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Café Coffee Day (CCD): A Case Analysis

Authors:

Abstract

The coffee market in India has been growing due to the demand for ready to drink coffee and has become a part of an individual’s daily consumption basket. Due to changing cultures, consumers are becoming aware of domestic and foreign brands, which are boosting the consumption levels. The export promotion schemes and other subsidies by the GOI, and increasing trend of eating out coupled with the rising share of young population has driven the market. Well-established coffee shop chains, such as Cafe Coffee Day (CCD) and Barista, enhanced their pan-India presence in the latter part of the review period. In 2010, Cafe Coffee Day and Barista had 970 and 200 stores, respectively, and they aim to continue expanding in the next few years. Meanwhile, several relatively new players, such as Costa Coffee, Coffee Bean, Gloria Jean’s and Java Coffee, are trying to establish a footing in Indian coffee retailing. Both these factors drove on-trade consumption of fresh coffee beans in 2010, with volumes growing by 12%. On-trade sales have emerged as the primary sales channel for fresh coffee beans, in the absence of any appreciable off-trade consumption.
Electronic copy available at: http://ssrn.com/abstract=1920827
CCD: A case analysis
Authors:
Sachin Bansal
Head- Strategy & Brand Marketing
sachin@sachinbansal.com
Professor Manoj Joshi*
Amity Business School, Amity University,
Lucknow Campus, Uttar Pradesh, India, 226010
®: +91-522-2330934, (M) +91-9415017498
E-mail: manoj.joshi.m@gmail.com
Electronic copy available at: http://ssrn.com/abstract=1920827
INDEX
Section 1: Introduction
1.1 Growth of the Café Industry in India
1.2 Corporate Profile
Section 2: Case Study on Café Coffee Day
2.1 Marketing Mix
2.2 Competition
2.3 SWOT Analysis
2.4 Comparison with Barista
Section 3: Conclusion
3.1 Business strategies suggestions to increase market share
INTRODUCTION
Logo
Parent Company Café Coffee Day (CCD)
Category Coffee joints
Sector Food Products
Tagline/ Slogan A lot can happen over coffee
USP Most recognizable and affordable brand in India
Segment People looking to go to have a coffee and snacks at a
hangout place
Target Group Youth in the middle and higher income groups
Positioning India's favorite coffee shop, for the young and the young at
heart
1.1 Growth of the Café Industry in India
The coffee market in India has been growing due to the demand for Ready to Drink
coffee and has become a part of an individual’s daily consumption basket. Due to
changing cultures, consumers are becoming aware of domestic and foreign brands, which
are boosting the consumption levels.
The export promotion schemes and other subsidies by the GOI, and increasing trend of
eating out coupled with the rising share of young population has driven the market.
Well-established coffee shop chains, such as Cafe Coffee Day (CCD) and Barista,
enhanced their pan-India presence in the latter part of the review period. In 2010, Cafe
Coffee Day and Barista had 970 and 200 stores, respectively, and they aim to continue
expanding in the next few years. Meanwhile, several relatively new players, such as
Costa Coffee, Coffee Bean, Gloria Jean’s and Java Coffee, are trying to establish a
footing in Indian coffee retailing. Both these factors drove on-trade consumption of fresh
coffee beans in 2010, with volumes growing by 12%. On-trade sales have emerged as the
primary sales channel for fresh coffee beans, in the absence of any appreciable off-trade
consumption.
In 2010, the average bill amount at coffee outlet was between rupees 135 and 150. This is
expected to rise to rupees 245 by 2016. With customers paying significant amount for
their coffees, they are also expecting a lot from an outlet. Factors such as menu,
ambience, service and brand name are playing an important role while choosing a coffee
outlet.
Indian Coffee Chains market is quite mature which is evident from the fact that Café
Coffee Day alone maintains more than 1000 Café’s in 141 cities in India. This forms the
main focus of this project.
1.2 COPORATE PROFILE
Café Coffee Day, A division of Amalgamated Bean Coffee Trading Company Ltd.
(ABCTCL), having its headquarters in Chikkamagaluru, Karnataka. It opened its first
cafe in 1996 on Brigade Road in Bangalore, and today has the largest cafe retail chain in
India – with over 1000 Café’s in 141 cities.
“Running café is a hospitality business and one needs to create the right ambiance and
experience and back it up with strong logistics”
Café coffee day is a 750 crores ISO 9002 certified company has over 5000 acres of coffee
states which is second largest in Asia registered as a social service provider to people.
Large numbers of coffee day cafes are located in Bangalore. The cafe chain has had much
success riding, and to some extent creating, the cafe culture wave that swept across
metropolitan India following strong economic growth resulting in an increase in youth
spending power. It has even tied up with World Space and Micro sense to enable its cafes
with satellite radio and Wi-Fi, respectively. Its first Wi-Fi cafe was opened on Lavelle
Road, Bangalore.
Its different divisions include:
Coffee Day Fresh n Ground (354 Coffee bean and powder retail outlets)
Coffee Day Xpress (341 Coffee Day Kiosk)
Coffee Day Take away (7000 Vending Machines)
Coffee Day Exports
Café Coffee Day
Coffee Day Perfect (FMCG Packaged Coffee) division
OBJECTIVE
The objective is to start trading in the overseas markets. Having set up a subsidiary in
Vienna and a franchise operation in Pakistan, the café coffee day expects to vend its
brand through departmental stores.
VISION
“To be the best café chain in the country by offering world class coffee experience at
affordable prices”.
MISSION
To be ranked no. 1 among the service sector
To provide the best quality services to customers at affordable prices.
CCD is aiming to create its own niche merchandising like Indian coffee powder,
cookies, coffee mugs and curry paste.
PHILOSOPHY
Its philosophy is to provide world class trendy lifestyle products and experience to its
customers and in order to execute it, it has opened some new outlets with the facility of
music lounges, book cafes etc.
NATURE OF BUSINESS
Café Coffee Day is a division of India's largest coffee conglomerate, Amalgamated Bean
Coffee Trading Company Ltd. It was the first to roll out the coffee bar concept in India
with its first Café in Bangalore. Café Coffee Day serves the coffee its grows on 6000
acres of its own estates and another 2500 acres of managed estates and is India only
vertically integrated coffee company.
First café was opened in Bangalore. It ranges from hot and cold coffees giving a pinch of
international flavours.
It has a well-equipped roasting unit catering to the specific requirement of the consumers.
The process is carried out under the control of experienced personnel to meet the highest
quality standards.
Coffee Day Comprises of the following Sub Brands
Coffee Day - Fresh & Ground
Café Coffee Day
Coffee Day – Vending
Coffee Day - Xpress
Coffee Day – Exports
Coffee Day - Perfect
MARKETING MIX
Café Coffee Day has a well-equipped roasting unit catering to the specific requirement of
the consumers. The process is carried out under the control of experienced personnel to
meet highest quality standards. The most modern technology available is used to
maintain consistency and roast the coffee beans to the demanding specifications of the
discerning coffee consumers.
Essentially a youth oriented brand with majority of its customers falling in the 15- 29
year age bracket. Each café, depending upon its size attracts between 400 and 800
customers daily.
USP of the Brand:
Affordable Price
PRODUCT:
Café Coffee Day product mix constitutes a wide range of products like samosa, biryani,
masala sandwich, tikka sandwich etc. The best selling item in summer is frappe, which is
coffee and ice cream blended together. The young people favor it. In winter it is
cappuccino. Their merchandising includes funky stuff like t-shirts, caps etc.
Serving Size:
The serving size of a product is a measure, not only of quantity, but also of value for
money.
PRODUCT SERVING SIZE
Hot Coffee 210 ml
Cold Coffee 350 ml
Smoothies 350 ml
Granitas 350 ml
PRICE:
Considering that Café Coffee Day knows its major customer lies in the bracket of 15-
29,it has tried to derive a policy whereby it can satisfy all its customers. The price for a
cup of coffee ranges from Rs.45 to Rs 80. From the time it first started its operations,
there has been only minor changes in the pricing policy of Café Coffee Day. The changes
have been more due to the government taxes than any thing else
PLACE:
The strategy CCD has adapted is to place a cafe in every possible location where some
business can be generated. This is a prime factor in determining the success of a retail
chain. Café Coffee Day looks to cater to their target market with strategically located
outlets. Their outlets are generally located in High Street/ Family Entertainment Centers,
gas stations, near Colleges etc.
PROMOTION:
Café Coffee Day involved in all the areas of serious consumer passion like:
Television: Café Coffee Day held a contest around a very popular programme on Zee
English called Friends. All the six lead characters are shown often visiting a coffee shop.
They have tied up with Channel [V]‘s Get Gorgeous contest.
Tie-ups: Besides that Café Coffee Day also tie up lot of the youth brands. So they have a
contest going on with Levis, another one with Scooty, Liril, latest one with Airtel
Friends.
Association with movies: CCD can be seen in movies like Khakhee and Mai Hoon Na
Sales Promotion: Café Coffee Day uses special ‘Café Citizen Card’ for rewarding Café
Coffee Day’s customers.
It is a loyalty program to gain new customers and retain the existing ones.
PEOPLE
Motivation and personal skill are laid emphasize upon. Their employees are like friend to
the customer but at the same time they know about the international standards of hygiene
and cleanliness and personal grooming.
COMPETITION:
Direct competitors
Barista – This is the closest comp
of CCD in the Indian market. They
target the same class of upwardly
mobile youth and young
professionals. But barista is always
viewed as a place to unwind after a
hard day’s work or an ideal setting
for some business meetings.
Café mocha-this aims at providing
level of experience to the customer
is hard to imitate. Inspired by
morocco and turkey, mocha offers
not just coffee but also sheeshas
from Egypt and gourmet desserts.
Mocha itself calls a coffee shop for
the soul
Indirect competitors
Eateries like Mc Donald’s and
Haldirams pose competition to cd
as they are likely attraction for
customers to be drawn to .a
consumer can well understand
why he should spend around rs.45
on a coffee when he can get a
burger and a coffee for the same
price at Mc Donald’s.
Local tea joints and coffee shops
like café Nescafe – they are
smaller places but nevertheless
target the same set of consumers
Qwicky-based mainly in Bangalore
,q has a strong local hold on south
India
Also local coffee houses like
Indian coffee house etc are also a
major threat to the company as far
as affordability is concern.
SWOT ANALYSIS:
STRENGTHS
Excellent brand name and brand
visibility
Huge young crowd as target group
Excellent ambience and service
Over 1000 outlets and 300,000
visitors per day
It produces/grows the coffee it serves
hence reducing the cost.
WEAKNESSES
Crowd management
Improper sitting arrangement.
Lacks strength to maintain brand
loyalty.
Follow the competitor strategy
THREATS
Entry of foreign players like
Starbucks
Dependent on Govt commodity
rates
Large unorganized market.
OPPORTUNITIES
Introduce cheaper versions of
coffee
Tap the smaller towns/cities
Merchandising.
Tie ups with other companies for
promotion
Competitive SWOT Analysis with Barista
Café Coffee Day Barista
Strengths
Taste & Quality of their products.
Grow their own coffee beans
Projected as an “affordable” brand.
Strengths
Strong Brand Image
Excellent Human Resource
Ambience and Décor
Strong base for expansion and growth
Weakness
Lacks the power and strength expected to
maintain brand loyalty.
Average rating for their behavior and service.
No tie ups with big international brands
Weakness
Average taste and quality of products
Perceived as an expensive brand
Inconvenient Delivery Process
Opportunities
Over 40% of the population is under the age
of 20, hence untapped market share and
potential for growth.
The use of clever collaborations
(bookstore,etc)
Opportunities
Strong Brand recall
Presence of large number of outlets
Pricing
Large number of untapped market
Threats
The brand doesn’t project a clear image to
customers about what Café Coffee Day is all
about.
Brand Loyalty is not so strong.
Threats
Coffee substitute
Rise in the cost of coffee products and
substitute
Competition from national and international
products
BUSINESS STRATEGIES SUGGESTIONS TO INCREASE MARKET SHARE
Price was one of the factors that
served as a hindrance not only to
the students, but also to the
working executives. Thus the most
likely solution to this problem
would be nothing but decreasing
the price but at the same time the
profitability of the joint should not
INNOVATION STRATEGIES
Changing the menu every 4 month
to prevent food fatigue
Introducing monthly special and
Indian snacks
Introduction of table service than
self service
be affected.
The next possible step that the
Coffee – bar should take is to
increase its awareness among its
target audience. This it can achieve
by various means of advertising
and that too keeping in mind the
specific categories of its
consumers. For e.g. it can target
the students by sponsoring the
cultural events that are organized
in various colleges.
Keeping in mind that a student
cannot spend as much as a working
executive does, special rates can be
introduced for the students.
New varieties of product should be
introduced on an experimental
basis.
Also to increase the reach of the
consumers more and more outlets
should be established.
The Coffee – bar can go in for
competitive analysis to understand
the competition and realize its
current standings.
LOW COST SERVICE TO
THEIR CUSTOMERS
The coffee at Café Coffee day is
priced at minimum rate for Rs. 40
for the starters and it increases with
the menu.
OPENING THEIR OUTLETS
IN THE REACH OF THE
CUSTOMERES
Customers can easily access the
Café Coffee Day near their homes
and do not have to go a far off
place in order to get a cup a coffee.
MERGERS AND
AQUSITIONS WITH VARIOUS
COMPANIES
Tie ups with different companies
like Deccan Airlines, Retail Chains.
CUSTOMER RETENTION
POLICY
Introducing new drinks
Café Coffee Day aims at retaining
their customer who visit on
everyday basis or weekly basis.
PROMOTIONAL
STRATEGIES:-LIKE
HOOKING UP WITH THE
ENTERTAINMENT
INDUSTRY FOR
PROMOTION.FOR EG:-
MUJHSE SHADI KAROGI etc.
Café Coffee day has invested in
promotion through various films
like Mujhse shaadi Karoge,
Mughal-e-azam, Kyun ho gaya na
etc.
IT GOES FOR PROMOTION
VIA BARTER DEALS.LIKE
WITH ENRIQUE IGLESIAS,
ELTON JOHN CONCERTS
AND WWE.
External analysis of the business
environment whereby the company
waited for the coffee consumer to
be educated and adapted to this
new market.
Very innovative in their logistic
department.
They follow a continuous
replenishment policy by
integrating vendor upstream.
They have a proactive approach.
They introduced table service instead of
self service
DISTRIBUTION STRATEGIES
Supply chain strategy
Decentralized distribution strategy
( for expansion plans)
Follow continuous replenishment
policy by integrating vendors
upstream
Web based order processing
system
Online inventory tracking process
Extensive research for identifying
market needs
MARKETING STRATEGIES
Meeting place for 15 – 29 years
old
Want their customers to grow with
them
Market associations with youth
oriented brands ( levis , TVS ,
Airtel, AOL )
Affordable
Well lit and respectable yet
informal
Societal concept of marketing
- Employment to
physically challenged
- Concept of quality
PROMOTION STRATEGY
Via barter deals
In-films promotion deals
Low cost strategy
COMPETITIVE INTELLIGENCE
STRATEGY
Discover unexplored market
segment
Hygienic eating place
Opening 100% veg outlet
Wi-fi – service
affordable price tag image
CUSTOMER RELATIONSHIP
STRATEGY
Regular cost feedback
Rewarding customers for loyalty
Café-citizen programme
New customer oriented intimation
(LERA)
Book-café’s
COST CUTTING STRATEGIES
Designing of in-house
Source their furniture and crockery
from outsource
Saving transportation cost
Cost cutting feeling in their
employees
STRATEGY GAPS:
Limited target audience-focused segment is the YOUTH.
Lack of price affordability due to varied purchasing power.
Home delivery service is unavailable-people staying at far off places cant avail
the service.
Entering into new products bringing more competition
SUGGESTIONS:
Extending the coffee types
Enriching the menu
Keeping the menu constant for long time
Going to parties
Espresso coffee installation menu
Promotion strategy other than barter deals
Café Coffee Day has done extremely well so far to project itself as an affordable
youth- oriented brand.
But there are still certain areas where their brand needs to be much stronger.
With regard to the physical evidence associated with the brand, Café Coffee Day
needs to do a lot of work if they hope to catch up with Barista.
First recommendation for Café Coffee Day is to clean up the décor at every
outlet, wherever unnecessary advertising is taking place.
Although it might be an important source of revenue, long-term customer
perception of the brand isn’t very positive.
Café Coffee Day would do better to provide promotional space for its partners
with the use of clever collaborations, and not printed advertisements and posters
everywhere.
Second recommendation is that Café Coffee Day looks at its current recruitment,
selection and most importantly, its current training policies.
Customers are not happy with the behavior and service of the staff, and Café
Coffee Day is lagging far behind Barista is this aspect.
REVIEW OF PROBLEM AREAS
Café Coffee Day has under performed or not lived up to potential in certain areas. The
areas are weaknesses, which need to be improved upon, as that both can eliminate any
disadvantage that may have, and improve customer satisfaction.
Weak brand image:
The Café Coffee Day brand, although clearly a youth- oriented brand, lacks the power
and strength expected to maintain brand loyalty. The brand doesn’t project a clear image
to customers about what Café Coffee Day is all about. This could prove as a deterrent
during future national and international expansion.
Inefficient human resources:
According to the market survey, Café Coffee Day’s staff received only an average rating
for their behavior and service. Café Coffee Day needs to work hard at this aspect,
especially considering they are a service sector organization that is looking at large
expansion.
Ambience & Décor:
The Ambience & Décor of Café Coffee Day outlets received a below- average rating
from respondents of the market survey. A lot of respondents did not like the fact that
Café Coffee Day outlets and literature served as prime space for a lot of advertising and
promotions. They felt as if the café’s had been hijacked just for advertising.
SUGGESTIONS:-
Café Coffee Day has done extremely well so far to project itself as an affordable
youth- oriented brand. But there are still certain areas where their brand needs to
be much stronger.
With regard to the physical evidence associated with the brand, Café Coffee Day
needs to do a lot of work if they hope to catch up with Barista.
My first recommendation for Café Coffee Day is to clean up the décor at very
outlet, wherever unnecessary advertising is taking place.
Although it might be an important source of revenue, long-term customer
perception of the brand isn’t very positive.
Café Coffee Day would do better to provide promotional space for its partners
with the use of clever collaborations, and not printed advertisements and posters
everywhere.
Perception of the brand its training policies
Increase promotional plan like T.V channels, boarding radio programs. Business
channel.
Small outlets on petrol pumps and in telecom places(small merger with telecom
sector like new arrivals Uninor, DOCOMO)as barista done with TATA
Improve internal marketing strategy.
Segment market for penetration strategy.
Pricing strategy regarding to population factor as how much people are belong to
such market.
Make more attractive promotion plan for attractive features.
... Having kept low prices, it mainly targets customers between the ages of 15-29 as the youth is a growing market and 64% of the country's population comprises of ages 15-34 (Shivakumar, 2013). CCD targets students and the working class (Joshi, 2011) wherein students comprise 52% of their customer base who are aged between 20-24 (Shivakumar, 2013) (Srisvatsava, 2013). Brands like Café Coffee Day gain differential advantage by being perceived as unique by the target market. ...
Research
Full-text available
Ethnic India is renowned customs among all other countries in the world. This customs are derived from dynamic cultures of the citizens of the nation. If it is considered that livelihood acts as factor for determining culture, then handloom/ weaving has direct bearing for setting up culture of a particular community. A group of artisans of Begampur area, Hooghly district of West Bengal crafts handloom tantsarees which becomes a generation wise customary since ancestral days. However, this craftsmanship is in danger due to various reasons. The aim of this paper is to indicate the various causes of endangering this craft and also to suggest possible means of revival. The entire production process of handloom sarees is itself endangering the present market. Enduring problem of earning low profi t results non availability of working capital. The same in turn makes the artisans unable to purchase raw material for producing these products. The same inconvenient has introduced “Mahajan” in the chain of the production. Basically good quality raw materials are found outside of West Bengal only. The “Mahajan” imports raw material and provides to the artisans. In return “Mahajan” receives fi nished goods i.e., Handloom sarees and only labour charges are paid to the artisans. This process of portraying reduced remuneration to the artisans becomes an indicative factor for making artisans refrained from this system which in turn declining the market of subject product gradually. Moreover, this indirect market facility has become consistent system for marketing the subject goods. Advertisement/sales promotions are not even catered for marketing these goods which results unawareness of the consumers from various places. This unawareness is also an indicative factor for declining the market. This paper is based on primary data collected from artisans, through face to face interview by the researcher and also SWOT analysis carried out for identifying weaknesses for declining the market. The primary data collected are subjected to statistical “Z” analysis for testing hypotheses and moreover deriving conclusion at the end of the study
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