Contents

1. The coffee shop industry in India ....................................................................................................... 1 1.1 Introduction ................................................................................................................................... 1 1.2 Major Players ................................................................................................................................ 1 1.3 Product offerings ........................................................................................................................... 1 1.4 Prime customers ............................................................................................................................ 2 1.5 Reason for choosing Barista and CCD ......................................................................................... 2 2 Cafe Coffee Day .............................................................................................................................. 2 2.1Corporate Profile............................................................................................................................ 2 2.2 Marketing mix ............................................................................................................................... 3 Product ............................................................................................................................................ 3 Core Product ................................................................................................................................... 3 Supportive Products ........................................................................................................................ 4 Price ................................................................................................................................................ 4 Place ................................................................................................................................................ 4 Promotion ....................................................................................................................................... 5 Process ............................................................................................................................................ 6 Physical evidence ............................................................................................................................ 6 People ............................................................................................................................................. 7 3 Barista Lavazza ................................................................................................................................. 7 3.1 Corporate Profile........................................................................................................................... 7 3.2 Marketing Mix ............................................................................................................................... 7 Product ............................................................................................................................................ 7 Core Product ................................................................................................................................... 7 Supporting Products ....................................................................................................................... 8 Price ................................................................................................................................................ 8 Place ................................................................................................................................................ 8 Promotions...................................................................................................................................... 9 Process .......................................................................................................................................... 10 Physical Evidence .......................................................................................................................... 10 People ........................................................................................................................................... 10 References ............................................................................................................................................ 11

1. The coffee shop industry in India

1.1 Introduction
The coffee industry of India is the sixth largest producer of coffee in the world, accounting for over four percent of world coffee production, with the bulk of all production taking place in its Southern states. India has always been predominantly a tea drinking nation. Coffee had been only moderately popular in some southern states. However, there has been a sudden change in this trend with coffee becoming more and more popular in recent times especially among the youth. Thanks to the new entrants in the segemnt including Barista, Caf Coffee Day (CCD) and others. Cafs are increasingly becoming more than places to sip coffee. A lot many things in life and work happen over a cup these days. India has now become one of the fastest growing coffee markets in the world. It is taking great strides on both counts; making its presence in the world market as well as in the domestic retail arena as more and more Indians prefer the drink.

1.2 Major Players

CCD 1259 Outlets Barista - 165 Outlets Costa Coffee 95 Outlets Gloria Jeans 20 Outlets Au Bon Pan 19 Outlets Coffee Bean and Tea Leaf - 17 Outlets Others (including Mocha, Coffee world, Bru world Caf and Standalone Cafes) 204 Outlets

Besides, retail players like Reliance Retail and Shoppers Stop are also retailing coffee with their multi-products offering outlets like Reliance TimeOut and Desi Caf respectively.

1.3 Product offerings

In keeping with the global coffee culture, purveyors in India have been offering the products in a wide range of variants that include hot coffee, cold coffee, coffee add ons, powder coffee etc. The chains have also been adopting state-of-the-art store formats and some even offer wifi access to their customers. As a step forward achievement, CCD has incorporated formats like music cafs, book cafs, highway cafs, lounge cafs, garden cafs and cyber cafs targeting a diversified customer profile.
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1.4 Prime customers

These cafs are increasingly filling in a sorely felt gap by becoming a meeting place for people in the age group of 15-29. India, with its huge young population flooded with disposable income, offers an exciting and ideal market to coffee retailers. According to researches, teen-agers form 25 per cent of the customer profile while 38 per cent of them are between 20 and 24 years and another 23 per cent belong to the age group of 25-29 years. Students and young professionals comprise around 72 per cent of the customers

1.5 Reason for choosing Barista and CCD

Barista and Caf Coffee Day were chosen because of their identical pattern of functioning and growth. They are the only two major players in the national coffee caf industry, and their customers consider both as interchangeable brands. This is why it is important to study show these brands differentiate themselves from each other, and attempt to improve brand loyalty amongst their customers. Moreover both are market leaders with CCD and barista Lavazza having 1259 and 165 outlets respectively.

2 Cafe Coffee Day

2.1Corporate Profile
Background, Market Entry & Growth

Caf Coffee Day is a division of India's largest coffee conglomerate, Amalgamated Bean Coffee Trading Company Ltd. (ABCTCL). ABCTCL grows coffee in its own estates of 10,000 acres (4047 ha). The land value of the plantations is US$250300 million. It is the largest producer of Arabica beans in Asia. Apart from this, the group also sources coffee from 11,000 small growers. ABCTCL is one of Indias leading coffee exporters with clients across USA, Europe and Japan. Cafe Coffee Day bought in the concept of cafes in India .Th e first one opened in 1996 on Brigade Road in Bangalore. It's been an exciting journey since then, it is now the largest organized retail caf e chain in the country with 1259 outlets. The company is known for being vertically integrated to cut costs: from owning the plantations, growing the coffee, making the coffee machines to making the furniture for the outlets. The machines cost them 1.2 lakh each, which they say is half the cost of an imported coffee machine. The maintenance cost of CCD's machines is also less than foreign machines.

Key Features 125 years of coffee growing history A fully equipped ISO certified roasting plant with a 70000 tonnes per annum capacity at Hassan 5000 acres of self-owned Coffee Plantations A ready and enviable base of more than 10000 suppliers Among the top exporters of coffee in India (Coffee Day Exports)

Coffee Day Comprises of the following Sub Brands Coffee Day - Fresh & Ground Caf Coffee Day Coffee Day Vending Coffee Day Xpress Coffee Day Exports Coffee Day Perfect

2.2 Marketing mix

Product Caf Coffee Day product mix constitutes a wide range of products that appeal primarily to Indian coffee and snack lovers. Most of the eatables have been adopted to meet the Indian taste buds like samosa, channa sandwich, murg chole sandwich, tikka sandwich etc. Thus they have been trying to capture the Indian taste along with classic coffee. The best selling item in summer is frappe, which is coffee and ice cream blended together in winters it is cappuccino. Their merchandising includes funky stuff like t-shirts, caps etc, CCD has recently introduced 'Cafe Moments these are prepaid cards designed to enable cashless transactions at all the CCD outlets. Customers can top -up their cards with denominations ranging from Rs. 100 to Rs. 5001 on an ongoing basis, enabling ease of use on the purchase of food, beverages and merchandise at the CCD outlets. Core Product Exotic international coffees e.g. Cappuccinos, Cafe Latte etc Food items e.g. Sandwich, Samosas etc Desserts and pastries

Supportive Products Funky Caps @ Rs 60 onwards Cool T-Shirts @ Rs 175 onwards Bags @ Rs 160 onwards Mugs @ Rs 60 onwards Coffee Filters @ Rs 95

Coffee Powders: Arabica @ Rs 43 Perfect @ Rs 35 Charge @ Rs 28 Dark Forest 200gm @ Rs 80

Price Cafe Coffee Day basically targets urban youth so it has fixed its prices in a manner so as to satisfy all its customers. The price for a cup of coffee ranges from Rs.44 to Rs 107. However there are some outlets where the students are given special discounts. CCD even set up their outlets in the college campus. For e.g. Caf Coffee Day has opened an outlet at the NMIMS campus where they are providing additional 10% discount to the students. CCD target audience is youngsters. Majority of them are dependent on their family for their expense. This is one of the most important reasons for low pricing compared to other cafes. They believe it in making their product at an affordable price. Pricing is one of the important weapons for them to fight against their competitor. From the time it first started its operations, there has been only minor changes in the pricing policy of Caf Coffee Day. The changes have been more due to the government taxes than anything else. Place Caf Coffee Day outlets are spread across India. However, there are more number of outlets in the metros and towns. Caf Coffee Day looks to cater to their target market with strategically located outlets. Apart from all the metro and big cities CCD has outlets in cities like Kolhapur and Nagpur in the west, Hubli, Belguam and Vizag in the South, Allahabad, Varanasi, Ambala and Patiala, in the North, Jodhpur and Mount Abu in Rajasthan and Bhubuneshwar, Ranchi, Cuttack, Darjeeling, Guwahati , Jamshedupr in the East etc. The first CCD outlet was set up on July 11, 1996, at Brigade Road, Bangalore, Karnataka. Following this, CCD crossed over 1000 cafs throughout the nation by 2011. They have a
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minimum of 1259 outlets. The number increases almost every week. A meter on their official website (Cafecoffeeday.com) keeps continuous track of the number. Promotion "A lot can happen over coffee" became a popular line among youngsters. In a bid to take their coffee chain national in 2000, the management decided to strengthen their brand pull with an appealing tag line. CCD is involved in almost all the areas of promotion .Caf 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 also tied up with Channel [V]s Get Gorgeous contest. Besides that Caf Coffee Day also has tied up with lot of the youth brands like Levis, Scooty, Liril, Airtel. Himalaya Drugs has tied up with Cafe Coffee Day, to create four dishes; Honey Cappuccino, Honey milk shake, Rich Chocolate Cake and ice cream topped with honey and nuts. The Cafe Coffee Day partnership is unique. It provided a platform to reach out to the target audience in a relaxed environment where they could experience innovative uses of honey. CCD can be seen in movies like Khakhee and Mai Hoon Na, Mujhse Shaadi Karogi etc. Customer Loyalty Programme:Coffee shops have a high loyalty factor i.e. 60-70% of customers come in at least once a week. The Cafe Citizens Programmed launched along with Net Carrots Loyalty Services would reward regular customers of Cafe Coffee Day. Any customer who bills a minimum of Rs 100 on a single bill is automatically eligible for membership to the Cafe Citizens Programmed. The programmed entitles members to a 10 percent discount on all food and beverage bills for a year from the month of membership. Members will also receive surprise gifts from India times Shopping when they reach a total billing amount of Rs 2,000, Rs 5,000, and Rs 10,000. Members can track their total bills spend at any Cafe Coffee Day outlet across the country. The programme was very successful and they attracted 1,35,000 citizens. Smart Card Programme: Started from 1st Aug, 04; one can enroll into the program by paying Rs.100/- at any Caf Coffee Day Outlet and get a TEMPORARY CARD immediately after filling in the enrolment form. With the Card, one can accumulate Value Points Equivalent To Cash on net purchases at every transaction made at any of CCD outlets, provided the card is submitted to the caf staff at the time of placing each order.

Sales Promotion: Caf Coffee Day uses special Caf Citizen Card for rewarding Caf Coffee Days customers. It is a loyalty program to gain new customers and retain the existing ones. It has now come up with 'Cafe Moments these are prepaid cards designed to enable cashless transactions at all the CCD outlets. Customers can top -up their cards with denominations ranging from Rs. 100 to Rs. 5001 on an ongoing basis, enabling ease of use on the purchase of food, beverages and merchandise at the CCD outlets.
Process

The ordering and delivery process in CCD was earlier based on self- service. But now in most its coffee shops the waiter comes and takes away the order and delivers the order on table. The company is known for being vertically integrated to cut costs: from owning the plantations, growing the coffee, making the coffee machines.
Physical evidence

a) Logo, image, brand: Caf Coffee Day has used bright red and green colors in its logo. RED stands for leadership, vitality, passion for coffee. The GREEN stroke harks back the coffee plantations that they own. Caf is noticeably larger in the logo to denote that Caf Coffee Day pioneered the caf concept in India way back in 1996.The font looks as though the letters have congealed out of a liquid. b) Architecture and Decor: Largely wood and granite based interior with young colours of today, like lime green, yellow, orange, and purple predominate. To further brighten the vibrant atmosphere of the cafs, there has been a greater thrust on providing more value added services such as video juke boxes, cosy sofa seating, and exciting round the year promotions. The major target group of CCD is the youngsters. However, the company wants to widen its target group. Caf Coffee Day has come up with a different type of caf The Lounge, which has different environment all together. Even the merchandise is different from that of the original CCD cafes. The coffees and the merchandise are much more expensive and of a better quality. These cafes are mainly targeted to people with high-income group and status oriented people. c) Literature: The literature provided by Caf Coffee Day is indicative of its youthful image. The menus, posters, pamphlets are all designed to attract young and young at heart.

People

Motivation and personal skill are emphasized. 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. Each outlet has a branch manager and male and female employees.

3 Barista Lavazza 3.1 Corporate Profile

Background, Market Entry & Growth Barista coffee was establishes in 1999 with the aim of identifying growth opportunities in the coffee business. Increasing disposable incomes and global trends in coffee indicate immense growth potential in one particular segment. More significantly, they believe they have been quick to spot a latent need waiting to be trapped: Coffee lovers seek a complete experience. One that combines intelligent positioning with the right product mix and carefully designed cafs. In other words, customers seek an experiential lifestyle brand. As of today, Barista exists in over 22 cities, and operates over 165 outlets nationally. In the last 2 years, Barista has opened over 100 outlets in the country and with a new outlet opening nationally every 14 dates, Barista is currently experiencing phenomenal growth. With outlets opening in Sri Lanka and Dubai, Barista is looking at potential growth opportunities in Asia, making it highly competitive international brand.

3.2 Marketing Mix

Product

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

Coffees Cakes and Pastries Coffee Beans

Supporting Products

Coffee Mugs in Orange and Blue which cost Rs 55 and Rs 99 T-Shirts which cost Rs 150

Coffee and Coffee beans are also considered as the core product for Barista. The company has also tested marketed coffee beans through its outlets in Mumbai and Delhi. Barista claims that they sell a best coffee bean. Barista has started with a new concept by the name Barista Merchandise. Barista Merchandise is available at selected Barista espresso bars in Delhi, Mumbai, Kolkata, Chennai, Hyderabad and Bangalore. The Barista merchandise are the different types of beans that customer can take home and have the coffee of his own taste. Some of the Barista Merchandise includes The French Press Barista House Blend

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

Barista has a Skim Pricing Policy. They began with a higher price, and skimmed the cream for the market. With the sudden spurt of growth in number of outlets, came the benefits of economies of scale. Because of this, they have been able to gradually lower their prices, and appeal to different segments of their target market. Currently, their prices are the lowest they have ever been, and they can competitively match their prices against Caf Coffee Days prices. The prices are constantly changing though, and the last 1-year has seen 3 changes (mostly reductions) in prices. This gradual price reduction meant that Barista could maintain its profit- maximization policy until it could earn large cost savings because of the benefits of high volume. The main factors that affect their pricing are their cost of goods sold. The costs are quite high because imports a majority of its products and product- sources.
Place

Barista looks to cater to their target market with strategically located outlets. Their outlets are generally located at High Street/ Family Entertainment Centers. Considering their generic
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appeal, there are Barista outlets in and around Malls, Cinemas, Colleges, and Offices etc. this endorses their brand image of a caf that appeals to coffee lovers of all ages. Distribution of outlets Every Barista outlet is owned by the company, and not franchised out to anyone. Barista can thus control and make quick changes to its entire retail chain. Barista currently operates in over 120 outlets all over the country, and at their current rate, they are opening a new outlet approximately every 10 days. They have a market presence in over 20 cities. Mumbai alone has over 30 outlets, and the number of outlets in the city is increasing at a phenomenal pace. Barista has a thumb rule for selecting cities and locations for the distribution of outlets. Location: this is a prime factor in determining the success of a retail chain. However, Barista Coffee has adopted a top down approach, wherein they first identify the cities and then decide on precise locations within its limits.
Promotions

Barista currently carries out mass promotion campaigns. This is mainly in the form of promotions in the Press, TV and Radio Medias. At present, they do not rely heavily on advertising, but rely more on sponsorships and strategic alliances with other corporations. Barista also takes part in various sales promotion activities to help increase sales at their outlets. a) Sponsorships: Barista sponsors various events and festivals, which provides them valuable promotion directed at strategic markets. The sponsorships are mainly in kind, although major events are sponsored in cash also. b) Collaborations: Barista has entered into special collaborations and alliances with various partners for co- marketing brands. For example, Barista entered into a deal with Leo Mattel toys to provide the popular board game Scrabble at every Barista outlet across the country. This is an ideal alliance for both the organizations, because it provides Leo Mattel with an important avenue for promoting their product, and it provides Baristas customers an added attraction for spending more time at Barista outlets. Barista has also entered into partnerships with various movies, for promotions through Barista, and recently, they tied up with Star World for its Absolutely Everybody campaign.

c) Sales Promotion: Barista uses a special Barista Coffee Card for its sales promotion activities. The Barista Coffee Card entitles you to one complimentary hot beverage when you are done sipping seven. It is available to all Barista coffee regulars. No membership fees, no references required. Fill out the card and you are a member. As a Coffee Card holder, you earn one stamp on the card every time you purchase a beverage. Simply present the card to the cashier when you place your order at any of their outlets. Once you have collected seven stamps, you can hand over the card to receive your complimentary hot beverage. Barista hopes this card can help drive sales growth, and increase customer retention.
Process

The order and delivery process at Barista is based on self- service, where a customer goes up to the counter to place his order, and goes back to the counter to pick his delivery once it is prepared.
Physical Evidence a) Logo, Colors, Images: Barista, since the beginning has looked to use colors in its caf

interiors, logos and images; to project a warm, earth glow, synonymous with coffee. Barista uses shades of Orange & Brown to good effect to promote its laid- back atmosphere. The logo is a combination of Brown, Orange and Light Yellow; with the word Barista written in an upward curve, and the word Coffee underneath. A simple logo that perfectly expresses Baristas brand image: A traditional caf for coffee lovers. b) Dcor and Architecture: Baristas internal dcor and architecture expresses the implicity you would normally associate with traditional cafs. The furniture is made of light shades of wood, and there are comfortable sofas in bigger cafs. The walls are shades of orange, with various photographs of the love for coffee spread around each outlet
People

The people at Barista are characteristically trained to be Pleasant, Polite and Positive. They ensure you have a quiet, uninterrupted visit and provide an escape from the daily pressures of life. Their uniforms are in sober shades of brown and orange, and contribute to the overall laid-back feeling of the caf.

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References
http://coffee.wikia.com/wiki/Coffee_industry_of_India http://www.indiaretailing.com/coffee-retail.asp http://articles.economictimes.indiatimes.com/2012-03-14/news/31173282_1_cafe-coffeeday-cafe-culture-cafe-business www.retailyatra.com www.indiainfoline.com www.cafecoffeeday.com www.agencyfaqs.com www.barista.co.in www.barista.com www.google.com http://businesstoday.intoday.in/story/cafe-coffee-day-in-promising-companieslist/1/18661.html http://business-standard.com/india/news/cafe-coffee-day-homeward-bound/463784/ http://businesstoday.intoday.in/story/indias-coffee-barons/1/1830.html http://www.hindustantimes.com/business-news/Features/Smelling-the-coffee/Article1817124.aspx http://en.wikipedia.org/wiki/Caf%C3%A9_Coffee_Day http://en.wikipedia.org/wiki/Barista_Lavazza

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