Coffee Shops: Differences in Products and Services

Purpose of study

The consumption of coffee has been on the increase in recent years, with the result that there has been a rapid increase in the number of coffee outlets within the food industry. In light of this, the different players in the industry have come up with diverse products and services to offer their customers, in a bid to gain a firm grip of the market share in the coffee sector. In addition, both the independent and the retail chain coffee houses have embarked on a program that aims at educating their customers on the different varieties of coffee on offer. Due to this, coffee consumers in Australia have become increasingly sophisticated (AFP 2008 p 2), and this has impacted the perception that they hold concerning the products and services offered by the retail coffee houses. Consequently, both the retail coffee chain and the independent players alike are promoting their outlets using various forms of advertisements (Arnould, Price & Zinkhan 2004 p. 23), such as television. This is an indication of the increased level of competitiveness within the retail coffee sector (Scott 2006 p. 66). It is also an indication that the sector is experiencing phenomenal growth, in effect acting as a cue for multinational coffee chains to invest in Australia.

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Approach to the problem and research objectives

It is the intention of this study to explore the existing differences in terms of the products and services offered by the independent coffee retailers in Australia on the one hand and on the other hand, the retail chain. The intention help shed light on the kind of services that these two industry players provide, and whether or not the differences in terms of their service provision could be their source of success in an otherwise competitive market. Furthermore, it is also the intention of this study to further shed light on the benefits that customers perceive when it comes to making a choice between having coffee at an independent retail outlet or a retail chain coffee outlet.

Accordingly, the specific objectives of this research study shall be to analyze the socio-demographic profile of coffee consumers of both the retail chain and the independent coffee outlets. Secondly, this study shall endeavor to examine the existing differences with respect to relational benefits and determinant attributes, as perceived by the customers between, on the one hand, the independent coffee shops outlets and on the other hand, their retail chain counterparts. In order to facilitate a successful carrying out of this study, a self-administered and semi-structured questionnaire shall be administered to the study’s respondents. In this case, the respondents to the questionnaire shall be the customers who frequent the coffee shops that this researcher will have selected.

The selection process of these sites will be done in such a manner as to create diversity. The data collected shall then be analyzed using such statistical tools of analysis as the Statistical Package for Social Sciences (SPSS), and Microsoft Excel (MS Excel). The presentation of the research findings shall be in the form of statistical tables and bar graphs. Finally, the research findings shall be discussed relative to the available literature on the same issue, in effect paving way for a conclusion and recommendations to better inform related studies in the future.

Literature review

Loyalty programs

Virtually all of the coffee shops outlets have now embraced the concept of loyalty programs as a way of enabling them to enlist loyal customers. Not only do loyalty programs help a business to establish a special bond with the business establishment (Euromonitor International 2009 par. 3), they are also aimed at ensuring that the coffee shop owners enjoy repeat business from their customers. According to Meyer and Waarden (2007 p. 225), loyalty programs ensure that customer switching behavior from one business establishment to the other is reduced drastically.

As a way of enticing customers, the business owners, in this case, the coffee shop outlets owners, issue their customers loyalty cards that help them to accumulate points based on the purchases that they make. Accordingly, should a customer deem it appropriate to switch their brand, they also lose the points that they have amassed, in effect meaning that they cannot redeem them for various prizes that could be on offer. Besides, loyalty programs show customers that they are appreciated (Lewis 2008 par. 3), and so the existing bond between the customer and the coffee outlets owners becomes even stronger.

Influencing secondary motivators

Secondary motivators have been categorized as those motivators that are conscious in nature. Further, the secondary motivators could be extrinsic or intrinsic. By extrinsic, what this means is that the rewarded behavior concept is involved here. Within the context of a coffee shop, the idea of a reward program could be categorized as an intrinsic motivator to loyal customers. On the other hand, intrinsic motivators are those that come from within an individual. Put simply, this is what drives an individual. There is a need to appreciate the fact that secondary motivators usually demand that an individual portray a high level of socialization, in addition to personal experience. Owing to the changing trends in life, coffee drinking has become more of a lifestyle, and both the retain chain coffee outlets and their independent counterparts are aware of this. As a result of the personal development experience, individuals would also wish to be identified with a certain coffee house and not others, and this will therefore influence their choice of the coffee outlet that they often frequent. Owing to the changing trends in lifestyle and a more sophisticated populace, a majority of the coffee makers have deemed it necessary to educate people on the various products that they offer through promotions, such as the use of discounts and loyalty cards. In addition, coffee shops also conduct several coffee festivals, such as the Aroma Coffee Festival that took place in Sydney, Australia.

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Friendly employees

The level to which the employees at a coffee outlet are friendly shall impact how frequently customers come to such an establishment (Smith 2008 par. 4). With friendly employees, a customer feels both and appreciated at the coffee shop. Furthermore, first impressions are lasting, meaning that the way a customer is handled the first time that they go to a given coffee shop, shall determine whether or not they will make a return visit. A majority of the independent coffee shops lack the financial resources to advertise like their retail chain counterparts. As such, the quality of service that they offer to the customers becomes their greatest asset.

Conceptual framework and hypothesis development

Both the independent coffee shops as well as the retail chain coffee outlets have come up with loyalty programs that aim at retaining and rewarding loyal customers in order to increase business revenues. In order for coffee shops to realize additional revenues, it is important that they are able to increase the consumption rate of coffee by their customers. Accordingly, loyalty programs work by ensuring that the existing customers do not switch coffee houses. If they are satisfied with the kind of service that they get and the coffee is also good, chances are that they will not only return later, but they are also likely to bring along with them their friends, in effect meaning more coffee consumption and consequently, additional revenue for the coffee shop. In addition, it is important that the employees at a coffee outlet are friendly, so that their customers may feel appreciated and return. However, it is not enough for the coffee shops to implement loyalty programs if at all they do not ensure that their employees are also friendly to the customers.

Banasiewicz (2005 p 234) has opined that a loyalty program has the potential to alter consumer behavior by way of motivating them to make a return visit to a given place of business. Besides, a friendly atmosphere in the form of employees ensures that the customers are also relaxed and satisfied. Owing to the fact that the coffee chain is able to advertise and hence become known better than the independent coffee shops, it would be prudent therefore if at all the independent coffee shops implemented a loyalty program to not only attract their customers but also retain these.

Methodology

Data collection for the study shall be through the use of a semi-structured and self-administered questionnaire. The study subjects shall be the customers who frequent the independent and the retain chain coffee shops. Ethical considerations shall be followed during the entire process of carrying out the study. In this case, consent shall be sought from both the management of the retail coffee outlets selected, as well as the subjects themselves. Data collected shall be analyzed using such statistical tools of data analysis as SPSS and MS Excel.

Project management

This research project shall be undertaken by a student who has enrolled for a master’s program in Business Management at Victoria University. This research study shall be undertaken in partial fulfillment for the award of a master’s degree in business for the student in question. In order to facilitate the undertaking of the study, this researcher shall enlist the services of two research assistants who have qualifications in bachelor’s degrees. Also, the researcher shall constantly seek the advice and direction of the supervisor to ensure that the project is not only relevant but also completed on time.

References

AFP 2008, “Coffee culture grinds Starbucks’ Australian operation.” Web.

Arnould, E, Price, L, & Zinkhan, G., 2004, Consumers (2nd Ed). Irwin McGraw-Hill.

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Banasiewicz, A 2005, ‘Loyalty program planning and analytics’, Journal of Consumer Marketing, Vol. 22, No. 6, pp. 332-239.

Euromonitor International 2009, “Specialist coffee shops in Australia see vigorous expansion”. Web.

Lewis, K 2008, “Coffee Shop Service and Quality Are Important”. Web.

Meyer, L, & Waarden, M 2007, ‘The effect of loyalty program on customer, lifetime duration and share of wallet ‘, Journal of Retailing, Vol 83, No. 2, pp. 223 – 236.

Scott, C 2006, ‘Scottish cafe society: contemporary consumption issues and lifestyle identities’, International Journal of Contemporary Hospitality Management, Vol. 18, No. 1, pp. 60-68.

Smith, J 2008, “New Wave Coffee”. Web.

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