Cafe Coffee day - marketing report

CAFE COFFEE DAY- A Marketing Report

EXECUTIVE SUMMARY

CCD aims to be the best coffee chain in the country by offering world class experience at affordable prices. For this, it closely upgrades and customizes its offerings to meet consumer needs. CCD induces a sense of belonging in the minds of the consumer. Students and employed professionals perceive CCD as a hangout place, a place for meeting friends and conversation. Ambience and interiors appeal to their visual senses and smell of coffee to their olfactory senses. People feel young at heart and relaxed being at CCD. CCD serves as a promoter of social networking and going to CCD is also considered as a status symbol. We have analyzed the marketing mix, to help understand the gap in offerings. E-commerce websites on web space, English newspapers and business and technology magazines in print media emerge as key focal media to reach consumers. TVCs should be distributed across all entertainment, news and music channels. Based on survey response and analyses we have come up with recommendations enhance consumer experience which translates into greater consumer satisfaction and consumer loyalty.

Contents

EXECUTIVE SUMMARY2BRIEF OF THE COMPANY4OBJECTIVE5SCOPE5METHODOLOGY5MARKETING MIX (7 P ANALYSIS)6CONSUMER BEHAVIOR8MASLOW'S THEORY8CUSTOMER MIND MAPPING9BRAND ASSET VALUATOR MODEL9DIMENSIONS OF BRAND EXPERIENCE10IMPLICATIONS FOR MARKETEER12RECOMMENDATIONS14Appendix16Survey16REFERENCES20

BRIEF OF THE COMPANY

Cafe Coffee Day is currently one the biggest and fastest growing company in the branded coffee business. It is a division of Amalgamated Bean Company Trading Company Limited. The first CCD outlet was set up on July 11, 1996, atBrigade Road, Bangalore, Karnataka.Since then, CCD has opened 1481 cafs across 28 states of India. It has also started international operations by opening cafe shops at cities like Karachi, Vienna, Dubai and Prague. CCD is unique in the sense that it manufactures the coffee that it serves over an estate of over 6,000 acres. The various brands in which CCD reaches to its million consumers are following: Coffee Day Fresh 'n' Ground, which owns 450coffee beanand powder retail outlets. Coffee Day Square, a high level coffee bar in Bangalore. Coffee Day Xpress, which runs 900 plus Coffee Day kiosks. Coffee Day Beverages, which runs over 14,000 vending machines. Coffee Day Exports, its exporting wing. Coffee Day Perfect, itsfast-moving consumer goodspackaged coffee division. Coffee Day B2C Plant, Coffee vending machine manufacturing in India

CCD is credited with creating the cafe culture wave that swept across the country and as an exclusive store with excellent service aims to enhance the consumers Coffee Experience. The target population of the cafe is majorly the young population in the urban cities with disposable income. CCD's claim to fame is its youth centric image, making it one of the most widely discussed brands on the web. CCD is emerging as the ideal hangout centre or 'adda' for the Indian youth riding on the emerging cafe market in India. This market although small from a global perspective, is booming from an Indian perspective. Coffee consumption in India has increased tremendously doubling from 55,000 tonnes in 1990 to 102,000 tonnes in 2012.Cafe Coffee day has won several awards and recognitions. It was named "most popular hangout joint amongst youth" at the 3rd Global Youth Marketing Forum in 2011. The Indian Hospitality Excellence Awards also named it "India's most popular coffee joint" in 2011.

OBJECTIVE

Understand why do people spend INR 75 for a coffee at CCD Understand consumer behaviour with relation to CCD Implications for the marketers.

SCOPE

People in the age group of 18 35 years in the metro cities who are regular CCD visitors or would like to have a CCD coffee. METHODOLOGY

Survey using a prepared questionnaire from a sample population of 150 people in the above target segment to understand the value proposition they see from a CCD coffee. Analyse the market by in-depth study, interviews and secondary research.

The profiling of respondents is as follows : - Age Group ProfessionParticularsNumber%

18 - 2510971

25 -354126

ParticularsNumber%

Student8355

IT Professional3423

Non - IT Professional3322

GenderParticularsNumber%

Male14172

Female5428

MARKETING MIX (7 P ANALYSIS)

1. ProductThe offerings by Caf Coffee Day have evolved in accordance with changing tastes of the customer. The wide network of outlets across India requires a standardised menu which can be replicated keeping in mind same level of quality. The product should initiate a sense of satisfaction based on aroma, appearance, and taste. Currently, CCD offers Beverages Hot Hot Coffee, Hot Tea, Hot Chocolate Cold Cold Coffee, Ice Tea, Frappe, Fruit Slush Food Sandwiches, Samosas, Desserts, Cookies, Ice creams, Cakes Merchandise Coffee Maker, Coffee Mugs, T Shirts, Coffee/Tea PowdersThe normal serving size of the Hot Coffee and Tea is 210 ml. Other beverages have a normal serving size of 350 ml.

1. PriceIn order to attract the consumers, keeping in mind the varying spending power, CCD has priced its products to appeal to students as well as working professionals. CCD has priced its products competitively, which has led to it being perceived as a value for money coffee chain in comparison with its competitors. CCD has adopted differential pricing based on locations such as premium malls and hot-spots, colleges, hospitals, IT parks and airports.

1. PlaceCCD has adopted an aggressive expansion strategy. Its key strategy has been to open an outlet in every possible location where decent business can be generated. It is one of the primary factors in determining its success. To cater to its target segments, Cafe Coffee Day has mostly opened at strategic locations. It is manifested by the fact that Cafe Coffee day outlets are available at most malls, High Street, Family entertainment centers, airports, hotels, colleges, IT parks and residential hotspots. CCD believes in cluster approach of opening outlets at hotspots. This is not viewed at cannibalization but is rather aimed at getting consumers accustomed to the brand and tapping multiple customers in the same area.

1. PromotionCaf Coffee Day has involved itself in multiple areas of high consumer passion like: Television: Caf Coffee Day held contests in partnerships with Zee English and WB channel who regularly air the American classic sitcom 'Friends'. The story of 'Friends' revolve around the lives of lead characters, who mostly hangout in a coffee shop. They had tied up with shows like Channel [V]s Get Gorgeous, Roadies etc. Tie-ups: CCD also tied up lot of the youth brands like Levis, Scooty, Airtel Friends Sales Promotion: Caf Coffee Day uses special Caf Citizen Card for rewarding Caf Coffee Days customers. It also tied up with 'Freecharge' to distribute coupons for complementary coffees with orders

1. PeopleThe staff is trained to be courteous, polite and importance is given to personal grooming and hygiene. Service is like a hygiene factor which is going to be noticed when it is absent. Good experience might not be in memory, but bad experiences have a lasting effect and can end customer association. High level of formalization must hence be maintained across all the outlets.

1. ProcessEarlier, CCD had a convenience model of service, but along with growth and expansion, CCD has moved to a self-service model for ordering and payment. This might be perceived as inconvenient by some of the customers, as it affects the continuity and flow of the experience.

1. PublicityThe brand has gained credibility for filling a much needed gap, which is a location for spending quality time in the fast moving urban lifestyle. The communication from the company in the form of taglines - A lot can happen over Coffee, Sit Down reinforce the offerings. There is a major network effect which has helped CCD retain customers as CCD has become synonymous with having coffee outside.

CONSUMER BEHAVIOR

We have analyzed the consumer behavior with respect to the Cafe Coffee Day by applying the following models: -1. Maslow's Theory2. Consumer Mind Map3. Brand Asset Valuator Model4. Dimensions of Brand Experience

MASLOW'S THEORY

Inference: According to Maslow theory, Caf Coffee Day will fall in the category of psychological needs inducing in people a sense of belonging to the community. It also overlaps with the Esteem needs to a fair extent playing on the consumers needs for recognition, status and self-esteem.

CUSTOMER MIND MAPPING

Inference: This mental map depicts the knowledge of CCD in the minds of consumers in terms of the key associations likely to be triggered in a marketing setting and their relative strength, favourability and uniqueness to consumers.

BRAND ASSET VALUATOR MODEL

Applying four pillars of brand equity to CCD based on, following inferences were drawn:Energized Differentiation: CCD currently has 1,481 outlets and is the market leader in retail coffee chain segment. 76% of respondents think of CCD when asked to name a retail coffee chain. At Cafe Coffee Day, conversation is the main product and everything else surrounds it. People go to a Cafe Coffee Day to have a conversation. This is also what the consumers felt as maximum number of respondents stated that they consider CCD as a hangout place, a place for discussions, for meeting friends. 71% of respondents said that they spend more than an hour at CCD which effectively validates the initial inference. Relevance: Majority of the 76% respondents who said they think of CCD, belonged to the age group of 18-35 and consisted of students and working professional. This suggests that these people visit CCD generally after their classes or office hours and choose CCD as meeting place, hangout place, etc. Esteem: 92% of the respondents had a positive perception of CCD. Consumers perceived CCD as the place for conversation, as a hangout place for meeting friends and a place for discussions with no interruptions from the staff. Convenient location, ambience and variety of food, snacks, desserts and coolers were main factors that drive consumers to the store. Knowledge: Since, 76% of customer think of CCD when asked to name a coffee chain, we infer that consumers are aware of CCD as a brand. Conversation is the main product offering of CCD which is in sync with consumer perception as the highest rating as 80% of the customers considered CCD as a meeting place.

DIMENSIONS OF BRAND EXPERIENCEConsumers evaluate a brand based on their experiences with the same. Using this model we can analyse consumers perception regarding the CCD Experience. The various dimensions on which we review CCDs brand experience based on the survey can be summarized as follows:Sensory : CCD as a brand appeals to multiple attributes of a consumers senses.The survey shows that the interior design of the caf is the highest ranked parameter in terms of visual appeal for consumers. The layout and seating arrangement, placing of the sofas, use of table for two and their positioning plays an important role in visual appeal. Outside view and aesthetic appeal also play an important role. However these parameters fall below interior design in terms of ranking. These were the aspects which appealed to the visual sensory feelings of consumers.One of the most important aspects of a coffee is its smell which was rated as above average in appealing to the sense of smell of consumers.For appealing to the auditory senses, upbeat music plays an important role as per the views of the consumers. From the perspective of an overall appeal to sensory feelings, survey showed that smell and visual appeal were the 2 most important factors defining brand experience for consumers.Affective : Affective attributes which define consumer brand experience include those which induce strong feelings and sentiments. It is the emotion which the perception of the brand exudes. Survey shows that approximately 60% of the visitors of CCD feel young by simply coming to the caf. It induces the feeling of being in a refreshing environment surrounded by young and active minds, leading to lively discussions and interactive informal meets. Another important feeling induced in the minds of consumers is that of satisfaction in terms of status symbol and self-actualization. Being in a well-designed ambience with great music and visual appeal leads to people feeling a part of a reputed group bringing some amount of credibility and status level. Another feeling which is evoked at the caf is that of nostalgia. Having spent great times with friends or peer group at CCD brings back those feeling on hearing the word-CCD. The feeling of being connected with ones friends, peers, business partners, social circle on the whole is another offering of CCD. People tend to feel a part of the group and its nurtures the human need of social satisfaction.Behavioural : Brand experience can also be defined in terms of attributes which induce specific behavioural patterns in their consumers. CCD is perceived as a place for fun, bringing out the light side in its consumers. They tend to behave in a relaxed fashion viewing CCD as a place to rejuvenate and relax. People who may not go to a gaming parlour to enjoy games may end up playing the same in a CCD as a part of the group which has come to enjoy. Thus the perception of CCD as a fun filled hangout spot induces behavioural attributes underling the same.Thus an analysis of the dimensions of brand experience based on the primary research data brings out interesting insights about brand CCD.

StrengthEnergized Differentiation & Relevance

StatureEsteem and Knowledge

CCD emerges as the leader in the retail coffee chain space and has become irresistible, combining high brand strength with high brand stature. They hence, have greatest potential to create future value. If we look at the value proposition to the consumers from another angle, CCD offers space for conversations on rent. The consumer is perceiving value from the experience rather than just the consumption of the productIMPLICATIONS FOR MARKETEER

Media GraphicsDuring the survey we asked the respondents which of the media graphics amongst newspaper, television, radio, magazines, internet do they regularly follow. The results of the survey is as follows Particulars% FollowersAge Group (18-25)Age Group (25-35)StudentIT ProfessionalNon -IT Professional

Newspaper60%62%63%60%65%63%

Television35%34%39%32%50%27%

Radio10%9%15%8%21%6%

Magazines17%19%17%16%21%24%

Internet85%84%90%86%85%84%

NewspaperParticulars% FollowersAge Group (18-25)Age Group (25-35)StudentIT ProfessionalNon -IT Professional

English ( ToI, Hindu, HT)80%80%77%78%95%67%

Hindi2%2%0%2%0%0%

Business (ET, Mint)18%18%23%80%5%33%

Inference: Approximately 60% of all respondents read newspapers across all segments of age and professions. English newspapers are the most commonly read papers (80% of respondents who follow papers) Business newspapers are the second most preferred choice 20% of those who follow papers. For IT professionals, English newspapers is the logical choice with 95% of them reading newspapers like ToI, Hindu, HT, Deccan Herald etc.

RadioInference: Our analysis revealed that only 10% of the respondents follow radio, but we observed that the level of acceptance of radio was higher amongst working professionals compared to students. This could be due to use of radio while commute.

TelevisionParticulars% FollowersAge Group (18-25)Age Group (25-35)StudentIT ProfessionalNon -IT Professional

Entertainment55%59%43%52%58%56%

Sports55%43%81%48%47%89%

Music56%68%38%48%71%56%

News49%40%69%52%53%33%

Movie58%54%69%51%71%56%

Inference: TV penetration is quite good with 35% of all respondents follow Television channels. There is not a significant difference in terms of preferences for TV channels.

MagazinesParticulars% FollowersAge Group (18-25)Age Group (25-35)StudentIT ProfessionalNon -IT Professional

Health11%15%0%8%29%0%

Fashion28%33%14%38%15%25%

Sports21%23%15%31%29%0%

Business60%48%100%54%71%63%

Travel18%24%0%8%29%25%

Technology50%48%57%39%85%38%

Inference:18% of the population reads magazines. This ratio is skewed towards working professionals (25%) compared to students (15%)

Business and Technology magazines are the most commonly followed magazines. Students also prefer Fashion and Sports magazines.

InternetParticulars% FollowersAge Group (18-25)Age Group (25-35)StudentIT ProfessionalNon -IT Professional

Social Networking89%90%86%88%96%85%

E-Commerce31%30%32%27%38%36%

Sports38%35%46%36%45%36%

Search Engines66%66%65%65%62%71%

Gaming7%8%2%5%14%4%

News49%42%68%40%58%64%

Songs & Videos42%39%51%37%65%32%

Inference: We have observed a very high usage of internet amongst all the categories (85%) A very high proportion of the respondents amongst all categories follow social media sites. A significant % of people use search engines like Google, Wikipedia and music and videos websites E-commerce sites have 35% usage, but considering the growth of e-commerce in the country, we expect an increase in the number of people who use these sites.RECOMMENDATIONS

Discounts : Special offers such as discounts on special occasions are preferred by approximately 60% of the consumers surveyed. Special discounts can be given to students on show of identity cards.Combo Deals : Combo meals were given a positive response by about 45% of the consumers. Seating Arrangement : 40% consumers felt the need for better seating arrangement keeping in mind the concept of a personal segregated space. Also 95% consumers come in groups of 5 or less. Hence the seating arrangement should be revamped keeping in mind these two aspects. Smaller personalized seating areas in lounges and smaller tables must be introduced keeping in mind the trend of visitor pattern. Menu : 30% people prefer more variety in menu would hence a dynamically changing menu be an attraction to visit CCD. Board Games : 25% people prefer to play board games. Survey analysis reveals an equal stress on this aspect across all segments of consumers surveyed students and professionals alike. Introduction of board games would help create a more interactive, friendly, fun-filled experience for its consumers. Apart from Board games, comics and tablets in premium stores.Special Occasion Celebrations : Students prefer to celebrate special occasions like Valentines Day, Rose Day, Friendship Day, etc at CCD. Other working professionals and self-employed individuals were not much enthusiastic about this concept. New Stores: Over 80 % consumers spend less than INR 500 at CCD. Keeping this in mind, we can increase the cafe outlets in the school and college areas. Lounges must be restricted to affluent localities.Latte ArtPeriodic changes to latte art according to location, occasion, season and customer can be incorporated to bring in a fresh and unique experience for the customer on every visit. This would lead to indirect publicity by word of mouth with customers looking forward to every new cup of coffee. Changes to Loyalty CardThe existing Loyalty Card can be altered to incorporate points to the customer based on number of visitors, number of referred enrolments, revolving discounts for future visits, customized merchandize on reaching landmarks. Customer Delight26% of the customers had a positive attitude towards freebies. Customer delight can be achieved by positively surprising customers without substantial costs to CCD. Some examples are complimentary cookies, desserts, birthday cards on order of cakes, or any merchandize. From Advertising Perspective With the growth of E-commerce, CCD should start concentrating more on advertising on E-commerce websites. In newspapers, consumers have shown a clear preference for English newspapers. In this section, CCD should concentrate on general category newspapers which have the maximum readership followed by business newspapers. CCDs promotion strategy on Television must be an equitable distribution of advertisements across all channels due to a lack of clear preference indicated by the survey. Business and technology magazines gain maximum readership as indicated by the results of the survey, hence CCD should focus on these two segments.

APPENDIXSURVEYCoffee Chains in IndiaQ1 Which coffee chain comes to your mind when you hear the words "coffee shop" ?Q2 How would you describe CCD in one sentence?Q3 You like going to CCD because:Q4 How often do you visit CCDAlmost daily (1)2-3 times a week (2)2-3 times every month (3)Not often (4)

Q5 What is the occasion/purpose for which you go to CCD?Dine out / eat during Snack time (1)Meet friend(s) (2)Business Interaction (3)Small Treats/Parties (4)Study / Work (5)

Q6 How much money do you spend there?Less than 200 (1)200 500 (2)500 1000 (3)More than 1000 (4)

Q7 You normally visit CCD in a group of how many people?Less than 3 (1)3-5 (2)5-10 (3)More than 10 (4)

Q8 How much time do you spend?Less than an hour (1)1 2 hours (2)2 4 hours (3)More than 4 hours (4)

Q9 What do you prefer to have while at CCD?Hot Beverages (1)Cold Beverages (Cold coffee, frappe, slush, juices) (2)Quick Bites (3)Desserts (4)

Q10 How do the following factors impact your decision to visit CCD ?Rate the following on a scale of 1-5 (1 being the lowest and 5 the highest),1 (Very low) (1)2 (Low) (2)3 (Average) (3)4 (High) (4)5 (Very High) (5)

Value for money (1)

Interior (2)

Ease of access (3)

Quality of Service (4)

Variety (Menu) (5)

Quality of food (6)

Quick Service (7)

Q11 What can be a factor for you to visit CCD more often?Discounts (1)Freebies (2)Combo Deals (3)More Menu Variety (4)Better Quality of food (5)Better Interiors (6)Personalized space (7)Better Quality of service (8)Occasion celebration (9)Board Games (10)

Q13 On the following parameters, select how satisfied you are with CCD on a scale of 1-5, 1 - Being highly dissatisfied and 5 Highly Satisfied ?Very Dissatisfied (1)Somewhat Dissatisfied (2)Neutral (3)Somewhat Satisfied (4)Very Satisfied (5)

Interior design (1)

Good crowd (2)

Outside view (3)

Layout/ Seating (4)

Smells nice (5)

Newspapers/WiFi (6)

Comfortable (7)

Upbeat Music (8)

Q14 Which of the following do you associate with CCD?Young (1)Status Symbol (2)Connected (3)Fun (4)Relaxed (5)Nostalgic (6)

Q15 Your age groupBelow 18 (1)18 25 (2)25 35 (3)More than 35 (4)

Q16 GenderMale (1)Female (2)

Q17 ProfessionStudent (1)IT professional (2)Non IT professional (3)Self-employed (4)Unemployed (5)If Others, please specify (6) ____________________

Q18 Income levelNone (If student click here) (1)Less than 5 lakhs (2)5 10 lakhs (3)More than 10 lakhs (4)

Q19 Location of CCD store most often visitedDelhi / Mumbai / Kolkata / Chennai / Bangalore / Hyderabad (1)Others (2)

Q20 Which of the following do you regularly follow?Newspapers (1)Television (2)Radio (3)Magazines (4)Internet (5)

Answer If Which of the following do you regularly follow? Newspapers Is SelectedQ21 Which newspapers do you read most often?English newspapers (ToI, Hindu, Deccan Herald, HT, DNA etc) (1)Hindi newspapers (Dainik Jagran, Navbharat, Hindustan etc) (2)Business Newspapers (ET, Mint, Business Standard etc) (3)Answer If Which of the following do you regularly follow? Television Is SelectedQ22 Which TV channels do you follow most often?Entertainment (1)Sports Channel (2)Music Channel (3)News Channel (4)Movies Channel (5)

Answer If Which of the following do you regularly follow? Magazines Is SelectedQ23 Which magazines do you read the most?Health (1)Fashion and Bollywood (2)Sports (3)Business (4)Travel (5)Technology (6)

Answer If Which of the following do you regularly follow? Internet Is SelectedQ24 Which websites do you visit the most?Social networking (1)E-commerce (2)Sports (3)General Info (wiki, google etc) (4)Gaming portals (5)News (6)Songs and videos (7)

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