CrossComparison Costa coffee - Barclays

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Lord Ashcroft International Business School
Principles of Marketing Management
Department: Marketing Enterprise and Tourism
Module Code: MOD004151
Module leader: Cassie Jones
Level: 7
Academic Year: 2015/6
Semester/Trimester/Session: SEM1
SID: 1500554
Name: Danilo
Surname: Valentino
Words count: 3,506

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Contents
Introduction ............................................................................................................................................2
1. Evaluation of the organisations activities against the Marketing models..........................................4
1.1 SERVQUAL.....................................................................................................................................4
1.1.1 Application of the SERVQUAL model and cross comparison of the chosen companies........7
1.2 Five Forces Model.......................................................................................................................13
1.2.1 Application of Porter’s model and cross comparison of the chosen companies.................14
2. Evaluation of the organization's economic performance.................................................................17
2.1 2014 Revenues and Market Value..............................................................................................17
2.2 Investments.................................................................................................................................18
2.3 Prices and Wages........................................................................................................................19
2.4 Internationalization of the service..............................................................................................19
2.5 Financial Trends ..........................................................................................................................21
3. Evaluation of the organisations ethical, social and sustainability performance through the Basic
Perspectives (BP) from Laczniak & Murphy (2006) ..............................................................................22
3.1 BP1 ..............................................................................................................................................24
3.2 BP2 ..............................................................................................................................................26
3.3 BP3 ..............................................................................................................................................26
3.4 BP4 ..............................................................................................................................................29
3.5 BP5 ..............................................................................................................................................30
3.6 BP6 ..............................................................................................................................................30
3.7 BP7 ..............................................................................................................................................31
Conclusion.............................................................................................................................................33
Appendix 1 ............................................................................................................................................33
References ............................................................................................................................................34
Introduction
This work is aimed to compare two Companies in three different steps:
1. Companies’ activities against a chosen marketing model
2. Evaluation of economic performance
3. Evaluation of ethical, social and sustainability performance

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The main organization is going to be represented by Costa Coffee, a coffee shop
chain owned by Whitbread; while the term of comparison is represented by Barclays,
a British multinational banking and financial services company based in London.
Both the companies provide services, are English and operate internationally too. In
terms of “size”, the table below shows some relevant numbers in the UK and abroad:
Costa Coffee Barclays
Number of UK
stores/branches
1.755 1.600
Number of
stores/branches
abroad
1.106 3.150
Number of countries
outside the UK
30 50
Market Capitalization
(billion)
7.75 38.6
Table 1, Size Comparison, Sources: (WhitbreadPLC, 2014) (BarclaysPLC, 2014)
According to these numbers, it is possible to state that the Companies present the
same size in terms stores/branches operating in the UK. Moreover, both the
companies operate abroad with a relevant number of outlets. The last line of the
table reports the Market Capitalization, which will be deeper analysed in the
corresponding paragraph 2.1.

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1. Evaluation of the organisations activities against the
Marketing models
The Marketing models chosen to evaluate the companies’ activities are the
SERVQUAL from Zeithaml, et al. (1988) and the FIVE FORCES MODEL by porter.
1.1 SERVQUAL
The abbreviation SERVQUAL stands for “Service Quality”. This Marketing model
evaluates the customers’ perception of service quality in service and retailing
organizations (Zeithaml, et al., 1988). In particular, Zeithaml (1987) argues that the
perceived quality is the consumer’s judgment about the entity’s overall
performance. Therefore, perceived quality results to be opposite of the objective
quality of a service. According to the authors, the SERVQUAL results to be a
multiple-item scale that retailers can use to better understand customers’
expectations and perception of the service.
Therefore, their aim was to identify the reasons why a customer can experience
a poor quality service through the theory of the “seven gaps”, which allows to
identify where the service has not been delivered in the proper way (Zeithaml, et al.,
1985).
Păuna (2012) actualizes this marketing model, underlining that in recent years, the
concept of quality has been broadened, thus it can be orientated on the producer,
on the customer or on the competition:
1. The producer looks at the process of production and the quality is objectively
measurable;
2. The customer, thus the final user of the product, will measure the
performance evaluating the user guide of the product/service;
3. In the competition point of view, the company will establish the level of the
service comparing it to other companies.
Moreover, Păuna (2012) aim is to simplify Zeithaml’s model, thus he adapts the gap
analysis from Zeithaml et al. (1985) as it follows:

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Figure 1, Service Quality Gap Model, (Păuna, 2012)

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Table 2, Service Quality Gap Model, (Păuna, 2012)
Consequently, the author identifies 5 factors which can measure both the
perceptions and the expectations:
Dimension Description
1.
Material Goods
Physical facilities and available equipment, staff
appearance; how easy to understand the
communication materials are
2. Reliability Supplying the promised service safely and correctly
3. Prompt Response Helping customers and supplying a prompt service
4. Security Transmitting a feeling of trust
5.
Empathy
Offering the customer an attentive and individual
service
Table 3, The determinant factors of service quality, (Păuna, 2012)
Therefore, the table above can be explained using Kumar, et al. (2009)’s work as
showed below:
Gap 1: between consumers' expectations and
degree of understanding of those by the service
suppliers
Gap 2: between the degree of understanding of
consumers’ expectations by the management and
the definition of service quality related to that
Gap 3: between the quality defined by the
producer and the quality perceived when the
service is put into practice
Gap 4: between the quality of the service and the
quality promised by the company
Gap 5: between the perceived and expected
experience

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Figure 2, Measuring Service quality using SERVQUAL, (Kumar, et al., 2009)
In particular, the different “SERQUAL dimensions” converge in order to evaluate the
relationship between the expected service (also influenced by external factors) and
the perceived service. The eventual gap (5) existing in this evaluation, will influence
the final Perceived Service Quality.
1.1.1 Application of the SERVQUAL model and cross comparison of the chosen
companies
The further step is to investigate how Costa Coffee’s activities can be applied to this
marketing model, comparing them to Barclays’ activities related to the same model.
First of all, it is important to list the services offered by the companies:

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Table 4, Services offered by Costa, (CostaCoffee, 2015)
Figure 3, Services offered by Barclays, (Barclays, 2015)
Supplies the finest ingredients and technology to produce
speciality drinks that customers love: Caffe-latte, cappuccino
and more
It also provides an ideal alternative to the hot drinks, offering
a wide range of refreshing blended and over-iced drinks,
particularly suitable for warmer periods of the year
Every Costa shop presents a dedicated stand for biscuits and
various snaks
Uses high technology machines made in Switzerland and
Italy, providing high quality drinks in the shortest time
possible

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After listing the services, it will be underlined if any gap occurs in the process of
delivering them. In order to do so, a questionnaire should be required to better
investigate customers’ opinions about certain facets of the service. However, due to
the lack of resources and time, this work is going to evaluate the customers’
feedbacks available online and highlight if any gap occurs in the process of
delivering service.
According to a survey conducted through 2013 and 2014, Costa Coffee is the
dominating shop in the UK, where people buy hot drinks out of home. In fact, in 2014
the 73% of consumer has used Costa Coffee rather than other shops like Starbucks
and Café Nero (Mintel, 2014).
Figure 4, Outlets used to buy hot drinks out of home, July 2013 and September 2014,
(Mintel, 2014)
Whereas, according to Blackmore (2013), in 2013 Barclays is just placed at the 15th
position in the UK banks ranking, three percentage points below the average, for the
quality of Customer Service in different financial areas.

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Figure 5, Financial providers rated by You, (Blackmore, 2013)
In the case of Costa, it is evident that the Company is the leading among the coffee
shop chains in the UK. While this information can be translated into a consequent
general statement the Company is well organized in the way of delivering its service,
at the same time it is possible to find some discrepancy in the experience of certain
customers:

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Figure 6, Complaint about Costa, (Everett, 2014)
Figure 7, Trip Advisor Reviews, (Tripadvisor, 2015)

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Figure 8, Trip advisor negative reviews, (Tripadvisor, 2015)
As the figures above show, some consumers report a bad experience they had in a
Costa branch, and sometimes that is enough to keep them away from the brand
forever. This discrepancy can be justified referring to Fleming (2006), who argues
that businesses sometimes provide an inconsistent service because managers and
executives do not have the tools to efficiently manage and improve the performance.
This “local variability” suggests big Companies like Costa, wide distributed on the
territory, to look carefully at the operative branches and assure a more standardized
level of service, also because this lack of consistency is able to increase the costs in
terms of managing complaints and cause the loss of customers. Moreover, the
Company could study if there is a Gap anywhere in the scale of gaps from 1 to 5
provided by the SERVQUAL model, with a consequent low score in the table of the 5
key factors. For example, the difference between the messages given by the brand:
 high quality
 experienced staff
and the actual negative experience of a customer that has to explain the Barista how
to make a drink (Tripadvisor, 2015), causes the Gap 4, that consists in the difference
between the quality of service experienced and the quality of service promised by
the company (Păuna, 2012). As a consequence, the second point in the table of the
5 key factors (Table 3), Reliability, will score a low result and will suggest Costa

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Coffee top managers where to focus their efforts to improve the service. One
initiative that Costa has undertaken, in order to assure a high level of service along
with a great customer satisfaction, is the “Costa Happy Taste Guarantee”, which
allows the replacement of a drink, whenever the customers is not satisfied.
(CostaCoffee, 2015).
In Barclays’ case, however, the Figure 4 shows that the company is already below
the average for quality of service. In fact, as Bachelor (2014) reports in The
Guardian, Barclays has been the most complained about the banks in 2014. In
particular, the majority of complaints has been about payment protection
insurance and general banking products. This lack of quality in the service can be
reconnected to the Gap 3, where there is a difference between the quality of service
defined by the producer and the quality perceived when the service is put into
practice (Păuna, 2012). This gap corresponds to a low result for the points 2. and 4.
in the Table 3. The first point is again about the Reliability and how the service
should be delivered as promised by the Company, while the second point is about
the feeling of Trust, which, in this case, is compromised because consumers did not
receive the proper protection insurance for their payments. These events gave
Barclays the award of “most fined bank in the UK” according to the Financial
Conduct Authority (Blackmore, 2013).
1.2 Five Forces Model
The five forces model from Porter, is used by managers to look at the balance of
power between different type of organizations, in order to analyse the attractiveness
and the potential profitability of an industry sector (Hanlon, 2013). Although it is
mostly relevant for a strategic approach of companies, it also provides important
contents in terms of marketing, as the table 5 will show.

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Figure 9, Five Forces Model, (Hanlon, 2013)
It can be applied through five questions:
 Force 1: Threat of New Entry?
 Force 2: Buyer Power?
 Force 3: Threat of Substitution?
 Force 4: Supplier Power?
 Force 5: Competitive Rivalry? (Hanlon, 2013)
1.2.1 Application of Porter’s model and cross comparison of the chosen
companies
Marketing Force
1: Threat of New
Entry (Competition)
 Limited access to
distribution channel,
innovation and product
differentiation
 Constant innovation and
good service required to
Costa in order to be
“unique”
Result: difficult access to new
competitors in the UK Market
In this sector the barriers are:
 Switching costs represents a
barrier
 Capital requirements
 Product differentiation economies
of scale.
Micro finance institutions could represent
a threat to Barclays as it targets the lower
end of the market, which is the largest
part of the global market. Thus, in
general, the threat of new entrants is low
Result: difficult access to competitors, but
there are other ways to compete with a
bank

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Marketing Force
2: Buyer Power
(Customers)
 Low switching cost
 Medium level of price
sensitivity
 Many other products
offered by close an
distant competitors
 Possibility for the
customer to brew his
own coffee thanks to the
machines provided for
domestic use and lower
long-term costs
Costa tries to deal with the
“home-made” coffee, providing
its own branded products (“la
cafetiere” and coffee beans) to
customers who wish to make
their own drinks at home
Result: threats of home-made
products and low switching cost
Due to high concentration and
availability of information of the
market as well as the great
number of alternative financial
institutions, customers in this
sector have more power.
Barclays’ advantage is
founded on the fact that it offers
insurance services, e-banking
and free credit cards as some
of the services that differentiate
it from its main rivals. In
general, the power of the
buyers is high.
Result: Barclays needs to
provide additional services to
retain more customers
Marketing Force
3: Threat of
Substitution (close
and distant
competitors)
 Tea
 Chocolate
 Soft drinks
 Smoothies
 Juices
Every day people are more
concerned about healthy food
and, in this sense, caffeine
represents an addictive drug
that consumers start to replace
with natural drinks such as
herbal teas or smoothies.
Result: the addictive nature of
coffee, as well as the allergies to
dairy drinks, could make
consumers decide not to drink
Costa products anymore. Thus,
through differentiation, the
company provides dairy-free
drinks and caffeine-free drinks.
 Cost of additional
services to stop
customer switching,
 Less customer
switching to the
substitute
 Threat of obsolescence
However, a threat to Barclays
bank is the availability of non-
banking financial institutions
that provide similar services
and products.
Result: the nature of the
service itself, implies a high
switching cost, but Barclays is
still threatened by non-financial
institutions

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Marketing Force
4: Supplier Power
(Suppliers)
 Lack of coffee beans
producers
 Crowded market and
rising production prices
for coffee beans
 The choice of suppliers
is also influenced by
their environmental and
economic quality
Result: Costa’s cares about
suppliers’ work conditions and
owns its own roastery in London
 The depositors are the
main suppliers of
Barclays: deposits
represent the largest
part of its working
capital.
 The world has become
more corporate, thus
suppliers control the
institution's interest
rates and their
bargaining power is
high.
Result: Barclays has to deal
with the high bargaining power
of customers, also because
they are its first suppliers
Marketing Force
5: Competitive
Rivalry
“If you can prime your target audience with cues
that separate them from other customer groups
that favour your competition, they will be more
likely to believe your message.” (Dooley, 2011)
 Many existing
competitors providing
similar products
 Already mature market
Result: through branding
strategies, Costa delivers
unique messages quality and
sense of belonging to the brand
(e.g. The slogan itself is “Costa,
for coffee lovers)
 Product/service
differentiation
 Growth rate of the
industry
 Concentration in the
industry and the number
of competitors
 An Increasing number
of financial institutions
has also caused the rise
of competitive rivalry
Result: Barclays has to invest
in branding in order to try to
limit the damages caused by
the activities on the market of
non-financial institutions
Table 5, Five Forces Model adapted for a Marketing evaluation of the organizations,
(BarclaysPLC, 2014; WhitbreadPLC, 2014; Costa, 2015; Barclays, 2015)
As the table above shows, due to the different nature of the organizations’ sector, the
barriers for new entrants, the type of buyers and suppliers, the threat of substitution
and the competition are different as well as the actions undertaken by the
Companies. Thus, the marketing approach required to Costa is more focused on
differentiation and product innovation, while for Barclays, the combination between
close and distant competition (kotler, et al., 2012), pushes the bank to invest money
in order to build a strong brand image and retain its customers, who could be
attracted by the services provided by non-financial institutions.

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2. Evaluation of the organization's economic performance
2.1 2014 Revenues and Market Value
According to WhitbreadPLC (2014), in 2005 Costa, with its 426 stores represented
the 6% of Whitbread sales. Since then, Costa’s sales have grown at 23% a year and
in 2014 it represented the 38% of Whitbread’s total revenues, becoming the
leading coffee shop in the UK.
Costa's incredible sales, led Whitbread's to gain a pre-tax profits rise by 16.5% to
£412m in the year ended 27 February – beating analysts' forecasts of £402m
(Farrell, 2014).
Barclays PLC instead is composed by different sources as follows:
Figure 10, Barclays Revenues, (BarclaysPLC, 2014)
These sources present the following distribution:

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Figure 11, Percentage of Contribution, (BarclaysPLC, 2014)
As shown by the figure 11, the two most relevant areas are the Personal &
Corporate Banking and Investment Bank, which contribute to the entire Group
Income with the 65%.
Overall, Barclays’ adjusted profit for the financial year 2014, after taxation, was
£3,798m and the statutory profit after tax for 2014 was £845m.
Additionally, the market capitalization, which represents the number of outstanding
shares of the Company times the price of a single share (Financialtimes, 2015), is
reported. For Costa Coffee it is 7,75 billion(£), while for Barclays it is 38,6 billion(£).
As it is evident, the value of the two companies is relevantly different, due to the fact
the Costa is part of a bigger Group (Whitbread) while Barclays is on its own.
Moreover, this value referring to the company size, is mostly relevant for the
investment community.
2.2 Investments
In 2013, Costa Coffee opened 73 new shops in China and Whitbread said it was also
planning to expand its Costa business in France after four stores – opened in 2013
in Paris – performed well. (Farrell, 2014)
Moreover, Whitbread plans to reach 900 stores in China by 2020, from about 340
stores already operating there. At the same time, in 2015 Costa Coffee owner
35%
17%
14%
30%
4%
Personal & Corporate Banking Barclaycard
Africa Banking Investment Bank
Barclays Non-Core

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promised £15m investment in digital development, in order to improve the benefits
linked to the use of a Costa Coffee club card, such as free Wifi. (Du Preez, 2015)
Thus, if for Costa Coffee, and then Whitbread, a growing positive trend can be
identified looking at the investments, Barclays has been facing a more difficult
period.
In fact, as Wilson (2014) argues, after Barclays acquired Lehman Brothers’
operations due to its collapse, the British bank has started facing the increased US
protectionism in terms of financial regulation. This situation has also been
aggravated by the “Britishness” of the Bank, which does not have place in the
management, for US-born executives who can create the right connection with Wall
Street. The chief executive of Barclays, Antony Jenkins, and his senior team, tried to
propose a new strategy for the investment bank, but it seems that a radical
rethinking of the entire bank’s business model needs to be undertaken.
2.3 Prices and Wages
Costa Coffee’s price policy is strictly linked to the National Living Wage (NLW), as a
consequence, in the second part of 2015, Whitbread announced a rising of prices for
the months, due to the increase of NLW, therefore an increase also for Whitbread
employees’ wages (the minimum wage has been increased from 6.8£ per hour to
7.2£) (Independent, 2015).
If Whitbread just accepted the increase of NLW, since 2004, Barclays has been
actively supporting the increase of the last mentioned: “Having supported the living
wage for over ten years, we know that it can improve productivity, morale and
retention rates. This is not just an expression of our corporate Values or an issue of
social impact, but good business sense”. In fact, in 2014 Barclays has commissioned
the University of Strathclyde, together with the living wage Foundation, to study
which is the value that can be offered to employees (BarclaysNews, 2014).
2.4 Internationalization of the service
As already mentioned, Costa is an international brand operating in the UK and
abroad, through different channels: equity stores, franchise stores and stores

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operated by joint ventures, as well as a wholesale operations; additionally, Costa
Express now has over 3,500 self–service machines.
Two of latest movements have been the subscription of a franchise agreement with
Fawaz A. Alhokair & Co., with the aim of opening the first Costa Coffee store in
Casablanca in early 2014; and the expansion into Spain, again through regional
franchise agreements with Sandpiper Iberia and The Coffee Company Spain
Limited. The first Costa Coffee store, outside of the airports, will open in Malaga
within the next two months. (Whitbread, 2015; Whitbread, 2014)
Figure 12, International Growth, (FinancialOrbit, 2013)
Barclays, on the other hand, operates in more than 50 Countries, with home markets
in UK, US and South Africa. In terms of income, in 2014 Barclays gained £572m on
available for sale assets, driven by foreign exchange fluctuations; and a £461m
valuation gain on the US Lehman acquisition assets. Moreover, the Company
registered £984m from the so called “Africa banking” (BarclaysPLC, 2014).

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2.5 Financial Trends
Figure 13, Revenues Trend for Costa, (WhitbreadPLC, 2014; WhitbreadPLC, 2013;
WhitbreadPLC, 2012; WhitbreadPLC, 2011)
Figure 14, Revenues Trend Barclays, (BarclaysPLC, 2014; BarclaysPLC, 2013;
BarclaysPLC, 2012; BarclaysPLC, 2011; BarclaysPLC, 2010)
After several economic considerations about the two chosen companies, the
respective trends for the revenues of the last 4-5 years, better underline their
performance.
£425.00
£541.90
£672.40
£807.70
£0.00
£100.00
£200.00
£300.00
£400.00
£500.00
£600.00
£700.00
£800.00
£900.00
2010/11 2011/12 2012/13 2013/14
Costa Coffee revenues(m)
£5,478.00 £5,685.00
£6,901.00
£5,167.00 £5,502.00
£0.00
£1,000.00
£2,000.00
£3,000.00
£4,000.00
£5,000.00
£6,000.00
£7,000.00
£8,000.00
2010 2011 2012 2013 2014
Barclays adjusted profit before tax (m)

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As the Costa Coffee’s red trend-line highlights, the Company has been characterized
by a consistent growth during the last years and this trend is the mirror of what the
bigger Group, Whitbread, is experiencing too, due to the right actions undertaken by
the management. For Barclays, the situation is slightly different. For instance, the
trend-line demonstrates how the Company has not been growing in terms of
“adjusted profit before tax”. This indicator, typical of banks, is the profit before tax
adjusted to exclude the impact of some other values. It provides a better basis for
comparing business performance between periods, however, this value is
considered to be significant, but not representative of the overall business
performance, because purified of some other important entities such as own credit
and provisions for Payment Protection insurance (BarclaysPLC, 2014). This negative
trend for Barclays, for the last years, reflects what happened to the Company in
terms of investments. As already stated, one of the big issues that the Chief
executive and the senior management team had to face, was the “US situation”
about the acquisition of Lehman Brothers Group and the increasing protectionism of
the US market towards the foreign investors.
3. Evaluation of the organisations ethical, social and
sustainability performance through the Basic Perspectives
(BP) from Laczniak & Murphy (2006)
Investigating the Companies’ responsibilities in terms of ethical, social and
sustainable performance, it is possible to underline some key aspects for both Costa
and Barclays:
Basic
Perspectives
COSTA COFFEE BARCLAYS
1
Societal Benefit:
Ethical
Puts People
First
- Looks after British Farmers
- Looks after farmers from the
growing-coffee countries
- Provides money to build
schools in developing
Countries
- Good Together program
- Commitment in Banking on
Change
- Commitment in building
Young Futures
- Health, Safety and Welfare
Policy for the employees
- Operating in accordance
with universal Human Rights

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2
Two Realms:
Ethical
Expectations for
Marketing Must
Exceed Legal
Requirements
- Embraces the increase of
National living wage, setting
the minimum wage to £7,2
per hour, from £6,5
- Does not just provide
recyclable tangible outputs, it
wants to excel by providing
one of the World’s most eco-
friendly cups
The Company’s commitment
in sustainable investments is
stated in Barclays (2015),
where the website describes
how the Bank is concerned
with this topic even though
the most important
international financial
regulatory agreement, Basel
III, does not have particular
indications for long-term
investments in sustainable
initiatives
3
Intent, Means,
and End: Three
Essential
Components of
Ethical Analysis
- Intent: Costa wants to
deliver an ethically correct
and sustainable service
- Means: it uses eco-friendly
products that come from well
remunerated suppliers
- End: does Costa follow
this process until the end
providing precise policies
in terms of disposing of the
used products?
- Intent: reduce the carbon
emissions
- Means: dedicated policies
for business trips and
properties portfolio
- End: exceeded the target
set by 10% thanks to a the
accurate implementation of
certain policies
4
Marketing
Managers Differ
in Moral
Imagination and
Development:
Four Types
Jim Slater, Costa Enterprises
managing director, can be
identified as a Legalist
Marketing Manager according
to what he declared in
Reynolds (2012)
Antony Jenkins, who
became chief executive in
2013, re-introduced a more
ethical way of
thinking/acting, which had
been lost because of the
previous chief executive. In
this way he can be classified
as a Moral Striver
5
Five Essential
Ethical Precepts
for Enlightened
Marketing
As Laczniak & Murphy (2006)
suggest, the first two
principles (non-malfeasance
and non-deception) are
embodied in the Costa
Coffee’s Code of Conduct,
which also promote the
principle of distributive justice
As Laczniak & Murphy
(2006) suggest, the first two
principles (non-malfeasance
and non-deception) are
embodied in Barclays’ Code
of Conduct, which also
promotes the principle of
stewardship.
6
Six Basic
Stakeholders:
Embracing the
Stakeholder
Concept
- Primary stakeholders: they
are actively involved in the
Company through the “Share
save scheme”
- Secondary stakeholders:
Costa values its suppliers
and tries to build long term
relationships
The adoption of a
Stakeholders orientation
results to be a fundamental
part of a bank, therefore
Barclays strives for a strong
engagement with all of its
stakeholders, from
employees to customers

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7
The Seven Steps
of Moral
Reasoning for
Marketing
Managers
Costa follows the seven steps
with consistency and focus
on its objectives, which are
mainly linked to the
sustainability of the products,
and the concern for the
population living in the
growing-coffee countries
Thanks to Antony Jenkins,
Barclays has focused on an
ethical way to manage
customers and investments.
Additionally, the bank,
aiming to lower the carbon
emissions through
sustainable investments, has
managed to report excellent
results
Table 6, BPs Grid, (Laczniak & Murphy, 2006)
3.1 BP1
As part of the Whitbread Group, Costa Coffee’s policies are embedded into a wider
series of actions undertaken by Whitbread, incorporated in a project named “Good
Together”:
Figure 15, “Good Together” for 2014, (WhitbreadPLC, 2014)

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In particular, Costa Coffee’s contribution to the Good Together program consists of
three main actions:
Environment & Rainforest alliance are both focused on the sustainability and
support of British farmers. For a Company that handles and provides “the world's
second most tradable commodity (coffee) after oil” (TheGuardian, 2011), it is very
important to control the goods provided from the production to the waste:
 Cups: Costa provides one of the World’s most environmentally eco-friendly
paper cups;
 Machines: the coffee machines used, are characterized by an auto-standby
option that put them “to sleep” when they are not used, this reduces the
carbon emissions;
 Recycling: Costa’s Roastery, in London, is one of the greenest in the world
thanks to the continuously reduction of carbon emissions, a 100% renewable
energy supply and 0% waste to landfill;
 Grounds for Grounds Project: thanks to this initiative, customers can go to a
Costa shop and ask for used coffee grounds for free (for example grounds
can be used for gardening);
 Supporting British and non-British Farmers: to support British farmers, Costa
only buys English milk, assuring that a fair price is paid for it. Moreover, Costa
is the only coffee Company in the UK that just uses coffee beans grown
sustainably. In fact, the Rainforest Alliance encourages farmers all over the
World to grow their crops in a sustainable way looking after the land for the
long-term;
Additionally, the Company includes the Costa Foundation, a charity organization
founded in 2007 with the aim of “giving something back” to those growing-coffee
countries such as: Colombia, Costa Rica, Ethiopia, Guatemala, Peru, Uganda and
Vietnam. Its mission is to improve the life of boys and girls living in these Countries,
providing education and relieving poverty. Thus, in 2013/14, the Costa Foundation
managed to raise £1.5m destined for school building projects; until today, this
Foundation has supported 41 schools in eight different Countries (Costa, 2015;
WhitbreadPLC, 2014).

26
Barclays, in the same way, puts people before everything thanks to Citizenship
program, composed of areas of different focus:
 Banking on change
 Building Young Futures
 Barclays spaces for sports
 Social Innovation
 Our people
 Diversity and inclusion (BarclaysPLC, 2015)
Therefore the bank’s managers declare: “We operate in accordance with the
Universal Declaration of Human Rights and take account of other internationally
accepted human rights standards. We also promote human rights through our
employment policies and practices, through our supply chain and through the
responsible use of our products and services”. (Barclays, 2015)
3.2 BP2
Not only Costa demonstrates to respect the law, for example, embracing the rise of
NLW and setting its minimum wage to £7.2 per hour from £6.5, it also wants to
achieve a superior level of distinction by excelling in the quality of its eco-friendly
products (Theguardian, 2015; Costa, 2015). On the other side, Barclays shows how
it goes beyond the “still poor” regulation provided by Basel III (a global regulatory
framework for banks) in terms of long-term sustainable investments
(UniversityofCambridge & UNEP, 2014), adopting an innovative policy aimed at the
reduction of carbon emissions. (Barclays, 2015).
3.3 BP3
For the three essential components of the ethical analysis of Costa, the theme of
sustainability is taken as a guideline:
Intent: Costa wants to deliver an ethically correct and sustainable service
Means: it uses eco-friendly products that come from well remunerated suppliers
(Costa, 2015)

27
End: does Costa follow this process until the end providing precise policies in terms
of disposing of the used products?*
The last question raises a doubt around the final part of the process of consumption,
where the Company is in charge of disposing of the used products. In order to
answer the question, the experience as insider researcher will be reported in the
appendix at the end of this work, trying to analyse the gap between what is publicly
declared by a Company and what actually happens.
Similarly, Barclay’s aim is to reduce the carbon emissions and take care of the
environment in general. The bank explains in the report about environmental policy
(Barclays, 2015) that:
“Barclays has a four year commitment from 2011 to 2015 to:
 Develop products and services for a low-carbon economy: this covers
financing and risk management services for clients which will help direct more
capital to low-carbon opportunities
 Manage climate change risks: this includes collaborating with our
stakeholders to minimise the risk to our own operations, as well as to our
customers and clients
 Reduce our own carbon footprint: as part of our Climate Action Programme
we are committed to reducing our absolute carbon emissions and to offsetting
the remainder.” (Barclays, 2015)
One of the results of this approach is reported in BarclaysPLC (2014), which
underlines the Bank’s outcome of exceeding the target set for 2014 by 10%:

28
Figure 16, Carbon emissions reduction of 2014, (BarclaysPLC, 2014)

29
3.4 BP4
Table 7, BP 4, Sources: (Reynolds, 2012; Shrimsley, 2013)
Type of marketers/managers
Jim Slater, Costa Enterprises managing director is
identified as a Legalist Marketing Manager,
according to what he declared in an interview for
marketing magazine about opening new Costa
shops:
Journalist: "What do you think about resistance
in some quarters from the dominance of coffee
chains on the high-street?"
Slater: "There have been a couple of examples
recently where there has been some resistance to
Costa opening in smaller towns."
"In each instance we adhered strictly to all the
planning rules. I am very proud of the quality of
our coffee, and our services, and we are delighted
to crate new jobs in previously vacant High Street
units "
Antony Jenkins, who has been chief executive
from 2012 to July 2015 (the relevant period for
this work), can be classified as a Moral Striver.
This is what he declared to The Financial Tme
just after he occupied his position:
"From now on it is not about just about making
money, but making money in the right way. After
all, what profiteth a man if he gain a fabulous
return on equity but lose his soul to clawbacks
three years later"
We’re going to put our clients first, our
shareholders first and our social obligations first.
Too many banks have put these in the wrong
order but for us they all will always be first. And
since our shareholders want us to make money
we’re putting profits first too"
"A moral banker never makes too much money.
A moral banker makes just the right amount. So if
we are moral then, by definition, however much
we rake in must be OK. "
Jenkins got sacked on the 8th July 2015
because of his lack of focus on the
investment operations

30
3.5 BP5
As Laczniak & Murphy (2006) argue, the first two of the Five Essential Ethical
Precepts for Enlightened Marketing, non-malfeasance and non-deception
principles, are embedded in the Code of Conduct of a Company.
Additionally, for both the organizations it is possible to highlight further principles for
which they strive:
Costa Coffee promotes the principle of Distributive Justice, by assuring that inside
its stores everyone "has the right to appropriately speak out without fear of
repercussion. One cannot be punished for constructively advising an employee. We
must also allow for people or express their opinion. We must all listen and consider
what every individual has to say” (WhitbreadPLC, 2011)
Whereas, at Barclays, Antony Jenkins has reinforced the principles of “ Respect,
trust, integrity, excellence, service and stewardship” stating “these will be our
watchwords” (Reynolds, 2012).
In fact, this is what is declared in the Barclays’ report about its code of conduct:
Figure 17, BP5 Barclays, (BarclaysPLC, 2015)
3.6 BP6
The sixth point of Laczniak & Murphy (2006) regards the stakeholders involvement,
distinguishing between primary and secondary stakeholders.

31
Costa Coffee’s commitment to primary stakeholders is translated into practice thanks
to the Sharesave scheme. This initiative allows Whitbread’s employes to participate
in the Organization buying shares. This purchase is undertaken using the
employee’s salary, from which a certain sum of money is taken every month. In this
way, employees who saved in the five-year scheme, for example, could be able to
quadruple their original investment, receiving a potentially life changing sum of
money at the end of the period. (Whitbread, 2014)
Whereas, for secondary stakeholders, such as suppliers, Costa’s commitment
consists of trying to build long-term relationships with all the strategic partners and
respect fair terms and conditions. This relationship is also based on the core
principles of sustainability, open and honest communication (Whitbread, 2015).
Barclays’s policy for stakeholders result to be more unified, as the Bank aims to a
consistent engagement for all of its stakeholders. Therefore, Barclays meets “with
the key stakeholders regularly to listen to and discuss key issues and hear their
concerns, and also to gather their opinions about our actions and plans. In addition
to this, it holds more formal meetings and events to provide an open forum for
discussion (Barclays, 2014)”.
Stakeholder engagement initiatives include:
 Stakeholder Dialogue Days, to continue exchanges and gather feedback;
 A series of Barclays Debates, to allow us to hear from a wide range of
stakeholders on key societal and economic issues. Read about the inaugural
Barclays Debate held in November 2014 (Barclays, 2014).
3.7 BP7
The following Table 8 about “The Seven Steps of Moral Reasoning for Marketing
Managers”, shows the process of ethical management for the two organizations
chosen:

32
Table 8, Seven steps, (Laczniak & Murphy, 2006)
Outcomes evaluation of the decision
Costa operates with high standards for every
objective set, but in some cases it should provide
more totalizing policies raegarding the final part of
the process of consumption
The Group decided to sack Antony Jenkins beacuse
of the loss reported from 2013 to 2015. In fact the
aim to lower carbon emission is strongly linked to
good investments
Decision about the ethical issue or question
The company uses and provides eco-friendly
tangible products. Moreover it contributes to build
Schools for children in need.
The Bank focused on the retail not concentrating on
the investments area
Ethical analysis
Costa way of acting has been more law-oriented due
to the type of Manager involved in the process
Under the control of Antony Jenkins, Barclays
followed strong moral and ethical oriented steps
Selection of an ethical standard or standards
The Code of conduct provides the standard
behaviour for whoever is involved in the
organization's activities
The Code of conduct provides the standard
behaviour for whoever is involved in the
organization's activities
Articulation of the stakeholder in the decision
Suppliers, both british and non-bitish, are fairy
remunerated and treated. Investements in the third
Wolrd countries
Regular and open dialogue with all the stakeholders
Framing the ethical issues or questions
The fields in which Costa is focused are:
Environment, Rainforest Alliance and Costa
foundation
Lowering carbon emissions and undertaking ethical
investments
Cultivating ethical awareness and sensitivity
Costa ensures that a high level of ethic is respected
in the Company for suppliers employees and
stakeholders
Barclays reasonably cultivates the principles of
ethical business caring about the environment and its
stakeholders as well
The Seven Steps of Moral Reasoning for Marketing Managers

33
Conclusion
After the evaluation of the companies under different aspects, it is possible to
understand that, in terms of activities against marketing models, the nature of the
sector is really important. In fact, different “Gaps” have been identified as well as
different approaches to the “Five forces model”, due to the different nature of
competition, service provided and customer expectations.
In the same way, the economic performance underlines differences between Costa
and Barclays. The first, is part of a bigger Group, and it is following a growing trend
that is leading both Costa and its owner (Whitbread) to an incredible growth.
Barclays’ performance instead, has been restrained by the investments in the US
and by the “soft”-approach of the managers to this situation. In fact, Jenkins (CEO)
got sacked on July 2015 because of his lack of focus on investments.
In conclusion, from an ethical point of view, it is possible to state that, even with
different approaches, both the companies strive for moral and environmental
objectives and dedicate part of their efforts to improve the living conditions of many
countries in the World.
Appendix 1
The insider researcher: personal experience into a Costa Shop
The appendix’s aim is to evaluate how Costa Coffee’s policies, in terms of
sustainability, can be compared to the everyday process of delivering the service. In
particular, the following considerations will refer to the Costa Coffee Shop in the
Grand Arcade, a shopping centre place in Cambridge, Cambridgeshire.
According to Hockey (1993), “Insider researchers may enjoy easier access and
greater rapport, but they also have to contend with the fact that their informants have
known them that much longer, and have had that much more time to form
preconceptions about them and their research”. In fact, the insider has been working
in this Costa shop for more than one year, experiencing the application of the
Company’s policies in different areas. This type of interaction with the organization
allowed the researcher to “perform his or her normal role within an institution and

34
achieve a more impact on the research than an outsider consultant” (Hawkins, 1990;
Mercer, 2007)
Therefore, as an insider, my experience in Costa led me to identify a gap between
what Costa wants to achieve in terms of being sustainable and what actually
happens in a shop. Even though the Coffee chain is able to provide one of the
world’s most eco-friendly paper cups for its drinks, it does not have a proper policy
for disposing of these cups after they have been used. It has been just after the
Grand Arcade management issued new rules about the rubbish on October 2015,
that in the store where I work, we started separating DRY rubbish from WET rubbish,
two types of garbage with different recycling levels, the dry one has, in fact, a higher
percentage of recyclable part (Rbkc.gov.uk, 2015). Therefore, before this regulation,
we were allowed to mix dry-recyclable-used cups with wet-recyclable-used cups,
lowering the recycling potential of the dry items. In my opinion, this represents a way
to waste the effort, in terms of money spent, by not achieving the proper level of
recycling from high quality eco-friendly paper cups.
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