Table of content:

.....................................................................................................................................6 3) Food & Beverages Market In India..........................................................................7 4) Transition Of Cafes..................................................................................................9 ....................................................................................................................................13 A) Origin....................................................................................................................13 B) About Coffee Day...............................................................................................13 C) Introduction........................................................................................................14 Caf Coffee Day currently owns and operates 169 cafes in all major cities in India. It is a part of India's largest coffee company named Coffee Day, ISO 9002 certified company. Coffee Day's most unique aspect is that it grows the coffee it serves in its cafes. Cafe Coffee Day's vending machines have a special niche in the market compared to competitors because Cafe Coffee Day machines offer filter coffee unlike the instant coffee offered by competitors' brands. Growing from a coffee exporter to a coffee parlour, caf coffee day has certainly come a long way in this segment....................................................................................................................14 D) Marketing Mix....................................................................................................15 II) Price ..............................................................................................................17 III) Place .............................................................................................................17 IV) Promotion ....................................................................................................18 Movie launches:.......................................................................................................21 Apart form product launches, the company also does a number of tie-ups with the movie industry in the same manner. For instance, there was Damdaar coffee that was sold during the launch of the movie DUM. There was also the Damdaar contest wherein the prizes were movie tickets, posters, CDs, and cassettes. In addition, the winners get a chance to meet and have a coffee with the stars of the movie.......................................................................................................................21 The latest movie promotion was done for the movie Mujhse Shaadi Karogi which said Bill a Shagun amount of Rs 301/- and you can enter the Mujhse Shaadi Karogi Contest and in the contest form there were questions like Who will win Priyanka? or How will you say Mujhse Shaadi Karogi to the person you love? etc.............................................................................................................................22 E) Ambience and Surrounding................................................................................23 F) International Presence.........................................................................................24 Spreading Wide:......................................................................................................25 CCD is planning to start soon with the international coffee at all the outlets. They have already done the test marketing in certain outlet of Bangalore. Adding the new flavour would increase the choice for the customer........................................25 H) Its All In the Mind..............................................................................................26 I) SWOT Analysis...................................................................................................28 II) Lokhandwala CCD:.......................................................................................31 A) Introduction........................................................................................................34 B) Barista Marketing Mix......................................................................................35 1

I) Product ...........................................................................................................35 II) Price...............................................................................................................36 Place ...................................................................................................................37 IV) Promotion.....................................................................................................37 C) Ambience And Surrounding ..............................................................................40 D) International Presence........................................................................................41 E) Future Strategy....................................................................................................41 F) Its All In The Mind ............................................................................................43 Barista is a place where the world meets. People come to Barista to have a meet or to relax. A lot of them actually come alone as well. This is actually one of those places with people coming in alone because they are comfortable with themselves. It is a place where people are meeting each other in an environment, which is fulfilling social and intellectual needs. ...................................................................43 G) SWOT Analysis.................................................................................................45 H) About the Visit...................................................................................................46 I) Barista at Bandra.............................................................................................46 II) Barista at Santacruz........................................................................................47 7) Effects of foreign Players.......................................................................................49 The potential of growth in liquid coffee retailing is huge as coffee consumption in the country is considerably low. In the North, coffee consumption is eight grams per persons as compared to 40 gm in the South...............................................................49 8) Suggestions and Recommendation........................................................................51 9) Conclusion.............................................................................................................53 Books, Newspapers, Magazines:................................................................................55

1) Executive Summary
Indian consumer is a very interesting entity. The consumer in India is as heterogeneous as the country itself is. The urban consumer contrasts with the rural and the South Indian consumer with the North Indian. Further still, the consumer in the metros militates with his usage and habit patterns. The Indian consumer, is therefore very difficult to understand and very difficult to predict. Tea and Coffee are the favourite drink in India especially tea. A quiet cafe revolution is sweeping urban India with the explosion of coffee bars. That is bad news for tea - still the favourite brew for a majority of Indians -, which has been losing out to coffee in recent years. India is one of the world's largest exporters of tea and one of its biggest consumers. However, it is coffee drinking which is increasingly becoming a statement of young and upwardly mobile Indians. Moreover, coffee bars, an unheard of concept until a couple of years ago, are suddenly big business. Coffee is slowly but surely substituting tea. There is also rise in the consumption of coffee. The specialty coffee movement has gained much of its momentum through the efforts of companies like Barista, Caf Coffee Day and Starbucks. In India CAF COFFEE DAY and BARISTA are the most popular and well-known cafs. The college crowd rates them as one of the coolest hangouts. These companies sell similar product but their positioning and target audience are very different from each other. These players not only sell coffee and tea but also food and other merchandise items. Despite of serving to different audience, these players compete with themselves. Each player fights for its own share of market. They try to differentiate themselves by the way of product or price or promotion. However, they are also facing the competition from the foreign players like Georgia, Starbucks etc. It would be interesting to see how the companies differentiate and maintain their share in the market.

2) Retail Industry In India

Accounting for over 8 per cent of the GDP in the West, retail business is the largest private industry, ahead even of finance and engineering. Over 50 of the Fortune 500 and about 25 of the Asian Top 200 companies are retailers. Today, in some developed countries, retail businesses have shares as large as 40 per cent of the market. For instance, in Thailand and Brazil the organized retail business has grown at tremendous pace. In contrast, the organized retail business in India is very small. This is despite the fact that India is one of the biggest markets. Retail business contributes around 10-11 per cent of GDP. It amounts to about $180 billion market and is six times bigger than Thailand and four-five times bigger than that in South Korea and Taiwan. India also has the largest number of retailers, about 12 million, though they are mostly small. The challenges facing the organized retail industry in India: Competition from the unorganized sector. Traditional retailing has established in India for some centuries. Most retail outlets are familyowned and offering limited products and finance facilities. In contrast, players in the organized sector have big expenses to meet. Organized retailing also has to cope with the middle class psychology that the bigger and brighter sales outlet is, the more expensive it will be. Competition is growing in the retail business and super stores are being set up, in the rural areas, customers are entirely at the mercy of retailers. With rising income and changes in life style, demand for better products became insistent. From a size of only Rs.20,000 crore, the organized retail industry will grow to Rs 160,000 crore by 2005. The total retail market, however, as indicated above will grow 20 per cent annually from Rs 400,000 crore in 2000 to Rs 4

800,000 crore by 2005. Big industrial houses, such as the TATAs, the RPG group, ITC, HLL, realizing the potential of the retail business, are now scrambling for a place in this segment. Over the last five years, these groups have set up a number of chain stores. For instance, West Side by Tatas, Food world by RPG, Shoppers' Stop (Rahejas), and so on. Global developments in the retail industry, together with changing demand patterns of the Indian consumer, have affected the retail industry format in India too. This can be seen in the emerging Supermarkets, Hypermarkets, Specialty stores and Malls in India. The value that retail can add to the economy cannot be underestimated. However, challenges that lie in implementing the change agenda required to capture these benefits should also not be underestimated. Reason for the increase in the organized retailing in India: Rewriting the laws Restructuring the tax regime Accessing and investing significantly in infrastructure

This level of change is unlikely to be successful if carried out by any one retailer. A concerted industry-wide effort and a partnership with the government are required to achieve a number of these goals. The crucial aspects to Retailing the front end of manufacturing and last-mile of supply chain need specialized skills, which will be individually deliberated at length covering: Finance Technology Supply Chain Management Inventory Management 5

Success and Survival VAT The Advantage

Most single-format retailers have diversified successfully into multiple formats. The move towards multi-category and multi-format outlets is diminishing the scope of existing retailers to differentiate based on assortment or location alone.

3) Food & Beverages Market In India

India ranks first in the world in production of cereals, livestock population and milk. It is the second largest fruit and vegetable producer and is among the top five producers of Rice, Wheat, Groundnuts, Tea, Coffee, Tobacco, Spices, Sugar, and Oilseeds, yet Indias share in international food trade is a minuscule 1.5%. Value addition to foods by processing is a mere 8% of total production. Organized food retailing industry is still at infancy stage with share less than 1 per cent of food retail market size in India. This is despite the fact that food is the largest category in consumers spending basket. Indian consumers are deprived of quality food products, variety and value-added services at the retail end largely because of the highly fragmented nature of food retailing. Organized food retail has the potential to bridge this gap - and herein lies the opportunity. The Indian food retail industry is of a highly fragmented nature and consumers are deprived of quality food products. Organized food retail has the potential to bridge this gap. Organized retailing is also emerging as an important gateway for the sale of food products. In Chennai, about 17 per cent of food sales flow through supermarkets. In the metros, most women have shifted to supermarkets from street corner grocers. The world of food retailing is witnessing a paradigm shift that will have long-term implications for the way food retailing evolves in emerging economies like India. Retailers are looking to capture a larger share of consumer spending by expanding their product portfolios. Increasing pressure on financial performance is also prompting food retailers to look at high-margin categories, which include non-food products and services. Retailers have also realized that they need to become multi-format if they are to expand their customer base and gain a competitive edge. 7

Differentiation on the basis of value for money and value-added services will, however, become increasingly important. Retailers across the world are experiencing a wave of consolidation that is being driven by the desire for economies of scale, saturation in domestic markets and the desire for access to new markets. In line with international trends, the Indian market has already seen organized food retailers going multiform and multi-category with an increasing focus on private labels. Consolidation is likely to be triggered by the entry of leading Indian corporate and international retailers into the food-retail arena. The share of spending on at-home food consumption has fallen from 90 per cent to 80 per cent in the last five years between the top two socio-economic strata. Significant spending on food and increasing out-of-home food consumption represent opportunities for food retailers and food-service companies. India has the highest number of retail outlets in the world 12 million outlets with a total retail space of about 2 billion sq ft. Owing to this fragmentation, the availability of retail space per capita in India is among the lowest in the world 2 sq. ft per capita compared with 19 sq ft in the US. Some 5 million of these outlets engage in retail of food and food products. The degree of fragmentation is much higher among food retailers than among nonfood retailers. The majority of food and food products are retailed through neighborhood kirana stores.

The organized food retailing sector in India is on the verge of a boom with almost all the big corporate houses including Tatas, Reliance, ITC Group, Lohias-promoted Indo Rama, Mumbai-based RK Hospitality, Kishore Biyani with his Big Bazaar, RPG group with its hypermarket and supermarket chain eyeing the sector aggressively. 8

4) Transition Of Cafes
Coffee remains in the outer periphery of interest in the minds of consumers. Other aggressive beverages like tea and the colas of every hue have a substantially higher degree of interest and of course advertising backing them. Coffee consumption is down in the last four years. From a level of 55,000 tpa, the numbers are down at 52,000 tpa today. Per capita consumption hover around 52 gms. This signifies a measly 10 cups of coffee per Indian per year! Branded coffee consumption is a small percentage of the total. Only 19 per cent are branded and the rest is in loose forms. However, a significant increase in consumption in the branded segment anticipated. This is going to be spurred by the liquid coffee cafes and of course, the inroads foreign brands will make in the domestic market soon. Liquid coffee bars and vending machines are going to spur consumption on in the country for coffee. These are going to be front-ended efforts that will make coffee that much more consumer-friendly and will make the beverage accessible at arms length reach and available at the end of a desire. It is expected to have 60,000 coffee vending machines in the country in the next three years and expect to see at least 4000 Cafes across the country in the next five years. The market for vending products in India is opening up. Towards the end of the review period, with organized retailing coming in, consumers started believing in brand names. Vending products through machines started not only for coffee and tea, but also for soft drinks, chocolate confectionery and magazines, amongst others. The total strength of vending machines in the country is approximately about 60,000 machines by the end of 2004, which includes a large number of unbranded machines too. Coffee pubs and cafes mushroom throughout India, with vending machines also on the rise. Over the review period, there was a mushrooming of coffee 9

pubs and cafes across regions, and across the country as a whole. Coffee chains like Barista, Qwiky's and Cafe Coffee Day (run by Amalgamated Bean Coffee Trading Co Ltd) have become hugely popular hangouts for Indian cities' young and trendy consumers. The cafes and pubs are not just places where people buy coffee; they also try to sell a certain lifestyle. The chains, with their glitzy interiors and designer furniture, are targeted at urban, uppermiddle-class and rich Indians.

10

Comparative Analysis-Caf Coffee Day and Barista

A) Origin
A traditional family owned a few acres of coffee estates, which yielded the rich coffee beans in the soil of Chikmagalur, However they soon amalgamated with Bean Coffee Trading Company Limited, now popularly known as Coffee Day. The coffee growing tradition was since 1875, but the opportunity after the deregulation of the coffee board in the early nineties. Coffee Day began exporting coffee to the connoisseurs across USA, Europe & Japan. In the calendar year 2000, Coffee Day exported more than 27000 tonnes of coffee valued at US$ 60 m to these countries and, for the second time in its short career of 7 years retained the position as the largest coffee exporter of India.

B) About Coffee Day

Coffee Day has a wide and professional network in the major coffee growing areas of the country comprising over 50 agents and 50 collecting depots. Coffee Day's two curing works at Chikmagalur and Hassan cure over 70,000 tonnes of coffee per annum, the largest in the country. Coffee Day has a wellequipped roasting unit catering to the specific requirement of the consumers. The process is carried out under the control of experienced personnel to meet highest quality standards. The most modern technology available is used to maintain consistency and roast the coffee beans to the demanding specifications of the discerning coffee consumers. Key Features: 125 years of coffee growing history A fully equipped ISO certified roasting plant with a 70000 tonnes per

annum capacity at Hassan 13

Comparative Analysis-Caf Coffee Day and Barista

5000 acres of self owned Coffee Plantations A ready and enviable base of more than 10000 suppliers Among the top exporters of coffee in India (Coffee Day Exports) Coffee Day Comprises of the following Sub Brands

Coffee Day - Fresh & Ground Caf Coffee Day Coffee Day Vending Coffee Day Xpress Coffee Day Exports Coffee Day Perfect

C) Introduction Caf Coffee Day currently owns and operates 169 cafes in all major cities in
India. It is a part of India's largest coffee company named Coffee Day, ISO 9002 certified company. Coffee Day's most unique aspect is that it grows the coffee it serves in its cafes. Cafe Coffee Day's vending machines have a special niche in the market compared to competitors because Cafe Coffee Day machines offer filter coffee unlike the instant coffee offered by competitors' brands. Growing from a coffee exporter to a coffee parlour, caf coffee day has certainly come a long way in this segment. Key Features: Pioneers of the Caf Concept in India with its first Caf at Brigade Road, Bangalore in 1996. This Caf was opened as a Cyber Caf (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 14

Comparative Analysis-Caf Coffee Day and Barista

the 15-29 year age bracket Each caf, depending upon its size attracts between 400 and 800 customers daily At present it operates 169 cafes across 43 cities Plans to operate 200 cafes by December 2004 It is a place where customers come to rejuvenate themselves and be themselves

D) Marketing Mix Every company goes through different phases in the business. The phase is
very similar to that of the product lifecycle. In order to sustain in the market and to maintain its market share it is essential for the company to have a right marketing mix. The company has to have a mix of proper product that is relevant to the target audience, proper price, proper reach i.e. the place and relevant promotion that keeps the target audience interested in the company. I) Product Caf Coffee Days menu ranges from hot and cold coffees to several other items. However, the core product is the coffee. The management believes that trend is changing towards coffee. So taking this opportunity, the company also sells coffee powder. Caf Coffee Day also believes in selling other merchandised products. Core Product: Exotic international coffees e.g. Capachinos

15

Comparative Analysis-Caf Coffee Day and Barista

Food items e.g. Sandwich, Samosas Desserts and pastries

Supportive Products: Funky Caps @ Rs 60 onwards

Cool T-Shirts @ Rs Bags @ Rs 160 Mugs @ Rs 60

175 onwards onwards onwards Coffee Filters @ Rs 95

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

New Introductions:

Reglon Sleeves T-Shirts @ Rs 249 Marquis pens @ Rs 315 Onwards. Shoulder Bags @ Rs 209 16

Comparative Analysis-Caf Coffee Day and Barista

Coffee Mints @ Rs 40

II) Price
Caf Coffee Day has positioned as Value for Money. The major target customers are the youngsters. Pricing is a very sensitive issue for the Indian consumers. Caf Coffee Day believes in mass marketing. The average spent by the customer is 100-125. Their coffee starts from as long as 15 Rs. However there are some outlets where the students are given special discounts. CCD even set up their outlets in the college campus. For e.g. Caf Coffee Day has opened an outlet at the NMIMS campus where they are providing additional 10% discount to the students. CCD is looking for expansion to more interior places. Here prices become more complex as the consumer are very conservative in spending. A cup of coffee at Rs. 35 is accepted in metro cities but not in small towns. The decor, ambience and the experience will play a major role in pulling the crowds in small cities. The price of the product has to be kept uniform in order to maintain the uniformity in all the outlets. CCD target audience is youngsters. Majority of them are dependent on their family for their expense. This is one of the most important reasons for low pricing compared to other cafes. They believe it in making their product at an affordable price. Pricing is one of the important weapons for them to fight against their competitor. III) Place Caf Coffee Day outlets are spread across India. However, there are more 17

Comparative Analysis-Caf Coffee Day and Barista

number of outlets in the metros and towns. For e.g. In Mumbai CCD have 37 outlets. In the past 12 months, Caf Coffee Day has also been on an aggressive drive to expand the number of cafs in the smaller towns across the country based on research and invitations received from these places to open more such cafes there. The company expects to cross the figure of 200 cafs in 60 cities by December 2004. There will be an increased focus in cities having populations from as low as Five Lakh upwards. However, the focus has not been on just opening more cafs wherever there has been an opportunity. Caf Coffee Day is already the largest and most wide spread retail chain of cafes in India with a current count of 169 cafs in 43 cites. CCD plans to reach cities like Kolhapur and Nagpur in the west, Hubli, Belguam and Vizag in the South, Allahabad, Varanasi, Ambala and Patiala, in the North, Jodhpur and Mount Abu in Rajasthan and Bhubuneshwar, Ranchi, Cuttack, Darjeeling, Guwahati and Jamshedupr in the East. IV) Promotion In order to stay with the competition and to keep the audience interested, they undertake lot of promotion activities. CCD jointly organizes large number of promotions with the other companies serving the similar target audience. These cafes have emerged as a new media vehicle for reaching the right type of the customer. CCD gets in physical touch with audiences, target loyalty club members, or advertises in their newsletters. CCD has also undertaken a promo jointly with TVS scooty. The promo was done at all the outlets across 43 cities. In this promo a package of 2 ices blended cold coffee and 1 choc fantasy for just selling for Rs 82.

Customer Loyalty Programme:

Coffee shops have a high loyalty factor i.e. 60-70% of customers come in at least once a week. The Cafe Citizens Programmed launched along with Net Carrots Loyalty Services would reward regular customers of Cafe Coffee 18

Comparative Analysis-Caf Coffee Day and Barista

Day. Any customer who bills a minimum of Rs 100 on a single bill is automatically eligible for membership to the Cafe Citizens Programmed. The programmed entitles members to a 10 percent discount on all food and beverage bills for a year from the month of membership. Members will also receive surprise gifts from India times Shopping when they reach a total billing amount of Rs 2,000, Rs 5,000, and Rs 10,000. Members can track their total bills spend at any Cafe Coffee Day outlet across the country. The programme was very successful and they attracted 1,35,000 citizens.

Smart Card Programme: Started from 1st Aug, 04; one can enroll into the program by paying
Rs.100/- at any Caf Coffee Day Outlet and get a TEMPORARY CARD immediately after filling in the enrolment form. With the Card, one can accumulate Value Points Equivalent To Cash on net purchases at every transaction made at any of CCD outlets, provided the card is submitted to the caf staff at the time of placing each order. The personalized permanent SMART CARD would reach at ones place in 7 days from the day of enrolment and the points would be transferred from temporary card to the PERMANENT SMART CARD. The points accumulated on the card would be printed on the bottom of the bill. So it is very easy to keep track of the points. As soon as 100 points have been accumulated on the card, one can start redeeming the points. Points can be redeemed on food, beverage and now even merchandise like coffee powder, T-shirts, mugs etc except Jukebox coupons.

Current Promotion: Oyester Bay

The current promotion is done with the Oyester Bay Jewellery for the womans day. CCD has arranged the contest, which is arranged for the 19

Comparative Analysis-Caf Coffee Day and Barista

womans day event. This type of contest attracts the young crowd especially girls. Fame Adlabs CCD is also involved in the promotion with Fame Adlabs. The pamphlets are being distributed indicating the current movie shown and the movies to follow. Also it shows the special offer for some lucky customer to get the coffee free. Magazine CCD also has private magazine distributed free to their customers. It includes ads and advertises about the promotions to follow. V) Tie-Ups CCD jointly organizes large number of promotions with the other companies serving the similar target audience. EBD Book Caf: EBD is book caf has joint ventures with CCD. EBD Book Caf believes that by selling books from within the espresso bars like CCD and other such co-locations that have a footfall of over 100 plus customers in a day will help them to achieve growth in book sales. One can find ones favorite books at such cafes starting from fiction, nonfiction, craft, religion, children cookery, and 20 management, lifestyle, art & books

Comparative Analysis-Caf Coffee Day and Barista

much more. EBD Book Caf are in collaboration with Caf Coffee Day have existing outlets in Ludhiana, Jaipur, New Delhi and Kanpur and are in discussion to open more such outlets in, Mumbai and Ahmedabad. The CCD bookshops are in the same premises though not necessarily inside the outlet. Himalaya with CCD: To drive usage of honey, Himalaya Drugs is developing daily diet products and looking at marketing them by tying-up with leading consumer brands. It has tied up with Cafe Coffee Day, to create four dishes; Honey Cappuccino, Honey milk shake, Rich Chocolate Cake and ice cream topped with honey and nuts. The Cafe Coffee Day partnership is unique. It provided a platform to reach out to the target audience in a relaxed environment where they could experience innovative uses of honey. The association with Cafe Coffee Day across 100 outlets in seven cities was not only to expand the category, but also towards creating touch points to experience the goodness of Himalaya Forest Honey Levis: CCD has also tied-up with Levis where CCD will promote Levis product in their cafes. Levis recently launched their latest range of apparel, Levis 501, through CCD as part of their annual laterals like Wall visuals, Tent cards, Posters and Door stickers. There is also a special Levis Drink. Movie launches: Apart form product launches, the company also does a number of tie-ups with the movie industry in the same manner. For instance, there was Damdaar coffee that was sold during the launch of the movie DUM. There was also the Damdaar contest wherein the prizes were movie tickets, posters, CDs, and cassettes. In addition, the winners get a 21

Comparative Analysis-Caf Coffee Day and Barista

chance to meet and have a coffee with the stars of the movie. The latest movie promotion was done for the movie Mujhse Shaadi Karogi which said Bill a Shagun amount of Rs 301/- and you can enter the Mujhse Shaadi Karogi Contest and in the contest form there were questions like Who will win Priyanka? or How will you say Mujhse Shaadi Karogi to the person you love? etc.

22

Comparative Analysis-Caf Coffee Day and Barista

E) Ambience and Surrounding

First Impression is the Last Impression. This is true in this business. The first thing that the customers come across is the surrounding and the ambience of the store. To further brighten the vibrant atmosphere of the cafs, there has been a greater thrust on providing more value added services such as video juke boxes, cosy sofa seating, and exciting round the year promotions. Trading Co. Ltd had gone in for an image change and revamping of interiors in the last quarter of 2001. Caf interiors at the company's 169 outlets are being given a whole, new look. In a change from the largely wood and granite based interiors, there is more of steel and lots more colour. The young colours of today, lime green, yellow, orange, and purple will predominate. The crockery will also sport these colours. The larger cafes will also have lounge areas and a few beanbags.

23

Comparative Analysis-Caf Coffee Day and Barista

F) International Presence
Caf Coffee Day, the premier retail chain of cafs in India announced major developments within the company including its dynamic plan to expand the chain into the overseas markets. After having established itself firmly in the domestic market offering a world-class food and coffee experience to over 25 million customers annually across the country, the chain has already started setting up the infrastructure at 10 cities where it has targeted to open at least 50 cafes by December 2004. The entire international offering will be based on the successful Indian brand/model in which Caf Coffee Day has gathered a lot of rich experience in coffee caf retailing. As with the domestic cafs, the international cafs will also be trendy, offering attractive prices, and the coffees served will be made from the premium quality coffee beans.

24

Comparative Analysis-Caf Coffee Day and Barista

G) Future Strategy
Spreading Wide: CCD is planning to increase its reach by going to the small towns. To achieve the mission of being a number 1 player in coffee category they cannot ignore these small towns. CCD plans to open 45 more cafes in the next three months. The Company is focusing on the southern states of the country such as Tamil Nadu, Karnataka, Andhra Pradesh and Kerala, and the western region, starting with various markets in the state of Maharashtra. To widen the scope of target audience, CCD is planning to open some special cafs. These cafes would serve to the different target audience. However, they have aggressive competition from the Barista and other cafes. According to the management, they have a greater threat from the foreign players. Expensive Cafes: The major target group of CCD is the youngsters. However, the company wants to widen its target group. Caf Coffee Day is planning to come up with a different type of caf, which will be having different environment all together. Even the merchandise will be different from that of the original CCD cafes. The coffees and the merchandise would be much more expensive and of a better quality. These cafes are mainly targeted to people with high-income group and status oriented people. International Coffee Flavours: CCD is planning to start soon with the international coffee at all the outlets. They have already done the test marketing in certain outlet of Bangalore. Adding the new flavour would increase the choice for the customer. 25

Comparative Analysis-Caf Coffee Day and Barista

H) Its All In the Mind

CCD holds a distinct position in the minds of the target customer. Most of the customers are loyal and visit the same outlet. CCD is very aggressive in terms of the marketing activity in order to maintain the market share. Major customers are youths. Focusing on the target group, tie-ups are done with other companies in order to keep the audience interested. They are planning to tie-ups with the cinema theaters, shopping malls. Coffee Caf Day is the most popular hang out place for the youngsters. CCD is perceived as energetic and trendy organization. The crowd is very lively. Most of the consumers are frequent visitors. Many of the people also have their loyalty card I visit here twice a week. Its a good place to hang out with friends. CCD has the wide variety of coffee that suit to the consumers needs. The ambience is very clean, well-lighted and airy. Most of the outlets also have large parking space and good seating arrangements. There is a young feel to it. The prices are very reasonable (compared to Barista, not our local Udipi) too and an average coffee would cost about Rs. 40. They also have attractive T-shirts sporting Coffee day labels, cups, etc for sale, which are manufactured by Coffee day. The food at CCD is at the affordable price. Customers coming out there also find the food interesting especially veg. wraps and the chicken ciabatta (Italian sandwich). However they dont like pizzas. Sometimes, the food smells a bit stale. The deserts are the most preferred by the youngsters especially chocolaty cakes and apple pie. The employees are very friendly. They maintain a good relation with their customers. At CCD employees are very helpful and serve the customers, which differentiate them from other cafes. CCD coffees are much cheaper than that of cafes. This is one of the main reasons for attracting the young college crowd. CCD is also 26

Comparative Analysis-Caf Coffee Day and Barista

very well spread. Many customers believe CCD move with the competitor. Wherever Baristas opens its outlet, CCD comes with the outlet. One will not find more of working class or management people. Its not the good place to have a business talks. The place is very noisy which makes them difficult to concentrate. Even the seats are much closed arranged thus does not maintains secrecy. The music at CCD is very loud and trendy that is suited for the young crowd. There are also some people who believe that CCD is cheap and it does not suit their status. The other problem that customer feels is the practice of having a TV set that is perpetually on MTV or Channel V or something and something loud and jing-bang going on.....It would be much better to have some soft music.

27

Comparative Analysis-Caf Coffee Day and Barista

I) SWOT Analysis
Strength: Large Number of outlet. In house sourcing of coffee beans. Tie Ups with good companies.

Weakness: Limited Target Audience. Follow the competitor strategy. Quality of food- Stale breads. Loud and Hard Music. Improper sitting arrangement.

Opportunity: Large Untapped Market Tie-ups with other companies for promotion.

Threat: Entry of Foreign players like Georgia, Starbucks etc. Large unorganized market.

28

Comparative Analysis-Caf Coffee Day and Barista

J) Outlets Visited
I) Carter Road CCD: The Store was started store started on 12 Sept 2003. This is one of the most premiums and the biggest of the CCD outlet with the capacity of 130 seat and 25 tables spread over more than 1200 sq. feet. The location of the store has also played an important role. The store is located just opposite the beach at the Carter road, which is one of the favourite freaky places for the youngsters. The store has indoor as well as the outdoor space. Being one of the most important outlets for CCD, it also has a jukebox so that the customers are entertained and can choose the song they like to hear. CCD working hours is normally from morning 9 to 11:30 nights. However, the outlet at Carter road Working Hours are from-Morning 9 to Night 1.30 as their daytime customers mainly includes youngsters, students, and families in the late night. However the peak timings are from- 6-8, 10-11 pm. The staff members include 2 Branch Manger and 12 male employees, and 4 female employees. CCD also follows the pattern of shifts i.e. 4 staff member in the morning and 14 in the evening. Normally the footfall at the Carter Road branch are 325 / per day. However it may vary substantially during the holidays and during other occasions. The Average spend by the customer is Rs 100. The footfalls and the average spending however vary. This branch has more footfalls and also the average spending is more compared to the other stores. The outlet has Unique Machine LaMarzotco (Asconia) which itself cost approximately 5 lac Rs.

29

Comparative Analysis-Caf Coffee Day and Barista

Customer Profile:

37% lies in the age group 20 and 24 27% between the age group of 25-29 years 60% of the customers who visit the caf 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

Customer Profile Students Families

Timing 5-9pm 9-11pm

Average Money Spend Rs. 100 Rs. 200

Average Time Spend 1-2 Hr 30 min

30

Comparative Analysis-Caf Coffee Day and Barista

II) Lokhandwala CCD: The Store at Lokhandwala is also a good revenue earner for the company. The store is located just outside the Lokhandwala and situated just opposite to Barista. This store is also an important store due to the location and also the target customers. Lokhandwala is on of the most famous place for shopping. This store is not as big as that of the outlet at Carter Road. It has a sitting capacity of 95 people. This store also has indoor as well as the outdoor space but has more of the outdoor spacing. The working hours at

Lokhandwala outlet is 9 am to 12 pm. The peak timings are 7-9p.m.(Working Crowd) 10:30 p.m.- 11.30 p.m. (Families) The USP of this store is its large parking space. Customers come to the outlet after shopping from Lokhandwala to have a coffee. The music is not appropriate which makes some of the customers annoyed. The Machine used in this outlet is Asttoria, which cost around 3.5 lac.

31

Comparative Analysis-Caf Coffee Day and Barista

The store sells lot of other products like T-Shirts and cups, which also do good business. However, the goods are not properly displayed. The staff at the outlet was efficient courteous and very helpful. There is a good customer service from the staff and helps the customer in making the decisions. The staff strength is 11 and is divided into 3 shifts that include 1 store manager. Customer Profile: Foot fall- around 115 per day The average spend: Rs.125-150/customer1-3 p.m. Comprises primarily of youth from the 18-30 yrs age group Attracts a lot of people from the film industry

32

Comparative Analysis-Caf Coffee Day and Barista

A) Introduction
Barista (which means bartender in English) is an Italian coffee chain shop. Barista traces its roots back to the old coffee houses in Italy- the hotbeds of poetry, love, music, writing, revolution, and of course, fine coffee. Barista Coffee was established with the aim of identifying growth opportunities in the coffee business. Increasing disposable incomes and global trends in coffee indicate immense growth potential in this particular segment. More significantly, they have been quick to spot a latent need waiting to be tapped: Coffee lovers seek a complete experience. One that combines intelligent positioning with the right product mix and carefully designed cafes. In other words, they seek an "Experiential lifestyle brand". As one might imagine, tapping into this need requires a company that can not only deliver great coffee and espresso bars, but one with the ability to scale up operations quickly. At Barista, they have gone to great lengths to establish this. Barista started its operations with its first outlet at New Delhi in Feb 2000. The Company was promoted by Amit Judges Turner Morrison Group BARISTA Coffee Company Ltd - in which Tata Coffee Ltd holds 34.3 per cent stake Ventured into India. Barista Coffee Company Limited has been recently listed among the top 100 brands in India by Super Brands India; the Indian Division of the globally renowned Super brands ltd. Barista was selected out of 711 leading Indian brands across 98 categories. Barista has its operations spread over 153 outlets across India. At present, Barista had, he said, over 120 espresso bars and corners in the four metros and 14 cities of India, with 35 being added over the last 12 months, out of which 10 had been relocated.

34

Comparative Analysis-Caf Coffee Day and Barista

B) Barista Marketing Mix

Barista continued to maintain its focus on quality by sourcing only Arabica beans and using the best international espresso machines, supplied by the Italy-based LaCimbali. Barista was, working towards becoming the number one in terms of parameters likes brand-imagery, brand-dominance, customer-loyalty and turnover. The strategy for fulfilling its mission over the next decade would be by leveraging its strong position in the Indian market to grow further in an Asian context.

I) Product
Barista cafes also have a good number of product mixes. The menu ranges from variety of coffees and pastries. Barista also sells other items like mugs, Coffee beans, T-Shirts, Coffee Kettles. Core Product: Coffees Cakes and Pastries Coffee Beans Supporting Products: Coffee Mugs in Orange and Blue which cost Rs 55 and Rs 99 T-Shirts which cost Rs 150 Coffee and Coffee beans are also considered as the core product for Barista. The company has also tested marketed coffee beans through its outlets in Mumbai and Delhi. Barista claims that they sell a best coffee bean.

35

Comparative Analysis-Caf Coffee Day and Barista

Barista has started with a new concept by the name Barista Merchandise. Barista Merchandise is available at selected Barista espresso bars in Delhi, Mumbai, Kolkata, Chennai, Hyderabad and Bangalore. The Barista merchandise are the different types of beans that customer can take home and have the coffee of his own taste. Some of the Barista Merchandise includes The French Press Barista House Blend

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

II) Price
Barista holds the perception of being an expensive cafe. However, Barista was the first organization to start the concept of the organized cafes in India. Initially Barista started with Skimmed pricing policy. Barista segmented the market according to the income and age. Due to the entrance of new players, Barista was finding difficult to maintain the market share. First and foremost, Barista re-defined the target market customer. They even planned to change their tagline. "Where the world meets And so when company looked at this positioning and they looked at the pricing - the strategy being that if we lower the pricing. Apart from this, Barista has also introduced new low-priced beverages. The officials say these price cuts have resulted in 15-per cent walk-ins at Barista's outlets during the last few months. Barista decided to alter their strategy in order to retain their market. After studying the market, 36

Comparative Analysis-Caf Coffee Day and Barista

Barista found that competitors were fighting against them against the pricing. They decided to reduce their pricing. It was not done from a perspective of acquisition. With reduction in the prices, there had been a 47 per cent increase in footfalls over the subsequent three months. December 2003 had, seen Barista experiencing a 21 per cent per-store increase in footfalls over the previous December, with the number of footfalls for the year totalling 14 million.

III) Place
Barista started its first outlet at Bangalore and from there it has started spreading its wings especially after price reduction. Now they are even planning to focus on raising the bar of coffee experience. Barista already has presence in all the metros and has a presence in all the highly populated regions like Mumbai, Delhi, Bangalore and many more places. Barista is seeking to expand through the franchisee route model and plans to enter B-class towns in the country and middle-class localities in the metros such as North and East Delhi. By 2005-06, Barista plans to have over 300 outlets across the country up from 153.

IV) Promotion
Barista did not initially believed in any kind of promotion but in order to keep their customers interested they started building the brand by communication both within the store as well as outside the store through mass media. It under takes various promotion activities during the festival or during occasions like Valentines Day. Barista has done advertising in almost all national newspapers. Barista has launched summer campaign through 37

Comparative Analysis-Caf Coffee Day and Barista

summer chillers, and was advertised through different channels. Sony: Barista Coffee has tied up with Sony Music. Under this association, Sony Music would endorse CDs and music cassettes of their recent acts, which will be used as the lucky draw prizes for the participants. Consumers buying food, beverage and merchandise for Rs 110/-and above during specified hours of the performance, will be entitled to participate in the lucky draw. The prizes will be given away in a couple of draws during the performance.

V) Tie-Up

Barista with Taj Group: Barista Coffee, a leading coffee bar chain, has tied up with Taj group of Hotels for setting up exclusive Barista expresso bars at the Taj hotels in metro cities. The first such bar would be at the Emperor Lounge at the Taj Mahal hotel in New Delhi followed by a Barista Bar at the Sea Lounge at the Taj Mahal Hotel in Mumbai. This would be followed by similar bars at Taj Mahal hotels in Calcutta, Chennai and Bangalore. Barista also will be housed at the coffee shops of all major Taj Hotels in the country. Barista with Tata Teleservice: Barista has also tied up with Tata Teleservice. This tie-up was primarily done in order to provide consumers' access to the Internet. The objective being, today if you look at Barista consumers, a fair number of them come to Barista to discuss business over a cup of coffee. Moreover, it is easier for them to meet at Barista, discuss business and send the information across. It is going to be focused primarily on work, towards the busy executive who is 38

Comparative Analysis-Caf Coffee Day and Barista

traveling and has dropped by for coffee or the small office segment who might just want to work out of Barista.

Lacoste with Barista: Lacoste India has decided to tie-up with coffee outlet chain Barista in all the major metros and some mini-metros. The strategy is to target younger audiences, which have a penchant for the "finer things in life". The customer segment of Barista is very different from the ones who visit a regular coffee shop. Elle-18: Barista is jointly tied up with Elle 18 to promote their product. Elle-18 is launching a collection of coffee colored lipsticks and has named it after Baristas beverages! Therefore, they are working with Elle 18, which is a youthful brand. Moreover, they both will grow with this association. For Elle 18, the objective is to build a platform for their range of coffee colored lipsticks and for them, the objective is to associate with the brand and have their consumers coming in to Barista. CBC Book shop: Barista has tie-up with CBC bookshop, which has book corner at eight Barista outlets in six cities. Baristas bookshops are right inside the caf. Barista prefers best sellers and classic, besides books on management, lifestyle, sports, health, religion, children and even cookery. Some of the outlets also stock activity books, comics, CD-ROMs and crayons. Other tie-ups: Barista has tie-ups with Planet M, Crossword and the Taj group of hotels 39

Comparative Analysis-Caf Coffee Day and Barista

for setting up Espresso corners within their premises. Moreover, along with ABN Amro, Barista has introduced a concept called Ban caf - a caf in the bank premises.

C) Ambience And Surrounding

The colour shades that they have used are terracotta; it is warm - it is orange. The background has a dark Orange colour. Orange colour signifies of a style and friendly ambience of its own. In order to match the colour combination of the surrounding even the uniform of employees are orange in colour. The place invites the customers to spend time. However, the focus would, continue to be to recreate the ambience of the typical Italian neighbourhood espresso bars in India so as to provide a comfortable place for people to relax and experience the joy of coffee. The ambience of the location and the quality of coffee would, continue to be the key factors while growing the chain. It has lots of board games for any one to indulge in, like chess, word scramblers, and a guitar to pluck some chords.

40

Comparative Analysis-Caf Coffee Day and Barista

Music: The music is not too loud and encourages conversation, and the person behind the counter is non-intrusive and friendly. Barista is also planning to organize live music. Listening to live music, while sipping a warm cup of coffee, next to your beloved can make an evening a perfect memory to cherish. In order to gift its customers with this tranquilizing experience, Barista is buzzing with live music this winter spate. Barista presents 'Oceans', the music band that will perform live at various Barista outlets. Sitting Arrangement: Barista is a place for relaxes. Even in a crowded espresso bar, at Barista, one will have his share of privacy. The seats are arranged at a certain distance to have a privacy of talks as their major customers come there to discuss the business or to relax and chat.

D) International Presence
The company operates over 130 coffee joints including four in Dubai and Colombo. Barista had chalked out aggressive strategies for expansions into Europe and West Asia. Barista has already started its operation in both Sri Lanka and Dubai and doing very well. They are talking terms with a few potential partners in Kuwait. Barista owns and manages all its outlets in India but operates through franchisees in other countries.

E) Future Strategy
The management at the Barista outlets thinks that their positioning is very different from that of CCD. They think that the people going to CCD are young 41

Comparative Analysis-Caf Coffee Day and Barista

college students. The target audience for the Barista are young managers and middle level mangers and also family. However there is a treat to them in terms of the share of the young college going crowd, which forms a main target audience for the CCD and comparatively small part for Barista. In order to maintain the share the managers of Barista thinks that they would need to increase their presence and also have to tap the other untapped market. The company is also planning to tie-up with other companies in order to increase the promotion activities that would keep the crowd interesting. They also are planning to organize the festivals of the college or sponsor prizes in the festival. Increase in outlet: As part of its marketing strategy, the company is planning to promote international coffee blends first through 40 Barista stores in Mumbai, Delhi and Bangalore. With the move, the company also hopes to expand the number of Barista Espresso Bars on an average rate of two to three per month as well. International expansion: Barista is also looking for the international expansion. They are planning to expand in the Kuwait market. Barista is also planning to expand its presence in the other Asian countries like Sri Lanka, Dubai. Promotional Activity: As part of its marketing strategy, Barista Coffee Company Ltd is planning to launch a host of consumer promotions at its outlets in 2004. For the purpose, the company is currently in talks with many entertainment, consumer goods and music companies, which include the US-based Bose Corporation, Swatch and International Travel House.

42

Comparative Analysis-Caf Coffee Day and Barista

Improvement in the Services: Initially Barista had a system of self-serving. Indian consumers are not comfortable with this concept. However in some of the outlets they have started serving the customers. Informative Staff: The staff should be qualified as they will be dealing with intelligent people. The staff should be friendly but should not try to educate the customer who is already aware of the things.

F) Its All In The Mind

Barista is a place where the world meets. People come to Barista to have a meet or to relax. A lot of them actually come alone as well. This is actually one of those places with people coming in alone because they are comfortable with themselves. It is a place where people are meeting each other in an environment, which is fulfilling social and intellectual needs. The employees at the Barista are also energetic. They help the customer in making decisions for their purchase. Some of the customers at the Barista think that they should be personally served rather than selfserving. When the person wants to orders for some thing customer has to go to the counter order the requirements, pay bill and the employee takes the name of the customer. When ever the order gets ready the employee shouts on the top of the voice calling for the customer to take the order. This actually unpleased the customer as the customer gets disturbed every time the employee calls for some person. Product:

43

Comparative Analysis-Caf Coffee Day and Barista

During the time of discussion I found two types of customers, one who visits regularly and other who visits rarely. The customers who come rarely are not actually the coffee lovers. They just come there to do some time pass. They have no complains about the product. But the customers who are coffee lovers are not satisfied by the product they serve. There are some customers who actually complain about the quality of the product. Coffees are not really that good. The bread is dry; the amount of filling has reduced in quantity etc. Their desserts fortunately have not suffered and are still pretty good. Customers not only come there to have a coffee or have a sandwich. They actually come there to have an experience. They find prestigious when they visit to the Barista. As major target audience are youths, young managers and middle level management people who come to discuss their business. The young students visit there as they feel the sense of maturity. The people who are status oriented would prefer visiting Barista rather than CCD. Their targets are youth, young executives and nucleus families. Barista also claims that intelligent people come here Someone who is intelligent and appreciates the good things in life. claim by Barista. There are many customers who come there, as they perceive themselves as intelligent people. For business people toting Laptops they can hook up to the net free of cost or catch up on the news business magazines and newspapers are available at every outlet. They also come to Barista, as its a good relaxing place where they can discuss about their clients. There are people who also come alone. They find Barista is the place where they can just have a coffee and think deep, as there is no one to disturb them. 44

Comparative Analysis-Caf Coffee Day and Barista

G) SWOT Analysis
Strength: Claim to sell the best coffee Large Number of outlet In house sourcing of coffee beans Espresso-Highest selling coffee

Weakness: Expensive coffee Self service for the customers Quality of food- Stale breads

Opportunity: Large Untapped Market Tie-ups with other companies for promotion

Threat: Entry of Foreign players like Georgia, Starbucks etc Large unorganized market

45

Comparative Analysis-Caf Coffee Day and Barista

H) About the Visit

I) Barista at Bandra The outlet at Bandra has a capacity of 48 with 16 circular tables and 2 side tables. The approximately area of the store is 800 sq.ft. The outlet is very big as the other outlet of the Barista. This outlet being at a very busy area, there is for to no the sit ambience customers

outside. Even the parking space is not sufficient. As the outlet is located at one of the busier area of Bandra, the working time for this outlet is from 9 in the morning to 1.30 in the night. However the outlet is located just opposite the National College, the peak time is during the afternoon dominated by students who are small spenders, shoppers & young executives in the evening and families in the night who are more than average spenders frequent in evenings & night. They come to Barista to relax and discuss about their business. The outlet has the staff capacity of 9 out of which 2 people stay from morning to evening. Footfall varies form 250-300 per day; however it varies widely during the festival time. The average spend per customer is Rs.120 per customer.

46

Comparative Analysis-Caf Coffee Day and Barista

Customer Profile: Customer Profile Students Average Money Spend Rs. 0 - 50

Timing

Average Time Spend 0.5 - 2 hrs

10 am-9pm

Executives Sales:

7 pm-12pm

Rs. 180

30 - 45 min

Only 35 % sales revenue is from foodstuff Balance from coffee and other beverages II) Barista at Santacruz

The Santacruz outlet has the capacity of 48 people with 14 circular tables and 2 side tables. The size is 1000 sq. ft.appox. The outlet is located at the residential place. Majority of the customers are corporate and families. The working hours are from 9 am to 12.30 am, however the peak timings are from 6 to 11. The total staff strength is 7 during the week days and 8 during weekends. The outlet is not the biggest contributor as it is located at a residential area and even the footfall is very less compared to that of the other stores (100 customers). The average spent per customer is also low i.e. 60-70 Rs a visit. The machine used by them are One M31 Dosatron by La Cimbali (operates 47

Comparative Analysis-Caf Coffee Day and Barista

from 9 am to 1:30 am) and one slush machine Hugoleni by Hugo Leni. The outlet has Guitar (not properly maintained) and chess & scrabble boards for entertainment.

Customer Profile:

Customer Profile Students Executives / Families

Timing
10 am-9pm

Average Money Spend Rs. 0 - 50

Average Time Spend 0.5 1.5 hrs

7 pm-12pm

Rs. 140

30 - 45 min

Sales: 40 % spend on food stuff / 60 % on beverages Sales revenues approx. Rs 7000 / day

48

Comparative Analysis-Caf Coffee Day and Barista

7) Effects of foreign Players

The potential of growth in liquid coffee retailing is huge as coffee consumption in the country is considerably low. In the North, coffee consumption is eight grams per persons as compared to 40 gm in the South. After attempts by Barista, Coffee Day and Qwicky's to provide Indian consumers the foreign players have finally decide to enter Indian markets. Caf Coffee Day and Barista dominate Indian caf market. The entry of foreign player is a treat for these players to maintain their market share. The foreign player would also target the similar segment of target market thus causing the problem for the local players. customers. I) StarBucks There is a tendency of Indian customers to visit once and if they get satisfied than they turn to be loyal

49

Comparative Analysis-Caf Coffee Day and Barista

Starbucks is one of the fastest growing brands in the world, after entrepreneur Howard Schultz bought the chain 15 years ago. Starbucks Coffee - with its 5,689 outlets in 28 countries - has grown in sales at an average of 20% annually to $2.6bn in '02. The Starbucks Corporation is reviving its plans for entering India. The

company is expected to actively scout for prime real estate in metro markets in the next few months, and plans to open its first store in the next 12-14 months. Starbucks has identified Delhi, Mumbai, and Chennai as the potential entry points for the chain in India. Starbucks is presently working on the franchisee model. The Starbucks target audience is the hip, urban, on-the-go caffeine addict, and the chain that originated in Seattle has got mega-plans for India. Starbucks has pinpointed high-potential localities like a few in South Mumbai and Bandra. In keeping with its international strategy, Starbucks will only open shop in the best of prime locations. The company's practice is to acquire real estate at a premium over market price, in order to squeeze out competition, and it is planning to do the same in India. II) Georgia Coca-Cola India found a good market for the hot beverages. They announced the launch of low-price ready-to-drink coffee and tea in a bid to capture a larger share of the domestic beverages market. The drinks will be marketed under the brand name Georgia and sold through a large number of retail outlets all over India. According to them, it is time to take the product from the class market to the mass market. Hot tea and coffee form the biggest combination in India's burgeoning beverage market. Georgia has launched two types of cafes, one where normal tea and coffees will be sold and would be priced at 3 4 Rs per cup; the other is Georgia Gold, which is for the premium segment. Georgia Gold has also merged with Mc-Donalds. 50

Comparative Analysis-Caf Coffee Day and Barista

More and More foreign players would enter into this segment. The company will have to differentiate their product from the others in terms of price, flavour, ambience and also target audience.

8) Suggestions and Recommendation

Pricing: Indian consumers are highly price sensitive. Pricing will play very important role. In order to sustain the competition it will be very important to have a proper pricing strategy in place. Over pricing the products would actually limit the scope of target audience. While under pricing would actually degrade their brand value. In either of the cases there will be a loss for the company, as they will loose their customers. Promotion and Advertising: Promotions have a deep impact on the Indian consumers. The consumers would also increase their consumption to take the advantage of the promotion schemes. Promotion should be design properly to keep the target customer interested. The promotion should not degrade the value of brand. The company also needs to tie up with other companies whose target audience match with theirs Like CCD with Levis, Barista with Archies etc. Merchandising: Indian consumers likes having more choice of before they actually make their selection of buying. Different type of coffees and food items need to be introduced in order to provide customers with more choice. Even new flavours of coffee beans should be introduced. Expansion: Each and every player wants to have a wider expansion in order to have more 51

Comparative Analysis-Caf Coffee Day and Barista

reached. The companies should open the outlets only where they find the potential. They should conduct detail study before taking a decision for opening an outlet. For e.g. CCD follows the strategy of following the competition. They open the outlet wherever Barista opens it. This has proved successful. This is a big risk as opening an outlet requires huge investment and it may result in a huge loss.

52

Comparative Analysis-Caf Coffee Day and Barista

9) Conclusion
Taking its inspiration from Italian corner coffee bars and the US coffee
chain Starbucks, Barista and other Indian chains are also trying to educate customers about the virtues and finer points to coffee drinking. Consumers are converging; they are thinking alike, they are aspiring for similar products. Tea drinking nations like Britain and Japan have been converted to coffee drinking, and Indian consumers are seeking similar lifestyles. Corner bars like these are offering more than just coffee and snacks to their customers. For many of their regular patrons, a visit to these bars is also a part of the western lifestyle they so much want to identify with. However, as tea and coffee battle it out in big city restaurants and bars, the most significant volume of tea is drunk by villagers in small shacks along the roadside. As long as these roadside stalls continue to do thriving business, tea will have a safe future in India. Indian Market is slowly getting converted into organized market. Many players would be coming and would be fighting for their share. As India being a major consumption of hot beverages, it would be interesting to keep the track of what actually transpires in the market in the near future. When both CCD and Barista started business they did face a bit of a difficulty, as the Indian market had been dominated by tea-drinkers till that time. When such caf were launched, people had to be educated about the different types of coffee, as no one knew the distinctions between a latte, cappuccino or frappe! So it took time for Indians to develop a taste for the different flavours. CCD and Barista are in one business but their strategies are very different. 53

Comparative Analysis-Caf Coffee Day and Barista

Both are targeting to different class of audience but they are competing with each other. Barista form very beginning has target to classes and not masses. It is a premium class brand. But now they are changing their strategy and they are planning to target masses but still upper class and in terms of prices they are not at par with CCD. CCD is a price warrior for Barista. CCD has set up at least half a dozen outlets in Delhi and Mumbai, right next door to barista and is hoping to lure baristas customers with a cheaper menu. And may be because of this Barista has suffered huge losses in the year 2002. Among 153 outlets, close to 40 make huge losses and another 10-20 barely break-even. The reason being, they were growing at a very fast rate. At present their all outlets are owned and they have now decided to move to a franchising model to cut capital expenditure. If one look at the pricing aspect CCD is cheaper and better but if one wants high quality and does not mind paying little more for that, then Barista is just the right choice. In India the market is huge and there is space for everyone as long as one is focused on a particular segment and caters to it. And if one live up to the promises one make, give good quality coffee at an affordable price and provide excitement to their respective customers then there is no competition at all!

54

Comparative Analysis-Caf Coffee Day and Barista

10) Bibliography
Books, Newspapers, Magazines: Philip Kotler, Marketing Management, 11th Edition Retail Biz N.Kumar, Marketing Management, 1st Edition Business Line Business today

Web sites: www.retailyatra.com www.indiainfoline.com www.cafecoffeeday.com www.agencyfaqs.com www.barista.co.in www.barista.com www.google.com

55