Case Study
Case Study
Case Study
Possible Solutions
researchers live with a family for several days in order to record their every move. The
project is designed to meet the needs of client companies who are looking for more than
the data gathered using traditional quantitative and qualitative research techniques.
Participants record their views and actions on a digital video camera, in the presence of
a researcher who stays with them from 8am until 10pm for a few days. A normal project
would last four or five days and the client may be invited along for part of the time.
Participants are paid 100 for their troubles. What did they do with the direct mail when
it came through the letter box? Did they use the coupon offer which it contained? Who
drinks the fresh orange juice in the house? How long do they spend cooking dinner?
How do they actually cook the ready-prepared meals they bought earlier? Does the
family eat together? These are examples of the vital information that sponsoring
companies hope to get hold of in order to position their products more effectively.
According to the company, the advantage of this method over conventional research is
that it picks up inconsistencies between what people say they do and what they actually
do. Following them throughout the day allows the researcher to see why a person's
habits might change according to random factors such as their mood, the time of day or
the weather. Crucially it reveals the quirks in our behaviour that marketers are
desperate to gain an insight into. For example, a person's store-card data might tell you
that they buy bread and margarine, but it doesn't tell whether they eat the bread fresh,
or toast it first before putting margarine on it.
In 1998, the magazine Marketing put this novel research method to the test with a
guinea pig family called the Joness. It then compared the results of this approach with
more traditional methods of profiling customers. In short, established systems such as
CACI, Claritas and Experian might say one thing about the buying behaviour of a family,
using lifestyle and electoral roll data, but did they bear any relation to reality?
The information that the researcher gathered in a short space of time told a lot about the
Jones family. By contrast, the database information about the Joneses, although
detailed and often accurate, could not capture the quirks and details that make up the
personality of the family. For example, it transpired that the Joneses had a keener than
average eye on value for money. Although information on them from the four database
companies correctly suggested that they enjoy luxuries like good food and foreign
holidays, it didn't say anything about the real life factors that influence their purchasing
decisions. The most noticeable of these was that although they like good food, Mrs
Jones mixed her shopping between the supermarket and a local discount store which
sells cut-price brands. This means that she only bought at Tesco or Sainsbury's what
she could not get cheaper elsewhere. She showed the researcher a can of branded
plum tomatoes which she got for 10p at the discount store as an example, explaining
that it would have cost 26p in the supermarket. Mrs Jones prided herself on being able
to hunt down bargains like this and occasionally rewarded herself by buying "something
luxurious", such as smoked salmon from Marks & Spencer. The freezer had an
important role to play as it allowed Mrs Jones to buy things she sees on special offer
even if she doesn't need them immediately.
Mrs Jones's eye for an offer made her a keen scrutiniser of direct mail. She checked
mailings for 'catches' in the small print and for any special offers. She collected mailers
worth chasing up on a clip on the fridge door, along with vouchers collected from
magazines. Mrs Joness financial nous means that she managed the family's money.
Not surprisingly, these details did not come out in database information. Of the
commercial databases, CACI's People UK and Lifecycle UK databases seemed to be
most at variance with the reality of the Jones' life. They got their ages wrong, incorrectly
surmized that they took business flights and incorrectly attributed Mr Jones with being
computer literate. Nobody in the household read the FT or the Independent as predicted
- they read the Daily Mail instead. Some of the other points made by CACI were right,
but were felt to be very generalized and could apply to anybody.
Claritas seemed to be much closer to reality. The Jones' predicted jobs were about
right and the database was correct in stating that they had credit and store cards. They
managed to say that the Joneses liked antiques, perhaps learnt as a result of them
occasionally buying Homes and Antiques magazine. They similarly were correct in
stating that they like gardening, DIY, foreign travel and eating out. The database had
predicted that the family would be most likely to own a Ford or Renault car. In fact, Mrs
Jones owned a Ford, while Mr Jones had a company Renault.
Based on "Keeping up with the Jones's, Marketing, 19th November 1998, pp 28-29.
1. Why is it important to study the composition of the decision making unit? To what
extent do you think this research approach will give a complete understanding of how
family units make purchases?
2. What new possibilities, if any, for market segmentation are opened up by this
approach to the study of buyer behaviour?
3. Critically assess the scope for expanding this type of research as a means of learning
more about buyer behaviour.
During the Autumn of 1998, mortgage rates in the UK were falling; unemployment was
close to its lowest level for two decades; pay rises were keeping ahead of inflation; and
share prices were recovering from their recent falls. Yet expenditure by British
households was falling sharply. For three consecutive months retail sales fell in value,
with retailers such as Marks and Spencers and Storehouse reporting below expected
levels of sales. Retailers have traditionally found excuses to justify poor sales to their
shareholders, including weather which is too cold/too hot. Even the death of Diana
Princess of Wales was widely blamed for keeping people out of the shops.
Throughout 1998, prices of consumer goods had fallen significantly, with consumer
durables down in price by an average of 2% in a year and clothing by 5%. Economic
theory would have suggested that lower prices would have resulted in higher sales,
especially considering the other favourable elements of the macro-environment.
However, this did not appear to be happening.
What else could have been happening in the marketing environment to explain falling
household expenditure? At the time, the media was full of reports of an impending
global economic crisis, triggered by difficulties in the Asian economies. Consumer
confidence is crucial to many high value household purchases such as houses and
cars, with consumers reluctant to commit themselves to regular monthly repayments
when their source of income is insecure. Even this may be only a partial solution, as a
survey of consumer confidence carried out in October 1998 by GFK on behalf of the
European Commission showed that although consumers were pessimistic about the
state of the national economy, they were quite upbeat about their personal financial
situation.
One possibility was that consumers had become cannier. If prices are falling, why not
wait longer until prices have fallen further? Consumers had also witnessed the effects
of previous over-borrowing and had been more cautious during the recent period of
economic growth, resulting in a historically low level of personal sector indebtedness. In
1997, 9% of disposable household income was saved, compared with just 3% at the
height of the economic boom of 1988.
For companies who need to commit resources a long while in advance in order to meet
consumers needs, an accurate understanding of the market environment is crucial if
stock surpluses and shortages are to be avoided. But this case shows that getting it
right can still be very difficult.
1. Identify all of the environmental factors that can affect the demand for consumer
durables and assess the magnitude and direction of their impact.
2. In what ways can a manufacturer of consumer durables seek to gain a better
understanding of its marketing environment?
3. How can a manufacturer of consumer durables seek to respond to environmental
change as rapidly as possible?
Introduction
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Exhibit 1: Total number of stores/cafes of Caf Coffee Day and its competitors
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1996 2008, CCDs first store launch to building a strong competitive advantage
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Co-branding
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Examine and analyze Cafe Coffee Days brand strategy in India, its success and future
challenges
Introduction
CCD today has become the largest youth aggregator, and from a marketing stand point, the
success has come by focusing on the 3As: Accessibility, Affordability and Acceptability.Bidisha Nagaraj, the Marketing president of Cafe Coffee Day
Although demographically, a typical consumer would be male or female between 15-29 years of
age, belonging to middle or upper middle class, we call our consumers young or young at heart.
We are about juke boxes, good and affordable coffee and food. The brand fit is with youth or the
young at heart. So we often look out for brands that are aspirational in nature. Sudipta Sen
Gupta, Marketing head, Caf Coffee Day.
brand image, brand management, Exclusive Brand Retailer of the Year, Barista, Java Green, Mocha,
company owned stores, national brand, south Indian retail chain, Chikmagalur, Co-branding,
international brand consultant Landor, Silent brew masters special employee program, a feeling of
togetherness, Coffee Day Exports, Coffee Day Xpress, Coffee Day Take Away (coffee vending
machines), Coffee Day Fresh n Ground (ground coffee retail outlets), Coffee Day FMCG (packaged
filter coffee powder)
Case Updates/Snippets
CCDs vision: To be the only office for dialogue over a cup of coffee
CCDs Expansion Strategy: Cafe Coffee Day has around 821 outlets in 115 cities in India.
CCD plans to take the total number of cafes to 1,000 by March 2010 and double it to 2,000 by
2014. (Update: By Jan 2012, CCD had approx 1,200 cafes and 900 Express outlets) In October
2009, CCD announced that it will increase its international presence from the current six outlets
in Vienna and Pakistan to a total of 50 stores across Europe and Middle East in two years time.
International coffee chains in India Recent entrants in the Indian market include
Gloria Jeans, Coffee Bean & Tea Leaf and Illy Caf.
Operating Formats Caf Coffee Day operates in both regular (Coffee Day Square) and
premium formats (Lounge).
Highway Cafes: In 2004, CCD began cafes on highways. By 2009, the total number of Caf
Coffee Day highway cafes rose to 30 owing to the overwhelming response it received from
travellers.
CCDs new brand identity: In October 2009, CCD unveiled a new brand logo, a Dialogue
Box, to weave the concept of Power of Dialogue. In accordance with this new brand identity,
CCD planned to give all its existing outlets a new look by the end of 2009. Cafs would be
redesigned to suit different environments such as book, music garden and cyber cafes suitable for
corporate offices, university campus or neighborhood. The change plan included new smart
menu, furniture design, among others.
Coffee consumption in India is growing at 6% per annum compared to the global 2%
plus. In India, the per capita consumption of coffee is around 85 grams while it is six kgs in the
US.
Milk production in India India is the largest producer and consumer of milk in the
world with 98% of milk being produced in rural India.
Coffee production in India India ranks sixth as a producer of coffee in the world
accounting for 4.5% of the global coffee production. India has about 170,000 coffee farms
cultivating around 900,000 acres of coffee trees.
CCDs International Expansion Strategy In June, 2010 Cafe Coffee Day chain
acquired Emporio for Rs 15 crore. Emporio is a Czech Republic-based caf chain present at 11
locations. CCD plans to co-brand the chain as Caf Coffee Day Emporio and later transition it to
Caf Coffee Day. CCD is also present in Vienna. The company wants to expand in the East
European region, West Asia and the Asia-Pacific region.
Cafe Market in India Coffee retailers cover only 170 cities out of 3,000 in India (early
2011 reports). In 2008, according to Technopak Advisors, the Indian food servcies market
cafes, full-service restaurants, fast-food outlets/quick-service restaurants was estimated to be $6
billion (Rs 26,000 crore) with organized players taking 13% of the market. (By 2014 this number
is expected to increase up to 27%.). According to Technopak Advisors, the caf market in India is
estimated at $150 million (Rs 678 crore) and growing at 40 per cent over the last five years.
Organized coffee market in India: The organized coffee market in India is about Rs 600
crores. This is approximately 20% of the total domestic coffee consumption (Rs 3,000 crores).
New Entrants in Indian Coffee Cafe market: In early 2011, Hindustan Unilever, the
FMCG giant planned to open a cafe outlet in Mumbai named Bru World Caf to popularize its
in-house coffee brand Bru (HULs only coffee brand sold only in India).
CCD to double its human resources count: CCD has 6,500 employees (as per Feb 2011
figures) with each cafe requiring about 6 employees. CCD plans to double its employee count by
2013.
Lavazza Espression store in India: In 2011, Lavazza, the Italian coffee brand opened
its first signature coffee shop Lavazza Espression in New Delhi, India.
CoffeeDay Wakecup: In January 2012, CCD launched its own brand of coffee maker called
CoffeeDay Wakecup targeting all coffee lovers. The product will be marketed at its 1125 cafes and
900 Express outlets. Competitor Lavazza had launched its own portable coffee machines
(Lavazza Blue 850) already but targeted the premium segment with the price being higher than
CCDs machines.
In February 2012, Caf Coffee Day announced plans to install interactive touchscreen tablets
in 500 cafes across the country.
7. Read the case rather quickly the first time to get an overview of the industry, the company,
the people and the situation. Read the case again more slowly, making notes as you
go.Read the case thoroughly
8. Many cases will involve several issues or problem. Identify the most important problems.
Examine related problems in the functional areas( marketing, finance. And so on)Define the
central issue
9. Inconsistencies between a firms goal and its performance may further highlight the
problems discovered in step 2. this will provide a guide for the remaining analysis.Define the
firms goal
10. Constraints may limit the solutions available to the firm. It may include limited finances,
personnel limitations, strong competitors and so on.. Constraints have to be considered
when suggesting a solution.Identify constraints to theproblem
11. Use your creativity to come up with the alternative solutions.Identify all
relevantalternatives
12. Evaluate each alternative in the light of the available information. Resist the temptation to
jump to this early in the case analysis. you also need to explain to explain the logic you used
to choose one alternative and reject the others.Select the best alternative
13. The final step in the analysis is to develop a plan for effective implementation of your
decision.Develop an implementationplan
14. Oral report Written reportsThe report
15. implementation Conclusion Alternatives Problem statement Executive
summaryWritten reports
16. Executive summary is a concisely written statement, less than one page, placed at the
front of the report. it briefly summaries the major points of the case and your solution. It
should describe the major issue, the proposed solution and the logic supporting
solution.executive summary
17. Present the central issue or major problem in the case here.Problem statement
18. Discuss all relevant alternatives. Be sure to state your assumptions and the impact of
constraints on each alternative.alternatives
19. Present the analysis and the logic that led you to select a particular solution. Also
discuss the reasons you rejected the other alternatives.conclusion
20. Outline a plan of action that will lead to effective implementation of the decision so that
the reader can see not only why you chose a particular alternative but also how it will
work.implementation
21. Implementation Conclusion Analysis of the key alternatives Problem statement
Description of the case situation Students should include the following whenever discussing
a case in the test:-Oral reports
22. THANK YOU