arun deepika abhishek kririka jitendra

8/4/2019 Arun Deepika Abhishek Kririka Jitendra

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GROUP PROJECT

RESEARCH PROJECT:

THREAT OF STARBUCKS ENTRY TO THE COFFEE RETAILERS IN INDIA

Submitted By,

ABHISHEK AGARWAL

ARUN SARODE

DEEPIKA KAMBOJ

JITENDRA DHANJANI

KRITIKA RATHOR

MODULE LEADER: KISHORE MORYA, SUNEEL SHARMA

GMSI577: RESEARCH METHODS

PGDBM - I


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CONTENTS

S.No. Topic Page No.

1. Introduction and Rational 3

2. Literature Review 3

3. Research Objectives 5

4. Research Methodology 5

5. Data Gathering 6

6. Data Analysis Technique 7

7. Interpretation of data (Caf Coffee Day and Barista) 8

8. Data Interpretation for Starbucks 13

9. Analysis of the Data 15

10. Conclusion 21

11. Recommendations 22

8. Bibliography 23


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THREAT OF STARBUCKS ENTRY TO THE COFFEE RETAILERS IN INDIA

INTRODUCTION AND RATIONAL:

Starbucks is the worlds largest premium coffee retail chain. It recently entered an agreement

with TATA where it will setup stores in TATA groups retail outlets and stores. Barista and

Caf Coffee day have established themselves in this sector as they were the pilot movers.

Customers have become so used to these coffee houses that they like staying at these places more

for their ambience rather than the product offered as CCD itself says A lot can happen over

coffee.

How will Starbucks differentiate itself? remains the question in such a case. Starbucks should

make sure that they carve a niche for themselves.

We have selected an MNC (Starbucks) which is entering Indian market. Starbucks will pose

threats to the existing coffee retailing giants like Caf Coffee Day and Barista. The main purpose

of this study is to analyze the Foreign & the Indian company and the effects that the Foreign

Company will have on the market it enters.

This study has been narrowed down to the comparison of the coffee that these retailers are

producing and how the coffee of the Starbucks will differ from the coffee that present retailers

are providing in India. We considered very limited variables for the comparison so as to obtain

detailed results as we determine our purpose.

This study would not only be useful to the existing coffee retailers in India but also would help

all the coffee retailers around the world interested to open their franchisee in India.

LITERATURE REVIEW:

Several studies have attempted a comparative analysis technique to compare prominent

service sector companies on a common platform, analysing their working and performance. In

our report we draw our attention to the following researches that have been conducted.


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Barista et. Al., (2005)

This report developed by Anna, Kevin and Fred (2005) is a fictional business plan. They

developed a coffee retail joint called HALFBUCKS which is quiet similar to that of Starbucks

and other coffee retailers and then developed a business plan for this company. This developed

business plan has all the ingredients of an actual business plan right from the target market to

strategy to marketing plan to sales and the financial projections. The area which we are interested

in is the competitor analysis; they have compared this company with the actual coffee giants

such as Starbucks, Costa Coffee, and Gloria Jean etc.

Mrda et. Al, (2008)

Ivana, Sanja and Strahinja developed their study by comparing the Costa coffee and Starbucks

on the basis of the business intelligence. This study performed PESTEL, Porters five forces,

SWOT, segmentation and marketing mix (4 Ps) of these two coffee giants and concluded how

starbucks appealed to a wide market when the economy was struggling.

Santamara & ni (2008)

The research report of Beatriz and Shuang (2008) describes about the most appropriate entry

mode for a specific market, such as exporting, licensing and franchising. Their research

investigated in a particular MNC: Starbucks and revealed the entry mode decisions and the

strategies of starbucks in the foreign markets. They divided the research into internal and

external factors of influence in the choice of entry mode.

Naiyar (2009)

This research report by Saroj (2009) compares and studies Barista and Cafe Coffee Day, analyze

their working and performance, and highlight what they are doing well, while providing

suggestions and recommendations for improvement. This report took in all the factors relating to

the study of the coffee retailing, which are the corporate profile, marketing mix and human

resources giving an overall picture about the comparison between two coffee chains.


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Our research will be very closely related to the coffee provided by the coffee retailers. How the

factors such as taste, resources and serving size etc. Provided by Starbucks will have an effect on

the Cafe Coffee Day and Barista.

The above researches carried out on the comparison of the brands of coffee and the literature on

the Starbucks will provide information about how to carry on our research project and also will

help in providing the secondary data which we are looking for the research project.

OBJECTIVES:

The research on the above mentioned topic is done with an objective to find the answers to thefollowing research questions by studying Caf Coffee Day, Barista and Starbucks.

1) To identify the threats imposed by new entrant Starbucks on the existing brands Cafe

Coffee Day and Barista.

2) To differentiate between various factors like Aroma, Taste and Flavor that these three

brands are offering.

3) To Identify the optimum pricing and serving size of the coffee and how the factor like

Serving size would have an influence on the Pricing of the coffee.4) To analyze the impact of brand name and Image on coffee consumers.

5) To identify the various factors like Pricing, Serving Size, etc. Other than the brand name

which would have an actual threat to the Cafe Coffee Day and Barista.

RESEARCH METHODOLOGY:

There are two main methods which resolve a research problem: quantitative and qualitativemethods.

In our research, we have collected both qualitative and quantitative data. Some of the variables

of the study are


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1) Aroma of the coffee: Aroma literally means the smell, in this research report the variable

aroma has been rated on the scale of 1-5 ranging from poor to excellent. The surveyed

sample both in India and other nations had to rate the aroma of the coffee offered by Caf

Coffee Day, Barista and Starbucks.

2) Taste: The data collected for the variable taste of the coffee in this research report has

been rated on the scale of 1-5 ranging from poor to excellent. The surveyed sample both

in India and other nations had to rate the taste of the coffee offered by Caf Coffee Day,

Barista and Starbucks

3) Value for Money: This variable was interpreted to the surveyed sample to know whether

the coffee they purchase in these retail coffee outlets is worth the money they paid for.

4) Serving Size: This variable was interpreted to the surveyed sample to know the optimum

serving size of coffee both in India and abroad.

5) Price: This variable was interpreted to know the appropriate price for the optimum

serving size of the coffee.

6) Brand Selection: This variable was interpreted to know the percentage of the people

who would prefer a particular coffee chain.

Data Gathering

We have planned to develop our report through surveys (primary data).

Surveys:

The research project will involve the use of questionnaire to gather data about the thoughts and

behaviors of the people which would be used as a dependent variable in evaluation and other

attributes will evolve around it.

The primary data of the existing companies that is Cafe Coffee Day and Barista could be

collected by surveying but to gather the data of Starbucks by surveying could be difficult as the

knowledge of the coffee provided by Starbucks is not known by the people.


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There were two surveys conducted, one of the survey was conducted in India who were familiar

with the local coffee chains Caf Coffee Day and Barista. There was another survey conducted in

the other countries especially to gather the information related to the Starbucks. The survey

conducted in India had a sample size of 98 people answering the questionnaire and the survey

conducted in the other nations had a sample size of 63 people.

Documentary Research:

This research report will also involve the use of texts and documents as source material.

Some of the literature reviewed will be useful to gather the data related to Starbucks and will be

helpful in realizing the objectives of the study.

Data Analysis Technique

Correlation:

This is one of the research instruments which will be helpful in making decisions using the data.

For example, this would help us in knowing how the serving size and pricing of the coffee are

related. Furthermore this would help us in making a decision while comparing Starbucks with

Barista and Coffee Day.

Hypothesis Testing:

In hypothesis testing we made a tentative assumption called null hypothesis and we defined

another hypothesis called alternative hypothesis, which is opposite to the null hypothesis. The

formulation of such hypothesis helped us to find the Optimum serving size of the coffee for the

people in India and also the appropriate price for the above serving size of the coffee.


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INTERPRETATION OF THE DATA (Caf Coffee Day and Barista):

A total of 98 people were asked the question that if the price and the serving size of the coffee bethe same, which of the coffee brand would they select. It is seen that a massive 49% of the

people would choose Caf Coffee Day over Starbucks though 84% of the people know about the

Starbucks as the international brand.

22%

49%

29%

Brand Selection

Barista Caf Coffee Day Starbucks

84%

16%

% of people who are familiar with

Starbucks

Yes No


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Although the percentage of people who are familiar with the brand Starbucks is much

higher, the percentage of Indians who preferred Starbucks over the existing coffee brands

is low.

The impact of the existing coffee brands is so much that the people are loyal to the brand,

given the size and the price of the coffee served in different coffee houses be the same.

Brand selection clearly shows that people have become so used to the ambiance and the

product offered to them by the existing brands.

Starbucks will have to differentiate its product and advertise it well to change the loyalty

of the people to the existing brands as the percentage of people who are not familiar with

the brand is slightly high.

96%

4%

% of people visited Cafe

Coffee Dayyes no

77%

23%

% of people visited Barista

Yes No


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Above mentioned data clearly tells us that more people have tried Caf Coffee Days

coffee than Baristas coffee. This shows that Caf coffee day has established itself really

well.

Differentiation of the Aroma:

It is seen that the number of people who did not have a coffee is in Barista is very large

when compared to Caf Coffee Day. This suggests the popularity of Caf Coffee Day in

India.

6%

36%

41%

13%

4%

Aroma (CCD)

average good very good excellent unknown

1% 2%

18%

39%

16%

24%

Aroma (Barista)

poor Average Good Very Good Excellent No


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Since the number of people visiting Caf coffee Day are more than Barista, the number of

people commenting on the various factors like Taste, Aroma, Value of money, etc will be

more for CCD than Barista.

The aroma of the coffee offered by CCD as well as Barista is rated in very good

category by most of the people. But there is a vast difference among the percentage of

people that considers the aroma of the coffee to be good.

The percentage of people rating both the coffee houses coffee aroma as excellent is

comparatively very low.

Differentiation of Taste:

4%

32%

44%

16%

4%

Taste(CCD)

average good very good excellent unknown

1% 4%

24%

37%

11%

23%

Taste (Barista)

Poor Average Good Very Good Excellent No


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Most of the people surveyed rated the taste of the coffee served in Caf Coffee Day and

Barista to be very good.

More percentage of people consider the taste of the coffee served in Caf Coffee day to

be excellent than that served in Barista.

The data also clearly shows that more people are familiar with the Coffee served at CCD

than the coffee served at Barista.

Overall, the taste of coffee served at Caf Coffee Day is rated better than the Taste of

coffee served at Barista.

Variable - Value for Money:

15%

33%29%

16%

1%

6%Value Of Money(CCD)

average good very good excellent poor unknown

4% 10%

27%

16%

19%

24%

Value for Money (Barista)

Poor Average Good Very Good Excellent No


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Although Caf Coffee Day is able to serve a coffee with better aroma as well as

taste, but when it comes to value of money, the surveyed people had a mixed

opinion about Caf Coffee Day.

Most percentage of people rate the value of money to be very good for the

served at Caf Coffee Day whereas most percentage considers the value of money

to be good for Baristas coffee.

Overall, there is a mixed review of Caf Coffee Day and Barista when it comes to

the value for money.

DATA INTERPRETATION FOR STARBUCKS:

A total of 63 people were surveyed from different countries to find their opinions about the taste,

aroma and value for money offered by the Starbucks.

In our finding out of 63 surveyed, about 92% of the people have visited starbucks to have a

coffee.

92%

8%

% of the people visited

Starbucksyes no


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59%11%

22% 8%

Aroma(Starbucks)

excellent good very good unknown

2%

55%13%

22%8%

Taste(Starbucks)

average excellent good very good unknown

9%

52%

21%

8%8%

2%

Value of Money(Starbucks)

average excellent good very good unknown poor


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A majority of people have visited Starbucks. There are very few people who have

not visited Starbucks.

The data clearly shows that the majority of people rate the value of money, aroma

as well as the taste of the coffee served at Starbucks to be excellent. A major

percentage of people are very happy with the coffee served to them.

The number of people who rated the taste and the aroma of the coffee to be

average, poor or just good are negligible when compared to the number of people

who rated them to be very good and excellent.

The fact that a majority of people are satisfied by the value of money offered by

Starbucks cannot be neglected. There is very little percentage of people who

consider the value of money to average or poor.

This finding interprets that Starbucks offer good coffee at a reasonable price.

ANALYSIS OF THE DATA:

Hypothesis Testing:

1) Serving Size: The surveyed people were asked to give an optimum value of the serving

size of the coffee, the sample size was 98.

The population mean was determined by the average serving size of the coffee retail stores in

India.

Hypothesis:

Null Hypothesis: = 240ml, (the optimum serving size of the coffee is 240ml).

Alternate Hypothesis: 240ml (the optimum serving size of the coffee is not 240ml).

Test Statistics:

Sample Size: 98

Sample Mean: 206.37


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Sample Standard Deviation: 45.59

Hypothesized value: 240

Standard Error: e = s/.

= 4.605

Test Statistic, t = (

t = -7.30

Degree of freedom = n-1

= 981 = 97.

Critical Value Approach:

With =0.05, and t distribution with 97 degree of freedom,

-t.025 = -1.985 and t.025 = 1.985 are the critical values for the two-tailed test.

Since, the t= -7.30 lies in the rejection zone, we reject the null hypothesis.

The result indicates that the optimum serving size of the coffee is not 240ml. The optimum

serving size can be above or below 240ml closer to the population mean.


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2) Price of the Coffee: The surveyed people were asked to give a price of the coffee they

think is appropriate in India, the sample size was 98.

The population mean was determined by the average coffee prices of retail stores in India.

Hypothesis:

Null Hypothesis: = Rs. 70, (the appropriate price of the coffee is Rs. 70).

Alternate Hypothesis: Rs. 70 (The appropriate price of the coffee is not Rs. 70).

Test Statistics:

Sample Size: 98

Sample Mean: 76.09


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Sample Standard Deviation: 42.14

Hypothesized value: 70

Standard Error: e = s/.

= 4.25

Test Statistic, t = (

t = 1.43

Degree of freedom = n-1

= 981 = 97.

Critical Value Approach:

With =0.05, and t distribution with 97 degree of freedom,

-t.025 = -1.985 and t.025 = 1.985 are the critical values for the two-tailed test.

Since, the t= 1.43 lies in the normal distribution curve, we accept the null hypothesis.

The result indicates that the optimum pricing of the coffee is Rs. 70.


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CORRELATION:

r is the symbol of correlation. The strength of the correlation ranges from -1 to +1.

(a) Direction of relationship between X, Y variables.

Positive (+r) = As X goes up, Y goes up

Negative (-r) = As X goes up, Y goes down

(b) Strength of a relationship between X, Y variables.

Closer to 1.0, stronger

Closer to 0, weaker

when r= 0 X,Y relationship not defined by a straight line


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Correlation between Price and the Serving size.

The two variables price and the serving size have been correlated using the Pearson correlationcoefficients.

The correlation matrix between these two variables is given by

Correlations

Descriptive Statistics

Mean Std. Deviation N

Serving size 2.0531E2 46.95807 98

price 76.0918 42.14337 98

Correlations

Serving size price

Serving size Pearson Correlation 1 .148

Sig. (2-tailed) .147

N 98 98

price Pearson Correlation .148 1

Sig. (2-tailed) .147

N 98 98

From the above correlation matrix we can see that the correlation coefficient is

r = 0.148.

The error of the 2-tailed correlation is .147

And the above table indicates that the price of the coffee and the serving size of the

coffee suggested by the surveyed people are not closely correlated.

It also indicated that the Price is positively related to the serving size.


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CONCLUSION:

This topic was selected with various objectives in mind, which includes- identifying the threats

imposed by new entrant Starbucks on existing brands like Caf Coffee Day and Barista. In order

to achieve the objectives, we selected six variables namely Aroma, Taste, Value for money,

Serving size, Price and Brand selection to carry out a comparative analysis of the chosen coffee

retailers.

Two main research methods used are quantitative and qualitative methods. Primary data was

collected through surveys. Two surveys were circulated, primary data for existing companies

(Caf Coffee Day and Barista) was collected by circulating a survey to people of India andprimary data for Starbucks was collected by circulating a survey to the people of US and UK.

Data analysis is done by using two methods. Hypothesis testing is done to find the optimum

serving size for coffee and its appropriate price. After performing the tests, we reached a

conclusion that the optimum size of coffee serving is not 240ml. it can be above or below 240ml

closer to the population mean. The tests also concluded that the optimum price for a coffee

serving is Rs70.

Correlation determines the relation between two variables such as serving size and price. This

method concluded that the price of a serving is positively related to serving size. Using Pearson

Correlation, we determined that the price of the coffee and the serving size of the coffee

suggested by the surveyed people are not closely correlated.

From the analysis of the Caf coffee day and Barista it can be seen that Caf coffee day has an

upper hand in the market in terms of all the variables such as taste, aroma and the value for

money.

Thus from the analysis of the variables of the starbucks, it can be seen that most of the people

have given highest rating to the taste, aroma and the value for money. From this it can be

concluded that starbucks offer very good product offering at a reasonable price, so it has a very

good chances of success in India.


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RECOMMENDATIONS:

Thus from the hypothesis testing it can be recommended that the price of the coffee be

maintained at Rs.70 with a appropriate serving size of around 200ml (population mean)

in order to have a perfect serving size and price ratio.

Though starbucks is an internationally known brand, people in India mostly preferred

Caf coffee day over it. Therefore starbucks should be aggressive in its marketing

strategies.

The people in India have a mixed opinion about the value for money. Starbucks can take

an advantage of this by providing coffee at a reasonable price.

From the analysis it is found that people in India are happy over the taste and aroma of

the coffee offered by Caf Coffee Day and Barista. Starbucks which is known best for its

coffee can easily gain as upper hand by providing its internationally acclaimed coffee

mix.

Majority of the people who visit these coffee retail joints are aged between 16 -25 years.

So targeting this segment of population would be the best thing.

Starbucks should open its stores in two different strategically picked locations i.e.

Mumbai and Delhi. Mumbai is highly populated cosmopolitan city and Delhi is theNations Capital. These locations are chosen to ensure the success of the venture.

With the success of these stores, Starbucks can expand to more stores in India.

Starbucks should also customize the menu to meet the tastes and preferences of the new

target audience. E.g Addition of tea and tea items.

The company can earn good brand loyalty with its assurance of quality and commitment

to giving back to the community.

Starbucks should tie up with different companies for distribution of its product like PVR.

Initially the retailing should be done on experimental basis at different multiplexes in

Mumbai and Delhi.


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BIBLIOGRAPHY:

1. Barrista, A. Kona, K. & Roast, F., 2005. HALFBUCKS Business Plan, [Online]

Available at:http://strategy.sauder.ubc.ca/hellmann/pdfs/HALFBUCKSFinalCase.pdf

[Accessed 10 October 2010].

2. Mrda, I. Nikic, S. & Baturan, S., 2008. Costa Coffee vs Starbucks, Business Intelligence,

[Online] Available at:

http://www.rodenberg.nl/publications/publications/COSTA_COFFEE_vs_STARBUCKS

.pdf [Accessed 10 October 2010].

3. Santamaria, B. & Ni, S., 2008. Entry Modes of Starbucks, [Online] Available at:

http://mdh.diva-portal.org/smash/get/diva2:121498/FULLTEXT01 [Accessed 10

October 2010].

4. Naiyar, S.S., 2009. Barista vs Cafe Coffee DayA Comparative Study, [Online]

Available at:http://www.iipmthinktank.com/functions/marketing.html [Accessed 10

October 2010].

5. Larson, R.C., 2008. Starbucks a Strategic Analysis Past Decision and Future Options,

[Online] Available at:http://www.nihul.biu.ac.il/_Uploads/dbsAttachedFiles/starbuck08full.pdf [Accessed 10

October 2010].

6. Anderson et. Al., 2001. Statistics for Business and Economics, 9th ed., Cenage Learning.
http://strategy.sauder.ubc.ca/hellmann/pdfs/HALFBUCKSFinalCase.pdfhttp://strategy.sauder.ubc.ca/hellmann/pdfs/HALFBUCKSFinalCase.pdfhttp://strategy.sauder.ubc.ca/hellmann/pdfs/HALFBUCKSFinalCase.pdfhttp://www.rodenberg.nl/publications/publications/COSTA_COFFEE_vs_STARBUCKS.pdfhttp://www.rodenberg.nl/publications/publications/COSTA_COFFEE_vs_STARBUCKS.pdfhttp://www.rodenberg.nl/publications/publications/COSTA_COFFEE_vs_STARBUCKS.pdfhttp://mdh.diva-portal.org/smash/get/diva2:121498/FULLTEXT01http://mdh.diva-portal.org/smash/get/diva2:121498/FULLTEXT01http://www.iipmthinktank.com/functions/marketing.htmlhttp://www.iipmthinktank.com/functions/marketing.htmlhttp://www.iipmthinktank.com/functions/marketing.htmlhttp://www.nihul.biu.ac.il/_Uploads/dbsAttachedFiles/starbuck08full.pdfhttp://www.nihul.biu.ac.il/_Uploads/dbsAttachedFiles/starbuck08full.pdfhttp://www.nihul.biu.ac.il/_Uploads/dbsAttachedFiles/starbuck08full.pdfhttp://www.iipmthinktank.com/functions/marketing.htmlhttp://mdh.diva-portal.org/smash/get/diva2:121498/FULLTEXT01http://www.rodenberg.nl/publications/publications/COSTA_COFFEE_vs_STARBUCKS.pdfhttp://www.rodenberg.nl/publications/publications/COSTA_COFFEE_vs_STARBUCKS.pdfhttp://strategy.sauder.ubc.ca/hellmann/pdfs/HALFBUCKSFinalCase.pdf


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Survey for Caf Coffee Day and Barista


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Survey for Starbucks

arun deepika abhishek kririka jitendra

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