CCD: A case analysis

Authors:

Sachin Bansal
Head- Strategy & Brand Marketing
sachin@sachinbansal.com

Professor Manoj Joshi*

Amity Business School, Amity University,
Lucknow Campus, Uttar Pradesh, India, 226010
: +91-522-2330934, (M) +91-9415017498
E-mail: manoj.joshi.m@gmail.com

Electronic copy available at: http://ssrn.com/abstract=1920827

INDEX

Section 1: Introduction
1.1 Growth of the Caf Industry in India
1.2 Corporate Profile

Section 2: Case Study on Caf Coffee Day

2.1 Marketing Mix
2.2 Competition
2.3 SWOT Analysis
2.4 Comparison with Barista

Section 3: Conclusion
3.1 Business strategies suggestions to increase market share

Electronic copy available at: http://ssrn.com/abstract=1920827

INTRODUCTION

Logo

Parent Company Caf Coffee Day (CCD)

Category Coffee joints

Sector Food Products

Tagline/ Slogan A lot can happen over coffee

USP Most recognizable and affordable brand in India

Segment People looking to go to have a coffee and snacks at a

hangout place

Target Group Youth in the middle and higher income groups

Positioning India's favorite coffee shop, for the young and the young at
heart

1.1 Growth of the Caf Industry in India

The coffee market in India has been growing due to the demand for Ready to Drink
coffee and has become a part of an individuals daily consumption basket. Due to
changing cultures, consumers are becoming aware of domestic and foreign brands, which
are boosting the consumption levels.

The export promotion schemes and other subsidies by the GOI, and increasing trend of
eating out coupled with the rising share of young population has driven the market.
Well-established coffee shop chains, such as Cafe Coffee Day (CCD) and Barista,
enhanced their pan-India presence in the latter part of the review period. In 2010, Cafe
Coffee Day and Barista had 970 and 200 stores, respectively, and they aim to continue
expanding in the next few years. Meanwhile, several relatively new players, such as
Costa Coffee, Coffee Bean, Gloria Jeans and Java Coffee, are trying to establish a
footing in Indian coffee retailing. Both these factors drove on-trade consumption of fresh
coffee beans in 2010, with volumes growing by 12%. On-trade sales have emerged as the
primary sales channel for fresh coffee beans, in the absence of any appreciable off-trade
consumption.
In 2010, the average bill amount at coffee outlet was between rupees 135 and 150. This is
expected to rise to rupees 245 by 2016. With customers paying significant amount for
their coffees, they are also expecting a lot from an outlet. Factors such as menu,
ambience, service and brand name are playing an important role while choosing a coffee
outlet.

Indian Coffee Chains market is quite mature which is evident from the fact that Caf
Coffee Day alone maintains more than 1000 Cafs in 141 cities in India. This forms the
main focus of this project.

1.2 COPORATE PROFILE

Caf Coffee Day, A division of Amalgamated Bean Coffee Trading Company Ltd.
(ABCTCL), having its headquarters in Chikkamagaluru, Karnataka. It opened its first
cafe in 1996 on Brigade Road in Bangalore, and today has the largest cafe retail chain in
India with over 1000 Cafs in 141 cities.

Running caf is a hospitality business and one needs to create the right ambiance and
experience and back it up with strong logistics

Caf coffee day is a 750 crores ISO 9002 certified company has over 5000 acres of coffee
states which is second largest in Asia registered as a social service provider to people.
Large numbers of coffee day cafes are located in Bangalore. The cafe chain has had much
success riding, and to some extent creating, the cafe culture wave that swept across
metropolitan India following strong economic growth resulting in an increase in youth
spending power. It has even tied up with World Space and Micro sense to enable its cafes
with satellite radio and Wi-Fi, respectively. Its first Wi-Fi cafe was opened on Lavelle
Road, Bangalore.
Its different divisions include:

Coffee Day Fresh n Ground (354 Coffee bean and powder retail outlets)
Coffee Day Xpress (341 Coffee Day Kiosk)
Coffee Day Take away (7000 Vending Machines)
Coffee Day Exports
Caf Coffee Day
Coffee Day Perfect (FMCG Packaged Coffee) division
OBJECTIVE

The objective is to start trading in the overseas markets. Having set up a subsidiary in
Vienna and a franchise operation in Pakistan, the caf coffee day expects to vend its
brand through departmental stores.

VISION

To be the best caf chain in the country by offering world class coffee experience at
affordable prices.

MISSION

To be ranked no. 1 among the service sector

To provide the best quality services to customers at affordable prices.
CCD is aiming to create its own niche merchandising like Indian coffee powder,
cookies, coffee mugs and curry paste.

PHILOSOPHY

Its philosophy is to provide world class trendy lifestyle products and experience to its
customers and in order to execute it, it has opened some new outlets with the facility of
music lounges, book cafes etc.

NATURE OF BUSINESS

Caf Coffee Day is a division of India's largest coffee conglomerate, Amalgamated Bean
Coffee Trading Company Ltd. It was the first to roll out the coffee bar concept in India
with its first Caf in Bangalore. Caf Coffee Day serves the coffee its grows on 6000
acres of its own estates and another 2500 acres of managed estates and is India only
vertically integrated coffee company.

First caf was opened in Bangalore. It ranges from hot and cold coffees giving a pinch of
international flavours.

It has a well-equipped roasting unit catering to the specific requirement of the consumers.
The process is carried out under the control of experienced personnel to meet the highest
quality standards.

Coffee Day Comprises of the following Sub Brands

Coffee Day - Fresh & Ground
Caf Coffee Day
Coffee Day Vending
Coffee Day - Xpress
Coffee Day Exports
Coffee Day - Perfect
MARKETING MIX

Caf Coffee Day has a well-equipped roasting unit catering to the specific requirement of
the consumers. The process is carried out under the control of experienced personnel to
meet highest quality standards. The most modern technology available is used to
maintain consistency and roast the coffee beans to the demanding specifications of the
discerning coffee consumers.

Essentially a youth oriented brand with majority of its customers falling in the 15- 29
year age bracket. Each caf, depending upon its size attracts between 400 and 800
customers daily.

USP of the Brand:

Affordable Price

PRODUCT:
Caf Coffee Day product mix constitutes a wide range of products like samosa, biryani,
masala sandwich, tikka sandwich etc. The best selling item in summer is frappe, which is
coffee and ice cream blended together. The young people favor it. In winter it is
cappuccino. Their merchandising includes funky stuff like t-shirts, caps etc.

Serving Size:
The serving size of a product is a measure, not only of quantity, but also of value for
money.

PRODUCT SERVING SIZE

Hot Coffee 210 ml
Cold Coffee 350 ml
Smoothies 350 ml
Granitas 350 ml

PRICE:
Considering that Caf Coffee Day knows its major customer lies in the bracket of 15-
29,it has tried to derive a policy whereby it can satisfy all its customers. The price for a
cup of coffee ranges from Rs.45 to Rs 80. From the time it first started its operations,
there has been only minor changes in the pricing policy of Caf Coffee Day. The changes
have been more due to the government taxes than any thing else

PLACE:
The strategy CCD has adapted is to place a cafe in every possible location where some
business can be generated. This is a prime factor in determining the success of a retail
chain. Caf Coffee Day looks to cater to their target market with strategically located
outlets. Their outlets are generally located in High Street/ Family Entertainment Centers,
gas stations, near Colleges etc.

PROMOTION:
Caf Coffee Day involved in all the areas of serious consumer passion like:
Television: Caf Coffee Day held a contest around a very popular programme on Zee
English called Friends. All the six lead characters are shown often visiting a coffee shop.
They have tied up with Channel [V]s Get Gorgeous contest.
Tie-ups: Besides that Caf Coffee Day also tie up lot of the youth brands. So they have a
contest going on with Levis, another one with Scooty, Liril, latest one with Airtel
Friends.
Association with movies: CCD can be seen in movies like Khakhee and Mai Hoon Na
Sales Promotion: Caf Coffee Day uses special Caf Citizen Card for rewarding Caf
Coffee Days customers.
It is a loyalty program to gain new customers and retain the existing ones.

PEOPLE
Motivation and personal skill are laid emphasize upon. Their employees are like friend to
the customer but at the same time they know about the international standards of hygiene
and cleanliness and personal grooming.

COMPETITION:

Direct competitors Indirect competitors

Barista This is the closest comp Eateries like Mc Donalds and

of CCD in the Indian market. They
target the same class of upwardly
mobile youth and young
professionals. But barista is always
viewed as a place to unwind after a
hard days work or an ideal setting
for some business meetings.
Caf mocha-this aims at providing
level of experience to the customer
is hard to imitate. Inspired by
morocco and turkey, mocha offers
not just coffee but also sheeshas
from Egypt and gourmet desserts.
Mocha itself calls a coffee shop for
the soul
Haldirams pose competition to cd
as they are likely attraction for
customers to be drawn to .a
consumer can well understand
why he should spend around rs.45
on a coffee when he can get a
burger and a coffee for the same
price at Mc Donalds.
Local tea joints and coffee shops
like caf Nescafe they are
smaller places but nevertheless
target the same set of consumers
 Qwicky-based mainly in Bangalore
,q has a strong local hold on south
India
Also local coffee houses like
Indian coffee house etc are also a
major threat to the company as far
as affordability is concern.

SWOT ANALYSIS:

STRENGTHS WEAKNESSES

Excellent brand name and brand Crowd management

visibility
Improper sitting arrangement.
Huge young crowd as target group
Excellent ambience and service Lacks strength to maintain brand
loyalty.
Over 1000 outlets and 300,000
visitors per day
Follow the competitor strategy
It produces/grows the coffee it serves
hence reducing the cost.
THREATS OPPORTUNITIES

Entry of foreign players like Introduce cheaper versions of

Starbucks coffee
Dependent on Govt commodity
rates Tap the smaller towns/cities

Large unorganized market. Merchandising.

Tie ups with other companies for
promotion
 Competitive SWOT Analysis with Barista

Caf Coffee Day Barista

Strengths Strengths

Taste & Quality of their products. Strong Brand Image

Grow their own coffee beans Excellent Human Resource
Projected as an affordable brand. Ambience and Dcor
Strong base for expansion and growth

Weakness Weakness

Lacks the power and strength expected to Average taste and quality of products
maintain brand loyalty. Perceived as an expensive brand
Average rating for their behavior and service. Inconvenient Delivery Process
No tie ups with big international brands

Opportunities Opportunities

Over 40% of the population is under the age Strong Brand recall
of 20, hence untapped market share and Presence of large number of outlets
potential for growth. Pricing
The use of clever collaborations Large number of untapped market
(bookstore,etc)

Threats Threats

The brand doesnt project a clear image to Coffee substitute

customers about what Caf Coffee Day is all Rise in the cost of coffee products and
about. substitute
Brand Loyalty is not so strong. Competition from national and international
products

BUSINESS STRATEGIES SUGGESTIONS TO INCREASE MARKET SHARE

Price was one of the factors that INNOVATION STRATEGIES

served as a hindrance not only to
the students, but also to the
working executives. Thus the most
likely solution to this problem
would be nothing but decreasing
the price but at the same time the
profitability of the joint should not
Changing the menu every 4 month
to prevent food fatigue
Introducing monthly special and
Indian snacks
Introduction of table service than
self service
 be affected. Introducing new drinks
The next possible step that the
Coffee bar should take is to
increase its awareness among its
target audience. This it can achieve
by various means of advertising
and that too keeping in mind the
specific categories of its
consumers. For e.g. it can target
the students by sponsoring the
cultural events that are organized
in various colleges.
Keeping in mind that a student
cannot spend as much as a working
executive does, special rates can be
introduced for the students.
New varieties of product should be
introduced on an experimental
basis.
Also to increase the reach of the
consumers more and more outlets
should be established.
The Coffee bar can go in for
competitive analysis to understand
the competition and realize its
current standings.
LOW COST SERVICE TO
THEIR CUSTOMERS
The coffee at Caf Coffee day is
priced at minimum rate for Rs. 40
for the starters and it increases with
the menu.
OPENING THEIR OUTLETS
IN THE REACH OF THE
CUSTOMERES
Customers can easily access the
Caf Coffee Day near their homes
and do not have to go a far off
place in order to get a cup a coffee.
MERGERS AND
AQUSITIONS WITH VARIOUS
COMPANIES
Tie ups with different companies
like Deccan Airlines, Retail Chains.
CUSTOMER RETENTION
POLICY
 Caf Coffee Day aims at retaining
their customer who visit on
everyday basis or weekly basis.
PROMOTIONAL
STRATEGIES:-LIKE
HOOKING UP WITH THE
ENTERTAINMENT
INDUSTRY FOR
PROMOTION.FOR EG:-
MUJHSE SHADI KAROGI etc.
Caf Coffee day has invested in
promotion through various films
like Mujhse shaadi Karoge,
Mughal-e-azam, Kyun ho gaya na
etc.
IT GOES FOR PROMOTION
VIA BARTER DEALS.LIKE
WITH ENRIQUE IGLESIAS,
ELTON JOHN CONCERTS
AND WWE.
External analysis of the business
environment whereby the company
waited for the coffee consumer to
be educated and adapted to this
new market.
Very innovative in their logistic
department.
They follow a continuous
replenishment policy by
integrating vendor upstream.
They have a proactive approach.
They introduced table service instead of
self service
DISTRIBUTION STRATEGIES MARKETING STRATEGIES

Supply chain strategy Meeting place for 15 29 years

Decentralized distribution strategy old
( for expansion plans) Want their customers to grow with
Follow continuous replenishment them
policy by integrating vendors Market associations with youth
upstream oriented brands ( levis , TVS ,
Web based order processing Airtel, AOL )
system Affordable
Online inventory tracking process Well lit and respectable yet
Extensive research for identifying informal
market needs Societal concept of marketing
 - Employment to
physically challenged
- Concept of quality

PROMOTION STRATEGY COMPETITIVE INTELLIGENCE

STRATEGY
Via barter deals
In-films promotion deals Discover unexplored market
Low cost strategy segment
Hygienic eating place
Opening 100% veg outlet
Wi-fi service
affordable price tag image

CUSTOMER RELATIONSHIP COST CUTTING STRATEGIES

STRATEGY
Designing of in-house
Regular cost feedback Source their furniture and crockery
Rewarding customers for loyalty from outsource
Caf-citizen programme Saving transportation cost
New customer oriented intimation Cost cutting feeling in their
(LERA) employees
Book-cafs

STRATEGY GAPS:

Limited target audience-focused segment is the YOUTH.

Lack of price affordability due to varied purchasing power.
Home delivery service is unavailable-people staying at far off places cant avail
the service.
Entering into new products bringing more competition

SUGGESTIONS:

Extending the coffee types

Enriching the menu
Keeping the menu constant for long time
Going to parties
Espresso coffee installation menu
Promotion strategy other than barter deals
 Caf Coffee Day has done extremely well so far to project itself as an affordable
youth- oriented brand.
But there are still certain areas where their brand needs to be much stronger.
With regard to the physical evidence associated with the brand, Caf Coffee Day
needs to do a lot of work if they hope to catch up with Barista.
First recommendation for Caf Coffee Day is to clean up the dcor at every
outlet, wherever unnecessary advertising is taking place.
Although it might be an important source of revenue, long-term customer
perception of the brand isnt very positive.
Caf Coffee Day would do better to provide promotional space for its partners
with the use of clever collaborations, and not printed advertisements and posters
everywhere.
Second recommendation is that Caf Coffee Day looks at its current recruitment,
selection and most importantly, its current training policies.
Customers are not happy with the behavior and service of the staff, and Caf
Coffee Day is lagging far behind Barista is this aspect.

REVIEW OF PROBLEM AREAS

Caf Coffee Day has under performed or not lived up to potential in certain areas. The
areas are weaknesses, which need to be improved upon, as that both can eliminate any
disadvantage that may have, and improve customer satisfaction.

Weak brand image:

The Caf Coffee Day brand, although clearly a youth- oriented brand, lacks the power
and strength expected to maintain brand loyalty. The brand doesnt project a clear image
to customers about what Caf Coffee Day is all about. This could prove as a deterrent
during future national and international expansion.

Inefficient human resources:

According to the market survey, Caf Coffee Days staff received only an average rating
for their behavior and service. Caf Coffee Day needs to work hard at this aspect,
especially considering they are a service sector organization that is looking at large
expansion.

Ambience & Dcor:

The Ambience & Dcor of Caf Coffee Day outlets received a below- average rating
from respondents of the market survey. A lot of respondents did not like the fact that
Caf Coffee Day outlets and literature served as prime space for a lot of advertising and
promotions. They felt as if the cafs had been hijacked just for advertising.
SUGGESTIONS:-

Caf Coffee Day has done extremely well so far to project itself as an affordable
youth- oriented brand. But there are still certain areas where their brand needs to
be much stronger.
With regard to the physical evidence associated with the brand, Caf Coffee Day
needs to do a lot of work if they hope to catch up with Barista.
My first recommendation for Caf Coffee Day is to clean up the dcor at very
outlet, wherever unnecessary advertising is taking place.
Although it might be an important source of revenue, long-term customer
perception of the brand isnt very positive.
Caf Coffee Day would do better to provide promotional space for its partners
with the use of clever collaborations, and not printed advertisements and posters
everywhere.
Perception of the brand its training policies
Increase promotional plan like T.V channels, boarding radio programs. Business
channel.
Small outlets on petrol pumps and in telecom places(small merger with telecom
sector like new arrivals Uninor, DOCOMO)as barista done with TATA
Improve internal marketing strategy.
Segment market for penetration strategy.
Pricing strategy regarding to population factor as how much people are belong to
such market.
Make more attractive promotion plan for attractive features.