Marketing Plan for Melto-Point Cafe

COFFEE INDUSTRY
COFFEE MARKET IN INDIA
Coffee is one of the most popular beverages in the world. The beverage industry in India has
gained importance in the last few years. The beverage retail has become a fashionable
concept today. A significant change in this industry in particular has been the growth of
coffee industry. India had been traditionally tea drinking country for ages. Recently, a new
mode of distribution for coffee has emerged in form of coffee chains. The coffee
consumption by Indians has increased in the last 4 to 5 years. The coffee demand was 169
MT in 1990-91 has increased to 306 MT in 2003-04 and had increased to 405 MT in 2010.
Traditionally coffee in India was restricted to the south and that too, predominantly in
people’s home. The size of organized coffee retailing is $185 million.

Industry PEST Analysis

Political:
The relationship and the trade practices between the coffee producing nations and where the
retail chain is operating should be good so that it propels the market growth in the operation
country and in turn benefits both the countries. Also land acquisition is an important factor
for setting up the store which is influenced by many political factors. Also there are many
state and local government norms and legal procedures which need to be satisfied.

Economic:
India’s GDP and per capita income is on the rise. It clearly depicts the improved and
increased purchasing power of the people as disposable income has increased. Also
urbanization is expanding which will fuel the economic growth story.There are also issues of
concern like inflation and recession which will have an impact on the commodity prices
leading to an increase in price which in turn affects the consumer spending power, may lead
to slow economic growth, job loss, scarce employment opportunities etc

Socio-cultural:
 The taste and preferences are influenced because of different social and cultural factors.
Some consumers may prefer tea over coffee and vegetarian food over non-vegetarian food.
Some may prefer to have coffee as a means to socialize among friends and relatives whereas
some may not have leisure to have coffee at the physical stores

All these customer needs and requirements have to be satisfied by the company.

Technological:
Technological developments in the industry have focused on the fresh coffee segment
ignoring the soluble coffee segment. However, fresh coffee developments have failed to
address significant issues in both milk-based and filter varieties.

Milk-based Coffee Equipment/machines must be cleaned regularly to maintain the output

quality and standard which otherwise may lead to significant amount of substandard coffee
being sold at a premium.

Filter-based Coffee Equipment Filter coffee must be discarded approximately every 30

minutes which otherwise will lead to inefficiencies if not done properly. In busy restaurant
environments, this policy is often forgotten which leads to substantial substandard coffee
being served to customers.Also technology can be used to improve the operational
efficiencies of the stores.

Market analysis
KEY PLAYERS

CCD: Taking pride in 130 years of coffee growing heritage, CCD is the first chain to enter
retail by incorporating Amalgamated Bean Coffee Trading Company Ltd (ABCTCL) in the
year 1994. Pioneering the café concept in India in 1996 by opening its first café at Brigade
Road in Bengaluru, ABCTCL today is one of Asia’s top 500 companies and aims to be
among the top three coffee retailing companies in the world.

Barista: Barista traces its roots back to the old coffee houses in Italy – the hotbeds of poetry,
love, music, writing, revolution and of course, fine coffee. Offering alternative options and
pleasures of coffee to millions, the chain is also revolutionising the coffee drinking
experience in most Indian cities. Barista owns more than 200 stores currently in India and has
cafes in other countries as well.

Costa Coffee: As part of its overseas expansion, British coffee retail chain Costa Coffee
launched its outlet in New Delhi, becoming the first international coffee chain to start
operations in India in September 2005. It has also been expanding its business through
exclusive franchisee partnership with Devyani International and expanding aggressively to
tap this potential market.

Coffee World: Coffee World is a premium specialty coffee house that offers a
comprehensive range of hot, iced and ice blended beverages. The brand is known for its
premium quality products and its signature ‘Frappes’ – ice blended coffees.

CBTL: The Coffee Bean & Tea Leaf is a California-based coffee chain, owned and operated
by International Coffee & Tea, LLC and has opened its first store in India in the last quarter
of 2007 opening stores in Rajiv Gandhi International Airport, Hyderabad .
Besides, retail players like Reliance Retail and Shoppers Stop are also retailing coffee with
their multi-products offering outlets like Reliance TimeOut and Desi Café respectively.

Market Presence:
Analyzing Café Coffee Day in Detail

CCD is the clear market leader in the business of coffee retailing. And Barista is the clear
no.2. The gap between CCD and Barista is quite big. In order to increase our market share,
we have to take away the market share from CCD.The name CCD is appealing and has made
a corner in consumers heart.

Corporate Profile: It was in the golden soil of Trivanthapuram that a traditional family
owned a few acres of

coffee estates, which yielded rich coffee beans.. With a rich coffee growing tradition since
1875 behind it coupled with the opportunity that arose with the deregulation of the coffee
board in the early nineties, Melto-Pint Cafe has a wide and professional network in the
major coffee growing areas of the country comprising over 48 agents and 50 collecting
depots. Melt-Point Café works at Chikmagalur and Hassan cure over 70, tonnes of coffee per
annum,
Melto- Point Cafe has a well-equipped roasting unit catering to the specific requirement of
the
consumers. The process is carried out under the control of experienced personnel to meet
highest quality standards. The most modern technology available is used to maintain
consistency and roast the coffee beans to the demanding specifications of the discerning
coffee consumers.
Market Demand: Market demand has a direct impact on the sales; moreover this demand
varies with the consumer for various requirements, as per the taste and flavour preferences.
Coffee acts as an energizer and stress reliever for some people, as the stress level in an
average human being is rising, demand for coffee may rise too.

Consumer: Consumer is the king for every producer. So Customer Relationship

Management, consumer satisfaction, continuous supply of the product, flooding the stores
with new products and creating a brand impact on every consumer are desirable. The
company should tend to entertain the tastes of all consumers by introducing new products;
this could be achieved by using feedbacks and suggestions.

Industry: Repositioning the company’s image and reframing the business strategies to suit
the changing consumer needs. Diversification of the business into related and unrelated
products to tap the potential market. For e.g. as Cafe Coffee Day has already entered into
selling food items such as sandwiches, rolls, pastries, mineral water etc and it could introduce
more products.

Supplier Related Factors: E-procurement of the raw material, reducing the

procurement time, relationship management and getting raw material at reasonable rates.

MARKETING STRATEGY OF CCD

ANALYZING COFFEE RETAILING INDUSTRY USING PORTER’S FIVE FORCE’S MODEL

Potential Entrant

Starbucks, coffee
club, coffee Threat
world of

New Entrants
Industry

Suppliers competitor’s rivalry Buyers

coffee Among existing firms students, Professionals,

plantations old couples

Bargaining Power

of Buyers
Substitutes

Barga
Other fast food joints like

Mcdonalds, Pizza Hut

Threat
and of
Amoretto
Substitute Products

or Services
Differentiation

Melto-Point Cafe has been able to differentiate itself from the competition by using the cost
leadership model. Also it successfully built a image for itself as a hangout place for the youth.

Segmentation

Demographic

➢ Age (15-35)

➢ Income-middle, upper middle & HNI groups

➢ Occupation-working executives, students,

➢ Generation-Youth

Geographic

➢ Major Cities, urban sector, IT Hub, near malls and Theaters

Psychographic

➢ Lifestyle- outdoor

➢ Personality-ambitious, gregarious

➢ Behavioral occasion-regular, special

➢ Benefits-quality, service

➢ Brand loyalty-split loyal

➢ Attitude- youthful

Targeting

➢ Working executives,

➢ Young youths

➢ Premium customers

➢ Travellers

Positioning

• It positions itself as “Urban Youngster’s favourite hangout.”

• Tag Line ‘Where Hearts Melt’

• It is for those who are young or young at heart.

 • Offers its customers a variety of coffee and coffee product.

MARKETING TACTICS
Product :
Café Coffee Day product mix constitutes a wide range of products that appeal primarily to
Indian coffee and snack lovers. Products have an Indian taste to it - be it food or coffee. Most
of the eatables have been adopted to meet the Indian taste buds like samosa, biryani, masala
sandwich, tikka sandwich etc. Thus they have been trying to capture the Indian taste along
with classic coffee. The best selling item in summer is frappe, which is coffee and ice cream
blended together. The young people favor it. In winter it is cappuccino. Their merchandising
includes funky stuff like t-shirts, caps etc.

Prices:
Considering that Melto-Point Café knows its major customer lies in the bracket of 15- 29, it
has tried to derive a policy whereby it can satisfy all its customers. The changes have been
more due to the government taxes than anything else. The company has adopted a very niche
pricing where all it products are more or less priced at the same range.

Physical Evidence:
a) Logo, Colors, Images:
Melto-Point Cafe has used bright red and green colors in its logo. RED stands for leadership
and vitality. It also stands for passion (… for coffee). The GREEN stroke harks back to their
coffee growing heritage and the coffee plantations that they own.\ Café is noticeably larger
than the rest of the text inside the logo box. The font looks as though the letters have
congealed out of a liquid. It gives the impression that the word is still forming itself and
evolving into something new and something better constantly.
Décor & Architecture:
Café interiors have been given a whole, new look. In a change from the largely wood and
granite based interiors, there is more of steel and lots more color now. The young colors of
today, lime green, yellow, orange, and purple predominate.

Literature:
The literature provided by Café is indicative of its youthful image. The Menus, posters,
pamphlets are all designed to attract young and young at heart. They also have their magazine
called as ‘Café Beat’, which is published monthly at their Trivanthapuram head office and
distributed throughout the branches.
Place:
The Café looks to cater to their target market with strategically located outlets. Their outlets
are generally located in High Street/ Family Entertainment Centers . Considering their
generic appeal, there are Barista outlets located in and around malls, cinemas, colleges,
offices etc. This endorses their brand image of a café that appeals to coffee lovers of all ages.
Sea side views and road junctions are the hot spot location for coffee lovers.

Process:
The ordering and delivery process in Cafe is Indiansized. ALL at your tables, the waiter
comes and takes away the order and delivers the order on table.
People:
People at Melto-Point Cafe believe that “People are hired for what they know but fired for
how they behave”. Motivation and personal skill are laid emphasize upon. Their employees
are like friend to the customer but at the same time they know about the international
standards of hygiene and cleanliness and personal grooming
Promotion:
Melto- Point Cafe does not believe in mass media promotions. But they are involved in all
the areas of serious consumer passion.
Through television:
The Café will tie up with Channel [V]'s Get Gorgeous contest. The reason being that a lot of
their young consumers are interested in careers. Modeling is a career that a lot of youngsters
are interested in and this was an excellent platform. There would also be promotion for
History Channel, where they’ll run a promotion for Hollywood Heroes. A lucky winner
would win a trip to Hollywood.
Ticket sales:
A contest in association with the recent movie campaign RaOne . Couples can win ticket for
free. This in turn raises the awareness level as cafe staff approaches the consumers to inform
them about the contest. There is not a better publicity mechanism then the person who is
serving you telling you about the same.

Tie-ups:
Besides that Café would also tie up lot of the youth brands. Wherein the promise to the
customer is that a lot can happen over a coffee. So every time they try to ensure
something good happens to their customer. So they will have a contest going on with Levis,
another one with Scooty, Liril, latest one with Airtel Friends. Another placement area is with
HDFC. HDFC wanted to promote their debit card and they choose Melt-Point Cafe. So 21
cafes have debit card machines.

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

Distribution of outlets:
Since all the cafes are owned by the company, it becomes easier for them conduct feedback
surveys like dipsticks etc. Cafes most unique aspect is that it grows the coffee it serves in its
cafes.Pioneers of the Café Concept in India with the its first Café at Brigade Road, Bangalore
in 1996. This Café was opened as a Cyber Café (first of its kind) but later, with the burst of
cyber cafes it reverted to its core competency…. Coffee. Café currently operates in 4 outlets
in Two states.
Distribution of stock:
Coffee Beans: The distribution of coffee beans start from their roasting plant at chikmagalur.
The coffee beans are sent to the main offices of north and south India on monthly basis. The
outlets contact the Head Distributors on weekly basis.
Allocation of Marketing Budget

Sr.No Particulars Amount

1 Advertising agency commissions : 8-9 lacs

Media Agency Charges (Creative Land Asia) +

Radio Advertising

(Gracious Communication)

2 Fixtures and fittings ( maintainence) 2lacs

3 Travel costs 2 lacs
4 Outlet space(per month) 2 lacs
5 Marketing communications costs:
5(a) Public Relations 10lacs
5(b) • Printing 15lacs

• Website Development & Hosting

• Brochure Design

5(c) Advertising: 3cr

• Television Advertising
• Radio Advertising
• Direct Marketing
• Newspaper Advertising
Total 3cr 40lacs