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  • 1. Café Coffee Day S International Marketing Project onA Coffee Shop Launch in Norwegian Market Prepared By: Chetan Panara Submitted To: Pro.Jitendra Sharma 2011
  • 3. DeclarationThis project report on Café Coffee Day launch in Norwegian market. Project has beensubmitted to Xcellon Institute-School of Business, Navarangpura, and Ahmedabad inpartial fulfilment of PGPGM Degree. Here by I, undersigns that this project report hasbeen completed by me under the guidance of Pro. Jitendra Sharma (Faculty:-InternationalMarketing, Xcellon Institute-School of Business Ahmedabad)Study of this project Report is entirely resulting of my own efforts and research is originalin nature. This project Report is not submitted either in part of whole to any other institutefor any other degree.Place: - Ahmedabad Xcellon School of Business Management, Ahmedabad. Page 3
  • 4. AcknowledgementI would like to hear fully acknowledge my gratitude and thanks to all the members whotook active part in accomplishing my project.At the very outset, I wish to thank Prof. Jitendra Sharma, Who helped me to choose suchan interesting topic to work upon as a fully fledged project and guiding me at each step.Interacting with him gave me a completely different view to look at a subject, throughoutits completion.I would also like to thanks again Mr. Devang Patel, for guiding, introducing and teachingme formal reports and showing me the direction at each step I make a mistake.I am also thankful to all the faculty of my institute, who helped me in giving all therequired information in a very cooperative manner. The project would not have beenpossible without the help of my friends and colleagues who have been patient enough withme. Xcellon School of Business Management, Ahmedabad. Page 4
  • 5. Table of ContentsPart 1: Country Analysis History-------------------------------------------------------------007 Geography--------------------------------------------------------009 Culture-media----------------------------------------------------011 Norwegian people and nature---------------------------------016 Education and Heath-------------------------------------------018 Political condition-----------------------------------------------020 Economy----------------------------------------------------------024 Industry-----------------------------------------------------------034 Immigration------------------------------------------------------038 Foreign Relation------------------------------------------------039 Some IMP fact about Norway---------------------------------040Part 2: Company selection and analysis History-Background--------------------------------------------046 Café format-------------------------------------------------------048 Department at Café Coffee Day-------------------------------052 7p’s of Marketing------------------------------------------------056 SWOT analysis of Café Coffee Day--------------------------058 Competitor and Competition-----------------------------------059 Compensation and Benefits------------------------------------061 Major responsibilities-------------------------------------------063 Seven steps of service-------------------------------------------068 Product at Café Coffee Day-----------------------------------071 Xcellon School of Business Management, Ahmedabad. Page 5
  • 6. Advertising Campaign-------------------------------------------074 Conclusion------------------------------------------------------- 078Part 3: Norway Coffee Industry Analysis Industry analysis-------------------------------------------------079 The Norwegian market structure------------------------------082 Environment------------------------------------------------------084 Five force analysis-----------------------------------------------086 Major competitor-------------------------------------------------089 Competitive analysis---------------------------------------------095 Target market analysis------------------------------------------100 Marketing tactics-------------------------------------------------106 Marketing Mix Tools--------------------------------------------109 Budget--------------------------------------------------------------114 Conclusion--------------------------------------------------------118 Bibliography------------------------------------------------------ 119 Xcellon School of Business Management, Ahmedabad. Page 6
  • 7. PART-A: Country AnalysisCountry: NorwayIntroduction HistoryThe Viking period (9th to 11th centuries) was one of national unification and expansion.The Norwegian royal line died out in 1387, and the country entered a period of union withDenmark. By 1586, Norway had become part of the Danish Kingdom. In 1814, as a resultof the Napoleonic wars, Norway was separated from Denmark and combined withSweden. The union persisted until 1905, when Sweden recognized Norwegianindependence.The Norwegian Government offered the throne of Norway to Danish Prince Carl in 1905.After a plebiscite approving the establishment of a monarchy, the Parliament unanimouslyelected him king. He took the name of Haakon VII, after the kings of independent Norway.Norway was a no belligerent during World War I, but as a result of the German invasion Xcellon School of Business Management, Ahmedabad. Page 7
  • 8. and occupation during World War II, Norwegians generally became sceptical of theconcept of neutrality and turned instead to collective security. Norway was one of thesigners of the North Atlantic Treaty in 1949 and was a founding member of the UnitedNations. The first UN General Secretary, Trygve Lie, was a Norwegian. Under the termsof the will of Alfred Nobel, the Storting (Parliament) elects the five members of theNorwegian Nobel Committee who award the Nobel Peace Prize to champions of peace.From 1945 to 1962, the Labour Party held an absolute majority in the parliament. Thegovernment, led by prime minister Einar Gerhardsen, embarked on a program inspiredby Keynesian economics, emphasizing state financed industrialization, cooperationbetween trade unions and employers organizations. Many measures of state control of theeconomy imposed during the war were continued, although the rationing of dairy productswas lifted in 1949, while price control and rationing of housing and cars continued as longas until 1960.The wartime alliance with the United Kingdom and the Norway was continued in the post-war years. Although pursuing the goal of a socialist economy, the Labour Party distanceditself from the communists (especially after Soviet seizure of power in Czechoslovakia in1948), and strengthened its foreign policy and defence policy ties with the U.S. Norwayreceived Marshall Plan aid from the Norway starting in 1947, joined the OEEC one yearlater and became a founding member of the North Atlantic Treaty Organization (NATO) in1949.Around 1975, both the proportion and absolute number of workers in industry peaked.Since then labour intensive industries and services like factory mass production andshipping have largely been outsourced.In 1969, the Phillips Petroleum Company discovered petroleum resources atthe Ekofisk field west of Norway. In 1973, the Norwegian government founded the Stateoil company, Statoil. Oil production did not provide net income until the early 1980sbecause of the large capital investment that was required to establish the countryspetroleum industry.Norway was a founding member of the European Free Trade Area (EFTA).Two referendums on joining the European Union failed by narrow margins in 1972 and1994.In 1981, a Conservative government led by Kåre Willoch replaced the Labour Party Xcellon School of Business Management, Ahmedabad. Page 8
  • 9. with a policy of stimulating the stagflated economy with tax cuts, economic liberalization,deregulation of markets, and measures to curb the record-high inflation (13.6% in 1981).Norways first female prime minister, Gro Harlem Brundtland of the Labour party,continued many of the reforms of her right-wing predecessor, while backing traditionalLabour concerns such as social security, high taxes, the industrialization of nature, andfeminism. By the late 1990s, Norway had paid off its foreign debt and had startedaccumulating a sovereign wealth fund. Since the 1990s, a divisive question in politics hasbeen how much of the income from petroleum production the government should spend,and how much it should save.In 2011 Norway suffered a pair of devastating attacks which struck the governmentquarter in Oslo and a summer camp of the Labour partys youth movement at Utøya island,resulting in 77 deaths and 96 wounded. The man behind the attacks, Anders BehringBreivik, who held far-right beliefs and claimed the attacks were "atrocious but necessary"in order to defend Europe from what he viewed as an excessive presence of Muslims onthe continent, has been arrested and can be charged with crimes against humanity. GeographyNorway comprises the western part of Scandinavia in Northern Europe. The ruggedcoastline, broken by huge fjords and thousands of islands, stretches 25,000 kilometres(16,000 mi) and 83,000 kilometres (52,000 mi) including fjords and islands. Norwayshares a 1,619-kilometre (1,006 mi) land border with Sweden, 727 kilometres (452 mi)with Finland and 196 kilometres (122 mi) with Russia at the east. To the north, west andsouth, Norway is bordered by the Barents Sea, the Norwegian Sea, the NorthSea and Skagerrak.At 385,252 square kilometres (148,747 sq mi) (including Svalbard and Jan May), (and323,802 square kilometres (125,021 sq mi) without) much of the country is dominated by Xcellon School of Business Management, Ahmedabad. Page 9
  • 10. mountainous or high terrain, with a great variety of natural features caused byprehistoric glaciers and varied topography. The most noticeable of these are the fjords:deep grooves cut into the land flooded by the sea following the end of the Ice Age. Thelongest is Sognafjord at 204 kilometres (127 mi). Sognafjord is the worlds second deepestfjord, and the worlds longest. Hornindalsvatnet is the deepest lake in all Europe.[44] Frozenground all year can be found in the higher mountain areas and in the interior of Finnmark county. Numerous glaciers are found in Norway.Norway lies between latitudes 57° and 81° N, and longitudes 4° and 32° E.The land is mostly made hard granite and gneiss rock,but slate, sandstone and limestone are also common, and the lowest elevations containmarine deposits. Because of the Gulf Stream and prevailing westerlies, Norwayexperiences higher temperatures and more precipitation than expected at such northernlatitudes, especially along the coast. The mainland experiences four distinct seasons, withcolder winters and less precipitation inland. The northernmost part has a mostlymaritime subarctic climate, while Svalbard has an Arctic tundra climate.Because of the large latitudinal range of the country and the varied topography andclimate, Norway has a larger number of different habitats than almost any other Europeancountry. There are approximately 60,000 species in Norway and adjacent waters(excluding bacteria and virus). The Norwegian Shelf large marine ecosystem is consideredhighly productive.• ClimateThe southern and western parts of Norway experience more precipitation and have milderwinters than the south-eastern part. The lowlands around Oslo have the warmest andsunniest summers but also cold weather and snow in wintertime (especially inland).Because of Norways high latitude, there are large seasonal variations in daylight. Fromlate May to late July, the sun never completely descends beneath the horizon in areas northof the Arctic Circle (hence Norways description as the "Land of the Midnight Sun"), andthe rest of the country experiences up to 20 hours of daylight per day. Conversely, fromlate November to late January, the sun never rises above the horizon in the north, anddaylight hours are very short in the rest of the country. Xcellon School of Business Management, Ahmedabad. Page 10
  • 11. The oil and gas industries, manufacturing and road traffic are the most important sourcesof CO2emissions. The NOx emissions are still above the target in the Gothenburg Protocolbecause of growth in the emissions from manufacturing industries, energy supply,shipping, motor equipment and oil and gas activity.The manufacturing industry, wood-burning and road traffic are important sources ofemissions of several heavy metals and organic environmental toxins. Wood-burning androad traffic lead to exceeding of air quality criteria set for towns and urban settlements.Old wood-burning stoves emit about six times as much airborne particulate matter as newstoves. Emissions of SO2 were in 2010 below the target for 2010 in the GothenburgProtocol despite increased emissions during the last year• BiodiversityThe total number of species include 16,000 species of insects (probably 4,000 morespecies yet to be described), 20,000 species of algae, 1,800 species of lichen, 1,050 speciesof mosses, 2,800 species of vascular plants, up to 7,000 species of fungi, 450 speciesof birds (250 species nesting in Norway), 90 species of mammals, 45 fresh-water speciesof fish, 150 salt-water species of fish, 1,000 species of fresh-water invertebrates and 3,500species of salt-water invertebrates. About 40,000 of these species have been described byscience. The red list of 2008 encompasses 3,886 species.Seventeen species are listed mainly because they are endangered on a global scale, such asthe European Beaver, even if the population in Norway is not seen as endangered. Thereare 430 species of fungi on the red list; many of these are closely associated with the smallremaining areas of old-growth forests. There are also 90 species of birds on the list and 25species of mammals. 1,988 current species are listed as endangered or vulnerable as of2008; of these are 939 listed as vulnerable (VU), 734 species are listed as endangered(EN), and 285 species are listed as critically endangered (CR) in Norway, among these arethe gray wolf, the arctic fox (healthy population on Svalbard) and the pool frog.The largest predator in Norwegian waters is the sperm whale, and the largest fish isthe basking shark. The largest predator on land is the polar bear, while the brown bear isthe largest predator on the Norwegian mainland, where the common moose (also known asthe "European Elk") is the largest animal• Natural Resources Xcellon School of Business Management, Ahmedabad. Page 11
  • 12. Petroleum, natural gas, iron ore, copper, lead, zinc, titanium, pyrites, nickel,fish, timber, hydropower Culture and mediaNorwegians interest in culture is growing. Surveys show that women are more interestedin cultural offerings than men, particularly with regard to ballet, opera and the theatre. Menhave the greatest interest in sporting events. The majority of cultural offerings are taken upmuch more frequently by persons with higher educationThe culture sector includes areas that cover music, dramatic art, libraries, museums andnot least media, which is steadily growing. Media is a collective term for newspapers,radio, TV, films and videos, books and the weekly publications.• Broadcast Mediastate-owned public radio-TV broadcaster operates 3 nationwide televisionstations, 3 nationwide radio stations, and 16 regional radio stations; roughly adozen privately-owned television stations broadcast nationally and roughlyanother 25 local TV stations are available; nearly 75% of households haveaccess to multi-channel cable or satellite TV systems; 2 privately-owned radiostations broadcast nationwide and another 240 stations operate locally (2008)Internet Hosts: 3.352(million 2010) Number in world: 27Internet Users: 4.431(million 2010) Number in World: 53• ReligionNorway has an official Protestant State Church based on the Evangelical-Lutheranreligion. Although there is no separation of Church and State, all inhabitants have the rightto exercise their religion freely in accordance with a 1964 amendment to the Constitution.Eight out of ten ethnic Norwegians are members of the State Church of Norway.Norwegian religious expression is largely private; whereas most individuals state thatreligion is important to them, this is not generally expressed through active religiousparticipation in organized communities. While roughly 80% of the population belong tothe Church of Norway, only 10% attend church services or other Christianity-relatedmeetings more than once a month. Xcellon School of Business Management, Ahmedabad. Page 12
  • 13. Some 5.9% of the population are members of other religious communities, while 6.2% donot belong to any religious community at all. The largest religious and life-stancecommunities outside the Church of Norway are the Humanist Movement, represented bythe Norwegian Humanist Association (63 000), Islam (60 000), the Pentecostal Movement(45 000), the Roman Catholic Church (40 000 or more), the Evangelical-Lutheran freechurch (20 000), Methodists (13 000) and several lesser free churches.The conversion of Norway to Christianity started in around 1000 and was a result ofcontact with Christian Europe through a combination of trade ties and Viking raids.Missionary activities conducted by the Anglo-Saxon church as well as from Germany andDenmark also helped Christianity to gain prominence over the gods of traditional Norsemythology and Sámi nature worship.Christian Norway belonged to the Roman Catholic Church until the Reformation of 1537.A ban on lay preaching was lifted in 1842, giving rise to several free church movementsand a strong lay organization within the Church of Norway. As a result, Norwegian churchsociety became closely associated with a conservative Christian interpretation and anactive missionary movement.• FestivalsFestivals take place throughout the year, covering all areas of culture including music,film, literature and various forms of art. ‘Norway Festivals’ is the organisation that helpsto coordinate and develop all the Norwegian festivals.Molde International Jazz Festival, the Quart Festival and Norwegian Wood are allinternational music festivals attracting renowned performers from all over the world.There are three travelling cultural institutions in Norway: the Norwegian national touringtheatre Riksteatret, the national touring concerts Rikskonsertene and the national touringexhibitors Riksgalleriet. These institutions are all funded by the government and performacross the country.• Gender equality o 4 out of 10 students at universities and university colleges are men o 2 out of 3 women are employed o 40 per cent of employed women and 14 per cent of employed men work part-time Xcellon School of Business Management, Ahmedabad. Page 13
  • 14. o 7 out of 10 managers are men o 89,3 per cent of children aged 1-5 had a kindergarten place in 2010 o 40 per cent of board members in public limited companies are women. In private limited companies, 17 per cent of the board representatives are women o 6 out of 10 Storting representatives are men• Parental benefits and paternity leaveDid you know that Norwegian parents have the right to a paid leave of absence during thefirst year of a child’s life? To encourage more men to assume a greater share of care-giving responsibilities, 10 weeks of parental leave are reserved for fathers.The aim of the parental benefit scheme is to help parents to combine working life andfamily life. Thanks to the scheme, Norway tops European statistics on birth rates andparticipation of women in the workforce.Norwegian parents may choose to take a total of 46 weeks of leave at 100 per cent pay or56 weeks at 80 per cent pay• The paternal quota worksThe paternal quota was introduced in 1993 to encourage more fathers to participate incaring for their child during its first year of life. Today 10 weeks of the parental leaveperiod are reserved for fathers. If a father does not use his quota, these weeks will beforfeited.Norway was the first country in the world to establish such a scheme.The results havebeen striking. In 2008, 90 per cent of fathers used their paternal quota. Moreover, agrowing number of men are choosing to take more leave than their quota. In 2008, 16.5 percent of fathers extended their leave beyond the reserved 10 weeks, compared to 11 per centin 2000.• Strengthening the role of fathers Xcellon School of Business Management, Ahmedabad. Page 14
  • 15. The paternal quota gives men an opportunity to develop a stronger bond to their childrenfrom birth. The impact of this extends far beyond the paternity leave period. More andmore, men are demanding equal parenting rights, for example in custody cases. A whitepaper on male roles and gender equality was published in 2009. It is the first of its kind inthe world.• Debate on sharing leaveParental leave is still a hot topic of debate. The Equality and Anti-discrimination Ombud,Beate Gangås, has proposed that the parental leave period be divided into three, with one-third reserved for the mother, one-third reserved for the father and one-third to be used asdesired. As of yet few political parties have shown their support for this solution.There is, nevertheless, broad political agreement that the paternal quota is an excellentinstrument for encouraging more men to take paternity leave. The quota was thereforeextended from six weeks to 10 weeks in 2009. Xcellon School of Business Management, Ahmedabad. Page 15
  • 16. Norwegians People and natureNorwegian adoration of nature is a vital ingredient in the countrys national identity. Overhalf of the population have ready access to a cabin, the schools arrange annual obligatoryski days, and most postcards produced by the tourist industry depict nature scenes ratherthan cultural attractions.Most Norwegians live in single-family homes and large apartments, equipped with everythinkable electric appliance. Nevertheless, great value is attached to closeness to natureand a simple lifestyle. Thousands of Norwegians spend weekends and holidays at thefamily cabin, which ideally speaking should be tucked away in the wilderness surroundedby the pristine landscape of the Norwegian mountains.The typical Norwegian cabin is built of logs and consists of a living room, one or morebedrooms, an outdoor lavatory, woodshed and small kitchen. Heating is preferably bywood, although kerosene is permissible, just barely. Oil lamps and candlelight providelight on dark winter nights. This simplicity is not due to a desire to save money. In fact amountain cabin in an attractive location is a costly investment, no matter how simply theyare furnished. The absence of modern comforts is founded on ideological and moral, ratherthan economic, reasons. (It must be added here that many Norwegians have a cabin by thecoast, usually in an area with a mild climate. Here, completely different rules apply: thesecabins can be comfortable second homes.)Hiking and going for walks are a way of getting out of the house, as Norwegians put it;you leave civilization and all its comforts and depravity behind to get in touch with your Xcellon School of Business Management, Ahmedabad. Page 16
  • 17. inner self and feel like an authentic person. Hikes and walks can be taken on a weekdayafter work, but are usually a weekend activity. A normal yardstick for gauging the successof a walk is the number of people you meet along the way. The fewer the people, the moresuccessful the walk was.Adoration of nature in Norway has many facets. It is official and has a political aspect;unspoiled nature is a national symbol. It is private and is associated with family rituals,such as cabin life. But it is also personal and individual, and in this area veneration ofnature has a clear sprinkling of religion. The state religion in Norway is the Lutheran faith,but reverence for nature is also very strongly ingrained. Instead of renouncing it asheathenish, Lutheranism has consciously embraced it - among other things, Christianbooks published in Norway often display Norwegian nature scenes on the cover.Moreover, the outdoors is often recommended by state church clergy as a great place forssreligious meditation and reflection. In this way, Christianity, which in principle places asharp dividing line between culture and nature (nature is evil, people are by nature sinful),avoids a direct confrontation with the strong Norwegian ideology that culture and natureare two sides of the same coin. Xcellon School of Business Management, Ahmedabad. Page 17
  • 18. EducationChildren and youths have a right and duty to complete a compulsory education, as doadults. Young people and adults who have completed their compulsory education have aright to further education that results in qualifications leading to higher education oremployment. With the right qualifications, pupils can go on to take a university oruniversity college education.Adult education statistics encompass adult education at primary and upper secondarylevel, Norwegian language studies for adult immigrants and courses organised by folkhigh schools, study associations and distance learning institutions o Private kindergartens account for 47 per cent of all kindergartens (2010). o 2.7 per cent of primary school pupils are in independent schools (2010/11). o Upper secondary education is split into 12 education programmes; 3 to prepare for higher education and 9 vocational. o 22 850 qualifying exams and apprentice final examinations were sat in 2009/2010. o 57 per cent of the pupils at upper secondary schools complete their education during the standard period of time, while 70 per cent finish within 5 years (2010). o Close to 28 per cent has higher education. 60 per cent of todays students are women (2010). o 36 800 completed a higher education of a lower or higher degree in Norway in 2009/10. o In 2009/10, 249 200 graduates in Norwegian tertiary institutions achieved on average 43 credit points (ECTS). o There are 504 200 participants on courses organised by study associations. 36 200 of these have offers of public or other approved exams or certifications (2010). Xcellon School of Business Management, Ahmedabad. Page 18
  • 19. • The information society o In the early 1990s, use of the Internet by the public became common. Today, surfing the net and e-mailing are part of our everyday lives. Information and communication technology (ICT) evolves quickly and is now used by enterprises, the public sector and households. The information society in Norway is characterised by the following: o An increasing number of services are being offered via the Internet. Only 11 per cent of the population did not use the Internet during the last 3 months. Especially older women are left outside the digital world. o 73 per cent of households have broadband, and this is most common in households with high incomes. o The share of households in Norway with access to a PC and the Internet is about the same as in the other Nordic countries, but Norwegian enterprises use ICT to a lesser extent than enterprises in the neighbouring countries. o In 2008 the information sector had a turnover and value added of NOK 272 and 98 billion respectively. o The information sector had 112 000 employees in 2008.• Standard of livingNorway has been ranked the best country to live in by the United Nations DevelopmentProgramme (UNDP) several times during the past decade. In addition, the WorldEconomic Forum’s Global Gender Gap Report has ranked Norway one of the world’sleading countries in closing the gender gap between men and women.Today Norwegians are living longer than ever before. A girl born in 2008 can expect tolive to nearly 83 years of age, while a boy can expect to reach just over 78 years of age.The general health of the population is very good, and the infant mortality rate isextremely low. Literacy is virtually 100per cent and most of the adult population has Xcellon School of Business Management, Ahmedabad. Page 19
  • 20. completed upper-secondary schooling. There is no extreme poverty in Norway, and therelative poverty level is low compared to other OECD countries.The GDP per capita is high, and wealth is relatively equally distributed among thepopulation. There is a high degree of gender equality at all levels of society. In keepingwith its welfare orientation, Norway has implemented a universal, public health servicefinanced by tax revenues and a national insurance scheme, applicable to all citizens andresidents that provide a host of social benefits.Both public and private consumption have increased enormously since 1900, and thewealth of the last few decades is primarily due to the discovery and exploitation of subseaoil and natural gas deposits in the North Sea. As a result of modernisation andurbanisation, the stable, traditional settlement patterns of the past have been replaced by atrend towards greater mobility, in which people more frequently move and change jobs. Xcellon School of Business Management, Ahmedabad. Page 20
  • 21. Political ConditionUntil the 1981 election, Norway had been governed by majority Labor Party governmentssince 1935, except for three periods (1963, 1965-71, and 1972-73). The Labor Party lost itsmajority in the Storing in the 1981 elections. Since that time, minority and coalitiongovernments have been the rule.From 1981 to 1997, governments alternated between Labor minority governments andConservative-led coalition governments. The first government coalition led by ChristianDemocrat Kjell Magne Bondevik came to power in 1997, but fell in March 2000 over theissue of proposed gas-fired power plants, opposed by Bondevik due to their impact onclimate change. The Labor Partys Jens Stoltenberg, a Brundtland protégé, took over in aminority Labor government but lost power in the September 2001 election when Laborposted its worse performance since World War I. Bondevik once again became PrimeMinister, this time as head of a minority government with the Conservatives and Liberalsin a coalition heavily dependent upon the right-populist Progress Party.The September 2005 elections ended the Bondevik government, and the Labor party cameback with its most substantial victory in years, securing 60 of the 169 seats in Parliament.While this election result once more made Labor the undisputed heavyweight inNorwegian politics, Stoltenberg, chastened by his previous stint as the head of a minoritygovernment, reached out to the far left Socialist Left party and agrarian Centre party toform a coalition government that commanded a majority of seats in Parliament. Thecurrent government is the first majority government in Norway in over 20 years, but thegoverning coalition has had to bridge substantial policy differences to build this majority.• Principal Government Officials King--Harald V Prime Minister--Jens Stoltenberg Minister of Foreign Affairs--Jonas Gahr Støre Minister of Defense--Anne-Grethe Strøm Erichsen Xcellon School of Business Management, Ahmedabad. Page 21
  • 22. • GovernmentNorway is a constitutional monarchy that divides responsibility between the parliament(Storting) and the Kings Council of State, which consists of a prime minister and otherministers of state. The Storting, which consists of 165 representatives, is the supremeauthority and controls finances. Representatives are elected by direct vote for a four-yearterm. One-quarter of the representatives serve in the upper chamber (Lagting), and the restform the lower chamber (Odelsting). Local government is represented by 450municipalities in eighteen counties.• Leadership and Political OfficialsLeaders are supposed to be articulate and dedicated spokespersons for the policies of theirparties. The major parties, listed roughly in order of their popularity in recent elections, arethe Norwegian Labor Party (Arbeiderpartiet), a socialist party affiliated with labor unions;the Progress Party (Fremskrittspartiet), a nationalistic party; the Conservative Party (Høyre ); the Christian Peoples Party (Kristelig Folkepartiet), which supports the use of theprinciples of Christianity in politics; the Center Party (Senterpartiet), which originallyfocused on agrarian issues; the Socialist Left Party (Sosialistisk Venstrepartiet); and theLiberal Party (Venstre), a reform party. Coalition governments that rely on the cooperationof two or more parties are not uncommon. Party leaders receive considerable mediaattention and are supposed to be accessible to the electorate. They are not likely to respondto offers of gifts or special privileges.• Social Problems and ControlThe judicial system has three levels: the district (Herredsrett) and citycourts (Byrett), the High Court (Lagmannsrett) with six jurisdictions in the nation; and theSupreme Court (Høyesterett). Each municipality has a conciliation council (Forliksråd),where civil cases go first for mediation and possible out-of-court settlement. If this effortfails, the case can be taken to the district or city court. An "ombud" system has beenestablished to hear complaints about actions by government agencies and private firms.The crime rate is about ten reported crimes per hundred thousand population. While therate of crimes against persons is increasing, most crimes involve property. Xcellon School of Business Management, Ahmedabad. Page 22
  • 23. • Military ActivityNational military service is required, with the option of community service forconscientious objectors. The nation has an army, navy, and air force; is a member of theNorth Atlantic Treaty Organization (NATO); and participates in peacekeeping operations.Norway spends 3 percent of the gross national product on defense.• Social Welfare and Change ProgramsAfter 1945, the National Insurance Scheme was developed to manage and allocateresources for health, old age, disabilities, widows, widowers, children, and single parents.Approximately 15 percent of government expenditures are for health services.Nongovernmental organizations play an important role in supplementing this welfaresystem in partnership with the government. Special attention is given to organizations thatsupport disadvantaged citizens through subsidies granted by local governments.• Nongovernmental Organizations and Other AssociationsApproximately 62 percent of the population belonged to at least one voluntaryorganization in 1995. Historically, voluntary organizations were first developed in themiddle of the nineteenth century as agents of change to support the social movements thatwere sweeping the country. Voluntary organizational life has been based on unpaidparticipation, personal membership, and commitment to egalitarian democratic principles.While participation in religious and temperance organizations has declined, membershiphas increased in organizations devoted to recreation and outdoor sports. Xcellon School of Business Management, Ahmedabad. Page 23
  • 24. EconomyNorway is one of the worlds richest countries in per capita terms. It has an important stakein promoting a liberal environment for foreign trade. Its large shipping fleet is one of themost modern among maritime nations. Metals, pulp and paper products, chemicals,shipbuilding, and fishing are the most significant traditional industries.Norways emergence as a major oil and gas producer in the mid-1970s transformed theeconomy. Large sums of investment capital poured into the offshore oil sector, leading togreater increases in Norwegian production costs and wages than in the rest of westernEurope up to the time of the global recovery of the mid-1980s. The influx of oil revenuealso permitted Norway to expand an already extensive social welfare system. Norway hasestablished a state Petroleum Fund that exceeded $132.6 billion as of December 2004. Thefund primarily will be used to help finance government programs once oil and gasresources become depleted. Norway is currently enjoying large foreign trade surplusesthanks to high oil prices. Unemployment remains currently low (3%-4% range), and theprospects for economic growth are encouraging thanks to the governments stimulativefiscal policy and economic recovery in the Norway and Europe.Norway voted against joining the European Union (EU) in a 1994 referendum. With theexception of the agricultural and fisheries sectors, however, Norway enjoys free trade withthe EU under the framework of the European Economic Area. This agreement aims toapply the four freedoms of the EUs internal market (goods, persons, services, and capital)to Norway. As a result, Norway normally adopts and implements most EU directives.Norwegian monetary policy is aimed at maintaining a stable exchange rate for the kroneagainst European currencies, of which the euro is a key operating parameter. Norway isnot a member of the EUs Economic and Monetary Union and does not have a fixedexchange rate. Its principal trading partners are in the EU; the Norway ranks sixth.• EnergyOffshore hydrocarbon deposits were discovered in the 1960s, and development began inthe 1970s. The growth of the petroleum sector has contributed significantly to Norwegianeconomic vitality. Current petroleum production capacity is more than 3 million barrels per Xcellon School of Business Management, Ahmedabad. Page 24
  • 25. day. Production has increased rapidly during the past several years as new fields areopened. Total production in 2003 was about 263 million cubic meters of oil equivalents,over 63% of which was crude oil. This represents a slight decline in crude oil productionover the past year, accompanied by sharp increases in gas and liquefied natural gas (LNG)production. Hydropower provides nearly all of Norways electricity, and all of the gas andmost of the oil produced is exported. Production increased significantly in the 1990s asnew fields come on stream.Norway is the worlds third-largest oil exporter and provides much of western Europescrude oil and gas requirements. In 2003, Norwegian oil and gas exports accounted for 56%of total merchandise exports. In addition, offshore exploration and production havestimulated onshore economic activities. Foreign companies, including many Americanones, participate actively in the petroleum sector.• Transportation o Airports 98 (2010) Country comparison to the world: 61 o Railways: Total: 4,169 km Country comparison to the world: 39 Standard gauge: 4,169 km 1.435-m gauge (2,784 km electrified) (2010) o Roadways: Total: 93,247 km (includes 253 km of expressways) (2008) Country comparison to the world: 50• Other economic data:GDP (Purchasing power parity)$255.3 billion (2010 estimates)Country comparison to the world: 47$254.2 billion (2009 estimates) Xcellon School of Business Management, Ahmedabad. Page 25
  • 26. $257.9 billion (2008 estimates)GDP (real growth rate)0.4% (2010)Country comparison to the world: 182-1.4% (2009)0.8% (2008)GDP by sectorAgriculture: 2.5%Industry: 39.4%Services: 58.1% (2010)Labour Force2.602 million (2010 est.)country comparison to the world: 108Labour force by occupationagriculture: 2.9%industry: 21.1%services: 76% (2008)• Unemployment rate:3.6% (2010) 3.2% (2009) country comparison to the world: 28• Investment:20.3% of GDP (2010) country comparison to the world: 88• Budget:Revenues: $235.5 billionExpenditures: $191.9 billion (2010 est.)• External EconomyNorway trades extensively with other countries. In addition, we have major investments Xcellon School of Business Management, Ahmedabad. Page 26
  • 27. abroad and other countries also invest a lot in Norway. The large revenues from export ofgoods and services mean that we can buy a great deal of what we need from abroad, at thesame time saving for the future. This has not always been the case. For a large part of lastcentury, we had to import more than we managed to sell, and we were constantlyborrowing money in order to cover the deficit. Although we still have debt abroad, othercountries now owe us far more than we owe them. This development is largely due to thefact that Norway sells vast quantities of oil and gas to other countries. Norway has soldmore than it has bought form other countries since 1990. The surplus was at its peak in2008. o Crude oil and natural gas are the goods that make up the largest part of the export revenue. In second place we find fish and preparations thereof. o The largest part of Norways export of goods in 2010 went to European countries. The UK receives most goods from Norway, caused by their import of oil and gas. If this export is excluded, Sweden is the largest importer of Norwegian goods. o The three largest import countries, excluding oil and gas, are Sweden, Germany and China. o Norway also trades in services extensively. International shipping contributes the most to the revenues from the trade in services. o At the end of 2010, other countries owed Norway NOK 2.358 billion. This makes up round NOK 478 000 per capita in Norway. Xcellon School of Business Management, Ahmedabad. Page 27
  • 28. This is gross domestic product of Norway. Xcellon School of Business Management, Ahmedabad. Page 28
  • 29. Norway is has more export basket than import basket in service sector.Norway imported road vehicles, miscellaneous manufactured articles, petroleum,petroleum products, electronic machinery, metalliferousNorway mainly exports metals, fish, petroleum product, gases, manufactured generalelectric machinery and equipment. Xcellon School of Business Management, Ahmedabad. Page 29
  • 30. Balance of trade of Norway. Xcellon School of Business Management, Ahmedabad. Page 30
  • 31. • Establishments and enterprisesNorwegian business and industry is made up of 350 000 private sector enterprises(including publicly-owned enterprises, excluding the primary industries). There has been asteady increase in the number of enterprises since these statistics were first published in2001. o Two out of three Norwegian enterprises are small enterprises in which the owner is the sole employee. o There are 1.6 million employees in private establishments and almost 770 000 employees in establishments in the public sector as at 1 January 2010. o 44 per cent of employees in private establishments are in enterprises with more than 100 employees. The enterprises with more than 100 employees constitute only 0.5 per cent of the number of enterprises. o The majority of enterprises and employees are found within wholesale and retail trade, repair of motor vehicles and motorcycles. o The most common organisational form is private limited company, followed by sole proprietorship. As many as nine out of ten enterprises have one of these two organisational forms. o The majority of newly established enterprises are within Professional, scientific and technical activities. o Newly established enterprises in Sogn and Fjordane have the highest survival rate, and enterprises in Oslo the lowest. o One out of three sole proprietorships is established by a woman. o The share of female board representatives in private limited companies was 17 per cent as of 1 January 2010. o The share of female board representatives in public limited companies was 40 per cent as of 1 January 2010. Xcellon School of Business Management, Ahmedabad. Page 31
  • 32. o o Key figures: o 357 581 enterprises (2009) o 99.5 per cent of enterprises have less than 100 employees o 481 720 establishments as at 1.1.2010 o 5 013 bankruptcies in 2009; 38 per cent more than 2008 o 42 069 newly established enterprises in 2009, 9.7 per cent less than 2008 o 53 per cent newly established enterprises in 2003 survived for a year and 32 per cent were still in business after five years o 48 per cent of turnover in 2008 was generated in enterprises with 100 or more employees• IncomeIn an economy where the majority of goods and services can be bought, our level ofincome has a great bearing on how we live. In order to comment on the economic livingconditions of the population, the fact that many persons form part of a household whereboth incomes and expenses are shared must be taken into consideration. Households inNorway receive cash incomes from a variety of sources: wages, income from self-employment, property income, different types of transfers, such as social security benefits,unemployment benefit, child allowance, cash for care, dwelling support, supplementarybenefit etc. o The majority of households have had good income growth in recent years. Measured in terms of fixed prices, the median income increased by 33 per cent from 2000 to 2009. o The most important source of income for households is wages. On average, income from wages accounted for 65 per cent of the total income in 2009. o In 2009, the 10 per cent of the population with the highest income had 20.2 per cent of the total income in Norway. Among the 10 per cent with the lowest income, the corresponding share was 4.0 per cent. Xcellon School of Business Management, Ahmedabad. Page 32
  • 33. o The low income group is strongly overrepresented by recipients of the basic pension, supplementary benefit recipients, immigrants, persons with longstanding illness, the long-term unemployed and young single persons.• PricesA price index is an average (often weighted) of prices in a specific class of goods orservices, and is used to measure price changes over time, or between differentgeographical regions. Price indices measure prices in different areas of the economy.Statistics Norways price indices are used in planning public-sector activities, when signingcontracts, pay settlements, forecasting and analysis, preparing the National Accounts andso forth.The Consumer Price Index (CPI) describes the monthly change in the price of goods andservices for an average household in Norway. The percentage change in the ConsumerPrice Index is a measure of inflation. o For comparing price changes between countries, a Harmonised Index of Consumer Prices (HICP) is used, while the European Purchasing Power Parity (PPP) survey shows the differences in price levels between countries. o The House Price Index measures the average change in value of all housing in Norway. The Price Index for New Detached Houses measures the trend in house builders house prices including VAT. o The Construction Cost indices measure the overall price trends for materials, labour, machinery and other factors involved in building and construction activity. o The Producer Price Indices measure the average changes in the prices domestic producers receive for goods or services they sell to the Norwegian and foreign markets. o The Price Index of First-hand Domestic Sales measures the price change of different goods in the domestic and import markets at the point of their first Norwegian transaction. Xcellon School of Business Management, Ahmedabad. Page 33
  • 34. Industries• Wholesale and retail trade o Turnover in the wholesale and retail trade has steadily increased in the last decade. Turnover in the retail stores has increased by more than 60 per cent. Mail order houses and sale via the Internet have had a significant increase in turnover during the last decade; it is more than twice as high in 2009. o In 1993, turnover for the 35 731 retail stores in Norway totalled NOK 163.8 billion, and the total number of employed persons was 152 448. In 2009, the number of establishments increased to 38 267, while the number of employed persons was 213 503. Turnover increased to NOK 386 billion. o In 1958, the average household spent almost 40 per cent of its budget on food and about 13 per cent on clothes and shoes. The share of expenses for food and drink has fallen, and from 2008-2009, the average household spent just over 11 per cent of its budget on food and more than 5 per cent on clothes and shoes. o Since 1945, the total consumption of alcohol has increased sixfold. In 1945, the average person (aged 15 and over) drank 1.68 litres of pure alcohol. By 2009, consumption had increased to 6.68 litres of pure alcohol. o The decline in the world economy lead to a drop both in exports and imports of goods in 2009. As an example the passenger cars import to Norway was about 140 300 last year - this is about 28 per cent less than in 2008 and 13 per cent less than in 2008. Especially imports of German, American and British cars fell. On the contrary, when our neighbouring country Sweden is concerned imports of cars increased. Xcellon School of Business Management, Ahmedabad. Page 34
  • 35. • Construction and housing • ConstructionThe construction industry is a cyclical industry. From 1966 to 1988, employment in privateconstruction businesses increased from around 80 000 to 126 000. In the four years from1988-1992, however, employment dropped by 30 per cent, back to the level of the late1960s.Following a relatively quiet period around the turn of the millennium, the constructionindustry has experienced unprecedented growth in recent years. In 2008, the number ofemployed increased to 186 000 (including employees in the public sector). In addition tothis figure comes foreign labour. • The building stock o In January 2008, the number of buildings in Norway was 3.8 million, of which 1.44 million or 38 per cent were residential buildings. o There are 2.3 million dwellings in Norway, of which 1.2 million are detached houses (January 2008). The number of residents per dwelling was 2.3 in 2001. Almost eight out of ten households own their dwelling. o There are almost 418 000 holiday houses in Norway. o Almost 1.2 million buildings, or 30 per cent of all buildings, are garages, outhouses, annexes etc. joined to or next to dwellings and holiday houses.• TourismIn 2010 Norwegians had 22.9 million trips with at least one overnight stop.33 per cent of these trips were outbound. The most popular destinations abroad wereSweden, Denmark and Spain. o Women had more often holiday-trips than men in 2010. Xcellon School of Business Management, Ahmedabad. Page 35
  • 36. o On our outbound trips, we prefer going by air and accommodate on hotels, while on domestic trips we prefer private car and private accommodation. o Number of guest nights at Norwegian hotels, camping-sites, holiday dwellings and hotels were 28.5 millions in 2010. o Germans, Danes, Swedes, Dutch and the British are the most frequent guests in Norway. They had almost two out of three foreign guest nights at collective accommodation establishments in Norway in 2010. o Accommodation enterprises had a turnover of about NOK 21.0 billion and food and beverage service activities had a turnover of about NOK 36.0 billion in 2009. o Non-resident guests in Norway spend most money on passenger transport services. o The travel industry accounts for approximately 3.3 per cent of the Gross Domestic Product (GDP), and 6.3 per cent of total employment in 2009. o Foreign tourists had over 7.9 million overnight stays in Norway in 2010, of which German tourists accounted for 21 per cent. Danes and Swedes accounted for 12 %. Norwegians aged 16-79 travelled on a total of 22.9 million overnight-trips in 2010. 17.6 of these were holiday trips o The average cost of a hotel room was NOK 859 in 2010. o Overall, tourists spent NOK 106 billion in Norway in 2010. Foreign tourists spent NOK 31 billion. o In 2009, there were 13 999 local kind-of-activity-units in the Norwegian tourism industry. They had a total turnover of NOK 89 billion.• Oil and gas o Investments: In the last years the investments exploration and in fields on stream Xcellon School of Business Management, Ahmedabad. Page 36
  • 37. have increased to record high levels. The most common investments activities are exploration- and production drilling, upgrading and measures to improve the degree of recovery. The greatest fields being developed now are Skarv in the Norwegian Sea and Gjøa in the North Sea.oo Production and reserves: The production of gas and oil (including NGL and condensate) ended at 61 Sm3 million oil equivalents (o.e.) in the first quarter of 2011. This is a decrease by five percent compared the first three months of 2010.o The international oil market: The average Brent Blend crude price in 1st quarter 2011 was 24 per cent higher than in 4th quarter 2010. The main driver for the increase was geopolitical concerns by oil market participants regarding the escalating unrest in the Middle East and North Africa.o Key figures and employees: The gross value of production and value added in the Norwegian oil and gas industry decreased by 20 and 27 per cent respectively from 2008 to 2009. The decrease came as a consequence of lower oil and gas prices and a continuing reduction in oil production.o Xcellon School of Business Management, Ahmedabad. Page 37
  • 38. ImmigrationImmigrants and those born in Norway to immigrant parents constitute 600 900 persons or12.2 per cent of Norways population. Broken down by region, 287 000 have a Europeanbackground, 210 000 persons have a background from Asia, 74 000 from Africa, 19 000from Latin-America and 11 000 from North America and Oceania.The majority of the immigrants are from Poland, Sweden, Germany and Iraq. Thirty-fourper cent of the immigrants have Norwegian citizenship. Between 1990 and 2009, a total of420 000 non-Nordic citizens immigrated to Norway and were granted residence here. Ofthese, 26 per cent came as refugees, 26 per cent were labour immigrants and 11 per centwere granted residence in order to undertake education. Twenty-three per cent came toNorway due to family reunification with someone already in Norway, and 16 per cent weregranted residence because they had established a family..The number of immigrants residing in Norway varies with the governments immigrationpolicy, labour market needs and shifting global crises. Immigration increased during andafter the Balkan wars of the 1990s. In recent years, the majority of new immigrants havecome to Norway as a result of family immigration.Statistics Norway has published figures on those born outside Norway since the PopulationCensus of 1865. Back then, 1.2 per cent of the total population of 1.7 million were bornabroad; the majority in Sweden. By 1920, the immigrant share of the total population hadincreased to 2.8 per cent. During the interwar period there was little immigration, and by1950 only 1.4 per cent of the population was born abroad. Statistics Norway does notregister individuals by religion or membership in life stance communities. Therefore, wedo not know who or how many persons in Norway are Buddhists, Muslims, Catholics, etc.However, we do have information about the number of members of the Norwegian Churchor other religious communities that receive central government subsidies. • Key figures per 01.01.2011: Xcellon School of Business Management, Ahmedabad. Page 38
  • 39. There are 500 000 immigrants and 100 000 Norwegian-born persons with immigrant parents living in Norway. Together these two groups represent12.2 per cent of Norways population. Immigrants and Norwegian-born persons with immigrant parents are represented in Norwegian municipalities. Oslo has the largest proportion with 28 per cent, or 170 200 people Almost half of all the immigrants come from Asia, Africa or Latin-America. 2 in 10 immigrants have lived in Norway for more than 20 years, and 4 in 10 have lived here for 4 years or less. 54 per cent of all Norwegian-born persons with immigrant parents have parents with an Asian background. 17 per cent are 20 years or older. Foreign RelationsNorway supports international cooperation and the peaceful settlement of disputes,recognizing the need for maintaining a strong national defence through collective security.Accordingly, the cornerstones of Norwegian policy are active membership in the NorthAtlantic Treaty Organization (NATO) and support for the United Nations and itsspecialized agencies. Norway also pursues a policy of economic, social, and culturalcooperation with other Nordic countries--Denmark, Sweden, Finland, and Iceland--throughthe Nordic Council.In addition to strengthening traditional ties with developed countries, Norway seeks tobuild friendly relations with developing countries and has undertaken humanitarian anddevelopment aid efforts with selected African and Asian nations. Norway also is dedicatedto encouraging democracy, assisting refugees, and protecting human rights throughout theworld. Xcellon School of Business Management, Ahmedabad. Page 39
  • 40. Some very useful information for industrialist who wantto do business or want to launch product in Norway• Facts and StatisticsLocation: Northern Europe, bordering Finland 729 km, Sweden 1,619 km, Russia 196 kmCapital: OsloPopulation: 4,574,560 (July 2004 est.)Ethnic Make-up: Norwegian, Sami 20,000Religions: Evangelical Lutheran 86% (state church), other Protestant and Roman Catholic3%, other 1%, none and unknown 10%• The Norwegian LanguageOver 99% of the 4.3m population of Norway speak the official language, Norwegian.Norwegian has 2 written forms, "Bokmal" (Book Norwegian) and "Nynorsk" (NewNorwegian) and they enjoy the same legal recognition, although "Bokmal" is increasinglymore common. Minority languages include Finnish, spoken by 0.2% of the population,mainly in the northern region of Finnmark, as well as "Sami", a language closely related toFinnish, spoken by 0.9% of the Norwegian population.• Norwegian Society & Culture• The FamilyMany families consist mainly of the nuclear family.Marriage is not a prerequisite to starting a family.Many couples live together without legalizing the arrangement with marriage. Therefore, itis best not to make presumptions about peoples marital status. Xcellon School of Business Management, Ahmedabad. Page 40
  • 41. • WomenWomen are highly respected in business and generally receive equal pay and have accessto senior positions. Norwegian women expect to be treated with respect in theoffice. Businesswomen are direct and can be skilled negotiators. Women may take up toone years maternity leave at 80% pay or 10 months at 100% pay. If a woman decides tostay home with pre-school children she receives a monthly stipend from the government.• Jante LawThe poet Aksel Sandemose put Jante Law into words and they convey an importantelement of Norwegian culture: humility. Jantes Law teaches people to be modest and notthink big. It is demonstrated in most peoples refusal to criticize others. Norwegians try tosee all people as being on equal footing. They do not flaunt their wealth or financialachievements and look askance at those who do. The tenets of Jante Law are:You shall not think you are special.You shall not believe you are smarter than others.You shall not believe you are wiser than others.You shall not behave as if you are better than others.You shall not believe that you know more than others.You shall not believe that you can fix things better than others.You shall not laugh at others.You shall not believe that others care about you.You shall not believe that you can teach others anything.• EgalitarianismNorwegians view themselves as egalitarian people whose culture is based on democraticprinciples of respect and interdependence.They like people for themselves and not for what they do for a living their professional Xcellon School of Business Management, Ahmedabad. Page 41
  • 42. accomplishments or how much money they earn.They have simple tastes and are not prone to ostentation or excessive showiness.They pride themselves on being honest and sincere in their personal relationships.• Meeting and GreetingGreetings are casual, with a firm handshake, direct eye contact, and a smile.Norwegians are egalitarian and casual; they often introduce themselves with their firstname only.In some circumstances people may use the honorific title "Herr" (Mr.) or "Fru" (Mrs.) andtheir surname.You can wait to be invited before moving to first names although most people will startwith this.Shake hands and say good-bye individually when arriving or departing.Shake hands with people on a first come first served basis.• Gift Giving EtiquetteIf invited to a Norwegians home, bring flowers, chocolates, pastries, wine, or importedspirits to the hostess.Flowers may be sent the morning of a dinner party so they may be displayed that evening.Do not give carnations, lilies or white flowers as they are used at funerals.Do not give wreaths, even at Christmas.Do not give even numbers of flowers.A houseplant is well received in the winter months.A bouquet of freshly picked wildflowers is always appreciated. Gifts are opened whenreceived.• Dining EtiquetteInvitations are generally given verbally.Norwegians are punctual in both business and social situations.Confirm the dress code with your hosts.Offer to help the hostess with the preparation or clearing up after a meal is served. Xcellon School of Business Management, Ahmedabad. Page 42
  • 43. Do not discuss business. Norwegians separate their business and personal lives.Reciprocate any invitation.Table manners are more formal than one might expect of a culture that is informal andegalitarian.Hold the fork in the left hand and the knife in the right while eating.Do not begin eating until the hostess starts.Most food, including sandwiches, is eaten with utensils.When you have finished eating, place your knife and fork across your plate with theprongs facing down and the handles facing to the right.The male guest of honour, generally seated to the left of the hostess, thanks the hostess onbehalf of the other guests with the phrase "takk for matten" (thanks for the meal).The host makes a small speech and offers the first toast.Toast the host/hostess during the meal.Women may offer toasts.Toasts are made with alcoholic beverages, but not beer.When someone is being toasted, raise your glass, look at the person, take a sip, look at theperson again, and then return the glass to the table.Women must put down their glasses first after a toast.• Business Etiquette & Protocol in NorwayIf you were to think about the most important cultural attributes that you will see operatingin business in Norway, they will be:Informal styleIndividual interestsTransactional relationshipsDirect communication• Building Relationships & CommunicationNorwegians are transactional and do not need long-standing personal relationships in orderto conduct business.Nonetheless, they prefer to do business with those they trust, so it is important that youprovide information about yourself and the company you represent prior to meeting your Xcellon School of Business Management, Ahmedabad. Page 43
  • 44. business colleagues.Relationships develop slowly and depend upon the other person being professional andmeeting all agreed upon deadlines.Giving a well-researched presentation indicates that you are serious about conductingbusiness.The basic business style is relatively informal.Norwegians respect confident, self-assured businesspeople.They are excellent time managers who do not require face-to-face contact in order toconduct business.If you are like-minded, the relationship will develop over time.Appearing overly friendly at the start of a relationship may be viewed as weakness.Maintaining eye contact while speaking is interpreted as sincerityNorwegians are direct communicators.They have no difficulty telling their colleagues that they disagree with something that hasbeen said.Their communication is straightforward and relies on facts.They are conservative and deliberate speakers who do not appreciate being rushed.They are scrupulous about honesty in communication, often to the point of pointing out thenegatives in their own proposals in greater detail than the positives.Norwegians are not emotive speakers and their body language is subtle.• Business Meeting EtiquetteAppointments are necessary and should be made as far in advance as possible.Appointments may be made in writing or by telephone.If writing, address the letter to the head of the division, even if you do not know theperson.Punctuality is imperative since it indicates trustworthiness.If you are delayed even 5 minutes, it is polite to telephone and explain the situation.Arriving late without prior notice can damage a potential relationship.It is often difficult to schedule meetings during July and August, which are popularvacation times; during the two weeks before and after Christmas; and during the weekbefore and after Easter.Meetings are rather informal. Xcellon School of Business Management, Ahmedabad. Page 44
  • 45. Send an agenda before the meeting so that your Norwegian colleagues can be prepared.There is not much small talk. Norwegians prefer to get to the business discussion quickly.Presentations should be precise and concrete, and backed up with charts, figures andanalysis.Avoid hype or exaggerated claims in your presentation.Leave time for Q&A at the end of a presentation. Norwegians do not interrupt and willsave their questions until you have finished speaking.• NegotiatingDecisions are consensus driven.Expect decisions to take time as your colleagues must weigh all the alternatives.Present a firm, realistic, and competitive initial price and expect a minimum of bargaining.Price is often the most important deciding factor.Norwegians do not generally give discounts, even to good customers or for large orders.Norwegians are detail oriented.Maintain eye contact while speaking.Negotiations are frank.Avoid high-pressure sales tactics.It is imperative to adhere to deadlines and commitments. If you do not, you will not beconsidered trustworthy, which will destroy the business relationshipNew concepts should be shown to be high quality, practical, and already market tested.Do not interrupt others while they are speaking. Xcellon School of Business Management, Ahmedabad. Page 45
  • 46. PART-2PRODUCT AND COMPANY SELECTION AND ANALYSISProduct: Coffee ShopCompany: Café Coffee Day History and BackgroundCoffee Day sources coffee from 5000 acres of coffee estates, the 2nd largest in Asia that isowned by a sister concern and from 11,000 small growers. It is one of India’s leadingcoffee exporters with clients across USA, Europe & Japan. With its roots in the golden soilof Chickmaglur, the home of some of the best Indian Coffees and with the vision of a trueentrepreneur nurturing it, Coffee Day has its business spanning the entire value chain ofcoffee consumption in India.Its different divisions include: Coffee Day Fresh n Ground (which owns 350 Coffee beanand powder retail outlets), Coffee Day Xpress (which owns 251 Coffee Day Kiosk),Coffee Day Take away (which owns 7000 Vending Machines), Coffee Day Exports andCoffee Day Perfect (FMCG Packaged Coffee) division Xcellon School of Business Management, Ahmedabad. Page 46
  • 47. Café Coffee Day (CCD) pioneered the café concept in India in1996 by opening its firstcafé at Brigade Road in Bangalore. Till about the late 1990’scoffee drinking in Indiawas restricted to the intellectual, the South Indian traditionalist and the five star coffee shopvisitors. As the pure (as opposed to instant coffee) coffee café Culture inneighbouring international markets grew, the need for a relaxed and fun “hangout” forthe emerging urban youth in the country was clearly seen.Recognizing the potential that lay ahead on the horizon, Café Coffee Day embarked on adynamic journey to become a large organized retail café chain with a distinct brandidentity of its own. From a handful of cafés in six cites in the first 5 years, CCD hasbecome India’s largest and premier retail chain of cafes with 251 cafes in 58 cities aroundthe country.Cafe Coffee Day introduced the café culture in India with its first cafe at Brigade Road inBangalore in1996.There has been no looking back for their company from then till now,infect they have grown from strength to strength.Cafe Coffee day is the regular meeting place for 18 to 35year olds, both male andfemale, who are waited on by friendly and informed staff, and are offered the best made,hot or cold , in an invigorating ambience.They provide invigorating ambience and excellent customer service clubbed with excellentcoffee to their customers. Each cafe depending upon its size attracts between 400 to800customers daily.• The following are ABCTCL 6 divisions: o Exports - Indias largest coffee exporters. Currently export over 30000 tonnes of green coffee per annum, i.e. 15% of India’s coffee exports. They have also ventured into specialty coffee exports. o Coffee Day Fresh and Ground- Major Player in the roast &ground filter coffee segment. It provides a unique assortment of blends at affordable prices. The coffee is freshly ground in front of the customer and sold to him. o Cafe Coffee Day – It is a place where customers come and rejuvenate themselves. It is a meeting place for the young and the young at heart. In the café Hot and Cold coffee as well as merchandise are sold to the customers. o Coffee Day Vending – To serve the man on the move who though hurry does not have to compromise on quality of coffee he drinks. Coffee Day has its vending machine placed in vendor outlets in major cities. Xcellon School of Business Management, Ahmedabad. Page 47
  • 48. o Coffee Day Express – Bridges the need gap between the leisurely cuppa and the bite at the café and a quick drink at the vending point. In this segment you will notice kiosks strategically positioned where a customer can not only drink coffee but also grab a quick bite on the move. o Coffee Day Perfect- For mass-in-home consumption section where filter coffee is consumed everyday. The filter coffee is sold in packaged form to the customers.• CAFÉ FORMATSCafé Coffee Day has been experimenting with café formats for quite sometime. Backedby the motivation of providing customers with exciting choices as well as constantlyredefining ‘the café experience’, CCD has ventured into the following formats: MusicCafés provide customers with the choice of playing their favourite music tracks on theDigital Audio Jukeboxes installed at the café! There are around 85 cafes with suchjukeboxes. 32 cafes also provide customers with the visual treat of watching their favouritemusic videos by means of Video Jukeboxes.Book Cafés offer the perfect solution to people who think that the coffee experience isincomplete without browsing through the bestsellers or reading a classic. CCD’s bookcorners accentuate the age-old combination of ‘coffee and books’. This exciting concepthas been successfully tested at 15 cafes in 12 cities across India and the numbers are set togrow exponentially. CCD has tied up with English Book Depot, one of India’s leadingbook distributors for placement and rotation of reading materials appealing to Café CoffeeDay’s discerning customers.Highway cafés presents the traveller en route not only with good coffee and scrumptioussnacks amidst great ambience but also with clean restrooms to get rid of that wearinessfrom the road!Lounge cafés at Hauz Khas, Delhi and Southern Avenue, Kolkata (Southern Avenue) andHyderabad (Jubilee Hills) combines the style and luxury of a lounge with the livelyambience and comfort of a café. With exquisite interiors, exotic menu and thematic music,CCD Lounge offers a whole new experience to the connoisseur while assisting the latterthrough its team of hostesses who are poise and style incarnate and are looked upon asfashion icons. Xcellon School of Business Management, Ahmedabad. Page 48
  • 49. Garden cafés combine the joy of rejuvenating amidst verdant landscapes and pots ofcoffee.Cyber cafés combine the urge to surf, & not to mention get connected through the internetwhile enjoying perfectly brewed cups of coffees, both domestic as well as Internationalblends! These are of course just milestones. CCD is about to launch Sports Café, FashionCafé & Singles Café……..LOGONew logo Old logoFor a brand to stand out and be successful there has to be a personal commitment fromstaff at all levels. The target customers must identify with it. It should be vibrant and havea “life” of its own. Liveliness, growth, fun and passion depicts our brand, our customers,our staff and our future – this is embodied in our design and colour.Our LOGO colours embody:Red Square= Leadership, passionWhite Swirl = Purity of purpose, invigorating properties of coffeeGreen Stroke = 125 years of coffee growing heritage of this vertically integrated Group Xcellon School of Business Management, Ahmedabad. Page 49
  • 50. SEGMENTATION STRATEGY:Café Coffee Day has its main consumer base in the age group of 15-29 years. Its customersare mainly middle class and upper middle class youth who are upwardly mobile.CCD seeks to target not just the youth but anyone who is “young at heart”.Brand Equitys Most Trusted Brands 2008 survey. - In the food services category, CCD ranks No 2 McDonald’s stands at No. 3 Barista lags at No 5The most profitable segment is the 20-24 age brackets. These customers can afford to visitCCD on a regular basis and have a habit-forming attitude towards CCD. Age Profile of the Customer BUSINESS ASSOCIATIONCCD has emerged as an interactive alternative media for brands to communicate with the‘young at heart’.Other media, such as electronic, print and outdoor, offer brand communication throughvisual and audio modes to a large section of the populace, both relevant and irrelevant.Café Coffee Day offers a much more interactive, targeted communication, sometimesadding even a taste dimension to a brand idea! Xcellon School of Business Management, Ahmedabad. Page 50
  • 51. Various in-café collaterals used to impart visibility to a brand inside a café or to add theelement of interactivity to a campaign are Posters, Tent Cards, Danglers, Leaflets,Brochures, Coasters, Drop boxes, Contest Forms, Stirrers, and Standees etc.Over the years, CCD has successfully promoted a number of brands/products/eventsthrough various innovative tactics and promo ideas. Cashing in on its mass captiveaudience AWARDS AND ACCOLADESCafe Coffee Day was named Food Services Retailerof the Year and Exclusive BrandRetailer of the Year at the 1st ICICI Bank Retail Excellence Awards functionin 2005.Cafe Coffee Day was rated the No. 3 food services brand in Business World and BrandEquity surveys in 2004. Cafe Coffee Day was ranked as the 3rd best" Retail F 6t B"chain in India in the Brand Equity survey in 2004Mr. V.G. Siddhartha, Chairman (Amalgamated Bean Coffee Trading Company Limited)received the “Economic Times - Entrepreneur of the year 2003 "award.afe Coffee Day has had a hat trick victory in the India Barista Championship. For 3years in a row, 2002, 2003, 2004 CCD has won all the top awards and its representativehas gone on to represent India at World Barista Championships, winning silver medal in2002 and 5th place in 2004 for the country. DEPARTMENTS AT CAFÉ COFFEE DAY BUSINESS DEVELOPMENT:The team decides upon a suitable site where the cafes can be set up. They identify,shortlist, and finalize a site by negotiating with property owners. A significant effort isinvolved in getting legal clearances and statutory compliances. After all formalities arecompleted, the site is handed over to the projects team. Xcellon School of Business Management, Ahmedabad. Page 51
  • 52. PROJECTS:The team comprises of some of the best designers who ensure that the coffee culture isspread across the country through beautiful outlets. All new cafes are built with astandardized design and the look of the café is in sync with the brand positioning. Theyaim to build cafes in the shortest possible time, at the least possible costs to capital outlay.A recent innovation is the Lounge cafes which are set up in Delhi, Bangalore, Hyderabadand Kolkata. OPERATIONS:This team achieves their sales objectives and is responsible for the daily running of theircafes in a profitable manner. Customer interaction is very important for this team, as theyare the ones who interface with the customer and provide them with a satisfactory serviceand product experience. Café managers train all their employees who are involved in day-to-day operations. The café staffs are their brand ambassador. The brand image of cafécoffee day is and will be reflected through them by the way they dress, behave and carrythemselves , both within the organization and outside. They are the face of the companysince they will be the first point of interaction with the customer. FOOD AND BEVERAGES {F & B}:CCD is a lot more than coffee. Apart from serving the best coffee in the country they alsoserve a wide assortment of savories and desserts. The various coffee concoctions that theyserve are the creations of their F&B team. They also ensure the highest level of hygieneand food quality. They impart training to the team on the preparation of the best quality ofcoffees and food at their cafes. The F&B team sources and manages vendors who supplyfood to the cafes. MARKETING:The marketing team is responsible for the brand positioningand all brand buildingactivities that result in increased sales and greater visibility. They are also responsible forthe various sales promotion activities and tie-ups. This team designs and manages themerchandise category, which is displayed and sold at their cafes. They constantly trackloyalty programs and promotions at the cafes to help minimize sales. The café citizenprogram is a unique customer loyalty tool which helps us to create new customer andretain existing ones by rewarding them with handsome points which can be earned andredeemed at the cafes. HUMAN RESOURCES AND TRAINING: Xcellon School of Business Management, Ahmedabad. Page 52
  • 53. The HR team deals with all matters pertaining to people within their team. They areresponsible for recruitment and selection at all levels from team members to themanagement staff. They are responsible for employee salaries, career development andcounselling. Constant efforts are made for employee up gradation in terms of improvingskills and job satisfaction to meet the aspirations of all employees. ACCOUNTS:They look after the day to day accounting and financial activities and also provide themwith the financial reports, which will help them, find out the profitability of the outlet.They help them reduce the costs and ensure compliance and fiscal discipline at the cafes. MANAGEMENT INFORMATION SYSTEM:Their function is mainly to update the point of sale software and the café website andprovide MIS reports to aid management. They also look into any other systemmalfunctioning, repairs, and replacements at cafes and offices. The café staff is trained onthe billing software by this team. Their new initiative is the phased roll – out of the Wi Fipoint of sales billing system. SUPPLY CHAIN MANAGEMENT:This is the team which ensures that all stock keeping units of items used in the café arereceived at stores from vendors and distributed to the cafes on time. They receive storeorders and maintain the inventory of stock keping units so that cafes do not run out ofcritical supplies at any point. Business development team:Café Coffee Day have a department-the business development team- who are in touchwith a lot of property owners who are interested in franchising and licensing CCD. Theynormally take up places on long lease. Company financeCCD is a privately held company. The group turnover is expected to touch about Rs threebillion now. It was Rs two and half billion last year. Advertisement departmentThe advertisement department tied up with various companies to promote CCD. They alsotied up with a channel called Zee English with a ground programme for a popular showcalled Friends. All the six lead characters were shown often visiting a coffee shop and a lotof youth like watching the programme. That is why they had a contest running where you Xcellon School of Business Management, Ahmedabad. Page 53
  • 54. can win Friends merchandise. The linkage was that it was that it is a youth basedprogramme and it had a coffee house.They were also involved in a lot of ticket sales in quite a few events, Enrique being one ofthem. they were involved in WWE, Elton John ticket sales. These acts are very muchappreciated by the consumers.The ticket sale is the organisers benefit. They need to tell people where the tickets areavailable and single Café Coffee Day logo says it all.CCD always ask for a certain amount of tickets around which they have a contest. Couplescan win ticket for free. This in turn raises the awareness level as cafe staff approaches theconsumers to inform them about the contest. There is not a better publicity mechanismthen the guy who is serving you telling you about the same.Besides that they also tie up lot of the youth brands. Their promise to the customer is that alot can happen over a coffee. So every time they try to ensure something good happens tothe customer. So they have a contest going on with Levis, another one with Scooty, andlatest contest with Liril.CCD still doesnt believe in mass media promotions. But they want to be involved in allthe areas of serious consumer passion. They are doing it with music. About 80 per cent oftheir cafés have a juke box and a few of their cafes are now book cafes.Next big consumer passion is Bollywood, so they have decided to be associated withmovies. they had a Hindi movie Bas Yun Hi and a couple of Telugu and Tamil films withprominent Cafe Coffee Day brand placement. Later they took a conscious decision ofbeing seen in certain movies like Khakee and Main Hoon Na and Bluffmaster being therecent hit.Another placement area that happened accidentally was with HDFC. They wanted topromote their debit card and they choose us. So all the 21 cafes had debit card machines,just during that month. The ad was shot in a Cafe Coffee Day premises.A lot of serials are shot in Cafe Coffee Day. Recently, Kahaani Ghar Ghar Kii was shotbut they have no prominent tie ups.What they are offering is just a location to shoot in. They do charge a very small amount,which is the direct revenue loss for that period.They have done ads but all through barter deals. If they get a good deal from any othermedia, they will definitely go in for a marketing deal. But as an advertisement option or asmarketing spend; they are not looking at mass media. Xcellon School of Business Management, Ahmedabad. Page 54
  • 55. Quality checksChecks take place all the time and in several aspects. The operational in-charge will goaround checking business, record keeping, and service and check the feedback forms. Thefood in-charge will look at the way food is being stored, coffee is being made, what is thetime take to extract the coffee and so on. Marketing person will go about checkingdisplays, how the merchandise is displayed. Xcellon School of Business Management, Ahmedabad. Page 55
  • 56. 7p’s of MarketingProductWide range of products appealing to Indian coffee and snack loversIndian tasteEatables adapted to Indian taste buds like samosa, biryani, masala sandwich, tikkasandwich etc. Indian taste along with classic coffeeMerchandising includes funky stuff like t-shirts, caps etc.PriceMajor customer -15- 29 yrs,Price ranges - 20 to 200.Minor changes (majorly - government taxes)PlaceStrategically located outlets (High Street/ Family Entertainment Centres) PromotionC.C.D. does not look at mass media as a viable area of advertisingTelevision (Zee English called Friends, Channel [V]s Get Gorgeous)Tickets Sales (IPL)Movies (Main Hoon Na, Kyun Ho Gaya Na, etc)Sales Promotion(Offer coupons, Gifts vouchers, Café Citizen Cards)Café Beat- an in-house magazine.Tie-up with World Space & Micro sense to provide satellite connectivityProcessOrder process - Based on services (Customer read menu and order).Flexible delivery process (Customer can go directly, take the order placed or orderdelivered on his table). Xcellon School of Business Management, Ahmedabad. Page 56
  • 57. PeoplePeople at C.C.D. believe that “People are hired for what they know but fired for howthey behave”Motivation and personal skill are laid emphasis upon.Physical EvidenceLogo, Colours, ImagesRED signifies leadership, vitality and passion . The GREEN signifies coffee growingheritage and the coffee plantations that they own. WHITE SWIRL signifies purity ofpurpose, invigorating properties of growing coffee.Café - larger than the text inside the logo box.Signifies that Café Coffee Day pioneered the café concept in India way back in1996.C.C.D. will like to own the word “café” in the minds of its customers.Décor & ArchitectureLiterature New LogoDress Code Xcellon School of Business Management, Ahmedabad. Page 57
  • 58. SWOT ANALYSIS OF CAFÉ COFFEE DAYStrengthExcellent brand name and brand visibilityHuge young crowd as target groupExcellent ambience and serviceOver 1000 outlets and 300,000 visitors per dayIt produces/grows the coffee it serves hence reducing the costProducts of extremely good quality and taste.Its a youth oriented brand , hence huge potential since 40 % population is below 20It produces/grows the coffee it serves hence reducing the cost.USP of brand is it’s considered a highly affordable brand.WeaknessCrowd managementImproper sitting arrangementLacks strength to maintain brand loyaltyFollow the competitor strategyWeak brand image and lacks strength to maintain brand loyaltyPoor ambience and decor. CCD outlet served prime space for advertising andpromotionsMany of the CCD stores are incurring loses due to wrong site selection.OpportunitiesIntroduce cheaper versions of coffeeTap the smaller towns/citiesMerchandising.Tie ups with other companies for promotionCoffee cafe industry is one of the fastest growing industries in Asia.More people like to visit CCD for informal meetings.CCD has gone international, and is planning to attract many new international markets,hence gaining international recognition Xcellon School of Business Management, Ahmedabad. Page 58
  • 59. ThreatsEntry of foreign players like star bucksDependent on Govt commodity ratesLarge unorganized marketCompetition with other coffee cafes like Barista, Mochas. Competitor Barista- This is the closest competitor to Café Coffee Day in the Indian market.. But Barista is often viewed as a place to unwind after a hard day’s work or an ideal setting for a business meeting. Café Mocha- This aims at providing a level of experience to the consumer which is hard to imitate.. Mocha calls itself ‘a coffee shop for the soul’. Qwicky- Based mainly in Bangalore, Qwicky has a strong local hold in South India.CAFÉ COFFEE DAY IN COMPETITIONIf you are talking about Cafe Coffee Day as meeting place then the park bench is theircompetitor, if you are talking about in terms of food and chain then McDonalds is acompetitor and so are other coffee chains like Barista And Mocha. In fact they areaiding each other in creating and growing the coffee culture. They are not trying to besome one else. They are not trying to be an upper class coffee shop where you canwalk in only if you have certain amount of money in your pocket. These are the upperend coffee shops that have hookahs and the works.They are about an every day hang out. They are about being the third most frequentedplace after home and workplace or college. So they are like the coffee chains overseasbut with about affordable fun. They have a distinct identity; they are about coffee andabout hanging out and about nice time spend. Xcellon School of Business Management, Ahmedabad. Page 59
  • 60. HYGIENE & FOOD HANDLINGEmployees use tongs or wear gloves to handle food items. They cannot USE BAREHANDS.Cutting Boards and knives to be washed and wiped dryevery hour.They always have to use clean and dry plates and bowls, cutlery while serving food.Clean the refrigerators before opening, and while closing.Cannot use chipped plates, cups.Cant open the mineral water bottle, tomato sauce sachets, before and also at the time ofserviceThe racks (where crockery are kept) should always be clean.Pantry area should be clean and dry all the time.Food Usage:Use first in rust out method.Order on a day-to-day basis.No food should be kept beyond the shelf life.The display has to be clean all the time.Only the fresh food received has to be used for display.Stack foods neatly on display plates.All the food, which is supposed to be microwave, has to have a paper underneath andthen transferred to a new plate.All items stored at room temperature to be covered at all times either by a toed cover orwrapped in cling film.All the cakes will be cut when they are received in the morning by the cafes.A clean knife dipped in hot water and then wiped to be used to cut the cake. Rinse theknife after each cut with hot water.The appropriate cutlery and accompaniments have to be provided along with the food.The food should not be heated along with the cling wrap.The food has to be taken care of while packing up the food for parcel order.Thumb rule to be followed while storing food in the coolers. (Display as well as backup ones) (All the pastries on the top shelf the vegetarian Savories on the centre and thenon-vegetarian Savouries’ on the bottom shelf.)Reject food items which appear damaged while receiving food.Date/Colour code stickers should be placed on all food. Xcellon School of Business Management, Ahmedabad. Page 60
  • 61. COMPENSATION & BENEFITS PAY PERIOD:Café coffee day’s employees are paid on a monthly basis. One shall receive one’s pay bythe seventh working day of the subsequent month. One can access salary slip by loggingonto café, when the window opens click on the “GO” button.One will have to enter the user name and password. One’s employee code is the user nameand password by default. Once login they can change the password by using the changepassword option. MEDICAL INSURANCE POLICY:Café coffee day had a tie-up with insurance agencies with policies such as the grouppersonal accident insurance and group health insurance policy. This is only applicable toemployees who are conformed in the organization. Details of the same can be availed fromHR department. STATUTORY DEDUCTIONS: EMPLOYEE PROVIDENT FUND:All full time employees who are appointed on the company’s rolls are eligible for theprovident fund schemes, which is a social security fund payable to on retirement. As perthe provisions, employees must contribute 12% of their basic salary and an equalcontribution will be made by the employer.The nomination form {Form 2} is filled at the time of joining. Yearly returns will beprovided. Please collect PF number from regional HR resource. It may take around 15- 20days from the time of filling and submitting the form. EMPLOYEES STATE INSURANCE:This is provided to employees who’s gross salary is Rs 7500/- p.m. or less and the benefitsprovided under the scheme are for sickness, maternity etc. the employee has to contribute1.75% of his gross salary and the employer contributes 4.75% of the employee salaryunder the scheme. The completed ESI form along with two post card sized full lengthphotographs should be submitted for ESI registration. Please collect ESI card number fromregional HR resource. Xcellon School of Business Management, Ahmedabad. Page 61
  • 62. HOW A CAFÉ COFFEE DAY CAFÉ IS MAINTAINED? INTERIORS: Wall finishes are washable. Clean them whenever necessary. Do not hang merchandise from electrical conducts on ceiling. These are of a clip- on type and loading them will pull them off from their saddles. Do not keep wipe pads on the counter top. If terra cotton pots are being used in café, they are to be painted with red oxide paint once in 3 months. Do not force shut the glass doors, but allow it to close of its own accord. Forcing the door shut damages the spring inside. Do not place merchandise on top of wall visuals/mirrors. Outdoor café floors need to be washed more often. LIGHTS: Red cube lights and cove lights above the servey are to be kept switched on always. GENERATOR: Check the water/oil/fuel levels in DG regularly. Always allow a fifteen second time gap between switching on the DG and flipping the change over switch. OUTDOOR: Umbrella’s should be opened fully and made taut. They should not sag. Umbrellas and awnings should be washed with water once a week. Doormats have to be cleaned at regular intervals with water. REWARDSThe management believes that rewards offered by the company should be meaningful andvaluable to the employees. The rewards are always based on attainable goals, they believein SMART goal stetting {S- specific, Measurable, A- attainable, R- realistic and T- timebound}. The rewards are clear, understandable and open to all. The main focus of therewards is to recognize performance and motivate the high performers. Xcellon School of Business Management, Ahmedabad. Page 62
  • 63. Major ResponsibilitiesTEAM MEMBERResponsibilitiesCustomer serviceServe the customer with a Smile, to their satisfaction.Should collect their handheld from the Docking station wear its belt on their necksand park it in the pouch.Provide speedy and effective Customer Service.Follow all service standards laid down.Ensure customer feedback forms are collected on adaily basis.In case of complaining customers, take suitable actionto solve the complaints.Keep Café Manager informed of all complaints.Responsible for table turnover.Never get into an argument with customers.Should constantly employ suggestive selling practices to make customers aware ofnew products and current promotion.CashieringPrinter is in working condition.Cash pouch has minimum float to start with.Handheld terminals and batteries are in good condition.Manager is intimated about the login password.Logout and hand over proper physical count of cash and the terminal to the nextperson – in the presence of the Café Manager- every time you leave the café.Bills are made for every order.Transfer- in and GRN entries are entered for the day.Cold Coffee Products/Food ServiceRecipes of cold coffee and cool drinks are adhered to.Pastry cooler display is setup using appropriate tent cards.The temperature of the refrigerator, freezer, and ice cube machine is of desiredlevel.Microwave, Mixer, Griller and Oven are in working condition and kept clean andhygienic.Shelf life of food is followed strictly and FIFO is maintained for storage. Xcellon School of Business Management, Ahmedabad. Page 63
  • 64. Food is dispensed at standardize service temperature.Food is handled using disposable gloves and tongs and never bare hands.Servery is kept clean and hygienic and avoids all sources of contamination.Café Opening DutiesSetting up the counter for the day’s operation.Receipt city store items like coffee beans, cold coffee mix & cups and stationeryand perishables like food, milk.Check on equipment (pastry cooler, AC, microwave, mixie, refrigerator, ice cubemachine, and freezer) for cleanliness and ensure they are in proper workingcondition.Cleanliness of the café interiors, exteriors and servery.Before they are handed over the terminal, it is the team member’s responsibility tosee to it that the terminal is in good condition.While taking the terminal, if there are damages noticed, Team member shall reportit on the register counters signed by café manager or his nominee.If the terminal batteries need to be changed or recharged then team member shallhand over the batteries to the café manager or his nominee and collect chargedbatteries from him.Café Closing DutiesCleanliness of all equipment and thorough cleaning of the café.Checking the physical stock with assistance from the café in-charge.Ensure food beyond shelf life is discarded and food to be retained overnight isstored t proper temperature.Assist the manager in compiling reports and updating registers etc.Part Timer/WeekenderThe responsibilities of a Part Timer/Weekender are similar to that of a teammember.Every Part Timer/Weekender should stringently follow these duties with a smilewith utmost diligence, zeal and application.The duty hours of the Part Timer/Weekender will be as specified by the CityManager/Area Manager.As you grow within the organization, you will be briefed about new role andresponsibility. Xcellon School of Business Management, Ahmedabad. Page 64
  • 65. Brew MasterResponsibilitiesAll standard recipes of coffee are strictly adhered to and maintain uniform qualityof these recipes at all times.Coffee Machines, Coffee Grinders and dispensers are cleaned and maintained welland all preventive maintenance procedures are carried out.Hot coffee is prepared as specified by the F&B Department.Excess coffee is stored in airtight containers at the end of the day.Grammage and flow of espresso is as per standards.Ensure speedy production of pending orders.Knowledge about storage and shelf life of coffee and food related products.Proper closing and opening of pantry and keeping the work area clean andhygienic.Manager In Charge Of a CaféResponsibilitiesShould maintain a positive image of CCD (café coffee day)Sport a smile always, as you are the Brand Ambassador.Achieve sales in a focused and planned manner.Achieving sales target daily.Table turnover and efficient customer handling.Handle pressure during the rush hours by ensuring proper pre-rush preparations.Allocating assignments and targets to the staff working in the floor area.Constantly review all suggestive selling practices employed by the café staff.Ensure all items on the menu are available at all times.Responsible for customer feedback forms.Forecast orders accurately to minimize wastage.Maintain legally required licenses and others documents as required by localauthorities.Implement other assignments delegated by the city manager from time to time.Should coordinate with the regional head and marketing department for variousproducts launches and other marketing initiatives to improve sales.Be responsible for all materials and machinery.To ensure that all the terminals are docked to the docking stations when not in use. Xcellon School of Business Management, Ahmedabad. Page 65
  • 66. Have complete knowledge of all standard operating procedures governing the caféand implement the same at all times.Maintain all records, reports and vendor/utility bills correctly.Maintain all opening & closing forms and formats.Adhere to all opening, closing, quality & consistency standards laid down by thecompany.Accountable for maintaining the stocks for smooth operations.All service standards, hygiene standards and cleanliness of the entire floor areas aremaintained.Maintaining all product standards, coffee standards and recipes as specified bycompany policy.Planning the counter and ensuring proper workflow is maintained.Speedy products of all hot coffee, cold coffee, food, other beverages and desserts.Ensuring all machines including the nurit terminal and the kiosk behind the counterare in working condition.Intimate the café manager immediately in case of any breakdown.Food standards and hygiene are maintained all times.Responsible for depositing the daily sales proceeds of the cafe in the bank.Ensure all stocks and inventories are properly accounted for.Practice wastage control and spot audits so as to have control over the raw materialcosts.Take the responsibility of charging the batteries and docking the terminals. Whenthe café manager is not present, only a senior team member designated by the cafémanager shall take responsibility of charging the batteries and docking theterminals.Coordinate and leave messages in the logbook regarding pending jobs for the nextshifts manager.Ensure fresh recruits get both on the job and classroom training.Ensure appropriate briefings and meetings are conducted to disseminateinformation and collect feedback.Conduct regular appraisals on the performance of his/her team member and discussstrategies for improvement of their performances. Xcellon School of Business Management, Ahmedabad. Page 66
  • 67. Solving customer problems amicably. But if unable to do so, inform the reportingauthority.Handle waiting customers efficiently. Fund them a seat and making sure that theydo not go away.HANDLING RUSHTypically 80% of the business happens in 20% of the time & cafes will havedistinct ‘lean’ & ‘rush’ periods. CCD cannot prepare rush hours during rushperiod,& therefore they have to prepare well in advance & have the café ready inall respects.PRE-RUSH PREPARATIONTo ease workload & handle rush hours betterForecast the sales for the rush periodAccordingly, ensure there are no stock out situations of any item on the menu.All the stock items or the food items should be well within reach & enough to lastduring rush hoursStaffing should be adequate & work should be allotted well in advance & thereshould be no confusion about who is doing whatAny breaks for the staff or change of old shift to mew shift staff should happenbefore rush time startsPep up the staffIf needed have one staff taking care of table turn over & ensure guests are received& seatedThe counter should be set up in a way that can help reduce clutter, crossoversbetween work areas & reduce the possibility of staff making mistakes. Xcellon School of Business Management, Ahmedabad. Page 67
  • 68. SEVEN STEPS OF GREAT SERVICE1 WELCOMES THE CUSTOMERAcknowledge customers presence at the café. A smile goes a long way. That is guaranteed.Open the door to receive a customer & greet him courteously with a smileMeeting greeting & seating the customer in a warm & friendly manner sets the ball rollingfor the service that follows .It will reflect in voiceCheck whether the customer wants a takeaway or will be seated at the caféTake his preference if possible & direct him to available vacant tables. Request thecustomers to be seated & introduce self.2. TAKE THE ORDER & PRESENT THE BILLA confident demeanour & good menu knowledge will help you to assist the customer tohis satisfactionHand over the menu to the customer & if not ready return to take the order in a fewminutesHelp the customer choose the right coffee or food by explaining in detail the attributes ofthe product. It is important that you recommend special product & add – ons & combos offood & beverages to the customers. Suggestive selling will help you offer customers abetter choice of their products.When the customer is ready to give the order , use handheld terminal. Choose “SELL”amongst user functions. Enter the table number & the number of people. Take the order.Check if the customer is the café citizen ,if not, enroll the customer in the café citizenprogramInform customers at what time they should expect order to be served. For eg. ” order willbe served in 10 minutes. Sir”Print the order confirmation cum bill & place it in the folder on the table.TIP: use one liner terminology to describe product & its benefits to the customer.3 .SALVER SERVICEServe the customer at the promised time & know the products that you are about to servePride in products will enhance the customers confidence in their brand.Arranged the readied products on a salver Serve the food first & serve the cold coffee , hotcoffee or other beverages later. However check the customers preference. For eg. “Can Iserve the food items first, Sir or will you like everything to be served together?” In case ofno specific customer preference serve food first followed by coffee/ beverages Announce Xcellon School of Business Management, Ahmedabad. Page 68
  • 69. the name of the product while you serve the product Remember who ordered which coffee/ food in case of a group & serve the items accordinglyIf there are four people gathered at a table, then bring the coffee two at a time. Else, if youwait to bring all four together, the first two will not retain their temperatures.In case there are any delays after announcing the time of service, please keep the customerinformed of delay.TIP:Ensure that you have served all the mandatory accompaniments with the food &beverages like sauces , cutlery , napkins etc..4. VERBAL FEEDBACK & REPEAT ORDERA feedback on existing service will help you improve performance in future .Also; thecustomer will feel more valued & important.Keep an eye on the tables in allocated section Check with the customer if they will likesome more coffee , snacks or desserts Interact with as many as customers as possible & gettheir feedback on the service & product. For eg. Hope you liked the coffee Sir! I hope youfound the service friendly & prompt. Is there any way we can improve our quality ofcoffee, food or serviceTIP: If you ask for feedback, you are sure to receive comments from customers5. CLEARANCESPrompt clearance of the tables ensures that customers find the café seating area clean,hygienic & presentable when they are seated at the tablesClearance should be very promptClear empty plates, cups & soiled napkins from the table using a salverEnsure that the surface & edges of the table is wiped with assigned scrubber .Use a spraygun to dampen the table with a cleaning agent prior to wiping the table.6. BILL SETTLEMENT & CUSTOMER FEEDBACKMAKE THE POST SERVICE WAITING PERIOD EASY & FAST FOR THECUSTOMERWhen the customer is ready to leave check the amount of the bill from handheld & tell himthe overall amount payableOnce the customer places the cash, remove the bill folder from the table & clear thetransaction promptlyRequest the customer to fill up the comment card. ”I will be delighted if you can kindly fillup our customer comment/ feedback form while I return with the change, Sir!” Xcellon School of Business Management, Ahmedabad. Page 69
  • 70. Present exact change to the customer & collect the comment card.” change, Sir!”In case of any negative comment , tackle the situation before the customer leaves the café.Acknowledge good comments too.7. PARTING REMARKSShow customers that we value them & want them to return. A pleasant parting remark willensure that customer comes back to caféThank the customer for choosing CAFÉ COFFE DAY. And how delighted you are to be ofservice to him. “Thank you for choosing CAFÉ COFFEE DAY, Sir! It has been a pleasurehaving you over.”TIP: It is not what you say , but how you say it! Xcellon School of Business Management, Ahmedabad. Page 70
  • 71. PRODUCTS AT CAFÉ COFFE DAYDescription of various Food and Beverages:Hot CoffeesOne Line Descriptions:Espresso: Strong black coffee extracted at high pressure and optimum temperature.Espresso Americano: A shot of lightened Espresso diluted with hot water.Macchiato: A shot of Espresso topped up with milk foam.Cappuccino: Strong milk based coffee with a shot of Espresso, milk and milk foam. It isone of the most popular hot coffees at Cafe Coffee Day.Café Latte: Milkier hot coffee, mild and goes best with coffee flavouring syrups. It has avery thin layer of milk foam.Chocó chino: A blend of Chocolate ice cream and Espresso garnished with a dollop ofmilk foam. It is neither a hot coffee nor a cold coffee. It is a warm coffee.Cafe Mocha: Chocolate flavoured Cappuccino. Goes best when served with whippedcream. Garnish it with a dash of cocoa powder.Irish coffee: A light Espresso flavoured with a choice of Irish Cream/ Hazelnut/ Carameland topped with Whipped Cream.Caffeine Kick: Double shot of espresso diluted with hot water.Black Velvet: Aristrettostrong coffee served around 5-20 ml.Kenyan Safari: An international coffee with the hidden flavour of Blueberry.Colombian Juan Valdez: Rich, mild international hot coffee with fruity flavour.Ethiopian Qahwah : International hot coffee with a hidden mocha flavour.Hot chocolate: Lots and lots and lots of chocolate. Cold CoffeesTropical Iceberg: Ice blended cold coffee with notes of chocolate. It is the most popularcold coffee across the country.Tropical Temptation: A Tropical Iceberg topped with whipped cream and a shot ofchocolate sauce.Cold Sparkle: Ice blended cold coffee with a sparkling taste of coconut, it is among theearliest cold coffees introduced in their menu. Xcellon School of Business Management, Ahmedabad. Page 71
  • 72. Iced Eskimo: Ice blended cold coffee with notes of coffee and cream balanced in rightproportions.Arabian Heights: Ice blended cold coffee with a distinct flavour of cardamom.Vegan Shake: It is made of 100 % pure vegetable fat and does not contain any animal fat& dairy product. It is unique and is being launched for the first time in the country byCCD.Cappachillo : Coffee with sweetened creamy milk served on the rocks.Mochachillo : Chocolate flavoured coffee with sweetened creamy milk served on therocks.Cafe Frappe: A judicious blend of ice cream and coffee that gives a smooth and creamyeffect.Almond frappe : Almond flavoured rich, creamy cold coffee with whipped cream,garnished with almond flakes.Chocó Frappe: A Cafe Frappe with an extra scoop of Vanilla ice cream and a shot ofchocolate sauce, garnished with cocoa powder.Devils Own: A smooth blend of cream and coffee drenched with chocolate sauce andtopped up with a shot of whipped cream.Kaapi Nirvana: It is their ultimate signature blend, very Indian with hidden Caribbeantaste, won the silver medal in the in the world barista championship held in Oslo 2002.Rich coffee taste, heavy body with creamy texture and does not require any additionalflavours.Fruit Frappe: A judicious blend of ice cream and fruits having different fruity flavors andthick cool texture. (Mango Frappe, Strawberry Frappe, Pineapple Frappe, Lichi Frappe,Cold Chocolate). TeasAssam Tea: A strong Tea grown in the best tea estates of Assam.Masala Chai: High grade Assam tea in combination with a Masala bag which ismeticulously prepared with pepper, cardamom and cinnamon to give an ethnic feel.Ice Tea: A flavoured cold tea served with lemon juice on the rocks, garnished with a sliceof lime. Xcellon School of Business Management, Ahmedabad. Page 72
  • 73. Granitas / CremosasGranitas: A cool slush drink in different flavour variantsPineapple Crush: Pineapple flavour.Cool Blue: Orange & hidden flavour of mint.Blood orange: orange flavour.Smoothes: Ice-drinks blended with ice-cream to give it a creamy texture, which gives asmooth creamy after tasteStrawberry/Mango Colada : A smoother, flavoured with strawberry/mango garnishedwith whipped cream.Cremosa: A fizz drink served with fruit concentrate, soda and Ice Cubes Served on theRocks. (Flavor options: Litchi, Ginger Spice and Pina Colada) DessertsMousse Au chocolate: A double layered Chocolate mousse with a combination of milk adark chocolate & subtle coffee flavor for all the chocolate lovers.Mocha Pastry: A fresh coffee sponge cake flavoured with Coffee cream and syrup.Chocolate Fantasy Cake: Rich Chocolate Pastry pampered with a rich garnish withchocolate truffle swirl.Pineapple Gateaux : Delicious cream and pineapple flavoured cake, very light andrefreshing.Chocolate Mousse : Creamy, Fluffy, Smooth, chocolate flavored dessert, ideal withcoffee.Black forest Cake : The all time favorite Choco pastry with cherries suited to our Indianpalate.Sugar/chocolate Doughnut : A deep-fried dumpling doused with cinnamon flavoured topdipped in sugar or chocolate truffle.Date & Walnut cake : Rich butter base Cake made of delicious combination Dates &Walnut.Chocolate Brownie: A rich dessert made with the combination of chocolate, butter,walnuts best with coffee.[TIP: Tastes best with a scoop of Vanilla Ice Cream.]Banana walnut cake: Delicious teacake flavored with bananas and walnuts Xcellon School of Business Management, Ahmedabad. Page 73
  • 74. ADVERTISING CAPAIGN THE LEVI’S CAMPAIGNThe 6” Below the Naval Jeans campaign, the SykesReversibles (Ulta Pulta) campaign, theLevi’s 501 campaign, the TLTT (The Levi’s Torture Test), the ‘Hello Gorgeous’ campaignetc all are some of the successful in café activations designed and executed for Levi’s.Every season CCD becomes an important media for Levi’s to launch its new range ofapparels. Along with providing tremendous on ground visibility in terms of wall visuals,tent cards, danglers, posters etc., a contest (wherein customers can win Levi’s clothes) isdesigned to inject customer interactivity and to add excitement to the entire campaign. Thecohesiveness of the entire campaign is accentuated by creating a new drink and christeningit as the Levi’s drink for the promo period! THE SUGAR FREE CAMPAIGNIn order to promote Sugar Free, CCD launched a “ Low calorie menu” in association withthe former for the calorie conscious. The new menu consisted of a wide range of Lowcalorie Hot coffees, International coffees, Tea, Tropical Iceberg & a range of veg. and non-veg. food as well as deserts like Lemon Soufflé to name a few. This menu wascommunicated to the customer by means of Sugar Free branded menu boards, menu cardsetc. Also, a few bottles of Sugar Free were displayed at the counter to serve as a pointer tothe on-going activity. THE TVS SCOOTY VALENTINE CAMPAIGNThe Valentine month in 2004 witnessed an innovative campaign for TVS Scooty. CCDpromoted TVS Scooty by means of a creative promotion which besides adding visibilityand customer interactivity also conveyed the brand attitude to the end customer and helpedthem relate to the same. Through the ‘TVS Scooty Valentine Singles Campaign’,customers were asked to enter the contest of why they will rather be single and make TVSScooty their Valentine that year. To add to the festivities of the Valentine month, CCDcreated 2 special combos called the TVS Valentine Combos– Hot & Cold (2 ice blended Xcellon School of Business Management, Ahmedabad. Page 74
  • 75. Cold coffees/2 Café Mochas with a Chocolate Fantasy). The contest was of course madeattractive by the no. of freebies like Sony Discmans & MP3 players etc. which customersstood to win. Not to mention the Mega prize of a 4 stroke TVS Scooty for 2 lucky winners THE CHANNEL V- GET GORGEOUS HUNTCCD was the exclusive on ground partner for the nationalhunt for the most gorgeousfemale models by Channel V, wherein candidates can drop their entry forms with portfolioat any CCD outlet. The event was heavily promoted by CCD through in café branding andon air by Channel V. CCD also launched a new range of ‘Get Gorgeous drinks’ aspart ofthe promotion. Innovative collaterals like branded stirrers etc. were used to add that extraelement of surprise. So much so was the success of the campaign that Channel V haschosen CCD to be the on ground partner for ‘Get Gorgeous- Part THE HIMALAYA HONEY CAMPAIGNThe Himalaya Drug Company had recently entered into a tie up with Café Coffee Day topromote their honey. This honey was made available through over 100 Café Coffee Dayoutlets across 7 cities, in a 3-month promotion where Coffee Day customers experiencedthe taste of pure of honey in innovative ways. Honey Cappuccino, Honey milk shake, richchocolate cake and ice cream topped with honey and nuts! Four unique dishes wereconceptualized by Café Coffee Day, each enriched with the goodness of pure HimalayaHoney. These were an instant hit with the customers. In addition to honey-based items,bottles of Himalaya Forest Honey were also available in all Coffee Day outlets Xcellon School of Business Management, Ahmedabad. Page 75
  • 76. MOVIE TIE-UPSCCD has become an important national on ground partner for Production Houses topromote movies better among the masses by means of colourful collaterals like – posters,tent cards, danglers et al. Interactivity is ensured by conducting exciting contests aroundthe movie wherein customers with the correct answers stand to win movie cassettes, CDs,movie tickets as prizes and also through a Lucky draw get a chance to win a ‘Coffee datewith their favourite movie stars’. Hence, the ‘touch & feel’ experience to the movie. The ‘Mujhse Shaadi Karogi’ Promotion:The contest, starting July 10, 2004 ran across 168 cafes in 42 cities for a month, where anycustomer billing a ‘Shagun’ amount of Rs 301 was guaranteed to win at least one prizeranging from audiocassettes to movie tickets and a chance to enter a lucky draw, whichwill win them a coffee date with Priyanka Chopra. To heighten the excitement, CCD evencreated an ambience of ‘Shaadi Season’ with cafe staff wearing heart shaped badges with‘Mujhse Shaadi Karogi Contest @ CCD’ pinned on their shirts. Creatively designedposters and tent cards in the wedding card format were used as tools to encouragecustomers to be a part of this contest. Cafe Coffee Day in ‘wi-fi tie-up with MicrosenseCafe Coffee Day, the countrys leading chain of cafes, has tied up with Microsense,provider of wireless computing solutions, to wi-fi enable its coffee outlets across thecountry. CAFÉ BEAT FACTFILE:12 pages, all colour, monthly tabloid. Available at all cafes across the country (226 cafesin 55 locations as of Today).Available FREE of cost to customers for in-café reading. Xcellon School of Business Management, Ahmedabad. Page 76
  • 77. Many customers also carry it away for their referrals. 38% of the customers at CCD readCafe Beat (survey conducted in Aug.04 in the 4 metros.). CCD gets around 3 millionwalk-ins in all its cafes per month. Essentially a youth magazine covering topics likemovies, music, travel, lifestyle, e-dating, books, career etc. which interest the youth.Displayed on magazine stands/counter at the cafes. The new issue is kept on the tablesduring the first week for greater visibility. New Introductions Malabar Monsoon premium Coffee Powder Varieties in coffee mugs Funky T-shirts and CapsCCD’s guide to Active Holidays (A travel guide focusing on adventure sports) while 16%visit monthly. Each café, depending upon its size attracts between 500 and 800 customersdaily, mainly between 4pm and 7 pm. Customers describe Café Coffee Day as the placethey frequent most after “home and workplace/college”. It is a place where they meetfriends and colleagues, in groups of 3 or more; a place where they rejuvenate and are freeto be themselves rather than a place to be “seen at” viz a viz other cafes.AIR DECCAN TAKES CAFE COFFEE DAY TO THE SKIES With Friele expected toenter the Indian market sooner rather than later, it seems logical that Indias leading finecoffee-cafe chainCafe Coffee Day should take to the skies, courtesy the countrys pioneering low-budgetairline which now links up more urban centres — 46 at last count — than the competition.Both Air Deccans parent company Deccan Aviation and Cafe Coffee Day took off in thesame year from Indias Garden City. Cafe Coffee Day, a division of the Rs 300-croreAmalgamated Bean Coffee Trading conglomerate, will now be the single-point vend orsupplying snacks and beverages on board all of Deccan Airs 186 daily flights.Cafe Coffee Day (CCD) estimates that when the roll-out is in full flow, the four millionpassengers on board Deccan Air flights can add up to Rs 20 crore a year to its annualturnover, at an average of Rs 50 per passenger. For Deccan Air, the tie-up can enable theairlines to provide its passengers with reasonably priced snacks and beverages of astandard quality. Which is what its passengers are said to have indicated a preference for ina recent survey. The CCD service will begin with the Bangalore-Chennai flights, and willbe extended to other sectors progressively. Since CCD has a pan-India footprint, thestrategy can be implemented seamlessly even in smaller hinterland towns, where the Xcellon School of Business Management, Ahmedabad. Page 77
  • 78. competition —in both aviation and the fine coffee cafe segment— does not have apresence.The MoU to this effect was signed today by Air Deccan managing director Captain GRGopinath and Cafe Coffee Day director Naresh Malhotra. Speaking on the occasion, CaptGopinath quipped that another factor he and Amalgamated Bean Coffee Trading chairmanVG Siddhartha and he owned neighbouring coffee estates. CONCLUSIONThe best known cup of coffee in town comes from here. You cant miss Cafe CoffeeDay; if there isnt one in your neighbourhood, theres one near your college/office,You might as well give in, theyre taking over. The college crowd is big, becausethe rates are more or less affordable, office goers hang out here at lunch breaks totake in the laid-back air of the place, first-dates meet here because its neutralground, and couples because theyre not likely to bump into their parents. Youreleft alone to play your favourites on the jukebox and nurse your mug of coffee forhowever long you want. All at a price, of course - Rs. 5 per favourite song andaround Rs. 25 for the drink the range of coffees here, both cold and hot, isimpressive. The latte (with cinnamon, if you like it that way), Irish coffee,Cappuccino and its chocolate-y version, the Mochaccino are the most requested hotcoffees. While the Frappe, with chocolate ice-cream blended in, the TropicalIceberg, which is the classic cold coffee, and the award winning Kaapi Nirvana arethe chilled favourites. Order cookies to go with it and, suddenly, none of yourproblems in life will seem like such a big deal. CCD also does a decent job of theteas, of which it has only three, but the Masala Chai is good. The eats here are alsovery popular; in fact, many people skip coffee altogether and just come here for thegrub. For the most part, though, the food here is nothing spectacular. Their ever-changing menus havent really improved matters, either. CCD also sells its ownrange of t-shirts, coffee mugs and bags. Their line of pre-packed coffee powders issteeply priced, but there is no dearth of takers, and the filter-coffee has somededicated drinkers It’s hard to miss: It sports a youthful look. Plush, pleasinginteriors, plus colours such as lime green, yellow, purple and orange predominatemake Café Coffee Day a soft-low decibel spot for the trendy youth. Xcellon School of Business Management, Ahmedabad. Page 78
  • 79. PART: 3 & 4Norway Coffee Industry analysisNorway coffee marketNorway’s small market (population 4.5 million) consumed about 40,000 tons of coffee. Althoughimports showed a substantial increase over the previous year, much of this can be credited to stockbuild-up to take advantage of lower prices rather than significant consumption growth. Over thelast decade total imports averaged 45,000 tons of green coffee equivalents but this number hastrailed down in recent years and so has per capita consumption.Per capita consumption of the leading country data 2010 12 10 8 6 4 2 0 Finala Denma Swede nethal switzerl Germa Belgiu norway austria France nd rk n ands ands ny m per capita consuption 10.7 10.1 9.7 7.8 7.1 7 5.7 5.5 5 3.9 3-D Column 6Per capita consumption inched slightly up to 9.3 kilos in 2001 and 10.7 kilos in 2010. But remainswell below the average of more than 10 kg that was common in the early 1990s the marketconsumes Arabica almost exclusively. Brazil is the largest single supplier; its naturals hold morethan 40 percent of the market. When combined with Colombia and Guatemala – the number twoand three suppliers - these three origins have about 75 percent of the total market. Mexico is also astrong supplier with a growing market share. Soluble coffee holds 9.1 percent of the market.The sustainable coffees represented approximately 1.1 percent of total consumption in 2001.Organic coffee amounts to less than 0.5 percent of the total market for coffee in 2001. This figure,which in the Scandinavian context is relatively low, according to one researcher reflects theabsence of a positive Norwegian consumer attitude towards organic products in general. Max Xcellon School of Business Management, Ahmedabad. Page 79
  • 80. Havelaar Norway was founded in 1997 and is the certifier for most of the country’s fair tradecoffee. Fair trade coffee is expected to soon amount to about 1 percent of the total market. In both2000 and 2001 most roasters experienced strong growth in fair trade coffees. Early reports for year2002 indicate very strong growth as well. In the same period organic showed flat or very smallgrowth according to their estimates. The rapid growth is mainly due to its ability to secure a broaddistribution from the major roasters. The Max Havelaar–registered suppliers account for the entirefair trade volume of 215 tons, while the organic segment measures 213 tons (figure 15.3). The MaxHavelaar group has secured a place with the major roasters and the retailers. With such soliddistribution and a developed roaster network, the next challenge will be to motivate larger numberof consumers to switch. That may well be their hardest challenge. The vast majority of sustainablecoffees are sold as mainstream coffees that are not distinguishable from others in terms of qualityor flavour characteristics. There is still a lingering perception that their quality is mediocrealthough now a percentage of these coffees (less than 50 tons) have entered the gourmet categoryand they are primarily organic.The market seems to be fairly transparent and well-organized in regard to certification and thereare not many competing labels or claims of sustainability. The national market is fairly welleducated especially concerning ethical commerce, an issue that has recently been raised byretailers. None of the roasters finds that certifications are confusing or a problem. Only 13 percentof the industry respondents felt that consumers experienced confusion in these markets. Debio isthe primary national certifier for organic coffees. Max Havelaar certifies most fair trade coffees,although some firms claim that their coffees are traded under similar ethical standards. Coop NorgeKaffe engage Det Norske Veritas, an independent certifying organization, to verify their fair tradesourcing practices in the field. Some of the roasters are showing a keen interest in what are called“relationship coffees”. These indicate a direct and mutually beneficial relationship between theproducer and the roaster but usually do not adhere to quite the same criteria or price levels of fairtrade coffee. These coffees pre-suppose a high level of trust between the grower, the buyer, theroaster, and the consumer since they do not always have independent third party certification oftheir practices. PremiumsPremiums for organic green beans range from US$0.10 to $0.35 per pound, with $0.25 given as themedian. Fair trade buyers pay the minimum price defined in the FLO standards, $1.26 per poundfor most imports. In the current markets, this represents approximately 50 percent more thanconventional coffee. Of the responding firms, nearly all feel that these premiums are reasonableacross the board for both organic and fair trade coffees. All of the respondents believe that fairtrade prices will continue unchanged for the next few years Xcellon School of Business Management, Ahmedabad. Page 80
  • 81. Retail pricesOne company dominates organic coffee sales in Norway and while their organic coffee is notcheap it is positioned to sell at a price that is 10 percent lower than their premium brand. BecauseNorway’s retail prices for conventional coffees are relatively high the price differences betweenthem and fair trade are not pronounced. Despite this reasonable parity, there has not been anoticeable surge in fair trade sales. Although this is not the result of rigorous analysis, it cannonetheless indicate that having similar prices between fair trade and conventional coffees may notnecessarily stimulate more fair trade sales. Unlike most of the other European markets, Norwegianconsumers did not respond quickly to double certified coffees. There is unanimous opinion in theindustry that this category will grow although the market for these is now very small. Significant supplying countries for sustainable coffeesThe primary suppliers for these markets have been Mexico, Peru, Guatemala, Brazil and PapuaNew Guinea. Mexico and Peru are the dominant suppliers by far. Others include Colombia, EastTimor, Bolivia, and India. International Entry strategy:Initially CCD is not going to give franchise like ccd give in India because we are notfamous in Norway so give so we launch own Coffee shop in Norway. Raw Material likeCoffees, Sugar, and tea will be export from India .initial level CCD recruit employee onlyfrom India. Land will take on lease Xcellon School of Business Management, Ahmedabad. Page 81
  • 82. The Norwegian market structureThe Norwegian market channels are relatively simple. Three main roasters and importers, allNorwegian owned, account for 85 percent of the market. Two medium size roasters cover 10percent of the market and 3 small roasters essentially share the specialty or gourmet market. Thereare also a modest number of in-shop roasters with small volumes. One importer covers the solublemarket that averages approximately 3 percent of the market (1300 tons). The importation ofroasted coffee is small and amounts to less than 5 percent of total imports. While there are threestrong traders in the market, they have little interest in sustainable coffees. There is increasingtrend among roasters to deal more directly with origins, sometimes through European brokers.Three large retail groups dominate this landscape and are responsible for more than 80 percent ofall coffee sales. There are also approximately 400 specialty retailers. Most of these are covered bythe small and medium roasters. The high-end or specialty trade is well developed through qualityroasters and a widespread network of retailers and coffee bars selling high quality fresh roast &ground coffee. This trend has spread to leading retailers that are establishing “shop in shop” freshroast coffee outlets. With regard to fair trade, the Max Havelaar registered roasters account foralmost the entire volume provided to the market. Fair trade coffees are mainly sold to consumersthrough grocery retail outlets. It is hardly sold in the high - end or specialty coffee market,probably because its quality has often not been considered good enough. All the large roasters nowhave a separate fair trade brand in the market. Hakon, Rema and NorgesGruppen cover about 3/4of the market and Coop Norge Kaffe covers much of the rest so basically FT coffee is offered inevery supermarket in Norway and has distribution access to almost 90 percent of the grocery retailstores. There is also a small but growing (institutional) market among community and charitableorganizations as well as among public corporations and governmental agencies Organic coffee isprimarily sold in grocery retail. One company accounts for the vast majority (approximately 90percent) of the volume. Both fair trade and organic that are distributed through the mainstreamgrocery channels are expected to grow, although at a different pace, of about 5 percent for organicand well over 10 percent for fair trade. Fair trade is also expected to continue its inroads in theinstitutional channel at a pace of about 5 percent annual growth in 2002 and 2003. Trends in the Norwegian marketThe total market for coffee is estimated to remain stable in the 2002-04 three-year period, whilefair trade and organic coffees are estimated to grow toward a joint market share of about 1.6percent in the period. After some initial reluctance, all major roasters now offer both organic andfair trade coffees. Charitable, community and governmental organizations seem to be an increasingmarket for fair trade coffee. There is only modest optimism for organic coffee among roasters andretailers and this is reflected in the forecasts for little growth.There may be an emerging market for“relationship coffees” or uncertified fair trade coffees that are not third party certified but, there has Xcellon School of Business Management, Ahmedabad. Page 82
  • 83. been little volume thus far. Some retail chains have decided upon a “green policy”, therebyintroducing an alternative to organic and fair trade. In 1999 the consumer awareness of the MaxHavelaar label was only 6 percent whereas in May 2002 it registered 30 percent awareness.Industry has a positive outlook for fair trade coffee over the next few years, expecting reasonablystrong growth of between 10 and 15 percent per annum. Sales figures for 2002 fair trade coffeesalready show healthier increases of about 30% for that year. Expectations for organic are moremuted and while some expect modest growth, others project reasonably flat sales. As conveyed infigure 15.8, the Norwegian sustainable market should almost double by 2004 from its 1999 level.This growth does not represent a large shift in volume, yet Norway’s sustainable market doesrepresent the average in terms of market share – projected to be 1.3 percent by 2004 Constraints in the Norwegian marketThe few dominant retail grocery chains are price-driven and have a conservative spacemanagement policy. If sustainable coffees do not gain sufficient market share their life on the shelfmay be cut short. Although these products currently have broad distribution, no one, including thestores carrying them, has made many marketing efforts. Key factors for further growthMembers of the industry were asked to, “Rate the importance or value of the following factors forexpanding your sustainable coffee business.”Quality of cupConsistent and reliable supplyPrice relative to conventional coffeeClarity between different types of certifications, criteria, and labelsAwareness of consumers about these coffeesIf the industry does not fulfill these factors it is likely that its future growth will be constrained.espondents were offered 4 choices ranging from “not at all important” to “very important”According to the industry respondents clarity about certification and labels is the least importantfactor in Norway. Consumer awareness is clearly number one in importance followed by cupquality. Norwegian consumers already seem to find that many of the sustainable coffees meet theirquality demands and if consumer awareness improves, due to their presence in multiple channelsof distribution, they may have a positive long-term future. Xcellon School of Business Management, Ahmedabad. Page 83
  • 84. Industry Analysis Societal Environment Economic VariablesDealing with a commodity, the coffee industry in the Norway is only marginally affected byeconomic forces such as GDP Trends, interest rates, inflation, or energy price and availability.However, (2008) suggests that higher employment rates might cause a shift incoffee consumption as more coffee will be consumed outside the home, thereby increasing thefoodservice sales at the expense of retail coffee sales. At the same time, the foodservice sales ofcoffee are particularly susceptible to changes in discretionary income. Since that type ofconsumption is generally not considered a necessity, an overall decline in discretionary income canresult in diminished foodservice coffee sales and vice versa. The data from the Norway CensusBureau (2008) seems to indicate a rather positive trend since foodservice and drinking places a7.6% sales increase in the past 12-month period and a 0.6% sales increase from June to July 2008.Besides, the economic situation in the different geographic regions has a noticeable effect not onlyon coffee sales in general but also on the demand for particular coffee types. Research and DevelopmentAlthough coffee is considered a commodity, the individual marketers in the coffee industry investsignificant resources in research and development in an attempt to establish a competitiveadvantage. Flavoured coffees, specialty coffees, Pods, better-for-you coffee blends, orFrappucchino® are just a few examples of how the industry takes advantage of technologicaldevelopments (, 2008). Furthermore, the National Coffee Association starteda campaign that promotes the health benefits of coffee and, based on scientific research, unmaskscommon beliefs about the harmful effects of coffee consumption. According (2008), this image campaign does not only increase coffee awareness amongconsumers but has also the potential to increase future consumption. From a corporate perspective,the proper application of modern is crucial to ensure adequate product management as well asinternal and external communication. Tracking product profitability, product-specific sales data,and inventory, as well as implementing employee and customer relationship management measuresare just a few areas in the coffee shop business that will greatly suffer from the lack of propertechnology support. Political-Legal VariablesAs stated by (2008), coffee come in top import item in the import basket”which makes the coffee industry very vulnerable towards foreign trade regulations Overall stabilitybeing granted, the political situation in the Norway is probably less concerning for the coffeeindustry; however, the respective situation in the major coffee growing countries might have a Xcellon School of Business Management, Ahmedabad. Page 84
  • 85. more imminent effect on the industry with regard to green bean supply and price. Greenfield(2004) instances the Coffee Crisis of 2001 during which commodity prices fell to an all-time low.The issue originated in the sudden rise of Vietnam as second largest coffee exporter and causedthousands of coffee farmers to loose their livelihood. Socio-cultural VariablesSocio-cultural forces have undoubtedly the most noticeable influence on the coffee industry. Asstated by (2008), consumers seek higher quality coffee, thereby increasingthe demand for the higher priced specialty coffee not only in the newly revived coffee houseculture but also at home. According to Dawidowska & Gardyn (2002), the lion’s share of patronsof specialty coffee houses is composed of those between 18 and 34 years old as well as those withan annual income of $75,000 or more. This demographic is not only enticed by the higher qualityand broader selection, but also by the overall coffee-shop atmosphere and non-coffee relatedofferings. The continuous monitoring of the population’s motive force with regard to overall coffeeconsumption as well as the benefits they seek is crucial for any company in the coffee shopindustry as it may provide open up a competitive advantage. Currently, the consumers’ busylifestyle enhances the demand for ready-to-drink coffees; in addition, the trend towards enhancedhealth consciousness causes marketers to emphasize coffee’s health benefits and “incorporatebetter-for you ingredients” in it Furthermore, enhanced consumer activism forced the coffeeindustry to place higher emphasis on sustainable coffees that are more considerate of theenvironment and/or the coffee farmers in the exporting countries. Xcellon School of Business Management, Ahmedabad. Page 85
  • 86. Five Force Model Threat of New EntrantsNew entrants in the specialty coffee market constitute a definite threat due to the lack of entrybarriers. Although clearly dominates the market with its more than 1000 coffee shops and itsadvanced infrastructure, the company has significant scale economy in the production and sale ofits products. As stated by Belissimo, Inc (2005), the capital requirements to open a new coffee cart,kiosk, drive thru, or coffee shop franchise range from $10,000 to $100,000 which allows for easymarket entry of new competitors. Despite marketers’ branding and differentiation efforts, coffeeremains a commodity for the majority of consumers who generally perceive very minimal, if any,switching costs between any two brands of coffee. While small businesses might not have theopportunity to sell their coffee in larger supermarkets, the coffee shops themselves and therespective websites constitute easily accessible distribution channels. Lastly, there is nogovernment policy in place that will restrict or limit the entry in the coffee market. Rivalry among Existing FirmsIn economics, the degree of rivalry is measured by indicators of industry concentration, whichusually expresses as the concentration ratios. It is used as an indicator the relative size of firms inrelation to the industry as a whole. According to the Bureau of Census (2008), as of 2002, theconcentration ratios for the largest eight, 20, 50 firms in the coffee shops industry are 66.2%,68.5%, and 70.6% respectively. Even though the figure for the largest four firms is withheld for thepurpose of avoiding the disclosure of data for individual companies, we can still make assumptions Xcellon School of Business Management, Ahmedabad. Page 86
  • 87. based on the noticeable differences on percentages between the largest eight-firm and four-firm.Assuming that the fluctuation of the differences between the largest four-firm and eight-firm iswithin 10%, we then can conclude that the concentration ratio for the largest four firms is wellabove 40%. In that case, the market form of the coffee shop industry appears to be an oligopoly inwhich a market or industry is dominated by a small number of sellers (Wikipedia, 2008). Thisimplies that the industry is somewhat disciplined, informally following the acknowledged marketleader’s strategic movements.Due to the lack of entry barriers, the number of competitors in the coffee market is countless. Thevast majority of which are most likely to serve coffee in one fashion or another. Especiallynoteworthy is the great diversity of competitors. A specialty coffee shop such as Café Coffee Daydoes not only directly compete with other specialty coffee shops, but also indirectly with any typeof restaurant, convenience stores, or even the coffee brewer at home. According (2008), the coffee market is estimated to exhibit a compound annual growthrate of 6.9% in the next five years which provides room for growth not necessarily on the expenseof other competitors. Again, coffee is widely considered a commodity and according to theSpecialty Coffee Association of Norway (2005), most consumers chose their coffee based onconvenience of location, quality of the product, friendliness and knowledge of staff, variety, andprice rather than particular brand. Unlike the high-tech industry, the coffee shop industry exhibitsfairly low fixed costs, low switching costs, and relatively low exit barriers in its realm. Taking thelow entry barriers into consideration, the low exit barriers have probably hardly any effect on themarket at large. Except for rent, furniture, and overhead costs; the majority of a coffee shop’sexpenditure can be capitalized on bespoke espresso machines and specific staff training. Variablecosts, such as direct material and direct labour, are directly influenced by sales. There is no strictpenalty cost for withdrawing from the market except for the potential loss on investments. As aresult, investors can flexibly switch markets in accordance with their strategic planning. SubstitutesAs outlined in the above paragraph, the competitive landscape in the coffee industry providescountless substitutes for a cup of Café Coffee Day coffee. If customers are not true-blue to theirfavourite coffee shop or brand, they will hardly perceive any switching costs whether they get theircoffee from kaffehuset friele as ,johannson joh kaffe as ,trond t wikant as, mocca kaffebar& brenneri. Surprisingly, the price for a cup of coffee is not necessarily the determinant factor forthe selection of one brand over the other but convenience and other “added benefits” clearly are.Market point out that the current price of roasted supermarket coffee is almoston the same level as it was in 1980; however, consumers are apparently willing to spend $3 ormore for a specialty coffee at their favourite coffee shop. The roomy chairs, free wireless internet,and pleasurable music that can be found in a coffee shop are no coincidence but rather an attempt Xcellon School of Business Management, Ahmedabad. Page 87
  • 88. by the respective store to establish a distinctive competency and capitalize on it. Besides the threatof other brands as substitutes, coffee can just as well be substituted for by completely alternateproducts. In realization of this fact and as a defence against it, many specialty coffee shops add arather comprehensive tea selection to their product portfolio. After all, only about half of the adultpopulation drinks coffee on a daily basis, so coffee shops need to provide an appealing subsidiaryfor the other half of the population in order to lure them into the stores. While newly publicizedresearch findings suggest otherwise and might eventually change the current public opinion, tea isgenerally considered healthier than coffee and therefore constitutes an important subsidiaryproduct for the increasingly health-conscious Norwegian consumer. Bargaining Power of Buyers and SuppliersDue to the very nature of the product and the composition of the industry, the bargain power offoodservice coffee consumers is definitely greater than that of the foodservice coffee suppliers.Although consumers are much dispersed and purchase comparably small proportions of theproduct, they can easily prepare their coffee at home or select an alternative supplier or substituteproduct at literally no switching costs. The great variety of available coffee in terms of price,quality, and service allows for the consumers to choose the respective product that best meets theirindividual needs and further strengthens the consumers’ position in the coffee market. Further upin the sales channel, and as outlined by (2008), many coffee marketersstrengthen their respective position by expanding their presence to several sales channels, therebyoftentimes assuming the role of seller and buyer. Friele, for example, poses a very real backwardintegration threat by eliminating several middlemen in the coffee production chain. The coffeeretailer does not only roast its own coffee in one of its three corporate-owned roasting facilities, italso freshly grinds its coffee in the stores. Xcellon School of Business Management, Ahmedabad. Page 88
  • 89. Major CompetitorMajor competitor in Norwegian market is kaffehuset friele as ,johannson joh kaffe as ,trond twikant as, mocca kaffebar & brenneri and coop kaffe . FrieleFriele (Kaffehuset Friele) is a Norwegian coffee manufacturer and brand based in Midtun, acommercial and residential district of the borough of Fana in Bergen, Norway. Friele is the largestproducer of coffee in Norway.The company was started in 1799 when ship’s captain Herman Friele I landed in Bergen to starttrading. He bought a property in Bergen and established an import business with emphasis oncoffee. Towards the middle of the 19th century, coffee consumption was growing due to fallingprices from increased global production.Friele is now owned by the seventh generation and chairman Herman Friele. Friele buys its coffeebeans from 9–10 different countries, mainly from Brazil and Kenya. Until the mid 1980s most ofthe coffee was sold in Western and Northern Norway, but since it has expanded throughout thecountry. The present plant was constructed in 1981.Friele Frokost Kaffe is the leading brand with a market share of 29%. Frieles product line alsoincludes the brands Kronekaffe and Café Noir. Collectively all the Friele coffee brands have a totalnational market share of 35%In 1799 Herman Friele bought his first coffee consignment and shipped it back to Bergen. Eventoday, Friele travels all over the world in order to taste coffee and choose the best batches.Kaffehuset Friele is today, Norways leading coffee roaster, with a market share of about 32 %(value). There are four other major players in the Norwegian coffee market, Joh. Johannson with29 %, Nestle with 16%, COOP with 15% and Kjeldsberg with a market share of 7%.Our largest coffee brand, Friele Frokost kaffe is also Norways leading brand and has a marketshare of 29 %(volume). We also have the brands Krone, Café Noir and Spesialkaffe (specialitycoffee). e offers products to both the food service segment (20 %) and the retail trade (8KaffehusetFriel0 %)."The secret behind good coffee is to find the right blend, and then roasting the beans just longenough, at the right temperature, so that the aroma and taste comes to its full potential."Norwegians drink a lot of coffee. Norway, along with the other Scandinavian countries is amongthe countries in the world that drink the most coffee. After tap water, coffee is the drink that is Xcellon School of Business Management, Ahmedabad. Page 89
  • 90. consumed the most, an average Norwegian drinks about 155 litres of coffee per year.At Friele we use only the best coffee beans from carefully selected coffee farms. In cooperationwith these farms we have found green coffee that safeguards the distinct and full bodied taste ourblend is known for. Our goal is to create the perfect "coffee moment" for as many as possible. Weuse the best methods and the most modern equipment in the manufacturing process from roastingto grinding. Kaffehuset Friele is known as Norways coffee authority.It goes without saying that coffee is an important part of Nordic culture, and that the interest forcoffee straddles all demographic divides with ease. It reaches the old, the young, the rich, thepoor and everyone in between. However, the supply side of the coffee market in the Nordiccountries is decisively split into two very different parts, governed by completely different rulesand objectives.This divide is commonly referred to as the difference between retail and specialty coffee, and justas commonly written off as the normal segmentation between mainstream and premium products.The fact of the matter is that while they nominally occupy the same space, these markets areworlds apart, and do not compete as much as supplement each other.An overwhelming majority of all coffee sold in the Nordic countries is supplied by roasteries thatseem like behemoths compared to the smaller, newer roasteries that comprise the second market.We will get to just how overwhelming that majority is in a bit.Entrenched is an apt description of the roasteries that enjoy significant market shares: in Norway,two roasteries have a combined market share of 63% (2009). The two are Friele of Bergen and Joh.Johannson of Oslo. Despite their size, their respective market shares are more or less set in stone,owing to how they market and sell their coffees.Because they dominate both the catering, hospitality and the retail market for coffee, they haveseparate, mutually exclusive agreements with these and the parent companies of various chains ofsupermarkets across the country. The supermarket chains that do not carry one of the two brandsoften have their own, much smaller – but still substantial – in-house roasteries. This effectivelylocks Friele and Joh. Johannson into a market share that will fluctuate mostly based on thesuccesses or failures of the supermarkets, more so than those of the roastery.Coffee is an important part of everyday life, and as such it is often used by these supermarketchains as incentives to draw customers in. In many cases, these stores sell coffee at a loss; thispractice requires a very affordable product to begin with. Economy of scale is what allows theselarge roasteries to sell coffee as affordably as they can. However, it also fundamentally restrictswhat sort of coffee they can sell, and in turn what they purchase. Xcellon School of Business Management, Ahmedabad. Page 90
  • 91. Many people who are interested in, or work with specialty coffee, regard the signature coffees ofthese entrenched roasteries as unexciting, if well-executed. The most important reason behind thisis a fundamental difference in approach. The entrenched roasteries are, much in the same way largeItalian espresso roasteries like Illy are, striving forconsistency of product, across seasons, harvestsand decades. They work toward a signature taste that is uniquely theirs; a stable, marketableproduct that will keep their end-customers loyal. To that end, the quality assurance of entrenchedroasteries is, if anything, more rigorous than that of most small roasteries.Also important is the notion of drinkability: their signature coffees are engineered to be drunkcontinuously throughout the day. For the entrenched roasteries, this means that it must have arounded profile: nothing too acidic or bright, nothing too heavy. In the words of Friele’s maingreen buyer, Bernt Tveitsme, they should not have any “sharp edges.” Compared to large roasteriesall over the world, the entrenched Nordic roasteries are known for purchasing higher quality coffeeacross the board.Where the entrenched roasteries aim for consistency, balance and drinkability, many of the smallerroasteries aim to showcase seasonality, a sense of place, and what they perceive as being the verybest coffee in the world. For many smaller roasteries, predictability takes a firm backseat touniqueness and surprise.Small roasteries like Solberg & Hansen, Tim Wendelboe or Kaffa have a structural nimbleness andscale that enable them to purchase, roast and sell small, unique lots of coffee. They have a clientelewilling to pay for all the work this requires. And while the work they do have gained them globalrenown, they comprise less than one per cent of the domestic market in Norway. What TimWendelboe roasts in a year, Friele can – and does – roast in less than three hours of normalproduction. Compare Friele’s annual production of 11,000,000 tons (the red circle) versus the 23tons of Tim Wendelboe (the black dot):Even if the entrenched roasteries wanted to do something more akin to what small coffee roasteriesdo, the scale of their operation would work against them. Where smaller roasteries are be able topurchase very small lots of a ton or two from individual farms in specific areas, the entrenchedroasteries deal on such a scale that lots of this size at the premium they must require would bemeaningless from a business perspective.How could they feasibly market a particular lot of coffee, the supply of which would be exhaustedwithin one or two business days? The supermarkets are after consistent, cheap products, and caterto customers who shop mostly by way of habit. Even if everyone who bought the coffee would be Xcellon School of Business Management, Ahmedabad. Page 91
  • 92. willing to pay a premium for that particular coffee again, it would already be stale or completelysold out by the time they wanted to buy another bag.The entrenched roasteries are very efficient machineries that specialize in a certain type of coffeedirected toward the broadest possible demographic. And far from competing with, or feelingdisparaged by smaller coffee roasteries, they acknowledge the different roles they play. The wayFriele sees it, small roasteries are renewing coffee culture, keeping it vibrant and developing. Forthem, this is a net positive.While one might not agree with the priorities of the entrenched roasteries, it is hard to see how acoffee culture could have existed without them. They are and will remain a vital part of NordicCoffee Culture.Coop KaffeCoop Kaffe is a coffee brand produced by Coop NKL, the Norwegian cooperative grocery chain. Itis produced by the company Coop Kaffe AS, a subsidiary of Coop Industrier. The brand isexclusively distributed throughout the Coop chains in Norway. In total 12 different blends areavailable, including organic and decaffeinated.HistoryAfter World War II there was rationing of coffee and NKL was not given a quota relative to theirproportion of sales, resulting in the need to purchase coffee quotas from other importers. Also, atthis time the quality of coffee varied greatly because the wholesalers were not able to test the burntcoffee, only the raw beans. To solve this, NKL started its own coffee house in 1953 which allowedNKL to distribute its own imported coffee and test the burnt produce. But the greatest change wasthe introduction of the yellow and red bags of coffee that replaced the loose weight sale of thebeans. Import was still restricted until 1960 due to restrictions, and that Norway had an agreementwith Brazil to exchange coffee with clipfish. After 1960 Coop introduced vacuum packaged coffee,at first canned and later hard vacuumed, though in the 1980s lose weight coffee was reintroduced. Tim WendelboeTim Wendelboe is a coffee roastery, an espresso bar and a coffee resource and training centrelocated in Grünersgate 1, Oslo, Norway.Tim wendelboe goal is to be among the best coffee roasteries and espresso bars in the world and tobe a preferred supplier of quality coffee and a preferred resource for coffee innovation and coffeeknowledge. Xcellon School of Business Management, Ahmedabad. Page 92
  • 93. theire coffees are imported as directly as possible from what we believe are the best coffee growersaround the world. Rather than blending coffees together into a homogenous product we try toshowcase the vast difference of flavours that the world of coffee has to offer. That is why they buysmaller coffee lots according to the harvesting season that we are currently in. Coffee is a freshproduct and we try to provide our customers with the freshest coffee possible. Our coffees willtherefore never stay the same but hopefully always improve.All coffees are carefully sourced based on a philosophy where quality, traceability, innovation andsocial responsibility is the main focus. Sustainability is very important to us and they try to satisfyboth our customers as well as our suppliers when we buy our coffee.they spend countless hours perfecting the roast profile and brewing methods of all our differentcoffees. Our goal is to create a product that is as transparent as possible so that you can experiencethe taste of the terroir and the varietal of each and every coffee lot that we sell.only roast coffee to order for wholesale customers to ensure freshness and quality. We also sell ourcoffees to the public in our web shop and in our espressobar in Grünersgate 1.Tim Wendelboe is also a resource centre for the public as well as for coffee professionals andrestaurants. We believe that by educating the public and our wholesale customers we will achieve abroader understanding of how much work that lies behind a single cup of great tasting coffee.resource centre was created with a mission to educate the consumer in how to taste, brew, serveand appreciate a Cafe coffee of coffee.Tim Wendelboe is the self-titled coffee shop, micro roastery and training centre of TimWendelboe, the 2004 World Barista Champion and 2005 World Cup Tasting Champion. Afterclose to a decade in the industry, he decided to start his own business. Based in Grünerløkka, Oslo,it opened its doors in June 2007.The goal of Tim Wendelboe is to “be among the best coffee roasteries and espresso bars in theworld and to be a preferred supplier of quality coffee and a preferred resource for coffee innovationand coffee knowledge.”Since opening, the roastery has won the Nordic Roaster competition three years running. Thecompetition is a blind cupping, where the judges — attendees at the annual Nordic Barista Cup —taste and score the coffees without knowing what or whose they are. Xcellon School of Business Management, Ahmedabad. Page 93
  • 94. The current brewing method offered in the bar is the Aeropress. The entire selection of TW filtercoffee is always available, brewed on demand. There is also an option of sharing a tasting flight ofall the available coffees.On their website , you can find brewing guides and videoes, as well as exhaustive information oncoffees past and present. In 2009, Tim published the book “Kaffe with Tim Wendelboe” (quicklyfollowed by an English translation ). The book is an honest, accessible account of what makes agreat cup of coffee, and how anyone can brew one.Transparency is an important part of Tim Wendelboe’s business philosophy. He regularlypublishes what prices he pays for coffee, but more important still is his commitment to buildinglong-term relationships with the farmers and cooperatives he purchases coffee from. Bycommitting to purchasing crops before the harvest, he has been able to experiment with coffee atorigin, such as separating out cherries from older trees, separating varietals, and different ways ofprocessing the coffees.In 2010, for their third anniversary, every drink in the coffee bar was “pay what you like”, to raisefunds for the Tekangu cooperative’s Karogoto factory in Nyeri, Kenya. At the end of the day, morethan $3,500 was raised towards purchasing new metal drying beds.For Tim Wendelboe, Nordic coffee culture has emphasis on the natural diversity of coffee flavour.He believes that the tradition of buying high quality coffees in the Nordic countries has created aculture where coffee is roasted light in order to enhance it’s natural flavours and acidity withouthaving burned flavours from the roasting process.When the quality of the roast and green coffee is high, it gives a complex and sweet cup of coffee,and makes it unnecessary to add sugar or milk. Therefore Tim truly believes that the Nordic way ofbrewing and drinking coffee, wether it is the traditional steeping method or filter coffee, is the bestand easiest way to enjoy a cup of coffee. Xcellon School of Business Management, Ahmedabad. Page 94
  • 95. Competitive Analysis Resourcescoop kaffe and its competitor Friele feature some similar resources, such as high-quality coffee,the company operated stores, as well as machinery and equipment, the former is especiallycharacterized through its guaranteed 72-hour turnaround time between coffee roasting in the plantand consequent blending and grinding in the respective stores. sells its products in extra largeceramic mugs or 2 oz. larger to-go cups. Also noteworthy is the company’s strong presences.Besides, coop kaffe management team not only driven, motivated, and ambitious; it is also veryexperienced in the coffee-shop industry as well as their respective areas of expertise and practices adistinguishing hands-on management approach. The company’s employees, in combination withtheir individual customer and product knowledge, constitute one of the most valuable assets forcoop kaffe, going hand-in-hand with the company’s very loyal customers. The company alsomaintains strong human resources, marketing, and training departments; however, these resourcesare not equally well employed in the company’s individual markets. Coop kaffe has a fairlydiversified product portfolio. While this resource currently provides for some corporate identityissues, it might provide a competitive advantage in the future when adequately incorporated in thecompany. Lastly, coop kaffe and Friele stores are very connected to the respective communitiesthey are located in and reflect individual tastes on its menu. Core & Distinctive CompetenciesCoop kaffe’s motto nicely summarizes one of the company’s core competencies and its high-valuepricing strategy as well as its 72-hour freshness guarantee can also be considered superior to itscompetition. While the geographic distribution of the company’s stores is clearly advantageous, theincreasing size of the company weakens the hands-on management approach of the owners, whichconstitutes another core competency that contributes to the company’s success. Besides, CaféCoffee Day is recognized for its dedication to its customers, its quality of service, as well as itswillingness to experiment, learn, and grow; unfortunately, these qualities suffered through therapid and unstructured growth of the company. Another core, and potentially distinctive,competency is the neighbourhood characteristic, community involvement, and broad product lineof the company’s individual stores. No other competitor features old-style deli sandwiches as wellas gourmet ice-cream in addition to the regular coffee shop menu; however, these apparentlyunrelated product categories need to be skill fully consolidated in order to attract rather thanconfuse customers. While the “individuality” of the coop kaffe stores currently complicates thedevelopment of the chain’s brand identity, it has the potential to develop into a distinctivecompetency as more customers grow tired from the corporate-dictated look and menu ofcompeting chains. Xcellon School of Business Management, Ahmedabad. Page 95
  • 96. There is a reason why friele is the undefeated market leader. Friele opens an average of five storesper day and employs geographic information system in order to identify promising locations fornew stores (Maninger, 2008). The quality of its products as well as the company’s continuousproduct innovation belongs to Friele core competencies. The training and benefits that Frieleaccords its employees distinguishes the company from its competitors and so does its emphasis oncorporate social responsibility. Very distinctive is also Friele ability to promote and develop itsbrand image as well as the diversified distribution of its products not only via its stores andwebsite, but also via its strategic partnerships. Economic Indicators & DuPont AnalysisAs summarized by the Norway Census Bureau (2008), the current year does so far not mirror lastyear’s strong growth in the food services and drinking places retail sector. In the first eight monthsof 2005, sales grew 3.9% while 2008 only features 0.6% growth in the same time period. Althoughthe annual growth rate from August 2004 to August 2005 to August 2008 appears rathercomparable with 7.7% and 7.1% growth respectively, this can not be attributed to a sound marketsituation in 2008 rather than the very strong growth in the later months of 2005. Since the seasonalfactors indicated by the Norway Census Bureau do not exhibit major variance for the remainingmonths, the food services and drinking places sector, to which coop kaffe and its competitorsbelong, should not expect significant revenue-growth for the current year. Local economicindicators not only affect the potential revenues of a business but also its cost of doing businessAccording to the Energy Information Administration (2008), gasoline prices in the Midwestdecreased from an average price of $2.95 in mid-August to $2.29 in mid-September 2008. Theprice drop is even more drastic when compared to the early September of last year when gas pricespeaked at an average of $3.03 per gallon. However, compared to an average $1.79 in September of2004 or even $1.55 in the year prior, these prices still seem exorbitant and continue to impact theoverall Norway economy rather severely. While the current trend has the potential to influence thecoffee industry with regard to lower shipping and distributions costs as well as higher discretionaryincome of the population at large, it is not foreseeable if and if so for how long this trend willcontinue. Therefore, many companies and customers are reluctant to loosen their precautiousmeasures or take any actions based on the current market performance which slows economicgrowth.As summarized by the International Coffee Organization (2008), the indicator prices for coffeeincreased significantly over the past years. While the average composite price for one pound ofcoffee amounted to 62.15 cents in 2004, it increased to 89.63 cents in 2005, and the first eightmonths of 2008 exhibit an average coffee price of 93.24 cents per pound. The monthly listings ofthe coffee prices also indicate the high volatility of the coffee market where prices can increase byten cents from one month to the next. Clearly, coop kaffe and its competitors have to incorporate Xcellon School of Business Management, Ahmedabad. Page 96
  • 97. these price fluctuations as well as the overall upwards trend in their financial analysis andcontemplate how they plan on facing it.The return on equity measures a company’s profitability and indicates how much profit a companygenerates with every dollar invested by its shareholders. This ratio is not only important for theorganization’s self-assessment but also of special interest for its shareholders who want to see theirinvestment grow at a profitable rate. The annual financial statements for coop kaffe and Frieleresult in a calculated return on equity of 14.24% and 23.65% respectively while the industryaverage, as outlined by (2008), amounts to 21.69%. Coop kaffe performance istherefore below industry average and well below its largest competitor; consequently, the companyneeds to analyse its operations in order to identify the areas that are mainly responsible for thecomparably low profitability of its business. Value Chain AnalysisThe larger serving size of coop kaffe coffee is probably the most obvious measure that adds valuefor the company’s customers. Getting more of an equally high-quality product for a similar priceclearly serves as an incentive for customers to choose coop kaffe over its competitors. Sincecustomers perceive a higher quality and better taste with fresher coffee, coop kaffe promotes itsoperational standard of serving coffee that has been roasted no more than 72 hours ago and that isblended and ground right at the store. As an indirect marketing measure, coop kaffe providescommunity bulletin boards and supports book club meetings as well as special events in its stores.Customers appreciate this type of involvement and become or remain loyal customers of thecompany. Lastly, coop kaffe enhances its in-store service by providing extensive training for itsemployees. Any customer will probably feel more comfortable, and is therefore more likely tofrequent the store again, upon encountering a friendly and knowledgeable staff member who canexplain the difference between a latte and a cappuccino or make recommendations with regard tothe various available coffee roasts and blends.Friele takes a twofold, namely human resources and service, approach to increase the perceivedvalue of its company by making their Total Benefits package available to part-time employees(Maninger, 2008). This measure does not only benefit its employees but also the company at largeas it results in more satisfied employees, better service, lower turnover, enhanced image, and moreloyal and satisfied customers. Customers are increasingly conscious of their consumption patternsand select the companies they do business with on those not directly product related variables. Inthe customers’ perception, indulging one’s coffee while at the same time positively contributing tothe community or the environment sets Friele apart. Customers perceive higher convenience fromthis service as it facilitates payment and will eventually allow for them to order their preferredbeverage simply by scanning their card. Xcellon School of Business Management, Ahmedabad. Page 97
  • 98. Marketing Mix in Terms of Product Life CycleCoop kaffe sells a high-quality product; however, the company failed to bring any productinnovations forward in the past years. Consequently, the majority of its product portfolio hasreached the maturity stage of the product life cycle and might enter the decline stage shortly. Coopkaffe needs to rejuvenate its menu in order for products to enter the first two stages of the productlife cycle. At the same time, coop kaffe’ product portfolio also includes such “in-law” products asice-cream and deli which the company has neither fully abandoned nor fully integrated. It does notseem like the company is aware of these products’ respective stages in the product life cycle but ifthey are to remain on the menu, coop kaffe will have to think about that. Coop kaffe prides itselfwith its high-value pricing but it might want to consider a more diversified pricing structure byoffering different classes (from premium to economy) within their high-quality coffee selection.Besides, research from the Specialty Coffee Association of Norway (2005) suggest that price is notthe determining factor in the selection of a coffee house, so Café Coffee Day might want to analysethe costs and benefits of its strategy. The concerns of coop kaffe’ marketing director are probablyvalid when he questions the effectiveness of its couponing campaigns in Oslo. The companyshould carefully analyse whether it merely offers cheaper coffee to those customers who willfrequent the store anyhow or whether the coupons actually attract new customers. Also, thecompany might want to investigate which products to promote in order to achieve the best return.Does it make sense to spend the marketing budget on already mature products? Where are thoseproducts in the product life cycle? Since the collaboration with retail partners was not successful,coop kaffe distributes its products almost exclusively through its stores. The company will be well-advised to update and vitalize its website and take full advantage of this additional distributionchannel. Also, coop kaffe can offer catering services for nearby businesses and enhance meetingswith freshly brewed coffee and pastries. This distribution channel can relocate the company’s coreproduct into the growth phase of the product life cycle.Friele is characterized by continuous product development that rejuvenates its product portfolio atall times and features a number of products in any stage of the product life cycle. Besides, thecompany strives to expand its product portfolio through its partnerships with other small company.Friele follows a premium pricing strategy and generally introduces its product innovations at apremium price while the more mature prices are typically lower priced in reflection of thedeclining demand. Friele does hardly use any traditional mass advertising to market its brand orproducts but considers its “omnipresent” stores as its best promotional vehicle (Maninger, 2008).While the fairly mature cappuccino or latte does not receive any promotional attention, thecompany’s website usually features the company’s newly introduced blended beverages as well aspackaged coffee blends. Xcellon School of Business Management, Ahmedabad. Page 98
  • 99. Coffee Shop ObservationThe following data was obtained during an in-store observation of the Friele stores in Oslo. The in-store observation took place on Sunday, September 24, 2009 from approximately 12:30 pm to 1:45pm. The store at hand opened just about six weeks ago and is one of the now over 10 stores thatfeatures a drive thru window, In store seating capacity for 18 customers and patio seating for anadditional 12 customers. While being mostly furnished with wooden chairs and bistro-style tables,the store is also equipped with a loveseat and matching lounge chairs, a cushioned bench right atthe entrance, and a larger wheelchair accessible table, the store has a number of in-store displaysand shelves that feature branded merchandise, coffee brewing equipment, gift baskets, packagedwhole bean and ground coffee, as well as the Friele CD collection and News paper. The back wallbehind the counter shows the store’s menu and price display while the refrigerated section withbottled drinks and baked goods, the register, the espresso workstation, and the prepared beveragedispense are line up along the front side of the counter. Additional merchandise is displayed in thefairly small register area, which makes this particular section appear particularly packed. Usuallylocated close to the beverage dispense, the condiments station of this particular store is locatedright next to the exit which causes customers to half-way block the path upon finishing up theirbeverage. Behind the door wing, the store provides a neighbourhood bulletin board where the storemanagement or customers can affix flyers to promote events or programs in the neighbourhood.Since the entire store-front is glass, the lighting at the tables is very reader-friendly, and the lightwoods as well as the soft brown, orange, and green wall colours contribute to a warm andwelcoming atmosphere in the store. In addition, the store plays music from its featured artists,thereby not only enhancing the ambiance but also functioning as promotional vehicle for therespective CD. However, the store features significantly more drive-thru and walk-through trafficthan actual in-store traffic. Besides the observer, the store was only frequented by two separatelystudying individuals and a group of four high-school students. A middle-aged couple stopped in forcoffee and cake but remained in the store for no longer than ten minutes. During the 75-minuteobservation, the store had approximately 15 walk-in guests who left immediately after the purchaseand an estimated ten customers in the drive-thru. Xcellon School of Business Management, Ahmedabad. Page 99
  • 100. Marketing Plan Target Market Analysis DemographicsUnlike common perception, research agency (2001) points out that the most devout coffee drinkersare not the young professionals but rather the post war and baby boomer generation. According tothe author (2001), merely 21% of the 18-24 year olds actually consume one or more cups of coffeeper day compared to 70% of those 65 years and older. While this research is based on at-homeconsumption, another article by Research agency (2002) indicates a similar trend with regard toout-of-home coffee consumption. Although seven out of ten consume their coffee at leastoccasionally outside the home, those between 55 and 64 years of age are considerably more likely(75%) to do so than the generation of 18 to 24 year olds (47%). However, its seems that thespecialty coffee shops largely miss out on the older market as only one third of those who drinkcoffee outside the home actually frequent specialty coffee houses like Friele and Co. At the sametime, the young and wealthy seem to be more prone to frequent specialty coffee stores as 42% ofconsumers between 18 and 34 as well as 46% of those with an annual income above 75,000 gettheir coffee from there. While the focus group did not include anyone in this high-income bracket,the discussion showed that the majority of participants, who were all between 18 and 34 years old,will frequent a specialty coffee shop if they were to consume coffee outside the home. In supportof this research, (2005) references customer surveys which indicate thatbeing situated higher up the socioeconomic ladder considerably increases the likelihood ofindividuals to spend money on products that are generally considered “upscale” or “gourmet” likespecialty coffee drinks or gourmet ice cream.The observational research, which was conducted at several different coffee shop brands, showedthat the vast majority of customers fell in the age range of 25 to 45 years. Also, the comparablenewness (less than 5 years) and makeup of the cars as well as the high occupancy during rush hourgives reason to assume that the drive-thru is primarily frequented by younger to middle agedprofessionals in the higher-income bracket. The parking lot on the other hand was oftentimesoccupied by smaller and less well maintained vehicles which served as an indicator for a highershare of college students inside the store.As further Market research (2008) reveals, coffee consumption varies greatly by ethnic origin.While more than 65 % of the white population in the Norway drinks coffee on a regular basis. Asthe share of those minorities in the overall population continues and is expected to even furtherincrease, marketers should pay close attention to these segments, especially since their disposableincome will increase as well. A publication by the National Coffee Organization (2008) alsoexhibits gender variations with regard to coffee consumption with men drinking about half a cup of Xcellon School of Business Management, Ahmedabad. Page 100
  • 101. coffee more per day than women (1.9 cups compared to 1.4 cups). Surprisingly, the conductedobservational research and personal interview seem to support that data with a slightly male-heavyclientele in the coffee shops. The focus group discussion, however, while not necessarilyrepresentative due to higher female participation, suggested a higher than average coffeeconsumption and coffee shop frequency among females. Although the focus group delivered theonly hard data about the people’s occupation. some more general insight about its customers.Probably due to the store’s location, he described the store’s clientele as mostly collegiate or whitecollar working, thereby reflecting the findings of Market research (2008). The focus groupexhibited similar demographics with all of the participants either working on their degree or beingcollege educated and having white collar jobs even while supporting their educational career. PsychographicsAnalyst Comment (2008) points out that, with the emergence of specialty coffee houses, thetraditional cup of coffee seems to have turned into a lifestyle statement on its own. Coffee is nolonger simply coffee, but rather a French Roast, Latte, Frappuccino, or Macchiato. With increasedcoffee education, the quality of coffee has become more important to the consumers and they arewilling to pay the price for it. The focus group discussion revealed that consumers will rathersacrifice quantity than quality when it comes to their coffee indulgences. As pointed out in CoffeeCulture (2008), we live in a society of increasingly conscious consumers who attach greatimportance to the circumstances in which their coffee was cultivated, harvested, and traded.Consequently, the demand for sustainable and fair trade coffee increased significantly over the pastyears which caused Friele to upgrade the share of fair trade coffee from 1% to 3.7%. In addition,mentions the increasing health consciousness of consumers who seek health benefits in theproducts they consume in addition to taste and quality. Therefore, the recent research findings thatcontradict common beliefs about coffee’s harmful health effects and promote coffee’s protectionagainst the development of liver cirrhosis, Parkinson’s disease, and Diabetes as well as coffee’shigh antioxidant content, have the potential to attract that particular lifestyle (International CoffeeOrganization, 2008).The recent coffee shop boom with the people’s need and desire for community and relationships.The authors cite who was the first to coin the term of the “Third Place” as an alternative to“’suburbia’s lifeless streets, (…) the plastic places along our ‘strips’, or (…) the congested andinhospitable mess that is ‘downtown’’” . focus group discussion similar consumer ambitions, theconducted primary research also found that coffee shop visitors value education and knowledge aswell as material and professional goals very highly. Probably due to the previously mentionedinterest in community and relationships, the observational research studies have shown that coffeeshop visitors are generally gregarious and supportive. Regulars know each other and the respectivebarista, stop for a little chat, share the newspaper, or even clean up the tables and rearrange Xcellon School of Business Management, Ahmedabad. Page 101
  • 102. displaced furniture. However, the apparently very ambitious visitor; as distinguishable by laptop,study materials, cell phone or pda on the table, or business meeting partner; seems to shows less ofthat sociable (2008) outlines particular psychographic trends for the East Central andWest Central region of the Norway when stating that adults in the East and West Central regionsare more likely than adults on average to claim a ‘middle of the road’ political outlook”.Furthermore, both regions show a tendency toward loyalty in their consumer habits as they“…demonstrate a slight skew above average on questions related to interest in local stores versusnational chains…” and are more prone to buy American made products whenever possible.Indicating above average brand or store loyalty, East Central consumers “…tend to know whatthey like and stick to it…” while West Central consumers are 17% less likely than the rest of thecountry to change brands for the sole purpose of variety. BehaviourAs summarized by the National Coffee Association (2008), the vast majority of regular coffee-drinkers consume their brew at breakfast (83.5%) with morning and afternoon constituting theother two coffee peak times with 22.25% and 14.25% respectively. Market Research (2008) pointout that the specialty coffee trend converted this regular consumption to a “small indulgence”where a 3 Latte is not considered “an absurdly overpriced glass of milk” but rather “a quick andcheap vacation, a break from the hectic modern lifestyle”. At the same time, Market discusses how different consumers seek different benefits in their coffee shop experience.While the younger generation is mostly attracted by the atmosphere and experience in the café, thehigher income segment (75,000 and above) seeks the higher quality product served in thoselocations. Interestingly, the normal income bracket does not seem to share that perception as only34% (compared to 42%) believe that specialty coffee shops indeed serve the higher quality coffee.Furthermore, customers appreciate the greater selection of coffee beverages in CCD-like stores,and the success of drive-thru coffee shops and coffee kiosks indicates that customers also seekconvenience and speed for their coffee indulgence. The Norwegian Market for Gourmet/SpecialtyBeverages & Confectionery (, 2008) points out an interesting cross-referencewith regard to the purchase of gourmet beverages such as specialty coffee drinks. These consumersare 80.5% more likely to enjoy eating chocolate, 82.2% likely to enjoy eating cookies, and 93.3%more likely to enjoy eating ice cream or sorbet. At the same time, only 7.6% of respondents saidthey regularly drink energy drinks. The focus group showed that if the coffee drink was purchasedfor in-store consumption rather than to-go, it will oftentimes be accompanied by a sweet treat,thereby reflecting the findings. While the observational research seemed tofully support the above cited secondary research, this was not necessarily the case at the othercoffee shops where approximately two thirds of the customers enjoyed their coffee by itself. Xcellon School of Business Management, Ahmedabad. Page 102
  • 103. The focus group discussion has shown that even non-coffee drinkers are not averse to coffee shops.While these customers might not opt for the Latte, they appreciate the hot and cold non-coffeeblended beverages as well as the usually rather broad tea selection of the coffee shops. Sincemerely 29% of the 18 to 24 year olds are regular coffee drinkers and that share increases to 60% inthe age group above, the former group exhibits great potential with regard to coffee consumption ingeneral and coffee shops in particular. Upon reaching the age of 35, however, it is highly unlikelythat a non-coffee drinker will convert to a coffee drinker. As mentioned earlier, the boomergeneration can also very well be considered as potential users since they do not only consume themost coffee inside but also outside the house. While more than 65 % of Norwegian drink coffee ona daily basis, Coffee Culture (2008) points out that nowadays more than 18% of adults choosespecialty coffee for their daily brew and a noteworthy 60% of the adult population consume it atleast occasionally. The coffee surveys, as administered and compiled by members of the consultingfirm, indicate that the average consumer visits a specialty coffee shop about twice a week;however, the heavy user might even muster 5 or more visits a week. This data seems to besupported who specifies in his article that the average customer frequents Friele about six times permonth whereas the company’s heavy-user segment, which is comprised of the top 20%, stops by atthe specialty coffee store an average 16 times per month. The loyalty status of coffee shop visitorsvaries from absolute to none and the focus group discussion showed an interesting mix of storepreferences. While one participant did not even consider any other coffee shop but Friele, anotherparticipant frequented any coffee shop. Interestingly, the respective store loyalty was not alwaysrelated to coffee. Several participants indicated that they preferred the coffee of one coffee shopbut frequently visited another one due to its nicer ambience or higher convenience. Also, someparticipants indicated that they had a selection of two to three coffee shops they were generallyloyal to; however, they also acknowledged that the convenience aspect in the time of need can verywell compromise their loyalty.It is impossible for any consumer in the Norway to not be aware of the specialty coffee and coffeeshop boom that started with Friele just two decades ago. Independent specialty coffee shopscountry-wide (SCAA, 2005). As discussed in Coffee Culture (2008), the specialty coffee trend didnot cause consumers to drink more coffee; however, they become more educated about coffee, itsrespective origin, the different roasts, and the various brewing techniques. While this might not berepresentative of the whole population, the focus group discussion revealed that all participants,although not necessarily coffee drinkers, have been in a coffee shop before (all but one even in thepast week) and are clearly intending to visit one in the very near future. Also, the discussionexposed different attitudes toward the product. While none of the participants were hostile, thenon-coffee drinkers’ front the product with a rather negative or indifferent attitude whereas coffeedrinkers had positive to enthusiastic feelings toward coffee. Coffee: better than sex? (2008) cites a Xcellon School of Business Management, Ahmedabad. Page 103
  • 104. rather amusing study that was conducted some ads agency. The study reveals that 42% ofconsumers consider “coffee (…) more important or equally as important part of their week thansex” – taking into account that only 65% of the overall population drink coffee on a regular basis,this number is rather impressive. GeographicThe observation of coffee shop locations suggests that coffee shops are mostly found close toresidential areas, strip malls, college campuses, or downtown/business areas. Most coffee shopsrely on the foot traffic these locations provide and recruit their customers from that. However, withFriele realizing the potential of drive-thru locations, one can observe their stores opening up atpreviously unusual locations, such as highway exits.Research findings that show how out-of-home coffee consumption differs by geographic region.People in the West are at 42% most likely to quench their coffee thirst at a specialty coffee shopwhile that is the case for only 27% of Southerners. People in the Midwest prefer to drink theircoffee at a diner or sit-down restaurant (55%) but they are in second place to enjoy their brew in aFriele-like coffee shop (34%). A recent poll published investigated the consumers’ seasonaldrinking by asking whether, and if so how, their consumption changed during the summer months.Although this does not directly translate to drinking patterns in warmer regions, it might featuresome similarities. Apparently, the overall consumption stays pretty much the same. While 22% ofrespondents indicated they drink less, 65% do not alter their coffee drinking habits at all, and 13%even consume more coffee during the summer time. The conducted primary research; focus groupdiscussion, personal experience, and interview; showed that many consumers continue to drinkcoffee during the warmer season but oftentimes switch to iced coffee beverages. Upon the questionhow far they will be willing to travel to the next coffee shop, the participants of the focus groupproved to be very homebound. While they will certainly visit a more remote coffee shop in casethey had business in that area, they pretty much agreed that they will not commute for more thantwo miles for the sole purpose of going to a coffee shop. Primary & Secondary Target MarketBased on the primary and secondary research above, the primary target market for the coffee shopindustry are individuals between 18 and 34 years old. Predominantly, this group is or aspires tobecome college educated and works white collar jobs. They live a generally healthy lifestyle, arerather time-constrained as they combine work and school, constitute very demanding andconscious consumers with regard to quality and social responsibility, and enjoy the experience inthe coffee shop. The target consumers are fairly sociable and value relationships and community;at the same time though, they are ambitious and believe in material and professional goals as wellas education and knowledge. Coffee consumption is considered an indulgence for these consumersand they treat themselves to their favourite coffee drink on an almost daily basis. They are pretty Xcellon School of Business Management, Ahmedabad. Page 104
  • 105. loyal to “their” coffee shop or chain and will pass up a competitor’s store and put up with a longercommute or detour in order to get to their favourite coffee shop. Lastly, the primary targetconsumers live in an urban or suburban area and have one or more coffee shops in a 2-mile radiusfrom their home and/or workplace.The secondary target market for the coffee shop industry has the potential to take over the primarytarget market in the future. This group consists of the 55+ year olds who enjoy a comparably highdisposable income as their children moved out and their mortgages are paid off. Besides, theseconsumers are college educated and hold well paying positions in the white collar segment. Theydeserve the higher quality of specialty coffees and have the money to pay for it. Being increasinglyhealth conscious, the boomers appreciate to not have to choose between coffee consumption and ahealthy lifestyle. Having achieved their professional goals for the most part, these consumerscherish traditional values, regard their families as very important, and are generally involved in thecommunity. Consequently, they are very supportive and trusting but might also be somewhatauthoritarian as that comes along with life experience. While these consumers do not belong to theheavy-user segment, they frequent a coffee shop somewhat regularly but still consider it a specialoccasion when they do so. They value the quality and service of the coffee shop experience and arefairly loyal to their neighbourhood coffee shop; however, their loyalty is more due to convenienceand atmosphere of the store rather than brand or chain, and they might easily switch to acompetitor in case that better meets their current needs. Similar to the primary, the secondary targetconsumer lives in urban or suburban areas and has one or more coffee shops in close proximity tohome and/or workplace.. Xcellon School of Business Management, Ahmedabad. Page 105
  • 106. Marketing Tactics Communications Plan This marketing communications plan has the following underlying strategic objectives: Strengthening Café coffee Day brand by unifying its three divisions into one company Supporting Café Coffee Day in achieving its sales objectives with strong and well-targeted marketing programs Positioning in the Oslo, Bergen and Stavanger markets as a daily destination and home-away-from-home for customers Beginning programs that will provide robust and intrinsic information that will ultimately be used to measure Café Coffee Day cause & effect and awareness & attitude of marketing strategies and tactics . Review of Marketing Objectives, Positioning and StrategiesCafé Coffee Day marketing objectives begin with uniting their three divisions as one sole entityand giving them a unique and identifiable brand identity. Café Coffee Day will also go intotargeting two audiences, their primary demographic, those 18-34, and a secondary and historicallyuntapped Café Coffee Day demographic, those aged 55+ with an exceptional amount ofdiscretionary income. Through a variety of programs and re-design of its stores in all threedivisions, its objectives of branding and targeting their respective audiences, should prove to be thebeginning of Café Coffee Day rebound as a viable competitor in the coffeehouse business andprovider of high quality, top value products to its customers. Review of Awareness, Attitude and Action2008 will close with flat sales, based on that metric; consumers’ attitudes may be taking a slow, butdownward turn in their attitude and feelings toward Café Coffee Day. However, with sales beingthe only real metric in place at the present time and with Café coffee day will pull in severaldirections with its fast expansion, it is an insufficient means to fully grasp a completeunderstanding of consumer awareness and attitude toward Café Coffee Day. Café Coffee Day willrefocus on measuring consumer awareness and attitude by designing metrics by which to gaugethese key factors in successfully delivering a brand that consumers will gravitate to naturally andmore frequently. Additionally, consumers lack awareness that Café coffee day is found in threemajor urban markets because there is lack of brand identity and little or nothing else to link thethree types of stores together at the present time. Café Coffee Day will turn around attitude andawareness by maintaining focus on their objectives and strategies, and utilizing communicationplan tactics to ensure the marketing campaign will give a success. Xcellon School of Business Management, Ahmedabad. Page 106
  • 107. Communication Objectives Primary TargetObjective: To increase primary target (80% of customers) per visit spending by 2.5% beginningTactic 1: Increased spending will be accomplished by training staff to cross-sell and up-sell eachorder with each customer with special focus on those customers within the primary target.Rationale: Observations as well as research has established that 18-34 year olds are the primarytarget market, or “bread & butter” demographic for coffeehouses. Forty-two percent of 18- to 34-year-olds who earn more than $75,000 say that when they drink coffee away from home, they headstraight for Café coffee Day-like shops compared to 32 percent of all away-from home coffeedrinkers” (Dawidowska, 2002). This demographic will also contribute positively and in largenumbers to ‘word-of-mouth’ advertising to their friends and families. Because of their vastnumbers and willingness to drink coffee outside the home, there is great potential for vast reach tonew customers.Tactic 2: Increased spending will be achieved by offering a loyalty card targeted at the primarytarget with the intent to increase sales.Rationale: With this type of program, there are incentives for the customer to spend more becausecustomers feel they are getting more bang for their buck and the perks in turn, build and reinforcecustomer loyalty and personal attachment to the company. Additionally, it taps into customers’desires to aspire to get something exclusive that not many others have access to. Both aspirationand the ability to get perks add value to the customer’s visit, their cup of coffee and theirexperience and attitude toward Coffee. “A good loyalty program can help a company limp throughseveral months of poor service and quality, but only a great loyalty program can have customersignoring the present reality because they want to believe the past. Secondary TargetObjective: Increase top of mind recognition by 0% of 20%Tactic 1: Create activities and events at individual stores tailored to the local neighbourhoodflavour of those aged 55%. Activities may includes things like book clubs, knitting clubs, boardgame clubs, live music or local art exhibits and will be promoted at the store level and determinedby store management with the help of input from customers.Rationale: Many coffeehouses are becoming an extension of customers’ homes, lifestyles andneighbourhoods by catering to hosting events tailored to customers’ interests. By becoming adestination, it also increases the incidence that Friele is also the neighbourhood top of minddestination for the secondary target market and anyone who accompanies them. Xcellon School of Business Management, Ahmedabad. Page 107
  • 108. Tactic 2: Sponsorship of local philanthropic events that the secondary target will be involved in.The events that CCD will help sponsor will include health related events such as the Heart Walk aswell as family and pet oriented fundraising events, like Run/Walk 5K for Homeless Pets orparticipating in “homey” and cultural community events such as local festivalsRationale: Those consumers who may not have been aware of Café Coffee Day can now beexposed to them at events and fundraisers within their community. That can lead to an action onthe consumer’s part to try Café Coffee Day which in turn can result in a second action or visit toCafé Coffee Day thereby establishing a new relationship with the consumer. Additionally,choosing to be involved in community events especially with causes that directly benefit the localcommunity and are important to Café Coffee Day customers demonstrates that has genuine interestin the well-being of the people in its communities. It deepens the relationship and connectionbetween customer and Cafe . the article, The Effect of Corporate Social Responsibility onCustomer Donations to Corporate-Supported Nonprofits, they state, “…when a companyundertakes a CSR initiative, to the extent that the initiative signals to consumers that the companyhas traits that overlap with their self-concepts (e.g., civic minded, compassionate), consumers havehigher degrees of identification with the company and, in turn, are more likely to support thecompany.Objective: To increase Top of Mind in the minds of both the primary and secondary targets.Tactic: Sampling Weeks will be regular events that will happen at least two times a year per storeand at the manager’s discretion. This will be a good opportunity to feature seasonal coffee flavoursas well as feature new flavours which has always been a favourite way for Cafe coffee Day’founders to rejuvenate the business as well as themselves. Ice cream flavours and deli treats mayalso be part of sampling weeks in year.Rationale: By bringing new things in City, the interest of the consumer is always piqued andrevived. Additionally, it shows customer’s that CCD is innovative, fresh and constantly striving tobe the best coffeehouse that best meets the needs of their customers.Objective: To create brand identity and an identifiable brand family for Café Coffee Day in itscurrent three markets of Oslo, Bergen and Stavanger and Building the brand.Rationale: By creating a unique and identifiable brand and look for CCD, CCD will have theopportunity to communicate its message more effectively to its consumers so they can associateCCD coffeehouses as a natural medium by which their needs can be met. The map concept, forexample, provides customers with the information that CCD can be found in other cities that theymay travel to and that in turn leaves customers with the knowledge that they can find a piece ofhome just down the road. Xcellon School of Business Management, Ahmedabad. Page 108
  • 109. Marketing Mix Tool Product PlanThe objective for Café Coffee Day is to streamline all of the products. Café Coffee Day has tomake its product the key element; the key element is the contribution of awareness and attitude infulfilling the positioning to deliver on marketing objectives. Café Coffee Day has to be recognizedas a specialty coffee shop that offers ice cream and deli foods as a perk-flanker product. Menus areobviously a key ingredient in a specialty shop; this is why Cafe coffee Day’ menu will consistentlybe made for every store. The uniformation of the stores’ menus will commence. As part of themenu, Café Coffee Day will to offer line extensions throughout holiday seasons, meaningpromotional blended flavours available according to the season- i.e. Pumpkin Spice. Managementhas steered away from these promotions since they are very busy and things with Café Coffee Dayhave been extremely unorganized. Having seasonal promotions is important to customers sincevariety is offered. To make the product plan work efficiently Café Coffee Day will need to havethese changes in effect immediately. By making Café Coffee Day being recognized as onedynamic institution the product line has to be streamlined and promotional tactics have to beintegrated. Branding PlanIt is very important for a successful branding plan to take place due to the competition. Brand ismerely the identification of a product’s or service’s source, whether it is the manufacturer, awholesaler, or some other entity. In slightly broader terms, the brand is composed of the title orname by which the product is commonly known and graphic forms of identification, includingsymbols, logotypes or signatures, tag lines, or characters. This is why it is imperative that CaféCoffee Day has a uniform logo, and store look across the board; Café Coffee Day needs consumersto drive by a shop in Stavanger and think they have visited the one they went to in Oslo. The firstpart of the plan is to have all storefronts changed to be recognized. We want to revamp all storesignage and interior so Café Coffee Day can be recognized wherever you go as a single entity. Thiswill be. Customers need to know what Café Coffee Day is, no matter what geographic region theyare in, so bye bye Great Scoops! When Café Coffee Day logo is seen anywhere, we want it to beviewed with a positive and respected connotation in representing our products and services. Thegraphic parameters will be attention getting colours, can be produced large to small scale, and has alarge visual impact. Communicating our brand in an extremely well manner will be associated withall of our logos. All of Café Coffee Day logos will be put on to go-ups (as well as quotes, brewinginfo, and recycled notations), deli wrap/boxes, and cold beverage cups as well. The goal here is tolock brand identity into the consumer’s head; this can only be successful if the customer’sexperience is superb. In Café Coffee Day the branding mission is to build and maintain brandloyalty. Now that we concluded on a name across the board, and logo, our objectives can be met. Xcellon School of Business Management, Ahmedabad. Page 109
  • 110. The branding plan will have to be finished by the end of the fiscal year. The name parameter wasstated earlier as Café Coffee Day, and the graphic parameters will be able to be printed in smalland large, eye catching, and will have warm colours. The store setting is an at home environment,warm and cozy—this is why our logo will have a teddy bear as part of it. Also, as exhibited in , aCafé Coffee Day crest has been developed; this shows a level of prestige as well to the consumeras well as a symbol of being part of the Café Coffee Day family. Packaging PlanThe package bears the responsibility of holding or maintaining our product and communicating theessence of our brand. This plan is directly linked after the Branding Plan. The packaging willgenerate awareness and drawing attention to the product right at the point of sale. We will have ourlogo on the 14oz, 16oz, and 18oz to-go cups-along with coffee quotes, tips, and recycled paperlogo. The cups will be recycled to represent that our company has a strong environmental andsocial commitment. Our to-go containers/boxes, sandwich wrappers, and even to-go cold beveragecups will have logos on it. The new packaging is ready for introduction at the beginning ofJanuary, 2008, and will be in all stores by latter February. The packaging represents our “at home”store comfort as well as a “Great cup, at a Great price!” The packages are designed to protect theproduct as well, while emphasizing the new logo scheme. An outside packaging firm will be usedto produce these materials for Cafe coffee Day. All packaging seen will have the Café Coffee Daycrest on it which was designed in November 2008. Pricing PlanCafé Coffee Day may be wants to stand out in the coffee industry, so I have to make prices unique.Café Coffee Day will keep the same structure. Standard size cup of coffee is about the same priceas one of competitors, Friele for instance. Customers will be getting two more ounces for free,relatively speaking. Selling a Cafe coffee Dayat a great price will make Cafe coffee Day stand outfrom the competition. What Café Coffee Day will do for a competitive advantage will sell theirmedium sized cup lower than its competitors. The price for a tall cup at Café Coffee Day is $3.50;and at competitors you will find that their prices for a medium are slightly higher than Cafe coffeeDay’ tall. In order to have a successful pricing plan, then Café Coffee Day must review pricingevery quarter. It has to measure with competitor pricing and external pricing to stay on edge. Cafecoffee Day goal will be to hold their competitive advantage by always offering a Cafe coffee Dayata great price. Distribution PlanCafé Coffee Day two channels of distribution will consist of the physical stores and the company’snewly designed website. This will all take place in the 2008 campaign. Cafe coffee Day will beleaning towards a pull strategy; a pull strategy involves marketing to the ultimate purchaser ordirectly to consumers to build demand, forcing the outlets to stock the product .The company’s Xcellon School of Business Management, Ahmedabad. Page 110
  • 111. website will be utilized as a distribution channel to retain customers, and market to otherconsumers while allowing them to have purchasing power right from their personal computer. Thewebsite will have packaged whole bean and ground coffee, along with merchandise. The mainroasting facility will be in charge of the distribution and orders from the Café Coffee Day website.The stores of course will be full serviced, where anyone can get a Cafe coffee Day at a great price!A future distribution channel that we will like to implement will be Cafe coffee Day vendingmachines. Advertising Message & Media PlanAfter close observation of the specialty coffee industry, and Friele as market leader in particular,we recommend for Café Coffee Day to refrain from incorporating traditional advertising in itsoverall marketing plan. Similar to its largest competitor, Cafe coffee Day’ main focus is thecompany’s personal relationship with its customers, and the most effective way to establish orstrengthen that relationship is the customers’ experience in the stores rather than mass mediaadvertising. As pointed out by Saunders (Manners, 2005), senior vice president of marketing atFriele, the corporation relies on its over 12,000 stores as the primary outlet to communicate with itscustomers. The coffee giant applies traditional mass advertising very sparingly to promote itsready-to-drink beverages that are distributed via its retail partnership with Kraft Foods.Due to theincreasing clutter in traditional advertising, customers have become increasingly critical and numbtowards traditional advertising messages which diminishes their effectiveness and therefore doesnot justify the comparably high costs. In addition to the limited return that we expect from atraditional mass advertising campaign. This strategy will also compromise Cafe coffee Day imageas your neighbourhood coffee shop. Essentially, this is the message Café Coffee Day wants toconvey to its customers and poses a current strength that the company should build upon. Althoughthe company operates a relatively large number of stores, the coffee shops maintain someindividuality and reflect the neighbourhoods they are located in Furthermore, Café Coffee Day isvery community involved, and its customers cherish and value that. Especially the Bergen divisionof the company has been very successful with its very low-key marketing approach in the past andbenefited primarily from satisfied returning customers as well as word-of-mouth advertising whichconstitute the best and most effective advertising any organization can wish for. We thereforerecommend that Café Coffee Day continues to embark on its rather experience-based and product-related advertising strategy and take full advantage of its stores to execute this strategy. In supportof this measure, Café Coffee Day should advertise its stores in the geographically relevant YellowPages, print as well as online, and the City Search website. Publicity PlanThe re-branding of the stores will result in a unified brand name, trademark, and product portfolio,thereby constituting the most important and cost-intensive marketing measure for Café Coffee Day Xcellon School of Business Management, Ahmedabad. Page 111
  • 112. at this point. The successful implementation of this measure will be accompanied by a news releasethat the company will make available in its stores, publish on its website, and distribute to localnewspapers in its operating markets for publishing. An example of the news release can be foundin Appendix B3. This will keep customers informed about the current changes and ease thetransition especially in the Bergen and Oslo markets. In addition, Café Coffee Day will sponsorphilanthropic events in the Stavanger, Bergen, and Oslo areas to promote its corporate socialresponsibility. As outlined in the budget section, the company will allocate 0.25% of its annualsales for this purpose. Corporate headquarters of Café Coffee Day will have to determine whatparticular events the company is going to support; however, in order to be consistent with theoverall company image, the sponsorships should involve causes that directly benefit the respectivecity (Stavanger, Bergen, Oslo). Interactive Communications PlanWhile the company’s website makes up the major component of the interactive communicationsplan, Café Coffee Day will at least partially supplement these measures with instorecommunication tools in order to serve customers who lack computer access. The plan’s purpose isto engage customers in the brand and have them voluntarily seek or provide information about thecompany or its products. Clearly, the interactive communications plan should tie in with thecompany’s overall marketing strategy. The following paragraphs outline a few examples of howCafé Coffee Day can implement such a plan.The corporate philanthropic sponsorships provide a great opportunity for the company to interactwith its customers. The organization’s website should allow customers to submit a proposal for thesponsorship of a cause that they consider worth supporting. Corresponding proposal forms shouldbe available in the stores which customers can hand to the store manager for forwarding to thecorporate headquarters. The top management of Café Coffee Day will then assess the input anddecide on the money’s allocation. Besides, customers should be able to suggest a neighbourhoodevent to be included in the bi-monthly newsletter. It will be at the discretion of the store manager,based on previously established corporate guidelines, to decide whether to mention the particularevent in the newsletter. Furthermore, customers should be encouraged to come forward with ideasabout in-store events that Café Coffee Day can facilitate. If the implementation costs arereasonable and there is a definite interest in the community, the store manager should confer withcorporate headquarters to carry through with the plan. For either purpose, the website should beequipped with an appropriate form and stores should have little proposal cards available.The customer loyalty card will also allow for interactive communication between Cafecoffees its customers. Not only does it provide the company with valuable informationabout its customers’ demographics but also about their purchase patterns with regard to Xcellon School of Business Management, Ahmedabad. Page 112
  • 113. location, time of day, frequency, and product. In the future, this will permit Café CoffeeDay to initiate individually targeted relationship marketing efforts. Besides, the customerswill be able to charge their card in order to conveniently pay for their in-store or onlinepurchases. The management of the card accounts will be possible through the company’swebsite which will simultaneously increase the traffic on the site and hopefully encouragepackaged coffee and merchandise purchases.Café Coffee Day can implement another interactive communications plan that will not only tie inwith the company’s product development but also couple the customers’ in-store experience withCafe coffee Day’ website. Café Coffee Day can introduce newly developed coffee blends in itsstores via “Coffee Sampling Weeks” and have customers vote for their favourite blend on thecompany’s website. The one blend that obtains the most votes will eventually be featured on thestores’ regular menu and be sold as packaged coffee for at-home consumption. Other ToolsIn lieu of a traditional advertising campaign, Café Coffee Day will foster its neighbourhood imageand its community involvement by facilitating in-store events on a very regular basis. Thereby, wewill like to allow the store managers a certain degree of liberty as to what events they will like toimplement based on the individual store’s clientele and premises. Some potential events include,but are not limited to, game board nights, knitting afternoons, speed dating evenings, scrapbooksessions, book lectures, or coffee education sittings. These events will be publicized via a bi-monthly store newsletter, which will not only feature the calendar of events in the store, but mightalso include important events in the stores’ respective neighbourhoods such as a library book sale,garage sales, or even Election Day. In addition, the newsletter can feature a product of the monthsection, general coffee or corporate news, and coffee or sweet treat recipes. While corporateheadquarters will be responsible for developing and designing the general content of thenewsletter, the individual stores can then insert their respectively featured events in the documentbefore they are made available in the stores and emailed to the company’s loyalty card holders. Xcellon School of Business Management, Ahmedabad. Page 113
  • 114. BudgetNorway Culture will capitalize on the strong demand for high-quality gourmet coffee. Theowners have provided the company with sufficient start-up capital. With successfulmanagement aimed at establishing and growing a loyal customer base, the company willsee its net worth doubling in two years. Norway Culture will maintain a healthy 65% grossmargin, which combined with reasonable operating expenses.Annual projected sales of $584,000 in 2011, which is in line with the industry averages forthis size of coffee bar Overall, as the company gets established in the local market, its netprofitability increases from 17.06% in FY2011 to 17.63% in FY2014 The table belowoutlines the projected Profit and Loss Statement for FY2012General Assumptions Year 1 Year 2 Year 3Current Interest Rate 10.00% 10.00% 10.00%Long-term Interest Rate 10.00% 10.00% 10.00%Tax Rate 25.42% 25.00% 25.42%The table below outlines the personnel needs of coffee bar Personnel Plan Year 1 Year 2 Year 3 Manager $35,000 $37,800 $40,824 Baristas $50,000 $54,000 $58,320 Employees $39,600 $52,000 $56,000 Total People 30 35 40 Total Payroll $124,600 $143,800 $155,144 Xcellon School of Business Management, Ahmedabad. Page 114
  • 115. Profit and loss Account 2012 2013 2014Sales $584,000 $642,400 $706,640Direct Cost of Sales $2,04,000 $224,840 $247,324Other $0 $0 $0Total Cost of Sales $204,400 $224,840 $247,324Gross Margin $379,600 $417,560 $459,316Gross Margin % 65.00% 65.00% 65.00%ExpensesSalary- payroll $124,600 $143,800 $155,144Sales and Marketing expenses $25,800 $27,600 $31,000Depreciation $5,400 $5,500 $5,500Rent $48,400 $52,800 $52,800License &consulting fee. sitesearch, Lease negotiation $6,000 $6,000 $6,000Maintenance $5,840 $6,424 $7,066Real Estate & LeaseholdImprovements, Design &Development $9,000 $9,500 $10,000Freight –export expenses $18,690 $21,570 $23,272Total Operating Expenses $243,730 $273,194 $290,782Profit Before Interest andTaxes $135,870 $144,366 $168,534EBITDA $141,270 $149,866 $174,034Interest Expense $2,821 $2,326 $1,618Taxes Incurred $33,740 $35,510 $42,424Net Profit $99,308 $106,530 $124,491Net Profit/Sales 17.00% 16.58% 17.62% Xcellon School of Business Management, Ahmedabad. Page 115
  • 116. Balance Sheet 2012 2013 2014AssetsCurrent AssetsCash $195,358 $296,358 $417,648Inventory $21,175 $23,293 $25,622Other Current Assets $0 $0 $0Total Current Assets $216,533 $319,651 $443,270Long-term AssetsLong-term Assets $59,170 $61,170 $63,170Accumulated Depreciation $5,400 $10,900 $16,400Total Long-term Assets $53,770 $50,270 $46,770Total Assets $270,303 $369,921 $490,040Liabilities and Capital Year 1 Year 2 Year 3Current LiabilitiesAccounts Payable $31,974 $31,947 $34,836Current Borrowing $6,700 $3,400 $100Other Current Liabilities $0 $0 $0Subtotal CurrentLiabilities $38,674 $35,347 $34,936Long-term Liabilities $20,000 $16,415 $12,454Total Liabilities $58,674 $51,762 $47,390Paid-in Capital $140,000 $140,000 $140,000Retained Earnings ($27,680) $71,628 $178,159Earnings $99,308 $106,530 $124,491Total Capital $211,628 $318,159 $442,650 $270,303 $369,921 $490,040Total Liabilities and Xcellon School of Business Management, Ahmedabad. Page 116
  • 117. CapitalNet Worth $211,628 $318,159 $442,650Expense 2012 2013 2014Direct Cost of Sales $2,04,000 $2,24,840 $2,47,324Salary- payroll $1,24,600 $1,43,800 $1,55,144Sales and Marketing expenses $25,800 $27,600 $31,000Depreciation $5,400 $5,500 $5,500Rent $48,400 $52,800 $52,800License &consulting fee. site search, Lease negotiation $6,000 $6,000 $6,000Maintenance $5,840 $6,424 $7,066Real Estate & Leasehold Improvements, Design &Development $9,000 $9,500 $10,000Freight –export expenses $18,690 $21,570 $23,272Total Expence $4,47,730 $4,98,034 $5,38,106IncomeSales $5,84,000 $6,42,400 $7,06,640 Xcellon School of Business Management, Ahmedabad. Page 117
  • 118. Break-even PointAdvertising Magazine:Objective of give advertise in magazine is create awareness about coffee café. Café coffee day willgive advertisement in 5 magazine in Oslo, Bergen and Stavanger. We will give advertisement onlyfor 2 month. Name of the magazine is below Name Circulation 1. Se og Hor 235,695 2. ) Hjemmet 2 206,543 3 Hor og Na 179,422 4. Familien 129,367 5. Norsk ukeblad 126,591 Newspaper:CCD will give advertisement in news paper when begging of the Café coffee shop.Nameof News paper is below Xcellon School of Business Management, Ahmedabad. Page 118
  • 119. Name Circulation 1. Bergens Tidende 90087 2. Aftenposten 256639 3. dagbladet 186136 4. Adresseavisen 86570 5. Dagens Næringsliv 69262 BannerCCD will put 2 -2 banner of café coffee day for 1 month in Oslo, Bergen and Stavanger. TelevisionAt initial level café coffee day will not focus on television advertises because televisionadvertises is very costly.Above list of advertising tools will main focus of Café coffee day. Café coffee day willalso use Social networking sight like Face book, twitter, my space, blogging, press release,Billboard and celebrity branding and Zero Budget marketing strategy will also try tofollow Xcellon School of Business Management, Ahmedabad. Page 119
  • 120. ConclusionAs my report based on launching of Café coffee day in Norwegian marketfrom the whole study on the various parameters it is not easy to enter in newmarket without any research and study of that market. So after study I cameto know that in Norway Café coffee day have good opportunities. Reason ofselecting this country is, Norway is big market of coffee, per capitaconsumption of coffee is 10.7 kg so I decided to select this country Xcellon School of Business Management, Ahmedabad. Page 120
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  • 122. (n.d.). Retrieved from (n.d.). Retrieved from (n.d.). Retrieved from (n.d.). Retrieved from (n.d.). Retrieved from http://www.norway.orgNorway. (n.d.). Retrieved from yCountryOverviews/Norway%20Market%20Overview.pdfnorwayindustries. (n.d.). Retrieved from (n.d.). Retrieved from (n.d.). Retrieved from (n.d.). Retrieved from (n.d.). Retrieved from (n.d.). Retrieved from (n.d.). Retrieved from (n.d.). Retrieved from (n.d.). Retrieved from Xcellon School of Business Management, Ahmedabad. Page 122