International Marketing Plan For Caf̩ Coffee Day РEntry Into The UK Market

About Café Coffee Day

Café Coffee Day, which is often abbreviated as CCD, is owned by the Coffee Day Global Enterprises and is one of the most well known and beloved coffee brands in a number of Asian countries, especially in India. The brand has more than 1500 outlets spread out across 28 states in India. As a matter of fact, the brand also has a presence in countries like Nepal, Malaysia, Austria and the Czech Republic(Cafecoffeeday.com 2018). For the young generations in India, Café Coffee Day is probably the largest and most powerful youth aggregator and is well known for its freshly brewed coffee and tasty snacks and beverages. The company in India largely focuses on the young, rich generations of India and is now planning to enter the market in the United Kingdom. In 2008, a survey by Brand Equity showed that Café Coffee Day consisted of the most established brand image in the food and beverages of India(Cafecoffeeday.com 2018). The main purpose of this report is to prepare a marketing plan for café coffee day in an international market, namely the United Kingdom. The paper will undertake a detailed analysis of the UK market and a competitive analysis to understand the proposed marketing strategy for café coffee day.

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  • Its reputation as a youth aggregator. In India and in the countries where CCD has established itself as a front runner in the business, the brand has always been associated with the younger generation. In other words, it is the ideal place for young people to get together, relax over a cup of coffee and spend some leisurely time together.
  • A wide range of food items and beverages that cater to different age groups and categories, with exceptional customer service (Raghu 2013).
  • It provides a fine blend of affordability and comfort which instantly appeals to the target market. The brand, despite its popularity, has ensured that a moderate to high pricing strategy is followed. Since the target market for the company is the younger generation, it is expected that they might belong to low income categories or might even be in school. As such, the products sold by CCD are affordable and yet of top quality.
  • CCD has a favourable reputation of providing freshly brewed coffee to its customers, thus inculcating a culture of recreation and leisure over a cup of coffee.
  • A skilled workforce with access to technological resources necessary for smooth operations.
  • The brand has lost some of its charm in its native countries, owing to lack of variation in the ambience and the products provided to customers.
  • CCD has also suffered losses in the past owing to wrongful selection of outlet locations. A repetition of that in the UK could affect the brand’s market position.
  • The coffee industry in the UK grew by at least 7.3 per cent in the year 2017 alone. At least 1215 new outlets for coffee stores were opened in different parts of the UK. Some of the branded chains reported a growth of 10.5 per cent in the profits reeled in the last financial year (Statista 2018). The rapidly growing numbers provide CCD with immense opportunity for growth in UK. With favourable branding and advertising, CCD is likely to perform well in the market.
  • In the past two years, the UK has witnessed several adverse economic changes. Yet, the coffee industry has reported a steady and consistent growth in the past few months. In the past year, the UK reported a growth of 4.5 % in GDP (Statista 2018). The consumer buying power is another important economic factor that must be taken into consideration. Despite the economic crisis last year, the consumer buying power has reported an increase in the past few months. Moreover, customers in UK are looking for cheaper alternatives to Costa Coffee and Starbucks, since the country is undergoing an economic recession.
  • The major threat that CCD would have to face in UK is competition from large international brands like Starbucks and Costa Coffee. Costa Coffee has more than two thousand outlets in UK; CCD thus would have to devise a robust marketing strategy that allows it compete in the same league as these branded chains.
  • There is a growing awareness of the adverse health impacts of coffee. For example, there have been numerous studies on the impacts of excessive coffee consumption on sleep patterns (Jain et al. 2017). Factors like these could affect the customer buying decision at CCD.
  • The threat of new entrants in the coffee industry of UK is relatively high. As mentioned earlier, the coffee brewing industry in UK is growing at a rapid rate and is expected to register higher rates of development in the upcoming years. Moreover, a large number ofpeople in UK belong to the cafe culture (Tucker 2017). The capital investments required for starting a business in this industry is also low, since the availability of technology and resources makes it possible to launch new brands. As a result, a large number of local brands have entered the market which could affect the profitability of CCD.

The target market for CCD in the new UK market will be young men and women between the ages twenty five to thirty five belonging to middle and upper middle classes. However, it must be remembered that beverage preferences are usually independent of age and gender. Yet, CCD in all its countries have followed a youth oriented marketing strategy so as to build a stable and loyal customer base in UK (Mishra 2013).

Market segmentation may be defined as the process of segmenting or dividing the market of buyers into distinct groups on the basis of common characteristics, needs and behaviour of the consumers. The main purpose of market segmentation is to help the company gain better insight into the minds of the customers so as to identify the unique needs of each customer group (Hess and Doe 2013). While entering the UK market, CCD will have to segment or break down its target market into different groups so that they can cater to individual needs in an efficient manner.

A combination of demographic and psychographic segmentation strategy will be used. Demographic market segmentation strategy may be defined as the process of dividing the market into various groups based on gender, age, sex, ethnicity and other such attributes. Based on the demographic segmentation strategy, the main focus of the CCD marketing strategy would be young men and women in UK between the ages of 19 and 32. This is also commonly known as the millennial generation.It is expected that young men and women between these ages would be independent, equipped with some money of their own and might even be working. In the UK, as of 2017, there are at least twelve million people belonging to this age group. However, in 2017, the census also showed that it was the older baby boomer generation that dominated a large portion of the UK population. CCD will focus on this particular generation and would thus have to include products and develop their pricing strategies accordingly.

Target Market

Following the geographic segmentation strategies, the CCD products will be marketed mainly in the urban locations of UK, where college students are more likely to visit. CCD will also follow a psychographic market segmentation strategy. Psychographic segmentation refers to the process of dividing the market into various groups based on the different personality traits like attitude, lifestyle, interests, values and so on – all of which have an impact on the customer buying decision (Ciribeli and Miquelito 2015). It is expected that the younger generations in the UK, especially people belonging to the millennial generations, would be college graduates who are working and thus have some money to spend. People belonging to these groups would prefer to socialise and meet and interact with likeminded people over a cup of coffee. As a result, CCD would establish itself in central locations or near colleges and universities, where youngsters can spend their leisure time.  

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It is important to understand the positioning strategy for the brand in the UK market. The brand will be positioned in the market as an affordable coffee shop for the youth of UK. The target market for the company would be the younger generation, preferably college going students and young working professionals. As such, the company would need to portray itself as s young, lively, vibrant brand meant for the younger population. Additionally, since a majority of the younger population prefer to drink tea, a few appealing tea related beverages would have to be introduced which appeal to younger markets (Ludwig et al. 2014).

(Figure: Positioning map)

In India, an organized product strategy was followed by CCD, where a range of products along with beverages were offered to the customers. These products were mainly Indian in taste, since it was assumed that this would appeal to Indian audiences. However, the food tastes and preferences in the UK are very different from that in India, and thus a few changes would have to be made as part of the product strategy so as to lure in the target population in the country. In the product strategy of CCD, there are different divisions providing a range of services. For example, CCD has Fresh ‘n’ Ground, which produces freshly ground coffee bean and powder to all its outlets. Coffee Day Square and Lounge is a slightly more expensive service that CCD offers to some of the outlets. These are premium coffee bars which contain a number of high priced products that are not available at other outlets(Cafe Coffee Day – India’s favourite Coffee Shop & hangout place 2018). At all other outlets of CCD, a range of products would be available including sandwiches, hot dogs, mini pizzas, pastries, light snacks and so on. As far as beverages are concerned, CCD serves a range of both hot and cold beverages which include espressos, cappuccinos, frappes, cold coffee, smoothies and even granitas. The most popular item in the CCD product range is the frappe (a fine blend of ice cream and cold coffee), and the company has thus proceeded to introduce a variety of frappes for the customers to choose from. It is expected that new and interesting products like these will appeal to the target audience, the younger generations in UK.

Market Segmentation Strategy

However, as the SWOT analysis shows, there is a growing concern about the health impacts of coffee consumption amongst the younger generations in the UK. As a result, a majority of the population has turned to healthier alternatives like tea or green tea (Ludwig et al. 2014). CCD should also thus include a number of tea related beverages like green tea, iced tea, flavoured teas and so on. Also, since CCD is essentially an Indian brand, introducing traditional Indian flavours in tea beverages could be considered a smart move. A large number of people in the UK consider India to be something exotic and glorious. Introducing flavours like Darjeeling tea could prove to be beneficial for the company. It would also function as their unique selling proposition or USP, which sets it apart from other brands like Costa Coffee or Starbucks which prefer to stick to mainstream flavours.

Since the company will be targeting customers belonging to the younger generations between the ages of 19 and 32, it is important to develop a pricing strategy that would cater to all customer groups. The SWOT analysis shows that brands like Costa Coffee and Starbucks are proving to be too costly for a number of customers in the UK. As such, introducing products with a moderate pricing strategy would ensure that CCD appeals to the right target audience. It would also give the company an edge over the other brands in the same industry (Davcik and Sharma 2015). The average price of coffee in the UK is approximately 4 pounds. The varieties of coffee like latte, frappes and mochas would cost more. Thus, the pricing strategy of CCD would be moderate to high (McCarthy 2018). An average cappuccino would cost around 2 pounds, with additional charges for extra add-ons like cream. Frappes and cold coffees would be priced higher, at approximately 3 pounds. Sandwiches and other snacks would be priced at moderate rates like 1.5 to 2 pounds. Since the tea related beverages would be exclusively reserved for the UK audience, these would be priced higher at 4 pounds per cup. The company would also have a range of merchandise like cookies, biscuits, juices or flavoured waters which could be purchased and consumed on the go.

As far as the entry mode is concerned in the UK, a franchising system will be used. CCD comes under the banner of Coffee Day Global Enterprises, an Indian company. In the United Kingdom, the corporation run would still remain under the same parent company and would be a franchise of the same. This is cost effective and would involve less political risks (Kotabe and Helsen 2014). The parent company would also be able to retain control over its franchises in a foreign market. CCD has a very aggressive distribution strategy in the countries it is currently operating in. In most major countries of India, there are at least ten to twelve outlets which are all centrally located and easily accessible. The same policy will be followed in the UK as well. The initial location for CCD will be London, which is one of the most popular cities in the UK. Gradually, the company will expand into the other cities as well. CCD will mainly focus on the urban locations, because college going students and working men and women between the ages of 19 and 32 are the target audience. Also, a number of outlets would be opened up near the colleges and universities and in densely populated areas so that it can lure in the target audience.

Positioning Strategy

CCD would have to devise strong marketing strategies in the foreign market. For that, the cultural differences would have to be taken into account. CCD would have to remember that the culture and values are very different in India than in the UK. As a matter of fact, the marketing strategies followed by CCD in Thailand and Malaysia would not be applicable in UK (Pongsiri 2013). The people in UK have a very different set of expectations from coffee stores than in India. For instance in the UK, cafes are mainly places where customers can relax or meet and interact with other people over a cup of coffee. Similarly, CCD could introduce a number of new flavours which are in accordance with the tastes and preferences of the people of UK (Srivastava 2015). Social media is another major means of communicating with the customers. Online marketing would be one an integral aspect of CCD’s international marketing strategy. Various strategies like click through rates and other metrics could be used to evaluate customer expectations and needs.

The company is targeting the younger population of UK. As such, the company would have to portray itself as a brand that is lively and youthful (Nadiri and Gunay 2013). The branding of the store would include the interior of the outlets as well. In any coffee store, the lighting, interior design, music and overall ambience play a crucial role (Jana, Das and Mishra 2015). For instance, CCD has a standard vibrant colour scheme that is followed in all its outlets. This also creates a strong and distinct brand image for the company. One of the main factors that must be considered while devising the brand strategy for CCD is the company perception. Most customers in international markets tend to perceive the CCD brand as distinctively Indian. While entering the UK market, the company would have reposition its brand as a global chain (Rashid and Ghose 2015).

The table below highlights potential problems and solutions. These are a few measures than can be used to regulate the quality of products and services delivered in the international market. The success of CCD in the UK will be measured based on the extent to which the company is able to meet its goals and align its strategies to its business mission. For instance, the market performance of CCD will have to be evaluated at regular intervals to ensure that the marketing strategies of the company are effective and able to appeal to the target audience. The success of the company will be measured on the basis of the fulfilment of the company goals and objectives within the timeframe. Product standardization is one strategy that will be used to control future performance. Standardization refers to the process of maintaining uniform characteristics or consistency in terms of quality and service. Ensuring would help the company gain a favourable reputation in the foreign market.

1

Changing needs and preferences of the customers.

High

This can be managed through regular analysis of customer needs and consumer buying decision.

2

Food safety

Low

A thorough analysis of the safety and hygiene guidelines that UK has, so that all outlets of CCD can abide by the same (Garcia Martinez,Verbruggen and Fearne 2013).

3

Inventory and finances

Moderate

A lean system should be followed (Villarreal, Garza-Reyes and Kumar 2016). That reduces wastage in the production process. CCD would thus produce goods based on expected customer needs. This would also make the business adaptable and flexible.

4

Market Competition

High

CCD is likely to face severe competition from existing brands like Costa Coffee and Starbucks. To manage this, it can keep its pricing strategy low. Another solution is the introduction of new products which the UK audience may not have tasted before.

Product Strategy

Conclusion and recommendations and timeline 

To conclude, it can be said that CCD, a predominantly Indian brand, would need to come up with a strong marketing and branding strategy that would establish it as a front runner in the UK coffee industry. As the report above shows, the brand which has established itself in the Indian market will have to rebrand its company image and incorporate a few changes into its product and pricing strategies to appeal to the target market in the UK. Recommendations for CCD before it enters the UK market would include:

  • A global product strategy must be followed. The standard products of CCD would be included as part of the strategy. However, the tastes of the UK market must also be kept in mind. Accordingly, certain tea related beverages may also be included.
  • A moderate pricing strategy must be followed. Since the target market for CCD would be the younger generation, a moderate pricing strategy with a range of products would be attractive to the niche markets.
  • An aggressive marketing and promotion strategy would have to be followed. This would include promotions through social media and email marketing. Promotional campaigns in the target locations may also be organized before the company enters the market to build anticipation amidst the potential audience.

A timeline has been provided which can be used by CCD to penetrate the new market:

Action

Time line

Extensive market research and analysis

2 weeks

Segmentation

2 weeks

Distribution strategy and location selection

2 months

Appointment of suppliers

1 month

Market entry

1 month

Establishment of first outlet in London

3 months

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