Hug a Mug project report and Market Survey

1. HUG A MUG – PROJECT
REPORT & MARKET
SURVEY
BY AS Level Commerce Class
Authors:
Nijin Muhammed, Sourav Satheesh,
Aadith Kesave, Mehanas, Vaishali Gopakumar

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LIST OF CONTENTS:
INTRODUCTION
1) COFFEE CULTURE
2) COMPANY HISTORY
3) PRODUCTS OFFERED
PRODUCT LIFE CYCLE
COMPETITOR
1) CAFÉ COFFEE DAY
*COMPANY HISTORY
* PRODUCTS OFFERED
*PRICING
* COMPARISON OF HUG A MUG AND CAFÉ COFFEE
DAY
2) DOWNTOWN
* COMPANY HISTORY
* PRODUCTS OFFERED
* PRICING
* COMPARISON OF HUG A MUG AND DOWNTOWN
MARKETING MIX
COMPARISON
1) SCOPE OF IMPROVEMENT
2) SCOPE FOR EXPANSION
SWOT ANALYSIS
QUESTIONNAIRE
SURVEY RESULT ANALYSIS

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SUGGESTIONS
DEMAND
SUPPLY
BOSTON MATRIX
TOP 6 REASONS WHY HUG A MUG IS SO POPULAR
CONCLUSION
BIBLIOGRAPHY

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INTRODUCTION
Coffee Culture
Coffee culture refers to the diffusion and adoption of coffee
as a widely-consumed stimulant by a culture. The formation
of culture around coffee and coffeehouses dates to 14th
century in Turkey. Coffeehouses in Western Europe and the
Eastern Mediterranean were traditionally social hubs, as well
as artistic and intellectual centres. In the late 17th and 18th
centuries, coffeehouses in London became popular meeting
places for artists, writers, and socialites, and were also the
centre for much political and commercial activity.
A coffeehouse or café is an establishment which primarily
serves prepared coffee or other hot drinks. In addition to
coffee, many cafés also serve tea, sandwiches, pastries, and
other light refreshments.
In India, the mushrooming of Coffeehouses across the
country in the last 15 years has familiarized Indians the
global experience of enjoying a non-alcoholic beverage
other than tea.
In Calicut HUG A MUG is known for its coffee chain and the
company is looking to expand the business as a coffee chain
cafe.

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Company History
Hug a mug is a new coffee chain introduced by HiLite group
in 2015. It is now one of the largest roasters in Calicut, and
focuses on nothing less than producing high end coffee. Hug
a Mug has four outlets till date in Calicut; a lounge at the
Business Park, a kiosk as well as an express counter in HiLite
Mall and another in Focus Mall. They have online ordering
for cakes (a tie up with Cake-Now) and home delivery, so
now you can get yummy food at your door step.
The lounge at the Business Park is open 24/7 making it easily
accessible and convenient. This LLP has a total of 40
employees across these four outlets and are hoping on
expanding to many other places soon, Thrissur being first on
their list. In less than 2 years, they have managed to capture
a significant share in the market.
Hug a Mug is one of those places where people of any age
group can hang out!! It could be from housewives wanting to
relax to students looking to study to even businessmen
discussing business.
Other than Hug a Mug in Calicut, Hug in a Mug (Bangalore)
and Hug a Mug Café (New Jersey) are other cafes outside
Calicut with similar names.

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Products Offered
Hug a Mug offers supreme coffee experience complete with
a delectable spread of pastries, cold beverages, sandwiches,
wraps, pastas, and snacks. They also offer breakfast combos
which are available all throughout the day (which makes it
much better!!).
In beverages, the well-known brand of syrups (used by
international cafés including Starbucks) are used for flavour
and imported Lavazza coffee beans from Italy are used in
brewing the coffee.
Hug a Mug provides a wide range of hot as well as cold main
courses and appetizers covering Thai, Indian, Mexican, and
Continental flavours.
Those of you have a sweet tooth will not leave unsatisfied
after having a taste of the mouth-watering cookies and
pastries.
A variety of waffles and pancakes are served at Hug a Mug
with delicious toppings to choose from.

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PRODUCT LIFE CYCLE
As per the information received, Hug a Mug is at a 50/50
stage between growth and maturity stage of the Product Life
Cycle. At this specific stage, not only does their profit, but
also their sales and competition increase. Hug a Mug’s public
awareness also increases.

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COMPETITOR
Café Coffee Day
Café Coffee Day (abbreviated as CCD) is an Indian café
chain owned by Coffee Day Global Limited, a subsidiary of
Coffee Day Enterprises Limited.
Coffee Day Global Limited is a Chikmagalur based company
which grows coffee in its own estates of 12, 000 acres. It is the
largest producer of Arabica beans in Asia exporting to
various countries including USA, Europe and Japan,

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Company History:
Café Coffee Day was started as a retail restaurant arm of CGL
in 1996.The first CCD outlet was set up on July 11, 1996,
at Brigade road, Bengaluru, Karnataka.
In 2010, it was announced that a consortium led by Kohlberg
Kravis Roberts would invest ₹10 billion (US$150 million) in
Coffee Day Resorts, owned by the company. The same year,
the logo was changed to the current logo, which the
company stated was to showcase the chain as a place to talk.
This was done with major changes in the layout of the stores,
including the addition of lounges and a total revamp of the
interiors
OUTLETS AS OF 2015:
As of March 2015, there are 1530 outlets across 29 states of
India. Cafe Coffee Day has also expanded outside India with
its outlets in Austria (Vienna), Czech Republic, Malaysia, and
Egypt.
The company is known for being vertical integrated to cut
costs: from owning the plantations, growing the coffee,
making the coffee machines to making the furniture for the
outlet.

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Products Offered:
BEVERAGES:
Cranberry Hot Cocoa
Gourmet hot cocoa with cranberry flavour, garnished with a
cream swirl, drizzled with cocoa toppings and dried
cranberries
Café Frappe
The all-time favourite Cafe Frappe. Rich, creamy and
irresistably cold coffee, that will never go out of style.

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Cappuccino
A shot of espresso topped steamed and foamed milk.
Designed for coffee lovers
Cranberry Latte
Cranberry flavoured hot coffee, garnished with a cream
swirl, drizzled with cocoa topping and dried cranberries.
The magical ingredient.

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Food :
Big Crunch
Chicken Cheese Burger
Juicy chicken patty seared to perfection. Then, stuffed
between soft oatmeal buns along with fresh veggies. So
good, you’ll be tongue-tied.
Big Crunch Veg Cheese Burger
Flavourful veggie patty cooked to perfection. Then, stuffed
between soft oatmeal buns with handpicked veggies. Sure to
make your eye widen and jaw drop.

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Crispy Veg Wrap
We made veggies taste good.
Garlic Bread
Buttery rich goodness infused with garlic. You won't be able
to resist it!
COMBOS :
Chiller Non-Veg 170
Combo

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Iced Tea + Non-veg Sandwich
Chiller Veg 160 Combo
Iced Tea + Veg Sandwich

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Pricing
Cafe Coffee Day follows the competitive pricing.
Competitive pricing is setting the price of a product or
service based on what the competition is charging. This
pricing method is used more often by businesses selling
similar products.
Over here Hug a Mug and CCD both are coffee chain shops ,
competitors to each other so they both are following the
competitive pricing to persuade the customers to their cafe .

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COMPARISION OF HUG A MUG AND CAFE COFFEE DAY
Price: As compared to Hug a Mug , Cafe Coffee Day is much
expensive.
 Including the taxes CCD is much expensive than
Hug a Mug.
Hygiene: As compared to Hug a Mug, CCD was unhygienic.
The floors and bathroom were dirty. But Hug a Mug is
throughout maintaining hygiene
Sales: Comparatively CCD had more customers an Hug a
mug as it is located in the central part of the city.
Staff: In a Hug a Mug , the service was faster as there were
enough staffs but in CCD there were 3 people inside and
outside the scene so the service was slower.

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Downtown
Company History
Downtown café has been set up as a trendy joint with the
appropriate ambience to attract they youth crowd. They have
four outlets, ever since they started in 2014. Two of the
outlets are in Calicut, one in Chennai and the other in Dubai.

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Products offered
Downtown offers Mexican, Indian, as well as Continental
food.
They have a variety of pizzas, bakes, sizzlers, pastas, wraps,
salads, sandwiches, and burgers. They have your back for
desserts too. They have a delicious range of ice-creams, ice-
cream shakes, and smoothies.
Don’t worry if your health conscious, they have things for you
too!! They serve fresh juices as well as healthy juices for
daily uses (Detox Green, Healthy Green and a few more).
Downtown bakes their own bread daily and uses a few
imported items as well in their main courses and appetizers.
Their coffee beans are also imported.

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Pricing
Downtown follows competitive pricing, where their prices
are set according to what the competitors have charged, as
they sell similar products. Competitive advantages are
conditions that allow a company to produce a good at a lower
price or in a more desirable fashion for customers. These
conditions allow the productive entity to generate more sales
or superior margins than its competition. Competitive
advantages are attributed to a variety of factors, including
cost structure, brand, quality of product offerings,
distribution networks, intellectual property, and customer
support.

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Comparison of Downtown and Hug a Mug
Price- When comparing Hug a Mug and Downtown, the
prices at Hug a Mug are a bit higher than Downtown.
Hygiene- Both places are equally hygienic. In terms of
services, there was a fault in Downtown, as one of the drinks
we ordered had a hair in it. But they were also quick enough
to get us a new one.
Sales- Hug a Mug and Downtown have a positive competitive
sale.
Staff- In terms of staff, both the staffs were polite and
consumer friendly. But in clothing, perhaps Hug a Mug
employees could have a more logo related uniform.

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MARKETING MIX
The marketing mix of a company consists of the
various elements as follows which form the core of a
company’s marketing system and hence helps to
achieve marketing objectives.
1) Product
Hug a Mug ensures that their products are all
of high quality and nothing less. They know the exact
quantities needed for the food. The highlight of Hug a
Mug is the “HUG OF THE DAY”, which keeps
changing on a daily basis.

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2) Price
A product is more than a physical item; it
also has psychological connotations for the
customer. Hug a Mug serves expensive food, but
pricing is not considered because of the quality of
food being served.
3) Promotion
Hug a Mug promotes themselves through
different medias of advertising like radios, internet,
banners, etc. They attempted to get into the Guinness
World Record by baking the longest Selfie Cake, but
couldn’t make it (but managed to gain more fame).
This is also another way of promotion. The skill in
marketing communications is to develop a
campaign which uses several of these methods
in a way that provides the most effective
results.
4) Place
It is not just about the physical position where it is,
but about the convenience of transportation of
products to the manufacturer and the end consumer.
Hug a Mug outlets are all in prime positions, in malls,
where many people hang out and the lounge, in a
comfortable and relaxed place. This makes Hug a
Mug easily accessible.

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COMPARISON
Scope for Improvement
While Hug a Mug is one of the best available cafes in Calicut,
there still exists scope of improvement.
o Store design that will be both visually attractive to
customers and designed for fast and efficient
operations.
o Employee training to ensure the best coffee preparation
training.
o Marketing strategies aimed to build a solid base of loyal
customers, as well as maximizing the sales oh high
margin products, such as espresso drinks.
o The food that comes to waste at the end of the day can
be donated, instead of throwing it away. That way it will
be social service too.
MARKETING
Advertising:
Place strategically timed advertisements in newspapers,
radio stations and television spots. Use the ads to promote a
special coffee blend or the fact that you offer free Wi-Fi in
your coffee shop. Hug a Mug has a good image among the
youngsters because of the attractive ads published on social
media. So this shows us that more ads with good content can
attract more people and the this café will have a good impact
on their marketing field.

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MARKET ANALYSIS OF HUG A MUG
Hug a Mug is mainly focusing on students and faculty most. It
is because of “products of the Highest Quality” and the
location and aesthetic appearance of its stores.

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QUALITY TESTING
Before serving the food Hug a Mug ensures the quality and
taste. They have captured a good position in the market and
provide special discounts on products and services during
special seasons. The current growth of Hug a Mug in the
market shows us that the customers are satisfied with the
provided.
Hug a Mug has well trained Barista. The price for products are
comparatively less where the youngsters can afford. Customers
general rating on Hug a Mug is 4.5/5.

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Scope for Expansion
As part of its theme for 2016, “Thinking Big”, Hug a Mug has
moved places within Calicut and as mentioned earlier is also
planning to open an outlet in HiLite Mall Thrissur soon. Still,
the brand has the capability to go much further, and Hug a
Mug should now consider expanding beyond Calicut, Kerala,
and even India. In simple business terms, international
expansion not only offers the potential for greater
profitability, but may also bring enough brand recognition to
defend one against competition.
Hug a Mug can even “Fly Places” by:
 Franchise offerings outside Calicut (or outside
Kerala/India).
 Kiosks to be opened near highways, tourist points and
hill stations such as Wayanad, Kodaikanal, Ooty, Kochi,
Trivandrum and the Bangalore expressway.
 Explore supplying to Taj or airline catering services.
 Consider opening a lounge inside the international and
domestic airports, which is particularly needed in
Calicut.
Hug a Mug can also issue loyalty cards in terms of brand
loyalty.

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SWOT ANALYSIS
STRENGTH
1. Brand name and visibility
2. Quality, service, and taste
3. Youth oriented brand
4. 24 hours
5. Excellent human resources (ambience and décor)
WEAKNESS
1. Wastage of food
2. As of now, lack of care for loyal customers
OPPORTUNITIES
1. Other than Cake-now tie up, further opportunities
2. Sure plan to expand in the next 2 years
3. Introduce unique version of coffee
THREATS
1. Competition -biggest competitor is CCD
2. Global policy conflicts
3. Other hangout locations
The above analysis helps identify the internal strengths and
weaknesses and the external opportunities and threats.

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QUESTIONNAIRE
Q1. Which of these cafés do you visit more?
A)Downtown
B) CCD
C)Hug a Mug
Q2. How often do you visit the café?
A)Weekends
B) Once in a month
C)Everyday
Q3. Are you satisfied with the services provided by Hug a
Mug?
A)Yes
B) No
C)Sometimes
Q4. Which among these do you prefer to have at Hug a Mug?
A)Coffee
B) Hot Meal
C)Pastries
Q5. What time of the day would you prefer to go at Hug a
Mug?
A)Morning
B) Noon
C)Evening
D) Night
Q6. Were there any problems faced by you during your visit
at Hug a Mug?

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A)Yes
B) No
Q7. If yes, what was it?
A)Service Problems
B) Hygiene Problems
C)Other Problems
Q8. How do you find the pricing of Hug a Mug?
A)Expensive
B) Reasonable
C)Average
Q9. What is your opinion about Hug a Mug?
Q10. Feel free to scribble your suggestions!!
Q11. What are the other cafés you have visited in Calicut?

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SURVEY RESULT ANALYSIS

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Suggestions
1) As per the survey, 46% say Hug a Mug is expensive, so
maybe they could reduce the prices.
2) Could provide seasonal discounts.
3) Employees uniforms could be changed to something
more like the logo of Hug a Mug.
4) Should have a permanent staffing, because proportions
change.
5) Should focus more on service problems, 60% have
mentioned service problems.
6) Could introduce Loyalty Cards.
7) Rather than throwing away the excess food, can donate
it (social service)
8) Like Downtown, can keep an entire wall for suggestions
and remarks. It rather looks appealing and fun.
9)

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DEMAND
Factors Affecting Demand:
1) Price of the Product
As per the survey done, 46% of the
candidates have mentioned that Hug a Mug is
expensive. Law of demand states that the quantity
demanded of the product is inversely related to the
price of the product, but in the case of Hug of Mug, they
have steady customers because of the brand
recognition.
2) Income of the Consumer
The prices of Hug a Mug as mentioned
earlier are high, and not every common man can afford
it.
3) Taste and Preferences
The people in Kerala are not very familiar
with coffee, as majority of the people are tea drinkers.
But yet people order coffee(Cappuccino) merely
because of the name and the fact that it western.
4) Quality of the Product
As the quality of the product is high and
well known, there will be an increase in the demand of
their products.

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SUPPLY
Factors Affecting Supply:
1) Price of Factors of Production
Hug a Mug has quite a few imported
items and so the price of factors of production will
increase, thereby increasing the price of the products.
2) Weather Conditions:
As the coffee beans are imported,
there are possible delays and scarcity of resources as it
depends on the weather conditions and situations in
Italy.

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BOSTON MATRIX
Boston Matrix categorizes the products into one of four
different areas; Question Marks (low market share, high
growth market), Stars (high growth products), Dogs (low
market share, low growth market) and Cash Cows (low
growth, high market share).
In this case, Cappuccinos are the stars which has the highest
growth and Bubble De Bubble is the cash cow which has low
growth.

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TOP SIX REASONS WHY HUG A MUG
IS POPULAR
1) Because of its unique Brand image
2) Catchy tagline “More than just Coffeeing”
3) Convenience as the place is apt for those looking to
relax and chill.
4) Because of the friendly staff members.
5) Because of the quality of the product.
6) Good and friendly ambience.

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CONCLUSION
The coffee market in India has been growing due to the
demand ready to drink coffee and has become a part of
individual’s daily consumption basket. Due to the changing
culture, consumers are becoming aware of domestic and
foreign brands. Well established coffee shop chain such as
HUG A MUG has created a unique style in the customer’s
mind. Starting as a single shop specializing in high quality
coffee, the company grew to be the largest roaster in Calicut
with four outlets and with more than 30 employees. HUG A
MUG has captured a good share in the market within the gap
of 1.5 years
Through all the information we gathered, we can come to
know that HUG A MUG is one of the best coffee shops in
Calicut.

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BIBLIOGRAPHY
1) www.google.com
2) www.wikipedia.org
3) www.hugamug.in
4) www.cafecoffeeday.com
5) www.facebook.com

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