Report: Marketing Strategy
Table of Contents
- MARKETING STRATEGY OF CAFE COFFEE DAY
- MARKETING STRATEGY OF STARBUCKS
- EVIDENCES OF MARKETING SUCCESS
- USING THEORIES TO ANALYSE AND EXPLAIN SUSTAINED MARKETING SUCCESS
The purpose of this report is to allow the readers to understand the marketing strategies of two separate companies. The companies chosen on this context are Cafe Coffee Day (CCD) and Starbucks. It is better to understand the meaning of the term marketing, before delving deep into the marketing strategies of the above named companies. Marketing is management and study of exchange of relationships in a business process. Therefore, it involves maintaining a hospitable relationship and communication with the customers. As this is focussed on customer relationships, marketing is one of the major components of the business management process. The activities of a business related to buying and selling of services or products is known as marketing. This therefore involves knowing the demand of customers and deciding whether it can be delivered to them at a convenient price. After the production of the service or product, marketing strategy involves promoting those services or products to the customers. This assessment gives a comparison between the strategies of marketing adopted by CCD and Starbucks and how successful they have been in the process of reaching the limit and the mass.
MARKETING STRATEGY OF CAFE COFFEE DAY
Cafe Coffee Day was announced as the most popular joint for hangout among the youth in 2011 at the 3rd Global Youth Marketing Forum. Discussing about the distribution strategy of CCD, it has several number of outlets across the globe including Austria, India, Malaysia and Cairo, Czech Republic, Egypt and Dubai. CCD also has a tendency to offer outlets as per the demography of the area. This is because demography often affects the needs and wants of the customer (Lakshminarayanan, Maggio and Best, 2017). The target customers of CCD have always been the youth ranging from the middle and higher income groups. The majority of the customers fall under the age group of 20-35, making them either students or young professionals (Surya, 2019). This signifies that CCD wants to hit the mass of students and the business individuals. The company is also based on a combination of strategies which include attributes of product, its quality and value. The huge range of beverages and food, reduction of the prices and availability of outlets located strategically are the few strength of CCD as a company, which have helped it to be much ahead of the competitors in the market. The success of the company is based on the 3A’s of Affordability, accessibility and acceptability.
MARKETING STRATEGY OF STARBUCKS
Starbucks is operating in more than 70 countries worldwide with around 24,000 retail outlets in the business of roasting, retailing spices, tea, coffee and whole bean. The company uses demographic and geographic strategies as; this selective targeting strategy is used by Costa coffee in more than 70 countries throughout the globe (Taecharungroj, 2017). This strategy helps the company in meeting the demand of the customers and creating new products as per the pattern of the demand. The company also has a positioning based on value to create imaginary impetus on the minds of the customers with their offerings and main product. The company maintains the quality; and taste of the coffees throughout the globe by controlling the purchasing, roasting and distribution of the coffee with a proper packaging method. The company also focuses on developing markets. This is one of the smartest strategies as expansion of markets allows the company to reach out to more people thus helping to increase the speed of incoming revenues. Starbucks offers its products to be served through licensed stores across the world which are owned by the company itself. Starbucks targets the customers from millennial falling under the age group of 15-45 years (Qian, & Xing, 2016). Therefore the mass of customers are those who like to spend time with friends and relatives while experiencing the taste of beverages from around the world.
EVIDENCES OF MARKETING SUCCESS
CAFE COFFEE DAY
The company started in 1996 and is the largest retailer of coffee in India. It is still growing in the industry of beverages and coffee especially. It is promoting coffee culture in the young mass of the country. The company produces 43% of filter coffee. It also allows the distribution of chicory, mocha and vanilla at cheaper rates. The network of CCD is across India with a number of 1450 cafes in 200 cities. Major portion of the customers of CCD falls under the age group of 20-30 which accounts to 57% of the population. The footfall in each cafe is 200 per day in an average basis (Voigt, Buliga and Michl, 2017). The company is now trying to expand in smaller towns and add new formats of Lounge and Square in metros. However, it is worth noticing that the company has not adopted the tradition of media marketing. It gained its popularity through digital marketing, that too only through social and web media advertising. Staying active in social media has helped it gain the popularity among the young mass. The company has a coffee roasting and curing facility at two places in the Western Ghats. The blends of coffee are created at the Coffee Lab Bangalore. The main objective of the company is to grow quickly in more cities and towns and maintaining its image of being the number one cafe coffee not only in India, but internationally too, at the countries where it has got its outlets. The company gets a boast of 9% healthy fan engagement for a month (Ottman, 2017). They are one of the most engaged brands in Facebook. CCD has been able to reach a huge number of its target customers through social media and YouTube. It serves 1.8 billion cups of coffee in a year in all the countries it is operating as of now. It has also offered many new services in its coffee shops including internet and music for the customers’ refreshment so that people can spare a few hours of leisure. Creating the need for hangout places was the first challenge faced by CCD. Cafe culture needs to be developed among masses before it is actually practiced. The challenge of the company was to spread this culture among people before it is actually accepted. Moreover, CCD wanted to create identity of its own.
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Starbucks had celebrated its 5 years success in India with around 100 stores in 2017. With its huge campaigning Starbucks had made people stand in queue for hours to get a Frappuccino of INR 100. The company declared a special offer to sell any beverage at this rate across India on 28th October 2017. In the history of Starbucks India is the fastest growing market of the company with 1000 partners and 40 stores in four cities. Starbucks is an iconic American chain which is Seattle-based and it has proved to be one of those international companies which have created a benchmark in the Indian Market clearly indicating its long term stay. It started its market in India with a collaboration of Tata Global Beverages with its first store in Mumbai in October 2012. The company knew well the target audience has to be the youngsters because they created hype in their market during the offer of INR 100 beverages. So, it teamed up with News and entertainment blogs including LBB, Buzz feed India and Scoop Whoop to take the campaign to the height of its popularity. This campaign was aided by offline marketing methods as well and the target was the first page of newspaper advertisements and pamphlets. Starbucks was successful because it made differentiation based on quality; it also provides excellent service to the customers. It maintains the image of a brand which is ethical. The company gained fame because of its advertising and branding in an unconventional way. The company maintains excellent focus on the orientation of customers and merchandising of brands. Customer connection is gained by following social media techniques. It uses negligible traditional methods for promotion and marketing. Good quality definitely means higher count on gain of customers by recommendations.
USING THEORIES TO ANALYSE AND EXPLAIN SUSTAINED MARKETING SUCCESS
VIRAL AND SOCIAL NETWORK MARKETING FOR CCD
Viral and social network marketing is a recent trend in the field of technological advertisement. Social networking is a new form of communication that enhances talking speed within a huge distance. People can reach out to each other easily, conveniently and in a faster way. One can easily promote a product through Facebook accounts, Twitter or YouTube. This exact marketing theory has been implemented by Cafe Coffee Day and that has created a benchmark for the company with an increased rate of revenue returns as well. An advertisement of the company goes viral within seconds, as the target customers are youngsters and business people. They always stay involved in social media and can catch advertisements within a fraction of seconds. Cafe Coffee Day is leading the market by adopting the policies of Social Network Marketing. It has helped the company to reach out to a major chunk of the population. In fact, the company has not undertaken any form of traditional advertisement methods. CCD has gained popularity through social media within a night and the active participation of the company in social networking sites have gained it huge popularity and the company has been able to target 57% of the total population (Douglas, J., Douglas, Cano, and Moyes 2018).
PORTER’S FIVE FORCES ANALYSIS IN STARBUCKS
Threat of new entrants – The threat for Starbucks in this case is moderate. This is because new entrants can provide competition only at a local level and moreover, their chances of gaining success remain low to medium for the image that has already been created by Starbucks. Starbucks has its access to suppliers and raw materials which becomes a main factor to brand an image of competition.
Threat of substitutes – The coffee of Starbucks have a lot of substitute products available in the market. Another threat is from the products that can be made at home. The switching costs are also almost negligible thus making the threats of substitutes from moderate to high.
Bargaining power of buyers – Buyers do not have power of bargaining much. So, the bargaining power is moderate to low for the buyers. This is because the purchase for individual is small. The customers are more sensitive over quality than the price and most of them belong to the category of premium customers. Thus powers of buyers are moderate to low in general.
Bargaining power of suppliers – Suppliers can apply only low to moderate pressure on bargaining. One of the major policies of Starbucks is ethical sourcing. The relationship of the company is very hospitable with the cocoa and tea farming communities. Moreover the suppliers are high and Starbucks can make plenty of room to make choices.
Competitive rivalry – Competitive rivalry in the industry is moderate to high. This is because monopoly in the competition. Even the barriers for entry and exit are small. The competition of Starbucks is moderate because of its market share. Nowadays, growth rate has moderated since a huge number of players are putting competition in the market share.
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The assignment have helped a lot in understanding marketing strategies in a general basis and the application of the same by both Cafe Coffee Day and Starbucks. The comparison of their strategies and success has shown how to create a market and gain popularity. The success stories have been given an elaborate explanation with proper implementation of data from the success histories. Furthermore, the social networking theory and price positioning theory along with the implementation of the same by the companies have been given a special place in this assignment. It has been shown how these theories have created a benchmark for both of the companies in Indian Market. This report is an overview and briefing of marketing strategies and their implementation by two several companies.
Douglas, J., Douglas, A., Cano, M. and Moyes, D., 2018. Investigating the Success of Independent Coffee Shops and Cafes in the UK: Findings from a Pilot Study. In Excellence in Services 21st International Conference (pp. 297-310). Le CNAM.
Lakshminarayanan, S., Maggio, E. and Best, S., 2017. Kofi or Coffee-Starbucks Enters the Indian Market. Journal of Case Studies, 35(2), pp.44-55.
Ottman, J., 2017. The new rules of green marketing: Strategies, tools, and inspiration for sustainable branding. Routledge.
Qian, Y.A.N.G. and Xing, T.U., 2016. Starbucks VS Chinese Tea—Starbucks Brand Management Strategy Analysis in China. International Business and Management, 12(1), pp.29-32.
Surya, N.K.A.R., 2019. Social opportunity on coffee shop. International journal of life sciences & earth sciences, 2(1), pp.13-18.
Taecharungroj, V., 2017. Starbucks’ marketing communications strategy on Twitter. Journal of Marketing Communications, 23(6), pp.552-571.
Voigt, K.I., Buliga, O. and Michl, K., 2017. Globalizing Coffee Culture: The Case of Starbucks. In Business Model Pioneers(pp. 41-53). Springer, Cham.
Abhijee,P., 2017. Porter’s five forces analysis of starbucks: starbucks porter’s five forces analysis: competition in the coffee industry. Retrieved from https://notesmatic.com/2017/01/porters-five-forces-analysis-of-starbucks/
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