Jagadeesh Krishnamurthy (JK): Costa Coffee has a relatively smaller presence in India as compared to Café Coffee Day. What is your audience profile?
Santosh Unni (SI): Costa Coffee is a premium product. We are operating in the higher end of premium coffee shop offerings.
The media has been presenting Costa Coffee as a premium coffee shop and Café Coffee Day as a mass market offering. I don’t think any coffee shop is mass market today, as that segment will have coffee and tea priced from Rs 10 to Rs 20. So, I don’t think anybody is in the mass segment.
One always tries to create a segment for oneself; so within the premium segment of coffee shops, we are at the higher end. The focus for Costa Coffee has been the metros. From a format standpoint, I don’t think we cater to the college going students segment, although we have a strong audience from there as well. Our focus is towards those who have just started their careers and our mean age at the stores is around 27 years. As an organisation, one of our main challenges is to try and bring this down to 23 years and get a larger audience in. So, our marketing efforts are in line with that, where we are positioning our outlets as a fun place to be rather than just a place for serious conversations (as it is perceived to be).
JK: Costa Coffee is now planning to add outlets in four more cities in the next couple of years to take it to eight cities. Why aren’t you increasing your footprint in the tier two cities and towns?
SI: It is a question of saturation in the larger cities before entering the smaller towns. The smaller towns are interesting for us, but there is so much to do in the larger cities. In our business, it is all about efficiencies. It is always efficient to operate in clusters rather than spread out.
JK: What has been your marketing strategy over the past three years? How has it evolved over the years?
SI: In the coffee shop business, our marketing strategy has always revolved around the product offerings. Being a coffee shop coming from the UK, our products have been historically strong in the hot beverages segment. Over the last two years, we have rolled out summer campaigns where we have introduced a series of cold beverages which are doing well. India is a very food-centric market. As Indians, we love munching something with our teas and coffees. We have a much larger range and quality of food products than our competitors, which we do communicate about a lot.
The other aspect of our marketing revolves around customer engagement. We have been fairly quiet in this aspect over the last few years. However, in the last couple of months, we are breaking out of the mould and engaging customers with our various initiatives.
We have defined four areas that we will focus on and create sub-brands in. One is the stand up comedy acts, for which we have the Laughccino; and the second one is music for which we have tied up with Universal Music and have started the Costa Rhythm & Brew. The third focus area will be books. Traditionally, Costa is well known for its association with books. In fact, in UK, we run the Costa Book Awards, a very popular literary prize for writers. Though we are not planning to bring down the Awards to India, we are planning to do something around books and are in talks with several publishers. The fourth area is around art. The walls of our cafes can be used as a great drawing board for artists. Having said that, we are still in the early stages of creating some kind of a property for these artists.
Since we have identified the four platforms that we are going to use, the focus will be to increase customer engagement. Despite these initiatives, our objective is not to convert our cafes into entertainment zones.
JK: Your competitors have been doing similar initiatives. How different will it be from their offerings?
SI: Frankly, I don’t think there will be anything radically new to do that somebody already has not tried. Various people might have done bits and pieces of it. However, none of them have a structure to it. The main difference in our offerings is the way we are creating sub-brands, instead of one-off events.
JK: What are the mediums that you will be choosing to communicate through?
SI: We are a brick and mortar company and so all our communications will be strong at the store level. Our customer engagement initiatives will revolve around the store. Having said that, internet as a medium is picking up and we are engaging our fans online as well. Going forward, when we have a larger presence across the country, we will not mind going on television.
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