Fair & Lovely

 

Contents

1. Introduction 3

2. Coffee Industry in India 4

3. CafÐ"© Coffee Day: Company Background 5

4. The Coffee Consumer 6

5. Non-Traditional coffee retailing in India 7

6. Competition Brewing in Coffee Retailing 7

7. Growth Strategy of CCD 9

7.1 Identifying the gaps 9

7.2 Customers' Latent Needs 9

7.3 Creating the right ambience 9

7.4 Distribution Strategy 9

7.5 Sourcing Policy 10

7.6 Supplier Management 10

7.7 Business Model 10

8 Service Mix for CafÐ"© Coffee Day 11

8.1 Product 11

8.2 Price 11

8.3 Place 11

8.4 Processes 11

8.5 Promotion 12

8.6 Physical Evidence 12

8.7 People 12

9. Store Formats at CCD 13

10. Menu Decision at CCD 14

11. Reward & Recognition for Employees 14

12. Customer Loyalty Programme 15

13. Customer Satisfaction 16

14. Customer Involvement 16

15. Future Focus: Enhancing experience through service initiatives 17

16. The road aheadÐ'..... 17

17. Issues for discussion in the case 18

Appendix A: Segmentation 19

Appendix B: Promotional Campaigns 20

Appendix C: Strategy Charts for Coffee Bars 23

Appendix D: Coffee Consumption Pattern in India 24

D1 :Based on Geography 24

D2 :Category Segmentation 24

D3 :Estimated Domestic Consumption (1991-2000) 24

Appendix E: CafÐ"© Coffee Day 25

Appendix F: Product Variety 26

Appendix G: CafÐ"© Citizen Card (loyalty card) 26

Appendix H: Distribution Network 27

Appendix I: CafÐ"© Coffee Day outlets 27

1. Introduction

"Running cafe is a hospitality business and one needs to create the right ambiance and experience and back it up with strong logistics" Over second and third cups flow matters of high finance, high state, common gossip and low comedy. It is a social binder, a warmer of tongues, a soberer of minds, a stimulant of wit and a foiler of sleep if you want it so. From roadside mugs to the classic demi-tasse, it is the perfect democrat.", said Naresh Malhotra, former Director, CafÐ"© Coffee Day.

"After experimentation and flirtation with different brands, the consumer will settle for one. The brand that will deliver on its promise and offer good service will survive in the long run, We see Cafe Coffee Day to be the major growth driver because it promotes coffee drinking as a lifestyle choice", he added.

Industry experts believe that one of the major obstacles in the growth of India's coffee retail market remains the fact that the country still remains traditionally a tea-drinking nation. While India has traditionally been a tea drinking nation, yet there is a growing coffee culture emerging, especially among the country's young adults. Also, there is a growing interest in western consumer brands and luxury products, hence, a lot of scope of higher penetration of coffee retailing chains.

Clearly, with India's middle class aspiring to be in sync with global culture, coffee retailers are looking at expanding their market share by offering that "total experience" -- right coffee, food and ambience with Wi-Fi's and jukeboxes -- to pull customers.

In the late 1990s, a silent cafe revolution was sweeping urban India. Coffee drinking was increasingly becoming a statement of the young and upwardly mobile Indians. Coffee bars, an unheard concept till a couple of years ago, had suddenly become big business and coffee bars like Barista, Cafe Coffee Day (CCD) and Qwiky's had become quite popular.

The marketing head, Sudipta Basu at CCD ascertains the fact that customer satisfaction implies successful marketing strategy. While Naresh, being the CEO wanted her to quantify marketing efforts & spends in terms of revenue & explain whether satisfaction actually leads to increased & repeated revenues.

Moreover, Sudipta Basu disapproved of the company's slow growth strategy which Naresh tried to justify by accounting it for developing strong backend & logistic systems.

2. Coffee Industry in India

India ranks 5th among the top 10 countries of the world accounting for 3 % of the total world coffee production and exporting 80 % of the total produce. The coffee chain market in India, at 6.5 per cent of the total coffee retail market, is valued at Rs 400 crore, according to the retail consultancy KSA Technopak. Growing currently at 25-30 per cent, the market will grow much more with the entry of new players.

It is also the fifth largest coffee producer. Being a traditional tea consuming country, the average coffee consumption in India was quite low at 10 cups per person annually. People in the North preferred instant coffee in contrast to those in the south, who preferred traditional filter coffee.

The growth of these specialty and gourmet coffee shops was a result of the economic and demographic changes, higher disposable incomes, increasing number of working women, and increasing awareness and exposure to global trends.

Coffee has been around in India since the 17th century. However, coffee drinking has traditionally been largely restricted to domestic consumption, and mostly