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Cardiff Metropolitan University

UNIVERSAL BUSINESS SCHOOL

Karjat, Mumbai

MARKETING ASSIGNMENT

Module: Marketing MBA7003

Module Leader: Prof. Sushant Nanda

Name: Chirag Sankeshwari

Student Id: St20095348

Date of Submission: 29th February 2016

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ABSTRACT 3

INDIAN COFFEE INDUSTRY 3

CAFÉ COFFEE DAY- AN OVERVIEW 4

MARKET SIZE, GROWTH TRENDS & FUTURE PROJECTIONS 6

SEGMENTATION TARGETING & POSITIONING 7

PESTEL ANALYSIS & CRITICAL SUCCESS FACTORS 9

MARKETING MIX 11

SWOT ANALYSIS 13

COMPETITOR ANALYSIS 14

PORTER’S FIVE FORCES MODEL 15

LIMITATIONS 16

CONCLUSION 16

BIBLIOGRAPHY 17

Table of Contents

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ABSTRACT

Café Coffee Day is regarded as one of the best cafe chain outlets in the country which

offers incredible coffee experience at competitive price. CCD encourages a feeling of

togetherness in the consumer’s mind. CCD is considered as a spot for meeting companion

and discussion where Students and working Professionals hangout. Environment and space

engage people to order for more coffee. Inside CCD people feel chilled out and relaxed.

CCD promotes through mouth publicity and going to CCD is considered prestigious. This

research is an endeavor to explain the strategies of marketiers embraced by Café Coffee

Day alongside concentrating on their unique abilities.

INDIAN COFFEE INDUSTRY

India stands in the sixth position in list of largest coffee producers of coffee in the world and has a share 3.9 percent in the worldwide coffee production. India consumes only 30 per cent of the total coffee production and the remaining is exported. India's coffee export volume was 286,545 metric tonnes in the year 2014-15 (India Brand Equity Foundation, 2015). In India, per capita coffee consumption is nearly 90 grams considerably low compared to other coffee exporting countries. This shows there is tremendous potential for the development of local coffee industry. The Indian retail coffee market is worth 1700 crore (Business Insider, 2014). The stakeholders are from domestic as well as international markets. Barista Lavazza, Café Coffee Day, Costa Coffee, Starbucks and Café Mocha are the counterparts in this industry. CCD leads in retail cafe chain in the country which is the founding company of Café Coffee Group. Coffee culture in India initiated by Café Coffee Day. The cafe population is mainly targeted the young generation with accessible income living in urban communities.

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CAFÉ COFFEE DAY – AN OVERVIEW

Café Coffee Day is known as biggest cafe chain in country possessed by Coffee Day Global

Ltd. CCD was earlier recognized Amalgamated Bean Coffee Company. Coffee produced

in the land of 12,000 acres Coffee Day Global has its own real estates. CCD being Asia’s

major producer which exports Arabica beans to different countries like Japan, Europe &

USA. (India Today, 2015)

On July 11, 1996 V.G. Siddhartha opened its first CCD outlet in Brigade Road, Bangalore.

By 2011, CCD extended over 1000 cafés in several cities all over the country and still

adding extra stores. CCD is an ISO certified company with revenue of 1,150 crore and

1423 plus cafes over 209 cities in India (Café Coffee Day). It has café outlets overseas in

Malaysia, Egypt, Czech Republic, Cairo and Austria.

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THE MARKET SIZE GROWTH TRENDS &

FUTURE PROJECTIONS

The market size of international coffee is worth USD 100 Billion and International Coffee

Organization assumes that coffee industry will have an annual growth of 4.7% from 2015-

2019. Annually 2.5 million bags are added to worldwide coffee production of which 80%

of its extension having a place with rising markets. India is popular for consuming tea.

Excluding South India has watched a low usage of coffee with per capita usage of

110g/year 8 kg in progressing nations.

Market size of café in India is assessed around Rs.6, 700 crore in 2014 & is supposed to

expand to Rs 15, 100 crore at annual growth rate of 15% till 2020. As it can be seen an

increase of 20% organized share from the latest CAGR report , meaning the organized

share increasing from Rs. 1,800 crores that is 27% to 36% from the year 2014 to 2020.

(Investing.com, 2015). Café culture has advanced from past 5 years along various new

cafes has been added in the market with entry of international participants.

Source: http://www.ico.org/monthly_coffee_trade_stats.asp

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SEGMENTATION TARGETING &

POSITIONING

Segmentation

a) Demographic Segmentation

Demographic segmentation is based upon following factors:

Age – 16 to 30 years old

Gender – Males and Females

Income – Medium class & Higher medium class Youth

Profession – Working Professionals, Students, Homemakers & Senior Executives

(Philip Kotler, 2013)

b) Behavioral Segmentation

Individuals who consider a cup of coffee as precious

CCD aims not only the youngsters but whoever has a youthful feeling

A unique place where individuals get refreshed and feel homely

Targeting

The target audience are medium and higher medium class youth. CCD aims Students,

Homemakers, Senior Executives and working professionals who famine to chill out after

work. CCD aims not only youngsters but anybody who has a youthful feeling at

reasonable price. (Café Coffee Day)

Positioning

CCD is linked through coffee lovers who are looking to the high growth trends in

cafes. Café Coffee Day has assumed an imperative part in arousing India to promote

café culture by assigning individuals a pleasant climate from comfortable seating to

arrange the finest varieties of coffee blends, drinks and edibles. A unique spot where

people might go and spend a quality time with their companions. It is better place

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elsewhere from the home and work atmosphere to refresh our minds. (Ideas Make

Market.com, 2012)

PERCEPTUAL MAPPING

High Quality Service

Low Quality Service

Expensive Affordable

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PESTEL ANALYSIS

Political Factors

Least political intervention

Easy availability of Coffee beans

Cost sustainability owing to govt. regulatory.

Economic Factors

Large coffee consumption in Southern India.

Fluctuation prices of coffee.

Societal Factors

Lovers of Coffee get quality assurance attached with the brand name.

Gossip over coffee as there tagline itself provides a wide scope of activities by

exclaiming, “A lot can happen over coffee”

Technical Factors

Innovation strategies to promote their brand

Availability of Wi-Fi and Bluetooth services

Environmental Factors

Disposal of waste

Avoid excess plastic usage

Legal Factors

Being ethical in its processes and rely on delivering constant customer delight

Complaints coming out from customers end are very few in number.

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CRITICAL SUCCESS FACTORS

Highly rated Taste & Quality:

On the basis of premium quality and taste, Café Coffee Day has maintained its market

share. Banking upon the huge potential of this attribute CCD can increase its share by

offering primary quality product. Producing their own coffee beans following the backward

integration strategy provides a base for future development and extension.

Value for Money Proposition:

Café Coffee Day is projected as a cost effective brand. In market study Café Coffee Day has valued high for their cost efficiency and worthiness for money. Strong Youth Orientation: The Café Coffee Day is mainly focused on youth. In India where major chunk of 40% population is below the age of 20 years, there is vast potential for Café Coffee Day to be biggest brands for youth in India. There is tremendous growth for market share in future. Excellent Customer Service: Café Coffee Day firstly stands for decent behavior and service of staff. In service organization customer service is of great advantage. CCD must struggle to maintain its favorable position in the market.

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MARKETING MIX

Product

CCD has upgraded its products and services over the years as per the tastes and

preferences of the customer. The countrywide outlets have uniform menu maintaining the

same level of efficiency and quality indicating a sense of perfection, aroma and taste.

Present product offering by Café Coffee Day,

Beverages

o Hot – Hot Coffee, Hot Tea, Hot Chocolate

o Cold – Cold Coffee, Ice Tea, Frappe, Fruit Slush

Food – Sandwiches, Samosas, Desserts, Cookies, Ice creams, Cakes

Merchandise – Coffee Maker, Coffee Mugs, T Shirts, Coffee/Tea Powders

Price

The products at CCD are moderately priced keeping in mind the student population as the

prices offered by its competitors. CCD is looked upon as a ‘value for money’ brand and has

adopted various pricing strategies based on different locations across the country.

Place

CCD acquired a firm expansion strategy. They believe in establishing a coffee shop

wherever it is successful. CCD believes in clustered approach for opening new outlets. It is

important here to understand cannibalization, consumer behavior and changing trends.

Promotion

Café Coffee Day has promoted through various media continuously, like:

Television: Café Coffee Day held contests in associations with Zee English and WB channel who frequently air the American classic sitcom 'Friends'. The story of 'Friends' revolve around the lives of lead characters, who mostly hangout in a coffee shop.

They had tied up with shows like roadies and Channel [V]‘s Get Gorgeous, etc. Tie-ups: CCD also tied up lot of the youth brands like Levis, TVS Scooty Airtel

Friends

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Sales Promotion: Café Coffee Day uses exceptional ‘Café Citizen Card’ for rewarding Café Coffee Day’s customers. It has also tie-up with 'Freecharge' to distribute coupons for complementary coffees over orders.

People

Well trained and groomed staff to provide best serviced to the customers. Hygiene,

behavior, professionalism and taste are given utmost importance.

Process

CCD has adopted a self-service model for ordering and payment. This may have a negative

impact on customers. They keep the preparation of food and beverage open to the

customers so that they have a real-time experience of the menu options.

Physical Evidence

The brand has gained credibility for finding and filling a much required gap, which is a

location for spending quality time in the rapidly moving urban lifestyle. The communication

from the company through its tagline – “A lot can happen over a Coffee” provides the scope

for spending quality time with people which can be for any reason. A major network effect

aided with loyal customer base has helped Café Coffee Day retain customers as it has

become synonymous with having coffee outside.

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SWOT ANALYSIS

Strengths

Café Coffee Day is India’s biggest retail chain

CCD has made amazing brand name and brand perception

Company has got ISO 9002 certification for being standard & assuring quality

More than 1000 outlets & 3,00,000 plus guests visit CCD throughout the country

Brand is mainly focused on young generation

CCD has been rated high in taste, quality & service

Expenses are reduced

“Highly affordable brand” is the USP of the brand

Weakness

Poor brand identity and lacks personal attention to the trustworthy customers

Fresh food are inaccessible

Coffee hubs have market penetration of 5%

Café market is highly competitive

Opportunities

Asia’s fastest developing commercial ventures

Association with various organizations for advertising &promotions

To publicize about brand

Exploiting small businesses

Low priced coffee varieties

Threats

Rivalry with Starbucks, Costa Coffee Barista, Cafe Mocha & Gloria Jeans

Existence of other Socializing areas

Market does not come under body or union

Reliant on government merchandise rates

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COMPETITOR ANALYSIS

Direct competitors

• Barista – The nearest rival of Café Coffee Day in the Indian market is Barista. The

main target audience of barista are young business professionals and young

individuals. Barista is a perfect location for business meetings or a spot to chill out

after a having stressful day.

• Café mocha – Trust building is main focus which provides level of experience to the

customer is hard to imitate. Café mocha is spurred by morocco and turkey just not

offers coffee but delivers sheeshas from Egypt and even gourmet delights. As mocha

names as “a coffee shop for the soul”.

Indirect competitors

• Tough competition to Mc Donald’s and Haldiram’s from CCD as they attract customers

to understand the reason behind spending RS 45 on a coffee instead McDonald’s

offers a burger and a coffee at the same price.

• Domestic tea pack joints and cafes similar to Nescafe – they are smaller hubs but

they attract the same customers.

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Source: https://www.vetr.com/research/NASDAQ:CCD/posts/7331349842-IPO-Watch-Indias-Cafe-

Coffee-Day

PORTERS FIVE FORCES MODEL

Threat of new Entrants – Medium

Many famous food joints/entertainment places/brands are present

High possibility of expansion

FDI strategies backed by government Buyer’s Power – High

Minimum trading cost

Variety of products available

Collection of amenities Supplier’s Power – Low

Absence of packaged cartels

Government policies on coffee & milk prices

Unified backtracking Threat of substitutes – High

Aired drinks, Milk refreshments, Juice bars & tea pack shops

Food joints for having snacks are McDonalds and Pizza Hut

Places for socializing are Bistro & Hukka parlours Industry Rivalry – High

Domestic rivalries are Cafe Mocha and Barista,

International cafe chains like Costa Coffee, Gloria Jeans & Starbucks entered the market

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LIMITATIONS

It was a challenge to find accurate data

Limited data available for secondary research

Lot of time was involved

Information for current scenario was hard to gather

Inadequate to gather competitors data

CONCLUSION In recent study Cafe Coffee Day has rated high for taste & quality of products. Working

on this facet in future will be immense potential to fascinate consumers based on quality and

taste of products. This is likely to be truth that coffee beans are yield in their own farms

which is imperative foundation for upcoming extension and growth. It gives intense rivalry

to competitors by fulfilling eminent café experience of consumers. CCD has worthiness for

money and is youth centric. “A lot can happen over coffee” message has heartened the

young generation especially who consume CCD products at a great extent.

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BIBLIOGRAPHY

Books

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1. Mehandiratta, P. (2014). Towards Coffee Café Revolution in India: A Case Study of Cafe Coffee Day, Journal of Marketing & Management Research, 4(7), pp.43-47.

2. Joseph, S. and Singh, V. (2013). Changing Lifestyles Influencing Indian Consumers:

Conceptualizing and Identifying Future Directions, Global Journal of Management and Business Studies, 3(8), pp.861-866.

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Emergence of Chain Establishments and the Private Nature of Usage, International Journal of Social Science Studies, 1(2), pp.205-218.

4. Nadir, H. and Gunay, N. (2013). An empirical study to diagnose the outcomes of customers

experiences in trendy coffee shops, Journal of Business Economics and Management, 14(1), pp.22-53.

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