Costa Coffee – Differentiation

I have previously written about how Costa Coffee has chosen to compete with Starbucks by differentiating itself based on speed of service.  Check out the post here.  Well Whitbread, the parent company behind Costa Coffee, looks determined to deliver an even more consistent strategy with its latest decision to open drive-through outlets – akin to fast food.  Six outlets, the first of which opens next month, will be ready through out the coming year.

Although I have previously said that I feel it is a poor decision to position Costa Coffee as convenient – rather than high-quality – coffee, I do think this a good decision by the firm.  Not only because it is consistent in terms of their long-term growth strategy, but because it increases Costa Coffee’s competitive scope.  Albeit, their main competitors are Starbucks, Cafe Nero and the like, on the road – at service stations – the cafe also competes against fast-food outlets.

Both coffee and fast-food satisfy the same need for commuters traveling by car: a quick no-nonsense stop for refreshment, and back en-route to their destination.  Hence, Costa Coffee is now in the same competitive environment as McDonald’s and KFC.  Costa Coffee have already stressed their speed of service and have focused recently more on high-margin food.  But more importantly, this no longer comes at the expense of quality by changing who they are competing with – thus altering who customers compare them to.  Costa Coffee could only offer a faster service than Starbucks if it compromised its quality image; however, since fast-food outlets have an even worse reputation for quality, Costa Coffee can compete with fast-food drive-throughs on both quality and speed of service.

The danger of positioning these new drive-through outlets as supplying higher quality food with faster service is, however, that there is no positioning at all: consumers know the food at Costa Coffee is not great anyway and during peak demand they not have the resources to maintain a consistently fast service that fast-food outlets can.

© Joshua Blatchford, author of Manifested Marketing, 26/04/2011

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  1. Starbucks – Relationship & Services Marketing « Manifested Marketing – Marketing Blog

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