Case Study

Wild Card: Bru World Café

Team ‘Bulls’

Team Members:

Ashutosh Srivastava (ashutosh10@iimshillong.in)

Ishant Arora (ishant10@iimshillong.in)
Priyansh Modi (priyansh10@iimshillong.in)

Indian Institute of Management

Shillong
Coffee Café Industry Coffee Café Players In India
General
Individual cafés: provide customers with a homely, classic appeal Domestic Market
Hotel cafés: provide supplementary services to the hotel industry 120000
Retail café chains: most organized sector and provide standardized 100000
level of service and quality 80000
60000
International Players entering into Indian Market1 Quantity (MT)
40000
•Starbucks is the world's largest coffee chain in terms of number of
cafes and revenue. 20000
•Dunkin' has 9,760 cafes in over 30 countries. 0

India Source: http://www.indiacoffee.org/indiacoffee.php?page=CoffeeData

•Total domestic coffee consumption of ` 3,000 crore2
Major Players
•Indian coffee market estimated between 650 cr and 1,100 cr1 Cafe Coffee Day Lavazza-Barista Costa Coffee Java Green
•India can absorb 5,400 cafes with current count of 1,926 outlets.1
1151
Drivers Size of
•Higher per capita salary and increasing disposable income and
•Increasing emphasis on lifestyle number 188
on circle
•Increasing population base of sophisticated and comparatively represe 77 46
young consumers nts
number
Opportunities & Challenges of
•India will have an estimated 110 million population in the literate outlets.
25-35 age group4 Premium Charged 
Average footfall (per day
•Indian consumer, who is gaining affluence but remains price- Number of cafes
per outlet)
conscious
•Top rental in upmarket locales Java Green 520
500
•Managing coffee prices, which are at a 17-year high Costa Coffee 480
460
•Handling a young and restless workforce Lavazza-Barista 440
•Challenge from entry of Starbucks and Dunkin’ in India 420
CCD

0 500 1000 1500

Source: http://allaboutoutdoor.com

Coffee Cofee Consumption Calculating Returns from Proposed Model to Calculating Returns – Corporate
Industry Pattern different Channels Calculate Returns Channels Prioritization Recommendations
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Coffee Consumption Pattern Place of Coffee Consumption Status Connotation
70 35
Drinkers Based on Heaviness of T s 30
60
Consumption o c 25
50 At home o
(All urban India) p 20
40 r
15
Non Drinkers Occasional Drinkers At home and b e
30 10
outside home
Light Drinkers Medium Drinkers o 5

(
20 Only outside x % 0
Heavy Drinkers

)
10 home
5% 7%
4%
25% 0
All West East
59%
•The Heavy Drinkers, Light Drinkers, and Medium More than a third drink coffee out-of home, at a national level. •Coffee is perceived by almost one-third
Drinkers form 34% of the urban population. Out of home consumption among the lowest in West, maximum people to be related to high status.
•This represents around 400 million potential being 42% in East •Positioning of coffee as a status product
consumers throughout India. will enable market penetration.
Time of Consumption
Place of Outside Home Consumption
% of people drinking coffee All North East West South
90 Base 1172 89 80 33 970
80 First thing in the morning
70 (Before 7 AM) 67 75 69 28 72
60 Canteen / Mess With Breakfast (7.01 AM – 10
Hotels / Restaurants AM) 73 72 77 82 71
50
Between breakfast & lunch
40 Coffee stalls
(10.01 AM – 1 PM) 45 51 70 31 44
30 Vending machines With lunch (1.01 PM – 4 PM) 39 50 33 18 40
20 Premium cafes In the evening before dinner
10 (4.01 PM – 7 PM) 76 75 33 71 77
0
All West East
With dinner (7.01 PM – 10 PM) 49 61 36 28 51
After Dinner (After 10 PM) 21 40 16 8 20
•Opportunity to increase coffee consumption lies in out-of-home
The positioning needs to be done as a drink suited for after-lunch and evening times.
segments, especially through vending machines and premium cafés.
•Cafés score highest in West. Source: ‘COFFEE CONSUMPTION IN INDIA – 2008’ report by Coffee Board of india

Coffee Cofee Consumption Calculating Returns from Proposed Model to Calculating Returns – Corporate
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Calculating Returns from different Channels

 Various Marketing Channels promote the Brand

 Need to identify the Sales obtained through different Channels
 Color coding Approach can be used
 Assign different Color Codes to identify Customers
 Customers influenced from different Marketing Channels need to be identified
 Different Marketing Channels can be assigned different discount coupons
 Return from different marketing initiatives can be then easily calculated

Different
Need to identify Customers Return from
Various Marketing
the Sales Assign different influenced from different
Marketing Color coding Channels can be
obtained Color Codes to different marketing
Channels Approach can assigned
through identify Marketing initiatives can
promote the be used different
different Customers Channels need be then easily
Brand discount
Channels to be identified calculated
coupons

Integrated Marketing Channel Identifiers on Products Discounts

1. Facebook Application 1. AB-XXXXXX Series
2. College Student Discount Channel Mapping 2. CD-XXXXXX Series
3. Promotional Bulk Deals 3. EF-XXXXXX Series
4. Festive Discounts 4. GH-XXXXXX Series
5. Interest Group Discounts 5. IJ-XXXXXX Series
6. FM Channel Ads 6. KL-XXXXXX Series
7. Airports + Malls Promotion 7. MN-XXXXXX Series

Coffee Cofee Consumption Calculating Returns from Proposed Model to Calculating Returns – Corporate
Industry Pattern different Channels Calculate Returns Channels Prioritization Recommendations
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 Scalable Model for ROI Calculation through Marketing for any Location
Proposed Model to Calculate Returns
Aggregate Sales S
Total Cost of
C
Goods Sold
Pamphlets
Intgegrated Marketing Facebook College Student Promotional Bulk Festive Interest Group FM Channel Coupons (
Unclassified Sales
Channels Application Discount Deals Discounts Discounts Ads Airports + Malls
Promotion)
Sales Discount Coupons AB-XXXXXX GH-XXXXXX KL-XXXXXX MN-XXXXXX
CD-XXXXXX Series EF-XXXXXX Series IJ-XXXXXX Series
( Various Series) Series Series Series Series

S-
Sales through various
S1 S2 S3 S4 S5 S6 S7 (S1+S2+S3+S4+S5+S6+
Channels (a)
S7)

Investments on
I1 I2 I3 I4 I5 I6 I7
different Channels (b)

C-
Cost of Goods Sold ( c) C1 C2 C3 C4 C5 C6 C7 (C1+C2+C3+C4+C5+C6
+C7)

S-
(S1+S2+S3+S4+S5+S6+
Profit Margin (a) - (b) -
S1-I1-C1 S2-I2-C2 S3-I3-C3 S4-I4-C4 S5-I5-C5 S6-I6-C6 S7-I7-C7 S7) - C +
(c)
(C1+C2+C3+C4+C5+C6
+C7)

S-
(S1+S2+S3+S4+S5+S6+
ROI on individual
S7) - C +
Channels (a) - (b) - ( c) S1-I1-C1/I1 S2-I2-C2/I2 S3-I3-C3/I3 S4-I4-C4/I4 S5-I5-C5/I5 S6-I6-C6/I6 S7-I7-C7/I7
(C1+C2+C3+C4+C5+C6
/(b)
+C7) /
I1+I2+I3+I4+I5+I6+I7

Coffee Cofee Consumption Calculating Returns from Proposed Model to Calculating Returns – Corporate
Industry Pattern different Channels Calculate Returns Channels Prioritization Recommendations
Responsibility
Calculating Returns –Channels Prioritization

Facebook Corporate Discounts College Discounts

 No. of Internet users in Mumbai – 32.4
lakhs
 Young Population on Social Sites = 31% =
32.4 * 0.31 = 10.044 lakhs
 Investment ( per day minimum cost) = 500
Rs. = 1.82 lakhs ( annual)
 Assumed Conversion Rate = 15 %
 Assumed Average Sales per person = 80 Rs.
 Assumed COGS per person = 30 Rs.
 Total Sales = 10.044 * 0.15 *80 = 120 lakhs
 Total Cost = 10.044*0.15*30 = 45.198 lakhs
 ROI = 120 – 45 – 1.82/1.82 = 40
 Mumbai Corporate Head count = 2.04
million
 People with high disposable income =
40%
 Assumed Conversion Rate = 45 %
 Assumed Average Sales per person = 80
Rs.
 Assumed COGS per person = 30 Rs.
 Total Sales = 20.4 * 0.4*0.45 *80 = 293.76
lakhs
 Total Cost = 20.4 * 0.4*0.45 *30 = 110.16
lakhs
 Investment in Corporate Relationships = 5
lakhs
 ROI = 293.76 – 5 – 110.16/5 = 35.72
 Total Population = 11,23,72,972
 Overall Literacy = 82.9%
 College Enrolment Factor = 0.41
 College going population
=112372972*0.829*0.41
 =1,86,31,438.7576
 College Discounts Spending = 10 lakhs
 Assumed Conversion = 2 %
 Assumed Average Sales per person = 60
Rs.
 COGS per person = 30 Rs.
 Total Sales = 186 * 0.02 *60 = 223 lakhs
 Total Cost = 186 * 0.02 *30 = 111.6
lakhs
 ROI = 223-111.6-10/10 = 12.14

Overall Weight Assigned to ROI = 0.3

Overall Weight Assigned to Footfall Increase = 0.7

2 1 Overall Rank
3
Overall Rank Overall Rank
Footfall Increment # 1.50 lakh Footfall Increment # 3.67 lakh Footfall Increment # 3.72 lakh
ROI # 40 ROI # 35.72 ROI # 12.14
Total Score # 13.05 Total Score # 13.285 Total Score # 6.2465

Coffee Cofee Consumption Calculating Returns from Proposed Model to Calculating Returns – Corporate
Industry Pattern different Channels Calculate Returns Channels Prioritization Recommendations
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CORPORATE RESPONSIBILITY

Increased
Customer
Footfall

Marketing Strategies
for Bru

Coffee Cofee Consumption Calculating Returns from Proposed Model to Calculating Returns – Corporate
Industry Pattern different Channels Calculate Returns Channels Prioritization Recommendations
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Recommendations

Best Practices in Industry- How they Differentiated themselves:

Starbucks Barista

Online Media Board Games to

Loyalty retain consumers
programs Ambience for
Additional High end
Services Consumers

Café Coffee Day Dunkin Donuts Local Cafes

Events and Hall of Fame

competitions for No Frills to retain
Target group Professional Café consumers,
Price,
Perceived Price Lower prices Extensive
differentiation compared to Menu
major competitors

Coffee Cofee Consumption Calculating Returns from Proposed Model to Calculating Returns – Corporate
Industry Pattern different Channels Calculate Returns Channels Prioritization Recommendations
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Recommendations

Interest Groups Tourists Corporates Incentives

Reference Groups  These groups meet regularly and often

like to visit those places regularly with
 Many studies shows Reference groups other Groups- Eg. Some Bars in Kolkatta,
have high impact on Consumer Behaviour where Literature enthusiasts come
Pattern especially during the time they regularly.
are together.  No other Café’s are targeting this Interest
 Urban Consumers often have varied groups, which is a significant portion of
interests for which they do not find like overall Target segment
minded groups easily
 Literature Enthuthiasts, Movie-buffs,
Entrance exams giving professionals- all
often like to meet people with similar
interests or goals and want some place to
meet.
 With having a small collection of Books
and movies, the Café can start such clubs-
and attract the consumers.

Coffee Cofee Consumption Calculating Returns from Proposed Model to Calculating Returns – Corporate
Industry Pattern different Channels Calculate Returns Channels Prioritization Recommendations
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Recommendations

Interest Groups Tourists Corporates Incentives

 This will be mainly done through Pamphlets

Tourists and discount coupons at Hotels and
 In line with the Value proposition of Bru- Airports- with the theme of Mystic India for
as a Traveller’s and Connesiur’s haven. travel.
 Also, one can advertise the help of Bru Café
 Significant Market in cities like Mumbai- regarding local tourist spots for those who
where many Tourists and Corporates do not know- which might make foreign
come from across the world and across tourists more susceptible to come to the
the India. Café.
 One of the segment on which no other
Café chain has focused.
 Many tourists often sit for long hours in
such café- hence will have higher Average
Bill from them.

Coffee Cofee Consumption Calculating Returns from Proposed Model to Calculating Returns – Corporate
Industry Pattern different Channels Calculate Returns Channels Prioritization Recommendations
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Recommendations

Interest Groups Tourists Corporates Incentives

Corporates  Also, Events like Occasional Poker

Tournaments can be held- which will not
 The biggest part of our Target segment cost the Café much but will highly be
 The main competitor for this segment is appreciated by this segment for the lack
Barista- which also targets the same of opportunity at most other places.
demographics.
 Corporate or Professionals often give high
importance to Ambience and taste of
Coffee, and low to price or other things.
 With Corporate Tie-ups with many
companies, not only will we promote Bru,
but with discounts offered- upto 10%, we
will give them additional incentives to
visit the place once.

Coffee Cofee Consumption Calculating Returns from Proposed Model to Calculating Returns – Corporate
Industry Pattern different Channels Calculate Returns Channels Prioritization Recommendations
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Recommendations

Interest Groups Tourists Corporates Incentives

Additional Incentives
 For the Customers to stay longer, puzzles
like Sudoku, and magazines for the target
segment should be kept at each table.
 Some Board games like Chess and
Scrabble should also be kept in house for
when demanded- this will not only negate
the advantage of Barista, but will also
help in brand building of Barista.

Coffee Cofee Consumption Calculating Returns from Proposed Model to Calculating Returns – Corporate
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References

1Economic Times news:

m..economictimes.com/PDAET/articleshow/7759620.cms
Starbucks has with 17,000 cafes in 55 countries, and revenues $10.7 billion in
2010.
2Economic Times article

http://articles.economictimes.indiatimes.com/2011-02-
25/news/28634361_1_coffee-brand-cafe-coffee-day-costa-coffee

3Economic Times article

http://articles.economictimes.indiatimes.com/2011-02-
25/news/28634361_1_coffee-brand-cafe-coffee-day-costa-coffee

4Financial Express
(‘Three out of every four youth in the country is literate. Rural India accounts’
article), and assuming growth in this segment to be equal to that of India’s
population growth from 2001-2010
Thank You