Coffee Shop Preferences Among Consumers Research

Executive summary

This report is for research on coffee shop preference among consumers and the factors that influence them. The objective of this research is investigate the differences in products and services in independent coffee shop and chain coffee shop and their positioning in the beverage industry. This information will assist the coffee shops in making decisions on how to expand and open more outlets in various parts.

This research shows various factors have been analyzed as factors determining the choice of coffee shop to patronize. Homogenization and many other factors have contributed to customers looking for other factors that they choose when they want to patronize a coffee shop. The factors that have been emulated in this research include the cleanliness of the coffee shop, appearance of employee, choice of cup, noise level, speed of service, employees friendliness, the accuracy in fulfilling orders, furnishings of shop, loyalty program of the shop, variety of coffee and food offered and coffee freshness.

This research shows that the most important factor among all factors affecting coffee shop preference is quality of coffee and service. he other factors also play an important role in determining the type of coffee shop the customer will patronize. It is important to note that no person will patronize any coffee shop with dirty environment and unfriendly employees.

Introduction and background of the study

Every era has brought its own set of opportunities and created niche sales prepositions for sales and marketing personnel. While there are official systems for choosing preferred numbers, there seems to be no formal mechanisms in place to monitor unscrupulous sales personnel on field.

Competition has created great challenges for marketers. Functions like production, distribution and consumption are being influenced by market forces. Changes taking place in the business environment have made customer service, quality assurance and price competitiveness vital for the existence of a firm. Business firms have realized that they cannot survive without marketing.

In today’s global business environment, most of the companies are attempting to manage their business strategy in line with their operational delivery. The need of the hour in today’s business world is to develop strategies in such a way that they payback in terms of competitive advantage along with cost reduction. A firm that offers the consumer the same value as the competitors, but at a lower cost is said to possess cost advantage, whereas a company that offers superior value to its customers when compared to its competitors, possesses differentiation advantage. These two advantages are called positional advantages as they represent the firm’s leading capability in the industry in either of these advantages. Additionally, analyzing the customer segments’, the competitive environment, and internal performance should be a continuous process for an organization. A company that can develop an effective and efficient competitive intelligence system will always succeed in handling the competition to its advantage (Mullins).

Approach to the problem & Research objectives

What cannot be assumed is a clear relationship between differences between products in independent and chain coffee shop outlet. Indeed, over reliance on quality to secure the customer could be at the cost of more powerful factors such as, the cleanliness of the coffee shop, appearance of employee, choice of cup, noise level, speed of service, employees friendliness, the accuracy in fulfilling orders, furnishings of shop, loyalty program of the shop, variety of coffee and food offered and coffee freshness.

The research objectives:

• Enquiring about factors that affect preference of a coffee shop for consumer
• Finding out about the qualities of a chain coffee shop and those of independent coffee shop outlet.
• To compare and contrast the buying behavior of customers in the coffee shop.
• To identify the key factors influencing the buying process of by customers
• Determine the competitors in the competitive edge
• Checking for the means the company is using to deal with the critiques.

Literature review

Consumer behavior is a study of how individuals make decisions to spend their available resources like time, money and effort on consumption related items. The heterogeneity among people across the world makes understanding consumer buying behavior an intricate and challenging task. The consumer’s identity, his beliefs, specific needs, attitudes and the kind of product and brands available in that product category influence his buying behavior. The marketing efforts have a profound impact on the buying decisions of customers. Hence, marketers attempt to obtain an in-depth knowledge of customers’ buying behavior.

Consumer behavior is affected by various factors that determine the product and brand preference of consumers (Donald, 1995). A few such factors are cultural factors, social class, social factors like reference groups, family, personal factors like age and lifecycle stage, occupation and financial status, psychological factors like superstitions, beliefs and attitude etc.

Customers tend to satisfy their needs on the basis of the intensity or requirement of the needs. Needs are general in nature but wants arise out of the desire to fulfill needs in a specific way. Wants that are conditioned by certain motives are known as a buying motive (Kotler, 1972). Hence, marketers must work to create these wants in the customers and target or position their product in such a way as to invoke desire in the customer to fulfill these wants (Andrew C. Gross et al, 1998).

A belief is a descriptive image or thought that an individual holds about something. People acquire beliefs and attitudes through experience as well as learning. The beliefs and attitudes held by people, in turn, influence their buying behavior (ICMR – ICFAI Center for Management Research, 2004).

Consumers pass through different stages before actually buying products. Data regarding these stages in the buying decision process can be obtained from the consumers who have already purchased the product or from prospective customers. Usually, the buying decision process can be divided into five stages namely, problem recognition, information search, evaluation of alternatives, purchase decision and post purchase behavior. All consumers may not necessarily go through all of the five stages. For instance, low involvement products that are frequently purchased do not need all the five stages of decision-making process. However, in the case of less frequently purchased, high priced products like the product that is being discussed in this paper – mobile phones, the customers go through all the stages in the decision process. Sometimes, the change in product, place, price or even service might compel the customer to go through all the five stages of decision-making.

The buying behavior of people is not predictable. When a consumer buys an expensive product like a mobile phone, as being discussed in this particular paper, it involves careful thinking and a large number of participants. Consumer buying behavior is based on the degree of buyer involvement and the degree of differences, he perceives among brands.

Conceptual framework, research questions and hypothesis

The framework of this study will be of a quantitative design. The reason of this selection is mainly because of the causal relation approach in establishing the aim of this study and its hypothesis. Additionally, as survey was chosen as the tool for data collection, where it could be considered as the traditional technique in quantitative techniques, this choice could be seen as appropriate. Another argument in favor of quantitative design is the fact that the purpose is seen in achieving generalization and prediction through established hypothesis and theories, rather interpreting the data and having a theory as a final result.

In the prior studies regarding consumer behavior toward a coffee shop outlet has had different opinions. But the claims made in these studies lack sufficient evidences to support them. The current paper will make an attempt to find out the extent of influence to the consumer has various factors on the consumption of coffee. For this purpose it is necessary to present sufficient evidences. Hence, the study conducted an elaborate survey to find out the extent of dependence of coffee shop on the various factors affection consumer behavior.

Hypotheses: There is a difference in products and services offered between independent and chain coffee shop outlets and this affect the customers’ perception and consumption behavior. The hypothesis is that the benefits from a coffee affect its consumption.

Research methodology

As seen above the purpose of this research is to investigate differences in the products and services of independent and chain coffee shops and how they affect the market. Based upon the findings of this research a set of recommendations has been made to help independent coffee shops to increase their market share. To meet the requirements of the research the information that has covered:

• A survey of the theoretical perceptions and findings of earlier research on the subject
• An attitudinal survey of the audience that this coffee shops targets as potential customers, and
• Comparison of response in relation to each coffee shop type and how they affect customer preference.

Interpretation and analysis of the information garnered will enable meeting the objectives and aims of this research. The approach to the research at hand shall consist of a judicious mix of the different ways that such a research may be undertaken. This shall consist of:

1. Detailed literature survey using different sources. Using publications and journals and reliable internet sites will help prepare a foundation for the research. This is essential, as books may not have the most current research reports. The literature survey will also help examine the factors affecting consumer behaviour.
2. Identification of specific factors that should be considered when operating a coffee shop.

Finally, analysis and discussion of the information collected through the literature survey, statistical methods and logical interpretation of the qualitative aspects will assist in meeting the objectives and aims of the research.

Data analysis

When data has been collected, it will be analyzed to have relevant information for decision making. Comparisons have been made between the three groups under consideration regarding each of the aspects under consideration. To form an average idea regarding each of these aspects for each of the groups under consideration, answers of all the participants of each group will be analyzed.

As far as statistical analysis is concerned two tailed t test will be used to check the statistical significance of the coefficient of the variable in the regression. If‘t’ statistic is found to be statistically significant then it can be said that there is significant then null hypothesis will be rejected and if average level of preference is found to be lower for the first group.

This investigation into the determinants of satisfaction with a coffee shop identified factors which contributed to overall customer satisfaction, in terms of the cleanliness of the coffee shop, appearance of employee, choice of cup, noise level, speed of service, employees friendliness, the accuracy in fulfilling orders, furnishings of shop, loyalty program of the shop, variety of coffee and food offered and coffee freshness.

Results and Discussion

A total of 480 questionnaires were sent to respondents visiting various Coffee shops. Convenience sampling was used to reflect the personal opinion of respondents who had at least used the coffee shops.

Customer preference is of prime importance to the research questions in this study. A summary of the survey results for the preference measures is presented in the below. Generally, the preference levels of the respondents were high in chain shop outlet as compared to independent. For most items, more respondents who responded with “independent or chain” than those who responded “unsure”.

Preference with chain or independent shops outlets

What is your preference (difference between independent and chain):

However, the satisfaction levels of the respondents lead us to the next research question to be answered, which concerns the determinants or elements that contributed to the satisfaction levels of the respondents.

All the items show very high factor coefficients under their respective factors. Hence, the factors are independent of each other, and there is no multi –co linearity among the factors. Thus, the multi –item measure of customer preference with coffee shop was reliable.

Determinants of coffee shop preference

While factor analysis identified the six dimensions of customer satisfaction levels was not indicated. In order to fulfill research question, regression analysis was carried out to determine the relative importance of these factors. The dependent variable is the overall preference level with the coffee variety and quality while the independent variables are factor scores of the six factors in the scale. A stepwise regression method with significance levels of 0.05 was used.

An examination of the parameter estimates suggests that factor quality of services and food had the greatest impact on customer preference. This variable is followed closed in importance by cleanliness of a coffee shop, but less important in explaining customer satisfaction was choice of cup.

Almost all factors had a positive influenced overall customer preference with the coffee shop. This could be to the fact that the first two factors mainly concern the experience which most shops provide in a similar way; so that the customer might not have has strong differences in perception..

Chi –square tests:

As the Pearson chi –squared value 131.287, 99.295, 118.475, 53.480 and 247.905 for Wide choice of coffee products, Variety of beverage types other than, Variety of food and desserts, Loyalty program and Food quality respectively is more than the critical value, 2.99, hence the test statistic’s value is located within the values of preference. Therefore, at the 5% level of significance, the hypothesis is accepted.

According to the Pearson correlation coefficient, was positive and significant at the 0.05 confidence level as hypothesized. The chi –squared test was also used to examine if there was a significant difference in the product in the two coffee shops and affects customers preference.

This study was examined the service perceptions of customer in a coffee shop setting and various factors were identified and then examined in terms of their impact on the overall service perceptions of customer satisfaction with the service they received, and their future intentions and willingness to recommend the coffee shop.

The analysis of the data has resulted in a number of findings. Firstly, most survey respondents have reported in majority than they were satisfied with the quality of coffee and service delivery. Various determinants were extracted using factor analysis. Of these determinants via using regression analysis, “quality service” factor was indicated as having the highest influence on preference, whereas “the cleanliness of the coffee shop, appearance of employee, choice of cup, noise level, speed of service, employees friendliness, the accuracy in fulfilling orders, furnishings of shop, loyalty program of the shop, variety of coffee and food offered and coffee freshness: had less influence on preference levels.

Limitation

Limitations to the research would in fact include many different considerations. Those considerations are inclusive of the number of respondents along with the factors that in consideration. Certainly, another limitation includes the ready acceptance to answer the questionnaires provided in regard to this research project. The numbers of respondents who were willing to volunteer this information even with assured anonymity provided several limitations toward tabulation and calculation accuracy in regard to percentages.

Summary, Conclusion and Recommendation

Summary

The chapter has drawn the major research findings and the conclusions which have been drawn from the findings. The findings are the ones which are going to be used to work on the area of the study. It has been found that there are certain factors which have contributed much to the consumers not patronizing independent coffee shop outlet as often as chain shops. The major conclusion is that the people they do not regularly patronize the independent shops because of the perception that their services are of low quality and they not satisfy most qualities that can only be found in the chain shop.

Though the independent shops are perceived to be of low quality they can develop strategies of improving the quality services in order to meet the needs of the customers hence increase market share for themselves. Through implementation of the strategies which have been mentioned under the recommendations the independent shops can be improved and gain a competitive advantage over the rivals which are chain shops.

The confidence will further be enhanced through comprehensive marketing strategies which the independent shops will be engaged in to ensure that their services have gained a competitive advantage. The overall outcome of the implementation of the strategies will be to increased customer satisfaction and preference which will result to increase market share.

Recommendations

The number of the people who were interviewed was few while the area of study was wide. The study should have involved more people in different areas in order to collect a comprehensive data that would have represented majority of the people in the society.

In order for people patronize independent coffee shop , quality of service should be improved be improved to meet the standards of the chain shops. Quality improvement is not the only way they should also improve Appearance of employee, make good choice of cup, reduce noise level, improve cleanliness of coffee shop, have a good speed of service, train employees to be friendly employees, the accuracy in fulfilling orders should be high, Furnishings in outlet should be appealing, introduce Loyalty program, increase variety of coffee and food, and coffee should be freshness.

The independent coffee shops outlet can carry out investigations which will help in learning the different strategies which are used by their rivals’ chain shops outlets in service delivery. Through the use of the knowledge gained it will be possible for the independent coffee shops outlet to improve their services.

The independent coffee shops outlets should implement strategies which will enable them to increase its market share in the general industry. Some of the strategies which can be used by the independent coffee shops outlet are through adoption of a program which will enhance awareness of their existence and improvement of quality, improvement of appearance of employee, make good choice of cup, reduce noise level, improve cleanliness of coffee shop, have a good speed of service, train employees to be friendly employees, the accuracy in fulfilling orders should be high, Furnishings in outlet should be appealing, introduce Loyalty program, increase variety of coffee and food, and coffee should be freshness. This will attract the customers to their site.

Conclusion

The research objectives which promoted this discussion were the following as mentioned in the introduction of this paper.

1. To ascertain whether the consumers prefer independent coffee shop outlet or chain coffee outlet
2. To know exactly what makes the consumers patronize more chain shop outlets as opposed to independent coffee shops outlets.
3. Coming up with a solution to the problem I regard to what should be done to raise the demand in independent coffee shops outlets.

Conclusions on the topic of study are based on the findings which have been observed from the study. The study shows that it is most customers prefer chain coffee outlet because of the various factors which they are perceived to be of high quality.

The research study was conducted in the best way possible to allow positive discussion of the research findings hence arriving at appropriate conclusions. However in carrying out the study there were various limitation s which were faced, the major limitation being the location in which the data was collected from, it was concentrated on one area yet people in other areas could have provided reliable data for the study. The reason for choosing the one area was based on the financial as well as time constrains, carrying out the study around this area reduced the financial cost incurred as well as the time for carrying out the study.

In future when carrying out a similar study the data should be collected on large geographical area in order to get different view of people. Also the sample used was small in future a large sample should be used since it can provide detailed information and diverse views on the study area.

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