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Comparative Analysis-Café Coffee Day and Barista

Project study report

On
Comparative analysis-Cafe coffee Day and

Barista

Submitted in partial fulfillment for the

Award of degree of
Master of business administration

MJRP College of corporate management

Submitted by:- submitted to:-


Abhishek jha MBA dept.
4th sem.

2010-2011

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Comparative Analysis-Café Coffee Day and Barista

PREFACE
Practical Knowledge is an important suffix to theoretical Knowledge. One
cannot merely depend upon the theoretical Knowledge. Classroom lectures
make the fundamental concept of Management clear. They also facilitate the
learning of practical Things. However, Classroom lectures must be correlated
with the Practical training situations. It is in the sense that practical Training in
a company has a significant role to play in the subject of business management.
Market Research is indeed an Ancient Art; it has been practiced in one form of the
other since the day of Adam and Eve. Its Emergence is of relatively recent origin for
success of any business and with in this relatively short period, it has joined a carry
great deal of importance.
In this age of globalization hyper competition has become a regular feature. Today the
markets are no less then battlegrounds and one has to strive very hard for survival and
growth.
Due to very rapid industrialization all over the world the demand for the
managerial personnel and the administrative personnel has increased. The perfect
study of Management involves both the theoretical as well as practical aspects. To
survive in this highly competitive market “Practical Knowledge” is as relevant as the
Theoretical.

The significance of MBA Degree is that the Theoretical aspects, which a student
learns throughout the year in the class sessions, can be practically applied through
different projects, which one undertakes. Keeping in tune with this doctrine, we have
tried to apply theoretical aspects through out the project, which we learned under the
course of management.

These companies sell similar product but their positioning and target audience
are very different from each other. These players not only sell coffee and tea but
also food and other merchandise items.

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Comparative Analysis-Café Coffee Day and Barista

1) Executive Summary

Indian consumer is a very interesting entity. The consumer in India is as


heterogeneous as the country itself is. The urban consumer contrasts with the rural
and the South Indian consumer with the North Indian. Further still, the consumer in
the metros militates with his usage and habit patterns. The Indian consumer, is
therefore very difficult to understand and very difficult to predict.

Tea and Coffee are the favorite drink in India especially tea. A quiet cafe revolution is
sweeping urban India with the explosion of coffee bars. That is bad news for tea - still
the favorite brew for a majority of Indians -, which has been losing out to coffee in
recent years.

India is one of the world's largest exporters of tea and one of its biggest consumers.
However, it is coffee drinking which is increasingly becoming a statement of young
and upwardly mobile Indians. Moreover, coffee bars, an unheard of concept until a
couple of years ago, are suddenly big business. Coffee is slowly but surely
substituting tea. There is also rise in the consumption of coffee. The specialty coffee
movement has gained much of its momentum through the efforts of companies like
Barista, Café Coffee Day and Starbucks.

In India CAFÉ COFFEE DAY and BARISTA are the most popular and well-
known cafés. The college crowd rates them as one of the coolest hangouts. These
companies sell similar product but their positioning and target audience are very
different from each other. These players not only sell coffee and tea but also food
and other merchandise items.

Despite of serving to different audience, these players compete with themselves.


Each player fights for its own share of market. They try to differentiate themselves
by the way of product or price or promotion. However, they are also facing the
competition from the foreign players like Georgia, Starbucks etc. It would be
interesting to see how the companies differentiate and maintain their share in the
market.

2) Retail Industry In India

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Comparative Analysis-Café Coffee Day and Barista

Accounting for over 8 per cent of the GDP in the West, retail business is the largest
private industry, ahead even of finance and engineering. Over 50 of the Fortune 500
and about 25 of the Asian Top 200 companies are retailers.

Today, in some developed countries, retail businesses have shares as large as 40 per
cent of the market. For instance, in Thailand and Brazil the organized retail business
has grown at tremendous pace.

In contrast, the organized retail business in India is very small. This is despite the fact
that India is one of the biggest markets. Retail business contributes around 10-11 per
cent of GDP. It amounts to about $180 billion market and is six times bigger than
Thailand and four-five times bigger than that in South Korea and Taiwan. India also
has the largest number of retailers, about 12 million, though they are mostly small.

The challenges facing the organized retail industry in India:

• Competition from the unorganized sector. Traditional retailing has established in


India for some centuries. Most retail outlets are family-owned and offering limited
products and finance facilities.

• In contrast, players in the organized sector have big expenses to meet. Organized
retailing also has to cope with the middle class psychology that the bigger and
brighter sales outlet is, the more expensive it will be.

Competition is growing in the retail business and super stores are being set up, in the
rural areas, customers are entirely at the mercy of retailers. With rising income and
changes in life style, demand for better products became insistent.

From a size of only Rs.20,000 crore, the organized retail industry will grow to Rs
160,000 crore by 2005. The total retail market, however, as indicated above will grow
20 per cent annually from Rs 400,000 crore in 2000 to Rs 800,000 crore by 2005.

Big industrial houses, such as the TATAs, the RPG group, ITC, HLL, realizing the
potential of the retail business, are now scrambling for a place in this segment. Over
the last five years, these groups have set up a number of chain stores. For instance,
West Side by Tatas, Food world by RPG, Shoppers' Stop (Rahejas), and so on.

Global developments in the retail industry, together with changing demand patterns of
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Comparative Analysis-Café Coffee Day and Barista

the Indian consumer, have affected the retail industry format in India too. This can be
seen in the emerging Supermarkets, Hypermarkets, Specialty stores and Malls in
India.

The value that retail can add to the economy cannot be underestimated. However,
challenges that lie in implementing the change agenda required to capture these
benefits should also not be underestimated.

Reason for the increase in the organized retailing in India:

• Rewriting the laws

• Restructuring the tax regime

• Accessing and investing significantly in infrastructure

This level of change is unlikely to be successful if carried out by any one retailer. A
concerted industry-wide effort and a partnership with the government are required to
achieve a number of these goals.

The crucial aspects to Retailing – the front end of manufacturing and last-mile of
supply chain need specialized skills, which will be individually deliberated at
length covering:

• Finance

• Technology

• Supply Chain Management

• Inventory Management

• Success and Survival

• VAT – The Advantage

Most single-format retailers have diversified successfully into multiple formats. The
move towards multi-category and multi-format outlets is diminishing the scope of
existing retailers to differentiate based on assortment or location alone.

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Comparative Analysis-Café Coffee Day and Barista

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Comparative Analysis-Café Coffee Day and Barista

3) Food & Beverages Market In India

India ranks first in the world in production of cereals, livestock population and milk.
It is the second largest fruit and vegetable producer and is among the top five
producers of Rice, Wheat, Groundnuts, Tea, Coffee, Tobacco, Spices, Sugar, and
Oilseeds, yet India’s share in international food trade is a minuscule 1.5%. Value
addition to foods by processing is a mere 8% of total production.

Organized food retailing industry is still at infancy stage with share less than 1 per
cent of food retail market size in India. This is despite the fact that food is the largest
category in consumers spending basket. Indian consumers are deprived of quality
food products, variety and value-added services at the retail end largely because of the
highly fragmented nature of food retailing. Organized food retail has the potential to
bridge this gap - and herein lies the opportunity.

The Indian food retail industry is of a highly fragmented nature and consumers are
deprived of quality food products. Organized food retail has the potential to bridge
this gap.

Organized retailing is also emerging as an important gateway for the sale of food
products. In Chennai, about 17 per cent of food sales flow through supermarkets. In
the metros, most women have shifted to supermarkets from street corner grocers. The
world of food retailing is witnessing a paradigm shift that will have long-term
implications for the way food retailing evolves in emerging economies like India.

Retailers are looking to capture a larger share of consumer spending by expanding


their product portfolios. Increasing pressure on financial performance is also
prompting food retailers to look at high-margin categories, which include non-food
products and services. Retailers have also realized that they need to become multi-
format if they are to expand their customer base and gain a competitive edge.

Differentiation on the basis of value for money and value-added services will,
however, become increasingly important. Retailers across the world are experiencing
a wave of consolidation that is being driven by the desire for economies of scale,
saturation in domestic markets and the desire for access to new markets.

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Comparative Analysis-Café Coffee Day and Barista

In line with international trends, the Indian market has already seen organized food
retailers going multiform and multi-category with an increasing focus on private
labels. Consolidation is likely to be triggered by the entry of leading Indian corporate
and international retailers into the food-retail arena.

The share of spending on at-home food consumption has fallen from 90 per cent to 80
per cent in the last five years between the top two socio-economic strata. Significant
spending on food and increasing out-of-home food consumption represent
opportunities for food retailers and food-service companies.

India has the highest number of retail outlets in the world – 12 million outlets with a
total retail space of about 2 billion sq ft. Owing to this fragmentation, the availability
of retail space per capita in India is among the lowest in the world – 2 sq. ft per capita
compared with 19 sq ft in the US. Some 5 million of these outlets engage in retail of
food and food products. The degree of fragmentation is much higher among food
retailers than among nonfood retailers. The majority of food and food products are
retailed through neighborhood kirana stores.

The organized food retailing sector in India is on the verge of a boom with almost all
the big corporate houses including Tatas, Reliance, ITC Group, Lohias-promoted Indo
Rama, Mumbai-based RK Hospitality, Kishore Biyani with his Big Bazaar, RPG
group with its hypermarket and supermarket chain eyeing the sector aggressively.

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Comparative Analysis-Café Coffee Day and Barista

4) Transition Of Cafes

Coffee remains in the outer periphery of interest in the minds of consumers. Other
aggressive beverages like tea and the colas of every hue have a substantially higher
degree of interest and of course advertising backing them. Coffee consumption is
down in the last four years. From a level of 55,000 tpa, the numbers are down at
52,000 tpa today. Per capita consumption hover around 52 gms. This signifies a
measly 10 cups of coffee per Indian per year!

Branded coffee consumption is a small percentage of the total. Only 19 per cent are
branded and the rest is in loose forms. However, a significant increase in consumption
in the branded segment anticipated. This is going to be spurred by the liquid coffee
cafes and of course, the inroads foreign brands will make in the domestic market
soon.

Liquid coffee bars and vending machines are going to spur consumption on in the
country for coffee. These are going to be front-ended efforts that will make coffee that
much more consumer-friendly and will make the beverage accessible at arms length
reach and available at the end of a desire.

It is expected to have 60,000 coffee vending machines in the country in the next three
years and expect to see at least 4000 Cafes across the country in the next five years.

The market for vending products in India is opening up. Towards the end of the
review period, with organized retailing coming in, consumers started believing in
brand names. Vending products through machines started not only for coffee and tea,
but also for soft drinks, chocolate confectionery and magazines, amongst others. The
total strength of vending machines in the country is approximately about 60,000
machines by the end of 2004, which includes a large number of unbranded machines
too.

Coffee pubs and cafes mushroom throughout India, with vending machines also on
the rise. Over the review period, there was a mushrooming of coffee pubs and cafes
across regions, and across the country as a whole. Coffee chains like Barista, Qwiky's
and Cafe Coffee Day (run by Amalgamated Bean Coffee Trading Co Ltd) have

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Comparative Analysis-Café Coffee Day and Barista

become hugely popular hangouts for Indian cities' young and trendy consumers. The
cafes and pubs are not just places where people buy coffee; they also try to sell a
certain lifestyle. The chains, with their glitzy interiors and designer furniture, are
targeted at urban, upper-middle-class and rich Indians.

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Comparative Analysis-Café Coffee Day and Barista

A) Origin

A traditional family owned a few acres of coffee estates, which yielded the rich coffee
beans in the soil of Chikmagalur, However they soon amalgamated with Bean Coffee
Trading Company Limited, now popularly known as Coffee Day. The coffee growing
tradition was since 1875, but the opportunity after the deregulation of the coffee board
in the early nineties. Coffee Day began exporting coffee to the connoisseurs across
USA, Europe & Japan. In the calendar year 2000, Coffee Day exported more than
27000 tonnes of coffee valued at US$ 60 m to these countries and, for the second time
in its short career of 7 years retained the position as the largest coffee exporter of
India.

B) About Coffee Day

Coffee Day has a wide and professional network in the major coffee growing areas of
the country comprising over 50 agents and 50 collecting depots. Coffee Day's two
curing works at Chikmagalur and Hassan cure over 70,000 tonnes of coffee per
annum, the largest in the country. 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.

Key Features:

• 125 years of coffee growing history

• A fully equipped ISO certified roasting plant with a 70000 tonnes per annum capacity
at Hassan

• 5000 acres of self owned Coffee Plantations

• A ready and enviable base of more than 10000 suppliers

• Among the top exporters of coffee in India (Coffee Day Exports)

Coffee Day Comprises of the following Sub Brands

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Comparative Analysis-Café Coffee Day and Barista

• Coffee Day - Fresh & Ground

• Café Coffee Day

• Coffee Day – Vending

• Coffee Day – Xpress

• Coffee Day – Exports

• Coffee Day – Perfect

C) Introduction

Café Coffee Day currently owns and operates 169 cafes in all major cities in India. It
is a part of India's largest coffee company named Coffee Day, ISO 9002 certified
company. Coffee Day's most unique aspect is that it grows the coffee it serves in its
cafes. Cafe Coffee Day's vending machines have a special niche in the market
compared to competitors because Cafe Coffee Day machines offer filter coffee unlike
the instant coffee offered by competitors' brands. Growing from a coffee exporter to a
coffee parlour, café coffee day has certainly come a long way in this segment.

Key Features:

• Pioneers of the Café Concept in India with its first Café at Brigade Road,
Bangalore in 1996. This Café was opened as a Cyber Café (first of its kind) but
later, with the burst of cyber cafes it reverted to its core competency….Coffee

• Essentially a youth oriented brand with majority of its customers falling in the
15-29 year age bracket

• Each café, depending upon its size attracts between 400 and 800 customers
daily

• At present it operates 169 cafes across 43 cities

• Plans to operate 200 cafes by December 2004

• It is a place where customers come to rejuvenate themselves and be themselves

D) Marketing Mix
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Comparative Analysis-Café Coffee Day and Barista

Every company goes through different phases in the business. The phase is very
similar to that of the product lifecycle. In order to sustain in the market and to
maintain its market share it is essential for the company to have a right marketing
mix. The company has to have a mix of proper product that is relevant to the target
audience, proper price, proper reach i.e. the place and relevant promotion that keeps
the target audience interested in the company.

I) Product

Café Coffee Day’s menu ranges from hot and cold coffees to several other items.
However, the core product is the coffee. The management believes that trend is
changing towards coffee. So taking this opportunity, the company also sells coffee
powder. Café Coffee Day also believes in selling other merchandised products.

Core Product:

• Exotic international coffees e.g. Capachinos

• Food items e.g. Sandwich, Samosas

• Desserts and pastries

Supportive Products:

• Funky Caps @ Rs 60
onwards

• Cool T-Shirts @ Rs 175


onwards

• Bags @ Rs 160 onwards

• Mugs @ Rs 60 onwards

• Coffee Filters @ Rs 95

Coffee Powders:

• Arabica @ Rs 43

• Perfect @ Rs 35
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Comparative Analysis-Café Coffee Day and Barista

• Charge @ Rs 28

• Dark Forest 200gm @ Rs 80

New Introductions:

• Reglon Sleeves T-Shirts @ Rs 249

• Marquis pens @ Rs 315 Onwards.

• Shoulder Bags @ Rs 209

• Coffee Mints @ Rs 40

II) Price

Café Coffee Day has positioned as “Value for Money”. The major target customers
are the youngsters. Pricing is a very sensitive issue for the Indian consumers.

Café Coffee Day believes in mass marketing.

The average spent by the customer is 100-125. Their coffee starts from as long as
15 Rs. However there are some outlets where the students are given special discounts.
CCD even set up their outlets in the college campus. For e.g. Café Coffee Day has
opened an outlet at the NMIMS campus where they are providing additional
10% discount to the students.

CCD is looking for expansion to more interior places. Here prices become more
complex as the consumer are very conservative in spending. A cup of coffee at Rs.
35 is accepted in metro cities but not in small towns. The decor, ambience and the
experience will play a major role in pulling the crowds in small cities.

The price of the product has to be kept uniform in order to maintain the
uniformity in all the outlets.

CCD target audience is youngsters. Majority of them are dependent on their family
for their expense. This is one of the most important reasons for low pricing compared
to other cafes. They believe it in making their product at an affordable price.
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Comparative Analysis-Café Coffee Day and Barista

Pricing is one of the important weapons for them to fight against their
competitor.

III) Place

Café Coffee Day outlets are spread across India. However, there are more number of
outlets in the metros and towns. For e.g. In Mumbai CCD have 37 outlets. In the
past 12 months, Café Coffee Day has also been on an aggressive drive to expand the
number of cafés in the smaller towns across the country based on research and
invitations received from these places to open more such cafes there. The company
expects to cross the figure of 200 cafés in 60 cities by December 2004. There will
be an increased focus in cities having populations from as low as Five Lakh upwards.
However, the focus has not been on just opening more cafés wherever there has been
an opportunity. Café Coffee Day is already the largest and most wide spread retail
chain of cafes in India with a current count of 169 cafés in 43 cites.

CCD plans to reach cities like Kolhapur and Nagpur in the west, Hubli, Belguam and
Vizag in the South, Allahabad, Varanasi, Ambala and Patiala, in the North, Jodhpur
and Mount Abu in Rajasthan and Bhubuneshwar, Ranchi, Cuttack, Darjeeling,
Guwahati and Jamshedupr in the East.

IV) Promotion

In order to stay with the competition and to keep the audience interested, they
undertake lot of promotion activities. CCD jointly organizes large number of
promotions with the other companies serving the similar target audience. These cafes
have emerged as a new media vehicle for reaching the right type of the customer.
CCD gets in physical touch with audiences, target loyalty club members, or advertises
in their newsletters. CCD has also undertaken a promo jointly with TVS scooty. The
promo was done at all the outlets across 43 cities. In this promo a package of 2 ices
blended cold coffee and 1 choc fantasy for just selling for Rs 82.

Customer Loyalty Programme:

Coffee shops have a high loyalty factor i.e. 60-70% of customers come in at least
once a week. The Cafe Citizens Programmed launched along with Net Carrots

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Comparative Analysis-Café Coffee Day and Barista

Loyalty Services would reward regular customers of Cafe Coffee Day. Any customer
who bills a minimum of Rs 100 on a single bill is automatically eligible for
membership to the Cafe Citizens Programmed. The programmed entitles members to
a 10 percent discount on all food and beverage bills for a year from the month of
membership. Members will also receive surprise gifts from India times Shopping
when they reach a total billing amount of Rs 2,000, Rs 5,000, and Rs 10,000.
Members can track their total bills spend at any Cafe Coffee Day outlet across the
country. The programme was very successful and they attracted 1,35,000 citizens.

Smart Card Programme:

Started from 1st Aug, 04; one can enroll into the program by paying Rs.100/- at any
Café Coffee Day Outlet and get a TEMPORARY CARD immediately after filling in
the enrolment form. With the Card, one can accumulate Value Points Equivalent To
Cash on net purchases at every transaction made at any of CCD outlets, provided the
card is submitted to the café staff at the time of placing each order.

The personalized permanent SMART CARD would reach at ones place in 7 days
from the day of enrolment and the points would be transferred from temporary card to
the PERMANENT SMART CARD. The points accumulated on the card would be
printed on the bottom of the bill. So it is very easy to keep track of the points. As
soon as 100 points have been accumulated on the card, one can start redeeming
the points. Points can be redeemed on food, beverage and now even merchandise like
coffee powder, T-shirts, mugs etc except Jukebox coupons.

Current Promotion:

Oyester Bay

The current promotion is done with the Oyester Bay Jewellery for the woman’s day.
CCD has arranged the contest, which is arranged for the woman’s day event. This
type of contest attracts the young crowd especially girls.

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Comparative Analysis-Café Coffee Day and Barista

Fame Adlabs

CCD is also involved in the promotion with Fame Adlabs. The pamphlets are being
distributed indicating the current movie shown and the movies to follow. Also it
shows the special offer for some lucky customer to get the coffee free.

Magazine

CCD also has private magazine distributed free to their customers. It includes ads and
advertises about the promotions to follow.

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Comparative Analysis-Café Coffee Day and Barista

V) Tie-Ups

CCD jointly organizes large number of promotions with the other companies serving
the similar target audience.

EBD Book Café:

EBD is book café has joint


ventures with CCD. EBD Book
Café believes that by selling books
from within the espresso bars like
CCD and other such co-locations
that have a footfall of over 100
plus customers in a day will help
them to achieve growth in book
sales. One can find one’s favorite
books at such cafes starting from fiction, non-fiction, religion, cookery,
management, lifestyle, art & craft, children books and much more. EBD Book
Café are in collaboration with Café Coffee Day have existing outlets in
Ludhiana, Jaipur, New Delhi and Kanpur and are in discussion to open more such
outlets in, Mumbai and
Ahmedabad. The CCD bookshops
are in the same premises though
not necessarily inside the outlet.

Himalaya with CCD:

To drive usage of honey, Himalaya


Drugs is developing daily diet
products and looking at marketing
them by tying-up with leading
consumer brands. It has tied up
with Cafe Coffee Day, to create four dishes; Honey Cappuccino, Honey milk
shake, Rich Chocolate Cake and ice cream topped with honey and nuts. The Cafe

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Comparative Analysis-Café Coffee Day and Barista

Coffee Day partnership is unique. It provided a platform to reach out to the target
audience in a relaxed environment where they could experience innovative uses of
honey. The association with Cafe Coffee Day across 100 outlets in seven cities was
not only to expand the category, but also towards creating touch points to experience
the goodness of Himalaya Forest Honey

Levi’s:

CCD has also tied-up with Levis where CCD will promote Levis product in their
cafes. Levi’s recently launched their latest range of apparel, Levi’s 501, through CCD
as part of their annual laterals like Wall visuals, Tent cards, Posters and Door stickers.
There is also a special Levi’s Drink.

Movie launches:

Apart form product launches, the company also does a number of tie-ups with the
movie industry in the same manner. For instance, there was Damdaar coffee that was
sold during the launch of the movie DUM. There was also the Damdaar contest
wherein the prizes were movie tickets, posters, CDs, and cassettes. In addition, the
winners get a chance to meet and have a coffee with the stars of the movie.

The latest movie promotion was done for the movie “Mujhse Shaadi Karogi”
which said ‘Bill a Shagun amount of Rs 301/- and you can enter the Mujhse
Shaadi Karogi Contest’ and in the contest form there were questions like “Who will
win Priyanka?” or “How will you say Mujhse Shaadi Karogi to the person you love?”
etc.

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Comparative Analysis-Café Coffee Day and Barista

E) Ambience and Surrounding

“First Impression is the Last


Impression”. This is true in this
business. The first thing that the
customers come across is the
surrounding and the ambience of the
store.

To further brighten the vibrant


atmosphere of the cafés, there has
been a greater thrust on providing
more value added services such as
video juke boxes, cosy sofa seating,
and exciting round the year promotions. Trading Co. Ltd had gone in for an image
change and revamping of interiors in the last quarter of 2001.

Café interiors at the company's 169 outlets are being given a whole, new look. In a
change from the largely wood and
granite based interiors, there is more
of steel and lots more colour. The
young colours of today, lime green,
yellow, orange, and purple will
predominate. The crockery will also
sport these colours. The larger cafes
will also have lounge areas and a few
beanbags.

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Comparative Analysis-Café Coffee Day and Barista

F) International Presence

Café Coffee Day, the premier retail chain of cafés in India announced major
developments within the company including its dynamic plan to expand the
chain into the overseas markets. After having established itself firmly in the
domestic market offering a world-class food and coffee experience to over 25 million
customers annually across the country, the chain has already started setting up the
infrastructure at 10 cities where it has targeted to open at least 50 cafes by December
2004.

The entire international offering will be based on the successful Indian brand/model in
which Café Coffee Day has gathered a lot of rich experience in coffee café retailing.
As with the domestic cafés, the international cafés will also be trendy, offering
attractive prices, and the coffees served will be made from the premium quality
coffee beans.

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Comparative Analysis-Café Coffee Day and Barista

G) Future Strategy

Spreading Wide:

CCD is planning to increase its reach by going to the small towns. To achieve the
mission of being a number 1 player in coffee category they cannot ignore these small
towns. CCD plans to open 45 more cafes in the next three months. The Company
is focusing on the southern states of the country such as Tamil Nadu, Karnataka,
Andhra Pradesh and Kerala, and the western region, starting with various markets in
the state of Maharashtra.

To widen the scope of target audience, CCD is planning to open some special cafés.
These cafes would serve to the different target audience. However, they have
aggressive competition from the Barista and other cafes. According to the
management, they have a greater threat from the foreign players.

Expensive Cafes:

The major target group of CCD is the youngsters. However, the company wants to
widen its target group. Café Coffee Day is planning to come up with a different
type of café, which will be having different environment all together. Even the
merchandise will be different from that of the original CCD cafes. The coffees and the
merchandise would be much more expensive and of a better quality. These cafes are
mainly targeted to people with high-income group and status oriented people.

International Coffee Flavours:

CCD is planning to start soon with the international coffee at all the outlets.
They have already done the test marketing in certain outlet of Bangalore. Adding
the new flavour would increase the choice for the customer.

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Comparative Analysis-Café Coffee Day and Barista

H) Its All In the Mind

CCD holds a distinct position in the minds of the target customer. Most of the
customers are loyal and visit the same outlet. CCD is very aggressive in terms of
the marketing activity in order to maintain the market share. Major customers are
youths. Focusing on the target group, tie-ups are done with other companies in order
to keep the audience interested. They are planning to tie-ups with the cinema
theaters, shopping malls.

Coffee Café Day is the most popular hang out place for the youngsters. CCD is
perceived as energetic and trendy organization. The crowd is very lively. Most of the
consumers are frequent visitors. Many of the people also have their loyalty card “I
visit here twice a week. It’s a good place to hang out with friends.

CCD has the wide variety of coffee that suit to the consumers needs. The ambience is
very clean, well-lighted and airy. Most of the outlets also have large parking space
and good seating arrangements. There is a young feel to it. The prices are very
reasonable (compared to Barista, not our local Udipi) too and an average coffee
would cost about Rs. 40. They also have attractive T-shirts sporting Coffee day
labels, cups, etc for sale, which are manufactured by Coffee day.

The food at CCD is at the affordable price. Customers coming out there also find
the food interesting especially veg. wraps and the chicken ciabatta (Italian
sandwich). However they don’t like pizzas. Sometimes, the food smells a bit stale.
The deserts are the most preferred by the youngster’s especially chocolaty cakes
and apple pie. The employees are very friendly. They maintain a good relation with
their customers. At CCD employees are very helpful and serve the customers, which
differentiate them from other cafes. CCD coffees are much cheaper than that of cafes.
This is one of the main reasons for attracting the young college crowd. CCD is also
very well spread.

Many customers believe CCD move with the competitor. Wherever Baristas
opens its outlet, CCD comes with the outlet.

One will not find more of working class or management people. It’s not the good

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Comparative Analysis-Café Coffee Day and Barista

place to have a business talks. The place is very noisy which makes them difficult
to concentrate. Even the seats are much closed arranged thus does not maintains
secrecy.

The music at CCD is very loud and trendy that is suited for the young crowd.
There are also some people who believe that CCD is cheap and it does not suit their
status.

The other problem that customer feels is the practice of having a TV set that is
perpetually on MTV or Channel V or something and something loud and jing-bang
going on.....It would be much better to have some soft music.

24
Comparative Analysis-Café Coffee Day and Barista

I) SWOT Analysis

Strength:

• Large Number of outlet.

• In house sourcing of coffee beans.

• Tie Ups with good companies.

Weakness:

• Limited Target Audience.

• Follow the competitor strategy.

• Quality of food- Stale breads.

• Loud and Hard Music.

• Improper sitting arrangement.

Opportunity:

• Large Untapped Market

• Tie-ups with other companies for promotion.

Threat:

• Entry of Foreign players like Georgia, Starbucks etc.

• Large unorganized market.

25
Comparative Analysis-Café Coffee Day and Barista

J) Outlets Visited

I) Carter Road CCD:

The Store was started store started on 12 Sept 2003. This is one of the most
premiums and the biggest of the CCD outlet with the capacity of 130 seat and 25
tables spread over more than 1200 sq. feet. The location of the store has also played
an important role. The store is located just opposite the beach at the Carter road,
which is one of the favourite freaky places for the youngsters. The store has indoor
as well as the outdoor space. Being one of the most important outlets for CCD, it also
has a jukebox so that the customers are entertained and can choose the song they like
to hear.

CCD working hours is normally from morning 9 to 11:30 nights. However, the
outlet at Carter road Working Hours are from-Morning 9 to Night 1.30 as their
daytime customers mainly includes youngsters, students, and families in the late
night. However the peak timings are from- 6-8, 10-11 pm. The staff members include
2 Branch Manger and 12 male employees, and 4 female employees. CCD also
follows the pattern of shifts i.e. 4 staff member in the morning and 14 in the
evening.

Normally the footfall at the Carter Road branch are 325 / per day. However it
may vary substantially during the holidays and during other occasions. The Average
spend by the customer is Rs 100. The footfalls and the average spending however
vary. This branch has more footfalls and also the average spending is more compared
to the other stores.

The outlet has Unique Machine – LaMarzotco (Asconia) which itself cost
approximately 5 lac Rs.

Customer Profile:

26
Comparative Analysis-Café Coffee Day and Barista

• 37% lies in the age group 20 and 24

• 27% between the age group of 25-29 years

• 60% of the customers who visit the café are male and 40% are female

• 52% of customers who visit the cafes are students

• 18% of the customers visit the cafes daily while another 44% visit weekly

30
1-2
9-11pm
5-9pm
Customer
min
Hr
Timing
Families
Rs.
Students
Average
200
100
Profile
Time
Money
Spend

27
Comparative Analysis-Café Coffee Day and Barista

II) Lokhandwala CCD:

The Store at Lokhandwala is


also a good revenue earner for
the company. The store is located
just outside the Lokhandwala and
situated just opposite to Barista.
This store is also an important
store due to the location and also
the target customers.
Lokhandwala is on of the most
famous place for shopping. This
store is not as big as that of the outlet at Carter Road. It has a sitting capacity of 95
people. This store also has indoor as well as the outdoor space but has more of the
outdoor spacing.

The working hours at


Lokhandwala outlet is 9 am to
12 pm.

The peak timings are

• 7-9p.m.(Working Crowd)

• 10:30 p.m.- 11.30 p.m.


(Families)

The USP of this store is its large


parking space. Customers come
to the outlet after shopping from
Lokhandwala to have a coffee. The music is not appropriate which makes some of the
customers annoyed. The Machine used in this outlet is Asttoria, which cost
around 3.5 lac.

The store sells lot of other products like T-Shirts and cups, which also do good
business. However, the goods are not properly displayed. The staff at the outlet was
28
Comparative Analysis-Café Coffee Day and Barista

efficient courteous and very helpful. There is a good customer service from the staff
and helps the customer in making the decisions. The staff strength is 11 and is
divided into 3 shifts that include 1 store manager.

Customer Profile:

• Foot fall- around 115 per day

• The average spend: Rs.125-150/customer–1-3 p.m.

• Comprises primarily of youth from the 18-30 yrs age group

• Attracts a lot of people from the film industry

29
Comparative Analysis-Café Coffee Day and Barista

Object 1

A) Introduction

“Barista” (which means “bartender’’ in English) is an Italian coffee chain shop.


Barista traces its roots back to the old coffee houses in Italy- the hotbeds of poetry,
love, music, writing, revolution, and of course, fine coffee.

Barista Coffee was established with the aim of identifying growth opportunities in the
coffee business. Increasing disposable incomes and global trends in coffee indicate
immense growth potential in this particular segment.
More significantly, they have been quick to spot a latent need waiting to be tapped:
Coffee lovers seek a complete experience. One that combines intelligent
positioning with the right product mix and carefully designed cafes. In other
words, they seek an "Experiential lifestyle brand".

As one might imagine, tapping into this need requires a company that can not
only deliver great coffee and espresso bars, but one with the ability to scale up
operations quickly. At Barista, they have gone to great lengths to establish this.

Barista started its operations with its first outlet at New Delhi in Feb 2000. The
Company was promoted by Amit Judge’s Turner Morrison Group BARISTA Coffee
Company Ltd - in which Tata Coffee Ltd holds 34.3 per cent stake Ventured into
India.

Barista Coffee Company Limited has been recently listed among the top 100
brands in India by Super Brands India; the Indian Division of the globally
renowned Super brands ltd. Barista was selected out of 711 leading Indian brands
across 98 categories. Barista has its operations spread over 153 outlets across India.
At present, Barista had, he said, over 120 espresso bars and corners in the four
metros and 14 cities of India, with 35 being added over the last 12 months, out of
which 10 had been relocated.

53
Comparative Analysis-Café Coffee Day and Barista

Object 1

B) Barista –Marketing Mix

Barista continued to maintain its focus on quality by sourcing only Arabica beans and
using the best international espresso machines, supplied by the Italy-based
LaCimbali.

Barista was, working towards becoming the number one in terms of parameters
likes brand-imagery, brand-dominance, customer-loyalty and turnover. The
strategy for fulfilling its mission over the next decade would be by leveraging its
strong position in the Indian market to grow further in an Asian context.

I) Product

Barista cafes also have a good number of product mixes. The menu ranges from
variety of coffees and pastries. Barista also sells other items like mugs, Coffee beans,
T-Shirts, Coffee Kettles.

Core Product:

• Coffees

• Cakes and Pastries

• Coffee Beans

Supporting Products:

• Coffee Mugs in Orange and Blue which cost Rs 55 and Rs 99

• T-Shirts which cost Rs 150

Coffee and Coffee beans are also considered as the core product for Barista. The
company has also tested marketed coffee beans through its outlets in Mumbai and
Delhi. Barista claims that they sell a best coffee bean.

Barista has started with a new concept by the name Barista Merchandise. Barista
Merchandise is available at selected Barista espresso bars in Delhi, Mumbai,
Kolkata, Chennai, Hyderabad and Bangalore. The Barista merchandise are the
different types of beans that customer can take home and have the coffee of his own
taste. Some of the Barista Merchandise includes

53
Comparative Analysis-Café Coffee Day and Barista

Object 1

• The French Press

• Barista House Blend

Barista is also diversifying its hot beverages menu and introducing several
specialty teas. The reasoning undoubtedly is based on the fact that apart from
South India, all other parts of the country are mainly tea-consuming areas, and
this step is expected to help the company expand its client base in the smaller
towns of these regions.

II) Price

Barista holds the perception of being an expensive cafe. However, Barista was the
first organization to start the concept of the organized cafes in India. Initially Barista
started with Skimmed pricing policy. Barista segmented the market according to the
income and age.

Due to the entrance of new players, Barista was finding difficult to maintain the
market share. First and foremost, Barista re-defined the target market customer.
They even planned to change their tagline. "Where the world meets” And so when
company looked at this positioning and they looked at the pricing - the strategy being
that if we lower the pricing.

Apart from this, Barista has also introduced new low-priced beverages. The
officials say these price cuts have resulted in 15-per cent walk-ins at Barista's
outlets during the last few months. Barista decided to alter their strategy in
order to retain their market. After studying the market, Barista found that
competitors were fighting against them against the pricing. They decided to reduce
their pricing. It was not done from a perspective of acquisition. With reduction in the
prices, there had been a 47 per cent increase in footfalls over the subsequent three
months. December 2003 had, seen Barista experiencing a 21 per cent per-store
increase in footfalls over the previous December, with the number of footfalls for
the year totalling 14 million.

III)

53
Comparative Analysis-Café Coffee Day and Barista

Object 1

Place

Barista started its first outlet at Bangalore and from there it has started spreading
its wings especially after price reduction. Now they are even planning to focus on
raising the bar of coffee experience. Barista already has presence in all the metros
and has a presence in all the highly populated regions like Mumbai, Delhi,
Bangalore and many more places.

Barista is seeking to expand through the franchisee route model and plans to enter B-
class towns in the country and middle-class localities in the metros such as North and
East Delhi. By 2005-06, Barista plans to have over 300 outlets across the country
up from 153.

IV) Promotion

Barista did not initially believed in any kind of promotion but in order to keep their
customers interested they started building the brand by communication both within
the store as well as outside the store through mass media. It under takes various
promotion activities during the festival or during occasions like Valentines Day.
Barista has done advertising in almost all national newspapers. Barista has launched
summer campaign through summer chillers, and was advertised through different
channels.

Sony:

Barista Coffee has tied up with Sony Music. Under this association, Sony Music
would endorse CDs and music cassettes of their recent acts, which will be used as the
lucky draw prizes for the participants. Consumers buying food, beverage and
merchandise for Rs 110/-and above during specified hours of the performance, will be
entitled to participate in the lucky draw. The prizes will be given away in a couple of
draws during the performance.

53
Comparative Analysis-Café Coffee Day and Barista

Object 1

V) Tie-Up

Barista with Taj Group:

Barista Coffee, a leading coffee bar chain, has tied up with Taj group of Hotels
for setting up exclusive Barista expresso bars at the Taj hotels in metro cities.
The first such bar would be at the Emperor Lounge at the Taj Mahal hotel in New
Delhi followed by a Barista Bar at the Sea Lounge at the Taj Mahal Hotel in Mumbai.
This would be followed by similar bars at Taj Mahal hotels in Calcutta, Chennai and
Bangalore. Barista also will be housed at the coffee shops of all major Taj Hotels in
the country.

Barista with Tata Teleservice:

Barista has also tied up with Tata Teleservice. This tie-up was primarily done in
order to provide consumers' access to the Internet. The objective being, today if
you look at Barista consumers, a fair number of them come to Barista to discuss
business over a cup of coffee. Moreover, it is easier for them to meet at Barista,
discuss business and send the information across. It is going to be focused primarily
on work, towards the busy executive who is traveling and has dropped by for coffee
or the small office segment who might just want to work out of Barista.

Lacoste with Barista:

Lacoste India has decided to tie-up with coffee outlet chain Barista in all the major
metros and some mini-metros. The strategy is to target younger audiences, which
have a penchant for the "finer things in life". The customer segment of Barista is
very different from the ones who visit a regular coffee shop.

Elle-18:

Barista is jointly tied up with Elle 18 to promote their product. Elle-18 is launching a
collection of coffee colored lipsticks and has named it after Barista’s beverages!
Therefore, they are working with Elle 18, which is a youthful brand. Moreover, they
both will grow with this association. For Elle 18, the objective is to build a platform

55
Comparative Analysis-Café Coffee Day and Barista

Object 1

for their range of coffee colored lipsticks and for them, the objective is to associate
with the brand and have their consumers coming in to Barista.

CBC Book shop:

Barista has tie-up with CBC bookshop, which has book corner at eight Barista outlets
in six cities. Barista’s bookshops are right inside the café. Barista prefers best sellers
and classic, besides books on management, lifestyle, sports, health, religion, children
and even cookery. Some of the outlets also stock activity books, comics, CD-ROMs
and crayons.

Other tie-ups:

Barista has tie-ups with Planet M, Crossword and the Taj group of hotels for
setting up Espresso corners within their premises. Moreover, along with ABN Amro,
Barista has introduced a concept called Ban café - a café in the bank premises.

C) Ambience And Surrounding

The colour shades that they have used are terracotta; it is warm - it is orange.
The background has a dark
Orange colour. Orange colour
signifies of a style and friendly
ambience of its own.

In order to match the colour


combination of the surrounding
even the uniform of employees are
orange in colour. The place invites
the customers to spend time.
However, the focus would,
continue to be to recreate
the ambience of the typical
Italian neighbourhood espresso
bars in India so as to provide a
comfortable place for people to

54
Comparative Analysis-Café Coffee Day and Barista

Object 1

relax and experience “the joy of coffee”. The ambience of the location and the
quality of coffee would, continue to be the key factors while growing the chain.

It has lots of board games for any one to indulge in, like chess, word scramblers, and a
guitar to pluck some chords.

Music:

The music is not too loud and encourages conversation, and the person behind
the counter is non-intrusive and friendly.

Barista is also planning to organize live music. Listening to live music, while
sipping a warm cup of coffee, next to your beloved can make an evening a perfect
memory to cherish. In order to gift its customers with this tranquilizing experience,
Barista is buzzing with live music this winter spate. Barista presents 'Oceans', the
music band that will perform live at various Barista outlets.

Sitting Arrangement:

Barista is a place for relaxes. Even in a crowded espresso bar, at Barista, one will
have his share of privacy. The seats are arranged at a certain distance to have a
privacy of talks as their major customers come there to discuss the business or to
relax and chat.

54
Comparative Analysis-Café Coffee Day and Barista

Object 1

D) International Presence

The company operates over 130 coffee joints including four in Dubai and
Colombo. Barista had chalked out aggressive strategies for expansions into
Europe and West Asia.

Barista has already started its operation in both Sri Lanka and Dubai and doing
very well. They are talking terms with a few potential partners in Kuwait. Barista
owns and manages all its outlets in India but operates through franchisees in
other countries.

53
Comparative Analysis-Café Coffee Day and Barista

Object 1

E) Future Strategy

The management at the Barista outlets thinks that their positioning is very different
from that of CCD. They think that the people going to CCD are young college
students. The target audience for the Barista are young managers and middle
level mangers and also family. However there is a treat to them in terms of the share
of the young college going crowd, which forms a main target audience for the CCD
and comparatively small part for Barista. In order to maintain the share the managers
of Barista thinks that they would need to increase their presence and also have to tap
the other untapped market. The company is also planning to tie-up with other
companies in order to increase the promotion activities that would keep the
crowd interesting. They also are planning to organize the festivals of the college
or sponsor prizes in the festival.

Increase in outlet:

As part of its marketing strategy, the company is planning to promote


international coffee blends first through 40 Barista stores in Mumbai, Delhi and
Bangalore. With the move, the company also hopes to expand the number of Barista
Espresso Bars on an average rate of two to three per month as well.

International expansion:

Barista is also looking for the international expansion. They are planning to
expand in the Kuwait market. Barista is also planning to expand its presence in the
other Asian countries like Sri Lanka, Dubai.

Promotional Activity:

As part of its marketing strategy, Barista Coffee Company Ltd is planning to


launch a host of consumer promotions at its outlets in 2004. For the purpose, the
company is currently in talks with many entertainment, consumer goods and music
companies, which include the US-based Bose Corporation, Swatch and International
Travel House.

Improvement in the Services:

53
Comparative Analysis-Café Coffee Day and Barista

Object 1

Initially Barista had a system of self-serving. Indian consumers are not comfortable
with this concept. However in some of the outlets they have started serving the
customers.

Informative Staff:

The staff should be qualified as they will be dealing with intelligent people. The
staff should be friendly but should not try to educate the customer who is already
aware of the things.

55
Comparative Analysis-Café Coffee Day and Barista

Object 1

F) Its All In The Mind

Barista is a place where the world meets. People come to Barista to have a meet or to
relax. A lot of them actually come alone as well. This is actually one of those places
with people coming in alone because they are comfortable with themselves. It is a
place where people are meeting each other in an environment, which is fulfilling
social and intellectual needs.

The employees at the Barista are also energetic. They help the customer in making
decisions for their purchase. Some of the customers at the Barista think that they
should be personally served rather than self-serving. When the person wants to
orders for some thing customer has to go to the counter order the requirements, pay
bill and the employee takes the name of the customer. When ever the order gets ready
the employee shouts on the top of the voice calling for the customer to take the order.
This actually unpleased the customer as the customer gets disturbed every time the
employee calls for some person.

Product:

During the time of discussion I found two types of customers, one who visits
regularly and other who visits rarely. The customers who come rarely are not
actually the coffee lovers. They just come there to do some time pass. They have no
complains about the product.

But the customers who are coffee lovers are not satisfied by the product they serve.
There are some customers who actually complain about the quality of the product.
Coffees are not really that good. The bread is dry; the amount of filling has reduced in
quantity etc. Their desserts fortunately have not suffered and are still pretty good.

Customers not only come there to have a coffee or have a sandwich. They actually
come there to have an experience. They find prestigious when they visit to the
Barista. As major target audience are youths, young managers

and middle level management people who come to discuss their business.

53
Comparative Analysis-Café Coffee Day and Barista

Object 1

The young students visit there as they feel the sense of maturity. The people who
are status oriented would prefer visiting Barista rather than CCD. Their targets are
youth, young executives and nucleus families. Barista also claims that intelligent
people come here “Someone who is intelligent and appreciates the good things in
life.” claim by Barista. There are many customers who come there, as they perceive
themselves as intelligent people.

For business people toting Laptops they can hook up to the net free of cost or
catch up on the news business magazines and newspapers are available at every
outlet. They also come to Barista, as it’s a good relaxing place where they can discuss
about their clients.

There are people who also come alone. They find Barista is the place where they
can just have a coffee and think deep, as there is no one to disturb them.

55
Comparative Analysis-Café Coffee Day and Barista

Object 1

G) SWOT Analysis

Strength:

• Claim to sell the best coffee

• Large Number of outlet

• In house sourcing of coffee beans

• Espresso-Highest selling coffee

Weakness:

• Expensive coffee

• Self service for the customers

• Quality of food- Stale breads

Opportunity:

• Large Untapped Market

• Tie-ups with other companies for promotion

Threat:

• Entry of Foreign players like Georgia, Starbucks etc

• Large unorganized market

53
Comparative Analysis-Café Coffee Day and Barista

Object 1

H) About the Visit

I) Barista at Bandra

The outlet at Bandra


has a capacity of 48 with
16 circular tables and 2
side tables. The
approximately area of
the store is 800 sq.ft.
The outlet is very big as
the other outlet of the
Barista. This outlet being
at a very busy area, there
is no ambience for the
customers to sit outside.
Even the parking space is
not sufficient.

As the outlet is located at one of the busier area of Bandra, the working time for this
outlet is from 9 in the morning to 1.30 in the night. However the outlet is located
just opposite the National College, the peak time is during the afternoon dominated by
students who are small spenders, shoppers & young executives in the evening and
families in the night who are more than average spenders frequent in evenings &
night.

They come to Barista to relax and discuss about their business. The outlet has the
staff capacity of 9 out of which 2 people stay from morning to evening. Footfall
varies form 250-300 per day; however it varies widely during the festival time.
The average spend per customer is Rs.120 per customer.

Customer Profile:

53
Comparative Analysis-Café Coffee Day and Barista

Object 1

Average
30
7
0.5
10pm-12pm
Rs.--45
am-9pm
2 hrs
Students
180
0
Customer
Timing -min
Executives50
Average
Money Time
Profile Spend
Spend

53
Comparative Analysis-Café Coffee Day and Barista

Object 1

Sales:

• Only 35 % sales revenue is from foodstuff

• Balance from coffee and other beverages

II) Barista at Santacruz

The Santacruz outlet has the capacity of 48 people with 14 circular tables and 2 side
tables. The size is 1000 sq. ft.appox. The outlet is located at the residential place.
Majority of the customers are corporate and families.

The working hours are from 9 am to 12.30 am, however the peak timings are from 6
to 11. The total staff strength is 7 during the week days and 8 during weekends. The
outlet is not the biggest contributor as it is located at a residential area and even the
footfall is very less compared to that of the other stores (100 customers). The average
spent per customer is also low i.e. 60-70 Rs a visit.

The machine used by them are One M31 Dosatron by La Cimbali (operates from 9 am
to 1:30 am) and one slush machine Hugoleni by Hugo Leni. The outlet has Guitar (not
properly maintained) and chess & scrabble boards for entertainment.

Customer Profile:

55
Comparative Analysis-Café Coffee Day and Barista

Object 1

30pm-12pm
7
0.5
10
Average
Customer
-–0
am-9pm
Timing451.5
Executives
Rs.
Students
140 min
- 50
hrs
Profile
/ Families
Time
Money
Spend

Sales:

• 40 % spend on food
stuff / 60 % on
beverages

• Sales revenues approx. Rs 7000 / day

55
Comparative Analysis-Café Coffee Day and Barista

Object 1

7) Effects of foreign Players

The potential of growth in liquid coffee retailing is huge as coffee consumption in the
country is considerably low. In the North, coffee consumption is eight grams per
persons as compared to 40 gm in the South.

After attempts by Barista, Coffee Day and Qwicky's to provide Indian consumers the
foreign players have finally decide to enter Indian markets. Café Coffee Day and
Barista dominate Indian café market. The entry of foreign player is a treat for these
players to maintain their market share. The foreign player would also target the
similar segment of target market thus causing the problem for the local players. There
is a tendency of Indian customers to visit once and if they get satisfied than they turn
to be loyal customers.

I) StarBucks

Starbucks is one of the fastest growing brands in the world, after entrepreneur Howard
Schultz bought the chain 15 years ago. Starbucks Coffee - with its 5,689 outlets in 28
countries - has grown in sales at an average of 20% annually to $2.6bn in '02.

The Starbucks Corporation is reviving its plans for entering India. The company is
expected to actively scout for prime real estate in metro markets in the next few
months, and plans to open its first store in the next 12-14 months. Starbucks has
identified Delhi, Mumbai, and Chennai as the potential entry points for the chain in
India. Starbucks is presently working on the franchisee model.

The Starbucks target audience is the hip, urban, on-the-go caffeine addict, and the

55
Comparative Analysis-Café Coffee Day and Barista

Object 1

chain that originated in Seattle has got mega-plans for India. Starbucks has pinpointed
high-potential localities like a few in South Mumbai and Bandra. In keeping with its
international strategy, Starbucks will only open shop in the best of prime locations.
The company's practice is to acquire real estate at a premium over market price, in
order to squeeze out competition, and it is planning to do the same in India.

II) Georgia

Coca-Cola India found a good market for the hot beverages. They announced the
launch of low-price ready-to-drink coffee and tea in a bid to capture a larger share of
the domestic beverages market.

The drinks will be marketed under the brand name Georgia and sold through a large
number of retail outlets all over India. According to them, it is time to take the
product from the class market to the mass market. Hot tea and coffee form the biggest
combination in India's burgeoning beverage market. Georgia has launched two types
of cafes, one where normal tea and coffees will be sold and would be priced at 3 –4
Rs per cup; the other is Georgia Gold, which is for the premium segment. Georgia
Gold has also merged with Mc-Donald’s.

More and More foreign players would enter into this segment. The company will have
to differentiate their product from the others in terms of price, flavour, ambience and
also target audience.

8) Suggestions and Recommendation

Pricing:

Indian consumers are highly price sensitive. Pricing will play very important role. In
order to sustain the competition it will be very important to have a proper pricing
strategy in place. Over pricing the products would actually limit the scope of target
audience. While under pricing would actually degrade their brand value. In either of
the cases there will be a loss for the company, as they will loose their customers.

Promotion and Advertising:

Promotions have a deep impact on the Indian consumers. The consumers would also
increase their consumption to take the advantage of the promotion schemes.
54
Comparative Analysis-Café Coffee Day and Barista

Object 1

Promotion should be design properly to keep the target customer interested. The
promotion should not degrade the value of brand. The company also needs to tie up
with other companies whose target audience match with theirs Like CCD with Levis,
Barista with Archies etc.

Merchandising:

Indian consumers’ likes having more choice of before they actually make their
selection of buying. Different type of coffees and food items need to be introduced in
order to provide customers with more choice. Even new flavours of coffee beans
should be introduced.

Expansion:

Each and every player wants to have a wider expansion in order to have more
reached. The companies should open the outlets only where they find the potential.
They should conduct detail study before taking a decision for opening an outlet. For
e.g. CCD follows the strategy of following the competition. They open the outlet
wherever Barista opens it. This has proved successful. This is a big risk as opening an
outlet requires huge investment and it may result in a huge loss.

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Comparative Analysis-Café Coffee Day and Barista

9) Conclusion

Taking its inspiration from Italian corner coffee bars and the US coffee chain Starbucks,
Barista and other Indian chains are also trying to educate customers about the virtues and
finer points to coffee drinking.

Consumers are converging; they are thinking alike, they are aspiring for similar products. Tea
drinking nations like Britain and Japan have been converted to coffee drinking, and Indian
consumers are seeking similar lifestyles.

Corner bars like these are offering more than just coffee and snacks to their customers. For many
of their regular patrons, a visit to these bars is also a part of the western lifestyle they so much
want to identify with. However, as tea and coffee battle it out in big city restaurants and
bars, the most significant volume of tea is drunk by villagers in small shacks along the
roadside. As long as these roadside stalls continue to do thriving business, tea will have a
safe future in India.

Indian Market is slowly getting converted into organized market. Many players would be coming
and would be fighting for their share. As India being a major consumption of hot beverages,
it would be interesting to keep the track of what actually transpires in the market in the
near future.

When both CCD and Barista started business they did face a bit of a difficulty, as the Indian
market had been dominated by tea-drinkers till that time. When such café were launched,
people had to be educated about the different types of coffee, as no one knew the
distinctions between a latte, cappuccino or frappe! So it took time for Indians to develop a
taste for the different flavours.

CCD and Barista are in one business but their strategies are very different. Both are targeting to
different class of audience but they are competing with each other. Barista form very beginning
has target to classes and not masses. It is a premium class brand. But now they are changing their
strategy and they are planning to target masses but still upper class and in terms of prices they

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Comparative Analysis-Café Coffee Day and Barista

are not at par with CCD.

CCD is a price warrior for Barista. CCD has set up at least half a dozen outlets in Delhi and
Mumbai, right next door to barista and is hoping to lure barista’s customers with a cheaper menu.
And may be because of this Barista has suffered huge losses in the year 2002. Among 153
outlets, close to 40 make huge losses and another 10-20 barely break-even. The reason being,
they were growing at a very fast rate. At present their all outlets are owned and they have now
decided to move to a franchising model to cut capital expenditure. If one look at the pricing
aspect CCD is cheaper and better but if one wants high quality and does not mind paying
little more for that, then Barista is just the right choice.

In India the market is huge and there is space for everyone as long as one is focused on a
particular segment and caters to it. And if one live up to the promises one make, give good
quality coffee at an affordable price and provide excitement to their respective customers
then there is no competition at all!

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Comparative Analysis-Café Coffee Day and Barista

10) Bibliography

Books, Newspapers, Magazines:

• Philip Kotler, “Marketing Management”, 11th Edition

• Retail Biz

• N.Kumar, “Marketing Management”, 1st Edition

• Business Line

• Business today

Web sites:

• www.retailyatra.com

• www.indiainfoline.com

• www.cafecoffeeday.com

• www.agencyfaqs.com

• www.barista.co.in

• www.barista.com

• www.google.com

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