64961938 Cafe Coffee Day Final Report

Café Coffee Day –Final Project Report on: “Promotional Strategies For Cafes in Malls (Mall Activations)”

SIP project report submitted in partial fulfillment of the requirements for the PGDM Programme

By: Amit Kumar Singh (Roll no. : 11009)

Project Supervisors: 

MR.ARUN P (Marketing Manager, Café Coffee Day) International School Of Business & Media, Pune (2010-12).

Acknowledgements The completion of the project would not have been possible without the kind help and support of some people who helped me complete my assignment and helped in ensuring that any form of hindrance faced was countered with, effectively. My deepest respects to my Company Project Guide, Mr. Arun P(Marketing Manager, Café Coffee Day) whose expertise and knowledge helped me enhance my own knowledge in all major aspects of business. I would also like to thank Mr.K.Ramakrisnan (Marketing Head, Cafe Coffee Day) without whose co-operation and support nothing would have been possible. Lastly I would like to thank all the customers of Café Coffee Day who provided the necessary feedback and suggestions required to complete my surveys.

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Executive Summary I was involved with one project during my two month internship with Café Coffee Day, Kolkata Regional Office. I was asked to work on one projects namely “Promotional Strategies For Cafes In Malls (Mall Activations)”. The timeline for the project was Two month. For my project on “Promotional Strategies For Cafes In Malls (Mall Activations)”, the research and Data Collection was done mainly through survey conducted on facebook as I was asked not to do a questionnaire inside the malls by my project guide. The Projects were done keeping in mind that Café Coffee Day is a youth oriented enterprise and that attracting and satisfying also attracting more young and vibrant people in one of its primary objectives.

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Introduction Today Café Chains like Café Coffee Day, Barista, Costa Coffee, etc. are in popular demand in India mainly because of the ambience these Cafes provide to their consumers and also because of an increase in the number of coffee drinkers in the country. A culture of coffee drinking which originated from the south has been spreading throughout the country mainly after the inception of such Cafes. Today‟s youth love their music and like socializing with friends and loved ones. Taking this into account, the Café Chains in the country provide just what the youth wants. If one walks into any Café, one can notice the trendy design, lavish seating, and light music playing in the background. Such is the sort of ambience the youth normally prefer. It sort of has a soothing effect which enables them to converse freely and share their experiences. However, with increasing popularity of such Café chains, more and more players are entering the market with better products and services, hence making it difficult for the existing players to retain or create new customers. By Doing the “Promotional Activities” wherein the customer gets discounts and other benefits, one can bring the customer closer to the Café and increase brand loyalty.

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Objectives of the Study The objective of the project on “Promotional Strategies For Cafes In Malls” is “To study Café Coffee Day, identify areas of excellence and areas needing improvement; and provide suggestions for such improvement”. The aim of this Thesis is to successfully compare two prominent service sector companies on a common platform, analyze their working and performance, and highlight what they are doing well, while providing suggestions and recommendations for improvement. QSR(quick snack restaurants), other eating outlets in malls and Café Coffee Day were chosen because of their identical pattern of functioning and growth. They are the only major player or competitor for café coffee day in malls and their customers consider both as interchangeable brands. This is why it is important to study how these brands differentiate themselves from each other, and attempt to improve brand loyalty amongst their customers.

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Concepts/Models used Project: “Promotional Strategies For Cafes In Malls (Mall Activations)”: Organizations need to retain existing customers while targeting non-customers. Measuring customer satisfaction provides an indication of how successful the organization is at providing products and/or services to the marketplace. Customer satisfaction is measured at the individual level, but it is almost always reported at an aggregate level. It can be, and often is, measured along various dimensions. A hotel, for example, might ask customers to rate their experience with its front desk and check-in service, with the room, with the amenities in the room, with the restaurants, and so on. Additionally, in a holistic sense, the hotel might ask about overall satisfaction “with your stay” As research on consumption experiences grows, evidence suggests that consumers purchase goods and services for a combination of two types of benefits: hedonic and utilitarian. Hedonic benefits are associated with the sensory and experiential attributes of the product. Utilitarian benefits of a product are associated with the more instrumental and functional attributes of the product . Customer satisfaction is an ambiguous and abstract concept and the actual manifestation of the state of satisfaction will vary from person to person and product/service to product/service. The state of satisfaction depends on a number of both psychological and physical variables which correlate with satisfaction behaviors such as return and recommend rate. The level of satisfaction can also vary depending on other options the customer may have and other products against which the customer can compare the organization's products. Work done by Parasuraman, Zeithaml and Berry between 1985 and 1988 provides the basis for the measurement of customer satisfaction with a service by using the gap between the customer's expectation of performance and their perceived experience of performance. This provides the measurer with a satisfaction "gap" which is objective and quantitative in nature. Work done by 6

Cronin and Taylor propose the "confirmation/disconfirmation" theory of combining the "gap" described by Parasuraman, Zeithaml and Berry as two different measures (perception and expectation of performance) into a single measurement of performance according to expectation. The usual measures of customer satisfaction involve a survey with a set of statements using a Likert Technique or scale. The customer is asked to evaluate each statement and in term of their perception and expectation of performance of the organization being measured. Their satisfaction is generally measured on a five-point scale.

Customer satisfaction data can also be collected on a 10-point scale. Regardless of the scale used, the objective is to measure customers‟ perceived satisfaction with their experience of a firm‟s offerings. It is essential for firms to effectively manage customer satisfaction. To be able do this, we need accurate measurement of satisfaction

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Industry details THE COFFEE CAFÉ INDUSTRY The beginning: It all began around 1000 A.D. when Arab traders began to cultivate coffee beans in large plantations. They began to boil the beans creating a drink they called „qahwa‟ which translates to ‘that which prevents sleep’. The drink became widely popular, and the need for coffee beans grew. First known discovery of coffee berries. Legend of goat herder Kaldi of Ethiopia, who notices goats are friskier after eating red barriers of a local shrub. Experiments with the berries himself and begins to feel happier.The first coffee trees are cultivated on the Arabian Peninsula. Interesting facts about Coffee & Cafés: • Coffee was first known in Europe as Arabian Wine. • Coffee is presently the second most traded commodity in the world. It is second only to oil. • Nescafe was invented by Nestle because it had to assist the Brazilian government to solve its coffee surplus problem. Coffee is now the world‟s most popular beverage, which leads to a boom in retail and hotel cafés. The American retail café Starbucks in born.

The Coffee Café Industry The Coffee Café industry is currently one of the biggest and fastest growing sectors in business. The industry consists of a mix of individual cafés, hotel cafés and retail café chains. 8

Individual Cafés: The main bulk of revenue is earned by small, individual cafés, run mostly by families and friends. It is a relatively unorganized sector. There are millions of such cafés around the world, and they provide customers with a homely, casual experience. The bulk of these cafés are mainly in Europe, where every little town or village has local cafés, where people gather together for a conversation over coffee, or just to be alone with their thoughts. These cafés have been the birthplace and sanctuary for various creative minds, revolutionaries and thinkers of our time. The most recent example is the author J.K. Rowling, who has written most of the Harry Potter series of books, sitting at her local café. These cafés set themselves apart from retail chain cafés and hotel cafés because they provide customers with a homely, classic appeal, which cannot be emulated. Hotel Cafés: Ever since the popularization of coffee, hotels all over the world started opening 24-hour coffee shops where visitors to the hotel could walk in for a cup of coffee and some food at any time. These coffeehouses are extremely important, because they provide international visitors to the hotel with a universal drink- coffee. Any customer can walk into any major hotel in the world, and enter the coffeehouse, and know what to expect. These cafés are not really major players in the coffee café industry, but rather provide supplementary services to the hotel industry. Retail Café Chains: The last, and the most organized sector in the coffee café industry, is the retail café chain. Off late, these chains have become extremely popular and are growing at an ever-increasing pace. These retail chains have work with an organized structure of man, material and money. The work 9

on developing a recognized brand consistent to all their outlets, which customers can easily relate to, wherever they go. They provide customers with a standardized level of service and quality at each of their outlets. The vast popularity of these retail chains is shown in the rapid international growth of brands like Starbucks. Customers can do to any Starbucks across the world and know exactly what to expect. The main focus of my project is increase the number of walk-ins per day in cafes in malls and eventually increase the sales in Café Coffee Day Growth of Café Industry in India Hot beverages have always been a part of the tradition of India, especially South India. Coffee took the first seat in South India when the traditional Brahmin classes brought down the beverage from the ruling British around the 1930s. During the early years the drink was confined only to traditional rich Brahmin families who served filter coffee in a „davra- tumbler‟. Coffee is no more confined to the rich Brahmin class now, though the tradition of serving filter coffee in the „davra- tumbler‟ continues to this day. In order to spread the drink, coffee houses emerged at various places in the country, which also served as the opposite places for lawyers and the educated class to hold discussions ranging from politics to cinema. It is also believed that many scripts and ideas for films evolved here. One of the oldest coffee houses in South India is the Raayars mess, Chennai, which serves first class filter coffee even today. The mess was established in the 1940s and continues the tradition of coffee but supplements it with Tiffin also. The vintage location of the mess attracts huge crowds even today early in the mornings, Coffee however was not the only item on the menu. These places also served food and other drinks to their customers. The drink also became famous and as a result even five star hotels began cashing in on it. Several hotels all over the country started opening coffee- shops that catered to high- end customers. This showed the popularization of coffee cafés, to all sections of society.

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The drink has now become more of a concept than merely a drink itself. The last decade witnesses the growth of numerous coffee pubs in the country. A number of coffee café owners tried to westernize the taste in contrast to the filter coffee.

Now, large retail chains like Qwikys, Barista, and Café Coffee Day have opened up around the country. The concept of a café today is not merely about selling coffee, but about developing a national brand. Retail cafés now form a multi- crore industry in the country, and have huge potential for growth locally, and internationally.

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CAFÉ COFFEE DAY Corporate Profile It was in the golden soil of Chikmagalur that a traditional family owned a few acres of coffee estates, which yielded rich coffee beans. Soon Amalgamated Bean Coffee Trading Company Limited, popularly known as Coffee Day was formed. 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, Coffee Day began exporting coffee to the connoisseurs across USA, Europe & Japan. In the calendar year 2000, Coffee Day exported more than 27000 tones 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. Coffee Day has a wide and professional network in the major coffee growing areas of the country comprising over 48 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.

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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 over 1090 cafes in all major cities in India. It is a part of India's largest coffee conglomerate named Coffee Day, ISO 9002 certified company. Coffee Day's most unique aspect is that it grows the coffee it serves. Key Features • 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.

• Essentially a youth oriented brand with majority of its customers falling in the 1529 year age bracket • Each café, depending upon its size attracts between 400 and 800 customers daily. • It is a place where customers come to rejuvenate themselves and be themselves. • USP of the Brand: Affordable Price 13

Quality Coffee – Winner of Platinum, Gold, Silver and Bronze medals at the India Barista Championship 2002. Product Sources: 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. Quality standards: Café Coffee Day has a check on quality all the time and in several aspects. The operational incharge will go around checking business, record keeping service and check the feedback forms. The food in-charge will look at the way food is being stored, coffee is being made, what is the time take to extract the coffee and so on. Marketing person will go about checking displays, how the merchandise are displayed Serving Size:The serving size of a product is a measure, not only of quantity, but also of value for money. The average serving size for Café Coffee Day‟s main product categories is

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Product Serving Size Hot Coffee 210 ml Cold Coffee 350 ml Smoothies 350 ml Granitas 350 ml

Merchandising: At Café Coffee Day merchandise started more as a sentimental thing than as a revenue stream. They wanted to reward coffee lovers and they started selling mugs. People wanted to wear something that reminded them of the cafe so they designed T-shirts and sold thousands of those. But soon it has become a serious business. 5 per cent of their revenue comes from the merchandising. Café Coffee Day sells various young and trendy merchandise through its stores: 

Caps

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T-Shirts

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Bags

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Mugs

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Coffee Filters

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Coffee Powders

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Coffee Mints

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Pens

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Process: The order process at Café Coffee Day is based on self-service, where the customer goes to the counter to place his order. Whereas they have a flexible delivery process, where they wait for some time for the customer to pick up the order but if the customer takes too long then the order is delivered on his table.

Positioning: Consumer Profile: Research shows that 37% of the customers are between 20 and 24years. 27% of the customers are between the age group of 25-29 years. 60% of the customers who visit the café are male and 40% are female. 52% of customers who visit the cafes are students. 18% of the customers visit the cafes daily while another 44% visit weekly. Each café, depending upon its size attracts between 500 and 800 customers daily, mainly between 4pm and 7 pm. Customers describe Café Coffee Day as the place they frequent most after “home and workplace/college”. It is a place where they meet friends and colleagues, in groups of 3 or more. The prices here are perceived to be reasonable and it is a place where customers come to rejuvenate themselves and be themselves rather than a place to be “seen at” vis a vis other cafes. Brand Image Café Coffee Day is a regular meeting place for 15 to 29 years old, both male and female, who are waited on by friendly and informed staff, and are offered the best made coffee, hot or cold, beverages and food in an invigorating ambience. It is urban youngster‟s favorite “hangout”. 16

Its customers are mostly young college students and young professionals. It is for those who are young or young at heart. Products: 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. Prices: Considering that Café Coffee Day 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 From the time it first started its operations, there has been only minor changes in the pricing policy of Café Coffee Day. The changes have been more due to the government taxes than any thing else. People: People at Café Coffee Day believe that “People are hired for what they know but fired for how they behave”. Motivation and personal skill are laid emphasize upon.

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Physical Evidence: a) Logo, Colors, Images: Café Coffee Days logo is a Dialogue box in red and white. It symbolizes what Café Coffee Day is all about- having a chat and relaxing and enjoying in the company of friends over a cup of coffee.

Décor & Architecture: Café Coffee Day had gone in for image change and revamping of interiors in the last quarter of 2001. 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.

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Literature: The literature provided by Café Coffee Day 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 Bangalore head office and distributed throughout the branches.

Locations: Café Coffee Day 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. Promotion: Café Coffee Day does not believe in mass media promotions. But they are involved in all the areas of serious consumer passion.

Through television: Café Coffee Day held a contest around a very popular programmed on Zee English called Friends. All the six lead characters are shown often visiting a coffee shop and a lot of youth like watching the programmed. That is why they had a contest running where customers could win Friends' merchandise. The linkage was that it is a youth based Programmed and it had a coffee house.

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They have tied 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. They have also done promotion for History Channel, where they have run promotion for Hollywood Heroes. They had asked a few question and a lucky winner won a trip to Hollywood. Social Media: CCD also communicates with its customers and potential customers using Facebook and Twitter.

Methodology used For the project on “Promotional Strategy For Cafes In Malls”, I was given approximately 10000 coupons to be distributed with help of a promoter outside or within the malls and the idea was put forward by me to simply increase the walk-ins in the café to eventually increase the sales. The data was collected based on information provided by: 1. The management of the organization. 2. Customers visiting QSR‟s and Café Coffee Day outlets. Besides the primary data collected with the help of the survey on facebook, I have also collected the relevant secondary data from various sources like magazines, books and Internet and newspapers. Based on the relevant primary and secondary data, a comparative analysis has been done so as to find out the areas of excellence and areas of improvement of both organizations. The areas of excellence and improvement have been identified based on factual information, in light of which recommendations and suggestions have been provided for the overall improvement of the organizations in the future. This Thesis was conducted in 2011 in Kolkata, India; so the information is relative to this city.

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The survey was conducted in the Cafes in Malls in Kolkata only.

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This had to be done without the knowledge of the Café team.

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The target age group was 16-45.

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This survey was conducted in the month of April and May.

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It was conducted only on peak hours(11 am to 2 pm and 5pm to 8 pm).

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Interpretations and conclusions/summary Customer Connect in any form of business is very essential. From the survey conducted to measure “Customer Expectations” it is evident that more and more people are starting to experience the atmosphere provided by the Cafes. Moreover, we even see that where Café Coffee Day has an edge over its competitor Barista when it comes to Ambience, Service and Pricing, it does need to work on its Core Product, where Barista wins. By Measuring Customer Expectations one can not only improve oneself but also come up with new innovative and fresh ideas so as to increase customer satisfaction hence increasing Café footfall even more. Café Coffee Day is projected as an “affordable” brand. This strategy has worked extremely well so far, and Café Coffee Day got a high rating, both for their prices and for their value for money, in the market survey. The Café Coffee Day brand is, and always has been, extremely youth- oriented. Ina country where over 40% of the population is under the age of 20, there is huge potential for Café Coffee Day to become one of the country‟s largest youth brands. The untapped market share and potential for growth is enormous.

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Recommendations

As far as customer Satisfaction is concerned Café Coffee Day is doing quite well. However, it has to counter stiff competition from competitors and new entrants. For Café Coffee Day: •

More range in food products

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Eggless pastries, momos wanted in menu.

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Magazines , newspapers and puzzles on table.

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Make seating less congested.

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Deduction in prices of some items.

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TV shows only DD1 in some cafes.

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Install coolers for outside seating.

Café Coffee Day has done extremely well so far to project itself as unaffordable youthoriented brand. But there are still certain areas where their brand needs to be much stronger. With regard to the physical evidence associated with the brand, Café Coffee Day needs to do a lot of work if they hope to catch up with Barista. My first recommendation for Café Coffee Day is to clean up the décor at every outlet, wherever unnecessary advertising is taking place. Although it might be an important source of revenue, long-term customer perception of the brand isn‟t very positive. Café Coffee Day would do better to provide promotional space for its partners with the use of clever collaborations, and not printed advertisements and posters everywhere. My second recommendation is that Café Coffee Day looks at its current recruitment, selection and most importantly, its current training policies. Customers are not

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happy with the behavior and service of the staff, and Café Coffee Day is lagging far behind Barista is this aspect. For Barista: •

Lower prices for all products.

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Lower wait time

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Quicker service.

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Open more outlets.

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Want better music.

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Bring more variety in food

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Want More Indian food in menu.

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Keep environment a few feet outside cafes also clean.

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Limitations of the Study For the project on “Promotional Strategies For Cafes In Malls”, I was not allowed to interact with the Café team and also the customers inside the cafe at any point of time during the survey i.e. my interactions were limited to just my friends online and also people going into the mall and not the customers sitting in the café and also coming out of the malls and to the people in the Regional office , Kolkata. The study was conducted only for Cafes in Malls in Kolkata i.e. for the Cafes in the city only.

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Scope for future improvements The Café Business is a booming one with an ever increasing customer base. If the existing players play it right, they would without doubt manage to create a healthy market for themselves creating a sort of barrier for new entrants. Although a high rating has been received by both Café Coffee Day and Barista in most of the parameters, both have to work on “pricing”. Moreover they need to keep updating their Cafes as time passes. Café Coffee Day already has a separate department for digital marketing which has been working on digital menus and other related aspects. The Seating in the Cafes is good, but not as good as the prices they charge. Moreover cleanliness of the Cafes is also important. A lot of respondents did not like the fact that Café Coffee Day outlets and literature served as prime space for allot of advertising and promotions. They felt as if the café‟s had been hijacked just for advertising. This has to be taken care of. The Café Coffee Day brand, although clearly a youth- oriented brand, lacks the power and strength expected to maintain brand loyalty. The brand doesn‟t project a clear image to customers about what Café Coffee Day is all about. This could prove as a deterrent during future national and international expansion. If it does work on these aspects, it will without doubt become on of the best Café chains in the world.

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Appendices

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Bibliography  www.cafecoffeeday.com  www.barista.co.in  www.google.com  Philip Kotler,” Marketing Management

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