotional Effectiveness 4.5
Productive Efficiency 4
Managerial Personnel 3.5

Market Attractiveness

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As the above table indicates, the attractiveness of the Pakistani Market for
Coffee is slightly above average. The escalating Coffee Culture and
the increase of Coffee drinkers in Pakistan show a healthy growth rate. The
Technological Requirements for this particular venture in Pakistan are not too
burdensome, considering the nature of the enterprise, the standard of the target
market and the possession of advanced technology by coffee.

Although the Inflationary pressure does tend to increase and is unstable, the
nature of the targeted market segments remains almost unaffected. Contracts
with the suppliers, transporters and employees and other damage-control
measure also protect the enterprise from serious danger. Thus the overall Market
Attractiveness is above average and suitable of entry.

Business Strength
Coffee is an established, internationally well-known and successful
member of the Whitbread Family. The quality of its product is unquestionably
the best. In fact, is renowned as “THE ITALIAN COFFEE MASTERS”

The Product Quality of speaks for itself through international success,

recognition & awards. The global reputation & Market Share of its Brand Name
is increasing at rapid pace, with outlets in the UK, Europe, Middle East, India &
now Pakistan, plus deals to launch in Poland, Romania and Bulgaria.

In keeping with the reputation for excellence, intends to employ the

best of the available resources in Pakistan which includes the best available
Production, Promotion and Distribution team. The Whitbread Family, including
also has a global reputation for employee recruitment, training and
retention which they uphold in Pakistan.

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Business Strength

High Medium Low

High

Medium

Low

Thus the
Business Strength is considered exceptional and the overall position is ideal for
expansion into the Pakistani market.

PROJECTED SALES IN PAKISTAN

100%

97%
89%
Growth
[Sales, Market Share]

Current Market Position

0
Dec Jan May Sept Dec
2006 2007 ’07 ’07 ‘07

Time Line [Year 2006-2007]

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The projected sales of Costa during its first six months are anticipated to rise
swiftly to almost 97%. The increasing trend of the market, occasions like
Christmas, New Year and the arrival of the winter season- along with winter
vacations, and the novelty of a new international brand of our repute and of
course our excellent product are likely to boost sales rapidly.

At the peak, in approximately May, interest is expected to ebb due to the ending
of the winter and vacation season, familiarity with the brand and its product. The
one time visitors are likely to cease to visit the outlet and the established clientele
is expected to remain. Thus a slight dip in sales to almost 87% is forecasted.

Around September onwards, a steady incline in sales is anticipated as a result of

increasing market size and market share, promotions, product diversification etc.

These projected sales figures are very attractive and prove expansion into the
new market to be ideal.

Along with this analysis, the sales forecast with respect to the individual target
markets are also very promising;

Market 2006 2007 2008 Total

Students & Youngsters Rs. 2,000,000 Rs. 2,300,000 Rs. 6,300,000 Rs. 10,600,000
Mature Consumers Rs. 755,000 Rs. 780,000 Rs. 1,280,000 Rs. 2,815,000
Families Rs. 970,000 Rs. 985,000 Rs. 1,720,000 Rs. 3,675,000
Professionals Rs. 1,775,000 Rs. 3,275,000 Rs. 9,200,000 Rs. 14,250,000
Totals Rs. 5,500,000 Rs. 7,340,000 Rs. 18,500,000 Rs. 31,340,000

10
Millions

Youngsters
8
Mature
6
Consumers
4 Families

2 Professionals

0 to the graph it can be seen that the market share of the students and
According
youngsters and
2006the professionals
2007 2008is expected to rise way more than the others. This is so
because the youth is more inclined towards the upcoming new trends in town and are

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prone to adopt the changes in society. Since the coffee culture is a new trend mounting
in Pakistan, the adolescents are apt towards it.

As for the professionals, the relatively soothing and peaceful ambience of the coffee
house and the easily approachable vicinities tend to be an advantage for business
meetings and otherwise. Professionally, media has also approached Costa for filming
various programs. This has added to the standing of Costa Coffee and has significantly
increased the responsiveness of the civics.

BUDGET FORECASTS:
The forecasted budget for the upcoming two years is as follows;

TYPE CURRENT 2007 2008 Total

Accommodation Rs. 2,000,000 - Rs. 5,000,000 Rs. 7,000,000
Training Rs. 1,500,000 Rs. 500,000 Rs. 4,000,000 Rs. 6,000,000
Transportation Rs. 250,000 Rs. 350,000 Rs. 1,000,000 Rs. 1,600,000
Fixtures Rs. 2,000,000 - Rs. 7,000,000 Rs. 9,000,000
Total Rs. 5,750,000 Rs. 850,000 Rs. 17,000,000 Rs. 23,600,000

8
Millions

7
6
5 Accommodation
Training
4
Transportation
3
Fixtures
2
1
0
Current 2007 2008

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STRATEGIC PLANNING
The Current Market Position according to the GE Matrix and the projected sales
figures lead to conclude that an INTENSIVE GROWTH STRATEGY should be
employed. By applying the situation to the ANSOFF PRODUCT/ MARKET
EXPANSION GRID:

CURRENT NEW
PRODUCTS PRODUCTS

CURRENT
1. Market Penetration 3. Product
MARKETS
Strategy Development Strategy

NEW 2. Market
Development Strategy 4. Diversification
MARKETS Strategy

The combination of
an existing and well-established Business in excellent Strength and entry into a
new Attractive Market, plus an ideal growth forecast suggests the adoption of a
MARKET DEVELOPMENT STRATEGY; whereby, the interest of a
previously unexplored environment should be aroused in . Expansion
into this new market will require a launch of new outlets, brand recognition,
establishment of clientele and production and distribution channels. Plus,
establishment of local management and employees.

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FUTURE PROMOTION AND EXPANSION PLANS:

Costa will be launching more branches all over Pakistan after developing an even
firmer hold on the local Karachi market. The expansion has been planned for the next
year that is 2008. the next targets will include Lahore and Islamabad.

For that purpose again the launch will not be very extravagant, but the already
established repute in the metropolitan of Karachi and the attachment of TV programs
and stars will do the required marketing. Ads will be published in the leading
newspapers and some bill board advertising will also be done. But over all it will be
low key marketing activity.

Allocated budgets mentioned earlier have been allotted keeping the expansion in mind.

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ANALYSIS:

The findings above notify that Costa has very strong market intensification potential.
We can observe that Costa has exceptional sales all through its first year after entering
the Pakistani market. The rationale following this is the unique taste and the highly
reputed image of Costa in the European markets. The word of mouth only has played a
significant role in their success.

The cash inflows are projected to increase much this year and in the next year
with the development plans. After expansion Costa will be able to establish a firm and
strong foothold in all the major markets of Pakistan. Since the targeted market segments
include only the higher middle and elite classes, therefore the venture is even more
successful. The sales forecasts give you an idea about the market share of students and
youngsters and the professionals increasing spectacularly over the span of these three
years. This is due to the quick adaptation by our youth and their fondness towards the
new trends.

The professionals on the other hand, always seem to be in the hunt for calming
and serene locations to carry out unofficial or official business meetings. Costa has
proved to be a first-rate spot for the purpose, as the sales figures suggest. Apart from
this the professional sales with relation to media will also increase since there is a very
strong showbiz industry in Lahore. From the beginning a number of TV channels have
already started airing their programs art Costa. Hence this would certainly increase the
revenue generation.

Summing up, we can say that Costa has entered and has maintained an excellent
marketing strategy inviting the customers and providing them services that will create a
niche of Costa in the Pakistani market very soon.

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RECOMMENDATIONS:

 The sales forecast of Costa are very promising but the franchise has not adopted
any above or below the line promotional methods. This should be considered.
 Costa should adopt some low key promotional strategies.
 They can go for advertising through bill boards or giving out brochures.

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