Internal and External Condition of CCD - Case Study Example

CCD Case Memo Name: Institution: DATE: TO: FROM: RE: Executive Summary One of the leading coffee industry players in Indian market is CCD, which by 2013 records was the largest Indian coffee Conglomerate (David, &, Tanya, 2013). The promising Indian market have seen international companies like Starbucks make entry into Indian coffee market, a sign of stiff competition in the industry. One of the strategic challenges that face CCD is how to counter the competition brought about by an international company like Starbucks (David, &, Tanya, 2013). CCD therefore needs to react to the Starbucks entry into the Indian market. CCD need to come up with ways to promote its brands in the market that has lately witnessed changes in the consumer cultures (Inderpreet, et al., 2012). Based on its strengths, CCD should focus on promotional activities, since this in the past proved to the best way through which the company attracts more customers. Improving human resource efficiency is a key factor that could help attract and retain more customers (David, &, Tanya, 2013). CCD also needs to focus on its regular customers and even have customer database in order to keep their track. This is to ensure they do not lose their already existing customers to competitor like Starbucks. Introduction/Problem Statement Indian coffee market has been growing over the past years. One of the leading industry players is CCD, which by 2013 records was the largest Indian coffee Conglomerate (David, &, Tanya, 2013). The promising Indian market have seen international companies like Starbucks make entry into Indian coffee market, a sign of stiff competition in the industry (David, &, Tanya, 2013). One of the strategic challenges that face CCD is how to counter the competition brought about by an international company like Starbucks (Inderpreet, et al., 2012). Starbucks is a well-established international company (Nancy, 2005). CCD therefore needs to react to the Starbucks entry into the Indian market. CCD need to come up with ways to effectively promote its brands in the market that has lately witnessed changes in the consumer cultures. Internal and External Condition of CCD Product CCD product mix comprises of products such as, masala sandwich, tikka sandwich, coffee beverages, biryani and samosa (Rajiv, 2008). During summers the company mostly sales frappe, which is a blend of coffee and ice cream, while during winter CDD mostly sales cappuccino. The young generation prefers frappe (David, &, Tanya, 2013). Price CCD mainly target middle-income earners, a group consisting of the youth aged between 15-30 years (David, &, Tanya, 2013). The company has always worked towards satisfying from different background within the nation, and thus prices its coffee from a range of Rs 45- Rs 80 (David, &, Tanya, 2013). Since its inception it can be noted that there has slightly changed. Place CCD locates in places it expects to do some productive business. Analysis of a place is usually done before establishment of a business unit. Analysis helps in them to identify whether the retail outlet will be successful (David, &, Tanya, 2013). To cater for its consumers and the whole market, the company strategically locates outlets especially in places like, near colleges, bus stations, gas stations, entertainment centers and high streets (David, &, Tanya, 2013). Strategic location has enabled the company to tap the untapped markets in various parts of India. Promotion CCD has various ways through which it promotes its brands. Their promotion program has helped the company gain more customers while at the same time maintaining the existing ones (David, &, Tanya, 2013). Some of its promotional ways include: Sales promotion- Sales promotion is a way through which CCD has been informing its customer of the products they offer within their outlets. The company uses ‘Café citizen card’ to reward its customers (David, &, Tanya, 2013). The company mainly relies on sales promotion as its way of promoting its brands since it allows direct interaction with its customers. Collaboration with movies- To promote the company, CCD has collaborated and featured in movies like Mai Hoon Na and Khakhee. SWOT Analysis SWOT analysis of CCD shows that some of the company’s strengths include an excellent brand name and brand visibility, excellent services and ambience, a huge target group that comprises of the young people, over a thousand outlets and the company is able to reduce its costs since it grows the coffee it serves (David, &, Tanya, 2013). Some of the weaknesses include, lack of the strength to maintain brand loyalty, improper sitting arrangement and crowd management (David, &, Tanya, 2013). Analysis of the opportunities shows that CCD can merchandise, tap the untapped markets, introduce cheaper coffee brands and collaborate with other companies to do promotion (David, &, Tanya, 2013). According to David, &, Tanya, (2013), threats on the other hand include entry of competitor such as Starbucks, large unorganized market, government control and availability of substitute products. CCD Competitive SWOT Analysis with Starbucks Coffee industry in India has several players who compete to have wide market share. A look at the SWOT analysis of CCD shows Starbucks as one of the competitors that has gained entry into the Indian market (David, &, Tanya, 2013). Each company offers various services to their customers. They also provide unique experience to the customers who frequent their outlets. It is evident that customers can easily shift from one company to another to enjoy the services, for instance, during the opening of Starbucks in India, the customers flooded their premises to enjoy services offers by the foreign company (Inderpreet, et al., 2012). Curiosity is one of the human factors considered the reason behind people frequenting Starbucks. CCD Starbucks Strength Offers affordable brands Produce/grow their own coffee Products viewed as high quality products Strength Strong base for growth and expansion A strong brand image Human resource considered excellent Weaknesses Lack of strength and power required to maintain loyalty of customers to their brands Not highly rated in terms of service delivery Weaknesses Viewed as a brand that is expensive Lack of large number of outlets in India Opportunities Existence of large untapped market Potential for future growth Pricing Opportunities Existence of untapped market Strong brand names Threats Threat of competitors Threats Competition Options for CCD Improve Promotional Activities and Service Delivery The main aim of CCD is to attract youth into their café, by advising their employees to be friendly to this target group (Rajiv, 2008). They also sell rock concert ticket and organize various contests on different television shows across the nation. However, with changing culture their customers will expect them to offer more than the concert tickets and contests (Inderpreet, et al., 2012). Entry of Starbucks into the Indian coffee market is expected to bring about more competition. Promotional activities in the past have worked well for CCD. CCD therefore needs to concentrate on promotional activities in order to gain more customers and be able retain the existing customers (David, &, Tanya, 2013). They also need to work towards the provision of better services and enhance their customer relationship. For example, the company can introduce coupon cards, where for instance when a customer can be added a fifth beverage free after purchasing four beverages. In line with promotional activities, CCD can improve their service provision in the décor and lounges by doing quick services, playing music, offering various games and informing their customers of their new products and promotions through the email (Inderpreet, et al., 2012). Focusing on the frequent Customers CCD should tirelessly work towards keeping their loyal customers, in order not to lose them to their close competitors such as Starbucks. Having been in the Indian market for a long period, CCD has a wider knowledge on the market segments it should attract more customers and maintain or enhance their loyalty to the company brands (Inderpreet, et al., 2012). To make the customers be loyal to the company, CCD needs to give their regular customers more attention. To keep in touch with them, for instance CCD can wish their regular customers happy holidays through messages, emails, provision of free beverages or through sending to them greeting card s(Inderpreet, et al., 2012). This will help enhance their loyalty since they will see that they are recognized by the company, always appreciated for the part they play towards the existence and growth of the company (Inderpreet, et al., 2012). At the end, it will enable the company and the customers have an emotional relationship and enhance customer loyalty to the company. Improve Efficiency of Human Resources CCD staff members comprises of young employees especially below the age of 25 compared to those of Starbucks who are mainly above 25 years of age (David, &, Tanya, 2013). In addition, David, &, Tanya (2013) Starbucks pays their employees highly as compared to CCD. As a result, Starbucks has been able to recruit its employees from CCD (David, &, Tanya, 2013). CCD therefore needs to work on their human resource policies in order to be able motivate them more. CCD should offer various covers for their employees, for instance medical, insurance in order to motivate and enhance their efficiency Recommendations A clear look at the alternatives shows that the three options are very useful ways through which the CCD can attract more customers and retain the already existing. It is important for the company to integrate the two in order to realize their targets and beat their competitors such as Starbucks (Inderpreet, et al., 2012). Firstly, the company should concentrate on the service delivery, for instance, by responding to the clients quickly, playing music that could sooth the customers during their time at the café or lounge (Inderpreet, et al., 2012). CCD should also provide their customers with the coupon cards through which the customers can be offered a fifth free drink after purchasing four. To enhance customer loyalty, CCD should also send emails to their clients to enable them sign for coupon or be able to view their latest products and offers. CCD can also organize shows in appreciation of their customers and reward various people who attend the shows. CCD should also motivate its human resources in order to enhance their performance. This will ensure they increase service delivery and customer satisfaction. Improving efficiency of human resources will help in enhancing the way through which employees approach the customers, hence high rating by their customers (David, &, Tanya, 2013). This could be done by frequent training of employees of the emerging issues and trends in the coffee industry. Lastly, the company should concentrate on pleasing their regular customers in order not to lose them (Inderpreet, et al., 2012). To do this, the company should create a database for their customers to keep track of the customer’s order in relation to their coupon cards. Since they expect their regular customers to purchase more of their products, to offer the fifth drink free after purchasing four drinks, the company needs to have this information within their system. Each customer with the promotional cards such as coupon cards should have their names within the customer database. This will help the company monitor their regular customers and be able to identify if the number is increasing or decreasing. CCD can take appropriate measure based on whether the trend is increasing or decreasing. To maintain their regular customers and enhance their loyalty, the company can also send them happy holiday wishes through the email or text messages (David, &, Tanya, 2013). Starbuck is an international company with a good image and its entry into the Indian market means a very tough competition (David, &, Tanya, 2013). However, if CCD improves its service delivery, concentrates on its existing regular customers and improve efficiency of its human resource, it will help it create a strong relationship with its customers and enhance customer loyalty to its brands and the company as a whole (Inderpreet, et al., 2012). As a result, the company will be able to enhance its survival and expansion even with the existence of Starbucks in the Indian market References David B. &, Tanya B. Coffee Wars in India: Café Coffee Day Takes on the Global Brands, Harvard School of Business, 2013 Inderpreet K., Shruti G., Ravindra Y., Samridhi S. Emerging Trends in Food and Beverages Services Retailing in India, June, 2012, Available at www.technopak.com Rajiv Banerjee, “Most trusted chain of Café Coffee Day,” The Economic Times, July 16, 2008, http://m.economictimes.com/features/brand-equity/most-trusted-chain-of-cafe- coffee-day/articleshow/msid- 3238814.cms, accessed June 2013 Nancy F. Koehn, “Howard Schultz and the Starbucks Coffee Company,” HBS No. 9-801- 361 (Boston: Harvard Business School Publishing, 2005), p. 21 Read More