Market Research Into Consumer Evaluation of Single Serve Coffee /Hot Beverage Makers
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1 Market Research Into Consumer Evaluation of Single Serve Coffee /Hot Beverage Makers Anthony Vatterott Marketing Research Dr. Haim Mano University of Missouri Saint Louis
2 I. INTRODUCTION Until the past 20 years in the United States, traditional home-brewed coffee was limited to the lower-grade Robusto coffee bean or a blend of Robusto and Arabica bean. The ensuing product was considered a commodity and marketed in large tins by Maxwell House and Folgers. For the fifty years leading up to the nineties, coffee suffered in quality due to the commoditization of the bean. With the advance of cultural individualism in the United States, the trend of coffee consumption has evolved toward higher-cost, lower volume coffee purchases; as an experience as opposed to a routine; as a luxury of escape instead of a daily primer for work. With deregulation of the coffee market, and the advent of free trade, organic and small-farm coffee producers and small batch brewers, the marketing effort has conditioned the consumer toward a preference for high-quality coffees. Up until the early nineties such artisan roasts, premium blends and unique regional flavors were available only in select premium brand chains (Starbucks, Gloria Jeans). Single-serve coffee makers have democratized the once luxurious treat of premium coffee, bringing the satisfaction of popular chain brands of individually prepared coffees from top brands such as Starbuck s and Caribou Coffee to the popular layman s coffee, Dunkin Donuts, to the home aficionado. Single serve coffees evolved from the culture of French press, single preparation and the traditional mechanical dip coffee brewer. The French press process considered the pinnacle of coffee preparation captures the whole flavor and aroma spectrum of the fresh-ground bean; however it suffers from the complexity, time and skill required for optimal brewing. On the opposite end of the coffee preparation spectrum, mechanical drip coffee makers prepare quick, hot coffee in higher volume; however drip coffee lacks from homogeneity of flavor and texture and residues of mechanical components. The single-serve coffee maker attempts to capitalize on the strengths of both methods. Single-serve coffee makers typically use a pressurized water and single serve coffee packet, which allows the mechanical pressurization of the machine to inject flash-heated water through the coffee component capturing the instant essence of the coffee flavor, aroma and texture. Throughout the nineties, such mechanical single-serve coffee makers were selectively available as espresso machines, cappuccino machines and corporate coffee vending systems. The prohibitive cost relegated these systems to the category of luxury as opposed to convenience. Nestle Corporation found market failure introducing its encapsulated coffee espresso delivery system names Nespresso until the middle nineties. Available as a luxury product, the system was distributed in Switzerland. Coffee was and still is only available through Nestle, limiting convenience and increasing the price per serving. Strictly an espresso-style machine, the limited availability, narrow selection and expensive price for using the machine has caused the Nespresso line to maintain its exclusivity at the cost of market expansion. It was not until 2001 that the first easy to use,
3 commercially affordable single-serve coffee system was introduced. Keurig offers an alternate form of single-serve coffee brewing. K-Cup machines are all designed to brew a cup of coffee, tea or hot chocolate, or other hot beverage. The grounds (or other brew material) are supplied in a prepared, single-serving unit, called a "K-Cup" pack. Although Keurig patented its K-cup technology in 1992, it was not until it was purchased by Green Mountain coffee Roasters tin 2006 that it was able to truly penetrate the market through leverage of the parent company s wide selection of coffee blends, roasts and flavors. Today, Keurig offers over 250 varieties of coffees for its K-Cup compatible systems, and through aggressive cross-platform licensing of the K-Cup technology, more manufacturers are available for delivering K-Cup coffee than other delivery methods. The most recent entrant to the single-serve coffee market is the Tassimo brand Hot Beverage System. Introduced in France in 2004, Tassimo uses a proprietary T-Disc technology that incorporates a scanned bar code to communicate the appropriate brewing settings to the machine for an optimal cup of hot beverage. The T-Disc also permits the brewing of beverages such as coffee, tea, espresso, cappuccino, hot chocolate and other hot drinks, notably those with milk or cream components. Developed by consumer powerhouse Kraft Foods, Inc., Tassimo has leveraged proprietary coffee and beverage brands such as Maxwell House, Gevalia, Twinings Tea and Jacobs Coffee, to create a company exclusive yet ranged flavor and variety proposition. It is primarily due to the advances in the single-serve coffee package technologies, as well as the leverage of large distribution and brand management by large corporations, that led to the discontinuing of the Senseo pod system in the United States in The three remaining leaders in single-serve coffee makers have each positioned themselves uniquely to benefit from the spectrum of coffee drinkers luxury to commercial, espresso to tea to hot chocolate, and within a price range of $.50 to $1.50 per serving. However little marketing research has been conducted on the comparative perception of value, quality and convenience that each brand provides. This market research attempts implement a series of marketing research initiatives to determine the differentiating characteristics of, strengths for, and consumer propensities toward Tassimo, Nescafe and Keurig single-serve coffee makers.
4 II. THE FOCUS GROUP individuals will be invited to participate in a controlled focus group. A camera will record the group and all discussions, and the communication will be transcribed for analysis of consumer perceptions of three single-serve coffee makers. The specific areas of interest are features, value, convenience and quality. Script: Thank you for agreeing to participate in this product demonstration. We will today be interacting with three models of single cup coffee maker. During the next hour, I will ask you to evaluate in qualitative, open-group discussion your impressions of these three coffee makers. The focus group will conclude after 60 minutes. I. I will begin with a (3) minute overview of each single cup coffee maker and technical specifications of each device, along with system cost and price per serving. The descriptions of each device come from consumer reports and listed market prices at top retailers, and are publically available online. I will then open the group to 10 minutes of discussion and ask for your impression of the form/design, features, and perception of quality. Maker Technical Specifications (3 Minutes): Pod System T- Disc K- Cup Nespresso Capsule Brew Time ~1 Minute <1 Minute ~1 minute Storage Capacity 48 oz 60 oz 34 oz Drink Types Coffee, Cappuccino, Tea, Cocoa, Latte, Espresso Coffee, Tea, Cocoa Price Cappucino, Tea, Espresso Pod Costs Sample Type Gevalia Starbucks Dimensions width 11 inches width inches height Nestle Medium Roast (Adante) width 8.90 inches height
5 height inches depth 8 inches weight 7.9 pounds inches depth inches weight pounds 9 inches depth 9 inches weight 9.90 pounds Feedback on Specifications (10 Minutes): Based on these Technical Specifications, what is your perception of form/design, features/benefits, and perception of quality? II. I will now give the group the chance to operate each machine for a period of 10 minutes, the outcome of which should be a single cup of coffee. I will provide cups, coffee pods or packets, and water. The objective is to familiarize your selves with each single cup coffee maker. During the (3) 10-minute practicums, your comments and behaviors will be recorded. Operation Period 1: Nespresso C185T (10 Minutes): Operations Period 2: Tassimo T47 (10 Minutes): Operation Period 3: Keurig B60 (10 Minutes): III. I will now read a descriptive narrative provided by the manufacturer of each single cup coffee maker. This descriptive narrative comes from the manufacturer s website and retail marketing collateral. Each descriptive narrative will take 1-2 minutes. After I read all three descriptive narratives, there will be a three-minute open discussion on each of 4 questions during which you will write down your personal feedback. Maker Features and Product Description (5 Minutes): Brand Tassimo T47 Single Cup Home Brewing System by Bosch Keurig B60 Brewing System Nespresso C185T Le Cube Automatic Espresso Machine Description The Tassimo T47 Home Brewing System by Bosch features Intellibrew Barcode Technology that automatically adjusts the amount of water, time and temperature for the perfect beverage every time. Flow thru water heater technology quietly creates beverages in about a minute with virtually no About This Brewer: Choose, brew and enjoy your cup of coffee or tea in three easy steps in the Keurig Special Edition Brewing System. This K- Cup brewing system makes a perfect cup of coffee, tea, or hot cocoa in less than one minute at the touch of a button. This Keurig brewing system Nespresso has developed a unique extraction system specially adapted to capsules. It controls every vital setting when preparing a perfect espresso. Nespresso machines have been designed with renowned partners and designers, and bring out the taste and aromas of coffee by
6 pre- heat time. Enjoy a premium cup every time from a wide selection of beverages; including coffee, cappuccino and latte, made with real milk; tea, espresso, crema, hot chocolate and iced beverages. All in the comfort of your home. Removable cup stand fits most cups, (travel) mugs and glasses.unit reads the barcode on each T- Disc to determine the precise water quantity, brew time and temperature to consistently deliver perfectly- brewed cups of coffee, espresso, tea, hot cocoa, and more. allows you the option to choose one of three cup- sizes. The blue, backlit LCD display features a 24- hour digital clock, programmable auto on/off and brew temp control. The Keurig Special Edition Brewing System features a detachable water reservoir with a blue light shining through it from the bottom that can accommodate up to 48 oz of water. The energy saving mode has auto on/off control that automatically switches off when the coffee is ready. This Keurig brewing system, featuring chrome accents, contains a removable drip tray that is dishwasher safe and can accommodate travel mugs for your travel needs. Enjoy coffee the way you want it when you want it with the Keurig Special Edition Brewing System. combining quality of design with ease of use. The Nespresso C100 Essenza Automatic Machine is part of our compact line, which features a modern, compact, and practical design. The machine deploys technology essential for preparing an outstanding Espresso, and is exceptionally easy to use: Automatic control of the amount of coffee in the cup. A high pressure pump (19 bars) extracts all the aromas and develops a smooth crema in the cup. A thermobloc which heats water to 187 and 196 during extraction and empties the remaining water after each use so that the water is fresh for each preparation. A simple system which perforates the capsule and soaks all the ground coffee to optimally filter the coffee. A functional handle system, which allows for easy coffee preparation.automatic ejection of used capsule. Removable water container (34 oz). Tray for used capsules. Back- lit control button. Questions for Open Discussion and Written Response (12 Minutes): a. What immediately stands out to you about each system? Tassimo T47 by Bosch: Keurig B60: Nespresso C185T: b. What do you feel is each brand s greatest strength? Tassimo T47 by Bosch: Keurig B60:
7 Nespresso C185T: c. What do you perceive is each brand s greatest weakness? Tassimo T47 by Bosch: Keurig B60: Nespresso C185T: d. Which unit would you choose for yourself, and why? Tassimo T47 by Bosch: Keurig B60: Nespresso C185T: This concludes the focus group. Thank you for participating. III. RESULTS OF THE FOCUS GROUP A. Female Responses by Frequency of Response (Excluding Ease of Use, Size): ALL FEMALE RESPONSES Ease of Use 12 Size 11 Variety 10 Temperature 9 Look 8 Speed 7 Price 4 Noise 4 Serving Size 4 Marketing 3 Features 2
8 SUMMARY: Female responses indicated the prevalence of certain cues at a higher frequency than others. The most prevalent cue (after Ease of Use and Size) was the importance of Variety in evaluating the single-cup coffee makers. Variety is defined here as the range of beverage options (tea, cocoa, coffee, cappuccino, expresso, etc.) and the ease of which more types of beverages can be made by a single system. The second most prevalent cue was that of beverage Temperature. Indeed, women felt a beverage that was ready to drink without waiting for it to cool down, was important. Women placed an almost equal importance on the Look of a system and the Speed with which it can make a cup of beverage. Remarkably, there were very few cues for Features, Price, Marketing/Branding and system Noise. B. Male Responses by Frequency of Response (excluding Ease of Use and Size): ALL MALES RESPONSES Ease of Use 12 Size 8 Variety 7 Look 5 Features 4 Speed 4 Price 3 Marketing 3 Temperature 2 Noise 1 Serving Size 1 SUMMARY: The most prevalent cues (after Ease of Use and Size) for males was for VarieThe look of a machine (rugged/modern) was important as well as the presence of features. Features included the accommodation of different cup sizes, a digital readout and the presence of color cues such as lights to indicate progress of the beverage being made. Males tended
9 to prefer a single cup coffee maker system that was faster to brew, but did not place as much emphasis on beverage temperature, the noise of the machine, or serving size. C. Under Age 40 Responses by Frequency of Response (excluding Ease of Use and Size): ALL UNDER 40 RESPONSES SUMMARY: Ease of Use 11 Size 8 Variety 7 Look 7 Features 7 Temperature 6 Marketing 5 Serving Size 3 Speed 3 Price 3 Noise 2 The most prevalent cues (after Ease of Use and Size) for focus group participants under 40 were more generally spread among Variety, Look and Features. Under 40 respondents wanted a system that had the capability to make multiple types of beverage but also desired more technology such as digital display, smart technology to help instruct on how to make the beverage, or to signal when it is done, and also liked the presence of LED lighting both as a feature and as an element of the Look of the system. Those participants under 40 place less importance on the speed at which a drink is made, and did not concern themselves too much with the price of a system (though interaction indicated that the lesser priced systems were favorable). Those under 40 place more importance than other groups on Brand/Marketing, possibly as an indicator of availability to purchase replacement pods.
10 D. Over Age 40 Responses by Frequency of Response (excluding Ease of Use and Size): ALL OVER 40 RESPONSES Easy To Use 15 Size 14 Speed 10 Variety 9 Look 5 Temperature 5 Noise 4 Price 4 Serving Size 2 Features 2 Marketing 1 SUMMARY: The most prevalent cue (after Ease of Use and Size) for focus group participants over 40 was predominantly the Speed of the system to make a beverage. Participants over 40 tended to have less patience for determining how to operate the systems, and so Speed here may be a combination of Ease of Use and the actual speed of making the beverage. Variety is also a prevalent cue. There is some distance between these cues and the next 4 cues (which are clustered) of Look, Temperature, Noise and Price. Features mattered little to participants over 40 and Marketing mattered even less, indicating the desire among the over 40 group to have a utilitarian product.
11 E. FURTHER SEGMENTATION: I further segmented respondents into the following categories, to determine if any cues trend toward a more specific segmentation. The additional segments are: Under 40 Male (U40M) Under 40 Female (U40F) Over 40 Male (O40M) Over 40 Female (O40F) I parsed the respondents by demographic and again aggregated their responses into cues. The following chart shows the frequency of each cue among the segments: Category U40M U40F O40M O40F Total H1 Ease of Use Trends O40 Size Trends O40, Trends F Variety Trends O40, Trends F Look Trends F Speed Trends O40 Temperature Trends F Features Trends U40, Trends M Price Neutral Marketing trends U40 Noise Trends F Serving Size Trends F F. SUMMARY OF HYPOTHESIZED TRENDS (AND RELEVANT SURVEY QUESTIONS: This information hints at some potential consumer behaviors related to the single cup coffee maker, from which I derive my questions for the consumer-based survey: ~As respondents get older the importance of ease-of-use increases. Q1: A single cup coffee maker should prepare a beverage in how many steps? (1)One step (2) 2 Steps (3) 3 Steps (4) 4 Steps (5) 5 Steps Q2: A single cup coffee maker should be very easy to use right out of the box. ~As respondents get older, the importance of size (preferred is smaller) increases. ~Size (preference toward smaller) is greater among women over men. Q3: How important is the size of a single cup coffee maker?
12 Q4: A single cup coffee maker should weigh: (1) Less than 17 lbs (2) Less than 15 lbs (3) Less than 13 lbs (4) Less than 11 pounds (5) Less than 9 Pounds ~As respondents get older, a greater variety is more important. ~Variety is more important among women than among men. Q5: My single cup coffee maker must make the following drinks: (1)Coffee (2) Coffee and Tea (3) Coffee, Tea, Cocoa (4) Coffee, Tea, Cocoa, Capuccino (5) Coffee, Tea, Cocoa, Capuccino, Expresso Q6: A single cup coffee maker should be able to make a variety of beverages (coffee, tea, cappuccino, expresso, cocoa). Q7: I vary which type of hot beverage I drink on a regular basis (from coffee to tea, to cocoa, etc.) Q8: I vary which flavor of hot beverage I drink on a regular basis ~Look/Style/Design is more important to women than men. Q9: The physical appearance (looks) of a single cup coffee maker is: Q10: My single cup coffee maker must have an appealing design or style: ~Speed is much greater importance among older respondents than among younger respondents. ~Speed is also of greater importance among women. Q11: The amount of time it takes to make a single cup of coffee is: Q12: The optimal amount of time to make a single cup of coffee is: (1)Less than 3 minutes (2) Less than 2.5 Minutes (3) Less than 2 Minutes (4) Less than 1.5 Minutes (5) Less than 1 Minute ~Temperature is more important to women than men; but the importance does not seem to change with age. Q13: The temperature of a beverage from a single cup coffee maker should be ready to drink right away. Q14: I am willing to wait this long for a single cup beverage to cool before drinking:
13 (1)More than 5 minutes (2) No more than 4 Minutes (3) No more than 3minutes (4) No more than 2 minutes (5) No more than 1 minute ~Features are more important to younger respondents and seem to matter less as respondents get older. Q15: How important are features such as a digital display, backlit buttons or clock on a single cup coffee maker? Q16: How important are features such as larger water reservoir, used pod collection bin or digital prompts? ~Price does not seem to have a significant trend among the segments. Q17: The reasonable price of a single cup beverage system (base unit plus pods) is about: (1)less than $.75/Serving (2) $.75 - $1.00/Serving (3) $1.00-$1.25/Serving (4) $1.25-$1.50/Serving (5) More than $1.50/Serving Q18: I will save money by using a single cup coffee maker instead of other sources of coffee (coffee shops, coffee by the pound, coffee at work) Q19: The convenience of using a single cup (pod-based) coffee maker outweighs the price per serving. ~Marketing seems to have a greater influence on younger respondents than on older respondents. Q20: I am more likely to buy a single cup coffee maker that can make Starbucks, Jim Horton s, or Caribou Coffee brand coffees (1)Not at all likely (2) Somewhat Unlikely (3) Indifferent (4) Somewhat Likely (5) Very Likely Q21: A brand name like Bosch, Keurig or Krups signifies a higher level of quality in a single cup coffee maker. ~Noise (less noise being better) is more important to women than to men. Q22: How noisy (or quiet) a single cup coffee maker is when making a serving, is important to me. ~Serving Size (capability of multiple sizes is better) is more important to women than to men.
14 Q23: A single cup coffee maker should be able to make more than one serving size at the push of a button. Q24: When I drink a cup of hot beverage (coffee, tea, cocoa, etc) I use the same size cup or mug. Demographic questions: Q25: My individual income is per year: (1)$0-25,000 (2)$25,001-50,000 (3)$50,001-75,000 (4)$75, ,000 (5)More than $100,000 Q26: My marital status is: (1)Single (2)In A Relationship (3)Married Without Children (4)Married With Children at Home (5) Married With Children Not At Home Q27: My Age is: (1)Under 18 (2) (3) (4) (5) (6) (7) 65 and Up Q28: I am a: (1)Female (2) Male Q29: I drink coffee, tea, cocoa or cappuccino/espresso: (1) Never (2) Occasionally (3) Regularly (4) Frequently (5) All the time Q30: I own a single-serve coffee maker (1)Yes (2) No IV. THE SURVEY Single cup beverage makers have been on the market for less than 10 years and only recently have become a popular household appliance. The purpose of this survey is to determine consumer preferences when selecting a single cup beverage maker. Most questions consist of answers on a scale from which one answer must be chosen. All questions have been randomly arranged and there is no time limit. All responses are anonymous. Please answer all 30 questions. Q1: A single cup coffee maker should prepare a beverage in how many steps? (1)One step (2) 2 Steps (3) 3 Steps (4) 4 Steps (5) 5 Steps Q2: A single cup coffee maker should be very easy to use right out of the box. Q3: How important is the size of a single cup coffee maker?
15 Q4: A single cup coffee maker should weigh: (2) Less than 17 lbs (2) Less than 15 lbs (3) Less than 13 lbs (4) Less than 11 pounds (5) Less than 9 Pounds Q5: My single cup coffee maker must make the following drinks: (1)Coffee (2) Coffee and Tea (3) Coffee, Tea, Cocoa (4) Coffee, Tea, Cocoa, Capuccino (5) Coffee, Tea, Cocoa, Capuccino, Expresso Q6: A single cup coffee maker should be able to make a variety of beverages (coffee, tea, cappuccino, expresso, cocoa). Q7: I vary which type of hot beverage I drink on a regular basis (from coffee to tea, to cocoa, etc.) Q8: I vary which flavor of hot beverage I drink on a regular basis Q9: The physical appearance (looks) of a single cup coffee maker is: Q10: My single cup coffee maker must have an appealing design or style: Q11: The amount of time it takes to make a single cup of coffee is: Q12: The optimal amount of time to make a single cup of coffee is: (1)Less than 3 minutes (2) Less than 2.5 Minutes (3) Less than 2 Minutes (4) Less than 1.5 Minutes (5) Less than 1 Minute Q13: The temperature of a beverage from a single cup coffee maker should be ready to drink right away. Q14: I am willing to wait this long for a single cup beverage to cool before drinking: (1)More than 5 minutes (2) No more than 4 Minutes (3) No more than 3minutes (4) No more than 2 minutes (5) No more than 1 minute Q15: How important are features such as a digital display, backlit buttons or clock on a single cup coffee maker? Q16: How important are features such as larger water reservoir, used pod collection bin or digital prompts? Q17: The reasonable price of a single cup beverage system (base unit plus pods) is about: (1)less than $.75/Serving (2) $.75 - $1.00/Serving (3) $1.00-$1.25/Serving (4) $1.25-$1.50/Serving (5) More than $1.50/Serving Q18: I will save money by using a single cup coffee maker instead of other sources of coffee (coffee shops, coffee by the pound, coffee at work)
16 Q19: The convenience of using a single cup (pod-based) coffee maker outweighs the price per serving. Q20: I am more likely to buy a single cup coffee maker that can make Starbucks, Jim Horton s, or Caribou Coffee brand coffees (1)Not at all likely (2) Somewhat Unlikely (3) Indifferent (4) Somewhat Likely (5) Very Likely Q21: A brand name like Bosch, Keurig or Krups signifies a higher level of quality in a single cup coffee maker. Q22: How noisy (or quiet) a single cup coffee maker is when making a serving, is important to me. Q23: A single cup coffee maker should be able to make more than one serving size at the push of a button. Q24: When I drink a cup of hot beverage (coffee, tea, cocoa, etc) I use the same size cup or mug. Q25: My individual income is per year: (1)$0-25,000 (2)$25,001-50,000 (3)$50,001-75,000 (4)$75, ,000 (5)More than $100,000 Q26: My marital status is: (1)Single (2)In A Relationship (3)Married Without Children (4)Married With Children at Home (5) Married With Children Not At Home Q27: My Age is: (1)Under 18 (2) (3) (4) (5) (6) (7) 65 and Up Q28: I am a: (1)Female (2) Male Q29: I drink coffee, tea, cocoa or cappuccino/espresso: (1) Never (2) Occasionally (3) Regularly (4) Frequently (5) All the time Q30: I own a single-serve coffee maker (1)Yes (2) No
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