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Background of the Study THE COFFEE CAFÉ INDUSTRY Evolution of a Coffee Café The beginning: It all began around 1000 A.D. when Arab traders began to cultivate coffee beans in large plantations. They began to boil the beans creating a drink they called ‘qahwa’ which translates to ‘that which prevents sleep’. The drink became widely popular, and the need for coffee beans grew. Interesting facts about Coffee & Cafés: Coffee was first known in Europe as Arabian Wine. Coffee is presently the second most traded commodity in the world. It is second only to oil. Nescafe was invented by Nestle because it had to assist the Brazilian government to solve its coffee surplus problem. Coffee is now the world’s most popular beverage, which leads to a boom in retail and hotel cafés. Retail Coffee Cafe Chains: Off late, these chains have become extremely popular and are growing at an ever-increasing pace. These retail chains have work with an organized structure of man, material and money. The work on developing a recognized brand consistent to all their outlets, which customers can easily relate to, wherever they go. They provide customers with a standardized level of service and quality at each of their outlets. The main focus of our project is on the nationally recognized retail café chain: Café Coffee Day. Growth of Café Industry in India Hot beverages have always been a part of the tradition of India, especially South India. Coffee took the first seat in South India when the traditional Brahmin classes brought down the beverage from the ruling British around the 1930s. During the early years the drink was confined only to traditional rich Brahmin families who served filter coffee in a ‘davra- tumbler’. Coffee is no more confined to the rich Brahmin class now, though the tradition of serving filter coffee in the ‘davra- tumbler’ continues to this day. In order to spread the drink, coffee houses emerged at various places in the country, which also served as the opposite places for lawyers and the educated class to hold discussions ranging from politics to cinema. It is also believed that many scripts and ideas for films evolved here. One of the oldest coffee houses in South India is the Raayars mess, Chennai, which serves first class filter coffee even today. The mess was established in the 1940s and continues the tradition of coffee but
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CCD Final Report

Apr 08, 2018

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Background of the Study

THE COFFEE CAFÉ INDUSTRY

Evolution of a Coffee Café

The beginning: It all began around 1000 A.D. when Arab traders began to cultivate coffeebeans in large plantations. They began to boil the beans creating a drink they called ‘qahwa’which translates to ‘that which prevents sleep’. The drink became widely popular, and theneed for coffee beans grew.

Interesting facts about Coffee & Cafés:

Coffee was first known in Europe as Arabian Wine.

Coffee is presently the second most traded commodity in the world. It is second onlyto oil.

Nescafe was invented by Nestle because it had to assist the Brazilian government tosolve its coffee surplus problem.

Coffee is now the world’s most popular beverage, which leads to a boom in retail andhotel cafés.

Retail Coffee Cafe Chains:

Off late, these chains have become extremely popular and are growing at an ever-increasingpace. These retail chains have work with an organized structure of man, material and money.The work on developing a recognized brand consistent to all their outlets, which customerscan easily relate to, wherever they go. They provide customers with a standardized level of service and quality at each of their outlets.

The main focus of our project is on the nationally recognized retail café chain: Café CoffeeDay.

Growth of Café Industry in India

Hot beverages have always been a part of the tradition of India, especially South India.Coffee took the first seat in South India when the traditional Brahmin classes brought downthe beverage from the ruling British around the 1930s. During the early years the drink wasconfined only to traditional rich Brahmin families who served filter coffee in a ‘davra-tumbler’. Coffee is no more confined to the rich Brahmin class now, though the tradition of serving filter coffee in the ‘davra- tumbler’ continues to this day. In order to spread the drink,coffee houses emerged at various places in the country, which also served as the oppositeplaces for lawyers and the educated class to hold discussions ranging from politics to cinema.It is also believed that many scripts and ideas for films evolved here. One of the oldest coffeehouses in South India is the Raayars mess, Chennai, which serves first class filter coffee eventoday. The mess was established in the 1940s and continues the tradition of coffee but

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supplements it with tiffin also. The vintage location of the mess attracts huge crowds eventoday early in the mornings, Coffee however was not the only item on the menu. These placesalso served food and other drinks to their customers.

The drink also became famous and as a result even five star hotels began cashing in on it.Several hotels all over the country started opening coffee- shops that catered to high- endcustomers. This showed the popularization of coffee cafés, to all sections of society. Thedrink has now become more of a concept than merely a drink itself. The last decade witnessesthe growth of numerous coffee pubs in the country. A number of coffee café owners tried towesternize the taste in contrast to the filter coffee. Now, large retail chains like Costa Coffee,Barista Lavazza, Coffee Bean and Tea Leaf, Mocha and Café Coffee Day have opened uparound the country. The concept of a café today is not merely about selling coffee, but aboutdeveloping a national brand. Retail cafés now form a multi- crore industry in the country, andhave huge potential for growth locally, and internationally. These cafés form the main focusof this project.

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Objective of the study

With the advent of the youth and culture, there has been a shift from the traditional tea centric

mindset leading to an increased intake of caffeine. Recently India has seen a boom in the

coffee market with the coming in of various houses like Starbucks, Costa Coffee, Lavazza,

Cafe Coffee Day just to name a few. The youth today perceive coffee as not just a beverage

but as a facilitator to help minds come together. This has further led to the democratisation of 

the coffee culture in India which has fuelled the expansion of the coffee segment from a niche

market to a wider market base. This has led to the widening of the consumer base from the

predominantly young segment to the more mature working professionals and also the non

professionals. Through our case study we endeavour to

1. Analyse the market potential and market players

2. Study the national and international market

3. Understand the market strategy adopted by top competitors

4. Study the measures adopted by top players to counter the competition(current and

future)

5. Understand the market scenario and recommend strategies for CCD to position itself 

in the mind of the consumer 

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Scope of the study

The scope of study includes detail study of the following about the selected major coffee

retail chain i.e. Café Coffee Day

I. Company Background

II. Retail Formats.

III. Franchise Distribution

IV. Products offering

V. Market Condition

VI. Customer Profile

VII. Market positioning.

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Research Methodology

For the purpose of this study, we prepared a research tool, questionnaire, to find out therelevant primary data pertaining to the functioning and working of Café Coffee Day.The data was collected based on information provided by Customers visiting Café Coffee

Day outlets.

Besides the primary data collected with the help of the questionnaire, we have also collectedthe relevant secondary data from various sources like magazines, books, Internet andnewspapers. Based on the relevant primary and secondary data, a comparative analysis hasbeen done so as to find out the areas of excellence and areas of improvement of bothorganizations. The areas of excellence and improvement have been identified based onfactual information, in light of which recommendations and suggestions have been providedfor the overall improvement of the organizations in the future.

This project was conducted in 2009 in Delhi NCR, India. So the information is relative to this

location.

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DESCRIPTION OF THE CURRENT SITUATION

Company

About the company: Cafe coffee day

Corporate Profile

It was in the golden soil of Chikmagalur that a traditional family owned a few acres of coffeeestates, which yielded rich coffee beans. Soon Amalgamated Bean Coffee Trading Company

Limited, popularly known as Coffee Day was formed. With a rich coffee growing traditionsince 1875 behind it coupled with the opportunity that arose with the deregulation of thecoffee board in the early nineties, Coffee Day began exporting coffee to the connoisseursacross USA, Europe & Japan. In the calendar year 2000, Coffee Day exported more than27000 tonnes of coffee valued at US$ 60 m to these countries and, for the second time in itsshort career of 7 years retained the position as the largest coffee exporter of India.

Coffee Day has a wide and professional network in the major coffee growing areas of thecountry comprising over 48 agents and 50 collecting depots. Coffee Day's two curing worksat Chikmagalur and Hassan cure over 70,000 tonnes of coffee per annum, the largest in thecountry.

Coffee Day has a well-equipped roasting unit catering to the specific requirement of theconsumers. The process is carried out under the control of experienced personnel to meethighest quality standards. The most modern technology available is used to maintainconsistency and roast the coffee beans to the demanding specifications of the discerningcoffee consumers.

Coffee Day Comprises of the following Sub Brands

Coffee Day - Fresh & GroundCafé Coffee Day

Coffee Day – VendingCoffee Day - Xpress

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Coffee Day – ExportsCoffee Day – Perfect

Café Coffee Day currently owns and operates 213 cafes in all major cities in India. It is apart of India's largest coffee conglomerate named Coffee Day, Rs. 200 crore ISO 9002

certified company. Coffee Day's most unique aspect is that it grows the coffee it serves.

Key Features

Pioneers of the Café Concept in India with the its first Café at Brigade Road,Bangalore in 1996. This Café was opened as a Cyber Café (first of its kind) but later,with the burst of cyber cafes it reverted to its core competency…. Coffee

Essentially a youth oriented brand with majority of its customers falling in the 15-29year age bracket.

Each café, depending upon its size attracts between 400 and 800 customers daily.

It is a place where customers come to rejuvenate themselves and be themselves.

USP of the Brand:

• Affordable Price

• Coffee – Winner of Platinum, Gold, Silver and Bronze medals at the IndiaBarista Championship 2002

Coffees & Teas Refreshing Alternatives Eatables

Hot Coffee Granitas Melting Moments

EspressoEspresso AmericanoMacchiatoCappuchinoCafé LatteChococinnoCafé MochaIrish Coffee

Blood OrangeCool BluePineapple CrushEmerald IceRuby Surprise

Banana n’ Walnut CakeBanana Chocolate MousseBanana Caramel pieChocolate DoughnutCookiesMarble CakePineapple GetauxChocolate Cake

International Coffee Smoothies Ice Creams

Colombian Juan ValdezEthiopian QahwahKenyan Safari

Mango ColadaStrawberry Colada

VanillaChocolateSeasons Best

Cold Coffee Cremosas Quick Bites

Sweet MintCold SparkleBrandied BananaTropical IcebergIced Eskimo

LitchiGinger SpicePina Colada

SamosaPuff PizzaCroissantFrench Fries

Kathi RollWraps

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BiryaniSandwichesKulchaBurger Pasta

Masala Sandwich

Coffee Add ons Cool Refreshers

HoneyFlavoured SyrupsRed EyeWhipped CreamScoop pf Ice creamChocolate Sauce

Fruit JuicesMineral Water 

Teas

Assam TeaMasala ChaiLemon ‘n Ice TeaKashmiri QahwahApple n Cranberry ice tea

Café Coffee Day: Product Width

Product Sources:

Coffee Day's most unique aspect is that it grows the coffee it serves in its cafes. Coffee Dayhas a well-equipped roasting unit catering to the specific requirement of the consumers. Theprocess is carried out under the control of experienced personnel to meet highest qualitystandards. The most modern technology available is used to maintain consistency and roastthe coffee beans to the demanding specifications of the discerning coffee consumers. Thecoffee beans are supplied to all the cafés from Chikmagalur.

The eatables at Café Coffee Day are catered by different vendors: example: ice creams arecatered by Cream Bell, Milk by Amul and samosa’s by Patsiers Gallery. Café Coffee Dayalso sells merchandise through its stores. 5 per cent of the revenue comes from sale of merchandise.

Quality standards:

Café Coffee Day has a check on quality all the time and in several aspects. The operationalin-charge will go around checking business, record keeping, service and check the feedback forms. The food in-charge will look at the way food is being stored, coffee is being made,what is the time take to extract the coffee and so on. Marketing person will go about checkingdisplays, how the merchandise are displayed.

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Serving Size:

The serving size of a product is a measure, not only of quantity, but also of value for money.The average serving size for Café Coffee Day’s main product categories is detailed in table:

Product Serving size

Hot coffee 210 ml

Cold coffee 350 ml

Granitas 350 ml

Smoothies 350 ml

Merchandising:At Café Coffee Day merchandise started more as a sentimental thing than as revenue

stream. They wanted to reward coffee lovers and they started selling mugs. People wanted towear something that reminded them of the cafe so they designed T-shirts and sold thousandsof those.

But soon it has become a serious business. 5 per cent of their revenue comes from themerchandising.

Café Coffee Day sells various young and trendy merchandise through its stores:

• Caps

T-Shirts• Bags

• Mugs

• Coffee Filters

• Coffee Powders

• Coffee Mints

• Pens

Process:

The order process at Café Coffee Day is based on self-service, where the customer goesto the counter to place his order. Whereas they have a flexible delivery process, where

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they wait for some time for the customer to pick up the order but if the customer takes toolong then the order is delivered on his table.

Positioning:

Consumer Profile:Research shows that 37% of the customers are between 20 and 24years. 27% of thecustomers are between the age group of 25-29 years. 60% of the customers who visit thecafé are male and 40% are female. 52% of customers who visit the cafes are students.

18% of the customers visit the cafes daily while another 44% visit weekly. Each café,depending upon its size attracts between 500 and 800 customers daily, mainly between 4pmand 7 pm. Customers describe Café Coffee Day as the place they frequent most after “homeand workplace/college”. It is a place where they meet friends and colleagues, in groups of 3or more. The prices here are perceived to be reasonable and it is a place where customerscome to rejuvenate themselves and be themselves rather than a place to be “seen at” vis-a-visother cafes.

Brand Image

Café Coffee Day is a regular meeting place for 15 to 29 years old, both male and female, whoare waited on by friendly and informed staff and are, offered the best made coffee, hot or cold, beverages and food in an invigorating ambience. It is urban youngsters favourite“hangout”. Its customers are mostly young college students and young professionals. It is for those who are young or young at heart.

Products:

Café Coffee Day product mix constitutes a wide range of products that appeal primarily toIndian coffee and snack lovers. Products have a decided Indian taste to it - be it food or coffee. Most of the eatables have been adopted to meet the Indian taste buds like samosa,

biryani, masala sandwich, tikka sandwich etc. Thus they have been trying to capture theIndian taste along with classic coffee.

The best selling item in summer is frappe, which is coffee and ice cream blendedtogether. The young people favor it. In winter it is cappuccino. Their merchandisingincludes funky stuff like t-shirts, caps etc.

Prices:

Considering that Café Coffee Day knows its major customer lies in the bracket of 15- 29,it has tried to derive a policy whereby it can satisfy all its customers. The price for a cup

of coffee ranges from Rs.17 to Rs.54. From the time it first started its operations, therehas been only minor changes in the pricing policy of Café Coffee Day. The changes have

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been more due to the government taxes than any thing else.

People:

People at Café Coffee Day believe that “People are hired for what they know but fired 

for how they behave”. Motivation and personal skill are laid emphasize upon.

Physical Evidence:

a) Logo, Colours, Images:Café Coffee Day has used bright red and green colours in its logo. RED stands for leadershipand vitality. It also stands for passion (… for coffee). The GREEN stroke harks back to their coffee growing heritage and the coffee plantations that they own. Café is noticeably larger than the rest of the text inside the logo box. This denotes that Café Coffee Day pioneered thecafé concept in India way back in 1996. Café Coffee Day would like to own the word “café”in the minds of its customers.

The Café Coffee Day Logo

When one thinks of a café it’s got to be Café Coffee Day. The font used for “Café” is calledSLURRY. The font looks as though the letters have congealed out of a liquid. It gives theimpression that the word is still forming itself and evolving into something new andsomething better constantly. This is the characteristic of Café Coffee Day’s customers andthis is the characteristic that the brand too wants to adopt. The upward SWIRL inside the logobox stands for the invigorating and uplifting nature of coffee and the ambience at Café CoffeeDay.

Décor & Architecture:

Café Coffee Day had gone in for image change and revamping of interiors in the last quarter of 2001. Café interiors have been given a whole, new look. In a change from the largelywood and granite based interiors, there is more of steel and lots more colour now. The youngcolours of today, lime green, yellow, orange, and purple predominate.

The Café Coffee Day Decor

Literature:

The literature provided by Café Coffee Day is indicative of its youthful image. The menus,posters, pamphlets are all designed to attract young and young at heart. They also have their magazine called as ‘Café Beat’, which is published monthly at their Bangalore head officeand distributed throughout the branches.

Locations:

Café Coffee Day looks to cater to their target market with strategically located outlets. Their outlets are generally located in High Street/ Family Entertainment Centres. Considering their generic appeal, there are Barista outlets located in and around Malls, Cinemas, Colleges,

Offices, etc. This endorses their brand image of a café that appeals to coffee lovers of allages.

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Promotion:

Café Coffee Day does not believe in mass media promotions. But they are involved in allthe areas of serious consumer passion.

Through television:

Café Coffee Day held a contest around a very popular programme on Zee English calledFriends. All the six lead characters are shown often visiting a coffee shop and a lot of youthlike watching the programme. That is why they had a contest running where customers couldwin Friends' merchandise. The linkage was that it is a youth based programme and it had acoffee house.They have tied up with Channel [V]'s Get Gorgeous contest. The reason being that a lotof their young consumers are interested in careers. Modelling is a career that a lot of 

youngsters are interested in and this was an excellent platform. They have also donepromotion for History Channel, where they have run promotion for Hollywood Heroes.They had asked a few question and a lucky winner won a trip to Hollywood.

Ticket sales:

Café Coffee Day is involved in ticket sales in quite a few events, Enrique being one of them. They were involved in WWE, Elton John, and Bryan Adams ticket sales. Theseacts are very much appreciated by their consumers.It helps both the organizers as well as Café Coffee Day. Organizers need to tell people wherethe tickets are available and single Café Coffee Day logo says it all. From Café Coffee Day’spoint of view, they always ask for a certain amount of tickets around which they have acontest. Couples can win ticket for free. This in turn raises the awareness level as cafe staff approaches the consumers to inform them about the contest. There is not a better publicitymechanism then the person who is serving you telling you about the same.

Tie-ups:

Besides that Café Coffee Day also tie up lot of the youth brands. Their promise to thecustomer is that a lot can happen over a coffee. So every time they try to ensure

something good happens to their customer. So they have a contest going on with Levis,another one with Scooty, Liril, latest one with Airtel Friends.

Another placement area they have is with HDFC. HDFC wanted to promote their debitcard and they choose Café Coffee Day. So 21 cafes have debit card machines.

Association with movies:

Café Coffee Day also decided to stick with the next big thing i.e. Bollywood. Earlier afew movies, whose target audience matched that of the consumers at Cafe Coffee Day,started shooting a few scenes in the cafe. So they had a Hindi movie Bas Yun Hi and a

couple of Telugu and Tamil films with prominent Cafe Coffee Day brand placement.Later they took a conscious decision of being seen in certain movies like Khakee and

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Main Hoon Na.

As part of this effort, the brand was placed smartly in two Bollywood ventures,the Amitabh Bachchan, Aishwarya Rai, Vivek Oberoi starrer Kyun Ho Gaya Na,Sajid Nadiadwala's Salman Khan, Priyanka Chopra starrer Mujhse Shaadi

Karoge, forthcoming movies like Salman Khan starrer Lucky and Socha Na Tha.

A lot of serials are shot in Cafe Coffee Day. Recently, Kahaani Ghar Ghar Kii was shot.

Sales Promotion:

Café Coffee Day uses special ‘Café Citizen Card’ for rewarding Café Coffee Day’scustomers. It is a loyalty program to gain new customers and retain the existing ones.The Café Citizens Card entitles members to a 10% discount on all food and beverage bills.The members also receive surprise gifts, along with special offers and invitations fromCafé Coffee Day from time- to- time.

The Café Citizen Card

Distribution:Distribution of outlets:

Every Café Coffee Day outlet is a part of India’s largest coffee conglomerate namedCoffee Day. Since all the cafes are owned by the company, it becomes easier for themconduct feedback surveys like dipsticks etc. Coffee day’s most unique aspect is that itgrows the coffee it serves in its cafes.Pioneers of the Café Concept in India with the its first Café at Brigade Road, Bangalore in

1996. This Café was opened as a Cyber Café (first of its kind) but later, with the burst of cyber cafes it reverted to its core competency…. Coffee. Café Coffee Day currently operates213 outlets all over the country. They have a market presence in over 49 cities. Delhi, NCR alone has 24 outlets, and the number of outlets in the area is increasing at a phenomenal pace.Each café, depending upon its size attracts between 400 and 800 customers daily. In additionto that they are also going abroad. They will open 50 outlets overseas in 10 cities.

Location:

This is a prime factor in determining the success of a retail chain. Café Coffee Day isfocusing mainly in malls and main markets.

Distribution of stock:

Coffee Beans

Table 10: Café Coffee Day - DistributionThe distribution of coffee beans start from their roasting plant at chikmagalur. The coffeebeans are sent to the main offices of north and south India on monthly basis. The outletscontact the Head Distributors on weekly basis.As far as other eatables are concerned, the inventory is checked on daily basis and orders

are placed according to the requirement. Café Coffee Day uses its own store vehicle(small van) for transportation needs.

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Human Resources

With the boost in the number of their retail outlets, Café Coffee Day had to concentrate onthe quality and quantity of their human resource in order to meet up with the set standards.They make sure that the employees all across the country are well trained and provideconsistent services at every outlet.

Recruitment & Selection:

It is the process of differentiating between applicants in order to identify those with a greater likelihood of success in a job. The role of selection in an organization’s effectiveness iscrucial for at least two reasons; first work performance depends on individuals and secondbecause of the costs incurred in hiring individuals is enormous for an organization. The bestway to improve performance is to hire the people who have the competence and thewillingness to work. Arguing from the employee’s viewpoint poor or inappropriate choicecan be demoralizing to the individual concerned and demotivating for the rest of theworkforce. The cost of searching and training individual may range from Rs. 2,50,000.or more. Costs of wrong selection are even greater. Selection is a long process commencingfrom the preliminary interview of the applicant and ending with the contract of employment.The process differs among organizations and between two different jobs within the sameorganization. Selection procedure for senior managers is long-drawn and rigorous but on theother hand for shop floor workers it is simple and short.

Café Coffee Day – Selection Process

Café Coffee Day is expanding at a phenomenal rate. Thus the need for right people, in theright place at right time is also increasing. In order to meet the demand for efficient andeffective workforce, Café Coffee Day has adopted the correct recruitment and selectionprocedures.

Sources of recruitment:Café Coffee Day has different sources for recruitment depending on the job profile indemand. For Team Members the sources are:In store PostersREJECTED APPLICATION

Referrals and Walk-ins.

Recruitment and selection process:

For posts of team members the following rounds take place

1. Psychometric tests, Behavioural Intelligence Test, Logical thinking and ComprehensionTest.

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2. Application blank.3. Personal Interview, Operations Interview, Regional Manager Interview.

For Area Manager:

Recruitment and selection process:1. Collection & review of curriculum vitae2. Personal interview with Regional HR Manager 3. Personal interview with GM- HR.

Training & Development:To ensure consistent employee performance, training and development policies are very

important- even more in service sector organizations. Café Coffee Day has set 12 daysrigorous training procedure at their office in Bangalore for all the assistant managers.Whereas all the team members undergo a 3 days training at respective head offices in Northor South India.

Employee working hours:The working hours are split into convenient shifts spread over 8:30 am to 10:30 pm.Night drops are provided for late evening shifts.

Employee code of Conduct:After substantial efforts Café Coffee Day has been able to convey to their staff (the oneswho serve food) that they are doing a job and are at par socially with many consumers.Their attitude and communications is kept up to mark. Along with cleaning the table well,their employees communicate with the consumers on one to one basis. It is a cultural shift; itis a huge responsibility as, in India you do not look at the people serving at your table as your peer. Their employees are like friend to the customer but at the same time they know aboutthe international standards of hygiene and cleanliness and personal grooming.

Promotion Policy:Café Coffee Day prefers promoting from within, rather than externally.

Performance Appraisal:Performance management is an integral part of a comprehensive human resourcemanagement strategy. Its objective is to maximize individuals' performance and potentialwith a view to attaining organizational goals and enhancing overall effectiveness andproductivity. The immediate superior carries out the performance appraisal at Café CoffeeDay every 6 months.

Employee Turnover & Retention:Café Coffee Day’s current rate of Employee Turnover is about 9%. The reason behind this isthe people between the age group of 19-24 who do not see their job as permanentmeans of income. They are not committed towards the organization.

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Major competitors

BARISTA LAVAZZA

Established in February 2000, Barista Lavazza is noted as a pioneer in Indian café culture.

The Barista Lavazza chain of Espresso bars delivers a truly Italian coffee experience in

warm, friendly and relaxed environment.

At Barista Lavazza their objective is to provide an authentic Italian coffee drinkingexperience in a warm, friendly, no pressure environment. They began operations in the year 2000 as they felt the time was right for the Indian consumer to experience a café thatprovided a third space, away from work and home, where the guest could relax and unwind.

Lavazza traces its origins back to 1895, when Luigi Lavazza purchased a little grocery store,Paissa Olivero, in the old commercial section of Turin for 26,000 Italian Lire, about US$ 20.In the early 1900's, he invented the concept of the blend - a complex art of mixing together coffee of different origins to obtain a distinctive taste and harmonious flavour in the cup.Before the turn of the century, the name Lavazza evolved into an international powerhouseand the unofficial ambassador of Italy, being synonymous with all things Italian - creativity,

art, passion and of course, espresso.

At last count, the Barista Coffee Company Limited has over 200 Barista Lavazza EspressoBars and Barista Lavazza Crèmes in over 30 cities across India. Besides the Indian sub-continent, Barista Lavazza also has cafes in locations across Sri Lanka, Oman and the UAE.Barista is owned by Lavazza, Italy's largest coffee company. Lavazza, the sixth largest coffeeroaster in the world, has a 46.5% share in the Italian retail market (value, source: Nielsen)and operates in over 80 countries in the Home and Away-from-Home sectors (Foodservice,Vending and Cafes).

COSTA COFFEE

Costa coffee was first poured on our shores in 1971 at 9 Newport Street, London, by Sergio

and Bruno Costa. Today, just a few metres away from where they first set up, the Costa

Roastery produces the same unique Mocha Italia blend that the Costa brothers worked so

hard to create.

COFFEE BEAN & TEA LEAF

Since 1963 Coffee bean & tea leaf has been passionate about serving their customers the best

coffees and teas from around the world. Today, throughout their organization, and thehundreds of locations around the world, they remain committed to their original vision of 

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quality and customer service. They serve over 22 varieties of coffee and 20 kinds of tea.

They are dedicated to serving the community and providing a destination and lifestyle quality

experience. They take pride in their handcrafted oak panelled stores; the ideal social

gathering place to build respectful relationships with our friends, and customers in thecommunity. Their store environment truly is cosy, warm and inviting and is ideal for just

enjoying The Coffee Bean & Tea Leaf® experience.

MOCHA

Fabled throughout hundreds of years of history, our Yemen Mocha coffee has been sought

after by traders, royalty and coffee connoisseurs the world over. Its rich full-bodied andlightly sweet taste is unique. Sanani, The Original Mocha Coffee indeed represents, the "King of Coffees" .

Everyone has heard of mocha but few know the origins of the delicious coffee thatconnoisseurs treasure. Mocha originates from its name sake port city of Mocha located in thesouthernmost tip of the Arabian Peninsula, now part of Yemen. Yemen Mocha is a dark,strong and sweet-tasting coffee that was discovered by the outside world in the 16th century.The fabulously wealthy Ottoman Sultans learned of Yemeni coffee and exported it to their capitol city, Istanbul, in burlap sacks labelled by their point of origin, Mocha.

Called qahwah in Arabic, the beverage became known as qahvay in Turkish, and as itspopularity mounted around the rest of Europe, terms like café and coffee caught on.

NESCAFE

Nescafé is a brand of instant coffee made by Nestlé. It comes in the form of many differentproducts. The name is a portmanteau of the words "Nestlé " and "café ". Nestlé's flagshippowdered coffee product was introduced in Switzerland on April 1, 1938 after beingdeveloped for seven years by Max Morgenthaler, Vernon Chapman and team.

There is a stark difference in the prices offered by Nescafe and Café Coffee Day. Nescafge

may use this to its advantage. Consumers are already aware of this price difference. Although

Nescafe is currently not engaged in a full- fledged offensive against CCD yet, it is launching

a countrywide offensive in the US targeting the instant-coffee market, using smart

advertising to make consumers aware of the price difference and quality.

One of the outdoor ads says, "Starbucks makes great instant. We make great instant. So why

does theirs cost 400 per cent more?" The last line to the multipanel ad proclaims Nescafe's

Taster's Choice as "the smart choice." Nescafe doesn't stop there - it has also taken the battle

online. TastersChoice.com asserts that "Good coffee is not expensive." It offers a budget

calculator and free samples and, borrowing from DDB Seattle's "UnSnobby Coffee" (built for 

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McDonald's McCafe launch in Starbucks' hometown), urges consumers to stage a "coffee

intervention." They may adopt the same strategy in India as well.

With recession, these ads have become increasingly common. And they're likely to continue,

as a number of the advertisers running with comparative campaigns have also reportedsubsequent sales increases.

Industry

Coffee is the second largest traded commodity in the world & is an extremely importantforeign exchange earner as far as the commodities are concerned.

Brazil and Columbia are top two coffee producers in the world. They account for more than40% of the total world produce while India’s contribution is just 4.1%.

Indian coffee is rated among the best-quality mild coffees in the international market and isexported to USA, UK Russia, Europe, Sweden, Norway, Yugoslavia, Belgium, Australia,Japan and the Gulf countries.

In India coffee cultivation is largely confined to the hilly regions of the southern states of Karnataka, Tamil Nadu and Kerala Karnataka accounts for 53 percent of the planted area (59percent planted to Arabica, 41 percent to Robusta) while Robusta is dominant in Kerala(which has 28 percent of planted area). In Tamil Nadu however the crop is majorly of Arabica (which has 11 percent of planted area). Some 1, 33,049 small planters and 2,948large planters cultilvate4d coffee during the year.

India produces 260mn Kgs of coffee per year. Indian coffee production has a yield of 800 – 900 kg. Per hectare, this is low compared to the world average of 1,100 kg per hectare. Thearea under coffee cultivation is approximately 3.1 lakh hectares.

India produces an average of nearly 2 lakh tones of coffee a year, valued at over Rs. 460crore, mainly grown in south India.

Out of the total production only 20% is consumed in the domestics markets rest is exported.Thus India has to depend heavily on foreign markets.

Indian coffee is typically mild and not too acidic-and yet it possesses and exotic full-bodiedtaste and a fine aroma. The flavour is full bodies, slightly acidic and straightforward.

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Selection of Samples and Data Collection

For the purpose of this study, we prepared a research tool, questionnaire, to find

out the relevant primary data pertaining to the functioning and working of Café

Coffee Day.

The data was collected based on information provided by Customers visiting

Café Coffee Day outlets.

Selection of samples: We concentrated our study to the customers of age group

<25, and also few samples from other age group.

Besides the primary data collected with the help of the questionnaire, we have

also collected the relevant secondary data from various sources like magazines,

books, Internet and newspapers.

This project was conducted in 2009 in Delhi NCR, India. So the information is

relative to this location.

The total number of samples collected from various sources is 345.

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Data Analysis and Findings

We are analyzing the data collected by preparing the following graphs.

Age of Respondents

79%

14%

4% 3%

<25

25-

35-

>45

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Graph 1:

The graph shows that majority of our respondents are from the age group <25.

Preference of Drinks

48%

29%

22%1%

Coffee

Tea

Milk

Soft Drin

Graph 2:

From this graph we can observe the preferences of beverages among different

age groups.

Choice of Outlet

55%

10%6%

30%

CCD

Barista

CostaCoffee

Others

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Graph 3:

This graph shows which coffee shop the respondents usually prefer to visit.

Although this is not a true indicator of market share it gives us some idea inwhich the coffee retail chains are operating in India.

Frequency of Visit

74%

17%

9%

<4

4 to

>8

 

Graph 4:

It indicates how often the respondents visit a coffee shop.

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Customer Profile of CCD

0%

10%

20%

30%

40%

50%

60%

70%

80%

<25 25-35 35-45 >45

Age Group

Percent

age

Graph 5:

From this graph we can understand the customer profile of Café Coffee Day

From the Graph1 we can observe that our maximum number of respondents are

from the age group <25, and from the Graph 4 we can observe that the

maximum number of CCD customers are from the same age group. So we are

concentrating on this segment.

We are plotting the following graphs for the age group <25 who visit

CCD

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Choice of outlet for age goup<25

56%28%

13%3%

CCD

Barista

Costa Coffee

Others

Graph 6:

From this graph we can understand the outlet preference of the youth segment.

Spending pattern at CCD of age group<25

18%

54%

24%

4%

<100

100-20

200-30

>300

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Graph 7:

This graph illustrates how much money the respondents under age group <25

usually spend at CCD. This chart also gives us an idea about the potential of this

segment.

Frequency of Visit

<4

4 t

>8

Graph 8:

This Graph indicates how often the respondents visited a coffee shop.

Considering the

Age group for the sample, it’s quite evident that their frequency of visit to CCD is

less. CCD could increase the frequency of visit of this group by promotion and

pricing strategy.

Duration of visit (min)

2%

25%28%

<10

10 to 30

30 to 60

>60

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Graph 9:

From the above graph we can observe the duration of visit of the target

customer at CCD.

Preference of location

10%

43%

43%

4%

Busy Market

Shoping Mall

Neighbourhoo

Office

Graph 10:

From the above graph we can observe the location preferences of age group

<25 and localities to be concentrated in a given place.

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Customer Expectations

10% 12%8% 5%

65%

0%

20%

40%

60%

80%

100%

Music Television Internet Books All

Category

Percentage

Graph 11:

From the above graph we can observe the customer expectations from the CCD

outlet and the focus areas for better customer experience.

Chi-square Testing:

We are doing Chi-square as a test of independence to know whether the

difference we observe among several sample proportions are significant or are

only due to chance.

The following 2x4 contingency table shows the observed frequency (f o) of 

different age groups’ preferences of the coffee retail outlets Café Coffee Day and

Barista.

Outlet / Age <25 25-35 35-45 >45

CCD 140 30 8 14

Barista 70 20 7 2

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Outlet / Age <25 25-35 35-45 >45 Total

CCD 140 30 8 14 192

Barista 70 20 7 2 99

Total 210 50 15 16 291

1) Stating the Hypothesis:

  H0: People equally prefer CCD and Barista ← Null Hypothesis

  H1: People don’t prefer equally CCD and Barista ← Alternative

Hypothesis

α = 0.1 ← Level of significance for testing these Hypothesis

2) Determining Expected Frequencies ( f e ):

We are calculating the expected frequencies for the cell by using the formula

f e = (RT*CT)/n

where,

f e = Expected frequency in a given cell 

RT = Row Total for the row containing that cell

CT = Column Total for the row containing that cell

n = total number of observations

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Table for expected frequency:

Outlet / Age <25 25-35 35-45 >45

CCD 138.55 32.99 9.89 10.55

Barista 71.44 17.01 5.10 5.44

 

3) Calculating the Value of chi-square statistics

f o f e f o- f e (f o- f e ) 2  (f o- f e ) 2

 / f e

140 138.56 1.44 2.07 0.015

30 32.99 - 2.99 8.94 0.27

8 9.9 - 1.9 3.61 0.364

14 10.56 3.44 11.83 1.12

70 71.44 - 1.44 2.07 0.029

20 17.01 2.99 8.94 0.526

7 5.1 1.9 3.61 0.708

2 5.44 - 3.44 11.83 2.175

Chi-square (χ2) = ∑ (f o- f e)2 / f e

Numerically from the table we find the value of chi-square ( χ2 ) is 5.468

 

From the table,

Degrees of freedom (df) = (rows-1)*(columns-1)

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= (2-1)*(4-1)

= 3

From the Chi-square distribution table, χ2(0.1,3) = 6.251

As shown from the above figure the sample Chi-square value is in the

acceptance region. So we can accept the null hypothesis that “People equally

prefer CCD and Barista”.

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Secondary Data:

We collected secondary data from the website of CCD which is as follows:

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8. Conclusion

From the study we have conducted we conclude that Indian coffee market is

maturing as the 48% of the respondents prefer coffee. Café Coffee Day has a

good potential to serve these customers as more than half of the respondents

would like to go to CCD to have coffee.

Majority of the CCD customers are urban youth who are of age less than 25

years. Though they don’t frequently come to CCD, they spend on average Rs.

100-200. They prefer to visit an outlet located in a shopping mall or in theirneighborhood. A huge portion likes to have music at the CCD outlet.

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2. “Market Segmentation” by Nirmalya Kumar 

2. www.cafecoffeeday.com

3. www.barista.co.in

4. www.google.com

Appendix:

Survey Questionnaire:

1. What is your age bracket? [ ]

a) <25 b) 25 to 30 c)>30

 

2. Which hot beverage do you prefer? [ ]a) milk b) coffee c) Tea d) Soft drinks

 

3. What do you think about coffee? [ ]

a)I like its taste and aroma b)It is refreshing and energetic c)good for

health

d) I hate it

4. Which coffee shop do you go to? [ ]

a) Brio b) Barista c) Cafe Coffee Day d) Costa Coffee

e) Other

5. What do you look for in a coffee shop? [ ]

a) ambience b) menu c) price d) service

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e) Other

 

6. How many times do you go to a coffee shop in a month? [ ]

a) <4 b) 4 to 8 d) >8

7. How much time do you spend in a coffee shop? [ ]

a) <10 min b) 10 - 30 min c) 30 min – 1 hr d) >1hr

 

8. How much do you spend in a coffee shop (Rs)? [ ]

a) <100 b) 100-200 c) 200-300 d) >300

 

9. What do you like to have in a coffee shop? [ ]

a) Hot coffee b) cold coffee/cool drink c) Ice cream/chocolate d) quick

bite

 

10. Who do you like to go to a coffee shop with? [ ]

a) Friends b) Family c) relatives d) lover

 

11. Which coffee shop do you prefer or frequent? One in [ ]

a) neighborhood b) a shopping mall c) a busy market place d)

Office

12. At what time do you go to a coffee shop? [ ]

a) Morning b) evening c) late night d) any time

 

13. What day of the week do you go to a coffee shop? [ ]

a) Friday b) Saturday c) Sunday d) any day

14. What do you want in a coffee shop? [ ]

a) TV b) music c) books d) internet e) all

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Recommendations

• Focus on Coffee and Non-coffee Beverages – expand their customer offerings andto come up with a wider variety in terms of both.

• Customer Satisfaction and Convenience important – customers have to wait for 

their turn for long durations due to the increase in number of customers and the lack of sufficient seating space.

• Pricing policy critical – break- up the pricing bands in a more customer friendlymanner.

• Increase average/spending & frequency of visits – lack of knowledge about cafécitizen card.

• Exploit Wellness trends among the youth – portray a more health conscious brandimage by providing a nutrition value chart for a range of drinks showing their healthbenefits. 

• Scope for Decor Improvement – have a more attractive decor and creative interiorsto enhance its visual appeal.

Limitations of the Project

• Small Sample Size• Biased Sample• Lack of Extensive Competitor Analysis