Cafe coffee Day Doc

Business Research Methods

Project Report

On

Strategy adopted by CCD during the time of recession.

Submitted By

Richa Ritwika

Akshay Srinivasan

Hariharan N.

Dhruv Gupta

Rishav Das

Aravind. D

Pratik Agrawal

Index

1. Introduction………………………………………………………………………..1

2. Tagline……………………………………………………………………………..1

3. USP of CCD……………………………………………………………………….1

4. About Merchandise………………………………………………………………..2

5. Problems Faced By CCD during Recession……………………………………2

6. International Plans………………………………………………………………...2

7. Customer…………………………………………………………………………...3

8. Promotion…………………………………………………………………………...3

9. Brand Strategy in India……………………………………………………………3

10. Research Data……………………………………………………………………6

11. Youth Behavior…………………………………………………………………...6

12. Key Target Audience…………………………………………………………….7

13. The Intangible Benefits………………………………………………………….9

14. Campaign – Mandatory Points………………………………………………...10

15. Current Updates………………………………………………………………...10

16. Conclusion……………………………………………………………………….11

17. Reference………………………………………………………………………..12

Introduction

Café Coffee Day, India‟s favorite coffee shop where the young at heart unwind. They

are a division of India‟s largest coffee conglomerate, the Amalgamated Bean Coffee

Trading Company Limited (ABCTCL), popularly known as Coffee Day. It‟s a Rs. 750

crore, ISO 9002 certified company. With Asia‟s second-largest network of coffee

estates (10,500 acres) and 11,000 small growers, Coffee Day has a rich and

abundant source of coffee. This coffee goes all over the world to clients across the

USA, Europe and Japan, making us one of the top coffee exporters in the country.

Café Coffee Day (CCD) pioneered the café concept in India in 1996 by opening its

first café at Brigade Road in Bangalore. Today, more than a decade later, Café

Coffee Day is the largest organized retail café chain in India with cafes functioning in

every nook and corner of the country. Drawing inspiration from this overwhelming

success, Café Coffee Day today has cafes in Vienna, Austria and Karachi. What‟s

more, new cafes are planned across Middle East, Eastern Europe, Eurasia, Egypt

and South East Asia in the near future.

Cafe Coffee Day Divisions

Coffee Day Fresh „n Ground.

Coffee Day Xpress.

Coffee Day Take Away

Coffee Day Exports

Coffee Day Perfect

Tagline: “A lot can happen over coffee”

Coffee can prompt you to get into a different kind of mind. You end up having a good

time. Coffee can lead you to so many things.

USP of CCD

Firstly, we have the right background of taste for coffee. It is due to the ideal

customer positioning and approach that the footfalls have increased. Average footfall

per day has been 50,000 to 70,000 customers at our outlets. The number is growing.

Secondly, we concentrate on the quality and range of products. We understand

coffee much more than anyone itself. We were positioned third at the World Barista

Championship in 2003. And, we have been winning the Indian Barista continuously

holding the top position since the last four years. Lastly, our pricing has been kept in

mind for the youngsters.

About Merchandise

We have launched our very own brand of merchandise comprising coffee mugs, t-

shirts, caps and the like. The primary objective is to create and increase the brand

awareness and equity as it bears our distinctly coloured logo.

Problems faced by CCD during recession

1. There overseas plans took a major hit because of recession.

2. Footfalls got reduced in the outlets, as people don‟t have much money in their

hands.

3. There revenue took a hit.

4. College fest lose spark as recession hits home

International Plans

Cafe Coffee Day (CCD), the food and beverage arm of Amalgamated Bean Coffee

Trading Company (ABCTCL), is steaming a cuppa of international acquisitions.

Indias largest cafe chain on Tuesday announced it has bought out Czech Republic

based cafe chain Cafe Emporio for Rs 15 crore. Cafe Emporio has 11 outlets with

seven of them in Prague, one each in Brno and Olomouc and two in Freeport-Hate.

CCD said it is talking acquisition to three other cafe chains in central and Eastern

Europe, and has also started looking at cafe chains in West Asia and the Asia-Pacific

region. Slovakia and Hungary are two European markets that CCD has a close eye

on.

In the next 2 to 3 years we plan to have 50 international outlets. Due to the recession

our international roll out took a back seat. But now the market has picked up and we

are aggressively looking to grow our footprint across emerging markets, said Shweta

Shetty, president (international business) at CCD.

In the last three months,V G Sidhartha, promoter of the Coffee Day Group, roped in

$200 million in funding from global private equity majors New Silk Route, Kohlberg

Kravis Roberts and Standard Chartered private Equity. A significant part of the

capital raised is being deployed for CCDs expansion in India and overseas markets.

So what does this acquisition mean for CCD in India? Well there could be a lot of

product interflow from Emporio on to the CCD menu. I really like the hot chocolate

that Emporio serves and I‟m sure it will be a big hit in our cafes in India. Besides this,

whatever product of Emporio that would suit our menus here in India, we would

definitely look to incorporate it, Shetty said.

Customer

Young at heart. The 15-35 years of age group which is meeting to get refreshed, or

for chat or reading or for that sake dating. People who want to have a good time and

good break.

Promotion

We want to add to the excitement of our customer by offering exciting and

adventurous associations. In 2003 we launched the „Treasure Hunt‟. It was a

stupendous success. Then, we had some activities, exciting and adventurous in

spirit, with Levi‟s and Airtel. These are all youngster-related activities since we have

loyal and regular customers, and so we keep doing these in-house activities. Then,

we have a Café Coffee Day Citizen Card, by which we send invites and other

interesting information to the customer. Recently we have tied up with CHannel [V]

for the „Get gorgeous‟ hunt.

Promotion through Fun Stuff

There are various contest & offers for the frequent flyers like „City Hopper‟ coupon

from the CCD at departure terminal, which entitles you to a 15% discount anywhere

in India except your city of origin.

Brand Strategy in India

CCD- an established brand image in India

Cafe Coffee Day (CCD) has an established brand image in India and ranks No 2 in

the Brand Equity‟s Most Trusted Brands 2008 survey - in the food services category.

Rival Barista is at No 5. CCD has been able to make a connection with the Indian

consumers, predominantly among the youth. CCD is the market leader in India and

was awarded the 'Exclusive Brand Retailer of the Year' by ICICI Bank in its Retail

Excellence Awards 2005 for the organized retail sector.

CCD’s wide network - the anytime, anywhere cafe

CCD has been able to make its brand presence felt through the sheer number of

stores. CCD has 1016 cafes at present and it has ambitious plans to launch more

cafes in the near future. CCD also has three cafes in Vienna, and two in Karachi,

Pakistan. Lagging behind CCD in the Indian market, Barista has about 400 cafés,

Java Green (around 150 cafés) and Mocha (around 100 cafés). The Indian organized

sector has potential for around 5,000 cafés.

Innovative formats to woo new customers

CCD‟s experiment with various formats (like cafes, garden cafes, lounge cafes and

Xpress Cafes) depending on the target audience has been fairly successful. CCD

has targeted different catchments area like high streets, malls (30 of CCD‟s 620

cafes are located in malls), multiplexes, offices, educational premises, and railway

stations.

Rising disposable incomes have made unique lasting experiences more valuable to

the consumer. Therefore, CCD is all set to add more formats to its portfolio like the

book cafes, movie cafes and sports cafes. During the afternoons, when the footfalls

are less, CCD is planning to tie-up with publishers and producers for organizing book

launches and having movie festivals. The plan includes selling books in the cafe

premises where authors can also read excerpts and sign autographs for book lovers.

A Cafe Coffee Day pick of the month will also be organized. CCD also tied up with

BPCL petrol pumps to have outlets in their premises. CCD has even adapted its‟

formats to be present in educational institutions and corporate campuses either in the

form of detailed Cafes or its economical model of CCD express. As per the new

strategy, around 15% of the stores will be based on the new formats while the

remaining ones will follow the „vanilla‟ format.

Reinforcing brand image with the cluster approach strategy

Ever since its entry in India, CCD created an entry barrier for competition with as

many as four CCD cafes dotting a single street. The cluster/blanket strategy aimed at

getting consumers habituated to the brand. Within the Mumbai suburb of Bandra, for

instance, CCD has six outlets. At another location it has six cafés within a span of

half-a-kilometre. The latent need in the market countered the cannibalization of

footfalls as was evident from the four successful cafes at its single catchments area

at Indira Nagar in Bangalore. The strategy also made operations easier with supplies

management and quick replenishment whenever one cafe ran out of stock. Having

one manager for a set of cafes improved efficiencies and reduced costs.

Company-owned stores instead of franchises to not dilute brand value

A crucial part of CCD‟s business strategy is that all its outlets are company-owned.

None of CCD‟s outlets is a franchise. While self-owned cafés are more expensive in

the short term, the company believes that a too-hasty switch to the franchisee model

may cost it its brand value. Besides, self-owned cafés mean greater control on

product quality, service and training.

Lower pricing and ‘no-segmentation’ approach

Though competitor Barista had the first mover advantage, CCD brand pitch aimed at

„the young and the young at heart‟ and lower price offering (lower by 30%-40 % when

compared to similar offerings at Barista) helped it overcome and leave Barista

behind. The age group from 18 to 29 (and above 29 also) flocked CCD cafes while

the brand Barista lost out due to constant change in management. Barista changed

ownership from Turner Morrison to Tata Coffee to Sivasankaran to Lavazza further

destroying brand equity.

From a largely south Indian retail chain to a national brand

While CCD was among the first coffee cafés to start operations in India, it was the

last to go national (by end of 2001). Till the late 90‟s, India was restricted to the

intellectual, the South Indian traditionalist and the five star coffee shop visitors. CCD

faced a huge challenge from being recognized primarily as a south Indian brand.

North India was not primarily a coffee drinking market compared to the south. Even

the south Indians loved pure filter coffee instead of instant coffee). Besides, India

was always known to be a „chai country‟ (Tea-drinking nation). Another problem was

logistics. Transporting fresh roasted coffee from its estates in Chikmagalur to faraway

places like Mussourie in the north and Jamshedpur in the east was a nightmare.

Co-branding

CCD never opted for mass media advertising and believed the chain‟s 1016 stores

would speak for the brand. The retail chain has involved itself successfully with co-

branding activities with reputed brands like Levi‟s, Apple iPod and Airtel. This made

sense as these brands also targeted the audience, CCD targeted. CCD was first

seen in an ad when the brand appeared in a co branded TV commercial for one of

Yamaha‟s motorbikes. CCD also promoted its brand via barter deals (in-film

promotion deals). E.g. the brand was placed smartly in two Bollywood movies

starring India‟s topmost actors like Amitabh Bachchan, former Miss World‟s

Aishwarya Rai & Priyanka Chopra and Salman Khan. The movies chosen had a

target audience that matched with that of the consumers at Cafe Coffee Day.

Shooting a few scenes in the café helped prominent Cafe Coffee Day brand

placement. CCD also got into a barter deal with Enrique Iglesias, Elton John concerts

and WWE (and also HDFC bank where the ad was shot in the cafe).

Reinvigorating the brand and taking it to the next level

Consumers, especially the youth, are no longer just a „target audience‟, but partners

that brand must connect with. Various in-café collaterals (like Posters, Tent Cards,

Danglers, Leaflets, Brochures, Coasters, Drop boxes, Contest Forms, Stirrers,

Standees etc.) to impart brand visibility and to add the element of interactivity to a

campaign are available inside the café. In 2002, CCD launched a 12-page tabloid –

Café Beat with articles on fashion, general interest and news about the chain. The

tabloid was published monthly and circulated at all cafés. New uniforms were

designed by students from the National Institute of Fashion Technology (NIFT).

Projecting a feeling of togetherness

In August 2008, CCD announced that leading international brand consultant Landor

will help it to reinvigorate its brand and take it to the next level. Only the brand name

and logo saying „A lot can happen over coffee‟ will remain the same. CCD will now

focus more on projecting a feeling of togetherness (friendship, romance or office

meeting in an informal environment) and celebration which are critical core values.

Accordingly the cafe ambience, the look and feel inside is set to be changed.

Silent brew masters – special employee program

As a socially conscious brand, CCD successfully employed (with training and

orientation) about 25 physically impaired (deaf and mute candidates referred to as

„silent brew masters‟) across Mumbai, Bangalore and Hyderabad with the help of

NGO, Enable India.

Research Data

In-house Research Data

Research shows that while our customers come to us for our products, a

substantial amount of our customers come to “Hang out” with friends.

The café is also the venue for business meetings (13%), celebrating special

occasions (10%) or just plain “Time Pass” (17%).

Youth Behavior

Strong Voice in household purchases

Make consumption related decisions in company of friends

Consumption areas: Personal clothing & accessories, food, entertainment,

consumer durables

Influencers: Peer group, workmates.

Tech Savvy

Access to large amount of money to spend

Likes to seen at the right place

Socially Active

Hangs out at cafes/malls

Looking for a good lifestyle

Looking for a multiplicity of experiences

Aspiration led purchases

Seeks 'feel-good factor' and expression of identity through choice of brands

consumed. But is also value conscious.

Spending Power: Rs 7,000-40,000 p.m.

KEY TARGET AUDIENCE

Major chunk of CCD customers falls within the age group of 20 to 30 which

accounts for 57% of the overall percentage.

The group comprises of mainly college going students and young working

professionals.

Sex Ratio & Marital Status

There is a definite skew towards singles:

66% singles, 27% married & 7% others.

Group Sizes

Maximum foot-falls are in groups of size varying from 3 to 5people followed by

people coming in groups of 2, a major part of which are couples.

THE INTANGIBLE BENEFITS

Research shows Café Coffee Day to be perceived as the home away from

home.

The distinctly segmented Target Group is with friends & colleagues (key

reference groups)

Relaxed and in a receptive mood, having a good time…having fun!

CAMPAIGN –MANDATORY POINTS

50 % of the total invoiced amount to be paid before the start of the promo,

rest to be paid half way through the campaign

All expenditure incurred on designing , creating and logistics of collaterals are

to be borne the third party

The collaterals to be sent directly to the cafes. Please share with us the soft

copies of the collaterals to be displayed in CCD for approval by CCD before

sending for print

All collaterals to be displayed in CCD would need to carry a CCD logo on

them

All Collaterals are to reach the cafes at least 2 –3 days prior to start of promo

so that there is enough reaction time at the cafes

Taxes extra as applicable

Current Updates

Mumbai, March 05, 2010: India‟s largest café chain Café Coffee Day (CCD)

continues its leadership as an iconic retail brand whose dynamism and popularity

have won it respect and admiration from both consumers and rivals. In a latest of a

series of honours, the chain was conferred with the title of the Most Admired F&B

Retailer of the Year: Cafes, Juice Bars and Parlours at the glittering third annual

Coca Cola Golden Spoon Awards ceremony in Mumbai last night. CCD won in the

same category at the 2009 Coca Cola Golden Spoon Awards as well.

Café Coffee Day fought off competition from four other finalists in the above

mentioned category: Barista, Jus Booster Juice, Costa Coffee and Baskin Robbins.

The Coca Cola Golden Spoon Awards -- IMAGES awards for excellence in food

retailing, were part of the ongoing annual food industry conclave Food Forum India at

The Renaissance, Mumbai. Incepted in 2008 by the IMAGES Group, Food Forum

India is India‟s largest gathering of food manufacturers, marketers, retailers and

support organisations in India, and includes an exhibition, conferences and the

awards ceremony. Year 2010 marks the third year for both Food Forum India and the

Coca Cola Golden Spoon Awards.

During fiscal 2009-10, Café Coffee Day has taken its retail presence to 882 outlets

across the country, which is a growth of nearly 16 per cent over the previous fiscal

year. The chain was ranked as the most likely winner by the industry due to its

continuous and significant marketing initiatives through the year.

Besides CCD, 12 other food & grocery retailers, F&B brands and professionals

received trophies in recognition of their achievements in the past year at the awards

ceremony.

Conclusion

During the recession time Café Coffee Day became more aggressive by promoting

CCD through co-branding, sponsoring the events, fun activities for their frequent flyer

customers like „City Hopper‟ coupon which is a discount coupon. They also gave 2

chocolate cookies free with one cup of hot/cold coffee. According to the local

environment they started providing the specialty of that city definitely with quality like

samosa for Lucknow city and idly sambhar at Mysore Road CCD.

So with these offers customers got attracted to CCD and these are some of the ways

with which Café Coffee Day sustained during recession.

“Surely A Lot Can Happen Over Coffee….!!!”

References

1. Ernst & Young Study –Yousumerism 2008 &

2. Bates 141 study -3 generations, 1 big market 2008)

3. www.cafecoffeeday.com

4. http://strat.in/2009/06/what-is-ccd-as-a-brand-up-to/

5. http://www.casestudyinc.com/coffee-day-brand-strategy-india

6. http://knowledge.wharton.upenn.edu/india/article.cfm?articleid=4300