K Ramakrishnan, President-Marketing, Café Coffee Day talks about the rationale behind the brand’s first ever commercial after 16 years of inception, success of their consumer initiative ‘Café Moments’, different formats to retain the youth segment where brand loyalty is a thing of the past
Q] What was the rationale behind the brand’s first ever TVC after 16 years of inception at this point?
I will answer this in two parts: one is the industry story and the other is the internal Café Coffee Day story.
We do regular usage and attitude studies for the brand. There is one measure called incidence, which is the measure of people that have walked into a place, so we do that for cafés as an industry business, not only for Café Coffee Day. These studies show that the percentage of people who drink coffee is only 47%; I am speaking specifically about the top six cities Sec A & B, age group 17 to 35. To me, this was a surprise, the glass is actually half-empty. We realized through research that the gap is due to perception gaps such as ‘cafés are expensive’, ‘I don’t drink coffee’, etc. We wanted to correct all these perceptions. A café is a place for conversations of all kinds, and more importantly, the offerings in cafés are way beyond coffees. In fact, only about 35% of our business comes from coffee. Other beverages and food comprise our other offerings. We realized we need to address a much larger audience then the one we are currently addressing - that is the industry reason why we are on television.
Internally, we always got feedback that we need to improve our food; in December, we changed our menu. In the last six months, all sandwiches and breads got changed; we introduced a lot of items and changed a lot of items as well. We added dessert shots, combos, and announced these changes in Delhi via localized campaigns. Likewise, in Mumbai and Bangalore. We had done nine cities when we thought it was time for us to go on a national blitz, and communicate to the rest of India. So the most effective and economical medium for us was television.
Q] Is this sudden move of using mass media and getting more aggressive in reaching out to a larger database a counter-move in response to the growing coffee chains and more specifically, the recent launch of Starbucks?
At the end of the day, we have 1400+ cafés. We are not restricted to premium or niche, the onus of building the market is on us and our strategy is driven by our consumers and us, much more than anything else. Obviously, this plan to go on TV was not made in the last two months; it has been there for a year-and-a-half.
Q] Has the coffee culture evolved in India? How has the café culture helped this growth?
Speaking about the café culture first, cafés are places where people hang around. India, as a country, has always believed in it – right from the olden times, there has always been a village square or addas. We have formalized it and built a business around it, and surrounded it with food and other offerings. The per capita consumption of coffee in India per person per year is 82 gm. In the US, it is 4 kilos and in Brazil, it’s 4.8 kilos. From that perspective, there is a long way to go as far as coffee penetration is concerned. Today, there is a need for a hangout joint at an arm’s length. There are so many malls in India where we have more than one café; there is a need for people to hang out, which is only growing from this perspective. There is a lot of opportunity going ahead; the task for the players is to leverage this opportunity. When a new neighbourhood develops, one of the first organized retailers to reach that place is Café Coffee Day. Currently, we are at 1408 outlets, we want to grow to 2000 outlets by 2014 pan-India. Our task is also to get more visitors.
Q] What about the brand’s presence in smaller cities?
We are present in 205 cities in total, and would like to increase our presence in smaller cities. Unfortunately, we are unable to go in as much as we like because of lack of infrastructure. It is a challenge to provide the same quality of food and beverages with the present infrastructure.
Q] Given the nature of your business, what are the specific activities that have helped you increase ROI significantly?
We chase a few metrics such as –
• Number of outlets we have and number of opportunities to interact with consumers
• How many people we are able to attract
• How many bills we are able to generate and the value of bills
Café Moments, a prepaid programme we introduced six months ago, works on the principle of paying in advance and getting a bonus. It is working extremely well. Through this, we have been able to increase our offtake and increase frequency to as high as 20% for consumers who are part of this programme.
So far, social media has worked for us as well - our Facebook page has more than three million members. We use it to listen to our consumers, we allow people to have conversations and get a direction of upcoming trends. We also leverage this medium for co-creation of offerings; this is very important. We create new offerings and test them both in the online and offline space. We do simple surveys of what consumers are looking for and then call people from our social media groups to sample it and go back and post their comments. Based on these insights, we launch a menu or a new offering. Even our music is decided like this - people decide what they want to listen.
Q] How does Café Coffee Day keep up with the experimental youth segment?
Our brand extension strategy answers the question. Apart from cafés, we have our lounges, based on the basic love that a consumer has for Café Coffee Day. Our lounges are about networking - the coffees here are different, the menu and music different as well. The Lounge is for the evolved Café Coffee Day consumer. Our third format is the Café Coffee Day square - this is for the aficionado of coffee, we specialize in single origin coffees here.
Q] What are some of the emerging consumer trends in the café industry today?
• Consumers don’t want to hear any form of preaching and are happy to participate
• They appreciate it if you listen and are much happier when action is taken on their feedback and complaints
• Group consumption is becoming higher; the trust factor is shifted to somebody like me
• There is multiple brand loyalty for consumers at different stages
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