OBJECTIVE OF THE STUDY

RETAIL MARKET OF COFFEE AND CONSUMER BEHAVIOUR

Under this research, the objective is to do a comparative analysis between Café Coffee
Day and Barista.

SUB-OBJECTIVES WORKED UPON:-

 Exploring the market?
 Which types of consumers are purchasing?
 What are the key factors in buying decision?
 Whether there is market potential or not?
 What are the other substitutes consumers are using?

INTRODUCTION TO COFFEE CHAINS IN INDIA

The liberalization of the Indian economy and its resulting effects on consumer habits is leading
to a higher incidence of eating out among the majority of consumers. This emerging trend is
especially prevalent amongst middle-class Indians, as dining out is increasingly perceived as a
form of entertainment.

While cafés/bars was performing well in 2003, witnessing a healthy increase of 10% in value
terms, diseconomies of scale are beginning to surface for the major chained specialist cafés/bars,
such as Café Coffee Day and Barista, due to over expansion of units.

Most coffee companies adopted the franchising route to set up operations and expand their
market presence, as opposed to direct investment or entering into joint ventures.

Logistical planning and outsourcing of ingredients are crucial factors in keeping the cost of
operations low. The initial strategy of opening outlets in smaller towns in India, which have
considerable purchasing power, is no longer favored by multinational coffee companies.

The trend towards takeaways is also fast gaining popularity among Indian consumers, with value
sales almost having doubled over the review period, although from a small base.
 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 2007,
Coffee Day exported more than 32000 tonnes of coffee valued at US$ 80 m to these countries
and, for the second time in its short career of 14 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.
 Introduction

Café Coffee Day currently owns and operates 436 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.

Key Features:

• Pioneers of the Café Concept in India with 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 15-29 year
age bracket
• Each café, depending upon its size attracts between 400 and 800 customers daily
• At present it operates 436 cafes across 69 cities.
• Fiscal year 2006-07 turnover was Rs. 400 crores.
• Marketing association with youth oriented brand like LEVIS, TVS, AIRTEL, and AOL.

• 125 years of coffee growing history

• A fully equipped ISO certified roasting plant with a 100000 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)
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.

I) 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

II) 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 25 Rs.
However there are some outlets where the students are given special discounts. CCD even set up
their outlets in the college campus.

CCD is looking for expansion to more interior places. Here prices become more complex as the
consumer are very conservative in spending. 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.

III) 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 Delhi & NCR CCD have 54 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 700 cafés in 75 cities
by December 2009. 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 600 cafés in almost all major cites.

CCD plans to reach cities like Kolhapur and Nagpur in the west, Hubli, Belguam and Vizag in
the South, Allahabad, Varanasi, Ambala and Patiala, in the North, Jodhpur and Mount Abu in
Rajasthan and Bhubuneshwar, Ranchi, Cuttack, Darjeeling, Guwahati and Jamshedupr in the
East.

IV) 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 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 country. In this promo a
package of 2 ices blended cold coffee and 1 choc fantasy for just selling for Rs 82.

Customer Loyalty Programme:

Coffee shops have a high loyalty factor i.e. 60-70% of customers come in at least once a
week. The Cafe Citizens Programmed launched along with Net Carrots Loyalty Services would
reward regular customers of Cafe Coffee Day. Any customer who bills a minimum of Rs 100 on
a single bill is automatically eligible for membership to the Cafe Citizens Programmed. The
programmed entitles members to a 10 percent discount on all food and beverage bills for a year
from the month of membership. Members will also receive surprise gifts from India times
Shopping when they reach a total billing amount of Rs 2,000, Rs 5,000, and Rs 10,000. Members
can track their total bills spend at any Cafe Coffee Day outlet across the country. The programme
was very successful and they attracted 1, 35,000 citizens.

Smart Card Programme:

Started from 1st Aug, 04; one can enroll into the program by paying Rs.100/- at any Café
Coffee Day Outlet and get a TEMPORARY CARD immediately after filling in the enrolment
form. With the Card, one can accumulate Value Points Equivalent To Cash on net purchases at
every transaction made at any of CCD outlets, provided the card is submitted to the café staff at
the time of placing each order.

The personalized permanent SMART CARD would reach at ones place in 7 days from the day
of enrolment and the points would be transferred from temporary card to the PERMANENT
SMART CARD. The points accumulated on the card would be printed on the bottom of the bill.
So it is very easy to keep track of the points. As soon as 100 points have been accumulated
on the card, one can start redeeming the points. Points can be redeemed on food, beverage
and now even merchandise like coffee powder, T-shirts, mugs etc except Jukebox coupons.

Promotion:

Oyester Bay

The current promotion is done with the Oyester Bay Jewellery for the woman’s day. CCD has
arranged the contest, which is arranged for the woman’s day event. This type of contest attracts
the young crowd especially girls.

Ad labs

CCD is also involved in the promotion with Adlabs.

The pamphlets are being distributed indicating the
current movie shown and the movies to follow. Also it
shows the special offer for some lucky customer to get
the coffee free.

Magazine

CCD also has private magazine distributed free to

their customers. It includes ads and advertises about
the promotions to follow.
Tie-Ups

CCD jointly organizes large number of promotions with the other companies serving the similar
target audience.

EBD Book Café:

EBD is book café has joint ventures with CCD. EBD Book Café believes that by selling books
from within the espresso bars like CCD and other such co-locations that have a footfall of over
100 plus customers in a day will help them to achieve growth in book sales. One can find one’s
favorite books at such cafes starting from fiction, non-fiction, religion, cookery,
management, lifestyle, art & craft, children books and much more. EBD Book Café are in
collaboration with Café Coffee Day have existing outlets in Ludhiana, Jaipur, New Delhi
and Kanpur and are in discussion to open more such outlets in, Mumbai and Ahmedabad. The
CCD bookshops are in the same premises though not necessarily inside the outlet.
Movie launches:

Apart form product launches, the company also does a number of tie-ups with the movie industry
in the same manner. For instance, there was Damdaar coffee that was sold during the
launch of the movie DUM. There was also the Damdaar contest wherein the prizes were
movie tickets, posters, CDs, and cassettes. In addition, the winners get a chance to meet
and have a coffee with the stars of the movie.

The latest movie promotion was done for the movie “Mujhse Shaadi Karogi” which said
‘Bill a Shagun amount of Rs 301/- and you can enter the Mujhse Shaadi Karogi
Contest’ and in the contest form there were questions like “Who will win Priyanka?” or
“How will you say Mujhse Shaadi Karogi to the
person you love?” etc.

Ambience and Surrounding

“First Impression is the Last Impression”. This is

true in this business. The first thing that the customers
come across is the surrounding and the ambience of the
store.

To further brighten the vibrant atmosphere of the cafés, there has been a greater thrust on
providing more value added services such as video juke boxes, cosy sofa seating, and exciting
round the year promotions. Trading Co. Ltd had gone
in for an image change and revamping of interiors in
the last quarter of 2001.

Café interiors at the company's 430 outlets are being

given a whole, new look. In a change from the largely
wood and granite based interiors, there is more of steel
and lots more colour. The young colours of today, lime
green, yellow, orange, and purple will predominate.
The crockery will also sport these colours. The larger cafes will also have lounge areas and a few
beanbags.

BARISTA

HISTORY OF BARISTA

Barista traces its roots back to the old coffee houses in Italy. Drawing inspiration from them,
Barista has single-handedly taken the challenge to transport the magic of Italian coffee
houses to countries across the globe. The cafes are designed to reflect the warmth, culture and
romance of Italy. This done, Barista was ready for the next step: turning it all into a brand. A
strategic alliance with TATA Coffee in 2001 resulted in backward and forward integration of
the entire coffee value chain. Both Barista Coffee Company and TATA Coffee Company take
proud ownership of the category from ‘bean to cup’.

A PARTNERSHIP RELATION

Their franchising system is founded on the premise that the Company can be successful only if
their franchisees are successful first. They believe in a partnering relationship with their owner/
operators, suppliers and employees and establishing a win-win relationship for everyone.

LOOKING FOR

Their selection of prospective candidates is based on an assessment of overall business

experience and personal qualifications. They look for individuals with good "common business
sense", a demonstrated ability to effectively lead and develop people, a focus on offering great
service and quality, and a history of previous success in business and life endeavors.
MARKET FOR COFFEE

Coffee was introduced to India back in the 17th century. Despite this long tradition its
consumption has been restricted to the South Indian states of Tamil Nadu, Karnataka and
Andhra Pradesh and as a limited urban phenomenon in the rest of the country. With 400
billion cups consumed each year, coffee is the world’s most popular beverage. In fact, as a
commodity, it is second only to oil. The growth in the specialty coffee segment can be
attributed to several factors: the increasing demands for innovative, sophisticated products
and more significantly, the demand for specialty cuisine and beverages as opposed to broad-
menu foods. Research has revealed that connoisseurs want more than a cup of coffee. They
want an entire experience, in an ambience that is friendly, comfortable and warm. Each
Barista Espresso Bar is designed keeping all this in mind. The end result is more than just a
coffee business – what emerges is a powerful brand called Barista.

The category in which Barista Espresso Bars exist is a vast and diverse category which
includes food chains, restaurants and other coffee chains. Research indicated that coffee
consumption in India currently stands at 66 gms per head, as compared to 1.2 kgs in the US
(Source: Indian Coffee Board). Clearly, there is vast scope and opportunity to develop this
huge but very latent market.

Barista Coffee Company opened its first espresso bar in New Delhi in February 2000. Today,
Barista has 160 outlets in 30 cities. It employs over 700 people, each of whom work
seamlessly to make Barista a superbrand in terms of image, quality and consumer
satisfaction. Barista caters to more than 1.25 million customers every month. The company
invests a great deal of time in market research and product development and soliciting
consumer feedback, evolving product and marketing initiatives based on consumer
preferences. This ensures consistent growth and enables the Barista Coffee Company to offer
the most desired products to the consumer.

There have been many determining factors which have led to the category growth – not least
of all the liberalization of the economy. Toady, people have more disposable incomes to
spend on food, retail and entertainment. Eating out is not any longer restricted to occasions
and the demand for the good things Life is seeing a very discernible upward curve. A key
factor is the overall experience the Barista Coffee Company provides to consumers. Barista
is also the first real exposure; consumers in India have had to the European coffee culture.
Coupled with a range of high quality coffee options, a warm ambience and superb service
the Espresso Bars were an instant hit. Product innovation played an important role, as almost
all the products on offer were new to the consumer. Backed by the expertise of Bernardo
Dela Mea, one of the top ten Roast Masters in the world, Barista serves Italian coffees in
their truest and purest form

COFFEE PROCESSING

From Bean To Barista.

Want to know what goes on in the time between sowing a coffee bean and finally drinking it at
Barista Espresso Bars?

They've got two versions of the story. The first is instant. Here goes…the coffee beans are
grown. Carefully sorted, graded, roasted, blended and packaged immediately. After which, they
are imported to a Barista Espresso Bar and freshly brewed for you

PRODUCT OFFERING

Barista is a comfortable place to spend time with friends, family, strangers, the girl next door, her
neighbor’s aunt, well, just about anyone. And even if you drop by alone, they have some of the
finest beverages to give you company.

Barista, and the world around it, is all about the joy of coffee. This is achieved by creating a
visual vocabulary that is seamless – from signage and promotions to packaging and merchandise.
The décor plays an important role in capturing its essence – a blend of evocative imagery and
deep, warm hues.

Following the ancient Venetian tradition of Italian Roast Masters, only the best ‘roasted to
perfection’ Arabica beans are used. All this is complemented by a communication that educates
consumers about the various types of coffee, the processes of brewing and the simple pleasures
derived from one little bean.

However, none of this would be possible without Barista’s most precious asset: a team of young,
talented and passionate people. The company has structured itself to help bring out the best in
each one of them. Barista has a set, three-week rigorous training procedure customized for each
employee. In the case of the brew masters, the training programmes are designed by world
renowned Roast Masters and regular updates are made to constantly add to their skill set and to
their ability to deliver the brand effectively.

If you’re worried about where to begin once you enter the shop, worry not, there’s plenty of help
from across the counter as the baristas (coffee barman in Italian), are ever-willing to help with
the wide list of offerings that they serve. They have decided to select from an assortment of mix
and fix beverage combinations.

To begin with, there's the Barista House Blend - our signature blend of coffee and select
international coffees from some of the most noted coffee growing regions of the world. Followed
by an extensive list of steaming hot espressos, cappuccinos and lattes made from the finest
Arabica beans.

To cool things down, they have fruit smoothies and chilled granitas in tropical flavours such as
strawberry, black current and the daring Blue Curacao!! The Granitas, crushed ice slush, was the
one offered pronounced heavenly on a hot October afternoon. The good old ice-cream sodas are
also available, but try the alternative offerings like the delicately pungent ginger or the latest
black current addition. A dose of friendly advice. The sodas are on the sweet side, so make sure
that you give your preferences in advance. And finally, a refreshing range of cold and frozen
coffees that will make anyone who tries them return for more.

The delicious aroma of freshly ground beans hits you when you enter, and the Italian names just
roll off your tongue as you read the menu. The worst thing about the place: - having so many
options, you don't know what to choose!!
If you're in the mood for something warm, try the ever-popular Cappuccino, sprinkled with
cinnamon and chocolate. The Cafe Mocha is a treat for chocolate-lovers and an intense espresso
with dollops of whipped cream garnished with chocolate syrup and cocoa powder, while the
Espresso is perfect for those who like their coffee straight and without any frills. As for those
who are connoisseurs of the “one black coffee”, A variety of sandwiches and desserts are also on
offer, so don't visit Barista on a full stomach!! This is a delightful place for coffee lovers of all
ages to meet and chill out over a cup of their favorite brew!!

The Barista Coffee Company brand portfolio consists of signature hot coffees like the
Cappuccino, Café Mocha, Café Latte, Café Borgia, Esperano and the all-time favourite cold
coffees like the Barista, Barista Frappe, Iced Café Mocha, Iced Café Latte supported with a range
of delectable food items. There are international coffee blends from Cuba, Ethiopia and Brazil
along with the single origin blends like Jamaican Blue Mountain. The company has come up
with a variety of new products in the food and beverage segments to grow the indulgence as well
as the value range. New introductions include a delectable array of desserts, new drinks such as
Barista Blast, Café Caramel, Smoothie Duets and mouth-watering ice cream sodas. Barista is
constantly trying to revamp its product portfolio to retain not just its existing consumer base but
also attract new ones.

At each Barista outlet the Espresso Mail Board lets consumers express their feelings - and
opinions. Games like Scrabble and Chess keep them intellectually stimulated and the guitar and
the jukebox complement the chilled out environment. Barista Espresso Bar is the place 'where
the world meets', be it for a friendly get together or a business meeting or just to be by them.

There are many firsts that Barista Coffee Company has to its credit. Barista Espresso Bars were
the first to keep games like Scrabble, Pictionary and Battleship. India's first coffee table
newspaper - Brew Print - was also launched by Barista Coffee Company. The Barista Espresso
Bars were the first place where the Baristas called customers by their first names to create an
atmosphere of informality and friendliness. The new Wi-Fi initiative for executives-on-the-go,
were yet another first in the country.

Another unique feature of the Barista Coffee Company is the porcelain serve ware used. It not
only keeps coffee hot but also helps retain the essence and flavours in the true Italian tradition. In
keeping with this tradition, Barista Espresso Bars were also the first ones to start serving coffee
in the original Italian coffee size: 190 ml.

The elaborate menu card gives you an idea of the types of coffee offered. A cup could cost you
anything from Rs 30 to Rs 65, depending on the flavour and toppings. The friendly staff gives
you the option of an array of add-ons - from Irish cream, caramel, cinnamon and almond to
vanilla and hazelnut, at an additional cost of Rs 15 to Rs 20. You also have the option of asking
for ‘decaffeinated’ coffee. The coffee beans used by Barista are roasted, ground, pressurised and
processed in Italy to retain their special flavour.

The term ‘cold coffee’ takes on a whole new meaning at this place. Savour this: The iced cafe
mocha is a fresh shot of espresso with chocolate and low-fat milk over ice at Rs 40 and the
Frozen Coffee is a full bodied espresso, demerara sugar and ice. Another interesting concoction,
aptly christened the Barista Special, is a melting pot of different flavours and served chilled.
Vanilla ice cream freaks could try Affoato, the drink in which their favourite flavour is added to
a fresh shot of espresso.

ESPRESSO ITALIANO

Short, dark and handsome, this Italian original is not to be confused with the milky, frothy drink
that has assumed the same name in India. Filling just half a demitasse cup, espresso italiano is
rich in aroma, acidity and body.
ESPRESSO MACCHIOTO
Espresso ‘marked with a dollop of foamed milk, or sometimes a dash of cold milk.
This bridges the gap between the very intense espresso italiano, and the more milky cappuccino.

CAPPUCCINO
One of Italy’s greatest inventions, it features the inimitable espresso italiano topped with steamed
milk and foamed milk in a thick cup to contain the flavor and warmth.

CAFE MOCHA
A wickedly extravagant blend of intense espresso, freshly steamed milk and rich chocolate
syrup, with a topping of sweet cocoa powder and optional whipped cream.

CAFE AMERICANO
A single shot of full-bodied espresso “stretched” with hot water, served black or with milk.
CAFE LATTE
A drink that originated in Seattle, USA. Served in mugs, it’s made with shots of espresso and
steamed milk, topped with a small amount of foam.

FROZEN COFFEE
An extravagant blend of full-bodied espresso, fresh milk based granite, flavoured syrup,
demerara sugar and ice.

ICED CAFÉ MOCHA

A fresh shot of espresso, chocolate and low-fat milk over ice.

AFFOGATO
A scoop of vanilla ice cream drowned in a fresh shot of espresso.

OTHER ITEMS:

TEA
Assam Tea, British Tea, Darjeeling Tea.
COLD BEVERAGES
Lime Ice, Granitas such as Strawberry and Blackcurrant

FOOD ITEMS

Man does not live by coffee alone. Which is why they have a delectable spread of savouries and
desserts to go with every cup. Their sandwich board offers grilled sandwiches stuffed with fresh
vegetables, spicy meats and more. Quick bites call for panini, hot dogs and muffins. While those
looking for something more substantial can try our fusion meals.
Speaking of meals, no meal is complete without dessert. Our signature desserts - dark
temptation, chocolate excess, cookies, pastries and wicked brownies fight with classics like apple
pie and doughnuts to get the attention of everyone's sweet tooth.

Barista –Marketing Mix

Barista continued to maintain its focus on quality by sourcing only Arabica beans and using the
best international espresso machines, supplied by the Italy-based LaCimbali.

Barista was, working towards becoming the number one in terms of parameters likes
brand-imagery, brand-dominance, customer-loyalty and turnover. The strategy for fulfilling
its mission over the next decade would be by leveraging its strong position in the Indian market
to grow further in an Asian context.

I) Product

Barista cafes also have a good number of product mixes. The menu ranges from variety of
coffees and pastries. Barista also sells other items like mugs, Coffee beans, T-Shirts,Coffee
Kettles.

Core Product:
• Coffees
• Cakes and Pastries
• Coffee Beans

Supporting Products:

• Coffee Mugs in Orange and Blue which cost Rs 55 and Rs 99

• T-Shirts which cost Rs 150

Coffee and Coffee beans are also considered as the core product for Barista. The company has
also tested marketed coffee beans through its outlets in Mumbai and Delhi. Barista claims that
they sell a best coffee bean.

Barista has started with a new concept by the name Barista Merchandise. Barista Merchandise is
available at selected Barista espresso bars in Delhi, Mumbai, Kolkata, Chennai, Hyderabad and
Bangalore. The Barista merchandise are the different types of beans that customer can take home and
have the coffee of his own taste. Some of the Barista Merchandise includes

• The French Press

• Barista House Blend

Barista is also diversifying its hot beverages menu and introducing several specialty teas.
The reasoning undoubtedly is based on the fact that apart from South India, all other parts
of the country are mainly tea-consuming areas, and this step is expected to help the
company expand its client base in the smaller towns of these regions.

II) Price

Barista holds the perception of being an expensive cafe. However, Barista was the first
organization to start the concept of the organized cafes in India. Initially Barista started with
Skimmed pricing policy. Barista segmented the market according to the income and age.

Due to the entrance of new players, Barista was finding difficult to maintain the market
share. First and foremost, Barista re-defined the target market customer. They even planned to
change their tagline. "Where the world meets” And so when company looked at this positioning
and they looked at the pricing - the strategy being that if we lower the pricing.

Apart from this, Barista has also introduced new low-priced beverages. The officials say
these price cuts have resulted in 15-per cent walk-ins at Barista's outlets during the last few
months. Barista decided to alter their strategy in order to retain their market. After
studying the market, Barista found that competitors were fighting against them against the
pricing. They decided to reduce their pricing. It was not done from a perspective of acquisition.
With reduction in the prices, there had been a 47 per cent increase in footfalls over the
subsequent three months. December 2004 had, seen Barista experiencing a 21 per cent per-
store increase in footfalls over the previous December, with the number of footfalls for the
year totalling 14 million.

III)

Place

Barista started its first outlet at Bangalore and from there it has started spreading its wings
especially after price reduction. Now they are even planning to focus on raising the bar of coffee
experience. Barista already has presence in all the metros and has a presence in all the
highly populated regions like Mumbai, Delhi, Bangalore and many more places.

Barista is seeking to expand through the franchisee route model and plans to enter B-class towns
in the country and middle-class localities in the metros such as North and East Delhi. By 2005-
06, Barista plans to have over 300 outlets across the country up from 153.

IV) Promotion

Barista did not initially believed in any kind of promotion but in order to keep their customers
interested they started building the brand by communication both within the store as well as
outside the store through mass media. It under takes various promotion activities during the
festival or during occasions like Valentines Day. Barista has done advertising in almost all
national newspapers. Barista has launched summer campaign through summer chillers, and was
advertised through different channels.

Sony:

Barista Coffee has tied up with Sony Music. Under this association, Sony Music would
endorse CDs and music cassettes of their recent acts, which will be used as the lucky draw prizes
for the participants. Consumers buying food, beverage and merchandise for Rs 110/-and above
during specified hours of the performance, will be entitled to participate in the lucky draw. The
prizes will be given away in a couple of draws during the performance.

V) Tie-Up

Barista with Taj Group:

Barista Coffee, a leading coffee bar chain, has tied up with Taj group of Hotels for setting
up exclusive Barista expresso bars at the Taj hotels in metro cities. The first such bar would
be at the Emperor Lounge at the Taj Mahal hotel in New Delhi followed by a Barista Bar at the
Sea Lounge at the Taj Mahal Hotel in Mumbai. This would be followed by similar bars at Taj
Mahal hotels in Calcutta, Chennai and Bangalore. Barista also will be housed at the coffee shops
of all major Taj Hotels in the country.

Barista with Tata Teleservice:

Barista has also tied up with Tata Teleservice. This tie-up was primarily done in order to
provide consumers' access to the Internet. The objective being, today if you look at Barista
consumers, a fair number of them come to Barista to discuss business over a cup of coffee.
Moreover, it is easier for them to meet at Barista, discuss business and send the information
across. It is going to be focused primarily on work, towards the busy executive who is traveling
and has dropped by for coffee or the small office segment who might just want to work out of
Barista.

Lacoste with Barista:

Lacoste India has decided to tie-up with coffee outlet chain Barista in all the major metros and
some mini-metros. The strategy is to target younger audiences, which have a penchant for
the "finer things in life". The customer segment of Barista is very different from the ones who
visit a regular coffee shop.

Elle-18:

Barista is jointly tied up with Elle 18 to promote their product. Elle-18 is launching a collection
of coffee colored lipsticks and has named it after Barista’s beverages! Therefore, they are
working with Elle 18, which is a youthful brand. Moreover, they both will grow with this
association. For Elle 18, the objective is to build a platform for their range of coffee colored
lipsticks and for them, the objective is to associate with the brand and have their consumers
coming in to Barista.

CBC Book shop:

Barista has tie-up with CBC bookshop, which has book corner at eight Barista outlets in six
cities. Barista’s bookshops are right inside the café. Barista prefers best sellers and classic,
besides books on management, lifestyle, sports, health, religion, children and even cookery.
Some of the outlets also stock activity books, comics, CD-ROMs and crayons.

Other tie-ups:

Barista has tie-ups with Planet M, Crossword and the Taj group of hotels for setting up
Espresso corners within their premises. Moreover, along with ABN Amro, Barista has
introduced a concept called Ban café - a café in the bank premises.

Ambience And Surrounding

The colour shades that they have used are

terracotta; it is warm - it is orange. The
background has a dark Orange colour. Orange
colour signifies of a style and friendly ambience of
its own.
In order to match the colour combination of the surrounding even the uniform of employees are
orange in colour. The place invites the customers to spend time. However, the focus would,
continue to be to recreate the ambience of the typical Italian neighbourhood espresso bars
in India so as to provide a comfortable place for people to relax and experience “the joy of
coffee”. The ambience of the location and the quality of coffee would, continue to be the
key factors while growing the chain.

It has lots of board games for any one to indulge in, like chess, word scramblers, and a guitar to
pluck some chords.

Music:

The music is not too loud and encourages conversation, and the person behind the counter
is non-intrusive and friendly.

Barista is also planning to organize live music. Listening to live music, while sipping a warm
cup of coffee, next to your beloved can make an evening a perfect memory to cherish. In order to
gift its customers with this tranquilizing experience, Barista is buzzing with live music this
winter spate. Barista presents 'Oceans', the music band that will perform live at various
Barista outlets.

Sitting Arrangement:

Barista is a place for relaxes. Even in a crowded espresso bar, at Barista, one will have his share
of privacy. The seats are arranged at a certain distance to have a privacy of talks as their
major customers come there to discuss the business or to relax and chat.

BUSINESS MODEL FOLLOWED BY THE COMPANY.

BARISTA – COMPANY OWNED OUTLETS

CCD – FRANCHISEE MODEL
FINANCIAL PERFORMANCE
CCD – TURNOVER 400 CRORES (FY 07-08)
BARISTA – 45 CRORE (FY 07-08)

COMPETETIVE ADVANTAGES (CCD)

• Large Number of outlet.

• In house sourcing of coffee beans.
• Tie Ups with good companies.

COMPETETIVE ADVANTAGES (BARISTA)

• Claim to sell the best coffee

• In house sourcing of coffee beans
• Espresso-Highest selling coffee

GAPS REMAINING THAT NEW ENTRANTS CAN EXPLOIT

• Differentiate them from the rest.

• Tie up with existing established brands.

• Use word of mouth and advertisements on radio.

• Run in store promotions.

• Use of opinions-leading cities.

• In film advertising.

SWOT Analysis - CCD

Strength:

• Large Number of outlet.

 • In house sourcing of coffee beans.
• Tie Ups with good companies.

Weakness:

• Limited Target Audience.

• Follow the competitor strategy.
• Quality of food- Stale breads.
• Loud and Hard Music.
• Improper sitting arrangement.

Opportunity:

• Large Untapped Market

• Tie-ups with other companies for promotion.

Threat:

• Entry of Foreign players like Georgia, Starbucks etc.

• Large unorganized market.

SWOT Analysis - BARISTA

Strength:

• Claim to sell the best coffee

• Large Number of outlet
• In house sourcing of coffee beans
• Espresso-Highest selling coffee

Weakness:
• Expensive coffee
• Self service for the customers
• Quality of food- Stale breads

Opportunity:

• Large Untapped Market

• Tie-ups with other companies for promotion

Threat:

• Entry of Foreign players like Georgia, Starbucks etc

• Large unorganized market
 Research Methodology

Research is a common parlance which refers to search for knowledge. Research is an organized
inquiry carried out to provide information for solving problems. More specifically, it is the
process of determining, acquiring, analyzing and synthesizing, and disseminating relevant data,
information and insights to decision makers in ways that mobilize the organization to take
appropriate actions that, in turn, maximize business performances. A good research generates
data that is derived by proficiently conducted reference which is used reliably for decision
making. In a good research methodology the purpose is clearly defined, design and process is
thoroughly planned, highly ethical standards are used and the researcher makes decisions
passably for decision makers need

TYPES OF RESEARCH
Descriptive Research – It includes surveys and fact finding enquiries of different kinds.
Its major purpose is to describe the state of affairs as it exists at present and the
researcher has no control over the variables.

Analytical Research – In this type of research the researcher uses facts and information
already available to analyze, to make a critical evaluation of the material.

Applied Research – It aims at finding the solution for an immediate problem faced by
the industry/business organization like identifying social, economic or political trends
that may effect a particular institution or the evaluation of the marketing research.
 Fundamental Research – It is concerned with the generalization and with the
formulation of a research study concerning some natural phenomenon or relating to pure
mathematics or concerned human behavior.

Quantitative Research – It is based on the measurement of the quantity or amount. It is

applicable to phenomenon that can be expressed in terms of quantity.

Qualitative Research – On the other hand is concerned with qualitative phenomenon,

i.e. phenomenon related or involving quality or kind. Such kind of result is especially
important in the behavioral sciences where the aim is to discover the underlying motives
of human behavior.

Conceptual Research – It is related to some abstract idea or theory and is generally used
by philosophers and researchers and thinkers to develop new concepts or to reinterpret
existing ones.

Empirical Research – It relies on experience and observation alone, often without due
regard for system and theory. It is data based research, coming up with conclusions,
which are capable of being verified with observation or experiment.

RESEARCH PROCESS

Various steps involved in research done on Consumer Behaviour are

Literature Survey – Before starting the research we conducted an in-depth study of the
topic so as to draw a clear image of what and how the research has to be carried out.

Formulating the Research Problem – The next step was to find out the problem of the
case. The most important task was to define the problem clearly from an analytical point
of view. This is the most important step because; if a problem is well defined then it
means that it is half solved.

Design of the Questionnaire – An unstructured questionnaire was framed by the group

for the purpose of survey. All the questions used are closed ended in the questionnaire.

Determining the Sample Size – Furthermore the next step was to choose the number of
people to be targeted from various age groups, salary scale, and gender. So many people
were approached for the survey

Collection and Analysis of Data – The data was collected from various people among
different age groups and the data was segregated into various parameters in order to
analyze it.

Interpretation of Data and Preparation of Report – The findings was identified and
recommendations were made and the final report was prepared.
Research Methodology used under this Project

The research will be a mix of Qualitative and Quantitative approach.

SECONDARYDATA:-

The data will be collected by review of literature and journals. Analysis of all available data from
all accessible sources.

PRIMARY DATA: -

The primary research will be carried to have a better understanding about the consumer
perceptions/behavior and retailer behavior.
For that purpose there would be in-depth One – on – One interview with the Target Population,
and also simple questionnaire to have a basic understanding.

Expected Sample Size

Under this dissertation project I’ll try to cover as many as 50 respondents and around coffee
retailers in NCR.
CUSTOMER SURVEY

Survey Methodology

A survey was conducted, consisting of a sample of randomly selected people, in the age group of
15-50. This survey aims to find out how Barista and Café Coffee Day’s target market, rate their
products and services. A copy of the customer survey is attached in the Annexure.
Characteristics of visit:
The respondents were first asked to describe the characteristics of a typical visit to a coffee shop.
This includes their choice of coffee shop, frequency of visits, time & money spent on a single
visit, average group size and influential factors affecting their choice.
Comparative Rating:
The survey also asked the customers to rate the following parameters on a scale of 1-5 (1 being
the worst, 5 being the best), for both Barista and Café Coffee Day:
1. Taste & Quality of products.
2. Prices of products.
3. Order/ Delivery time & Order/ Delivery process.
4. Performance of staff.
5. Ambience.
6. Availability of products.
7. Value for money of products.
8. Overall performance.