ccd vs starbucks

Project on CCD VS STAR BUCKS

CHAPTER IIntroduction

Starbucks started operations in 1971 at the Pike Place Market in Seattle. Original

owners were Jerry Baldwin and Gordon Bowker, where their initial aim is to set up a store

and bring high quality whole-bean coffee to Seattle instead of offering coffee by the cup. In

year 1982, the company changed its direction after the recruitment of Howard Schultz as

director of retail operations and marketing of Starbucks. Schultz utilized the ability of

Starbucks and opened a new coffeehouse in Seattle; adapt the Italy espresso bar concept with

varieties of brewed coffee for Seattle coffee lovers. The test was a great success, but the

owner decided not to expand the concept, and this disagreement caused Schultz to leave the

company in 1985 and start his own coffee-bar company, II Giornale by year 1986 with his

partner Dave Olsen. The next year, 1987, II Giornale decided take over Starbucks with total

USD3.8million cost. Schultz had great plans for expansion, with the based of 11 stores in

1987, Starbucks opened 15 new stores in 1988 and 20 in 1989, total of 165 stores in year

1992. The same year, Starbucks listed on NASDAQ and the IPO raised USD29million for

Starbucks and by the closing bell the company’s market capitalization stood at

USD273million. The growth was estimated 200% per year increasing after 5 years after

Schultz and company bought over. In order to go further steps of expansion, Starbucks

formed more strategic partnerships to gain from their targeted customer, such as United

Airlines flight, Host Marriot, Aramark group, Kraft, tobacco giant Philip Moris, and many

others. In 1996, Starbucks opened its first store outside US and Canada in Tokyo, this was

achieved through joint venture with Sazabu Inc. Starbucks now operates about 1,200

international outlets, there are 850 Starbucks located in Fourteen Asian and Pacific, which

are:- Japan, Singapore, Philippines, Thailand, Malaysia, South Korea, Beijing, Shanghai,

Hong Kong, Macau, Australia, New Zealand, Taiwan, and Indonesia. Starbucks’ vision

is to establish the company as most recognized and respected brand in the world. The core

value of Starbuck is actually “relationship”, it creates a great working environment and treat

each other with respect and dignity. Schultz and company strongly believe “relationship” is

essential to motivate the whole company to build a trustful, and long terms relationship with

customer and business partners.

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Situational Analysis

General Environmental Analysis

Economic view

China market recovered rapidly after Asian financial crisis in 1997, considered

the fastest growing market in the world in terms of gigantic population and the overall

rising economic growth. Foreign investment increase drastically after China entering

the World Trade Organization, which occurred because of cheap labour rates and

manufacturing costs, the fast developing economy attracted investors from various

industries in worldwide. And these factors had created a good Starbucks’ supplier

network in China and generate more high-income potential customers for Starbucks.

The demand of China domestic market is inestimable during that period, and the

stable economic environment promises investor like Starbucks a bright future.

Social view

Globalization on China’s economic development affect the young generation

of Chinese customers have been the most susceptible to the western trend. Because of

the rigid government legislation, which allowed Chinese people to have only one

child, and it caused the purchasing power increased for those young married couples

and willing to spend more money on recreational issue. The change of culture

influences many aspect of people’s life. Nowadays, more Chinese is pursuing high

quality of living environment; the increasingly wealthy Chinese people are willing to

pay more for new experiences and better products of service. These social facts

created a good potential market for Starbucks.

Political view

China market was slowly opened to foreign trade and investment after year

1978, Deng XiaoPing controlled the country. Under his rein, China abandoned the old

planning and slowly moving towards globally. In 2001, China started to share the

same rules as global market after entering the World Trade Organization (WTO), it

also makes the internal policy more transparent in order to protect the interest of

foreign investors. It also helps in reducing government intervention in privately

owned business and attracting more foreign investment to the country. All these

development supplied great opportunities for foreign investors.

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Industry Analysis Economic view

Tea, consist more than 40 percent of total market value, leading the China beverage market.

The competition of both tea and coffee is fierce as both can be substitute to each other. It

faces competition from mainland and also foreign investor, many direct foreign competitors

looking the opportunity and penetrates into China market, such as Seattle Coffee Chain, Ding

Haom and even McDonald’s is entering coffee business, the amount is increasing from year

to year. Compare to year 1999, there is a increased of 73 percent in China Food and Beverage

industry in 2002, estimated 20 percent growth average from year 1999 to 2002.

Social view

Tea is a tradition beverage in China. Some conservative groups in China

believe that it will be difficult to develop Coffee market and replace Tea. But, the

change of culture have made the difference, an expanding group of wealthy and

young people who an enthusiastic about chasing “taste” and “fashion”. This Petty

Bourgeoisie group not only drink coffee but require high–quality coffee. They

are the typical consumers of foreign brands and it is also the target customer of

Starbucks. To them, coffee means only Starbucks and equal quality assurance.

Political view

Although government function strained by law frame of the WTO, foreign

investors is still facing the unexpected difficulties to apply special government

investment license, in some small cities, bribery is necessary to get the license. The

Sixteenth Communist Conference further ensured that the opening policy will

continue to protect the interest of foreign investor. In terms of leadership changes and

province leaders, who normally held their position until age seventy, were replaced

earlier than usual to maintain the competitiveness and make sure the decision made is

matched with the global requirements.

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Market Analysis

After reviewed the findings above, potential customers were classified into two

groups, which were “wealthy and young people group” and “bourgeois group”. “Wealthy and

young people group” – Age (18~28), who are enthusiastic about chasing “taste” and fashion”,

and with high purchasing power.

“Bourgeois group” – Age (25~40), whom required a comfortable space with relaxed

atmosphere beyond home and office, for business discussion or chitchat. With such

requirement, high quality products and store environment is the keys to remain customers’

loyalty.

China market covers a wide geographical area, the unbalanced distribution of income

define the potential market, as the sixty percent civilian wealth in the cities is owned by nine

percent of the population, the social unbalance issue become a criteria when select the store

location. In choosing locations, Starbucks chose the most expensive locations to maximize

brand share, one of the promotion strategies to attract the bourgeois group customers. To

make Starbucks coffee convenience goods in China, Starbucks applied the same strategy as in

US, the coexistence of several Starbucks branches in the same area, which stimulates

consumption.

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SWOT Analysis

Strengths

The main strengths of Starbucks come from the company’s brand image as well as

the high visibility that the company has in various markets. Additionally, Starbucks also

has experienced and competent workforce that ensures that quality services are offered to

the customers. The existing relationship with supplies of coffee beans also means that

Starbucks is able to get quality coffee all year round.

Weakness

Even though there are a few weaknesses, the main weakness can be argued to come

from the company’s overreliance on its CEO since its inception implying that the company

might struggle if the CEO was to leave Starbucks.

Opportunities

One of the major opportunities for the company is that there exist various high

potential markets that the company can expand its operations into.

Threats

The ever increasing number of the competitors in what can be described as an

already overcrowded market can be argued to be one of the major threats to Starbucks.

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Marketing Assessment Plan

From the PESTLE as well as Porter’s five forces analysis, it is evident that Starbucks

has to develop effective marketing strategies in order for the company to be successful in the

various markets that it operates in. The following are the proposed marketing strategies that

should be adopted by the Starbucks during the next three years;

Segmenting the market

Starbucks needs to segment the market into various markets in order to ensure that

the needs of each segment are met. It is only after the company has segmented the market

that it can be able to developed different products that can appeal to different segments.

Product Differentiation

The production differentiation strategy that has been adopted by Starbucks as

discussed by Thompson, Shah and Tomas (2006) should be further developed in order for

the company to ensure that different products are available fro different types of customers.

In addition, may be Starbucks could consider developing new products that could be

retailed by major retailers. For example, Starbucks could enter into agreements with major

retailers like Wal-Mart to retail Starbucks sandwiches.

Customer Service

In order for Starbucks to be successful, the company has ensure that the customer

service is friendly at all times in order to ensure that the customers are always satisfied

which will in the long run result to repeat purchase as well as loyal customers. In order to

ensure that that the customers are satisfied, Starbucks should establish feedback collection

mechanism that would

Three Year Strategic Proposal

Provide customers with the chance to explain their views about the company’s offering as

well as what could be done in order to ensure that what the company offers appeals to the

customers.

Promotion Strategy

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Promotion can be defined as an activity that is aimed at raising the awareness of a

particular product or brand. As discussed by Thompson, Shah and Tomas (2006), Starbucks

has adopted various promotion strategies throughout the years in order to ensure that

potential customers are aware of the company’s service offering. From that perspective,

Starbucks has to keep on implementing various promotion strategies in order to ensure that

the company’s brand image is enhanced. In addition, the various promotion strategies

adapted by Starbucks ensures that the company manages to position its coffee as the

ultimate coffee in the market.

In conclusion, during the next three years, Starbucks should implement marketing

strategies that would help enhance the Starbucks brand in markets where the company has

already established presence while in new the new markets, the marketing strategies should

aim at positioning Starbucks as the ultimate place where one can enjoy a cup of coffee.

Financial Plan

From the figures given by Thompson & Shah (unknown), with the exception of year

2009, the net revenue of Starbucks has been consistently on the increase since year 2005.

Furthermore, financial figures posted by Starbucks (2012) indicated that the company’s net

revenues increased in the fiscal year 2010 with an 8.4% increase. Moreover, the income from

the various international markets has also been on the increase over the years with the

exception of year 2009 implying that the company is on the right path. On a wider

perspective, the increased revenues means that the company has also been increasing its

market share something that will help the company retain its market leadership position in

the sector.

Three Year Strategic Proposal

From that perspective, Starbucks financial objectives for the next three financial years should

aim at continuing the trend of increasing sales revenues with a target of 20% increase per

year while at the same time; the company should also aim at increasing gross profit with 15%

increase every year for the next three years

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CAFÉ COFFEE DAY

Origin

A traditional family owned a few acres of coffee estates, which yielded the rich coffee beans

in the soil of Chikmagalur, However they soon amalgamated with Bean Coffee Trading

Company Limited, now popularly known as Coffee Day. The coffee growing tradition was

since 1875, but the opportunity after the deregulation of the coffee board in the early nineties.

Coffee Day began exporting coffee to the connoisseurs across USA, Europe & Japan. In the

calendar year 2000, Coffee Day exported more than 27000 tonnes of coffee valued at US$ 60

m to these countries and, for the second time in its short career of 7 years retained the

position as the largest coffee exporter of India.

About Coffee Day

Coffee Day has a wide and professional network in the major coffee growing areas of the

country comprising over 50 agents and 50 collecting depots. Coffee Day's two curing works

at Chikmagalur and Hassan cure over 70,000 tonnes of coffee per annum, the largest in the

country. Coffee Day has a 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.

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)

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Coffee Day Comprises of the following Sub Brands

Coffee Day - Fresh & Ground

Café Coffee Day

Coffee Day – Vending

Coffee Day – Xpress

Coffee Day – Exports

Coffee Day – Perfect

Café Coffee Day currently owns and operates 169 cafes in all major cities in

India. It is a part of India's largest coffee company named Coffee Day, ISO

9002 certified company. Coffee Day's most unique aspect is that it grows the

coffee it serves in its cafes. Cafe Coffee Day's vending machines have a special

niche in the market compared to competitors because Cafe Coffee Day

machines offer filter coffee unlike the instant coffee offered by competitors'

brands. Growing from a coffee exporter to a coffee parlour, café coffee day has

certainly come a long way in this segment.

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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.

Product

Café Coffee Day’s 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. Café 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

Perfect @ Rs 35

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Charge @ Rs 28

Dark Forest 200gm @ Rs 80

Product Mix

Coffees & Teas Refreshing

Alternatives

Eatables

Coffee with Milk Smoothies Sandwiches

Cappuccino

Caffe Mocha

Caffe Latte

Guava

Mango

Grape

Paneer Tikka

Cheese & Tomato

Chicken Tikka

Smoked Chicken

Black Coffee Granitas Rolls

Espresso Italiano

EsperanoTM

Americano

Blue Curacao

Lime Ice

Mixed Fruit Tango

Guava Crush

Kadhai Paneer Roll

Chicken Masala Roll

Dessert Coffees Milk Based Pastas

Latte Bianco

Caffe Borgia

Strawberry Freeze

Mocha Freeze

Icepresso

Tangy Tomato Pasta

Creamy Chicken Pastas

Cold Coffees Iced Tea HOT TEA

Brrrista

Brrrista Frappe

Brrrista Blast

Iced Caffe Mocha

Lemon

Peach

Assam

English Breakfast

Darjeeling

Earl Grey

Coffee Add-ons Other Drinks Desserts

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Various Flavours

Chocolate Fudge

Whipped Cream

Espresso Shot

Ice Cream Scoop

Ginger Fizz

Kinley Water

Walnut Brownie

Mocha Excess

Chocolate Excess

Dark Temptation

Chocolate Mousse

Chocolate Chip Muffin

Almond Raisin Muffin

Apple Cake

People Mix

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 café.

Promotion Mix

According to research, over 65% of Barista’s customers are in the 15- 30 age- group. The

majority of these are students and young urban professionals. Barista positions itself as a

brand for anyone who loves coffee. Their products, services

and outlets are more like the traditional European cafés, 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.

a) Logo, Colors, Images:

Barista, since the beginning has looked to use colors in its café interiors, logos and images; to

project a “warm, earth glow, synonymous with coffee”. Barista uses shades of Orange &

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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 Barista’s brand image:

A traditional café for coffee lovers.

b) Décor and Architecture:

Barista’s internal décor and architecture expresses the simplicity you would normally

associate with traditional cafés. The furniture is made of light shades of wood, and there are

comfortable sofas in bigger cafés. 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 cafés. 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 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.

d) 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.

e) Sales Promotion:

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Barista uses a special “Barista Coffee Card” for its sales promotion activities. The 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

f) Collaborations:

Barista has entered into special collaborations

and alliances with various partners for co -

marketing brands. For example, Barista

entered into a deal with Leo Mattel toys to

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 Barista’s customers an added attraction

for spend 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.

Place

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 .While selecting a city Barista has devoted substantial

management time and 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.

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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.

New Introductions:

Reglon Sleeves T-Shirts @ Rs 249

Marquis pens @ Rs 315 Onwards.

Shoulder Bags @ Rs 209

Coffee Mints @ Rs 40

Price

Café 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.

Café Coffee Day believes in mass marketing.

The average spent by the customer is 100-125. Their coffee starts from as long as 15 Rs.

However there are some outlets where the students are given special discounts. CCD even set

up their outlets in the college campus. For e.g. Café Coffee Day has opened an outlet at the

NMIMS campus where they are providing additional 10% discount to the students.

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CCD is looking for expansion to more interior places. Here prices become more complex as

the consumer are very conservative in spend. A cup of coffee at Rs. 35 is accepted in metro

cities but not in small towns. The decor, ambience and the experience will play a major role

in pulling the crowds in small cities.

The price of the product has to be kept uniform in order to maintain the uniformity in all the

outlets.

CCD target audience is youngsters. Majority of them are dependent on their family for their

expense. This is one of the most important reasons for low pricing compared to other cafes.

They believe it in making their product at an affordable price. Pricing is one of the important

weapons for them to fight against their competitor.

Place

Café 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,

Café Coffee Day has also been on an aggressive drive to expand the number of cafés 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 cafés 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 cafés

wherever there has been an opportunity. Café Coffee Day is already the largest and most

wide spread retail chain of cafes in India with a current count of 169 cafés in 43 cites.

CCD plans to reach cities like Kolhapur and Nagpur in the west, Hubli, Belgaum and Vizag

in the South, Allahabad, Varanasi, Ambala and Patiala, in the North, Jodhpur and Mount Abu

in Rajasthan and Bhubaneswar, Ranchi, Cuttack, Darjeeling, Guwahati and Jamshedpur in

the East.

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

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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.

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

Star Bucks. This store is also an important store due to

the location and also the target customers. Lokhandwala

is on of the most famous place for shopping. This

store is not as big as that of the outlet at Carter Road. It

has a sitting capacity of 95 people. This store also has

indoor as well as the outdoor space but has more of the outdoor spacing.

The working hours at Lokhandwala outlet is 9 am

to 12 pm.

The peak timings are

7-9p.m.(Working Crowd)

10:30 p.m.- 11.30 p.m. (Families)

The USP of this store is its large parking space.

Customers come to the outlet after shopping from

Lokhandwala to have a coffee. The music is not

appropriate which makes some of the customers

annoyed. The Machine used in this outlet is Asttoria,

which cost around 3.5 lac. 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

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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/customer–1-3 p.m.

Comprises primarily of youth from the 18-30 yrs age group

Future Strategy

The management at the Star Bucks 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 Star Bucks 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 Star

Bucks. In order to maintain the share the managers of Star Bucks 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 Star Bucks stores in Mumbai, Delhi and Bangalore. With the move,

the company also hopes to expand the number of Star Bucks Espresso Bars on an average

rate of two to three per month as well.

International expansion:

Star Bucks is also looking for the international expansion. They are planning to expand in the

Kuwait market. Star Bucks is also planning to expand its presence in the other Asian

countries like Sri Lanka, Dubai.

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Promotional Activity:

As part of its marketing strategy, Star Bucks 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 Star Bucks 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.

Its All In The Mind

Star Bucks is a place where the world meets. People come to Star Bucks to

have a meet or to relax. A lot of them actually come alone as well. This is

actually one of those places with people coming in alone because they are

comfortable with themselves. It is a place where people are meeting each other

in an environment, which is fulfilling social and intellectual needs.

The employees at the Star Bucks are also energetic. They help the customer in making

decisions for their purchase. Some of the customers at the Star Bucks think that they should

be personally served rather than self-serving. When the person wants to orders for some

thing customer has to go to the counter order the requirements, pay bill and the employee

takes the name of the customer. When ever the order gets ready the employee shouts on the

top of the voice calling for the customer to take the order. This actually unpleased the

customer as the customer gets disturbed every time the employee calls for some person.

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Product:

During the time of discussion I found two types of customers, one who visits regularly and

other who visits rarely. The customers who come rarely are not actually the coffee lovers.

They just come there to do some time pass. They have no complains about the product. But

the customers who are coffee lovers are not satisfied by the product they serve. There are

some customers who actually complain about the quality of the product. Coffees are not

really that good. The bread is dry; the amount of filling has reduced in quantity etc. Their

desserts fortunately have not suffered and are still pretty good. Customers not only come

there to have a coffee or have a sandwich. They actually come there to have an experience.

They find prestigious when they visit to the Star Bucks. As major target audience are youths,

young managers and middle level management people who come to discuss their business.

The young students visit there as they feel the sense of maturity. The people who are status

oriented would prefer visiting Star Bucks rather than CCD. Their targets are youth, young

executives and nucleus families. Star Bucks also claims that intelligent people come here

“Someone who is intelligent and appreciates the good things in life.” claim by Star Bucks.

There are many customers who come there, as they perceive themselves as intelligent people.

For business people toting Laptops they can hook up to the net free of cost or catch up on the

news business magazines and newspapers are available at every outlet. They also come to

Star Bucks, as it’s a good relaxing place where they can discuss about their clients.

There are people who also come alone. They find Star Bucks is the place where they can just

have a coffee and think deep, as there is no one to disturb them.

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INDUSTRY ANALYSIS

In hospitality industry there is much kind of outlets like hotels and resorts, restaurants, bar,

coffee shop these are the place is serving food and beverage here I am going to give my

research about coffee shops which providing like hot and warm coffees and quick bites to the

customers. I did my research work on Indian coffee shop company who having more than

900 café in 91 major cities in India and outside India.

The world coffee production in the coffee year 2009-10 is estimated to be 123.6 million bags

signifying a decline of over 4.5 million bags in the CY 2008-09 when production totaled at

128.2 million bags. This is revealed in a report of International Coffee Organization market

report for January 2010 excluding additional information that has to come from Colombia

and Vietnam. The ICO report also states of a significant fall in coffee production in Brazil -

by about 14 percent besides production shortfall apprehended in countries like Cote d'Ivoire;

Tanzania, Uganda, Papua New Guinea, Vietnam, Mexico, El Salvador, Equador and Peru.

The Colombian production is unlikely to register worth mentioning increase. The over all

world supply of coffee is likely to be tight in 2010 due to low level of opening stocks as well.

Total world exports of coffee (2008 & 2009)

2008 2009 % Change

Colombian Milds 12219 9278 -24.07

Other Milds 22524 20861 -7.38

Brazilian Naturals 28724 30033 4.56

Robustas 34199 34518 0.93

Total 97666 94690 -3.05

Source: International Coffee Organization, Coffee Market report, January , 2010

In the export front calendar 2009 closed with a decline of 3 percent at 94.7 million bags from

97.7 million bags in 2008. World consumption however is provisionally estimated at 130

million bags in 2008 from 128 million bags in 2007. Domestic consumption in exporting

countries was up at 36.7 million bags compared with 35.4 million bags in calendar 2007.

The Brazilian Coffee Industry Association expects 4.15 percent increase in world

consumption of coffee.

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Indian Coffee Board puts country's coffee production at 2.90 tonne (Post monsoon

estimation) and 3.06 tonne (Post Blossom Estimation) respectively. For the present crop

year beginning October, the board has estimated an output of Arabica at 101,525 tonnes

and Robusta 204,755 tonnes. Karnataka leads the country with 2.05 tonne (Post monsoon

estimation) and 2.21 tonne (Post Blossom Estimation) production followed by Kerala and

Tamil Nadu. According to ICO estimate, India produced over 3.1 million bags of 60 kgs

each in 2009 compared with 3.3 million bags in 2007.Country's coffee exports during fiscal

2008-09 stood at 1.96 lakh tonne signifying marked decline from 2.18 lakh tonne in 2007-

08.

India's Coffee Production (In tonne)

State 2006-07 2007-08 2008-09 2009-10

Karnataka 206025 191575 183860 205700

Kerala 59475 49000 57200 59250

Tamilnadu 18225 18100 16255 19350

Non-traditional areas

(Andhra Pradesh & Orissa)4085 3175 4870 5185

North Eastern region 190 150 115 115

Total 288000 262000 262300 289600*

Post Monsoon estimates *

Source: Federal Ministry of Commerce, Government of India

India accounts for about 4.5 percent of world coffee production and the industry provides

employment to 6 lakh people. Among the coffee growing states, Karnataka accounts for 70

percent of country's total coffee production followed by Kerala (22 percent) and Tamil

Nadu (7 percent). Europe accounts for about 70 percent of India's total coffee exports. Of

this again, 70 percent is shipped via Suez Canal. Major Indian coffee importing countries

include Italy, Germany, Russian federation, Spain, Belgium, Slovenia, US, Japan, Greece,

Netherlands and France.

India's Exports of Coffee

Year Quantity (In tonne) Value ( In Rs crore)

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2006-07 249029 2007.90

2007-08 218998 2046.29

2008-09 197171 2242.64

2009-10 (Upto March 8, 2010 181225 1944.98

Source: Federal Ministry of Commerce, Government of India

With a view to expand coffee cultivation, Coffee Board has been implementing

developmental programmes for coffee development in North Eastern Region and Non

Traditional areas. During 11th Five Year Plan, Coffee Board has proposed to support coffee

expansion programme taken up by the Integrated Tribal Development Agency on 24000 ha.

area in Andhra Pradesh and on 850 ha. area in North Eastern Region, which will facilitate

export of coffee. As a part of export promotion, the Coffees from different regions with their

logos are promoted including the coffee from the areas under Integrated Tribal Development

Agency, as ‘Araku’ Coffee. Constant endeavour is being made by the Government to help the

coffee growers to ease their bank debts

TYPICAL SERVICE OFFERING

CUSTOMER’S EXPECTATIONS

When a customer visits a coffee shop they expect a good experience. They want the service

provider to provide them with the best services they have. From the chart given below we can

easily make out that the customers gives high preference to the quality of services and they

give least preference to the pricing. The major reason behind customer giving least preference

to the price is because they want a good experience which is beyond price.

From the above chart one can easily make out that 42% people consider the quality of

services offered by the coffe shop before going to it.

The next important factor considered by customer before choosing a coffee shop is

the ambience. They want the coffee shop to be a cool hangout place where they can

hangout with friends and do some combined studies

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BUNDLE OF BENEFITS

Following are the benefits that a customer can get from Café Coffee Day:

1. Benefits through pricing of products

Considering that Cafe Coffee Day is trying to target a market whose age range is

between 15 and 60 years, a pricing policy appealing to this segment is difficult. The

pricing is extremely low and act as a deterrent to some customers who might regard it

as an indicator or quality, while very high prices cannot be afforded by most of the

youth. But since Cafe Coffee Day’s current consumer profile is quite young, their

prices are mostly inexpensive, and at par with their competitors.

2. Benefits through different product line

They are Coffee Day's most unique aspect is that it grows the coffee it serves in its

cafes. Coffee Day 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. The coffee beans are

supplied to all the cafés from Chikmagalur. The eatables at Café Coffee Day are

catered by different vendors: example: ice creams are catered by Cream Bell, Milk by

Amul and samosa’s by Patsiers Gallery. Café Coffee Day also sells merchandise

through its stores. 5 per cent of the revenue comes from sale of merchandise. Café

Coffee Day product Mix constitutes a wide range of products that appeal primarily to

Indian coffee and snack lovers. Products have a decided Indian taste to it - be it food

or coffee. Most of the eatables have been adopted to meet the Indian taste buds like

samosa, biryani, masala sandwich, tikka sandwich etc. Thus they have been trying to

capture 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.

3. Benefits through Location

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Cafe Coffee Day 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 Cafe Coffee Day outlets in and around

Malls, Cinemas, Colleges, and Offices etc. This endorses their brand image of a café

that appeals to coffee lovers of all ages.

4. Benefits through People

The people at Cafe Coffee Day are characteristically trained to be Pleasant, Polite and

Positive.

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