5 A CCD

Coffee Wars in India: Caf Coffee Day 2013
Group 5: Ashutosh B16013 | Pulkit B16035 | Sahil B16041 | Samiksha B16042 |

Sharodiya B16046
Problem Analysis
As of 2013, a key issue for CCD management is that it has not remained
competitive enough to sustain market leadership position in India. CCDs
external environment has changed significantly with rise in expectation levels
from blossoming middle class and entry of global dominant coffee chain
Starbucks bringing global service standards. CCDs competitive strategy shift
from differentiation towards cost leadership has given it unique cost
advantage. Nevertheless, new strategy also made CCD complacent with average
customer service levels, new operational challenges and limited focus on
attractive affluent segment that may impact CCD brand equity and future growth
ambitions. This has forced the senior management, CCD Founder and Chairman,
V.G. Siddhartha and Director, Venu Madhav of CCD to contemplate how CCD can
retain its market leadership position in Indi and ward off any threat to their
market share by Starbucks.
Situation Analysis
Macro-Environment
Analysis
Industry
Analysis
Company
Analysis
PESTLE Analysis:
Political Less bureaucratic hurdles
due to globalisation. Cost control
because of various government
regulations and policies
Economic Higher disposable
income rapidly increasing. Cheaper
raw material due to self-sourcing.
Social Targeting young population.
Image of a meeting/get together
place.
Technological Marketing through
social
media.
Providing
entertainment through Wi-Fi, Muisc,
and Videos etc.
Environmental
Usage
of
biodegradable cups and reduced
Porter Analysis
SWOT Analysis
Weaknesses
Strengths
Loyal Customer Base Failing service
standards
Vertical Integration
Lower salary for

Affordable Prices
employees
First Mover
Relatively unknown
Advantage
Opportunities
brand, hence cant
Threats
Merchandising
Increasing global
Increase Brand
competitors
awareness through
Presence of other
marketing
Hangout locations
Strategic alliances in
Unorganized market
real estate and/or
Future Course of Action

Which Generic Strategy to use?
Cost Advantage - Both Caf Coffee Day (CCD) and its emerging competitor
Starbucks have backward integration in India markets, thus both have similar
input costs. Thus, creating a cost advantage may not be that advantageous to
CCD as they may not have a clear edge in cost. Moreover, Starbucks and Tata
Group have deep pockets which again makes price war with them unviable.
Focus CCD already has a wide presence in Indian market catering to a variety
of needs through their multiple offerings like Express, lounge and square in
addition to cafes. Thus, cutting down on them focusing on only a narrow/niche
market would not be possible.
Thus, CCD has
differentiation.
to
create
competitive
advantage
through
broad
based
How to go about it?

CCD should consolidate its hold on its stronghold of student markets (age group
15-25), by expanding aggressively especially in Tier 2- Tier 3 cities. It should try
to build strong customer loyalty in this segment. The aim should be to emerge as
uncontested market leader in these markets across India.
At the same time CCD should expand its lounge offering to cater to its customers
as they transition from student age group and lifestyle to more professional
lifestyle category (age 25-40). CCD should use features like loyalty programmes
(cashback offers, privilege user benefits) that will allow customers to transition to
CCD Lounge as their lifestyle need changes. The idea is to build relationship with
customers so as to retain them within CCD brand.
CCD can make use of strategic alliances with real estate companies to gain cost
advantage in leasing/renting spaces. This will provide them with access to prime
locations in their target cities and consolidate their position vis--vis their
competitors.
How to block Starbucks?
Taking on Starbucks head-on is a recipe for disaster for CCD. Starbucks being an
international brand with strong brand equity and access to premium real estate
locations (due to strategic alliance with Tata Group) is a difficult competitor to
fight with in its segment. Unlike earlier international competitors like Barista and
Costa Coffee, fighting Starbucks on price may not be feasible either.
That is why rather than fighting Starbucks directly for its relevant customer
segment (high paying professional in age group 25-40), CCD should try to build
loyalty among these customers before they reach this lifestyle or age. Using
loyalty programmes as mentioned above, CCD should try and ensure that these
customers prefer CCD due to past relationship and CCD should be able to offer a
comparable experience to Starbucks to reduce attrition due to service gap.
Glocalisation - CCD should use its experience of working in diverse social and
economic conditions as India over past 15 years to offer relevant customised
offerings based on regional and local differences in tastes and differences. This is
a relevant value where a foreign brand like Starbucks may have difficulty
competing as they have to ensure global standards in line with their global
brand.
Recruitment Perspective - Though Starbucks may have poached CCD service
staff by paying higher salaries, it would not be advisable for CCD to compete
with Starbucks on salary. Instead, CCD should emphasize scope for greater
growth as its selling point. Due to its deeper penetration in the country, it can
also incentivise its employees by offering location closer to their hometowns.

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5 A CCD

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Coffee Wars in India: Caf Coffee Day 2013

Group 5: Ashutosh B16013 | Pulkit B16035 | Sahil B16041 | Samiksha B16042 |

Lower salary for

Future Course of Action

How to go about it?

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