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    Porter Analysis of CCD

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    vidhu devadhar
    The document discusses the competitive environment of Cafe Coffee Day. It notes that the threat of new entrants is low due to Cafe Coffee Day's large established network and brands. The threat of substitutes is high since tea, soft drinks, and homemade coffee are readily available alternatives. Customers have medium bargaining power since switching costs are low, but purchases are individual. Supplier bargaining power is low since Cafe Coffee Day does backward integration and suppliers are not unique. Competitive rivalry is high since the industry has many competitors like Starbucks, low switching costs, and products have low differentiation. Starbucks was a major threat when it entered but its higher prices limited its competitive impact.

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    Porter Analysis of CCD

    Uploaded by

    vidhu devadhar
    32 views4 pages
    The document discusses the competitive environment of Cafe Coffee Day. It notes that the threat of new entrants is low due to Cafe Coffee Day's large established network and brands. The threat of substitutes is high since tea, soft drinks, and homemade coffee are readily available alternatives. Customers have medium bargaining power since switching costs are low, but purchases are individual. Supplier bargaining power is low since Cafe Coffee Day does backward integration and suppliers are not unique. Competitive rivalry is high since the industry has many competitors like Starbucks, low switching costs, and products have low differentiation. Starbucks was a major threat when it entered but its higher prices limited its competitive impact.

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    The document discusses the competitive environment of Cafe Coffee Day. It notes that the threat of new entrants is low due to Cafe Coffee Day's large established network and brands. The threat of substitutes is high since tea, soft drinks, and homemade coffee are readily available alternatives. Customers have medium bargaining power since switching costs are low, but purchases are individual. Supplier bargaining power is low since Cafe Coffee Day does backward integration and suppliers are not unique. Competitive rivalry is high since the industry has many competitors like Starbucks, low switching costs, and products have low differentiation. Starbucks was a major threat when it entered but its higher prices limited its competitive impact.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    32 views4 pages

    Porter Analysis of CCD

    Uploaded by

    vidhu devadhar
    The document discusses the competitive environment of Cafe Coffee Day. It notes that the threat of new entrants is low due to Cafe Coffee Day's large established network and brands. The threat of substitutes is high since tea, soft drinks, and homemade coffee are readily available alternatives. Customers have medium bargaining power since switching costs are low, but purchases are individual. Supplier bargaining power is low since Cafe Coffee Day does backward integration and suppliers are not unique. Competitive rivalry is high since the industry has many competitors like Starbucks, low switching costs, and products have low differentiation. Starbucks was a major threat when it entered but its higher prices limited its competitive impact.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 4

    Threat of New Entrants

    1. Older and more established companies and brands café coffee day have an additional
    advantage of reached economies of scale, and as a result are able to reduce their marginal
    cost of their products.
    2. There is low risk of brand-new entrants to Cafe Coffee Day as it has rather big network of
    circulation internationally dominating with well-reputed image. there are previously well
    established native and international brands in the Indian coffee marketplace.
    3. An important barrier to enter the coffee retail market is the large amount of capital
    required to do the same. This barrier to entry acts as an impediment to those willing to
    enter the industry unless they are backed by industrial giants. Since the current
    competitors have already captured a significantly large portion of the market, any new
    entrant will need to spend a large amount of capital of advertising and promotional content
    to capture market interest.
    4. Café Coffee Day’s Fresh ‘n’ Ground has definite advantage with respect to access to raw
    material and consequently, distribution channels due to the fact that they own large
    amounts of coffee plantation holdings.
    5. There is no restrictive policy of the government regarding the coffee cafes in India. In fact,
    government is encouraging the Foreign Direct Investment(FDI).
    6. There is a low cost of switching for a customer in the coffee industry.

    Threat of Substitutes
    Threat of substitutes is exceedingly high for numerous reasons.

    1. First reason is that India is well-known for tea nation and therefore tea can be a straight
    away substitute of coffee.
    2. Coffee, Coolers, Tea, Sweet treats are the main products of CCD. But its main products are
    centred around drinks made with coffee. Any drink that can potentially replace them can
    be considered a substitute. Pepsi and Coca cola offer a wide range of soft drink products
    such as Coke, Sprite, Costa coffee, Georgia coffee etc. At the same time, there are local
    varieties of drinks from every country, such as Tea, Coffee and other beverages etc., that
    also have the potential to replace CCD coffee and other drinks.
    3. Some of these drinks that have caffeine in them, such as mountain dew, Sprite, etc., have
    greater potential to replace CCD coffee than others due to the similar post-consumption
    effect.
    4. Customers do not have to face any commendable switching costs to switch to the
    aforementioned substitutes. They are readily available in most stores in locations CCD
    operates at and are comparatively affordable compared to CCD products. Hence, it can be
    concluded that the threat from substitutes is high.
    5. Also people have homemade options to have good coffee at home either using instant
    coffee like Nescafe or buying a coffee machine.
    6. Moreover, teenagers can go for other places to hangout like pubs or ice cream Parlors
    instead of visiting to these coffee shops.
    7. The buyer has vast opportunity to taste and try other substitutes available in the market. In
    this sense, the entry of foreign coffee brands are also multiplying the effect and giving
    chance to buyer to try new substitutes.

    Bargaining Power of Customers


    1. The bargaining power of buyers is relatively Medium because the swapping cost of coffee is
    not extremely high in India as there are numerous native and international coffee brands
    that are available at the doorstep. Further, there is an extensive diversity in the products
    and services available at other coffee outlets. This seems to be an excellent hazard for any
    company. Therefore, Cafe Coffee Day ensures to keep its customers pleased. This has
    actually led Cafe Coffee Day to be one of the faithful businesses in eyes of its buyers.
    2. Buyers at CCD are mostly individuals purchasing a coffee for themselves, making purchases
    out of their individual conscience. They do not make bulk purchases and also do not exhibit
    any cohesive group behavior. Although bulk purchases are also made, they are mostly
    limited to corporations purchasing them and not individuals per se.
    3. The number of buyers is very high
    4. There are very low chances that buyer will integrate backward and threaten industry
    because the product do not have significant important in the consumer’s daily living.
    5. It is a daily basis consumable products and take insignificant share of buyer’s income.

    Bargaining Power of Suppliers:

    1. CCD grows it’s the coffee which is served in the cafes so there are no suppliers in the case
    of coffee

    2. For eatables that are served are catered by different suppliers as per the required
    standards put in place.

    3. CCD Manufactures its own coffee vending machines and café furniture nationally.

    4. Bargaining power of suppliers is bit to be low because there is no presence of monopoly.


    5. Further, the government and other regulatory bodies have enforced several regulations and
    limitations on the prices of coffee and milk.
    6. There is an enormous level of backward integration in the coffee industry that actually
    reduces the bargaining power of suppliers.
    7. In the food and beverage market, Cafe Coffee Day owes the largest share of market
    needing greater number of supply chains. This triggers it to be a picturesque buyer for the
    suppliers. Hence, any of the provider has never ever expressed any complain about price
    and the bargaining power is also low. In reaction, Cafe Coffee Day has actually likewise
    been concerned for its suppliers as it thinks in long-lasting relations.
    8. Given the fact that these raw materials are not something unique, they can be procured
    from suppliers that follow the standards. This would mean there is very little bargaining
    power for the suppliers.
    9. The firms will not face any switching cost reducing the bargaining power of supplier.
    Competitive Rivalry

    1. The competitive rivalry for the firm depends on mainly the number of competitors available
    in the market at the moment, product and brand differentiation and the switching cost of
    the customers.
    2. Currently, the main competitors to CCD can be all the local cafes, restaurants that serve
    coffee, other firms like Starbucks, Dunkin Donuts, McDonald's McCafé, Costa Coffee, etc.,
    3. Given the fact that this belongs to the Food Industry, switching costs can be considered
    close to zero.
    4. As for the product differentiation, CCD offers a wide range of drinks and the experiential
    benefits associated with the outlets, but its competitors are equally large to contend that.
    5. Starbucks announced its entry into India back in the year 2012 by a 50-50 joint venture with
    Indian business tycoon TATA. Starbucks prices were not extremely high but more expensive
    then CCD because of having an international brand image with exceptional quality. The
    price which was charged by Starbucks was Rs. 95 (cappuccino) quiet high as compare to
    CCD’s cappuccino which has the price of around Rs. 66. Much the same as CCD, Starbucks
    also offered a variety of other products like frozen yogurts, sweets, quick sustenance, and
    other food as well in every last bit of its shops as per the preference of customers.
    Starbucks was the serious threat because they owned a globally established brand name
    and exceptionally well financial position.
    6. But one element which might become threat for Starbucks itself is the element of price
    because the average bill for two persons at Starbucks is around Rs. 600 which is quiet high
    as compare to Rs. 175 of CCD’s. Cafe Coffee Day brings in local customers by its low
    expense of the product with the regional taste of the items maintaining its first place in the
    international market.

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