Cafe Coffee Day ( Ccd )

30 3.2.6. Five Forces Analysis ......................................................................................................................... 31 Diagram 3: Five Competitive Forces in the Coffee Industry .................................................................. 32 3.2.6.1. Threat of New Entrants .................................................................................................................. 32

The “Coffee Wars – The Big Three: Starbucks, McDonald’s and Dunkin’ Donuts” article focuses on the company analysis of the Starbucks brand and how its main competitors, McDonald’s and Dunkin Donuts, has affected their brand and driven competition higher. Even though there are many companies trying to enter the specialty coffee market, these three companies own the majority of the market share. With Starbucks’ top quality and above average prices they hold a different market than the fast coffee/food market of Dunkin’ Donuts and Starbucks; yet the competitive moves Dunkin’ Donuts has made over the years in order to compete with Starbucks and surpass McDonald’s has driven competition up between all three companies. The competition has stiffened ever more in the past ten years due to the changing economy. This led to “the big three” to come up with different techniques to gain competitive advantage over the other. Although the competition between these companies is to gain most of the market share, consumers are still loyal to a certain brand; this makes it difficult to gain each other’s clientele. McDonald’s continues to appeal to customers who want value and speed, Dunkin’ Donuts focuses on the middle-class, while Starbucks a customer who desires a higher quality product along with being recognized for using the brand.

Starbucks is one of the leaders in coffee industry. Starbucks has entered into many new markets and today it has more than 16,000 outlets across the globe (Johnson, Scholes and Whittington 2011). Due to unlimited business opportunities, Starbucks Corp has set strategies to enter India as it is next major hub for development in near future. Previously Starbucks has gained wide success in China and Japan due to high consumption of coffee and tea. Since its inception, Starbucks has tapped the major markets across the world, India was left untapped. In India, Starbucks has setup alliances with TATA Global Beverages which is a unit of TATA Group of Companies. Starbucks along with TATA has started with an investment of $80 million and plans to open 50 coffee shops in a year. Currently few coffee shops has been setup by Starbucks, however in near future, it is expected that the company will achieve its target in capturing Indian market (Lamb2009). Thus, besides sourcing coffee beans from TATA, Starbucks can now explore more Asian markets (Hitt, Ireland and Hoskisson 2012).

Café Coffee Day was able to transform the tea drinking market of India into a successful café coffee market industry throughout the country. This “new” concept of coffee and cafés were to appeal to the younger generation who desired to socialize more but just needed a place to do so. Café Coffee Day was able to commandeer the coffee market and appoint themselves as the top coffee chain in India. Café Coffee Day was capable to be extremely successful until a large competitor, Starbucks, was launched in India. Starbucks attracted the established individuals and middle aged people who were able to afford its pricier product. Café Coffee Day has a younger demographic consisting of teenagers and college students who were unable to pay for the

The first store of coffee club is opened in Brisbane in 1989. The Coffee Club has become Australia’s largest home-grown cafe group with over 400 stores throughout 8 countries. The Coffee Club is well-known for its famous all day breakfast and serves as a relaxed meeting place for over 40 million customers. The coffee club always promise good food, great service and excellent coffee that will make smile on customers face. The first part I am going to explain is the role and relationship of different actors of the coffee club.

The strategy is necessary for the establishment of a good relationship between the wholesale clientele and the company. The association that the regional sales teams have with the wholesale customers is vital for giving the company the necessary information regarding the performance of the product. The triple-tiered strategy is necessary for the identification of the challenges that the competitors are going through, and building on their weakness to increase the sales volume. An element of a weak competition in consideration involves brand recognition. Carolina Coffee

The industry’s saturation is moderately high with a monopolistic competition structure. For new entrants, the initial investment is not significant as they can lease stores, equipment etc. at a moderate level of investment. At a localized level, small coffee shops can compete with the likes of Starbucks and Dunkin Brands because there are no switching costs for the consumers. Even though it’s a competitive industry, the possibility of new entrants to be successful in the industry is moderate. But this relatively easy entry into the market is usually countered by large incumbent brands identities like Starbucks who have achieved economies of scale by lowering cost, improved efficiency with a huge market share. There is a moderately high barrier for the new entrants as they differentiate themselves from Starbuck’s product quality, its prime real estate locations, and its store ecosystem ‘experience’. The incumbent firms like Starbucks have a larger scale and scope, yielding them a learning curve advantage and favourable access to raw material with the relationship they build with their suppliers. The expected retaliation from well-established companies for brand equity, resources, prime real estate locations and price competition are moderately high, which creates a moderate barrier to

Starbucks can follow some strategies to differentiate their product even more that will lead to vary their menu prices. For example, Starbucks might create “saving menu” by selling some products at a lower prices to attract even more customers. Also, Starbucks might take into consideration the strategies of opening “Starbucks carts” that open in smaller express places that don’t fit for a whole store. Those “Starbucks carts” will attract even more customers because it is easier to get access to. “Starbucks carts” may provide the customers with low cost products to draw larger market base. To be a best cost provider in the market will allow Starbucks to be the most attractive company in the coffee market internationally. Thus, Starbucks will have a competitive advantage over its rivals by fulfilling the needs of a huge customer base in the market, by providing a high quality products and provide products with the best costs.

Barriers to entry for coffee retailers are low, hence increasing the threat of new entrants. Equipment, facilities, furniture, etc. can be leased by new coffee retailers, thus, reducing initial capital expenditure and upfront investment. Since the industry is high fragmented at the bottom levels, new players can create and compete in niche areas within the market. However, small players may not be able to compete with the major players in the industry who have successfully achieved economies of scale and high degree of operational efficiency. Furthermore, consumers may have a strong association and preference for a brand such as Starbucks and may be reluctant to switch to another new brand of coffee.

In general the coffeehouse industry in the United States was experiencing an increase in coffee consumption per capita due to the “Starbucks effect”. At this time Starbucks was operating approximately 20,000 stores in the United States and was living a fast expansion strategy worldwide.

Understanding the market conditions and competitive environment that a company operates is an imperative for its success. Notably, the market conditions and competitive dynamics in an industry have a direct impact on the operations and strategies of a company and consequently its ability to achieve its business and corporate objectives. Keurig Green Mountain is a speciality coffee company in the United States Food and Beverage Appliance manufacturing industry; it was founded in the year 1981. Keurig a market leader in coffee blends and portions market in the United States is also ranked among the 50 best manufacturers in the country by the IndustryWeek. Keurig product line comprises of diverse beverages including coffees, teas, hot cocoa, other beverages and, products such as appliances, portion packs, ground coffee and coffee beans. The company’s has grown tremendously since its inception into the industry and this is attributable to its highly diversified product line; it has more than 400 types of coffee blends and technological innovations. This research paper presents an analysis of the market conditions of Keurig coffees.

India, like many other Asian countries, has a tea drinking culture, but the coffee market is catching up and growing fast. This case talked about the stories of Café Coffee Day (CCD), the Indian coffee industry market leader, along with its competitor Starbucks from USA. CCD was founded in 1996 and by April 2013 it had around 3,000 stores within the Indian market. CCD had not faced any severe threat up till 2012 when Starbucks made its entry into the Indian market through a joint venture with Tata. As the world’s largest coffee chain company, Starbucks wanted to get a slice of the cake. In 2013, it opened 11 stores in Delhi and Mumbai.

Coffee Day is determined to become a favourite Coffee place for local coffee addicts, a place to relax and try to escape the daily stresses of life and best place to meet your friends or to read a book, all in one. With the growing demand for high-quality coffee and great service, Coffee Day will capitalize on its proximity to build a core group of regular customers. Coffee Day will offer its customers the best brewed coffee in the area that will be complimented with pastries and other snacks.

It was an average day in a local coffee shop. My life was average,nothing exciting. I lived in an average apartment in an average town. I worked an average job and went home and did average things. That is until I went to that average coffee shop on that average day. I was sitting at the table doing my last minute assignment for work. I looked up and saw a gorgeous girl walk in the coffee shop. She saw me too. I wasn’t the kind of person to go up to someone I didn’t know and start talking to them. Thankfully she was though. She came up to me and smiled, she told me her name was Aubree and I told her my name was Blair. Little did I know I had just met the person that would bring excitement to my life.

Starbucks’ retail entry model in the United States does not have the same strategy as their international model. In the states Starbucks holds great control as a corporation, but in international territory, country partnerships, cultural, government laws and politics play a very important role in Starbucks’ entry strategy. Starbucks has set it sights globally since the coffee market has come close to saturation in the U.S. which will give them the opportunity to continue to expand without fierce competition. Starbucks has looked to countries like India and other emerging markets with great growth potential to set down new roots. Starbucks recognizes India as a great choice to expand business internationally but also recognizes the complexity in the same market after several attempts to enter without success.