Introduction: Coffee Basics Coffee is one of the world's most popular beverages.

Some claim it is the most widely consumed liquid in the world aside from water. Coffee is more than a beverage, however. It is a memory, an anticipation, a lifetime of consoling moments of modest pleasure woven into our lives. Coffee's success as a beverage undoubtedly owes both to the caffeine it harbors and to its sensory pleasure. Coffee lovers come to associate the energizing lift of the caffeine with the richness and aroma of the beverage that delivers it. Coffee is produced from the seeds of a small red fruit that grows on plants halfway in size between shrub and tree. The process that turns these seeds into beverage is a long and complex process, perhaps the most complex process associated with any major beverage.

How Coffee is produced Specialty coffee is a multicultural and culinary work-in-progress. By the time coffee is consumed, it has been subject to at least seven momentous processes carried out by seven potentially unrelated parties resident in anywhere from two to four parts of the world. Unlike fine wines, which are often bottled by the same people who grow the grapes and produce the wine, coffee is not bottled and is not just purchased, opened, and enjoyed by the consumer. The process of bringing coffee from the crop to the cup is kicked off by someone who grows and picks the coffee fruit. A second party (usually) buys the fruit and removes the soft, fruity parts from the seeds, then dries the seeds (now called beans), two steps together known as processing and both crucial to the ultimate quality and character of the coffee. The processor usually sells the dried beans to a third party, the exporter. The exporter may blend beans from different processing mills before bagging and shipping them. A fourth party imports the coffee into the consuming country, though in most cases he spares it any further manipulation, confining himself to passing judgment on it and selling it to a roaster. At this point the coffee is subjected to perhaps the single most influential act of all: roasting. The roaster also may blend beans from a variety of crops and regions. The retailer performs a simple but very significant service: handling the coffee sensibly and selling it before it gets stale. Finally, the consumer buys the coffee, grinds it (usually), and finally produces an actual beverage. But we're not even finished here. The consumer, before enjoying this meticulously grown, processed, roasted, blended, and brewed coffee, may any number of dairy products, sweeteners, or flavorings, all with differing effects on the final beverage.

Indian Overview India has a landmass of 3.3 million square kilometers and incorporates a number of quite distinct climatic zones. Of the 1 billion people about 70 percent live in rural areas. Coffee cultivation is largely confined to the hilly regions of the three southern States. Karnataka accounts for 53 percent of the planted area (59 percent planted to Arabica, 41 percent to Robusta). Robusta is dominant in Kerala and Arabica in Tamil Nadu. Most coffee holdings are small. Small holders farm about two-thirds of the area whereas large holders, farm 35 percent of land and account for 40 percent of output. Arabica coffee is grown at comparatively higher altitudes (1,000-1,500 meters) than Robusta (500-1,000 meters). Soils cropped to coffee are generally well drained and slightly acidic in nature. Arabica areas obtain greater annual rainfall (1,600-2,500mm) than Robusta areas (1,000-2,000mm). Rains which occur normally between March and May, known as blossom and backing showers, are critical for flowering and fruit-setting in coffee. Coffee was introduced in the year 1600 A.D. but commercial plantations were set up during the 1820s following British investment. Most of the coffee planted in early years was Arabica apparently introduced by a Muslim pilgrim, Baba Budan. Robusta was introduced at the end of the nineteenth century for planting in estates at lower altitude. Following serious economic problem in the earlier years, representatives of the coffee industry sought measures for amelioration. The first Coffee Control Conference in September 1940, arranged by the Government, recommended that the private marketing of coffee in India should be prohibited and replaced by marketing by an authority - The Coffee Board. Producers were then obliged to surrender their produce to the Board, which in turn sold the coffee through domestic and export auctions. The growers received their remuneration based on the average sales realization. Besides marketing, the other functions of the Board were promoting the sales and consumption of coffee in India and elsewhere;

promoting agricultural research; development; improvement of quality and other management.

WORLD OVERVIEW The coffee industry worldwide is still being haunted by uncertainties. The coffee price crisis could not be defused. It's a long drawn process. As such no legal and political basis are inexistence for direct market intervention. According to the International Coffee Organization (ICO) market report for May 2004, world exports by exporting countries stood at 85.70 million bags during the 12-month period (June 2003 to May, 2004) signifying 3.81 percent decline compared with 89.10 mn bags. Exports in the first 8 months of coffee year 2003/04 (October,2003 to May 2004) were down 3.17 percent to total at 57.33 mn bags compared with 59.21 mn bags in the previous year. Exports during calendar year 2003 stood at 85.22 mn bags signifying a decline of 2.67 percent compared with the same period in last coffee year which recorded exports of 87.56 mn bags.

Project Overview The coffee culture has caught up in Indian cities today. The hip and happening, the young and old alike, students, professionals throng the coffee parlors that have become a rage. The outlets of Barista, Caf Coffee Day in the various metros have added a new dimension to coffee. Many may even advocate the fact that chai is out, and kapi is in today!

Coffee so long was the prerogative of the South Indian homes. Having a steaming cup of filter coffee along with the morning newspaper was a regular feature for an archetypal South Indian be it a Tamilian, a Keralite, an Andhraite or even a Kanandiga. Coffee was not a regularly favored beverage in a majority of Indian homes, till a few years back. Coffee was kept for the most privileged guests! Also the intellectual had a strong relationship with coffee, with the Coffee Houses being a seat for intellectual exchanges, debates, literary forums.

Thanks to the coffee chains, today coffee has occupied a place in the common mans menu. Coffee is hip and for the hep!

The Coffee Board The Coffee Board statutorily consists of a Chairman and 33 members appointed by the Central Government. These members represent various interests - growers, traders, curers, labour, consumers and the Government. Until 1992-93 coffee marketing was wholly administered and regulated by the Board. Reflecting government policy and responding to the views of the growers, a process of liberalization was initiated by the Board during 1992-93. An Internal Sale Quota (ISQ) was introduced. This allowed growers to sell 30 percent of their output directly to the domestic market. The ISQ was replaced by a Free Sale Quota (FSQ) in 1993-94 which allowed growers to sell 50 percent to the domestic market or export directly. The FSQ was increased to 100 percent to small growers and 70 percent for large growers in 1994-95. In the subsequent season large growers were also given 100 percent FSQ. Now all restrictions have been 6

abolished. As a consequence, the Coffee Board is actively devising new roles for the changed free market situation. Most small growers prefer to sell coffee in the form of dry cherry and parchment. Many private buyers who are active in the coffee-growing zones buy coffee directly from growers. Larger growers and estates sell coffee in green and graded form either directly to exporters or by private auction. The coffee is processed to the quality specification of the Board before it is exported or auctioned. Domestic distribution of coffee takes place through wholesale and retail roasters.

INDIA'S DOMESTIC COFFEE MARKET India accounts for about 4.5 percent of world coffee production and the industry provides employment to 6 lakh people. Among the coffee growing states, Karnataka accounts for 70 percent of country's total coffee production followed by Kerala (22 percent) and Tamil Nadu (7 percent). Europe accounts for about 70 percent of India's total coffee exports. Major Indian coffee importing countries include Italy, Germany, Russian federation, Spain, Belgium, Slovenia, US, Japan, Greece, Netherlands and France. Despite being the traditional exporter of coffee, India does not rank even among top 11 exporting countries to Germany, where India exports maximum amount of its coffee. Further, a report by World Trade Organisation indicates that in the postWTO regime, coffee prices have fluctuated widely from year to year. In last few years Indian coffee industry is witnessing flat export performance. In fact, it dropped further, during 2002-03 fiscal year by little over 13 percent- from 2.14 lakh tones in 2001-02 to 1.86 lakh tones in 2002-03. India's domestic coffee market is estimated at around 55,000 tones to 60,000 tones. Besides the per capita consumption has declined from 80 grams in 1960-61 to 55 grams in 2001-02. On the other hand, the consumption of tea, a close substitute for coffee has increased from 296 grams to 657 grams during the above time periods (GOI, 97-98). 7

With the market size of about Rs.1600 crore, the domestic coffee market is very important and has a potential for growth in the beverage market. A stable and growing domestic market assumes a great importance to the Indian Coffee growers, distributors and coffee processing companies. Promotional campaigns to increase the demand must be through generic marketing and advertising. In this context it becomes essential to understand the nature of demand function for coffee in the domestic market. If the price sensitivity of coffee demand is low then it justifies the use of non-price factors such as advertising and generic marketing campaigns to promote coffee demand.

The two main reasons for the slow increase in demand for coffee in India can stated as follows: 1. Coffee is considered as a gourmet drink confined to middle class literate segment. It has still not penetrated the low-income groups as tea did. 2. Coffee is an acquired taste and habit formation is an influencing factor in consumption. Coffee is considered as more expensive than tea, and needs more sugar and milk for preparation than tea.

A study conducted by IIM (Ahmd) on coffee demand, by applying the Error Correction Model to quarterly time-series data, estimated the short-run and longrun price elasticity of demand and the influence of other variables on the demand for coffee. The results showed that although price elasticity of demand for coffee is low, it is much lower in the short-run than in the long-run. This suggests that temporary price incentives will not achieve any significant demand increase. Moreover, coffee demand is characterised by habit formation. Therefore, demand for coffee can be increased by non-price factors like improving quality standards and communicating the same to the consumers via generic promotion campaigns and/or brand advertising.

Why are coffee bars getting popular ?

While any diner can offer someone a cup of coffee or tea, people are getting tired of the ordinary. They are willing to pay much more for gourmet coffee or teas. It is an inexpensive way for them to pamper themselves. Coffee and tea put a smile on peoples faces. People are creatures of habit. If they find an environment and a good cup of coffee they will keep coming back for more.

Why do people visit coffee shops? Coffee shops is a place where the world meets. It boggles the mind to see the kind of people sitting there, what they're doing there, etc. 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 music is not too loud and encourages conversation, and the person behind the counter is non-intrusive and friendly. Any consumer knows that even in a crowded espresso bar, you will have your share of privacy. This is because the other consumer is not listening in; he is too involved in himself. What are the competitors doing to get the customers or what new innovative techniques they are adopting to attract more customers. Barista They have strategic tie-ups. We had a strategic tie-up with the Star Group, which was a powerful platform to work with. We're also doing something with Elle 18. They're launching a collection of coffee colored lipsticks and have named it after our beverages! So we're working with Elle 18, which is a youthful brand. And we'll both grow with this association. For Elle 18, the objective is to build a platform for their range of coffee colored lipsticks and for us, the objective is to associate with the brand and have their consumers coming in to us.

10

Caf coffee day They want to add to the excitement of our customer by offering exciting and adventurous associations. Last year in 2003 they launched the Treasure Hunt. It was a stupendous success. Then, they had some activities, exciting and adventurous in spirit, with Levis and Airtel. These are all youngster-related activities since they have loyal and regular customers, and so we keep doing these in-house activities. Then, they have a Caf Coffee Day Citizen Card, by which we send invites and other interesting information to the customer.

WHAT NEW IS THE CUSTOMER LOOKING FOR WITH REGARDS TO USP ? First and foremost thing what I would be doing is that the rate of the products will be less compared to other coffee shops. Concessions will be given to college students. Birthday celebrations at a nominal rate. Menu card will be in the form of cup and saucers and all the products related to our product will be displayed in our shops. The colour of the outlet will be very attractive to the customer. Caf life will be a whole lot of fun with local comedians, artists and fun makers organizing events And as usual compared to the other coffee shops the first preference will be for the quality of the product, service provided etc.

11

DIFFERENCE BETWEEN BARISTA & CAF COFFEE DAY Very often the products look basically the same. For the purpose of marketing and gaining preference for their own products manufacturers have to identify their product as being different from those of competitors. Both Barista & Caf Coffee Day have a wide variety of similar products, including both coffee and non-coffee based products. Barista offers coffee based products which includes caf mocha, caffe latte, cappuccino etc with your favourite flavours. The non-coffee based products include smoothies, granitas, ginger fizz etc and also food stuffs and desserts which have a western taste to it like veg. puffs and chiken rolls etc. Whereas on the other hand Caf Coffee Day offers Indian variety along with the

international products which are even offered in Barista. The Indian variety they offer are Assam Tea, Masala Chai, chicken biryani, veg samosa etc which give an ethnic feel. But offering such a large variety of products makes Caf Coffee Day nonetheless a canteen. Caf Coffee Day provides customers with the kind of products, which typically suit the Indian tongue whereas in Barista, the blend of coffee is more westernized. Both the coffee shops have an in house production and offer best quality products accordingly. Barista has introduced 'smoothies' recently, which was earlier available in Caf Coffee Day. Caf Coffee Day is planning to introduce filter coffee( Dark Forest

Premium Coffee), which is a most liked beverage in South India, from where it originates. 12

Apart from offering a variety of products Barista and Caf Coffee Day provide many ways to entertain their customers. Barista offers a game of scrabble, battleship or chess to while away with the free time, a guitar, to pluck some chords for music lovers, a message board on which you can stick a wacky message which the others can read. Apart from that a television set is also present showing channels like MTV, Channel V, TEN Sports, STAR Sports, ESPN etc or any other channel of your choice. Caf Coffee Day offers a different kind of entertainment. They have a jukebox which plays the songs of your own choice ranging from old melodies to latest hits in Hindi and as well as English by buying a coupon of Rs.5. The coffee shop also has its official publication 'The Beat' which updates the customers of the latest happenings in Caf Coffee Day. A large variety of young and trendy merchandise which is just a brand extension is also present for sale, with which the youth identify themselves, like funky mugs, T-shirts, caps and coffee powder, which have the logo of Caf Coffee Day present on it. This helps in the promotion of Caf Coffee Day.

Our Organization Overview

1. Registered Name Costa- Rican Coffee Pvt. Ltd. (Est. 2004) 2. Organizational Mission

13

We established Costa-Rican Coffee Pvt. Ltd. because we love coffee. Coffee is not just about a simple cup of hot or cold liquid, it is to do with the aromas, the taste and the whole experience of enjoying coffee. Costa-Rican Coffee Pvt. Ltd is committed to enrich peoples lives. Our customers will be guaranteed consistent, high quality specialty coffees, teas and associated products; supported by highly efficient, friendly and professional service. Our employees will be provided a secure, fulfilling and prosperous work environment. 3. Vision Statement Through our professional skills and clarity of purpose and values, we aim to become the Number One Coffee Chain in India.

4. Organizational Values

Transparency in all dealings with key stakeholders Commitment to customers with regards to our quality services. To practice business ethics integrity, environmental sensitivity and social responsibility.

5. Organizational Objectives (short term) 1. The business units key objective for the period is to penetrate the markets in Maharashtra at a faster rate than our competitors which can be achieved only through quicker opening of our outlets. 2. 3. 4. To be the first to capture 25 percent of the coffee chain market in Mumbai by two years. Research and establish six-ten other innovative products by the sixth month, ready to market by the eighth month. To franchise 6 of the 12 outlets to be launched within the six month period.

14

6. Organizational Objectives (long term) 1. The business units key objective for this period is to increase the rate of return on investment (ROI) to 10% within two years, which can be accomplished by increasing the profit level and reducing the level of investment. 2. 3. 4. Nation wide launching of our coffee chain and also making our presence felt globally. Own a coffee plantation company by the fourth year, which would supply us with best quality coffee beans at reasonable rate. To be cash positive by the third year, and earn minimum profits of 2 crores by the fourth year and to sustain profitability.

FINANCIAL PLAN 1. Underlying Assumptions

To test launch Costa-Rican in Pune with a franchisee outlet at an estimated cost of about Rs. 25 30 lakhs for a period of one month and to further continue the franchisee.

To advertise in the areas, through bus stand hoardings and other hoardings around the launching locations in Mumbai two weeks before the official launch in that area. Total estimated cost Rs.30-40 lakhs. (For the period of six months).

15

The launching of 10-12 outlets in Mumbai, at prime locations whose outlets would either be fully owned by the company or through franchisee at an estimated cost of around Rs. 4 to 5 crores.

To launch 2 Costa-Rican Mobile Coffee units at the end of the third and the sixth month at a total cost of around Rs.12 lakhs. To launch 20 Costa-Rican coffee espresso corners at Navi Mumbai railway stations, bus depots, tourist spots and other such areas where it is economically viable. Cost of Raw Materials would be around Rs. 1cr (6 months) Creditors paid 7 days end of month To tie-up with food specialists for introducing better quality confectionaries Coffee seeds to be purchased only from wholesalers (Indian and foreign)

2. Financial Highlights (Best Case Scenario)

Cash positive at the start of the third year of operation. Rs 5 lakhs committed to R&D each year for developing in house variety of coffee. Cash surplus to be invested into purchase of a coffee plantation farm or company. To reduce over head costs by constantly following the Total Quality Management (TQM) at all the outlets.

3.Breakeven Point Assumed to be arrived at the end of second year (best case scenario).

4. Advertisement Revenues We assume to earn an advertisement revenue from in house ads. at around Rs 15 lakhs for the period of six months.

16

Its become a trend for the Indian youth to sip steaming mugs of latte, cappuccino or mocha after college. Professionals crowd in the afternoon to grab a quick bite of a sandwich and wash it down with a cup of coffee in the hectic lunch hours. Many even conduct their client meetings over a cup of coffee. There are die-hard coffee fanatics for whom these coffee parlors have become the getaway from the daily grind, where they can sit back, relax and surrender to the simple pleasures of coffee. Well, its the coffee culture that speaks no discrimination of color except for the color of coffee.

These coffee hangouts have an interesting array of the brew varieties to choose from ranging from the ubiquitous Expresso to Italiano, Romano, Cappuccino, Mocha or Latte. Some of these parlors keep the country-specific varieties viz., Columbian, Kenyan, Ethiopian. The master Baristas create the blend from the top grade beans, of course using the Expresso method to extract the aromatic oils of each bean.

Had it not been the innovative Luigi Bezzera in 1903, there would have been no sound of steam from those Expresso machines. And beans definitely meant business. A multi-million dollar business virtually grew from small seed like fruit called beans. But this much-hyped beans which was once an object of smuggling was not to stay confined to homes or restaurants, coffee was already a product strong enough to bring it to an exclusive limelight. Thus, the emergence of Coffee parlors.

A laid back ambience to drive away the daily pressures of life is what the coffee parlor aim at doing.

Coffee has become an experience. And coffee is here to stay!

17

MARKET SEGMENTATION We have segmented the market on the basis of demographics like age, income, occupation. Also psychographics like lifestyles and also on the basis of region

TARGET MARKET We have targeted youngsters and business class. Thats because the maximum consumption in any coffee chain is by the youngsters. These youngsters like to spend most of the time outside their house where they can sit comfortably without anybody disturbing them at least for an hour and a half because of this reason we are targeting youngsters. For business class usually they conduct meeting which is very important and urgent in restaurants where they can enjoy the food as well as they can discuss the matters what they wanted to discuss, so we have separate table for this type of meetings where they wont be disturbed and they would like to have a cup of coffee rather than having lunch because of which we are targeting them as well.

POSITIONING Positioning is nothing but creating an image in the minds of the customer about our product. We aim to position our caf COSTA-RICAN as a place to experience the joy of having coffee in a unique ambience, style and taste.

PRODUCT DIFFERENTIATION Our caption is NOT JUST COFFEE which means that our caf is not only rich in its taste of coffee but also backed by efficient and demanding service to our customers 18

MARKETING STRATEGIES

4 PS OF MARKETING

Product Costa-Ricans menu includes Hot Coffee, Ice Blended Coffee, Milk Shakes, Quick Bites, Costa-Rican Combos, Melting Moments and Ice Creams and Ice Tea. CostaRican exclusive items include the special tea drinks like Malibu and bubble tea etc.

Price Costa-Ricans are using psychological pricing. Besides coffee items all other majority items are being priced by using psychological pricing as it is considered best suitable for our product. For the pricing of our product we see to it that we get our basic amt of the product and then we add all our other expenses keeping in mind that the price is not too high but reasonable compared to my competitors.

19

Promotion

For promoting Costa-Ricans as a coffee chain we have decided to resort to hoardings (on the bus stop as well) and pamphlets with discount coupons. Till the Daily sales is concerned we are going to adopt the following strategy:BILLING AMT. (1) 500 (2) 300 & above (3) 200 & above (4)100 & above OFFER Discount of 10% on the net bill amount 3 Jazzy Costa-Rican mugs 2 special friendship mugs Rs.10 off coupons (on the next purchase)

Place We have chosen Mumbai as a launching pad since Mumbai is India's one of the biggest metropolitan city and it has a potential for the growth of any kind of retail industry. The places where COSTA-RICAN intends to launch an outlet includes:

Bandra,linking road Mithibai and N.M. college, Parle Church gate Hira Panna Hira Nandani and many more

20

MARKETING STRATEGIES Set up the coffee shop with a grand opening at one of the prime location and a brand ambassadors with celebrities coming in. Advertise the opening of the caf shop through different medias like television, print media and so on. Promote the product between kids by using cartoon characters to generate an appeal for the product say like Popeye drinking Caf Life Products instead of Spinach. Also put up offers which would make the kids attracted towards the product. Powerful strategy that we are going to use in the long run are as follows. 1. Tie up with family restaurants giants like Mcdonalds or Pizza Huts in order to base our product in their outlet also providing our outlet to sell their product which would not only make caf life not a coffee shop but also a family restaurant. 2. I would like to introduce a new scheme in order to promote my product in the corporate world like call centers where we have an outlet and the scheme would work this way. a. Tie up with the company is required in order to avail the scheme to the employee. b. After an employee becomes permanent he would be entitled for the scheme. c. As per the scheme the employee could avail a credit buying system in which he would buy any beverages or product at our outlets after he offers a statement that shows that he has worked for 15 days for the month and based on the salary value of 15days he could avail any product upto that credit limit and by the end of the month his salary would be deducted which will automatically be transferred to our account. d. He would be provided with a caf card which he needs to swap and the amount of the product will be automatically entered into his account . 3. As we are investing a lot on research on new range of products these products will be entered into the market along with fast and high selling products which the competitors sell, which would capture their small portions of their market.

RECRUITMENT AND TRAINING

21

Provide training for the workers who are working in the coffee shops like Customer service techniques, serving methods. Maintaining quality and standard in their working.

ADDITIONAL FEATURES COFFEE FROM THE KETTLE . INTRODUCTION OF THE BEVERAGE COFFEE COSTA-RICAN DEVELOPS A FOOD FETISH INTRODUCTION OF COFFEE-COMBOS

INTRODUCTION OF PARCEL FACILITY

MARKETING

STRATEGIES

FOR

COFFEE

BAR

IN

THE

CORPORATE WORLD

To establish COSTA-RICAN in the corporate area the following are the marketing strategies

22

1.The channels showed on the screen within the bar will be news channels for informative channels like NGC and Discovery. 2. The magazines that revolve within the bar shall be related to business and would also include different corporate newspapers and magazines of particular companies. 3. There shall be a coffee named after a particular corporate name. 4.Coffee bars established in call centers and MNCs that work all around the clock, the bar too will be at their service for 24 hours. 5.Having a corporate meeting corner within the bar. Collaborating with a particular corporate name and setting up a coffee corner within their office premises. 7.Collaborating with a particular corporate name and setting up a coffee within their office premises. corner

8. To have a display board in the bar that will enable them to put forth various new products and other related information. 9. Offering them with various schemes like discounts incase the firm has a tie up with COSTA-RICAN

SWOT ANALYSIS

23

Strengths Quality products Successfully test marketed in Pune Skilled and committed team Good tie up strategy. High investment in research which thereby create new products in the market.

Capitalize on Strengths

Market entry and to gain market knowledge Favourable consumer perception Pune seen as test market ground for Mumbai Management has skills and experience in a variety of areas Ability to negotiate on tie ups with companies

Weaknesses Management team is new to the market. Board not yet finalized Limited Pune experience Company doesnt own any plantation. 24

High competition

Address Weaknesses Committed to expansion Positions to be offered to venture partners Professional sales team recruited with assistance of venture partners who will have affinity with, and experience in the food/beverage industry.

THREATS With the entry of new competition in the market the existing caf shops will become more alert, due to which they will become more aggressive in their approach by giving more discounts and some other techniques of marketing by which they can get more customers. BENEFITS OF LAUNCHING COFFEE CORNERS 1)Investment is low ( as compared to coffee bars) 2)By launching coffee corners at variety of places we can easily penetrate the market 3)Customer awareness is done at a faster rate. 4)Costa-Rican can advertise its products at a wide range. 5)At every coffee corners there will be 2 types of coffees sold at a reasonable rate.

25

BENEFITS OF LAUNCHING MOBILE VANS

(1)It requires one time investment. (2) It reaches the consumers through places like open ground exhibitions and concerts. (3) It also reaches the places where the sports competitions are held such as play grounds (4) By reaching at variety of places Costa-Rican can advertise itself to a large extent. (5) By using mobile vans transportation of raw material is easy.

26

To stay steady in competition with one another, Costa-Rican coffee bar should keep in pace with the help of the following three Cs:

Clarity Strong brands are clear about what they are and what they are not. They understand their unique promise of value. And this promise of value sets them apart from their competitors. It differentiates brands and allows them to attract and build loyalty among a desirable set of consumers. Volvo, for example, is clear about their commitment to safety and security. They are not about speedy sports cars, or about small economy cars, or about luxury cars. They build cars for families. Cars that are safe. And they clearly focus their communication activities on this differentiation. Nordstroms clarity is around unmatched customer service. And it is clear from the moment you step into the store. Nordstrom has been able to separate itself from other retailers through this unwavering commitment to customer service and satisfaction. There are several retailers who will sell you a black Armani suit; but only Nordstrom will turn it into an experience you will talk about with friends and colleagues. This clarity guides Nordstrom as they build on their current business. When they developed their on-line store, they did so in a way to ensure that customers would experience the same level of service they have come to expect from the Nordstrom brand.

Consistency

27

In addition to being clear about who they are, strong brands are also consistent. They are always what they say they are. For Volvo, they are always about safety. They dont change their focus from model to model. When new editions come out each year, they are safe too. And Volvo consistently communicates that. Or look at Madonna. Madonna is the chameleon brand of entertainment. She reinvents herself with each CD that she produces. She didnt change for her first five CDs and then stay the same for the next two. She consistently changes. And the one thing we can be sure of with regard to her upcoming CD is that it will be nothing like any of the others she has done before. Madonnas ability to change consistently throughout her career separates her from other entertainers, thereby strengthening her brand.

Constancy It is not enough to be clear and consistent if you are not always visible to your target audience. Strong brands are constant; they are always there for their customers and prospects. They dont go into hiding. For Coke, the world is the target market. That is why you cant make it through a day without being exposed to their bright red color or familiar script logo. Vending machines, people carrying a coke as they walk down the street, restaurant menus, product placement in TV shows and movies, billboards and print and TV advertisements all scream COKE. Coke is a constant in our lives. And Coke is the worlds strongest brand. Chances are, your brands target market is a lot smaller than Cokes. And that is good news, making it easier (and a lot less expensive) for you to remain constantly connected to your target audience

28

MENU CARD OF COSTA-RICAN HOT COFFEE

Cappuccino

Rs.20.00

(Classic Italian espresso topped with steamed and foamed milk) 29

Cafe Mocha Cafe Latte Espresso Espresso Americano Chococinno

Rs.30.00 Rs.25.00 Rs.15.00 Rs.15.00 Rs.20.00

(Hot coffee with a swirl of chocolate) (A hearty mug of espresso and steamed milk) (A shot of espresso stretched with hot water less than in Americano) (A shot of Espresso stretched with hot water- served Black or with milk) (A sinful combo of chocolate ice cream and hot coffee) ICE BLENDED COFFEE

Almond Frappe Cold Sparkle

Rs.49 Rs.29 Rs.29 Rs.49

(It is a almond flavor rich, creamy cold coffee.) (Chilled coconut - flavoured coffee.) Tropical Iceberg (Chocolate flavoured coffee with crushed ice.) Devils Own (A smooth blend of cream and coffee, drenched with chocolate sauce and topped up with a shot of whipped cream) COFFEE ADD ONS

Cinnamon Flavour Flavored Syrups

Rs.10 Rs.15

(Try hot coffee with specially imported flavours.)

30

Red Eye (An additional shot of espresso. For strong coffee.) Whipped Cream Scoop of Ice Cream Chocolate sauce Rs.10 Rs.10 Rs.10 (Snowcap your coffee with some lightened cream.)

Rs.15

ICE TEA

Assam Lemon'n (Chill out ) Malibu

Tea Ice Tea Rs.29 Rs.29 Rs.19 Rs.19

Rs.19

(Premium tea from the misty hills of Assam.)

Bubble tea Fruit juices

OUR STRATEGIC ANALYSIS Change in Social and Attitudinal Trends of Consumers Consumer friendly

31

Employment Growth of television channels gives exposure

Abroad ambience

Not just food

COMPETITIORS ANALYSIS MARKETING STRATEGY

BARISTA Promoted by the New Delhi-based Java Coffee Company, Barista is the fastest growing coffee retailing chain in the country. The brand takes its name from the Italian term for a coffee brew master. Since beginning Barista has tried to position itself as a fine caf and not as a coffee pub that Qwiky's and Caf Coffee Day are. 4PS 1) PRODUCT :- The product of Barista includes a variety of coffees, special teas, food and beverages, ice-creams and pastries. (2) PLACE :- The first Barista outlet was started in March 2000 in New Delhi, where tea is much more of a universal drink than coffee. Currently, the company 32

operates around 140 outlets across the country. In Mumbai, barista has 34 outlets at places like Bandra, Bandstand, Chowpatty, Ghatkopar, Linking road and many more 3) PRICE :- Barista brews a cut price strategy . Barista has recently cut prices of nearly all items in its menu card by 20-25 per cent. The new pricing strategy is a result of the recent change in the brand positioning of Barista-from indulgence to a hangout. Barista has also introduced new low-priced beverages which shows that it follows penetration strategy. (4) PROMOTION :- Barista is offering consumer promotions at their existing outlets whereby on the purchase of a Barista coffee worth Rs 150, consumers can avail of a Lacoste gift voucher worth Rs 500 and a Lacoste calendar. Barista has plans to make a foray into branded merchandise such as caps, T-shirts, coffee mugs and other promotional ways

PORTER 5 FORCE MODEL

(1)RIVALRY :- There is a very tough competition between barista and CCD, with both claiming to be number 1 in coffee chain industry in INDIA. CCD outlets have lower investment than that of barista due to which they have been able to keep their prices 10-20% lower than barista. (2) THREAT OF NEW ENTRANTS :- Barista has almost 140 outlets all over INDIA. CCD its competitor has been launching its outlets at almost same areas where Barista has launched. Also there are new players in market like the Quickys, Java Green, Starbucks, Caf shop and few others.

33

(3) THREAT OF SUBSTITUTE PRODUCTS :- Coffee being a beverage product it has many Substitutes like Georgia Coffee launched by Coca-Cola, Ice Tea launched by HLL, Food chains like Mc Donald's, Pizza Hut etc also Soft Drinks and Fruit Drinks. 4) BARGAINING POWER OF SUPPLIERS :Tata owns 34% stake in Barista. Due to this, the coffee and tea grown by Tata company is available to Baristas at a comparatively low price. Hence the bargaining power of the supplier is quietless. (5) BARGAINING POWER OF BUYER :Since the coffee chain industry is in the growth stage and also coffee consumption is less in INDIA compiled with other competitors it becomes tough to maintain customer relationship. Buyer can easily switch on to the competitor very easily.

STPD Segmentation : Barista segmented the market on the basis of places. It has setup outlets in business areas, near college campus, shopping malls and other such areas where the concentration of high end consumers are high.

Targeting : Its target segment includes professionals, working couples and families in the SECA and SEC-B categories.

Product differentiation : 34

1)The Italian ambience 2)Its diversification in hot beverages by introducing specialty teas Positioning : Barista has positioned itself as a place where people meet and also as a premium coffee brand in India. But it is changing its positioning from a premium retail outlet to that of a hangout or a meeting place frequented by young people.

SWOT ANALYSIS STRENGTHS : Barista provides a strong platform in the coffee retail segment. This combined with the inherent strengths of Tata Coffee, gives the company a unique competitive advantage. In Barista, the staff are brew masters, professionals in the art of making coffee. One factor that attracts the younger crowd to this cafe is the unassuming attitude of the staff at these outlets. WEAKNESS: The main weakness of barista are :(1)Their Investment is high (2)The price of products are comparatively high. (3)It attracts only the premium segment

OPPURTUNITY : Barista is exploring the opportunities of serving even in overseas markets like Sri Lanka and Dubai. Through Tatas brand image it can get a better access to the European markets. THREATS:

35

One of the major threats of Barista are the new entrants in the market like Star bucks , Java green , Quickys and Cafe Coffee Day.

STARBUCKS

A cup of coffee never seemed so tasty to real estate developers. As the global coffeechain Starbucks prepares to enter the Indian market Starbucks, which has become as well-known as that quintessential American product Coca-Cola, is likely to open its green-and-white cafes in India in early 2003 Starbucks

SWOT ANALYSIS Strength: 1.Well established position toward up scale consumers 2.Loyal customer base 3.High quality product 4.Well known brand name Weakness: 1.Their prices are higher than their competitors. So It is difficult for Starbucks to penetrate mass market with prices above market averages.

36

Opportunity: 1.The rapidly growth of the specialty coffee market put Starbucks in the lead for expansion. It is already the largest coffee chain retailer in the world. 2.For even more rapid growth they could franchise their name & product to potential "Starbucks lovers. Threats: 1.Since the price if high the customers may shift to the nearest competitor. 2.Concern for Caffeine; more people are aware of the risk in the consumption of caffeine. But consumption of caffeine had not decrease for the past years.

4 Ps Product: All Starbucks stores offer a choice of regular or decaffeinated coffee, changing "coffee of the day," and a broad selection of Italian-style espresso beverages, as well as distinct packages. The product mix in each store varies and depend on the size of the store and its location. Larger stores include approximately 30 of the company's more than 50 varieties of whole bean coffees and a range of coffee-related products. Place: The US market is the strongest. Starbucks is trying to open stores in Japan the second largest coffee drinkers in the world. Price:

37

Starbucks comparatively have higher prices for their products. They intend to maintain this price range for retail stores, specialty coffee sales and direct mail. Promotion:

Starbucks advertisers through television, print media, and also through In-store promotions. In markets with a less established specialty coffee presence, the company's advertising emphasizes fundamental distinction between Starbuck's coffee and lesser-quality ground and whole bean coffees.

SEGMENTATION Starbucks have divided the market in 3 segments. The first one is at retail levels which represent 87% of the total sales of the company . The second market is the specialty sales (companies such as USAir) that accounted for 9 % of the sales. Finally, direct mail order accounted for 3% of the company's net sales.

TARGETING Starbucks target primarily customers that fit their niche market: Educated people and college students (25 to 44 years). Customer's income is about $50,000 (mean). Starbucks coffee drinkers are primarily white but other races are loyal customers as well.

POSITIONING

38

High quality product Product differentiation Global coffee-chain

SWOT ANALYSIS Of CAF COFFEE DAY STRENGTHS Pioneers of the caf concept in India. Have successfully targeted the middle class segment with their affordable pricing. it is a part of Indias largest coffee Conglomerate amalgamated bean coffee trading company ltd. A rs 250 crore iso 9002 certified company.

OPPORTUNITIES1.Caf coffee day is putting all its effort into expanding and penetrating inside India. The are opening in places where other competitors have yet not entered. 2. 2.They are going into franchising.

Threats

39

One of the major threats of CAF COFFEE DAY are the new entrants in the market like Star bucks , Java green , Quickys and Barista.

MARKETING STRATEGIES OF CAF COFFEE DAY

CAFFE COFFEE DAY, besides having their normal strategies to sell keep coming up with new ideas as soon as they see any opportunity on their way. Here is a list of a few of them.

They usually use vibrant colors in their outlets to please their target group of youngsters They have started having tie-ups with big malls.

They have a newspaper of their own called THE BEAT. Its a news paper for the paper for the young. To keep up the excitement they got into a 4 months promotional tie up with Levis They even made a special drink which was called LEVIS ULTA-PULTA coffee. After their success at the India barista championship, they had their brew 40

masters prepare special drinks . They have a caf citizen program. They have a musical caf in Bangalore where live music is played as also it becomes a stage On the 55th Independence Day promised cry that it will give money for educating 55 underprivileged children. They have this special coffee which is called take away large, for those who want to have a sip on their way

NEW PRODUCT DEVELOPMENT

41

1. How often do you visit coffee shops?

50 40 30 20 10 0
42

Very often

Sometimes

Rarely

Never

In which coffee shop do you prefer hanging out in?

43% 57%

Barista Caf Coffee Day

3. Which coffee shop offers a better blend of coffee?

5. Which coffee shop provides better variety of foodstuffs alongwith coffee?

50%

50%

Barista Caf Coffee Day

43

5. Which coffee shop can be called as being ideal for the family or relative gatherings?

44