Ccd Starbucks

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Initially, Barista was CCD’s closest competitor. Starbucks, being a premium brand (50% more expensive than CCD) is slightly overpriced for the Indian consumers and thus is not a direct competitor.

CCD will grow the overall coffee market in India, as it is planning to improve both the breadth and the quality of its food and beverage offerings; upgrade interiors, and improve the service levels through training. They are on the right track of targeting the college students and working professionals, nearly 40% of the market. Also another advantage is the fact that the average ticket size is smaller at Rs. 175 and since Indians are a little price sensitive, it works to the company’s advantage.

- What leanings from the China can be implemented by Starbucks in India? Or Indian market is very different now as Starbucks is entering after 12 years? Is joint venture with Tata’s a right decision by Starbucks?

Learnings from China:

- Partnering with the local firms – Starbucks in China partnered with 3 different firms to obtain local expertise

- Tailor its offerings according to the local taste – Starbucks China introduced beverages using popular local ingredients

- Education about Coffee – Starbucks China educated the local population about coffee and how to adapt to it in their daily life

- Service Quality – Starbucks distinguished itself from the rest of the competitors by providing exceptional service standards.

- In-store experience – It focused on providing the in-store experience to its customers by providing them an upscale ambience. It soon became a de facto meeting place for executives as well as for the gathering of friends

- Brand Positioning – Starbucks positioned itself as a premium brand to offset the higher cost of dine-in services

- Talent Strategy – It influenced the parents of their employees by making them hear testimonials

- Initial focus on high visibility areas – Initially Starbucks opened its stores in international hubs like Beijing, Shanghai and Guangzhou

Partnering with the Tata Group is the right strategy for Starbucks as

- They are a trusted brand in the country and partnering with the right brand is essential for its success

- They bring with themselves their supply chain expertise

- Tata Group already owned the Tata Global beverages which is the second largest branded tea company in the world

- They had their presence in the catering space which made it easier for them to create an offering for the Indian customers

- How should CCD respond to Starbucks in India? What should be their important goals? Should CCD expand aggressively with premium offerings to compete with Starbucks?

CCD should adopt a flank position defensive strategy, and focus on consolidating its share of the young middle and upper class segment through its cafes, and a mature office goer/experience seeker crowd through its lounges and squares.

The major goals CCD should focus on are:

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From Exhibit 7, it is seen that the perceived value from a CCD Lounge/square is more with respect to Coffee Xpress or shops. To leverage this, CCD should expand to acquire SEC A1/A2 and B1 customers, who would otherwise be enamored by the affluent experience of Starbucks.

- How should CCD handle the breadth of the offerings? What should be the strategy for non-coffee product categories?

It should improve the breadth by diversifying into high margin but related products. Breadth should be less and more focused, keeping more of the regional tastes.

Strategy for non-coffee product categories:

- Regional customization of food menu

- Improve the quality of food with focus on providing freshly made food (fast moving items like samosas) which is not happening currently

- Take office or college snack party orders ( a model used by food chain FASOOS)