Starbucks / Dunkin Donuts research. Presented by Alex Hockley and Molly Fox. Wednesday, June 13, 2012
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1 F& H Starbucks / Dunkin Donuts research Presented by Alex Hockley and Molly Fox
2 Executive Summary: These days there are a significant amount of coffee establishments located in Center City, Philadelphia. Out of all of them two remain most popular among students; Starbucks and Dunkin Donuts. At F+H we are aiming to uncover what it is that makes an avid coffee drinker choose one of the establishments over another.
3 Industry Analysis: After surging over the past decade, in 2009 coffee/fast food industries experienced a major slowdown due to the economic downturn and partially to changing consumer tastes. Despite this, it is an industry that is consistently profitable. In total, it takes around 1/3 of the American dollar spent on food. While coffee/fast food establishments will have to adjust to consumers growing demand for healthier items, it is expected to increase over 5% in the next year and make up four percent of the gross domestic product (GDP). Statistics show that over 77% of Americans consume some form of coffee beverage.
4 S.W.O.T. Analysis: Strengths -profitable organizations with well known names and product lines -friendly, well trained staff -customers have habits and routines and go to SB/DD frequently -reputation for creatively developing new products -strong financial foundations -knowledge based -globalized -widespread and consistent Weaknesses -in some places there are SB or DD stores within a very short distance which can make them susceptible in a down economy -every increasing number of competitors in a growing market -self cannibalization -cross functional market -expensive (SB) Opportunities -new products and services (Fair Trade products) can be offered -expansion into retail operations -technological advances -brand extension -emerging international markets Threats -the prices of coffee and dairy products are rising, may lower profit margins -due to state of economy people have become more cautious about spending money on non essential items -US market saturation -negative publicity from poorly treated farmers in supplying countries -consumer trends toward more healthy ways and away from caffeine -alienation of younger, domestic market segments
5 Hypothesis, Purpose: Throughout our research process we aimed to solve one specific problem. It was hopeful that the research undertaken would give us insight into whether or not avid coffee drinkers preferred consuming Dunkin Donuts or Starbucks coffee. We also wanted to discover the reasoning behind the consumer s decisions to purchase coffee at one establishment over another. Due to the fact that we were asking which and why consumers may choose Starbucks over Dunkin Donuts or vice versa, one main justification for doing so would be to increase profits and market share. If for example, Dunkin Donuts is proven to be a favorite over Starbucks then our research tells us that something has to be done for the less popular chain to revamp themselves. Whether it be lowering prices, improving customer service, implementing more locations, offering more items, or improving upon their taste, necessary measure must be taken.
6 Research Objectives: By doing our research we would like to find out why consumers choose Dunkin Donuts or Starbucks. We are also wondering if age or major has anything to do with their choice of establishment. We would like to know when consumers drink coffee and if the time of day determines when they purchase coffee outside their homes.
7 Limitations: In the process of gathering research and undertaking the questionnaire, we discovered many limitations. One of the most significant was the time constraint. Having just 3 or so weeks to gather all of our information put a limit on everything else. Had we had more time, our sample size could have increased by a significant amount. With a larger sample size, we could have had more accurate and solid results. Coinciding with the issue of time also comes our limited location. With more time we could have reached out to a larger audience as opposed to just 20 people in the Center City area. Another obvious limitation to our study was our overall lack of knowledge and experience on the subject. Having never conducted market research of any kind, both of us were slightly hindered. Perhaps with further knowledge we could have created a different and better questionnaire for example. Many more things could have been accomplished if we were more familiar and educated on the subject, had more time, and a larger sample size.
8 Methodology: 1. Qualitative (open-ended questions and chart) -If Starbucks lowers their price would you choose them over Dunkin Donuts? Why or why not? -How many cups do you drink in the morning, noon, and night? -How often do you buy coffee outside your home? -What is the average price you pay for a cup of coffee? 2. Quantitative (classifiers) -Are you and avid coffee drinker? -Male/Female? -Age? -Where do you live? -What is you major? -Do you drink coffee every day? -Which do you prefer, DD or SB? -Do you believe that DD and SB have the same quality coffee? 3. Special Criteria set for respondents -We asked are you a coffee drinker? ( coffee drinker can be defined as drinking an 8 oz. cup of coffee at least 5 times a week If respondents answered no, they were to hand in questionnaire.
9 Sample Plan, Questionnaire: For our sample plan the most important aspect was that we tested coffee drinkers only. We also wanted to make sure that the respondents were AIPH students. The purpose for that was to give them a chance of being on a limited budget. Due to time constraints we were limited to questioning 20 individuals only. Before the final questionnaire was handed out, we came up with a prequestionnaire as a tester of sorts. On our pre-test we asked are you a coffee drinker?. We shortly found out that respondents weren t sure what exactly classified them as coffee drinkers. To fix this, on our final questionnaire we defined this as drinking an 8 oz. cup at least 5 times a week. In addition, we added a chart to gain further insight into respondents habits, and a qualitative open ended question.
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24 Recommendations, Future Research: In the future if we were to do further research it would benefit us to conduct a focus group of coffee drinkers. In addition to focus groups, we would like to be able to reach out to a broader audience in places other than Philadelphia/ Center City. If possible we would also like to gain more insight into the companies (SB/DD) themselves. This would provide us with information necessary to perhaps provide further recommendations. According to our results, it s recommended that Starbucks take measures to increase their sales. One obvious way would be to lower their prices.
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