I went through an article on Café Coffee Day partnership with Proline (http://www.thehindubusinessline.com/todays-paper/tp-corporate/article2999910.ece). It made me to think about the reason behind the introduction and the future of this venture. There are many coffee brands in our country like Barista, Lavaza, Costa Coffee, etc. The coffee major Starbucks has also announced their entry into the Indian markets.
Rather than coffee related products, Café Coffee Day is selling products like T-shirts, Mugs, Coffee Makers, Gift cards etc. It’s a sort of merchandising. I think this partnership with Proline will help them in generating more revenue as well as developing a good brand image. Launching T-shirts can attract more customers for Café Coffee Day which will help them to interact with more customers. Coffee Day has already introduced their T-shirts in foreign markets and it was a great success. Earlier, even companies like King Fisher, Fly Emirates and Starbucks have seen a grand success in merchandising. I think it’s a kind of their brand extension strategy and I also feel that merchandising is a branding tool. India’s leading Café chain “Café Coffee Day” earns 10% of its revenue from sale of merchandise.
There are many Coffee Chains in India largely selling Coffee related products. This kind of innovation will increase the share of merchandising. What I feel is that the merchandise needs to communicate the ethos of the brand and what it stands for. It will create impulse purchase. So Café Coffee Day must carefully design merchandise mix and they have to partner with the right players also. These are some of the key challenges for the Cafe; here they chose a right partner for introducing their T-shirts. Because, Proline is already an established brand. They have created a position in the mind of customers for the clothing like T shirts. It will help Cafe Coffee Day in strengthening their presence in the apparel segment also.
Hi Subin,
ReplyDeleteBut, don't you think that by moving away from selling coffee, CCD is diluting its core competence?
This may not be a de-risking strategy.....but, it could well be a 'me-also' strategy for coffee chain.
Thanks for your comment, I don't think their core business will be diluted in the current scenario since they are not going to sell their T-shirts like normal apparel retailing but only concentrating on impulse purchase by the customers those who are coming to CCD.
ReplyDeleteHi Subin,
ReplyDeleteHow can you say impulse purchase alone will happen? some customers might come only for taking T- shirts from CCD. so this type of customer entry will disturb ambiance of the store. This will sure results in giving poor experience to existing customers of CCD.
Thanks for your comment Srini.Not only impulse purchase other kind of purchase also will happen.But CCD has to bring proper store layout without disturbing existing customers.We all know that Starbucks is coming to India.They have already applied these things successfully in foreign countries, definitely they will introduce it here also.I think through this CCD is strengthening their business.
ReplyDeleteHi Subin,
ReplyDeleteMost of the CCD stores are small in size, i think existing store layout will not enough to differentiate the T shirt space from coffee area.
In foreign countries, people culture is different. They used to visit starbuck 2 0r 3 times in a week but Indians are not like that. i think this strategy will not help them to increase the brand value.