History And Background Of Costa Coffee

The extreme evaluation of the services of Costa Coffee shop is discussed in this report considering at Luton Mall particularly dealing on the Customer Relationship Management, Blueprinting, Physical evidence and Service quality. Initially the associated facts and issues are discussed in the theoretical and academic point of view by the author to accomplish the goal of this report. After that, analyzing the case study of Costa Coffee at Luton Mall service operations, author diverts theoretical consideration into concrete action. Customer relationship management, service quality and physical evidence has tremendous blow on the function of service organizations as service marketing is the main theme of this report. By organizing service operations blueprinting any error can be recognized and handled.

1. Introduction:

The main purpose of this report is to analyze the services of ‘Costa Coffee’ in the local shopping mall ‘Luton Mall’ which is belonging to significant evaluation on customer relationship management, blueprinting, physical evidence and service quality of the coffee shop. At the present phenomenon, economic growth and economic development has been affected significantly by the service marketing in many regions. According to Gilmore (2003), new jobs and growth are enriched in developed countries by the contribution of service sector. But only developed nations are not dominating the service industry solely. Therefore, some key facts and issues are considered to enhance the growth of service industry to achieve the goals. Those key issues are customer relationship management, blueprinting, physical evidence and service quality. So, considering and integrating these issues with service provider organizations are necessary to achieve growth and success of service marketing.

2. Case Study:

In the UK, Costa is belonging to the business segment of WhiteBread Plc. Costa is organized by franchising or owned and operated under WhiteBread to accelerate the income for the group. The biggest coffee shop chin in the UK is Costa Coffee which is consisted with 1069 stores. It has worldwide penetration and operates over 25 countries along with 531 stores. Costa has signed deal with the world largest Hotel chain ‘Hilton Hotel’ for the goodwill of its product and service quality. In UK, Costa provides service to 60 Hotels by supplying coffee. In 2010, the revenue of Costa was £339m which was 23.6% of the WhiteBread revenue. According to the Annual Report of WhiteBread (2010) and Datamonitor Company Profile (2011), the most powerful strength of the group is its excellent service quality and performance. The key issues of Costa Coffee service at ‘Luton Mall’ will be assessed by the report. While visiting the shop and undertaking notes, the visual experiences and physical experiences are necessary for significant evaluation of service marketing areas taking into consideration of Costa Coffee at the local shopping mall.

3. Physical Evidence:

Physical evidence is significant for the organizations because customers are the most important ingredients of the service system. Sometimes customer faces arbitrary situations with the observed service and actual service but customer services are surrounded by physical evidence. It is important to manage evidence strategically by the service marketer because the attraction and destruction of value depends on the management ability of the service marketers. According to Verma (2009), the product package to product is service physical evidence. For an example, well established marketing mix P’s are consisted with packaging. For this packaging, salesman works silently without any hesitation. An appropriate packaging can influence customer mind by attracting customer attention, providing customer confidence, product characteristics and making impression. For excellent sale, product package is much more important that is impressive presentation of marketing efforts. Proper packaging influences customer evaluation of product and judgement of product. According to Verma (2009), service categories include physical evidence are divided into two parts peripheral and dominant. The leading fraction of the provided service facilities are consisted with dominant evidence. On the other hand, peripheral evidence has an influence to make customer decisions though it is not observable as dominant physical evidence. In regard to Verma (2009), physical evidence again segregates into three parts those are facility exterior, facility interior and other tangibles. According to Solomon (1995), physical evidence influences the service marketing. Socialisation, facilitation and service packaging are the proposition of physical evidence. Packaging is considered in products physical evidence as stated earlier but in case of service product ‘service packaging’ is the term for service protection and preservation. Because service products are not like goods, those are intangible items. Complex interaction of human and non-human ingredients composing a system that creates the output which is referred as service facilitation. According to Verma (2009), values, norms, expectation, roles and relationship are the main theme of service socialisation by appropriate interaction of service providers and service users with clear understanding.

While visiting the Costa Coffee shops at ‘Luton Mall’ theoretical understanding and experiences are considered. It is clearly notified that in the service providing process Costa Coffee has various classes of physical evidence. Self help or service order facilities are provided to customers and it has interior and exterior facilities for both of its shop. Moreover, customer services are provided by Costa Coffee mainly on the basis of order. Making deals, managing lead times, product and service availability and cleanliness including quality are ensued by Costa Coffee in the mean time. Costa Coffee at ‘Luton Mall’ normally does not show the sub products like straw, sugar and napkins. Those are the peripheral evidence of the physical evidence recognized by visiting Costa Coffee.

4. Service Quality:

There are two different perceptions about service quality according to the view of service provider and customer. According to the Fisk, Grove and John (2009), service providers think about service quality that the organizations specifications and requirements are portrayed by the levels of service characteristics. On the other hand, customers think about service quality where customer service exceeds or meets the expectations. Customer satisfaction and product quality are two great ingredients to establish the service quality’s foundation (Brady and Cronin, 2001). Hence, customer retention, profitability, cost, customer satisfaction and positive word of mouth are the main basis of service quality. In addition perception and expectation gap paradigm leads to establish service quality conceptualisations. In this case expectation and perceived service are compared for getting quality result. The most popular SERVQUAL model is used to found the gap paradigm of expectation and perception. According to the Parasuraman, Zeithaml and Berry (1988), perceived quality is considered as “overall superiority or excellence is a great deal of customer judgement” on the other hand, customer expectation is considered as “for impending transaction or exchange what facts likely to happen”. The ingredients of service quality like reliability, responsiveness, competence, access, security courtesy, knowing the tangibles and credibility are recognized by them. The four occurring gaps (Figure 1.1) that may create service quality problems in the organization are also recognized by them.

Figure: 1: Service Quality Gap Model, (Parasuraman, Zeithaml and Berry, 1988)

The perception and expectation gap are classified by these four gaps. In addition, previously mentioned ten dimensions of SERVQUAL model have been converted into five dimensions those are tangibles, reliability, assurance, empathy and responsiveness (Parasuraman, Zeithaml and Berry, 1988). These five converted components are given below in the diagram.

Figure: 2: SERVQUAL model, (Brady and Cronin, 2001)

Costa Coffee preserves highest possible standards that lead to attain perceived service quality which has founded by concluding the theoretical understanding of Costa coffee. After getting the physical experience about service of “Luton Mall”, this is experienced that the customers visit the shop frequently to know their desired product. Customer choice and desired product is an indication of reliability and some staff members are aware of this circumstance. In addition, the customer preference and modified provided service is the indication of service responsiveness. For example, customers are provided services according to their choice like whole milk, semi-skimmed or skimmed coffee are organized by the choice of the customer what they want. Besides, Costa Coffee establishes assurance and empathy for customer to meet customer expected service that is, if service is unsuccessful to assemble customer expectation they provides refund and customize the product to attain perceived service quality.

5. Customer Relationship Management:

The new marketing concept ‘Mantra’ has been evolved for organizing Customer Relationship Management. The new marketing concept is consisted with revelation of marketing techniques and tools. To trace out the behaviour of customer many organization have developed Customer Relationship Management like Microsoft, SAP, Oracle and many others. Long-term profits can accumulate from the value customer for that reason knowing their understanding and motivation towards the product is mandatory. Identifying customer behaviour leads significant potentiality to achieve long-term profits. Usually by launching new products and acquiring competitor’s products, marketers are intended to attract customers. According to Winer (2001), organizations converted the technique from customer acquisition to conversation to customer retention. Customer retention leads to significant impact (as 95%) on the net present value. Little number of customer retention cause great impact on profitability and net present value that is provided by customers (Reichheld, 2001). According to the Winer (2001), to establish a complete CRM perspective organization need to acquire the information about customer and those information provides chance to build appropriate CRM. The basic model of CRM is given below including 7 components.

Figure: 3: Basic CRM Model (Winer, 2001).

To accelerate the operations in UK and international market Costa Coffee preserves customer relationship management strategy that lead to attain growth. Costa Coffee Club card is provided to the customers in the UK markets by the help of another organization namely “Givex” which is known as loyalty programme. Registration is necessary to use and protect the card. Any time customers purchase any product need to swipe the card in the Costa Coffee. To trace out the customer’s behaviour, price, undertake right product, promotion offer to the target customer and overall providing Costa and ‘Givex’ utilize previously mentioned procedures given on the figure 3. In this procedure Costa can know the process to retain the customer by providing perceived service quality. It is experienced that almost every sales assistant wants coffee card when they visit Costa Coffee at Luton Mall. Another card system is available in the Costa Coffee that is point card, when the customers do not have a card they are provided point card. For every purchase customers get a point and after a certain period of time those point are accumulated until it able to purchase Costa products. After analyzing the financial performance, loyalty programme and continuous national and international growth a concluding remarks can make that Costa Coffee maintain an effective CRM strategy for new customers and retaining existing customers.

6. Blueprinting:

Blueprint can be used in various sectors. For visualizing the whole process blueprint is using in the service marketing. To recognize and keep away from failures and bottlenecks blueprint is used in the single process where service interaction is necessary to identify and manage failures, possible deviations, operations and interaction. According to Bruhn and Georgi (2006), to plan the management of human resources, capacities and technologies service provider are taken secondary activities and internal service for the interaction process. It is important for every organization including service marketing to undertake blueprint. Complete performance operations of the organization can be drawn by the help of blueprint. For the sake of blueprint organizations can minimize the error and can accelerate efficiency though reducing cost. Many unnecessary activities also can be minimized by the help of blueprint.

The way of operations and strategy is deferent among the organizations. If two organizations are in same industry it does not mean blueprint is same. Organizations belong to same industry or competitor their blueprint is different. Conversely the blueprinting service for Costa Coffee is given below.

It is clearly visible in the above figure that the service process of Costa Coffee at ‘Luton Mall’. The service blueprinting of Costa Coffee is divided into three significant lines. Employee’s interaction to the customers and dealing with the orders and CRM are described in the interaction line. In addition, in the second line employee’s tendency to provide service at different stages of the shop at Luton Mall are shown in the visibility line. The manager ability to manage employee wages, stocks availability, store performance and customer related issues is described in the final stage which is internal interaction.

Figure: 4: Costa Coffee Service Blueprinting

7. Conclusion:

The procedure of managing service operations, strategies and implementing the theoretical and academic understanding has discussed in the above report taking into consideration of Costa Coffee shop at ‘Luton Mall’. In addition, physical evidence of service has organized by critical analysis and the ways of managing curtail part of the physical service. Customer expectations and customer retention procedure has also discussed by providing standard service quality. The way of managing customer relationship management to retain customers and blueprint of service operations for achieving the goal has stated in the above. Physical evidence of service, effective service operation, managing standard service quality is necessary though service is intangible. For achieving the success, customer relationship management is an effective ingredient for the organizations. All the elements of success has effectively implemented in the ‘Costa Coffee’ at ‘Luton Mall’ for that reason it is an identical example.