Table of Contents

EXECUTIVE SUMMARY ............................................................................................................................. 2

MARKETING STRATEGY ............................................................................................................................ 2

STARBUCKS ............................................................................................................................................. 3

1. Unique marketing strategy ........................................................................................................... 3

2. Product quality ............................................................................................................................ 3

3. Comfortable environment............................................................................................................ 3

4. Customer satisfaction .................................................................................................................. 3

5. The Starbucks community ............................................................................................................ 4

6. Innovation ................................................................................................................................... 4

7. Brand Marketing .......................................................................................................................... 4

CAFFE NERO ............................................................................................................................................ 5

CAFFE NERO’S USP............................................................................................................................... 5

CAFFE NERO’S TARGET MARKET .......................................................................................................... 5

CRITICAL ANALYSIS BETWEEN THE TWO COMPANIES .............................................................................. 6

REFERENCES ............................................................................................................................................ 7

EXECUTIVE SUMMARY:

Among the many cafes that have opened up in the United Kingdom the top three names remain Costa

Coffee, Caffe Nero and Starbucks. This assignment is a review and critical analysis on the marketing

strategies that have been utilized by both Starbucks and Caffe Nero. This assignment begins with a

general on what marketing strategies are and their importance. After that the marketing strategies

being used by both Starbucks and Caffe Nero have been discussed. Finally a critical analysis is given on

the two companies.

Starbucks portrays itself as a high quality coffee for the high class and is priced slightly higher than the

coffee of Caffe Nero. It stays true to its American originality and emphasizes solely on its wide range of

coffee drinks with only a few snacks and desserts. Apart from that, Starbucks distinguishes itself from

other cafes by providing a very comfortable atmosphere with facilities like Wi-Fi so their customers can

enjoy surfing the web while drinking their coffee.

On the other hand Caffe Nero emphasizes on its Italian blend and portrays itself as not only a café but

also a bar and restaurant. It has quite an extensive menu with a variety of popular Italian dishes. Due to

this many people visit Caffe Nero to have meals rather than just a cup of coffee. They have brought a

pure European vibe to their cafes thus remaining true to their originality. For the convenience of their

customers and to add to their attracting they have also launched loyalty cards.

MARKETING STRATEGY:

Marketing strategies help businesses in promoting their products and services in a certain way that they

want to. While cashing on their most important points they try to create an image of their brand in the

minds of their target customers so as to achieve their target sales and a favorable market share.

Marketing strategies help businesses in gaining a competitive edge by catering to those specific niches

that others fail to identify. Marketing strategies devised by organizations vary in duration from one year

plans to those extending well over many years. A lot of factors are taken into consideration when

devising marketing plans and strategies that are defined by the environment within which the company

operates. This is most often referred to as a SWOT (strengths, weaknesses, opportunities, threats)

analysis which helps businesses in pinpointing the areas which they can take advantage of and the areas

which they need to be careful of.

The most important factor that any business has to take into consideration, when creating its marketing

strategies is its competitors. Competitors’ actions have a huge impact on what an organization should

do. In the coffee chain industry there are now plenty of independent coffee shops in UK like the most

popular Starbucks, Monmouth Coffee, Coffee Aroma, The Apple Tree and Caffe Nero. In this assignment

the marketing strategies of both Starbucks and Caffe Nero will be reviewed after which a critical analysis

will be given of the both.

STARBUCKS:

The first Starbucks outlet was opened in Seattle well over thirty years ago. Today Starbucks proudly

stands at $4.1 billion with thousands of outlets not only in the United States but all over the world.

Many companies have studied the secrets and strategies adopted by Starbucks in an attempt to learn

how Starbucks grew so fast. The marketing strategies being adopted by Starbucks at present will be

discussed in this assignment (voteforus.com 2011).

1. Unique marketing strategy:

The marketing strategy adopted by Starbucks has remained unconventional. They didn’t adopt

the common styles of advertisement using billboards, newspaper ads or television commercials.

Rather they relied on word – of – mouth to promote their brand name.

2. Product quality:

The most important thing that Starbucks never lost control of is the quality of their coffee

beans. They were the first ones to introduce the true Italian “burnt espresso” flavor to the

Americans. They justify their high quality by charging a slightly higher price than most other

cafes.

3. Comfortable environment:

Another focus of Starbucks outlets is the environment they provide in their cafes for their

customers. Starbucks has always been promoted as that perfect place to relax when out of

home and out of the office. They have started offering Wi-Fi connectivity in their outlets so that

their customers can browse the internet as well while they enjoy their cup of coffee.

4. Customer satisfaction:

Customer satisfaction is the strongest favorable point of Starbucks. Each customer that enters a

Starbucks outlet is given such a special treatment that they truly feel like they are in a special

place.

5. The Starbucks community:

Starbucks has truly taken full advantage of the latest hype of social media. They have adopted

their latest marketing strategies around social media websites like creating fan pages on

Facebook and Twitter where they actually respond to all customers and keep in touch by posting

pictures, videos and all the latest promotional information.

6. Innovation:

Starbucks has always kept its menu fresh by constantly coming up with new items and different

blends and flavors in their coffee. Some of their latest hit drinks have been the Green Tea Latte

considering the health conscious consumers along with iced tea and Frappuccino for their

outlets in warmer climates.

7. Brand Marketing:

Starbucks has always portrayed itself as a high quality product and thus decided to rely on word

– of – mouth promotion only. This served to be a quite useful marketing strategy as comparison

to going for promotional ads in magazines, newspapers, billboards etc. They have recently

begun utilizing the social media websites in the most effective manner ever. Their Facebook and

Twitter pages have proved quite useful in promoting the image of Starbucks while also enabling

them to have direct communication with all their customers on one platform (voteforus.com

2011).

CAFFE NERO:

According to chairman of Caffe Nero, Gerry Ford (2008), Caffe Nero Group Ltd is ‘the largest

independent coffee retailer in UK, with over 400 stores in the UK’. It was founded in the year 1977 and

today has its outlets open overseas as well in Turkey and Middle East. They distinguish themselves from

other café’s in UK by emphasizing on the fact that they are an Italian Coffee Company. Their main aim,

as in the words of Gerry Ford (2008), ‘is to provide a European style coffee house experience offering

premium espresso – based gourmet coffee, authentic Italian food products and a relaxing atmosphere in

every store’.

Caffe Nero has been given many awards for its high quality coffee over the years and for its outstanding

experience that they deliver in their shops. Tatler has rated Caffe Nero as ‘The best espresso this side of

Milan while Egon Ronay has labeled it as “The Traditional Italian Café”. Caffe Nero has also been given

the label by UK consumers as “The best UK Coffee House” in nine consecutive years (Allegra Report, the

UK’s definitive guide for the coffee industry).

CAFFE NERO’S USP:

The Caffe Nero’s marketing strategy mostly emphasis on its unique selling point which is a pure Italian

theme. Caffe Nero portrays its self from more than just a café. Rather it has created a perfect blend of a

café cum bar and restaurant. Therefore Caffe Nero is not limited to only providing a place for coffee and

snacks rather you can go there just to enjoy a meal. They have a wide range of exquisite desserts along

with many Italian dishes like the Italian wraps, soups, sandwiches, pasta and paninis.

CAFFE NERO’S TARGET MARKET:

Caffe Nero mainly targets tourists in UK or the Italians searching for their Italian taste in cuisine. They

are targeting the middle – income group of people who are middle – aged, students or business people

who prefer to go to a café during their lunch breaks. Furthermore, Caffe Nero has formed a partnership

with the famous chain retail store, House of Fraser, due to which around 145 cafes opened up, many of

which were located within House of Fraser stores (James, Situation Analysis of the Caffe Nero Group Ltd

– Festive City http://www.ivoryresearch.com/sally-james.php Accessed on 16 April, 2011).

CRITICAL ANALYSIS BETWEEN THE TWO COMPANIES:

Now that a basic review has been given on the marketing strategies being used by both Starbucks and

Caffe Nero, an analysis will be done on what differentiates them from each other.

Caffe Nero and Starbucks are direct competitors but Caffe Nero distinguishes itself from

Starbucks by selling cheaper coffee than Starbucks.

Caffe Nero offers a wider range of food items along with its coffee beverages which makes it

stand apart from Starbucks which does not have such a wide range of assortments.

Caffe Nero adopts a strong brand positioning by emphasizing on its European – style coffee shop

as compared to Starbucks which is of American origin. Caffe Nero has a unique selling point

which emphasizes on the cafes continental – style whereas Starbucks is of American style.

Starbucks has successfully opened thousands of outlets overseas and in the international market

whereas Caffe Nero still lacks in international expertise and has just recently opened its stores in

Turkey and the Middle East.

Starbucks has plenty of outlets all over UK whereas Caffe Nero does not have sufficient outlets

in Central London.

Caffe Nero has a lot of potential of growing because it enjoys many unique selling points like its

pure European authenticity.

REFERENCES:

1. Ford, G (2008), ‘THE BEST ESPRESSO THIS SIDE OF MILAN’, [online] Available at

http://www.caffenero.com/ [Accessed on 16 April, 2011]

2. Voteforus.com (March 29, 2011) Starbucks Success Is It’s Word Of Mouth/Social Media/Viral

Marketing Strategy [online] Available at

http://www.sosemarketing.com/2011/03/29/starbuck%E2%80%99s-success-is-its-word-of-mouthsocial-

mediaviral-marketing-strategy/ [Accessed on 16 April, 2011]

3. James, S, Situation Analysis of the Caffe Nero Group Ltd – Festive City [online] Available at

http://www.ivoryresearch.com/sally-james.php [Accessed on 16 April, 2011]).

4. VoteforUs.com Starbucks Marketing Strategy Unconventionally Effective [online] Available at

http://www.voteforus.com/starbucksmarketingstrategy.html [Accessed on 16 April, 2011]

5. Kembell, B, Hawks, M, Kembell, S, Perry, L, Olsen, L 2002, ‘Catching the Starbucks Fever’, Missouri

State University. Unpublished.

6. Rajul (2010), ‘Starbucks vs Caffe Nero vs Costa: who wins?’, *online+ Available at

http://londonhotelsinsight.com/2010/05/10/starbucks-vs-caffe-nero-vs-costa-who-wins/ [Accessed on

16 April, 2011]