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.

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CHAPTER 1 INTRODUCTION
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 family-owned 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
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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 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
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Supply Chain Management Inventory Management 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.

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
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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. 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
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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.

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.

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Coffee pubs and cafes mushroom throughout India, with vending machines also on the rise. Over the review period, there was a mushrooming of coffee 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.

The Coffee Caf Industry

The Coffee Caf industry is currently one of the biggest and fastest growing sectors in business. The industry consists of a mix of individual cafs, hotel cafs and retail caf chains. Individual Cafs: The main bulk of revenue is earned by small, individual cafs, run mostly by families and friends. It is a relatively unorganized sector. There are millions of such cafs around the world, and they provide customers with a homely, casual experience. The bulk of these cafs are mainly in Europe, where every little town or village has local cafs, where people gather together for a conversation over coffee, or just to be alone with their thoughts. These cafs have been the birthplace and sanctuary for various creative minds, revolutionaries and thinkers of our time. The most recent example is the author J.K. Rowling, who has written most of the Harry Potter series of books, sitting at her local caf. These cafs set themselves apart from retail chain cafs and hotel cafs because they provide customers with a homely, classic appeal, which cannot be emulated. Hotel Cafs : Ever since the popularization of coffee, hotels all over the world opening 24-hour coffee shops where visitors to the hotel could walk in for a cup of coffee and some food at any time. These coffeehouses are extremely important, because they provide international visitors to the hotel with a universal drink- coffee. Any customer
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can walk into any major hotel in the world, and enter the coffeehouse, and know what to expect. These cafs are not really major players in the coffee caf industry, but rather provide supplementary services to the hotel industry.

Retail Caf Chains: The last, and the most organized sector in the coffee caf industry, is the retail caf chain. 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 vast popularity of these retail chains is shown in the rapid international growth of brands like Starbucks. Customers can do to any Starbucks across the world and know exactly what to expect. The main focus of my project is on two nationally recognized retail caf chains: Barista & Caf Coffee Day. Growth of Caf Industr y in Indi a 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 supplements it with Tiffin also. The vintage location of the mess attracts huge crowds even today early in the mornings, Coffee however was not the only item on the menu. These places also served food and
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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- end customers. This showed the popularization of coffee cafs, to all sections of society. The drink has now become more of a concept than merely a drink itself. The last decade witnesses the growth of numerous coffee pubs in the country. A number of coffee caf owners tried to westernize the taste in contrast to the filter coffee. Now, large retail chains like Qwikys, Barista, and Caf Coffee Day have opened up around the country. The concept of a caf today is not merely about selling coffee, but about developing a national brand. Retail cafs now form a multi- crore industry in the country, and have huge potential for growth locally, and internationally. These cafs form the main focus of this project.

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CHAPTER 2 STUDY ON BARISTA

Introduction: Barista coffee was establishes in 1999 with the aim of identifying growth opportunities in the coffee business. Increasing disposable incomes and global trends in coffee indicate immense growth potential in one particular segment. More significantly, they believe they have been quick to spot a latent need waiting to be trapped; Coffee lovers seek acomplete experience. One that combines intelligent positioning with the right product mix and carefully designed cafs.In other words, customers seek an experiential lifestyle brand. As of today, Barista exists in over 22 cities, and operates over 140 outlets nationally. In the last 2 years, Barista has opened over 100 outlets in the country and with a new outlet opening nationally every 14 dates; Barista is currently experiencing phenomenal growth .With outlets opening in Sri Lanka and Dubai, Barista is looking at potential growth opportunities in Asia, making it highly competitive international brand.

Corporate Profile Back ground, Market Entry & Growth : Barista coffee was establishes in 1999 with the aim of identifying growth opportunities in the coffee business. Increasing disposable incomes and global trends in coffee indicate immense growth potential in one particular segment. More significantly, they believe they have been quick to spot a latent need waiting to be trapped: Coffee lovers seek a complete experience.One that combines intelligent positioning with the right product mix and carefully designed cafs. In other words, customers seek an experiential lifestyle brand.

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The Barista Caf Logo As of today, Barista exists in over 22 cities, and operates over 140 outlets nationally. In the last 2 years, Barista has opened over 100 outlets in the country and with a new outlet opening nationally every 14 dates, Barista is currently experiencing phenomenal growth. With outlets opening in Sri Lanka and Dubai, Barista is looking at potential growth opportunities in Asia, making it highly competitive international brand.

Product Sources: Barista sources its coffee beans from around the world, but a major supplier is TATA Coffee, part of the TATA Group that owns a large stake- holding in Barista. These coffees beans are then sent to Venice, Italy where they are roasted into a blend exclusively for Barista. The food and desserts at Barista is exclusively catered to by the Taj, who ensures a high standard of quality with all its products. Barista also sells merchandise through its store, all of which is imported. The merchandise accounts for nearly 1/6 th of Baristas overall sale. Quality Sources: Barista has a check on the quality of its products every 14 days. Barista also incorporates TQM at its headquarters in Delhi. Since Delhi is the base for all its distribution, quality control measures are adopted there to avoid any poor quality products being distributed. 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 Baristas main product categories is detailed below: Product Serving Size Hot Coffee (2 kinds) 240 ml/ 300 ml
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Cold Coffee 340 ml Smoothies 300 ml Granitas 340 ml

Merchandising: Barista sells various kinds of merchandise through its stores. 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. The table details the different merchandising products. Merchandise Tiramisu Flavors Coffee Mugs Blue Curacao Barista French Press Barista Coffee Beans

Pricing : Barista has a Skim Pricing Policy. They began with a higher price, and skimmed the cream for the market. With the sudden spurt of growth in number of outlets, came the benefits of economies of scale. Because of this, they have been able to gradually lower their prices, and appeal to different segments of their target market. Currently, their prices are the lowest they have ever been, and they can competitively match their prices against Caf Coffee Days prices. The prices are constantly changing though, and the last 1 -year has seen 3 changes (mostly reductions) in prices. This gradual price reduction meant that
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Barista could maintain its profit- maximization policy until it could earn large cost savings because of the benefits of high volume. The main factors that affect their pricing are their cost of goods sold. The costs are quite high because imports a majority of its products and product- sources.

Process: The order and delivery process at Barista is based on self- service, where a customer goes up to the counter to place his order, and goes back to the counter to pick his delivery once it is prepared. Positioning: Consumer Profile: According to research, over 65% of Baristas customers are in the 15- 30 age- group. The majority of these are students and young urban professionals. Brand Image: Barista positions itself as a brand for anyone who loves coffee. Their products, services and outlets are more like the traditional European cafs, where people would meet for the love of coffee, and for an intellectual appealing time. They position their outlets as a place where the world meets, and they look to appeal to anyone in the 14- 60 age group that loves good coffee and looks for a nice quiet time. Brand Value Pyramid The Brand value pyramid helps to evaluate Barista brand and helps us to understandit better from the customers point of view. It involves three parts which are explained below. Beliefs and values
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These are beliefs and values which the customer associates with a particular brand.In case of Barista, the customer believes it be a place to relax and hang out withfriends. It is an informal and casual place. It provides a different experience of having coffee in a relaxed setting outside home

Benefits

Quality coffee Variety of food Good Experience Lifestyle Quality staff service Features

Wide variety of coffee and food products Books Game Wi-Fi MerchandiseThe Brand Value Pyramid best demonstrates the power of a brand. Barista brand has been studied here using the brand value pyramid.

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EVALUATION OF MARKETING STRATEGIES OF BARISTACOFFEE PARLOUR

Product The core product offered by Barista is coffee. Their menus also consist of traditional favorites like cappuccino, espresso, iced mocha and other varieties of coffee and tea, juices and other beverages, sandwiches etc and variety of desserts, breads like paninis, ciabattas and French baguettes. It is surrounded by warmth, good taste, good aroma and the ambience of place. It serves not only coffee but also an experience. Now Barista even offers branded merchandise like caps, T-shirts, coffee mugs and other coffee paraphernalia. It gives the customers a very interactive social environment by providing newspapers, magazines, a guitar, games and television on, music playing as well as message boards to pen down your thoughts. Some stores also have an outlet of Corner Bookstore (they joined hands in November 2003)which sells all varieties of books. This year, Barista has launched Swiss Hot chocolate, sundaes in two flavors, frozen Swiss chocolate, pastas and rolls, chilly cheese toasts, a new range of sandwiches with wafers besides a health range of sandwiches-slimmerss choice with brown bread and low fat option. In another change, Barista is diversifying its hot beverages menu and introducing several speciality teas. It has introduced Wi-fi services where executives and students canaccess the internet from any of the numerous access points. It plans to introducemusic downloads next. Brotin Banerjee, marketing head Barista coffee company says delighting the customer is our USP (unique selling proposition). Baristas product mix constitutes a wide range of products that appeal primarily to traditional coffee lovers. Their products themselves are traditional products with traditional names. Food items like croissant, pastas, and sandwiches are complimentary to their coffee, and project a very classic image of Barista. Their merchandising also consists of primarily coffee related products like coffee beans, coffee machines, etc 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,
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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. 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 BlendBarista 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 tea-consuming areas, and this step is expected to help the company expand its client base in the smaller towns of these regions. Pricing The pricing of Barista beverages is quite high as unique brands often command higher
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prices. It is much highly priced than its competitors, with the starting price of coffee at Rs.35 going on till Rs.100, whereas, Caf Coffee Days price ranging between Rs .28 to Rs.60 and whereas Qwikys starts low at Rs.15 going on tillRs.60.Now it has started revising its prices. Recently, Barista cut prices of nearly all items in its menu card by 25 per cent. Now, a cup of standard cappuccino coffee cup at Barista is available for Rs 30, down from Rs 40 earlier, while cold coffee Frappeis available for Rs 40 per cup against Rs 55 earlier. Also Classic cold coffee is now cheaper by Rs 12 at Rs 33 a cup. Apart from this, Barista has also introduced new low-priced beverages. 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, 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 totaling 14 million.

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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. Barista looks to cater to their target market with strategically located outlets. Their outlets are generally located at High Street/ Family Entertainment Centers. Considering their generic appeal, there are Barista outlets in and around Malls, Cinemas, Colleges, and Offices etc. this endorses their brand image of a caf that appeals to coffee lovers of all ages. People: The people at Barista are characteristically trained to be Pleasant, Polite and Positive. They ensure you have a quiet, uninterrupted visit and provide an escape from the daily pressures of life. Their uniforms are in sober shades of brown and orange, and contribute to the overall laid-back feeling of the caf. Physical Evidence : a) Logo, Colors, Images: Barista, since the beginning has looked to use colors in its caf interiors, logos and images; to project a warm, earth glow, synonymous with coffee. Barista uses shades of Orange & Brown to good effect to promote its laid- back atmosphere. The logo is a combination of Brown, Orange and Light Yellow; with the word Barista written in an upward curve, and the word Coffee underneath. A simple logo that perfectly expresses Baristas brand image: A traditional caf for coffee lovers.
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b) Dcor and Architecture: Baristas internal dcor and architecture expresses the simplicity you would normally associate with traditional cafs. The furniture is made of light shades of wood, and there are comfortable sofas in bigger cafs. The walls are shades of orange, with various photographs of the love for coffee spread around each outlet. c) Literature: The literature provided by Barista is indicative of its brand image. The menus, posters, pamphlets are all traditionally designed, with a classic and simple look. One aspect of particular note is their magazine, which is privately circulated in the cafs. The magazine encourages customers write, draw, make etc anything creative; and this is then published in the magazine. The magazine not only provides an avenue for advertising, but also an opportunity for Barista to express its brand image. Promotions : Barista currently carries out mass promotion campaigns. This is mainly in the form of promotions in the Press, TV and Radio Medias. At present, they do not rely heavily on advertising, but rely more on sponsorships and strategic alliances with other corporations. Barista also takes part in various sales promotion activities to help increase sales at their outlets. a) Sponsorships: Barista sponsors various events and festivals, which provides them valuable promotion directed at strategic markets. The sponsorships are mainly in kind, although major events are sponsored in cash also. b) Collaborations : Barista has entered into special collaborations and alliances with various partners for comarketing brands. For example, Barista entered into a deal with Leo Mattel toys to
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provide the popular board game Scrabble at every Barista outlet across the country. This is an ideal alliance for both the organizations, because it provides Leo Mattel with an important avenue for promoting their product, and it provides Baristas customers an added attraction for spending more time at Barista outlets. Barista has also entered into partnerships with various movies, for promotions through Barista, and recently, they tied up with Star World for its Absolutely Everybody campaign. 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 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. Sales Promotion: Barista uses a special Barista Coffee Card for its sales promotion activities. Barista Coffee Card entitles you to one complimentary hot beverage when you are done sipping seven. It is available to all Barista coffee regulars. No membership fees, no references required. Fill out the card and you are a member. As a Coffee Card holder, you earn one stamp on the card every time you purchase a beverage. Simply present the card to the cashier when you place your order at any of their outlets. Once you have collected seven stamps, you can hand over the card to receive your complimentary hot beverage. Barista hopes this card can help drive sales growth, and increase customer retention. Distribution: Distribution of out lets

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Every Barista outlet is owned by the company, and not franchised out to anyone. Barista can thus control and make quick changes to its entire retail chain. Barista currently operates in over 120 outlets all over the country, and at their current rate, they are opening a new outlet approximately every 10 days. They have a market presence in over 20 cities. Mumbai alone has over 30 outlets, and the number of outlets in the city is increasing at a phenomenal pace. Barista has a thumb rule for selecting cities and locations for the distribution of outlets. Locat ion: this is a prime factor in determining the success of a retail chain. However, Barista Coffee has adopted a top down approach, wherein they first identify the cities and then decide on precise locations within its limits. Selecting a city : Barista has devoted substantial management timeand effort in zeroing in on the cities where they are now situated. The selection of the cities was based on the following criteria. Sizeable population of executives, students and families in SEC A &

Barista category; High disposable income with people looking for new vistas in leisure and lifestyle oriented concepts; High level or organized retail activity; Rapid socio- economic development; Level of commercial importance (Industrial cities, state capitals etc.) Number of educational establishments and opportunities available for employment. On the basis of the above criteria, they had initially targeted cities like Delhi, Mumbai, Bangalore, Chennai and Hyderabad. Chandigarh and Ludhiana were later added due to tie- ups with Planet M and Ebony to set up store-in- stores at their outlets. They are also pursuing an equally aggressive international business expansion strategy. They have over 50 overseas locations presently under their consideration. They have already done their groundwork in terms of getting brand and name registrations in over 30 of these locations. To facilitate their global expansion, they plan to work with strategic partners, who share the same vision of expanding and promoting the brand worldwide. Currently they have opened new outlets in Sri Lanka and Dubai as a part of their international strategy.

Distribution of Stock The distribution of stock at Barista begins from the coffee beans being sent abroad for roasting. The roasting takes place in Venice, and the beans are then supplied to the main warehouse in Delhi. Stock is then distributed to the various Regional Warehouses, and then to the local Warehouses. The outlets get their stock from the Local Warehouses. Barista uses a Re-Order Level system for the distribution of their stock. Barista out sources its transportation needs from external organizations, and currently uses trucks as the preferred means of distribution.

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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 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. 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.

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CHAPTER 3 STUDY ON CAF COFFEE DAY

COMPANYS BACKGROUND A lot can happen over coffee Cafe Coffee Day is owned by the ABCTCL, which is the largest producer of Arabica Coffee in Asia. Started in 1996 by VG Siddarth, CCD pioneered the cafe concept in India. By 2000, the company had just 14 outlets in six cities. Then the company started on a massive expansion program that has seen it set up nearly 1000 outlets in India in ten years. It also has shops in Vienna and Karachi and has plans to expand to other overseas destinations. CCD today has become the largest youth aggregator, and from a marketing stand point, the success has come by focusing on the 3As: Accessibility, Affordability and Acceptability.- Bidisha Nagaraj, the Marketing president of Cafe Coffee Day. Although demographically, a typical consumer would be male or female between 15-29 years of age, belonging to middle or upper middle class, we call our consumers young or young at heart. We are about juke boxes, good and affordable coffee and food. The brand fit is with youth or the young at heart. So we often look out for brands that are aspirational in nature. Sudipta Sen Gupta, Marketing head, Caf Coffee Day. Coffee Day sources coffee from 5000 acres of coffee estates, the 2nd largest in Asia, that is owned by a sister concern and from 11,000 small growers. It is one of Indias leading coffee exporters with clients across USA, Europe & Japan. With its roots in the golden soil of Chickmaglur, the home of some of the best Indian Coffees and with the vision of a true entrepreneur nurturing it, Coffee Day has its business spanning the entire value chain of coffee consumption in India. Its different divisions include: Coffee Day Fresh n Ground (which owns 350 Coffee bean and powder retail outlets), Coffee Day Xpress (which owns 251 Coffee Day Kiosk), Coffee Day Take away (which owns 7000 Vending Machines), Coffee Day Exports and Coffee Day Perfect (FMCG Packaged Coffee) division. Caf Coffee Day (CCD) pioneered the caf concept in India in 1996 by opening its first caf at Brigade Road in Bangalore. Till about the late 1990s coffee drinking in India was restricted to the intellectual, the South Indian traditionalist and the five star coffee shop visitor. As the pure (as opposed to instant coffee) coffee caf culture in neighboring international markets grew, the need for a relaxed and fun hangout for the emerging urban youth in the country was clearly seen.

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Recognizing the potential that lay ahead on the horizon, Caf Coffee Day embarked on a dynamic journey to become a large organized retail caf chain with a distinct brand identity of its own. From a handful of cafs in six cites in the first 5 years, CCD has become Indias largest and premier retail chain of cafes with 251 cafes in 58 cities around the country. Cafe Coffee Day introduced the cafe culture in India with its first cafe at Brigade Road in Bangalore in 1996.There has been no looking back for their company from then till now, in fact they have grown from strength to strength. Cafe Coffee day is the regular meeting place for 18 to 35 year olds, both male and female, who are waited on by friendly and informed staff, and are offered the best made, hot or cold , in an invigorating ambience. They provide invigorating ambience and excellent customer service clubbed with excellent coffee to their customers. Each cafe depending upon its size attracts between 400 to 800 customers daily.

The following are ABCTCL 6 divisions:

1. Exports - India's largest coffee exporters. Currently export over 30000 tonnes of green coffee per annum, i.e 15% of India's coffee exports. They have also ventured into specialty coffee exports. 2. Coffee Day Fresh and Ground- Major player in the roast & ground filter coffee segment. It provides a unique assortment of blends at affordable prices. The coffee is freshly ground in front of the customer and sold to him. 3. Cafe Coffee Day - It is a place where customers come and rejuvenate themselves. It is a meeting place for the young and the young at heart. In the caf Hot and Cold coffee as well as merchandise are sold to the customers. 4. Coffee Day Vending To serve the man on the move who though hurry does not have to compromise on quality of coffee he drinks. Coffee Day has its vending machine placed in vendor outlets in major cities. 5. Coffee Day Express Bridges the need gap between the leisurely cuppa and the bite at the caf and a quick drink at the vending point. In this segment you would notice kiosks strategically positioned where a customer can not only drink coffee but also grab a quick bite on the move.
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6. Coffee Day 'Perfect'- For mass-in-home consumption section where filter coffee is consumed everyday. The filter coffee is sold in packaged form to the customers.

Key Features: 125 years of coffee growing history A fully equipped ISO certified roasting plant with a 70000 tonnes per annum capacity at Hassan 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

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 the 1529 year age bracket Each caf, depending upon its size attracts between 400 and 800 customers daily
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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

POSITIONING Caf Coffee Day, at its inception in 1996 was the vanguard of a caf culture in India. At a time when the country was growing well economically and young India enjoyed higher spending power, CCD as it is popularly known, started to set up the first retail chain of coffee bars. It broke new ground in 1999 when the entire market grew phenomenally with the entry of new players. From the beginning, it positioned itself as being a coffee bar and has maintained that positioning for a long time now. For a consumer, CCD represents a fun place where one can go with a whole bunch of friends at any time of the day and have a good time, over coffee. In 2002, Caf Coffee Day underwent a rebranding exercise through a change in its logo. The earlier logo was a simple red square with a white streak running across, and Coffee Day written at the bottom. At this stage, CCD was still perceived as a South Indian coffee joint similar to the Coffee House in Kolkata, a place where intellectuals meet and spend their time discussing issues. CCD saw a latent market in youngsters, who were increasingly looking for a place to spend time with friends and have fun. It then created an umbrella mother brand, Coffee Day and four subbrands to represent the various activities. The logo then incorporated red, white and green colours, a larger font and emphasis on the word Caf. According to the company, red signifies leadership and passion and the white swirl stands for purity of purpose and the feel of coffee. The new colour green endorsed the long heritage of CCD in growing coffee. Caf Coffee Day is known to experiment with different caf formats. They have been: Music cafs Books cafs
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Highway cafs Lounge cafs Garden cafs Cyber cafs

The most recent addition has been lounge cafes. These cater to a more niche segment than the general consumer segment of CCD. The age group of 20-29 would be more able to afford a lounge setting than the group of 15-19.

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ADVERTISING, SALES PROMOTION AND SEGMENTATION STRATEGY

Caf Coffee Day does not look at mass media as a viable area of advertising or marketing spend. CCD is advertised through barter deals with other brands for ground events BELOW-THE-LINE ACTIVITIES: 2003- Levis launched a new range of Low Rise jeans through a campaign called 6 below. CCD displayed POPs of Levis in all its outlets during the campaign. 2004- The launch of Liril Orange soap by HLL was conducted in Caf Coffee Day. 2008- TVS Scooty tied up with CCD for events in the coffee bars and at malls on Valentines Day in February. 2011- CCD was the official ground partner for the Channel V Get Gorgeous contest IN-FILM ADVERTISEMENTS: Some Telegu and Tamil films with prominent brand placement Hindi films- It started with Bas Yun Hi and then conscious advertisement decisions were made for Khakee, Main Hoon Na, Kyun Ho Gaya Na and Mujhse Shaadi Karoge. All these movies were targeted at young movie-goers, teenagers and people looking for light-hearted entertainment. These are much the same kind of people who are likely to visit Caf Coffee Day. Serials like Kahani Ghar Ghar Kii, but there are no important tie-ups with such entities.

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SALES PROMOTIONS: Merchandising-

Every CCD stocks merchandise ranging from coffee mugs, Tshirts,caps, bags, coffee filters, mints, different flavours of coffee powders, tea and cream, wafers and biscottis. It also merchandises promotional materials for other brands it associates with. When some brands are conducting events for which passes are distributed or movie premiere tickets are given out, CCD is an important hub for these activities as most of the target market. CCDs Guide to Active Holidays-

It is a travel guide focusing on adventure sports and is available in the CCD outlets, for people seeking escapade from monotonous life. Caf Beat- An in-

House magazine which gives the entire low-down on whats happening in CCD outlets across the world. It describes experiences of customers, celebrations in CCDs, and covers youth-centric topics like movies, music, travel, lifestyle, e-dating, books and careers. Around 38% of CCD goers read Caf Beat and some carry it back with them. CCD Tie up-

CCD has tied up with WorldSpace and Microsense to provide satellite connectivity in its outlets. SEGMENTATION STRATEGY: Caf Coffee Day has its main consumer base in the age group of 15-29 years. Its customers are mainly middle class and upper middle class youth who are upwardly mobile. From the market, CCD seeks to target not just the youth but anyone who is young at heart. More than 10% of their customers are above 35 years of age. The evidence of the connect CCD has been able to make, particularly among the youth, comes
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from the findings of Brand Equity's Most Trusted Brands 2008 survey. In the food services category, CCD ranks No 2, while McDonalds stands at No. 3 and Barista lags at No 5. The graph below indicates official figures for the type of consumers of CCD. We can clearly see that its most profitable segment is the 20-24 age brackets. Thesecustomers can afford to visit CCD on a regular basis and have a habit-forming attitude towards CCD.

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

Supportive Products: Funky Caps @ Rs 60 onwards Cool T-Shirts @ Rs 175 onwards Bags @ Rs 160 onwards Mugs @ Rs 60 onwards Coffee Filters @ Rs 95

Coffee Powders: Arabica @ Rs 43

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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 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 100125. 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
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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 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.

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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 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

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The current promotion is done with the Oyester Bay Jewellery for the womans day. CCD has arranged the contest, which is arranged for the 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, non-fiction, religion, cookery, management, lifestyle, art & craft, children books and 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.

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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 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. E) Ambience and Surrounding
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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. 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. 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
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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. 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
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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 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.

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CUSTOMER SURVEY AND COMPARATIVE STUDY

Carter Road CCD: The Store was started store started on 10 FEB 2013. 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. 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
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52% of customers who visit the cafes are students

18% of the customers visit the cafes daily while another 44% visit weekly

Customer Profile

Timing
5-9pm

Average Money Spend Rs. 100

Average Time Spend

1-2 Hr

Students

Families

9-11pm

Rs. 200

30 min

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.

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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. 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

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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 no ambience for the customers to sit 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.

Customer Profile:
Customer Profile Students Executives Timing
10 am-9pm 7 pm-12pm Average Money Spend Average Time Spend 0.5 - 2 hrs

Rs. 0 - 50 Rs. 180

30 - 45 min

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Sales: 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 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 Average Money Spend Average Time Spend 0.5 1.5 hrs

Timing 10 am-9pm

Students

Rs. 0 - 50

Executives / Families Sales:

7 pm-12pm

Rs. 140

30 - 45 min

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

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Survey Methodology A survey was conducted, consisting of a sample of randomly selected people, in the age group of 18-25. This survey aims to find out how Barista and Caf Coffee Days target market, rate their products and services. A copy of the customer survey is attached in the Annexure. Characteristics of visit: The respondents were first asked to describe the characteristics of a typical visit to a coffee shop. This includes their choice of coffee shop, frequency of visits, time & money spent on a single visit, average group size and influential factors affecting their choice. Comparative Rating: The survey also asked the customers to rate the following parameters on a scale of 1-5 (1 being the worst, 5 being the best), for both Barista and Caf Coffee Day: 1. Taste & Quality of products. 2. Prices of products. 3. Order/ Delivery time & Order/ Delivery process. 4. Performance of staff. 5. Ambience. 6. Availability of products. 7. Value for money of products. 8. Overall performance.

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ANALYSIS OF THE SURVEY Characteristics of visit Preference of coffee shops:

CCD

BARISTA

50%

50%

Graph 1 The Graph 1 shows which coffee shop the respondents usually preferred to visit. Although this is not a true indicator of market share, it gives us some idea or the closeness in which both companies operate. They both received an equal preference in the survey, with 50% of the respondents choosing Barista and the remaining 50% choosing Caf Coffee Day, indicating there is no clear winner in terms of actual visits to the outlets. This can be analyzed in relation to the comparative rating respondents give both outlets, to help us identify which areas both the chains are doing well in, where they need to improve and where the opportunity for growth exists. Frequency of visit:
2-3TIMES A WEEK NOT OFTEN 30% 50% 20% 2-3TIMES A MONTH

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Graph -2 The Graph -2 indicates how often the respondents visited a coffee shop. Considering the age- group for the sample, its quite evident that they have enough free time to visit cafs regularly. Out of those surveyed, 50% said they visited a coffee shop 2-3 times a week, and 30% visited a coffee shop 2-3 times a month. This is great opportunity for Barista and Caf Coffee Day to attract regulars with loyalty programs

Spending Habits:
25-75 Rs OVER 125 Rs 75-125Rs

40%

50% 10%

Graph 3 The values of Graph - 3 illustrate how much money the respondents usually spend at coffee shops. While the majority of respondents spent between Rs. 25 & Rs. 75 on a 50 single visit to an outlet, a high percentage also spent between Rs. 75 & Rs. 125. An important point to note here however is that a majority of the people who were in the Rs. 75 & Rs. 125 bracket were Barista customers. Length of Visit:

1/2-1hour

Over 2hours 40%

1-2 hours

50%

10%

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Graph 4 The survey also asked the respondents how much time they would usually spend on a single visit to a coffee shop. The Graph - 4 shows that half of them would spend between 1 hour and 2 hours, and 40% would spend between hour to 1 hour. Average group size:
2 peple more than 5 people 3-5 people

20% 60% 20%

Graph 5 Another important factor to consider is the size of the groups that go to these cafs. This would help us identify consumer patterns, and enable us to create customer- specific policies. The Graph - 5 shows that 60% of the respondents visit caf in groups of 3-5 people. This would indicate that they are usually accompanied with common friends, who have similar tastes, and buying patterns. The remaining 40% either went with only 1person, or in a group of more than 5 people. Deciding Factor:

Ambience/Experience

Value for money

Taste of coffee/ food

40%

40%

20%

Graph 6 When asked about the most important factor that contributed to their choice of coffee caf, an equal number (40%) of respondents selected the taste of coffee/ food and the
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ambience/ experience. Only 20% of them choose value for money as their most important factor. This would indicate a clear shift of consumer focus from price factors to service factors.

Comparative Rating
Parameter Barista Caf Coffee Day

Taste & Quality of Products The first parameter that respondents were asked to rate was the taste and the quality of the products available at both Barista and Caf Coffee Day. Essentially these products are Coffees, Other Drinks (like Granitas, Cremosas etc), eatables and desserts. Finding out how customers feel about the taste and quality of products offered, could help both these organizations improve their share, by adapting and improving their products. This parameter is also especially important, because 40% of the sample stated Taste & Quality of Coffee/ Food as the most influential factor in choosing a coffee caf. Coffees 3.5/5 Comparative Rating - Taste & Quality of Prime Products. Since coffee is the primary product served by cafs, it is vital that the taste and quality standards of their coffee are up to the mark, because it directly affects the cafs performance. Various kinds of coffee are available, and a detailed list can be found in the product mix of both Barista and Caf Coffee Day. The Coffee at Caf Coffee Day seems to have a slight edge over Barista. This is quite an important fact, considering Caf Coffee Day uses its own brand of Coffee beans, while Barista uses a combination of imported coffee beans and coffee beans from TATA Coffee. A large chunk of Baristas costs are tied up with importing Coffee Beans and roasting them abroad. Their performance in this area didnt live to expectations. Some respondents highlighted the variety of flavors Caf Coffee Day has as an added advantage. OtherDrinks 4/5 3.5/5 4/5

Comparative Rating Other Drinks Though most customers visit caf for coffee, other drinks like Granitas, Cremosas, smoothies and ice teas are very popular. Cafs need to focus on providing the right kind of drinks in the right taste and with a certain level of quality. Ratings for the taste and

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quality of Other Drinks indicate a marginal advantage for Barista over Caf Coffee Day, with ratings of 4/5 and 3.5/5 respectively. Caf Coffee Day should look at different ideas for improving in this area. A significant number of respondents also specifically expressed their preference for Baristas smoothies, and Caf Coffee Days Cremosas.

Eatables 3.5/5 Comparative Rating - Eatables Caf customers usually have a light snack or side order along with what they are drinking. This provides an opportunity for cafs to offer these eatables at marginally higher prices, and increase their revenue. Increase in revenue though, would be useless if they offered substandard eatables, which can often be caused by inefficiencies in storage and distribution, which leads to eatables becoming stale. Thats why it is important for cafs to provide high quality food, which allows them to charge a premium. Respondents rated the eatables available at both Cafs equally, this in spite of the fact that Barista uses Taj as their national caterers, while Caf Coffee Day has private caterers in each city. 3.5/5

Overall 4/5 Comparative Rating Overall Taste & Quality of Products Overall, Barista received a higher rating of 4/5, thanks almost entirely due to its Desserts. Otherwise, both Barista and Caf Coffee Day performed almost identically. The closer Caf Coffee Day gets to Barista in the Desserts products area, the harder it will be to differentiate the two in terms of taste a& quality. The equality of their performance in the core product area, would then lead to a larger differentiation in their peripherals. Value for Money Customers always take into consideration 2 factors while purchasing a product. The price of the product, and the quality/ quantity value of the product. Having a low- priced, low value product or a high- priced, high- value product is often difficult to market or sell. What customers ultimately look for is value for money. In cafs especially, serving products at the right price in the right quality/ quantity is extremely important. Customers should feel that their paying the lowest price possible for the quality and quantity of the product they receive. This rating would reflect on the relationship between the price of the product, the taste & quality and the serving size. Since the four basic products cafs
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3.5/5

offer are priced differently, with different quality and quantity values, the value for money for each should be rated separately. Coffee

3.5/ 5 Comparative Rating Value for money-Coffee

4/ 5

The value for money for coffee is probably the most important factor, since customers visit cafs primarily to drink coffee. Barista received an average 3.5/ 5, which is probably a result of the lower ratings they received in the Taste & Quality and Prices of Coffee. Caf Coffee Day on the other hand received a very good 4/ 5 rating, probably as a direct result of having a better Taste & Quality and Prices rating.

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CONCLUSION
Areas of Excellence Both cafs have certain areas where they have been consistently performing well. These are essentially the strengths of the brand, and Barista & Caf Coffee Day need to capitalize on these strengths to increase their market share and brand loyalty. The mainareas of excellence, based on the Case Studies & Market Survey, have been identified as follows:

Barista 1. Strong Brand Image: Barista has a strong and clear brand image. Their customers can easily identify and relate to the Barista brand this helps increase and maintain brand loyalty. 2. Excellent Human Resource: According to the survey, Barista received an excellent rating for the service and behavior of their staff. This is a huge advantage, especially in a service organization. Barista must strive to keep this advantage. 3. Ambience & Dcor: Another significant area of excellence is the kind of ambience and dcor Barista cafs have. Respondents to the survey, including whose who chose Caf CoffeeDay as their choice of caf, gave Barista a near perfect rating for their Ambience & Dcor. 4. Strong base for expansion & growth: Barista have worked hard on heir brand image and human resources, and have a strong base for future expansion and growth- whether nationally or internationally. Caf Coffee Day 1. Highly rated Taste & Quality of products: Caf Coffee Day got a high rating in the market survey, for the Taste & Quality of their products. If they work on this aspect, there is huge potential for them to attract customers, just based on the taste and quality of products. This is also helped by the fact that they grow their own coffee beans, and this provides an important base for future expansion and growth. Caf Coffee Day even won theBarista Coffee- Making Championship for the Best Coffee. 2. Value for money proposition: Caf Coffee Day is projected as an affordable brand. This strategy has worked extremely well so far, and Caf Coffee Day got a high rating, both for their prices and for their value for money, in the market survey.
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3. Strong youth orientation: The Caf Coffee Day brand is, and always has been, extremely youth- oriented. In a country where over 40% of the population is under the age of 20, there is huge potential for Caf Coffee Day to become one of the countrys largest youth brands. The untapped market share and potential for growth is enormous. Areas Needing Improvement Both Barista and Caf Coffee Day have under performed or not lived up to potential in certain areas. The areas are weaknesses, which need to be improved upon, as that both can eliminate any disadvantage that may have, and improve customer satisfaction. The mail areas needing improvement, based on the Case Studies & Market Survey, have been identified as follows: Barista 1. Average taste & quality of products: According to the market survey, other than their Dessert, Barista got only an average rating for the taste & quality of their products. Considering their strong brand image of being the coffee- lovers traditional caf, they have not performed up to expectations in this area. 2. Perceived as an expensive brand: Customer perceptions of Baristas prices and value for money are quite negative. Even though the prices of Barista and Caf Coffee Day are almost identical, Barista is still perceived as the more expensive brand. 3. Inconvenient delivery process: On a smaller note, Baristas self- service delivery process received almost unanimous complaints from respondents of the market survey. They found it inconvenient to go back to the counter just to receive their order. Caf Coffee Day 1. Weak brand image: The Caf Coffee Day brand, although clearly a youth- oriented brand, lacks the power and strength expected to maintain brand loyalty. The brand doesnt project a clear image to customers about what Caf Coffee Day is all about. This could prove as a deterrent during future national and internationalexpansion. 2. Inefficient human resources: According to the market survey, Caf Coffee Days staff received only an average rating for their behavior and service. Caf Coffee Day needs to work hard at this aspect, especially considering they are a service sector organization that is looking at large expansion.
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3. Ambience & Dcor: The Ambience & Dcor of Caf Coffee Day outlets received a below- average rating from respondents of the market survey. A lot of respondents did not like the fact that Caf Coffee Day outlets and literature served as prime space for a lot of advertising and promotions. They felt as if the cafs had been hijacked just for advertising.

RECOMMENDATION & SUGGESTIONS

Barista Barista has an extremely strong brand image, but they need to work hard on improving their customer perception of being and expensive brand. Barista and Caf Coffee Day have almost identical pricing, but Barista is still perceived as the more expensive brand. Thats why my first recommendation for Barista is, to carry out a promotion campaign to ensure that their target market is well aware of their current low prices. This would help change customer perception and turn Barista into an affordable brand. Another backlash of having such a strong traditional caf brand image is thatcustomers have very high expectations of the taste & quality of products. Barista needs to work hard at this aspect, especially for coffee and eatables products. My second recommendation is for Barista to look at its coffee beans suppliers and coffee brewing process to ensure that it is the best it can be. This is especially important considering the international expansion Barista is undertaking. Barista should also look at the Taj, their national suppliers for eatables and desserts, and either improve the taste & quality of eatable, or look at another supplier- because as of now, they are not living up to expectations, and losing customers to Caf Coffee Day. On a smaller note: the Barista delivery process should change, so that ac af attendant delivers the coffee to the table. This may seem insignificant,but it can go a long way in improving customer satisfaction. Caf Coffee Day Caf Coffee Day has done extremely well so far to project itself as an affordable youth- oriented brand. But there are still certain areas where their brand needs to be much stronger. With regard to the physical evidence associated with the brand, Caf Coffee Day needs to do a lot of work if they hope to catch up with Barista. My first recommendation for Caf Coffee Day is to clean up the dcor at every outlet, wherever unnecessary advertising is taking place. Although it might be an important source of revenue, long-term customer perception of the brand isnt very positive.
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Caf Coffee Day would do better to provide promotional space for its partners with the use of clever collaborations, and not printed advertisements and posters everywhere. My second recommendation is that Caf Coffee Day looks at its current recruitment, selection and most importantly, its current training policies. Customers are not happy with the behavior and service of the staff, and Caf Coffee Day is lagging far behind Barista is this aspect.

RECOMMENDATION & SUGGESTIONS

Barista Barista has an extremely strong brand image, but they need to work hard onimproving their customer perception of being and expensive brand. Barista andCaf Coffee Day have almost identical pricing, but Barista is still perceived as themore expensive brand. Thats why my first recommendation for Barista is, to carry out a promotioncampaign to ensure that their target market is well aware of their current low prices. This would help change customer perception and turn Barista into an affordable brand. Another backlash of having such a strong traditional caf brand image is that customers have very high expectations of the taste & quality of products. Barista needs to work hard at this aspect, especially for coffee and eatables products. My second recommendation is for Barista to look at its coffee beans suppliers and coffee brewing process to ensure that it is the best it can be. This is especially important considering the international expansion Barista is undertaking. Barista should also look at the Taj, their national suppliers for eatables and desserts, and either improve the taste & quality of eatable, or look at another supplier- because as of now, they are not living up to expectations, and losing customers to Caf Coffee Day. On a smaller note: the Barista delivery process should change, so that a caf attendant delivers the coffee to the table. This may seem insignificant,but it can go a long way in improving customer satisfaction.

Caf Coffee Day Caf Coffee Day has done extremely well so far to project itself as an affordable youth- oriented brand. But there are still certain areas where their brand needs to be much stronger. With regard to the physical evidence associated with the brand, Caf Coffee Day needs to do a lot of work if they hope to catch up with Barista. My first recommendation for Caf Coffee Day is to clean up the dcor at every outlet, wherever unnecessary advertising is taking place.
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Although it might be an important source of revenue, long-term customer perception of the brand isnt very positive. Caf Coffee Day would do better to provide promotional space for its partners with the use of clever collaborations, and not printed advertisements and posters everywhere. My second recommendation is that Caf Coffee Day looks at its current recruitment, selection and most importantly, its current training policies. Customers are not happy with the behavior and service of the staff, and Caf Coffee Day is lagging far behind Barista is this aspect.

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