Marketing Plan for Melto-Point CafeCOFFEE INDUSTRY

COFFEE MARKET IN INDIA

Coffee is one of the most popular beverages in the world. The beverage industry in India has

gained importance in the last few years. The beverage retail has become a fashionable

concept today. A significant change in this industry in particular has been the growth of

coffee industry. India had been traditionally tea drinking country for ages. Recently, a new

mode of distribution for coffee has emerged in form of coffee chains. The coffee

consumption by Indians has increased in the last 4 to 5 years. The coffee demand was 169

MT in 1990-91 has increased to 306 MT in 2003-04 and had increased to 405 MT in 2010.

Traditionally coffee in India was restricted to the south and that too, predominantly in

people’s home. The size of organized coffee retailing is $185 million.

Industry PEST Analysis

Political:

The relationship and the trade practices between the coffee producing nations and where the retail chain is operating should be good so that it propels the market growth in the operation country and in turn benefits both the countries. Also land acquisition is an important factor for setting up the store which is influenced by many political factors. Also there are many state and local government norms and legal procedures which need to be satisfied.

Economic:

India’s GDP and per capita income is on the rise. It clearly depicts the improved and increased purchasing power of the people as disposable income has increased. Also urbanization is expanding which will fuel the economic growth story.There are also issues of concern like inflation and recession which will have an impact on the commodity prices leading to an increase in price which in turn affects the consumer spending power, may lead to slow economic growth, job loss, scarce employment opportunities etc

Socio-cultural:

The taste and preferences are influenced because of different social and cultural factors. Some consumers may prefer tea over coffee and vegetarian food over non-vegetarian food. Some may prefer to have coffee as a means to socialize among friends and relatives whereas some may not have leisure to have coffee at the physical stores

All these customer needs and requirements have to be satisfied by the company.

Technological:

Technological developments in the industry have focused on the fresh coffee segment ignoring the soluble coffee segment. However, fresh coffee developments have failed to address significant issues in both milk-based and filter varieties.

Milk-based Coffee Equipment/machines must be cleaned regularly to maintain the output quality and standard which otherwise may lead to significant amount of substandard coffee being sold at a premium.

Filter-based Coffee Equipment Filter coffee must be discarded approximately every 30 minutes which otherwise will lead to inefficiencies if not done properly. In busy restaurant environments, this policy is often forgotten which leads to substantial substandard coffee being served to customers.Also technology can be used to improve the operational efficiencies of the stores.

Market analysis

KEY PLAYERS

CCD: Taking pride in 130 years of coffee growing heritage, CCD is the first chain to enter

retail by incorporating Amalgamated Bean Coffee Trading Company Ltd (ABCTCL) in the

year 1994. Pioneering the café concept in India in 1996 by opening its first café at Brigade

Road in Bengaluru, ABCTCL today is one of Asia’s top 500 companies and aims to be

among the top three coffee retailing companies in the world.

Barista: Barista traces its roots back to the old coffee houses in Italy – the hotbeds of poetry,

love, music, writing, revolution and of course, fine coffee. Offering alternative options and

pleasures of coffee to millions, the chain is also revolutionising the coffee drinking

experience in most Indian cities. Barista owns more than 200 stores currently in India and has

cafes in other countries as well.

Costa Coffee: As part of its overseas expansion, British coffee retail chain Costa Coffee

launched its outlet in New Delhi, becoming the first international coffee chain to start

operations in India in September 2005. It has also been expanding its business through

exclusive franchisee partnership with Devyani International and expanding aggressively to

tap this potential market.

Coffee World: Coffee World is a premium specialty coffee house that offers a

comprehensive range of hot, iced and ice blended beverages. The brand is known for its

premium quality products and its signature ‘Frappes’ – ice blended coffees. 

CBTL: The Coffee Bean & Tea Leaf is a California-based coffee chain, owned and operated

by International Coffee & Tea, LLC and has opened its first store in India in the last quarter

of 2007 opening stores in Rajiv Gandhi International Airport, Hyderabad .

Besides, retail players like Reliance Retail and Shoppers Stop are also retailing coffee with

their multi-products offering outlets like Reliance TimeOut and Desi Café respectively. 

Market Presence:

Analyzing Café Coffee Day in Detail

CCD is the clear market leader in the business of coffee retailing. And Barista is the clear

no.2. The gap between CCD and Barista is quite big. In order to increase our market share,

we have to take away the market share from CCD.The name CCD is appealing and has made

a corner in consumers heart.

Corporate Profile: It was in the golden soil of Trivanthapuram that a traditional family

owned a few acres of

coffee estates, which yielded rich coffee beans.. 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, Melto-Pint Cafe has a wide and professional network in the

major coffee growing areas of the country comprising over 48 agents and 50 collecting

depots. Melt-Point Café works at Chikmagalur and Hassan cure over 70, tonnes of coffee per

annum,

Melto- Point Cafe 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.

Market Demand: Market demand has a direct impact on the sales; moreover this demand varies with the consumer for various requirements, as per the taste and flavour preferences. Coffee acts as an energizer and stress reliever for some people, as the stress level in an average human being is rising, demand for coffee may rise too.

Consumer: Consumer is the king for every producer. So Customer Relationship Management, consumer satisfaction, continuous supply of the product, flooding the stores with new products and creating a brand impact on every consumer are desirable. The company should tend to entertain the tastes of all consumers by introducing new products; this could be achieved by using feedbacks and suggestions.

Industry: Repositioning the company’s image and reframing the business strategies to suit the changing consumer needs. Diversification of the business into related and unrelated products to tap the potential market. For e.g. as Cafe Coffee Day has already entered into selling food items such as sandwiches, rolls, pastries, mineral water etc and it could introduce more products.

Supplier Related Factors: E-procurement of the raw material, reducing the procurement time, relationship management and getting raw material at reasonable rates.

MARKETING STRATEGY OF CCD

ANALYZING COFFEE RETAILING INDUSTRY USING PORTER’S FIVE FORCE’S MODEL

Potential Entrant

Starbucks, coffee club, coffee world

Industry

competitor’s rivalry

Among existing firms

Suppliers

coffee

plantations

Buyers

students, Professionals,

old couples

Threat of

New Entrants

Differentiation

Melto-Point Cafe has been able to differentiate itself from the competition by using the cost

leadership model. Also it successfully built a image for itself as a hangout place for the youth.

Segmentation

Demographic

Age (15-35)

Income-middle, upper middle & HNI groups

Occupation-working executives, students,

Generation-Youth

Geographic

Major Cities, urban sector, IT Hub, near malls and Theaters

Psychographic

Lifestyle- outdoor

Personality-ambitious, gregarious

Behavioral occasion-regular, special

Benefits-quality, service

Brand loyalty-split loyal

Attitude- youthful

Substitutes

Other fast food joints like

Mcdonalds, Pizza Hut

and Amoretto

Bargaining Power

of Suppliers

Threat of

Substitute Products

Bargaining Power

of Buyers

Targeting

Working executives,

Young youths

Premium customers

Travellers

Positioning

• It positions itself as “Urban Youngster’s favourite hangout.”

• Tag Line ‘Where Hearts Melt’

• It is for those who are young or young at heart.

• Offers its customers a variety of coffee and coffee product.

MARKETING TACTICS

Product :

Café Coffee Day product mix constitutes a wide range of products that appeal primarily to

Indian coffee and snack lovers. Products have an 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 Melto-Point Café 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 changes have been

more due to the government taxes than anything else. The company has adopted a very niche

pricing where all it products are more or less priced at the same range.

Physical Evidence:

a) Logo, Colors, Images:

Melto-Point Cafe has used bright red and green colors in its logo. RED stands for leadership

and vitality. It also stands for passion (… for coffee). The GREEN stroke harks back to their

coffee growing heritage and the coffee plantations that they own.\ Café is noticeably larger

than the rest of the text inside the logo box. The font looks as though the letters have

congealed out of a liquid. It gives the impression that the word is still forming itself and

evolving into something new and something better constantly.

Décor & Architecture:

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.

Literature:

The literature provided by Café 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 Trivanthapuram head office and

distributed throughout the branches.

Place:

The Café 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.

Sea side views and road junctions are the hot spot location for coffee lovers.

Process:

The ordering and delivery process in Cafe is Indiansized. ALL at your tables, the waiter

comes and takes away the order and delivers the order on table.

People:

People at Melto-Point Cafe believe that “People are hired for what they know but fired for

how they behave”. Motivation and personal skill are laid emphasize upon. Their employees

are like friend to the customer but at the same time they know about the international

standards of hygiene and cleanliness and personal grooming

Promotion:

Melto- Point Cafe does not believe in mass media promotions. But they are involved in all

the areas of serious consumer passion.

Through television:

The Café will tie 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. There would also be promotion for

History Channel, where they’ll run a promotion for Hollywood Heroes. A lucky winner

would win a trip to Hollywood.

Ticket sales:

A contest in association with the recent movie campaign RaOne . Couples can win ticket for

free. This in turn raises the awareness level as cafe staff approaches the consumers to inform

them about the contest. There is not a better publicity mechanism then the person who is

serving you telling you about the same.

Tie-ups:

Besides that Café would also tie up lot of the youth brands. Wherein the promise to the

customer is that a lot can happen over a coffee. So every time they try to ensure

something good happens to their customer. So they will have a contest going on with Levis,

another one with Scooty, Liril, latest one with Airtel Friends. Another placement area is with

HDFC. HDFC wanted to promote their debit card and they choose Melt-Point Cafe. So 21

cafes have debit card machines.

Sales Promotion

Café uses special ‘Café Citizen Card’ for rewarding customers. It is a loyalty program to gain

new customers and retain the existing ones. The Café Citizens Card entitles members to a

10% discount on all food and beverage bills. The members also receive surprise gifts, along

with special offers and invitations from Melt-Point Cafe from time- to- time.

Distribution of outlets:

Since all the cafes are owned by the company, it becomes easier for them conduct feedback

surveys like dipsticks etc. Cafes most unique aspect is that it grows the coffee it serves in its

cafes.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. Café currently operates in 4 outlets

in Two states.

Distribution of stock:

Coffee Beans: The distribution of coffee beans start from their roasting plant at chikmagalur.

The coffee beans are sent to the main offices of north and south India on monthly basis. The

outlets contact the Head Distributors on weekly basis.

Allocation of Marketing Budget

Sr.No Particulars Amount1 Advertising agency commissions :

Media Agency Charges (Creative Land Asia) +Radio Advertising (Gracious Communication)

8-9 lacs

2 Fixtures and fittings ( maintainence) 2lacs3 Travel costs 2 lacs

4 Outlet space(per month) 2 lacs5 Marketing communications costs:5(a) Public Relations 10lacs5(b) Printing

Website Development & Hosting Brochure Design

15lacs

5(c) Advertising: Television Advertising Radio Advertising Direct Marketing Newspaper Advertising

3cr

Total 3cr 40lacs