Cafe Cofee DayMohamed Hasan – 5890164Mohammed Alsiari- 7572441Yuktika Pahwa -7487132Anuja Patil-7844470Wasif Raza -7590939

Agenda

• Introduction

• Porter’s 5 Forces Analysis

• SWOT Analysis

• Marketing 4P’s

• Recommendations

• Risk Analysis

• Questions

Introduction

• In 1995, V.G Siddhartha opened the first Café coffee Day (CCD) in India’s political and commercial capitals .

• Within few years CCD expanded to close to universities and companies.

• Current market leader in India– 60% market share as of April 2013.

Current Industry

• Barista, Costa Coffee, Dunkin Donuts and Lavazza still exist in the market with a minor imposed threat on CCD.

• Starbucks opened 13 stores in India through a joint venture with Tata Group ( Indian multipurpose company) which has an excellent infrastructure.

Problem?

How to approach the entrance of Tata Starbucks to the market.

Porter’s 5 Forces Analysis

Threat of New Entrants• Retail property acquisition

• Large Capital Investment• Staff training• Coffee bean suppliers• Bistro and bakery • Furniture availability and

affordability• Compliance with food and

beverage standards• Knowledge of local food and

beverage preferences and behaviours

• Brand acknowledgement and loyalties

Substitutes• Tea beverages ‘black tea,

chai, mint, ice tea, etc.’• Restaurant that can offer a

variety of beverages.• Bars and alcohol drinks• Non-espresso beverages• Cold beverages• Protein shakes and power

drinks• Soft drinks ‘Soda’

Porter’s 5 Forces Analysis

Competitive Rivalry• Indian coffee market is in growth

period

• Exclusive agreement with coffee plantations

• Owning coffee bean plantations and distributions network

• Access to premium retail locations• Marketing partners to monitor

customer coffee drinking habits and behaviour

• Consistent coffee quality among many locations of the same company

Power of Suppliers• Coffee suppliers

• Distributors margins• Exclusivity agreements with coffee

companies• Bistro bakeries • Proximity of coffee plantations to

coffee shops• Furniture manufacturers and

prices to manufacture customized dining areas to a certain company

Porter’s 5 Forces Analysis

Power of Buyers

• Affordability of foods and beverages. India is a high price sensitive country and the prices should reflect the local economy.

• Following factors have to be considered:

• Food and beverage quality

• Interior ambience• Variety of products (Quantity and Quality)• Services provided (Customer Satisfaction)

SWOT Analysis

Strengths• Well established in India with

~1400 stores and kiosks

• %60 market share, first in coffee market

• Own coffee producing fields

• Limited bar cultures, coffee houses are the alternative

• 60% of customers are regular, loyal

• Manufactured their own vending machines and furniture (cutting costs)

Weaknesses• High retail property costs

• Low customer service satisfaction

• Access to premium realty locations

• Increasing cost of renovations and salaries to keep up with Starbucks

• Challenge to retain customers• Changing strategies away

from coffees (E.g. Breakfasts did not work)

SWOT Analysis

Threats• Employees turn overs• Similar prices in CCD squares

as Starbucks may shift some customers to Starbucks.

• Getting edged out of premium retail locations.

• Massive renovations costs• Aggressive approach toward

Starbucks

Other FactorsPromising Trends•The hype around Starbucks entry is over

Benchmark•Tata group provide coffee plantations and premium location•It has the power to keep Starbucks in media, more advertising•Able to afford higher salaries

SWOT Analysis

• Opportunities:– Joints ventures with retail groups to provide

premium retail and share costs.– Brand lounges and squares differently than

CCD to justify their different prices among different locations.

Marketing 4P’s

• Price: – They own their Coffee plantations– They manufacture their own coffee machines– Price sensitive customers

– They maintain a reasonable pricing strategy

• Place: • Half of the stores in urban areas• 1469 stores, 1000 takeaway outlets, 450 fresh

retail coffee, 22000 vending machines.• Slightly high retailing prices.

Marketing 4P’s

• Product:– Variety of Coffee and Iced beverages.– Ready to eat sandwich’s, burgers and desserts.– Local food items: Samosa and Chicken Tikka.

– Lounges have separate kitchens and chefs.

• Promotion– Sells T-shirts, bags, coffee mugs, etc.– Tickets for Concert and allows shooting movies at

their stores.– 60% of the CCD customers are regular visitors.

Recommendations

• Invest research on cutting down costs at the Squares and Lounges.

• Introduce Family areas to broaden the market segment.• Introduce loyalty cards to maintain high percentage of

loyal customers. • Enhance customer satisfaction by increasing the salaries

of workers and improve training system.• Gain more feedback from customers by creating

discounts for surveys and having suggestion boxes.

Risk analysis

Recommendation Risk Mitigation

Research to cut down cost

Could be expenditure of unnecessary capital

Focusing on lounges and squares close to Starbucks

Family areas price sensitive customers Hold the idea until further information is provided regarding Starbucks.

Customer satisfaction Prices increase in order to pay higher salaries.

Focus on customer satisfaction in locations close to Starbucks.

Loyalty Cards Decreasing profit margin Start the functionality of cards only in locations close to Starbucks.

Questions