Strategic Comparison of Coffee Brands To Incorporate Best Business In India

In Business Report by Tarun GuptaLeave a Comment

This report aims to compare marketing, marketing strategies and target market of CCD, Costa Coffee, Starbucks and Barista Lavazza coffee to incorporate best business in India.

Methods of Research:
Research method includes primary research and secondary research to look into how companies in coffee industry generate best business in India.

Primary Research

  • Visiting outlets of CCD, Costa Coffee, Starbucks and Barista coffee at Connaught Place. It is one of the most popular and crowded market places in Delhi
  • Surveying Customers

Secondary Research

  • Through Internet

Starbucks Coffee

Starbucks Coffee

Starbucks is one of the most admired international coffee brands. As Indian economy is growing, Starbucks has sensed business opportunities and has entered through a joint venture with Tata Global Beverages and worked to create best business in India.

Business Strategy To Generate Best Business In India:

  • Starbucks is selecting strategy in a systematic manner by opening stores only in prominent locations to attract more consumers and starting with the small business to create best business in India.
  • Giving customers a high quality coffee experience along with comfortable and spacious facility where they could spend their time with friends and family. According to a research report on coffee chain, “Very few of Indian consumers order a beverage to take away with them. Most consumers spend about 45 minutes in a café, using it as a spot to meet friends and relatives.”

Target Customers:

Starbucks has higher prices as compared to other Coffee shops. As said by a customer (a college student), “…We normally go 3-4 times during a week in coffee shops. That’s why we prefer to go to CCD than Starbucks. But if we have to go once in a month, we might go to Starbucks.” Starbucks attracts mostly high class and foreign customers. Very few college students or youngsters go to Starbucks.

Promotion And Advertising Strategy To Generate Best Business In India:

Starbucks has adopted a unique sampling strategy for the publicity of its product by distributing free coffee in small cups in front of their outlet to generate best business. Normally coffee is distributed during peak hours, such as during lunch hours. According to a server in Starbucks, “We distribute free coffee to make consumers aware of our taste. Normally it is distributed when we have some new coffee. But since we are new in India, we are distributing all the coffees. In summers, we distribute cold coffee and in winters, we distribute hot coffee”. Starbucks believe in word of mouth publicity. They believe that a satisfied and happy customer could be the best source of publicity and this could help in generating best business in India.

Product Mix:

Starbucks offer wide variety of products to its customers. Ready to eat items offered by Starbucks can be classified into 2 categories:

Drinks: They serve 100 per cent Arabian coffee. All the drinks are prepared in top quality. This is one of the main reasons to create best business in India.

It can be further classified into 3 sub-categories:

  1. Espresso Beverages (Hot or Iced)
  2. Frappuccino Blended Beverages
  3. Non-Coffee Beverages

Each category has about 8 to 10 different varieties. Each product is offered to customers in 3 different sizes- short, tall and grand having different prices. Customers also have the option of adding special syrup or shot in their drinks. All the products are served in high quality cleaned and designer cups and glasses. They also have different types of sugars, such as brown sugar, no sugar and regular sugar for different customers.

Food: All the food items were of high quality. But they have very less variety in food items which goes up to 6-7 items. Food items include delicious muffins and cakes, and roll and sandwich.

Starbucks also sell different types of world-class coffee beans. They also sell different varieties of chocolates. Customers could also purchase world-class coffee cups, designer glasses and tea flasks from Starbucks. This business is another source of revenue for Starbucks.

Pricing Strategy To Generate Best Business In India:
Starbucks do not employ any discount strategy to attract customers. They have positioned themselves in high price segment. All the items in Starbucks are 30-40 per cent costly, if compared from other coffee shops. They believe in providing top quality and service at high prices.

Starbucks AmbienceAmbiance:
Ambiance of Starbucks can be rated highest if compared it to other coffee shops. They change their ambiance with the change in season. This is the main contributor which generates best business in India. They have different ambiance in summer and in winter. Each store is designed specifically. For example, the store in Connaught Place, New Delhi has ropes and carpets on the wall with the pictures of Indian spices. This look makes it very soothing for the eye. Sofas and chairs were very comfortable with enough space to sit. Outlets are so spacious that we could easily walk and move. This was complemented by the soft music soothing to ears. When I visited the store, there were lot of customers in the store, but the place didn’t seem crowded because of vast available store space. Stores are designed to give customers a unique experience in Starbucks. They aim to provide world-class facilities to its customers. Starbucks has also emerged as a meeting place for businessmen and entrepreneurs.

Attitude of The Staff:
Staff was very helpful and polite. They were good in communications and in etiquette. There was one dedicated person to help customers find their place. Also there was one extra person at the counter to help customers chose their drink. Behavior of the manager towards employee was also good. Even once, I saw manager picking leftover plates. This reflects their courteousness and good culture. All these factors increase customer loyalty which generates best business opportunities in India. Starbucks also replaces the drink of a customer free of cost, when a customer after being taste his drink finds it not suitable for himself. This sends a positive message towards Starbucks.

Prepaid Card
Starbucks also offers customers a facility of prepaid card. In which customers can fill any amount and then they can use this card for paying their bills. This card saves customer every time from carrying cash or their debit/credit cards.

Recommendations For Generating Best Business In India

  1. They have either one or two store in a city. Customers have to travel a lot, if they want to have coffee from Starbucks. Instead of traveling, many customers chose to go to other nearby coffee shop. So Starbucks should focus on increasing the number of outlets. This will further help them to generate best business in India.
  2. Starbucks should try to give personal attention to each customer to generate best business in India. Starbucks has mostly high class customers and giving them personal attention will increase brand loyalty.
  3. To attract more youths, Starbucks should decrease their price.
  4. Starbucks has always adopted social media marketing strategy, but in India people are less attached to internet as compared to US and UK. Therefore Starbucks should adopt other modes of advertising to increase awareness among Indian consumers.
  5. Starbuck further needs to identify business opportunities to increase their market share in India.

Costa Coffee

costa coffee

Costa Coffee was founded in 1971. It is headquartered in Dunstable, UK.

Promotional And Marketing Strategy To Generate Best Business In India:
Management at Costa Coffee has adopted a strategy of distributing coupons which offer free Cappuccino coffee on order of Rs. 175 and above to generate best business. This strategy has been very helpful in increasing the business and sales of Costa coffee. They have also adopted a tagline for these coupons which says, “Sometimes, the best thing in life comes for free.”

Target Customers:
They target premium customers who want best quality hot coffee. Costa coffee can’t be said famous among youths.

Location of The Store:
Although location of Costa coffee store at Connaught Place, Delhi is at a prominent place. But it is really hard to locate the store, unless someone has already visited it. It has a very small entry between two pillars which makes it difficult to sight.

Product Mix:
They had wide variety of drinks and snacks which provides customers with a lot of choice. This has helped him to generate best business in India. Apart from this, customers could also purchase different varieties of chocolates from here. Costa coffee also offers three different varieties of sauces along with the snacks. In Costa coffee, customers have the liberty of preparing their own coffee. They could actually chose what thing they want to add in what quantity, such as customers can chose how much quantity of coffee syrup should be added in his drink. This gives customer a choice to modify coffee according to his taste.

Pricing Strategy To Generate Best Business In India:
Costa coffee could be put in the premium segment in terms of pricing. They even charge customers for the sauces.

Costa Coffee AmbienceAmbiance:
Walls were painted with bright different colors giving a refreshing feel. Ambiance could be put in the premium segment category. Store is accommodated with chairs and tables to sit. They don’t have big and comfortable sofas to rest. They also accommodate a rack of news papers for the customers to read. Costa Coffee could not be put into luxury segment. Costa coffee stores are less spacious and comfortable. Costa coffee needs to focus more on this aspect to be the best business today in coffee brands.

Attitude of The Staff:
Costa coffee scores highest in this aspect. This is the main factor which has helped them to find best business in India. The staff at the store is very helpful and they always keep a smile on their face. They help customers in all manners without getting irritated. They also greet customers personally, such as when customers enter, servers personally welcome them and when customers leave, servers say them, “Good day” or “How was your coffee?” There was no extra employee assigned for this task.

There were only 3 employees who were involved in all the jobs like billing, preparing coffee and cleaning tables. But they were able to maintain this very well. They were also giving education about different coffee to customers. Employees at Costa Coffee are very enthusiastic and maintain a positive environment which helps them to attract more customers. They establish a kind of relationship with customers by making them feel that they are important and giving personal attention to everyone. Thus, by treating customers in this manner, Costa coffee succeeds in building long term relationships with their customers and increase customer loyalty.

Recommendations For Growing Business In India:

  1. There are many customers who are not aware about Costa coffee. So Costa coffee should focus on advertising through print and TV media to be India’s best business of Coffee Chains.
  2. Costa Coffee stores are congested and lacks luxury factor. They should increase luxury factor in their stores to increase the number of footfalls.
  3. Costa Coffee should increase number of outlets to reach to more customers.
  4. Costa Coffee should open 24*7 stores at some important stores to create business in India and to target youth segment.

Barista Lavazza

Barista Lavazza Cafe

Barista was established in 2000. Ownership of Barista coffee in India has changed three times from Tata Coffee to Sterling Group to Lavazza. Now even their current owners Lavazza Spa is looking either to sell it or to some strategic partner for Barista Coffee to have best business in India with low investment. Therefore, Barista Lavazza needs to find some good investors to invest in their outlets. Few years earlier, Investing in Barista through entrepreneurship activities would have been very profitable because Barista was pioneering among customers in terms of its taste, quality and service and was generating best business in India (may be without investment) but frequent change of owners and emergence of other coffee outlets has led Barista towards decline.

Promotional Strategy To Generate Best Business In India:
Earlier they used to have 50 per cent discount on all the items. Currently they do not provide any store discounts, but there is 15 per cent discount option on selected bank cards like SBI, ICICI and Citi Bank.

Target Customers:
Target customer of Barista varies from high class customers to youth to generate top business in India.

Product Mix:
Barista has wide variety of drinks and food items available in their menu. They vary in different categories. They also have many varieties of tea to attract Indian customers. They also serve different varieties of soda and lemonade. But many items were not available to serve. They were not prepared because of less or no sale of those items. Barista sell different varieties of chocolates and cold drinks as well. Apart from these, they also sell coffee beans and designer cups to generate best business today.

Pricing Strategy To Generate Best Business In India:
Barista have both low price and high price items to do well and good business in India. They serve coffee and tea in three different sizes having different prices. Thus Barista can neither be put in high price category nor in low price category.

barista ambience

Ambiance:
Barista scores average in terms of store ambiance, but store was not properly maintained. Box for keeping newspaper was broken at few places. Store was also not properly cleaned. Although there was not much crowd, but the store felt congested. There were news papers and novels available for the customers to read. There was also a TV which was not showing any program. Chairs were not comfortable to sit; a customer will feel tired after being seated for long hours on those chairs.

Service Time:
It took a long time to serve the coffee and the service was also not proper.

Taste:
The quality and taste of food was not up to the standards of Barista.

Attitude of The Staff:
Staff was very helpful and they were treating customers very well. There was only one server available, still he was handling all the customers very well.

Recommendations For Generating Best Business In India

  1. Lavazza Spa should either try to find a strong strategic partner for Barista or sell Barista immediately. This might again bring back the Barista brand which is currently declining and help them to create best business in India.
  2. Barista is losing customers due to its poor quality. Therefore they shouldn’t compromise with their quality, if they want to be India’s top business.
  3. Barista also need to increase the quality of its service to be best in coffee business.
  4. Barista should bring new innovative items in their menu to attract more consumers.
  5. Barista need to identify business needs and need to generate new business ideas. Based on these, they need to make business plans to improve their position. Barista also need to include risk management techniques to survive in case of loss.

Café Coffee Day (CCD)

cafe coffee day

CCD can be said as the India’s favorite coffee shop and has found best businesses in India. It is the first choice among the youth and the college students. It is an Indian company established in 1996. CCD started from small scale business and now they have around more than 1000+ cafes in various cities of India.

Target Customers:
CCD can be put in the low price segment. They target everyone in the family to generate business opportunities in India. Youths and families go to CCD to celebrate and spend their time. But mainly CCD target customers are youths because of the cheap products that they provide. CCD has emerged as a meeting place among youths.

Unlike other coffee brands where you have to travel a lot to reach out to an outlet, the best thing about CCD outlets are that they are available everywhere which has really helped them to generate business in India. They have made a network of their outlets. Whenever you want a coffee, you can always find a CCD store near you. They are present in almost all the malls and in almost all important places of a city. They have more than one outlet in bigger market places, such as in Connaught Place, Delhi, CCD has more than 5 outlets. They have made themselves available to customers. CCD find customers, customers do not find CCD.

Advertising Strategy To Generate Best Business In India:
CCD has not spent much on advertising. Recently they have started advertising on print media and TV. They have also started a campaign recently to increase awareness about its new products. CCD also provides an option to other brands to advertise with them. This is also a source of revenue generation for them. They are leveraging all the opportunities to provide best business of coffee chains in India. CCD has around 1000+ cafes in India and has successfully conducted a number of campaigns for various other brands. CCD has reach ability to a big group of youth and other brands could leverage this to benefit themselves by advertising through CCD.

Business Strategy To Generate Best Business In India:
Business Level Strategy of the CCD is to make them available to customers by reaching near to them. They are also known for providing cost cutting and finding alternative sources of revenue generation. This helps them to provide coffee cheaper than other coffee brands which has helped them to serve one of the best in India.

Product Mix:
CCD has wide variety of menu from food to beverages. They also have many different varieties available under beverages and food. They provide different seasonal flavors as well and constantly change and modify their menu to attract more customers. Other than these, customers have different add-on syrups to add to their drinks. CCD also has different combos available, these combos let customers have different products under one item.

Pricing Strategy To Generate Best Business In India:
CCD can be put in the low price segment. This has also helped them to be top business. They own plantations, grow their own coffee and make coffee machines and furniture for outlets themselves. This let them cut their product cost and they could provide cheap products to customers.

Subsidized Outlets:
Many companies have gone into partnership with CCD and have opened subsidized outlets for their employees in company’s campus. CCD has reached to the business center and to the work area. Therefore they have become popular in business district. CCD has maintained these outlets as business facilities and provides business service to attract more customers. CCD has increased its business and popularity through these strategic decisions and has successfully created best business in India.

cafe coffee day ambience

Ambiance:
CCD scores average in terms of ambiance. They have many outlets; few of them are big and comfortable, while few of them are small and less comfortable. Comfort, luxury and ambiance vary among different outlets.

Attitude of The Staff:
Staff was not very helpful at CCD and was also less enthusiastic and energetic as compared to other coffee shops.

Café Moments Card:
CCD provides its customer with choice of Café Moments Card. This card provides customers with special benefits. With this card in pocket, customers don’t have to carry any money. A customer having Café Moments Card gets free beverages on birthday and other occasions. This card has other benefits as well, such as, on a recharge of Rs 100 to Rs. 999, extra 5 % amount is loaded in the card, 7% is loaded on recharge of Rs. 1000 to Rs. 2499 and 10 % is loaded on recharge of Rs. 2500 and above. Customers also get a free beverage after 5 café visits. Thus benefits provided by this card has helped CCD to grow business in India.

Café Coffee App:
Customers can download Café Coffee App to their mobiles. This help customer to locate stores, get exciting offers and browse menu.

Recommendations For Generating Best Business In India:

  1. To increase awareness among consumers and to perform best in business, CCD should sponsor Cricket matches or TV shows.
  2. CCD should open luxurious cafes at prominent places to attract high end customers.
  3. CCD should try to establish itself as “Coffee House of India” by bringing more items according to Indian taste and try to enter rural India to generate best business in India.
  4. Should focus more on quality and service.

Summary

summary of cafe

Comparison among Starbucks, CCD, Costa Coffee and Barista Lavazza is summarized as below. Each item is rated on a scale of 1 to 10. These are the factors which decide best business in India.

Mode of Comparison

Starbucks

Costa Coffee

Barista Lavazza

CCD

Variety of items

Less

Sufficient

Average

Excellent

Price

High

High

Average

Low

Quality of food

High

High

Average

High

Ambiance *

1

2

3

4

Comfort and luxury *

1

2

4

3

Service Time

Low

Low

Average

Average

Attitude of the employee

Good

Very good

Good

Average

*For these, ranking has been provided.

Conclusion:
India has lot of business opportunities which coffee companies can leverage to earn profits and increase market share. Thus coffee shops in India need to focus on various aspects catering to consumer needs to generate best business in India.

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