AMITY LONDON BUSINESS SCHOOL

UK RESEARCH REPORT ON STARBUCKS IN UK AND CAF COFFEE DAY INDIA

BYANKIT MEHRA MBA 3C A1808711002

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Table of Content
Sl.no 1. 2. 3. 4. 5. 5.1 5.2 5.3 5.4 5.5 5.6 6. 6.1 6.2 6.3 6.4 6.5 6.6 7. 8. 9 10 . Content Literature review Objective and Research Methodology Introduction Cultural Context and issues India and UK Detailed Analysis Caf Coffee Day INDIA STP SWOT Analysis Porters five forces 5Ps PESTEL Analysis Market share and competitor analysis Detailed analysis Starbucks UK STP SWOT Analysis Porters five forces 5Ps PESTEL Analysis Market share and competitor analysis Comparison and Contrast INDIA VS UK Recommendations for INDIA Recommendations for UK Bibliography Page no. 3 4 5 8

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LITERATURE REVIEW

Starbucks is a high-margin brand that serves about 4 million customers per

week (Forbes). Furthermore, the company also currently owns Seattles Best Coffee and Torrefazione Italia coffee brands. The company is ranking in at #338 in FORTUNE 500, and its on 240 in FT Global 500.

One of the reasons that Starbucks employees are often so pleasant and helpful is that Starbucks is a great company to work for, says Starbucks partner Joy Wilson in The Starbucks Experience. It takes care of employees with respect. This mind-set trickles down from the executives to the thousands of baristas worldwide.

The Starbucks name is synonymous with coffee. Each week around forty million customers visits Starbucks and 18 times per month is the rate of most loyal customers who visits their Starbucks. If we talk about employee turnover rate, its 250 percent lower than the industry level, which is not an accident.

Caf coffee day .Cafe coffee day is the first caf who pioneered the caf

culture in India by opening its first caf at Brigade road, Bangalore A smart, simple space that they could call their own for a while. Over cups of coffee people can discuss, hold short meetings listen to conversations, or even have a lot of good fun .It is still the largest organized retail caf chain in India with cafs across the country. Coffee Day today is totally in tune with its target audience with the rapport thats very strong just as the deep red coffee day color.

Today Caf Coffee Day is at the forefront of the Coffee revolution co-riding with coffee growers, corporations, suppliers, and planters.

OBJECTIVES AND RESEARCH METHODOLOGY

Objectives
Products and segmentation of both the markets.. Marketing strategies of both the companies. Detailed analysis of Starbucks in UK and Caf Coffee Day in India.

Methodology
Here project analysis will be made by collecting secondary data from different websites, journals, etc. Secondary datas- published and research datas collected from different websites, journals, newspapers, company research papers.

Introduction

Starbucks Coffee UK
Starbucks is not just related to a great cup of fresh coffee, but also a better quality product with excellent customer service and better understanding of coffee culture. It has achieved unpredictable achievements in coffee chain industry. In United Kingdom Starbucks have around 793 stores. For making excellent coffee it purchases and roasts the high quality coffee and sell them with fresh, rich-brewed espresso beverages, different varieties of coffee related accessories and equipments. More than quality coffee, Starbucks features a variety of hand-crafted beverages, a selection of salads and sandwiches. Starbucks merchandise includes exclusive coffee brewers, espresso machines and other items related to coffee and tea.

The total numbers of Starbucks stores are 15,011. Starbucks have their stores in 44 countries outside of the United States and 1,049 stores are

company owned operated in Australia, China, Canada, Singapore Germany, U.K. and Thailand

Caf Coffee Day

It is a division of, Amalgamated Bean Coffee Trading Company Ltd. ABCTCL which is largest coffee conglomerate in India. Coffee In its own estates of 10,000 acres ABCTCL grows coffee. US$250300 million is the land value of the plantations. It is the largest producer of Arabica beans in Asia. ABCTCL is one of Indias leading coffee exporters with its clients across USA, Europe, USA and Japan. First caf of Caf Coffee Day was opened at Brigade Road, and its still one of the most happening places in Bangalore. The First Caf Coffee Day logo was of a bright red cube with a green stroke above e in Caf Coffee Day. The word Caf was made to focus Caf Coffee Days introduction of Caf culture in India. SLURRY was the font used for Caf the font looks as though the letters have congealed or coagulated out of liquid. The currently used logo includes a dialogue box which highlights the connection between 'conversations' and coffee. "A lot can happen over coffee is the tagline.

The business of Caf Coffee Day has grown spectacularly 1,408 stores across the country, it is the largest chain of coffee stores. They clearly had the most recognizable of all coffee brands and young people People who comes under the bracket of Middle income Group regularly visited their stores.

Cultural context and Issues India and UK

Caf Coffee day in India is more focused at Value for Money which caters its target market. The low per capita consumption and increasing income levels are the factors for the growth of coffee Industry in India. In UK, people have high standard of living and to maintain that they cannot afford to compromise on anything, whether its quality of Coffee, ambience of the place or leisure. Starbucks is mainly adult-focused. Urban areas are its target market, where people are willing to go the extra mile to purchase costly gourmet coffee. Unlike in Indias Caf Coffee Day, Starbucks have a strategy of opening a new store in a area where a store already exists, it applies this strategy to avoid long line ups and crowdie atmosphere. In India people like spicy and tangy food (snacks) so the cafs (caf coffee day) offers people samosas, tangy wraps and rolls. Here in UK people usually do not prefer spicy and tangy food so to cater the need of the people in UK, cafes here (starbucks) offers non spicy Perfect Porridge, Pastrami & Emmental Sandwich and other sandwiches including ham tuna etc. ,croissants and much more.

Detailed Analysis

CAF COFFEE DAY

STP

Segment Target Group Positioning

Nice place for coffee and snacks A good hangout place Youth in the lower and middle class people Youths favorite coffee shop

SWOT Analysis
Strengths Excellent brand visibility and brand name Large number of young crowd as target group Good service Around 1000 outlets across India and 300,000 visitors per day Its the producer of its own coffee thus reducing the cost.

Weakness High competition in this sector

Opportunity Introduction of cheaper versions of coffee Tapping the smaller towns/cities

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Merchandising They can tie up with other companies for promotion

Threats Entry of foreign players in the Indian market Dependent on Government commodity rates Large unorganized market.

Porter's Five Forces Analysis

Threat of new entrants Costa Coffee Barista

Bargaining power of customers: Comparison in price with competitors Variety of products offered Service provided

Bargaining power of Suppliers: local suppliers are contact for supply of food items Believes in backward integration Its own coffee plantation base in Bangalore Threat of substitutes: Costa coffees ice tea. Coffee offered by its competitors. Cold drinks served in stadium. Competition within industry : Barista who targets same youth
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Coke and Pepsi

5 Ps of Caf Coffee Day

Price: Caf Coffee Day segments lower and middle class people so the price for a cup of coffee ranges from Rs.17 to Rs.99.

Product: Let it be food or coffee, products here are according to Indian taste. Most of the eatables are made according to Indian taste buds like samosa, masala sandwich, tikka sandwich etc. The best selling item in summer is frappe, which is coffee with a blend of coffee. In winter it is cappuccino.

Coffees and teas Coffee

Refreshing alternatives Granitas

Eatables Melting moments

Espresso Espresso Americano Macchiato Cappuccino Caf Latte Chococinno Caf Mocha Irish Coffee
International coffees

Blood Orange Cool Blue Pineapple Crush Emerald Ice Ruby Surprise

Banana n Walnut Cake Banana Chocolate Mousse Banana Caramel pie Chocolate Doughnut Cookies Marble Cake Pineapple Getaux Chocolate Cake
Ice creams

Smoothies

Colombian Juan Valdez Ethiopian Qahwah Kenyan Safari Cold Coffee

Mango Colada Strawberry Colada

Vanilla Chocolate Seasons Best

Quick Bites

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Sweet Mint Cold Sparkle Brandied Banana Tropical Iceberg Iced Eskimo

Samosa Puff Pizza Croissant French Fries Kathi Roll Wraps Masala Sandwich

Promotion: CCD is involved in Television: CCD held a contest around a very popular programme on Zee English called Friends. Get Gorgeous contest which comes on Channel [V] advertises caf coffee day. Movies Assosiation: CCD can be seen in movies like Khakhee and Mai Hoon Na Sales Promotion: CCD uses special Cafe Citizen Card for rewarding Cafe Coffee Days customers. By this program new customers are gained and existing ones are retained.

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Place: The strategy CCD has adapted is to place a cafe in every possible location where some business can be generated. People:
At CCD they recruit people for what they know and are fired for what they

behave.

Physical evidence: Logo, image, and brand: Leadership, vitality, passion for coffee represents RED color. The GREEN color represents the Coffee plantation that they own. Architecture and Decor: interior such as wood and granite based are used with young colors like yellow, lime green, purple, orange are used. The Tag Line: Among youngsters "A lot can happen over coffee" became a popular line. Factors like food, ambience, music, meeting people , and atmosphere were main factors that were drawing people to their Cafes.

PESTEL ANALYSIS

Political

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Based out of South India where there is high political stability and greater respect for the customer Less of red tapism Easy sourcing of coffee beans Rules and regulations according to Indian market

Economic Heavy coffee drinkers in South India Cheaper sourcing maintain Quality

Social Since it targets the middle class and is affordable so it acts as a good meeting place.

Technological They provide entertainment over Bluetooth and marketing strategy also based around technology. Associations with different e-comers portals

Environmental Effective water conservation. Limited production Use biodegradable plastics

Legal Since its ethical and based on customer delight so there are fairly less number of consumer complaints and quick customer service.

Caf Coffee Day

Human Resource Management;

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With the boost in the number of their retail outlets, C.C.D concentrates mainly on the quality and quantity of their human resource so as to meet up with the set standards. They have a clear intension of keeping well trained employees who can provide constant service at every store. People are hired for what they know but fired for how they behave. People of CCD believes this. . More emphasis is given on personal skills and motivation

Caf coffee Day COMPETITIVE ANALYSIS In India, caf coffee day suffers a lot of competition; it results in carrying out new marketing strategies and different ways to fight competition. The following are the current figures showing the market share of companies in India.
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30%Caf Coffee Day 26%Barist 23%Costa coffee 12% Mocha 9%Others

EXPENSIVE

COSTA COFFEE MOCHA BARISTA

LOW QUALITY

HIGH QUALITY

CAF COFFEE DAY OTHERES

INEXPENSIVE

Detailed analysis Starbucks Coffee UK

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STPS

Segment

Target Group Positioning

People can sit back and relax A great cup of coffee with good atmosphere and facilities. Middle and Higher income group A highly reputed brand Name says it all

SWOT Analysis

Strength: Strong brand name and image associated with high quality. Healthy financial performance People admire the atmosphere of Starbucks High-skilled management team High technology High quality products with new innovations.

Weakness: Products with high price Clusters of stores with aggressive expansion Opportunities: Large consumer group Launching new products extension Lifestyle Selling more whole coffee beans and equipments
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Threats: Competitors Lack of ownership of coffee farms Global crisis Intellectual-property violation

Porter's Five Forces Analysis

The threat of entry: Nothing can make much of a problem for Starbucks as they have a very large share of the London market that will be relatively immune to the threat of new entrants. It would not be easier for the new entrants to offer great quality of coffee at a competitive price

The power of buyers: Starbucks has low switching costs between the suppliers. Starbucks is associated with a great quality of coffee for elite and loyal customers.

The power of suppliers: Starbucks being the most famous specialty coffee shop chain in UK and still expanding need for Suppliers increases. It would not be unwise to say that Suppliers need Starbucks. The threat of substitutes: Just as a bald head reduces the need for hair gel. Starbucks example would be, if an alternative to coffee is offered to a customer, he would rather switch from coffee to tea. This is the power of Brand
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Competitive rivalry: Starbucks is free from any competitive rivals that are of similar size to them as a result there are no rivals in the market that would be considered in balance with them.

5PS
Price: Starbucks prices matches with its competitors but, it assures quality. Starbucks is an attractive combination of features, high quality, excellent service and other attractive attributes. Product: Starbucks is known for care in selection of high quality coffee beans and expertise in roast. It takes care of strict economical, environmental, and quality standards of its coffee beans. Starbucks differentiates its coffee and related products depending upon its innovation and competence. Referishing Alternatives Cool lime with real lime Berry Hibiscus Chocolate Beverages Classic Hot chocolate Vanilla spice hot chocolate Starbucks signature hot chocolate Eatables Muffins and donuts Skinny ginger muffin All butter croissant Cinnamon swirl Skinny blueberry muffin Triple Belgian Muffin Sandwiches Gluten free tuna Nicoise roll
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Coffees and teas Coffee Vanilla spice Latte Cafe Americano Flat white Caf Latte Caf Mocha Cappuccino Caramel Macchiato

Espresso Espresso con panna Iced Caf Americano Flavoured Latte

Iced Caramel Macchiato Skinny Flavoured Latte Place: Starbucks site its stores at that place where the access of its segmented customers are more.eg Oxford Street, Chelsea. In order to relieve long customer lines and improve service, Starbucks generally opens a new store near the existing one. The Starbucks strategy for expansion is by entering new markets where the opportunity exists, in UK itself there are more than 750 stores.

Free York egg mayo Roasted chicken egg mayo Bistro boxes chicken with red pesto pasta Tune with mint pea

Sale promotion Starbucks loyalty scheme is simple Pre-paid the card with 5and for free shots syrups and whipped cream. If you then buy enough coffee you will earn 15 stars, which will help you get a voucher for a free coffee home delivery.

People: It provides dental, vision and medical coverage to all employees, even including part-timers. . The purpose is to instill in its partners a sense of purpose, loyalty, enthusiasm and commitment.

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Physical Evidence: Logo, Colors, Images: In a lot of ways, shes a muse always inspiring and pursuing us ahead. She is a storyteller who is carrying Starbucks, and remembering the past. Any other people who look at her, it means something different to everyone.

PESTEL Analysis
Political Rules and regulations according to the UK industry. The level of Political stability within UK. Greater public accountability Economic Customers buying power Local currency exchange rates Economic environment of the locations where Starbucks operates Level of taxation

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Social Consumer spend more and more money on Coffee Customers also visit to sit down and relax

Technological Coffee machines are also available for home usage which are better and cheap

Environmental Rules and regulations for the Local Environmental countries producing coffee beans faces problems in the country (natural disaster) Environmental issues in a global level and Global warming

Legal policies and regulations about caffeine production and consumption by health authorities Trade regulations and introduction of tougher customs Industries licensing regulations

The Value System Human Resource Management;

All employees are equal for Starbucks. Bonuses like health care coverage, free coffees are given to its employes. Employees of Starbucks undergoes a 24 hour training period before dealing with customers.

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Competitor Analysis of Starbucks

The following are the share of companies in the coffee industry in UK. 35% Starbucks 20% Local Coffee Outlets 14% Internet Cyber Cafes 13% Caffe Nero 10% Costa Coffee 8% Coffee Republic.

EXPENSIVE STARBUCKS

COSTA COFFEE LOW QUALITY CAF NERO HIGH QUALITY

COFFEE REPUBLIC

INDEPENDENT COFFEE SHOPS INEXPENSIVE

Comparison and Contrast INDIA VS UK

1. Brand Image

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Caf coffee Day in India has a good brand image in its target market, who is middle class and strong youth orientation. The mentality of this target market is value for money and thus there is a good brand Image in their eyes, unlike the upper middle class and the elite who does not have a positive brand image about the company. Caf coffee days brand loyalty is weak and not up to the mark. The brand doesnt project a clear image to customers about what Caf Coffee Day is all about Starbucks UK has a very good brand image in the market as it caters to the public who can sit with a great cup of coffee with great ambience with leisure. 2.Value for money Proposition Caf coffee day leads the table in this proposition as there prices starts from RS 17 which is not even a pound (0.20 pence).The mentality of large part of India is getting the value for the money . Starbucks do not compromise on the quality of coffee in relation to its price and this is the reason for Starbucks success.

3. Ambience and Dcor In Starbucks, this is what the customers likes the most. They just sit with a cup of great quality coffee with leisure with a soothing environment and just relax. Caf Coffee Days outlets are very loud and youth oriented with the use of bright shades of Red and yellow. 4. Highly rated taste and Quality of product. Starbucks has the highly rated taste and quality of product and the best part is that it has same prices with its competitors such as Caf Nero Costa Coffee etc. Thus it comparatively represents a combination of features, high quality and excellent service Caf Coffee Day has an average rating for the quality but as far as taste is concerned it is that they have not performed up to the expectations of general public.

5. Inefficient human resources:

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Caf Coffee Days staff has only an average rating for their behavior and service. Motivation and personal skills are laid emphases upon. Although they are high on Corporate Social Responsibility by employing handicapped people Starbucks manages its staff very well and thats the reason that the employment turnover is very less in the company. It provides Medical, dental, and vision coverage to its employees even part timers to bring in the commitment, enthusiasm and loyalty, what it benefits out of this is reduced recruiting and training costs. 6. Advertisements The things which we can see in the CCD stores are lots of advertisements and promotions all over just seems like it has been hijacked by just the advertising, just the opposite of Starbucks UK. Starbucks do not advertise, infect it only picks one or two charity or events that reaches the community it serves.

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Recommendations for India

The Coffee Coffee Day made extremely well for the moment to project itself like accessible youth directed brand. But there are always certain areas where the brand must be much stronger. My strong recommendation for the Caf Coffee Day is that, they must rehabilitate the decoration, where that useless publicity/advertisements occurs. Caf Coffee Day would do better if it uses clever collaborations, and not just printed posters and advertisements all around.

Recommendations for Starbucks for UK

Starbucks in UK is at such a position that it can sustain the downfall of taking the risk. While the customers are waiting for the order, an interesting non elevator type of music can be played, to give a more soothing effect. Between the order taking counter and the delivery desk or somewhere an LED television can be put up to advertise products with less demand. Exclusively new range of products can be offered in the market, t he company must not stop innovating and taking risks. Starbucks should innovate such items that can be had with any drink, any time in a day that will not only make current customers happy but draw in new more customers as well.

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BIBLIOGRAPHY
http://starbucks.co.uk/ http://www.studymode.com/subjects/starbucks-4-p's-of-marketingpage1.html

http://www.managementparadise.com/forums/principlesmanagement-p-o-m/208074-swot-analysis-starbucks-corporation.html Book Setting up and managing your own coffee bar by John Richardson

http://www.marketing91.com/swot-cafe-coffee-day/

http://www.marketing91.com/marketing-mix-cafe-coffee-day/ http://www.cafecoffeeday.com
Weekly Magzine The World February 14 2013

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