CASE 28 Café Coffee Day INTRODUCTION Café Coffee Day is a chain of coffee shops in India. A division of Amalgamated Bean Coffee Trading Company Ltd. (ABCTCL), it is commonly known as Coffee Day. Opened its first cafe in 1996 on Brigade Road in Bangalore, today it has the largest cafe retail chain in India— with 401 cafes in 72 cities. Headquartered in Bangalore, majority of its cafes are also 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 the BPO boom and the resultant increase in youth spending power. With a hip, trendy image, the chain attracts a lot of young folk who work in BPO businesses. It has even tied up with WorldSpace and Microsense to enable its cafes with satellite radio and Wi-Fi, respectively Its first Wi-Fi cafe was opened on Lavelle Road, Bangalore Coffee Day sources coffee from 5000 acres of coffee estates, the second largest in Asia, which is owned by a sister concern, and from 11,000 small growers. It is one of India’s leading coffee exporters, with clients across USA, Europe and Japan. The comparison among Competitors Coffee Accounts is shown in Fig. 1. With its roots in the golden soil of Chickmanglur, the home of some of the best Indian coffees, and with the vision of a true entrepreneur nurturing it, Coffee Day has its business spanning the entire value chain of coffee consumption in India. Its different divisions include: Coffee Day Fresh ‘n’ Ground (which owns 350 coffee bean and powder retail outlets), Coffee Day Xpress (which owns 341 Coffee Day Kiosks), Coffee Day Takeaway (which owns 7000 vending machines), Coffee Day Exports, and Coffee Day Perfect (FMCG Packaged Coffee) division. It is now entering the European market as well, making forays into Pakistan, Austria and Germany to set up cafes abroadCASE 28: Calé Colles Day 319 1B Branded coffee accounts 53 | m Nonbranded cotfee accounts 40 1 Café chains FIG. 1 Comparison among competitors coffee accounts. Café Coffee Day competitors include Barista, Cafe Mocha, and MacDonalds. CORE STRENGTH OF THE COMPANY The company is looking at being all aspects of coffee, right from the estates to the cup of coffee that they serve. They are getting into new areas, and have got into coffee vending very seriously. They are looking at Coffee Day Takeaway and Coffee Day Kiosk divisions very seriously. The company believes that if its linkages are strong with coffee, as fa product, in all its aspects it will prove to be helpful. The company strives to be a true coffee conglomerate. HOW DOES THE COMPANY MOVE AHEAD TAKING THEIR MERCHANDISE INTO ACCOUNT Merchandise started more as a sentimental thing than as a revenue stream for the company. They wanted to reward coffee lovers and, so, they started selling mugs. People wanted to wear something that reminded them of the cafe, so they designed T-shirts and sold thousands of those. But, yes, it has become a serious business now. They are looking at 5% of revenue coming from the merchandising. They are also into selling bags, pens and filters. But there will always be a linkage with youth and coffee. They want to keep their focus on coffee rather than becoming a retail store QUALITY CHECKS IN CAFE Quality checks are conducted at regular intervals and in several aspects. ‘The operational in-charge will go around checking business, record keeping, service and the feedback forms. The food in-charge will look at the way food is being stored, coffee is being made, the time taken to extract the coffee, and so on. The marketing person will go about checking displays, how the merchandise are displayed, and others.320 Case Studies in keting — The Indian Context MAJOR PROBLEMS TO BE ADDRESSED * Increasing customer focus and loyalty through various value additions by exploring: Maenesion of ‘push’ concept to ‘pul? concept for Gift Certificates * Maximising revenues through addon merchandise — Focus on Customer needs and wante — Not enough add-on product-mix to attract more customers, CUSTOMER PROFILE Customer Response pe major chunk of Café Coffee Day (CCD) vistors fall into the category of the weekly visitors who account for 35.48%, Tre monthly visitors who Fig 2 3226% and 11.3% made up the daily visto se shown in Fig. 2 Rarely, 20.9 Dally, 11.3 Weekly, 35.48 Monthly, 32.26 FIG. 2. Customer responses, Time-Spending Pattern of Consumers descending order of their preferences20-85 82% FIG. 3 Target customers. Shopping mall 69.4% Bookstore 58% Drive 56.5% Movie 51.6% Game parlour 32.3% This translates into maximum votes for shopping malls followed by bookstores. Customer Perception of CCD 80.65% customers associated a ‘cool’ image with CCD followed by favoured place for ‘loved ones’ (43.5%) to spend time together. The rest is as shown in the bar chart shown in Fig. 4. 90 80 7 60 50 40 30 20 Trendy -Cool_- ‘Loved ones Family Just coffee Rain/boring outing 1B Soriest FIG. 4 Customer perception of CCD.322 Case Studies in Marketing — The Inolan Context FUTURE MOVES OF ccD The management is making significant changes in its service profile to fahance its performance and popularity among customers. The changes the company is making in its centres in India are listed below. Menu Updating The CCD management is thinking about adding new products to their menu based on their study, as shown in Fig. 5, which indicates that 31% of the customers prefer inclusion of fruit beverages. Quick snacks lie second with 27% of respondents favouring them. Baked items and health inks are demanded by 22% and 20% of the people, respectively. Health beverages Quick snacks oe 27% Baked items Fruit beverages 22% 31% FIG. 5 Customer preferences. Gifts from CCD The CCD management has intimated its plans to customers about the Gifts that CCD has started offering in terms of GCs, chocolates, lowers, apparels, soft toys and books. The Coffee market in India is growing at the rate of 2.2% annually Increasing revenues through merchandise would go a long way as the coffee market has not seen a substantial growth. Concentrating on merchandise and other new products, such as fruit-based and diet-based beverages, and baked items, would actually serve the two-pronged strategy: * It would help to cater to the tastes of the customers, who otherwise would not have visited CCD, or the nonrevenue customers, thereby attracting more customers. Also, the induced consumption factor could mean that CCD is aiming at increasing its market share of the pie. * Focus on these products would help boost the bottomline of CCD as revenue margins for such products could be substantially higher.CASE 28: Café Coffee Day 323 ISSUES FOR DISCUSSION . What strategies would you suggest for revenue generation for CCD? . What are the drawbacks in CCD's market offering and what needs to be done? . What marketing strategies should CCD adopt in the liberalised market? Justify your answer. |. Do SWOT analysis for CCD.