Coffee Junction

8/2/2019 Coffee Junction

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Mission of business

Growth with innovation and increasing chainOf coffee junction

What we want to achieve?

We want to achieve the sustainable growth in the competitive market, as there is less organized

competitor in the market but there is large chunk of the unorganized coffee shops in the market so

there is the need of growth in the competitive market.

How we will achieve?

Since we are talking about the growth that will be achieve by the regular innovation ie by bringing

change in the business by providing different array of products like introducing new games change in the

themes in the coffee shop according to the demand.

Concept of coffee junction:

Coffee junction is the coffee shop which give wide variety of product and make product system for the

Non-alcoholic beverage product which include tea,coffee,cokies,snakes,and cold drinks.We are trying

to become India's largest coffee conglomerate. Coffee junction is claiming with its tag line of the more

than a sip this create a perception in the mind of the customer that it will give sum value added

services with the cup of coffee or tea i.e. it is also providing the sophisticated games such as pool and

chess for its sophisticated and young customer.

We are providing games like pool and chess with the intension that these are game that will take long

time to complete and by the time they can have a sip of coffee or tea which relaxes there mind and

stress. Coffee junction can also be the good place for hang out and meeting with clients with fabulousambience together with the soft music. Since the main target area will be the metro cities and near

about area as these cities have a large chunk of the income group which have high salaries and

sophisticated crowd and that will be the main target customer.These customers will always be the

young and sophisticated customer, that will make the long term gain by creating brand loyalty.


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Market size and growth

Growth opportunity:

Growth opportunities of the coffee junction will me more in the area near good colleges to attract

youth. It will also focus to the area which is near the office area to attract customer for their relaxationand hangout.

Since this business of coffee have less number of competitor in the market and the big competitor is less

so our business have the more opportunity in the market and this segment of the market is growing at

very fast rate but its international market is at the stagnant stage of there is more chances of the foreign

investor in the Indian market so that may be future competitor in the market.

Service differtiation & strength:

Our cafe will serve not only coffee but the whole array of the services which include the

tea,snakes,game zone which make the services differentiation from its competitor and our mission issustainable growth so we will follow the pricing strategies which are feasible to the customer and able

to cover our per unit cost.

Market attractiveness:

According to a study conducted by the International Coffee Organization, India is the fifth largest coffee

producer in the world. Karnataka alone is responsible for producing 70% of the total coffee output of

the country. This shows that there is the need of the coffee caf in the Indian market. The traditionallytea-drinking society of India has been steadily increasing its coffee intake as the young and middle-class

aspire to have more Western tastes. Group networking is embracing the practice of meetings over

coffee as professional and recreational clubs alike gather routinely at coffee shops in Indias major cities

to discuss business and pleasure.

Industry overview:

The Coffee Caf industry is currently one of the biggest and fastest growing sectors in business. The

industry consists of a mix of individual cafs, hotel cafs and retail caf chains.

Individual Cafs:

The main bulk of revenue is earned by small, individual cafs, run mostly by families and friends. It is a

relatively unorganized sector. There are millions of such cafs around the world, and they providecustomers with a homely, casual experience. The bulk of these cafs are mainly in Europe, where every

little town or village has local cafs, where people gather together for a conversation over coffee.

Hotel Cafs: Ever since the popularization of coffee, hotels all over the world started opening 24-hour

coffee shops where visitors to the hotel could walk in for a cup of coffee and some food at any time.

These coffeehouses are extremely important, because they provide international visitors


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to the hotel with a universal drink- coffee. Any customer can walk into any major hotel in the world, and

enter the coffeehouse, and know what to expect. These cafs are not really major players in the coffee

caf industry.

Retail Caf Chains:

The last, and the most organized sector in the coffee caf industry, is the retail caf chain. Off late, these

chains have become extremely popular and are growing at an ever-increasing pace. These retail chains

have work with an organized structure of man, material and money. The work on developing a

recognized brand consistent to all their outlets, which customers can easily relate to, wherever they go.

They provide customers with a standardized level of service and quality at each of their outlets.

Feasibility report:

Market threat: our business have the stiff competition from the big retail brand like Caf CoffeeDay, Barista Lavazza, Java Green, Costa Coffee, and Gloria Jeans Coffee, but the market is still

young. There are more than 140 registered caf in India which may affect out profit margine.ourbiggest threat in the business is the FDI in retail if there will be 100% FDI in retail shops then

there can be the mushrooming of the foreign brands.

Business weakness: Due to serving a gaming zone to our customer there can be the highinvestment cost with it and it may take more time to cover the capital investment, this may also

effect the overall per unit cost of production. Customers dont have the brand loyalty with our

product will also affect the profit at its introductory stage so this will cost heavy advertisement

cost and promotion cost.

Risk analysis:

Competition is high in the initial stage with the existing brands in the market and there is thethreat of the foreign brand and FDI in the market

Financial risk since at the maturity stage there will be more investment in the advertisement,high capital investment which includes coffee machine, land, furniture etc.

Economic risk is also included at the introductory stage of the product as there can be lessdemand of the product in the market as there is big brands are there in the market which are

doing well and at the initial stage may be the customer will not have willingness to pay higher

price.

Ecological risk there can be legal issue while registering the caf in the market.S.W.O.T Analysis:

Strength of the business is the distinct service of the game zone and providing tea of widevariety.


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Weakness of the business is that it doesnt have any existing brand name or support of any loyalbrand in the market and have comparatively high cost of investment.

Opportunity: despite of the stiff competition in the market and existing of the big brand Indianbeverage market is still young market which opens opportunity to the new player to enter into

the market.

Threat: The biggest threat in the market is the 100%FDI in the single retail out let which willintensify the competition in the market as there is already big brand in the market.

Micro economic factor:

There can be the problem of the availability of the good work force. There can be the problem of the have having furniture and fixture at cheap cost. Managing chain of retail outlets will be biggest problem for the internal management of the

company.

We have near about 140 competitors in the market but still this market is young and growing sothere is opportunity of growth in the market.

PEST Analysis:

There is lots of political issue which caf may face at the initial stage due the change in theworking or the policies of the government. The present UPS govt are in the favor of the 100%

FDI in the retail outlet India which may create problem.

The present Economical condition in the market are in the favor of the business as there isrecession in the market so there will be less requirement of the initial capital for the business.

At the initial stage society may not accept the new brand In the market but the concept ofsophisticated games are brought in the market keeping the need of society in the mind and also

fulfilling the need of the variety of tea .

Since there in very less need of the technology for this business accept for the use of the Wi-Fizone, which is not such big issue.

Cost estimation:

Fixed cost:

Land bought=3500000 Construction=1500000 Furniture=500000 2 coffee machine=16000 Ice cream machine=12000 Tea machine=4000 Flavor soda machine=13000 Salary

o 4 main staff for shop @80000 each=32000 pmo 1 sweeper @6000=6000 pm


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Fixed rent for electricity=300 pmTotal fixed cost=5583300

Variable cost:

Electricity bill=2500pm Advertisement expense=6000pm Maintenance=12000pa i.e. 1000pm

Total variable cost=9500pm

Total cost=5592800

Estimated sale p.m. =60k to 70k pm (To cover the fixed and variable cost)

Per day sale=approx. 3000

Contribution=sales-variable cost(including salary)

=60000-41500

=19500pm

B.E.P(units)=5592800/19500

=286unit.

Competitors Strength:

Barista

Barista has a Skim Pricing Policy. They began with a higher price, and skimmed the

cream for the market. With the sudden spurt of growth in number of outlets, came the

benefits of economies of scale. Because of this, they have been able to gradually lower

their prices, and appeal to different segments of their target market.

Currently, their prices are the lowest they have ever been, and they can competitively

match their prices against Caf Coffee Days prices. The prices are constantly changing

though, and the last 1-year has seen 3 changes (mostly reductions) in prices. This gradual

price reduction meant that Barista could maintain its profit- maximization policy until it

could earn large cost savings because of the benefits of high volume.

Barista positions itself as a brand for anyone who loves coffee. Their products, servicesand outlets are more like the traditional European cafs, where people would meet for the

love of coffee, and for an intellectual appealing time. They position their outlets as a

place where the world meets, and they look to appeal to anyone in the 14 - 60 age group

that loves good coffee and looks for a nice quiet time.

Products:

Baristas product mix constitutes a wide range of products that appeal primarily to

traditional coffee lovers. Their products themselves are traditional products with


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traditional names. Food items like croissant, pastas, and sandwiches are

complimentary to their coffee, and project a very classic image of Barista. Their

merchandising also consists of primarily coffee related products like coffee beans,

coffee machines, etc.

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Prices:

Considering that Barista is trying to target a market whose age range is between 18

and 60 years, a pricing policy appealing to this segment is difficult. Extremely low

prices act as a deterrent to some customers who might regard it as an indicator or

quality, while very high prices cannot be afforded by most of the youth. But since

Baristas current consumer profile is quite young, their prices are mostly inexpensive,

and at par with their competitors.

Solution to the problem:

Since the future threat is the FDI in the retail market so to overcome to this problem we havecome with the solution of regular innovation in the service and product which will give the

competitor edge in the future and we will follow the penetration pricing policies which areacceptable by the society at the initial stage.

For the heavy investment in the game zone we came with the idea of leasing the game zone inthe initial stage and its demand increases with the time we will buy those games.

We will use the social media for the extensive advertisement of the business which wiil be goodand cheaper mode for positioning the customers.

We will also try to have joint venture with the college canteen and petrol pumps for opening ofthe outlets.

For reducing the financial burden will give the self service to the customer which will reduce thesalary budget to the employee.

Will Focus the posh area and area where we will get huge young crow and that will be our targetcustomers in the market.

Documents

Coffee Junction