MARKETING MANAGEMENT

CASE ANALYSIS

COFFEE WARS IN INDIA: CAF COFFEE DAY TAKES ON THE GLOBAL

BRANDS

By Group AO-2

Jagannath Akela 14905

Meghana Chore 14S721

Raunak Rao 14S732

Avinash Singh 14S752

Hitesh Takhtani 14S716

 1. What should be the important goals for Siddhartha and Venu Madhav when
considering their responses to Starbucks entry into India?
The major strength of Cafe Coffee Day was its early arrival in the Indian market. This gave it
an early entry advantage. Cafe Coffee Day had grabbed a large part of the market share and
became the favorite of the Indian customers. The organization was totally assimilated with
the furniture in the cafes and lounges. It also offers excellent quality in its novel and in-
house recipes, fusions and assortments. Regarding the entry of Starbucks, CCD should go
head on in competing. Prices should be parallel with similar kiosk vendors like Starbucks.
Cafe Coffee Day cafes should endure in price products established on their current pricing
strategy, targeting the middle and upper middle classes. Lounges should be sited as an
exceptional brand, unswervingly competing with Starbucks, in terms of atmosphere and
location. They should start having clever collaborations .The main motivation should be on
the shopper experience, so the ambience and style should be restored to improve the
quality stature of the store. Customer rendezvous should be more. Wi-Fi and other set
contribution activities should be made more and more obvious. To progress the quality of
service, CCD should look upon the recruitment, selection and training policies of the staff.
All these suggestions will definitely have positive impact as a response to stand against the
international giant.

2. What are CCDs most important competitive advantages? Biggest

competitive challenges?
The most important advantage of CCD is that it has its own plantations and is perceived as a
Coffee expert. Then it has its training department which trains young people who then get
absorbed into the business. This results in the best customer service. Then CCD is too
obvious for teenagers and youth below 30 and this adds an added advantage since 3/4 th
population of India is youth. Nonetheless the people above 30 already like the lounge
facilities provided, hence an all-round perfect place for everyone. It offers a product variety
in terms of the type of cafes which serves the tastes of different segments of demography
i.e. The lounges and squares for the upper middle class and caf kiosks for middle class.
Having known the Indian taste, CCD can modify and mold itself according to the
geographical locations in India where Starbucks is still new and vulnerable.
The biggest and most dangerous competition for CCD is Starbucks and the speed at which
its getting famous. That way most of the customers might shift away and hamper CCDs
reputation. This might result in the threat of mobility, loss of the supplies along with the
threat of substitutes.

3. What are Starbucks most important advantages and challenges?

Although CCD was a dominant player and market leader in the industry, the entry of
Starbucks posed a threat due to the following advantages of Starbucks:

Starbucks is the market dominant player in the world.

Highly professional and interactive staff who gives a personalized homely touch to the
customer experience (e.g. addressing customers by first name and remembering the
regulars favourites)

Tie up with Global Tea giant and respected name in India The TATA group. TATAs
familiarity with the Indian market was an added advantage.

The tie up helped in opening stores quicker and at premium locations.

Starbucks created an aspirational, premium brand with international appeal.

Target segment of working professionals above 25 years of age which differed from CCDs
primary target.

Targeting upper middle class as opposed to CCDs middle class segment.

More appealing to tourists and travellers.

Better employer as compared to CCD.

Policies like Just say yes which maintains customer goodwill.

Challenges:

Indian market is price sensitive and therefore premium prices might not seem attractive.

Making the product affordable to youngsters.

Maintaining the service level with the talent available in the industry.
Ever rising Real estate prices may slow down expansion.

Making the brand a third place after home and work in the conservative Indian Market given
its premium and foreign image.

4. Which of the following paths should Siddhartha and Venu Madhav follow and
why?

- Slight Course Correction

- Bigger, bolder, aggressive reaction

CCD although the market leader and has swept away competition in the past, has a definite
need to secure its ground on the home turf from Starbucks.

Starbucks and CCD both have access to premium locations, quality supplies and with the
intense media coverage and curiosity that Starbucks has managed to garner, there exists
therefore equal growth opportunities for both the players and CCD must address this in the
short run and in the long run both.

We suggest, CCD since a dominant name with 60% of market share, must not react
aggressively and impulsively. It should instead hold its ground and roll out improvements in
the short run and gradually make headway towards long term action plan.

Short term-

It is known that people visit Starbucks for its service more than the taste. CCD must
therefore improve on the service level offered by employees. CCD must train and motivate
employees to take extra special efforts in their quality of service to give a more personalised
experience.

CCD has a good mix of Food menu as compared to Starbucks. It could however increase the
depth of beverages.

The attrition rate needs to be controlled by providing health coverage plans and better
incentives and a more sophisticated image to the employees.
CCD must not just expand the Squares and Lounges, but should in fact expand the cafes as it
attracts its primary segment of market. It must expand more cafes in busy locations, closer
to colleges, in urban busy locations.

Long term-

CCD must increase the number lounges and squares steadily in order to expand its customer
segment from teenagers to working upper middle class professionals which is the primary
target segment of Starbucks.

It should advertise aggressively in the period of 2-5 years to increase the visibility of the
brand and hence increase advertising budget of $3m to $5m can be spent.

It must expand in tier 2 and tier 3 cities where Starbucks will take time to establish.

CCD must all this while not let its aspiration of going international and being the top 2 or 3
in the world market subside.

It must gradually work towards building an international image and can expand in the
international market as the coffee maker from India with an international local touch.