Presentation
MKE2018
ARush_Project_12172017.docRunning head: RESEARCH PLAN 1
RESEARCH PLAN 13
Research Plan: Starbucks
Allyson M. Rush
Rasmussen College
December 17, 2017
Executive summary
The market today has brought in various factors that affect the purchasing power of a consumer as well as the decision. These are important aspects of any market in the world. The coffee industry will be focused on since it is one of the most dynamic industries in the world. Many studies have focused on this industry looking into various factors. There are few, if any studies, to have focused on whether the cost of coffee influences how much is purchased and how the company can lower its prices. The study found that for most people price of coffee affected their decision to buy it. Further, most of the coffee consumers would not buy an expensive coffee whereas there is a cheaper one. Additionally, it was established that prestige, quality, loyalty, free choice, and taste were the main reasons why people purchase coffee the expensive type. Lastly, it was determined that price was the sole determinant of their buying habit. In light of the findings, the study concludes that for most people price of coffee affected their decision to buy it. Further, the study concluded that the coffee consumers would not buy an expensive coffee whereas there was a cheaper one. Given that price is the sole determinant of consumers’ buying habit, Starbucks and other companies in the industry should consider price effect whenever they are making decisions regarding their prices.
Table of Contents
10 Participants
13 Limitations
14 Findings
14 Conclusions
15 References
Introduction
Consumerism is a field that has been studied widely around the world. The corporate world seeks to be ahead of all decisions taken by the consumers so that revenues can be secured at all times in all seasons. The market today has brought in various factors that affect the purchasing power of a consumer as well as the decision. These are important aspects of any market in the world. This is the reason why it is important to keep updated on the trends of consumer behavior which also explains why global corporations keep on spending millions in research to identify the best way to cope up with the changes within consumer mannerisms. In this context, the coffee industry will be focused on since it is one of the most dynamic industries in the world. A slight price change can have tremendous changes in the industry. Thus, this industry is the best one to study how costs and price can affect the product since coffee is a product with a heightened sensitization to external factors.
Problem Statement
The various trends and factors influencing the purchase decision for most consumers in the world form the basis of most research projects based on consumerism. In this context, things are not different. The focus is on factors that influence the purchase of coffee spices at Starbucks specifically cost and price. Many studies have focused on this industry looking into various factors. There are few, if any studies, to have focused on whether the cost of coffee influences how much is purchased and how the company can lower its prices. Thus, this study seeks to fill this knowledge gap.
Research objectives
Broad Objectives
· To find out whether the cost of coffee influences how much is purchased and how the company can lower its prices.
Specific Objectives
· To find out how much how much each coffee spice costs.
Research Questions
· How does the cost of a coffee spice influence its purchase?
· To what extent does the pricing of a coffee spice influence its purchases and the cost of the product?
Hypothesis
· The cost of a coffee spice influences its purchases and the cost of the product
Literature Review
Over the past years, a lot of studies have been made concerning the coffee making and marketing industries or companies. The studies indicate that a lot of companies have been striving to know of the ways to maintain their customers and their relations (Kotler & Armstrong, 2001). Some of them have even gone as far as making their products cheaper than other companies to attract more customers and retain the ones that they have already.
Besides the cost-effective nature of the products of the companies, some went ahead even to provide a conducive environment in the whole process, and this makes them get even more customers in addition to the ones they previously had. The behavior aspect of the companies also showed that it could be a way to promote their market even more. This mainly occurred through; how much the consumer buys of the product due to its cost-effectiveness, how frequent the product is bought by the consumer, the behavior patterns displayed by the consumers whenever they purchase the product (Kanuk & Wisenblit, 2010).
Studies showed that the only way to differentiate between the non-loyal customers and the loyal customers was by several ways, among them; the loyal customers keep coming to buy the same item or product regularly due to the affordable prices which are given by the company, the good customers will always go and bring more customers to the company to purchase and try consuming the products produced by the company, consumers who are true will always ask for other products produced by the company to try them and see the results (Bowen & Shoemaker, 1998).
Research also shows that the cost of the products also influences the purchasing of the products, since when the consumer buys a product and uses it and then the results he/she gets back will determine if the consumer will again come back to purchase the product again and again. If the costs are affordable and the product is good quality, then the likelihood of the consumer to come back is very high.
It has also been found that at times, the customers may feel to have a change of the same brand but from different companies. When they are doing this they also incur searching costs of information, whenever they find that the cost of searching or gathering more information on the product is high, then their morale on the purchase of the different product goes down. This is because no one wishes to incur more costs on a product that they already have access to and works better (Fildes & Robertson, 2007).
Perceived product value is another key aspect that influences the purchasing of the product. When the customers feel that the product they are purchasing offers a greater value than the likelihood of re-purchasing the product becomes very high. This has helped a lot of companies develop regarding their business markets. These among other practices have been employed by various companies which have seen them develop both regionally and internationally (Young & Peterson, 2010). Studies also proved that constant prices of the products by the companies made them gain and maintain their customers since the consumers get what they want readily and at a good cost.
Sampling Design
The study used a total of 318 coffee spice consumers at Starbucks in New York. This was the target population which was based on random selection. From there, a sample size was determined using a sample size formula as explained by Bryman and Bell (2015).
The formula is
Where; n = Size of the sample,
N = Size of the population and given as 318,
℮ = Acceptable error and given as 0.05,
∂p = The standard deviation of the population and given as 0.5 where not known,
Z = Standard variate at a confidence level given as 1.96 at 95% confidence level.
From the formula, the sample size is 208. The sample size fits within the minimum of 30 proposed by Taylor, Bogdan, and DeVault (2015).
Research design
Using the questionnaire/survey method, the data obtained was largely quantitative. By employing the quantitative method, it matched with the research questions since the research required empirical data. This data was used to determine the cost of the coffee spices and what drives the respondents to purchase it. After obtaining the data quantitatively, the study critically analyzed it and also interpreted the figures and numbers appropriately. Finding rationale for the responses provided was also a priority for the researcher. The study also brought out limitations that were found during the study; those that the study had control over and those that it did not. The use of questionnaires is the best method in this case as it ensures the questions being posed to the respondents are all the same. There were uniform questions that helped gather the right information and data from the respondents. According to Anees-ur-Rehman, Wong and Hossain (2016) research should be conducted using the people who are ready to answer the available questions but not everyone you meet on the road. In some cases, research that can lead to poor results if the response rate is low when it is not based on a voluntary basis to answer the questions. The researcher, therefore, included only the respondents who will be willing to take the questionnaires and return them within the set time.
Quantitative methods of research require one to be keen on the kind of respondents one is dealing with. Since the research was on a specific objective of determining the impact price has on the buying habit, the expected answers were mostly yes or no and a rationale for the same (Ghose, 2014). Conducting the research on a specific company or product requires permission from the specific authorities. The researcher sought permission to conduct the study by visiting the manager and informing him of the study. The permission was granted. The study used a sample that was randomly generated among the workers.
Measurement Questions
The questions asked to the respondents were as follows:
· To what extent does coffee price affect your buying habits?
Very Great Extent [ ] Great Extent [ ]
Little extent [ ] Very Little Extent [ ]
No extent at all [ ]
· Would you buy an expensive coffee whereas there is a cheaper one?
Yes [ ]
No [ ]
Not sure [ ]
· What would make you buy the expensive type?
Prestige [ ] Taste [ ]
Quality [ ] Free Choice [ ]
Loyalty [ ]
· Price is the sole determinant of the customer buying habit.
Strongly agree [ ] Agree [ ]
Disagree [ ] Strongly Disagree [ ]
Not Sure [ ]
· I would buy an expensive coffee out of customer loyalty.
YES [ ]
NO [ ]
· How many times do you look at price before buying the coffee?
1 [ ] 2 [ ] 3 [ ] 4 [ ]
Measurement Scales
The measurement scales were used in determining the number of similar answers in a question and comparing it with others. Some participants gave ambiguous answers, and those were considered spoilt responses. This research aimed at giving very accurate answers, and therefore ambiguous answers were not accepted. The results were then compared on the basis of similarity. The scale then measured the difference between the results and the range. For example, on a scale of 1 to 10, if most of the respondents fall at 4, the final result was termed as four. If there was a tie that was the final result and was termed as correct.
Participants
The research was done around Starbucks. The participants were the customers from the shops and most were students and the working class around those regions. The students were the best target since they were willing to respond to the questionnaires in most cases and gave the best results (Anees-ur-Rehman, 2016). However, the research gave anyone wanting to participate a chance. They were contacted prior to being given the questionnaire for them to accept first, compared to being forced.
Potential for Errors
There was the likelihood that the results which the respondents gave may have had some errors. The errors were likely to occur if the answers given were ambiguous and if the client gave inappropriate responses to a certain question.
Compensating for Errors
The errors in the case of ambiguous answers were disregarded. This was done to ensure that the only data being compared was the accurate one. Inappropriate answers were also not used in the data for comparison. This ensured that the only results being compared were those that were accurate.
Data Analysis
The answers collected for the questionnaire questions are outlined below. Firstly, the respondents were asked to indicate the extent to which coffee price is affected by their buying habits. The respondents’ responses were as shown in the figure below.
From the figure shown above, it is clear that a majority of the respondents indicated that price of coffee affected their decision to buy it (33.7%). Further, 21.6% of the respondents indicated that the coffee price affected their purchase decision greatly, 12.5% indicated little extent while 18.3% indicated very little extent. Majority of the respondents indicated that price of coffee affected their decision to buy it.
As well, the respondents were asked to indicate whether they would buy an expensive coffee whereas there is a cheaper one. The results were as shown below.
According to the graph below, 47.6% of the respondents indicated that they would not buy an expensive coffee whereas there is a cheaper one. Further, 36.1% indicated they would buy while 16.3% indicated they were not sure. Evidently, most of the respondents indicated that they would not buy an expensive coffee whereas there is a cheaper one.
The respondents were also asked to indicate the reason(s) they would buy the expensive type. The following responses were as tabled below.
Table 1: Decision to buy the expensive type
|
|
Mean |
Std. Deviation |
|
Prestige |
4.3246 |
1.24260 |
|
Taste |
2.0580 |
.85237 |
|
Quality |
3.2029 |
.75609 |
|
Free Choice |
2.3261 |
.77519 |
|
Loyalty |
2.9130 |
1.10393 |
From the table above, the respondents indicated with a mean of 4.3246 and a standard deviation of 1.24260 that prestige was the reason why they would be an expensive coffee type. Also, the respondents indicated with a mean of 3.2029 and a standard deviation of 0.75609 that quality was the reason why they would be an expensive coffee type. Further, the respondents indicated with a mean of 2.9130 and a standard deviation of 1.10393 that loyalty was the reason why they would be an expensive coffee type. Additionally, the respondents indicated with a mean of 2.3261 and a standard deviation of 0.77519 that free choice was the reason why they would be an expensive coffee type. Lastly, the respondents indicated with a mean of 2.0580 and a standard deviation of 0.85237 that taste was the reason why they would be an expensive coffee type.
When the respondents were asked if the price was the sole determinant of their buying habit, they answered as shown in the figure below.
From the figure above, 42.8% of the respondents strongly agreed that price was the sole determinant of their buying habit. Further, 26% of the respondents agreed that price was the sole determinant of their buying habit. Also, 18.8% disagreed while 12.5% strongly disagreed that price was the sole determinant of their buying habit. Therefore, the majority agreed that price was the sole determinant of their buying habit.
Limitations
The main limitations of the study were that there was that there was limited time to study more variables and consider more samples. Further, the study was limited to just one firm which means if there were more resources comparative study would have been undertaken to compare several firms. Further studies should be carried out to cover these limitations and improve this field of study.
Findings
The study found that for most people price of coffee affected their decision to buy it. Further, most of the coffee consumers would not buy an expensive coffee whereas there is a cheaper one. Additionally, it was established that prestige, quality, loyalty, free choice, and taste were the main reasons why people purchase coffee the expensive type. Lastly, it was determined that price was the sole determinant of their buying habit.
Conclusions
In light of the findings, the study concludes that for most people price of coffee affected their decision to buy it. Further, the study concluded that the coffee consumers would not buy an expensive coffee whereas there was a cheaper one. Additionally, it can be concluded that prestige, quality, loyalty, free choice, and taste are the main reasons why people purchase coffee the expensive type. Lastly, the study concludes that price is the sole determinant of their buying habit.
Recommendations
From the conclusions, the study recommends that price be prioritized in this industry. Given that price is the sole determinant of consumers’ buying habit, Starbucks and other companies in the industry should consider price effect whenever they are making decisions regarding their prices. All prices must be within the range that the consumers have been accustomed to at all times. If there is need to raise the price, the raise should not exceed the price limit that prevails in the industry. This way loyal consumers will be maintained and much more acquired.
References
Anees-ur-Rehman, M., Wong, H. Y., & Hossain, M. (2016). The progression of brand orientation literature in twenty years: A systematic literature review. Journal of Brand Management, 23(6), 612-630.
Armstrong, G., Kotler, P., Harker, M., & Brennan, R. (2015). Marketing: an introduction. Pearson Education.
Bryman, A., & Bell, E. (2015). Business research methods. Oxford University Press, USA.
Ghose, A., Ipeirotis, P. G., & Li, B. (2014). Examining the impact of ranking on consumer behavior and search engine revenue. Management Science, 60(7), 1632-1654.
Hankinson, P. (2001). Brand orientation in the charity sector: A framework for discussion and research. International Journal of Nonprofit and Voluntary Sector Marketing, 6(3), 231-242.
Jung, H. S., Namkung, Y., & Yoon, H. H. (2010). The effects of employees’ business ethical value on person–organization fit and turnover intent in the foodservice industry. International Journal of Hospitality Management, 29(3), 538-546.
Robertson, A., Soopramanien, D., & Fildes, R. (2007). Segmental new-product diffusion of residential broadband services. Telecommunications Policy, 31(5), 265-275.
Slavova, M. (2014). Consumerism as a Source for Innovation and Product Development.
Taylor, S. J., Bogdan, R., & DeVault, M. (2015). Introduction to qualitative research methods: A guidebook and resource. John Wiley & Sons.
Weigold, M. F. (2001). Communicating science: A review of the literature. Science communication, 23(2), 164-193.
