Barista Coffee- Substitute Product within Niche Market

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3.4.3. Barista Coffee- Substitute Product within Niche Market Corporate Profile: Background, Market Entry & Growth:

Barista coffee was establishes in 1999 with the aim of identifying growth opportunities in the coffee business. As of today, Barista exists in over 22 cities, and operates over 140 outlets nationally. In the last 2 years, Barista has opened over 100 outlets in the country and with a new outlet opening nationally every 14 dates; Barista is currently experiencing phenomenal growth. With outlets opening in Sri Lanka and Dubai, Barista is looking at potential growth opportunities in Asia, making it highly competitive international brand.

Product mix:

Please refer to Appendix 3 for product offerings and pricings.

Product Sources:

Barista sources its coffee beans from around the world, but a major supplier is TATA Coffee, part of the TATA Group that owns a large stake- holding in Barista. These coffee beans are then sent to Venice, Italy where they are roasted into a blend exclusively for Barista. The food and desserts at Barista is exclusively catered to by the Taj, who ensures a high standard of quality with all its products. Barista also sells merchandise through its store, all of which is imported. The merchandise accounts for nearly 1/6th of Barista’s overall sales.

Merchandising:

Barista sells various kinds of merchandise through its stores. The table details the different merchandising products.

Merchandise, Tiramisu Flavors, Coffee Mugs, Blue Curacao, Barista French Press, Barista Coffee Beans

Pricing:

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. Considering that Barista is trying to target

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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 Barista’s current consumer profile is quite young, their prices are mostly inexpensive, and at par with their competitors.

People:

The people at Barista are characteristically trained to be Pleasant, Polite and Positive. They ensure you have a quiet, uninterrupted visit and provide an escape from the daily pressures of life. Their uniforms are in sober shades of brown and orange, and contribute to the overall laid-back feeling of the café.

Physical Evidence:

a) Logo, Colors, Images: Barista, since the beginning has looked to use colors in its café interiors, logos and images; to project a “warm, earth glow, synonymous with coffee”. Barista uses shades of Orange & Brown to good effect to promote its “laid- back” atmosphere.

b) Décor and Architecture: Barista’s internal décor and architecture expresses the simplicity you would normally associate with traditional cafés. The furniture is made of light shades of wood, and there are comfortable sofas in bigger cafés. The walls are shades of orange, with various photographs of the love for coffee spread around each outlet.

Place:

Barista looks to cater to their target market with strategically located outlets. Their outlets are generally located at High Street/ Family Entertainment Centers. Considering their generic appeal, there are Barista outlets in and around Malls, Cinemas, Colleges, and Offices etc. this endorses their brand image of a café that appeals to coffee lovers of all ages.

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Promotions:

Barista currently carries out mass promotion campaigns. This is mainly in the form of promotions in the Press, TV and Radio Medias. At present, they do not rely heavily on advertising, but rely more on sponsorships and strategic alliances with other corporations.

Barista also takes part in various sales promotion activities to help increase sales at their outlets.

a) Sponsorships:

Barista sponsors various events and festivals, which provides them valuable promotion directed at strategic markets. The sponsorships are mainly in kind, although major events are sponsored in cash also.

b) Collaborations:

Barista has entered into special collaborations and alliances with various partners for co- marketing brands. For example, Barista entered into a deal with Leo Mattel toys to provide the popular board game Scrabble at every Barista outlet across the country. This is an ideal alliance for both the organizations, because it provides Leo Mattel with an important avenue for promoting their product, and it provides Barista’s customers an added attraction for spending more time at Barista outlets.

Barista has also entered into partnerships with various movies, for promotions through Barista, and recently, they tied up with Star World for its “Absolutely Everybody” campaign.

c) Sales Promotion:

Barista uses a special “Barista Coffee Card” for its sales promotion activities. The Barista Coffee Card entitles you to one complimentary hot beverage when you are done sipping seven.

It is available to all Barista coffee regulars. No membership fees, no references required. Fill out the card and you are a member. As a Coffee Card holder, you earn one stamp on the card every time you purchase a beverage. Simply present the card to the cashier when you place your order at any of their outlets. Once you have collected seven stamps, you can hand over the card to receive your complimentary hot beverage. Barista hopes this card can help drive sales growth, and increase customer retention.

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Competitors’ strength:

 Strong brand image: Barista has a strong and clear brand image. Their customers can easily identify and relate to barista brand.

 Excellent Human Resource: According to a survey, Barista received an excellent rating for the service and behavior of their staff.

 Ambience & Décor: Another significant area of excellence is the kind of ambience and décor Barista cafés have.

 Strong base for expansion & growth: Barista have worked hard on their brand image and human resources, and have a strong base for future expansion and growth- whether nationally or internationally.

Competitors’ weakness:

 Average taste & quality of products: According to the market survey, other than their Dessert, Barista got only an average rating for the taste & quality of their products.

 Perceived as an expensive brand: Customer perceptions of Barista’s prices and value for money are quite negative. Even though the prices of Barista and Café Coffee Day are almost identical, Barista is still perceived as the more expensive brand.

 Inconvenient delivery process: Barista’s self- service delivery process received almost unanimous complaints from respondents of the market survey. They found it inconvenient to go back to the counter just to receive their order.¹⁶

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