Understanding the impact of Starbucks on CCD would require us to understand the target customer segment and their behavioural aspects. The consumer segment for Starbucks has normally been in the following proportions.
While speaking to some of the customers, we tried to gather insights regarding café chains and how they are perceived.
The underlying threat from Starbucks is two-fold:
1. As Starbucks is more appealing to customers in the 24-30 age group who have just finished college and started a job, CCD might lose some of its customers.
2. With CCD entering the interiors and expanding, it becomes increasingly difficult to maintain its experience across all centres.
Proposed strategy
We propose a two-pronged strategy that would focus on
1. Give direct competition to Starbucks with brand extension and rebrand strategy to position CCD Lounge and CCD Square as places for more intellectual and sophisticated conversations.
2. Strengthen CCD’s core value proposition with customer engagement programmes at normal CCDs to build customer loyalty and increase customer retention
Recommendations
Reposition CCD Lounges and CCD Squares and differentiate them as places for more mature, intellectual conversations meant for professionals and elite crowds. To position them as premium cafés, drop ‘CCD’ from CCD Lounge and CCD Square to just ‘The Lounge’ or ‘The Square’ to differentiate them from the usual CCDs. Other name suggestions can be Mugs Cafe and Brown Chocs.
Offer more variety in the menu, especially with food items like Eggs Benedict, salads, paninis etc to add to the sophisticated and intellectual image of the café. Also, food offers higher margins in profit and improves the bottom line.
The target segment of these cafés should be those in the 24-30 years age group. These are achievers who want to assert their position by going to better cafes, professionals, and artists who want a more sophisticated environment for intellectual conversations. Also, enhance the ambience by choice of music, or with professional guitar players to add to the elite and sophisticated touch.
Maintain the customer experience across all chains of CCD as Starbucks takes great care for consistency. One idea can be to get ‘My Café Coffee Day Moment’ framed photos with friends at CCD. Also, CCD can combine coffee with youth and music to reach out to colleges and emphasise the friendship theme as the ambience touch point.
From coupons to Loyalty cards for increasing consumption and footfalls, give more points and more discounts as the customer swipes his card more. Also, leverage social media, which is a hit among youngsters coming to CCD. Social media apps can help form a community of coffee lovers.
( Niloy Roy and Ratika Sablania are pursuing PGP in management at IIM Ahmedabad. )