College Students and Coffee Purchasing: Factors that Affect College Students to Consume Coffee. You Wu, Li Yang, Anran Tang, Zeyu Liao

Transcription

1 College Students and Coffee Purchasing: Factors that Affect College Students to Consume Coffee from A Specific Coffee Brand You Wu, Li Yang, Anran Tang, Zeyu Liao Boston University December 12, 2017

2 Table of Contents I Introduction...3 II The Client. The Competition. The Industry...3 The Client...3 The Competition...4 The Industry...5 III Literature Review...6 IV Predictors...16 V. Measures...17 VI. Instrument...24 VII. Methodology...31 VIII. Results...33 Analysis of Reliability...33 Analysis of Frequency...35 Analysis of Correlations...50 IX. Discussion...64 X. Recommendations...69 XI. Assessment...75 Methodology...75 Measures...75 Instruments...76 XII. Reference

3 I. The Introduction Starbucks is the largest coffeehouse chain in the world, spreading all over the campuses in the US. With its dominance in domestic market, Starbucks is also facing competitions from quick service coffee and specialty coffee shops, and would like to further increase the sales and promote brand images to college students. Our research question is what factors influence college students to buy coffee from a specific brand. We analyzed the predictors that affect the consumption behaviors of college students in the Great Boston area through literature review and data-based analysis to provide suggestions for the promotion of Starbucks. II. The Client. The Competition. The Industry The Client Starbucks corporation, an American coffeehouse chain, founded in 1971 in Seattle Washington (Starbucks, 2017). The company promises to make high-quality whole bean coffee to customers (Starbucks, 2017). With the mission to inspire and nurture the human spirit one person, one cup, and one neighborhood at a time, Starbucks thrived in the past few years and expanded itself to more than 19,000 stores in over 60 countries (Market Realist, 2014). In terms of market positioning, Starbucks pictures itself at the higher-quality end of coffee offerings and targets at average middle-class American (Market Realist, 2014). After these years, Starbucks has successfully drawn an equation between drinking coffee and enjoying life. For every customer, Starbucks offers personalized coffee. The process of buying a beverage in a Starbucks store is a way customers involve themselves into the brand culture. You can buy a special beverage that is made especially for you, and then sit in the store, listen to the music, do your work and enjoy the surroundings (Market Realist, 2014). 3

4 Nowadays, Starbucks follows the franchise model, whereas it historically proposed the standard retail business model (Krikorian, 2014). Most of the company s revenue are generated from retail stores located around the globe, where the population is denser or with more travelers around. (Krikorian, 2014) According to Company Filings, 58% of the annual revenue comes from Beverage Selling, and 16% comes from Food. Packaged and Single Served Coffees contributes 15% of the annual revenue. Because of the large-scale production, the company is experiencing economy of scale: Amateur speculative estimates range from $0.20 to $0.75 (Krikorian, 2014). Over all, around 43% operating expense belongs to Cost of Goods Sold and Store Operating Expense contributes to 32%. Most recently, Starbucks is under great competition. According to USA Today, Starbucks share declined to 11 percent among the U.S. restaurants tracked by xad, down from 12 percent in January. (Patton, 2017) The Competition Regarding Starbucks coffee sales, Starbucks main competitors are those specialty coffee shops, quick-service restaurants and ready-to-drink coffee beverage. Starbucks coffee products are also facing the direct competition from specialty coffees from convenience stores, grocery stores, warehouse clubs and specialty retailers (Starbucks, 2015). The price and convenience become the main factor for competition. Keurig Green Mountain s unique and convenient coffee pods design helps it take control of 20% of coffee retail market in U.S. Keurig s sales reach to 2.57 billion dollars in 2015 and Folgers reach to 1.56 billion. Starbucks sales are about 0.95 billion whereas Maxwell House are about 0.82 billion and Dunkin Donuts are about 0.42 billion (Groden, 2015). Dunkin Donuts and McDonald s, both are the quick-service restaurants, have become Starbucks powerful 4

5 competitors. McDonald s 2015 revenue is about 26 billion dollars while Starbucks is only about 18.5 billion. The pressure also comes from retails coffee brands, such as Maxwell House and Folgers, which have controlled over the most part of dry coffee goods market (Hawley, 2015). The Industry Coffee is the highest selling beverages in the U.S. According to National Coffee Association, in 2015, the total economic impact of coffee industry in America was $225.2 billion, and 76 percent of adults in the United States reported that they drank coffee (2015). With such a huge market within the US, a variety of coffeehouses and fast food brands are competing over consumers with a growing speed of coffee shop chain at 10 percent annually compared to a growth rate of 2 percent in fast food chains, while by 2021, the industry is expecting a reach of $46.2 billion (SBDCNet, 2016). The research report by SBDCNet also claims that intense competition will continue driven by pricing, new product introductions and expansion into healthier alternatives to consumers (2016). According to the latest National Coffee Drinking Study from the National Coffee Association, the consumption of coffee is experiencing a sharp rise during recent years among consumers aged (SBDCNet, 2012). Specifically, in the US market, the sales of coffee have topped the list of coffee expenditure by country, having more than 10 billion retail value sales, with specialty coffee shops sales doubled over 15 years (Euromonitor International, 2014). The retail coffee has experienced a slight growth for the past decade because of the cheaper price, the level of convenience and the necessity of coffee. Relatively, comparing to retail coffee chain, in specialty coffee industry, Starbucks still dominates the market, yet the position was weakened during the past decade due to the rise of other retailers, specialty coffee shops and brands. After 5

6 the third wave of coffee movement, more and more coffee shops began to emphasize new methods of brewing coffee and became less expresso-driven. III. Literature Review Behaviors towards coffee consumptions can be influenced by many factors. As a great number of gamers play in coffee industry, college students are given more and more options to consume coffee and the related products. Other than coffeehouse chains like Starbucks, specialty coffee shops, quick-service restaurants and ready-to-drink coffee beverage products are also the choices college students consider when consuming coffee. Their decisions are driven by multiple factors, as numerous of studies have been conducted to test which factors have influenced on students consumption behaviors. Coffee Consumption Characteristics The price of coffee might be an effective factor influencing customers shopping behaviors. When considering pricees, some customers might think through the price-quality schema, which means they are seeking for high price products that stand for high quality. Some customers would be more prestige sensitive, which means they would feel more prominent and think they are in a higher status when purchasing higher price products. However, some customers tend to have more price awareness, which means they always seek for lower price product. Some also tend to have more sales proneness and coupon proneness, which means they are more likely to seek for products with coupons or sales available (Lichtenstein, Ridgway, & Netemeyer, 1993, p.235). 6

7 Price now works as an indicator of the quality of the product for all types. However, it only works as an extrinsic cue when customers can t differentiate the quality variation, the variation of quality exists among different products, the variation of price exists among products, and simply lacks of other cues to tell the quality difference (Zeithaml, 1988). Brand image and company reputation are also factors need to be taken into consideration. Brand image is like how customers think about the brand. Customers attach themselves to a certain brand by assigning a symbolic meaning to it or connecting specific attributes with it. It s customers perception and impression about the brand in their mind. Company reputation illustrates whether the company achieves the expectation of stakeholders and whether the company s performance is socially and politically desired. Brand image was found to have a positive relation with perceived quality of the brand s product whereas the positive relation between brand image and customer value and customer loyalty were not statistically supported. In addition, company reputation was found to be positively correlated to customer value and customer loyalty, whereas the positive relation between company reputation and perceived quality was not fully supported (Cretu & Brodie, 2007). One of the rudimentary marketing works is to research how to convey a brand image to audience (Park, Jaworski and Maclnnis, 1986, p.135). As a way to build brand image, companies continue to support and promote their involvement in communities to form better relationships with customers. For example, information label of Fair Trade coffee can positively influence sales as whether the coffee shop is in a low- or high- information condition, consumers prefer to support Fair Trade over non-fair Trade coffee selections (Stratton and Werner, 2013, p.370). Starbucks states its 100% ethical sourcing of coffee on the official website to promote Fair Trade concept to customers. It is also dedicated to help coffee farmers around the world with planting 7

8 problems and collaborate with the industry to make coffee the world s first sustainable agricultural product (Starbucks, 2017). Such brand image as a company with social responsibility and care about global environment boosts consumers perceptions of the quality and reputation of the whole company. The site selection also turns out to be very essential for the retail industry. When making a decision about location, retailers should always think about distance. The majority of people go shopping on their way to work, back home, and to school. If customers have specific attachment to a certain brand, they would rather spend 10 to 30 minutes by car or on foot to complete their purchasing behaviors, in which case the distance factor has been weakened. Besides, customers prefer driving to the stores in their communities. In this case, the distance factor has been less prominent as well because customers might take the transportation time into consideration or they would like to go to different places to shop. Moreover, customers are found to be more sensitive to the psychological distance to the store rather than the real distance. In other words, customers decision would be more affected by the traffic jams, landscaping on the way to the store, road width, road signs and so on, comparing to the physical distance between customers and store location. Therefore, customers psychological reaction to the distance should be considered in the first place instead of actual physical distance (Nwogugu, 2006). People of different ages and genders vary in consumption of coffee. Heaviest coffee consumers in the US are those aged 40-59, average about 4 cups per day; while consumers aged 18 to 24 are the lightest imbibers, at 2.5 cups. From the online survey (2017) conducted by the National Coffee Association, the elder group of people are, the larger share of coffee becomes. Many students do not eat at a fixed time, and most them eat in a hurry, take-away coffee becomes their option. Coffee consumption among college students varies from gender as their 8

9 incidence of consuming coffee was 58.34% with a higher rate in girls (75%) than boys (46.66%) (Gotia S. L., Gotia S. R., & Gurban, 2013). Therefore, how to attract more young people to drink coffee is a challenge that Starbucks faces (Thurston, Morris and Steiman, 2013, p.234). As for coffee industry, flavor of coffee is an essential incentive. In analyzing the 2017 National Coffee Drinking Trends report, Nick Brown (2017), the editor from Roast Magazine, points out a trend of consuming gourmet coffee has seen a rise in 2017 compared with that of 2016 and a record high 59% of all the coffee consumed were gourmet coffee, more than the rate of 46% in 2012 (2017). For the question of home-made or drink outside, 85 % of those surveyed consumed coffees at home and 27% had coffee outside while some people did both (Thurston et al., 2013, p.234). Besides, coffee flavor preferences vary among demographics. The survey of 2016 National Coffee Drinking Trend report found that American prefers medium, and dark roasts rather than lighter ones. However, the result varies from east to west as east residents prefer light medium or light roasts, especially for urban residents living in big cities like New York, Washington D.C, Philadelphia or Boston, while residents living in the west coast enjoy dark roasts (Ronnoco, 2016). One of the most important considerations in coffee consumption trends is health concerns, and these concerns have greatly influenced the consumption patterns (S. Lundsberg, 1998). On one hand, some epidemiological research found out that drinking coffee can help prevent certain kinds of chronic disease, such as diabetes, Parkinson s disease and protecting liver. On the other hand, coffee consumption is connected with some cardiovascular disease risk factors such as blood pressure (V. Higdon and Balz Frei, 2006, p.101). However, little evidence and limited data have been collected to prove that coffee consumption increases risk of cancer. Health Canada s research of caffeine effects states that a temperate intake of coffee everyday would not directly 9

10 lead to diseases. Besides, the essay also suggests that pregnant women or women planning to be pregnant can limit the amount of coffee intakes (p. 116). The long-lasting debate of the effect of caffeine to health has continued for centuries, which has somewhat impeded some consumers from purchase caffeine products. Caffeine is still a big concern for coffee drinkers. Barone and Robert states that 85 mg caffeine is the standard dose for a 5-oz. cup of coffee and children under 18 years old should take less than 1 mg/kg a day (1995, p.119). It suggests that for coffee companies, strictly control caffeine per cup to ensure students suggested intake every day, and organized campaign of caffeine content to inform customers of the products healthy quality could be influential on consumer behaviors. The Influence of In-Store Experience We believe that customer experience that a brand provides is an important factor that affects customers buying decisions. Talking about how customer experiences affect customer loyalty, Gurski suggests that nowadays, in order to survive in a heavy completive market and increase customer loyalty, rather than focusing on improving product quality and service quality, companies should provide better brand experience (2014, p.1). Starting with presenting a chart, Gurski states that the transformation from providing commodity to experience has significantly increased the price that customers are willing to pay for coffee (2014, p.2). Moreover, the author believes that when customization is a good way to help company move from serving goods to services, from services to experiences (Gurski, 2014, p.5). He presents a figure of progression of economic value to show that when it shifts from commodity to experiences, company s competitive position becomes more differentiated; price of products or services shifts from 10

11 market price to premium price; and the needs of customers becomes increasingly relevant (Gurski, 2014, p.5). Having the hypothesis that customer experience affects loyalty, Gurski examined nine independent variables that affect the customer experience and those are Product Quality, Service Quality, Atmosphere Quality, Imagination Quality, Concentration Quality, Surprise, Other People, Cognitive Quality, and Hedonic Quality. These variables are closely associated with Customer Experience Quality, Perceived Value and finally, Customer Loyalty Intentions (Gurski, 2014, p.7). The research is designed based on CXQ (Customer Experience Quality) Scale, and Starbucks was chosen to adapt the questionnaire in order to transfer the theory into practice and evaluate the proposed hypothesis (Gurski, 2014, p.15). After the research and analysis, the researchers found the following results: Product Quality is the core value among these variables. According to Gurski, in Lemke, Hueiju and Wenchang s study, Product Quality represents the essence that a company offers to the market (2009). To evaluate the product quality is to identify if the company s products satisfied the customer s expectation of good quality. In this case, study the quality of Starbucks coffee is to find out the attributes of the tangible core product coffee (Gurski, 2014, p.10). Service Quality is something beyond an actual product offering to the customers, which is very essential to customer experience. It includes staff, employees, and other service providers that interact with customers. To study the Service Quality is to evaluate what customer sees as a high-quality service. For instance, are those service providers friendly, polite, patient, or effective (Gurski, 2014, p.10)? The result shows that the Cronbach s Alpha of Service Quality is around 0.859, which made Service Quality one of the two essential factors that determines to Customer Experience and Customer Loyalty (Gurski, 2014, p.10). 11

12 Store Design is another factor that affects Customer Experience. Customer does not only use the products and services, in the case of Starbucks, customers will go to the stores where the store design and decorations will create an environment whether good or bad. Store decorations affect the Atmosphere, Concentration and Imagination. Atmosphere is how the visual variables that creates an environment around the customers. Concentration relates to if the store can successfully attract customers and make them enjoy the setting and forget about time. Imagination refers to if the store decoration can arouse fantasies and resonate with customers. (Gurski, 2014, p.10) According to the report, Atmosphere Quality is another important factor besides Service Quality that determines the Customer Experience. This shows thoughtful decoration can help to transfer a message to customer (Gurski, 2014, p.20). Other people refers to word-of-mouth from other customers that involves in the company earlier or at the same time. Their opinions will affect the customer's perception of Customer Experience (Gurski, 2014, p.10). Research find out that, meeting with friends or relatives while drinking coffee proverbially evokes that customers lose track of time. Which is also referred to as a feeling of flow in experience literature (Gurski, 2014, p.20). Customer s self is a factor that affects how customers perceive the Experience. Basically, it is divided into two parts: The first part is how much customers believe that the products or services solve their problems and provide direct benefits; The second part is if customers find fun and joy when using the products or services (Gurski, 2014, p.10). College Students Consumption Characteristics The consumption behaviors of college students are determined by numbers of factors. Although influenced by many environmental factors, the subjective drivers from students 12

13 themselves still play important roles towards such behaviors. The research conducted by Hwang and Kim (2015) suggests that buying behaviors differ based on the personality of a consumer. The data shows that personality would influence a consumer s choice of purchasing environment, focuses when making a purchase decision, and preference of information displays. For instance, while narcissists make quick purchase decisions and prefer to focus on the visual elements of a product, in contrast, people with high self-efficacy prefer to examine the product attributes and take a rational approach in making purchase decisions (Hwang & Kim, 2015). Additionally, although relationship marketing takes a vital part in branding, it is likely that a consumer may choose to cower when facing the invasive marketing tactics and choose not to purchase (Delacroix & Guillard, 2016). Now that relationship marketing has been valued by more and more marketers, the selfbrand connection has become an essential driver that affects consumer behaviors. Sicilia, Delgado-Ballester, and Palazon (2016) claims that when high in self-brand connection, a consumer has higher possibility to act in positive word-of-mouth behaviors, which is an effective way to market the brand and reflects in high brand loyalty. While low in self-brand connection, the possibility to engage in a positive word-of-mouth marketing will be more related to one s personality, which is the need to belong and self-disclosure (Sicilia et al., 2016, p. 66). Yet as the researches focus on the now-inevitable social media, Social Media Websites like Facebook inspires and motivates self-promotion and superficial behaviors, such as posting pictures and updating statuses (Hwang & Kim, 2015, p. 996). Therefore, with social media as the top game player in marketing field, the self-brand connection is significantly important in influencing consumers buying behaviors. 13

14 As mentioned above, social media has a dominant role in today s marketing environment. Social media websites give consumers a channel to express their concerns about ethical behavior of a company, especially among students with higher educational level who pay more attention to social responsibility of companies through ethical purchase and consumer behavior (Roubik & Mazancova, 2017, p. 275). Doane (2001) defines ethical consumption as the purchase of a product that concerns a certain ethical issue and is chosen freely by the consumer. Now that mainstream consumers pay more attention about the ethicality and how their purchase can affect the environment, animals and society, they tend to lay their eyes on certain goods that benefit environment ( environment friendly products, animal well-being, or legally logged wood ) or society ( products free from child labor, Fair Trade products ). This factor is especially important among young consumers because as people decide to purchase coffee from a certain brand, a fair-trade label would raise their brand loyalty. The fervor of being a part of making the world a better place has become an intrinsic lifestyle for young adults and educated people (Roubik & Mazancova, 2017). To conclude, the ethicality of a certain product, or the social responsibility a brand holds have remarkable impact on college students consumption behavior. Since college students are often users of technology such as social media and the Internet in general, they are more likely to buy products online (Kim, 2012, p. 82). With this factor coming into play, the influencing variables for online shopping also determines the consumption behaviors of college students, which in food and beverage industry, are the factors of ordering online. The research conducted by Kim (2012) measures the important factors on online shopping, which can be summarized as convenience, security, enjoyment, and willingness. The convenience and security of the ordering process, the above-average user experience of the 14

15 process, and the willingness to order from the consumers are also the determiners of the consumption behaviors of college students. The financial status of a student is also an important factor that triggers consumption. Although the group of college students is usually perceived as a lower-income group (Monika, 2015, p.76), their purchasing ability based on their financial status can still not be overlooked in the present market. In the study conducted by Monika, Horáková (2015, p.75), it is found that university students are highly affected by marketing strategies and selling techniques. The article states that the marketing research aimed at consumer behavior of US university students describes the structure of their consumer expenditures. While most college students are not financially independent, the variety of choices for them to get financial support during college years - such as student loans, which are not just used to pay tuitions and study-related expenses but also for regular consumer expenditures - are able to drive their consumption compulsory. As for the consumption in food and beverage industry, students still spend most of their money in retail stores - about 47%, and the least in small shops - about 22% (Monika, 2015, p.75). IV. Proposed Predictors Perceived price (Zeithaml, 1988) Age (National Coffee Association, 2017) Gender (Gotia S. L., Gotia S. R., & Gurban, 2013) Perceived health concerns towards caffeine (S. Lundsberg, 1998) Location (Nwogugu, 2006) Perceived coffee quality (Gurski, 2014) Preference of flavor (Ronnoco, 2016) 15

16 Product design (Steenis N. D. et al., 2017) Perceived corporate image (Cretu & Brodie, 2007) In-store experience (Gurski, 2014) Perceived benefit from discount (Gurski, 2014) Perceived service quality (Gurski, 2014) Concentration quality (Gurski, 2014) Other people (Gurski, 2014) Perceived cognitive quality (Gurski, 2014) Perceived hedonic quality (Gurski, 2014) Personality (Hwang & Kim, 2015) Perceived ethicality of the product (Roubik & Mazancova, 2017) Current financial status (Monika, 2015) Perceived convenience and security of the purchase (Kim, 2012) 16

17 V. Constructs and Measures Dependent Variable Measures During the past month, which coffee brand you have purchased beverages from? If you did not buy any beverages from a specific shop, please write zero. Starbucks Dunkin Donuts McCafe Pavement Coffeehouse Thinking Cup Caffe Nero 7-Eleven Other specific brand in the future: If you were to purchase coffee from a specific coffee brand in the future, how likely would you be to shop at the following: Very Unlikely Unlikely Feel Neutral Likely Very Likely Starbucks Dunkin Donuts Thinking Cup McCafe Pavement Coffeehouse Caffe Nero 7-Eleven Other 17

18 Coffee Consumption Constructs and their corresponding measures Does not describe me at all Doesn t really describe me Can t really tell Sometimes describes me Definitely describes me Price Perception: a customer s tendency to place greater importance on low prices rather than high quality when shopping( Bruner, 2015, p.393) (R) I am willing to pay a higher price for products of good quality Price is the deciding factor when I buy a product I usually strive for the lowest possible price Price plays an important role in my choice of products Health benefits of the product: the degree to which a person was thinking about the health-related consequences (p.245) ( Adapted) I care about the ingredients of the drinks I purchase. I consider the health consequences of drinking coffee often. I concern about the effects of drinking coffee I care about the benefit of drinking coffee. Knowledge of stores price: a consumer s subjective knowledge of the prices charged by stores for similar products and an understanding of their 18

19 various price-related specials (p.278) I know a lot about how prices compare for similar items across different stores. I know which stores have the best prices I know which stores have good price promotions I know which stores have coupons available Cognitive resources demands: the ease with which a person has processed something (p.142) (adapted) (R) It requires a lot efforts to find a coffee shop The purchasing process is easy It requires very little effort to buy a cup of coffee Food salience: a person view a food as being visible, desirable, and easy to access at a particular point in time (p.233). It is difficult to resist drinking coffee Coffee keeps attracting my attention I think of drinking coffee all the time Coffee is attractive to me Environment Quality: the visual variables that creates an 19

20 environment around the customers (Gurski, 2014, p.20) When I go to a coffee shop, I care about the overall in-store environment very much. The overall in-store environment of the coffee shop is very appealing to me. I would go to the coffee shop again only because of its overall in-store environment. I would recommend this coffee brand solely because of its overall in-store environment. Menu Design: the effectiveness of using simple menu design techniques to sell a specific menu item. (Bowen & Morris, 1995) I prefer coffee shops that have simple menu design because I want the ordering process to be simple. (R)I prefer coffee shops that have complicated menu design because I want more options when ordering. I care about if a coffee shop has simple or complicated menu. I don t go to the coffee shop if the menu is too complicated. Intention to download the coupon: A consumer s expressed likelihood of going online to download a coupon for a product.(p. 263) It is very likely for me to download the coupon online. 20

21 I want a coupon very much. I have strong intention to download a coupon online. I like to seek for coupons. Similarity to other customers: A customer s belief that he/she is similar to and identifies with other customers in a particular service environment (p.397) I could identify with other customers in the coffee shop. I am similar to other customers in the coffee shop. The other customers come from a similar background to myself. I fit right in with the other customers. Attitudes towards the brand: A consumer s preference of a brand and he/she is glad to be seen with it (p.64). There is a specific coffee brand that I like. The brand fits my life. (R) It is embarrassing to be seen with the brand. (R) I avoid being with the brand. Satisfaction with shopping experience: A customer s delight in shopping at a particular coffee shop (p.370). I enjoy purchasing coffee in a specific coffee shop. I am satisfied with the purchase 21

22 experience (e.g., ordering, payment procedure). Overall, I am satisfied with the instore experience of consuming coffee. Innovation ability: A customer s belief that a company is capable of creating original and interesting new products (p.260). I think the company has the ability to develop really innovative new drinks. The company is in the position to derive very original product ideas. The company has a large potential to foster creativity. I think the company can create very attractive new drinks. Loyalty to the store: A consumer s plan to shop at a particular coffee shop again in the future and to recommend it to others (p.293). I am certain that I will shop at the coffee shop again. I would recommend the coffee shop to others. This coffee shop is my first choice when it comes to purchasing coffee. In the future, I will make more purchases at this coffee shop than at other coffee shops. Justice Efficacy (Purchase of Free Trade Products): A customer s belief that he/she can 22

23 help others by purchasing free trade product (p.270). I believe I can make a difference by purchasing fair-trade coffee. I believe that by purchasing fairtrade coffee I can help others. (R) I believe that purchasing fair trade won t do much in terms of helping those in need. I believe that purchasing fair-trade coffee can reduce the injustice experienced by others. Social media usage: The degree to which a customer uses social media to monitor and stay current with brands (p.402). My relationship with the coffee brand is enhanced by social media. I use social media to monitor other coffee brands in the community. I use social media to follow sales and promotions. I use social media to monitor events. Demographic How old are you? Are you a male or female? ( ) Male ( ) Female 23

24 VI. Instrument We are conducting this study to learn about students opinions concerning a variety of current topics. Thank you for taking the time to complete our survey. Your responses are anonymous. Our first questions are about shopping. For each of the following statements, please tell us how well it describes you by checking the box corresponding with your choice. Doesn't describe me at all (1) Doesn t really describe me (2) Can t really tell (3) Sometimes describes me (4) I am willing to pay a higher price for products of good quality. (1) o o o o o I know a lot about how prices compared for similar items across different stores. (2) o o o o o Definitely describe me (5) I usually strive for the lowest possible price. (3) o o o o o It is very likely for me to download the coupon online. (4) o o o o o I know which stores have coupons available. (5) o o o o o I want a coupon very much. (6) o o o o o Price plays an important role in my choice of products. (7) o o o o o I have strong intention to download a coupon online. (8) o o o o o I know which stores have good price promotions. (9) o o o o o Price is the deciding factor when I buy a product. (10) o o o o o I like to seek for coupons. (11) o o o o o I know which stores have the best prices (12) o o o o o 24

25 The next questions are about coffee. For each of the following statements, please tell us how well it describes you by checking the box corresponding with your choice. I care about the ingredients of the coffee Doesn't describe me at all (1) Doesn t really describe me (2) Can t really tell (3) Sometimes describes me (4) drinks I purchase. (1) o o o o o (2) o o o o o drinking coffee often. (3) o o o o o is too complicated. (4) o o o o o The purchasing process of coffee is easy. I consider the health consequences of I don't go to the coffee shop if the menu I believe that purchasing fair-trade coffee can reduce the injustice experienced by others. (5) o o o o o Definitely describe me (5) It is difficult to resist drinking coffee. (6) o o o o o It requires a lot of efforts to find a coffee shop. (7) o o o o o I believe that by purchasing fair- trade coffee I can help others. (8) o o o o o Coffee is attractive to me. (9) o o o o o I concern about the effects of drinking coffee. (10) o o o o o I care about the benefit of drinking coffee. (11) o o o o o I believe I can make a difference by purchasing fair-trade coffee. (12) o o o o o I think of drinking coffee all the time. (13) o o o o o I care about if a coffee shop has simple or complicated menu. (14) o o o o o I believe that purchasing fair trade won t do much in terms of helping those in o o o o o 25

26 need. (15) Coffee keeps attracting my attention. (16) o o o o o I prefer coffee shops that have complicated menu design because I want more options when ordering. (17) o o o o o When I go to a coffee shop, I care about the overall in-store environment very much. (18) o o o o o I prefer coffee shops that have simple menu design because I want the ordering process to be simple. (19) o o o o o There is a specific coffee brand that I like. (20) o o o o o 26

27 The next questions are about specific coffee brand. Which of the coffee brand is your favorite? o Starbucks (1) o Dunkin Donuts (2) o McCafe (3) o Pavement Coffeehouse (4) o Thinking Cup (5) o Caffè Nero (6) o 7-Eleven (7) o Other (8) Now please keep in mind the brand you chose above. All of the following questions are about the brand you identified. Doesn't describe me at all (1) Doesn t really describe me (2) Can t really tell (3) Sometimes describes me (4) The overall in-store environment of the coffee shop is very appealing to me. (1) o o o o o My relationship with the coffee brand is enhanced by social media. (2) o o o o o I would go to the coffee shop again only because of its overall in-store environment. (3) o o o o o I use social media to monitor other coffee Definitely describe me (5) brands in the community. (4) o o o o o shop. (5) o o o o o coffee shop. (10) o o o o o I am satisfied with the purchase o o o o o I enjoy purchasing coffee in the coffee I am similar to other customers in the 27

28 experience (e.g., ordering, payment procedure). (6) Overall, I am satisfied with the in-store experience of consuming coffee. (7) o o o o o the coffee shop. (8) o o o o o promotions. (9) o o o o o I could identify with other customers in I use social media to follow sales and I think the company has the ability to develop really innovative new drinks. (11) o o o o o I fit right in with the other customers. (12) o o o o o I would recommend this coffee brand solely because of its overall in-store environment. (13) o o o o o The company is in the position to derive very original product ideas. (14) o o o o o I use social media to monitor events. (15) o o o o o The other customers come from a similar background to myself. (16) o o o o o The brand fits my life. (17) o o o o o In the future, I will make more purchases at this coffee shop than at other coffee shops. (18) o o o o o I would recommend the coffee shop to others. (19) o o o o o foster creativity. (20) o o o o o attractive new drinks. (22) o o o o o it comes to purchasing coffee. (23) o o o o o brand. (24) o o o o o The company has a large potential to I think the company can create very This coffee shop is my first choice when It is embarrassing to be seen with the 28

29 I am certain that I will shop at the coffee shop again. (25) o o o o o I avoid being with the brand. (26) o o o o o How likely are you going to purchase coffee in a coffee shop in the next week? o Very Unlikely (1) o Unlikely (2) o Feel Neutral (3) o Likely (4) o Very Likely (5) Approximately, how many cups of coffee have you purchased for each of the following coffee brands during the past week? If you did not buy any coffee from a specific brand, please choose Other and write 0. o Starbucks (1) o Dunkin Donuts (2) o Pavement Coffeehouse (3) o McCafe (4) o Thinking Cup (5) o Caffè Nero (6) o 7-Eleven (7) o Other (8) 29

30 specific brand in the future: Starbucks (1) Dunkin Donuts (2) Pavement Coffeehouse (3) McCafe (4) Thinking Cup (5) Caffe Nero (6) 7-Eleven (7) Very Unlikely (1) Unlikely (2) Feel Neutral (3) Likely (4) Very Likely (5) How old are you? Are you a male or female? o Male (1) o Female (2) 30

31 VII. Methodology In order to help Starbucks generate recommendations to increase sales among college students in Boston area, our team planned to conduct a quantitative survey targeting college students on campus. The survey aims to find out coffee consumption characteristics of college students. Measures Our survey consists of four sections, with three sections measuring independent variables and one section measuring dependent variables. Dependent Variables. The dependent variables are listed as Starbucks and its competitors in the local market, which are Dunkin Donuts, McCafé, 7-Eleven, Caffé Nero, Pavement Coffeehouse, and Thinking Cup. The questions use scales to measure the likelihood for our respondents to purchase coffee in a specific brand among the ones listed above. Independent Variables. The independent variables serve as valid predictors of coffee consumption behaviors among college students. Our survey contains 15 constructs to measure the characteristics of shopping, the attitudes towards coffee, and the behaviors of coffee consumption under a specific coffee brand. They are identified from literature reviews in our previous section. The measures of independent variables consist of 58 questions, with most of them are selected from the Marketing Scales Handbook Volume 8. Respondents Sampling Our respondents include 119 college students. We picked our samples within George Sherman Union in Boston University. In order to make our sampling process more efficient, we embedded systematic sampling into our process to make our samples less biased. We spent three days collecting our data between 12pm to 2pm in this location, with 40 responses each day, 31

32 choosing every third person that has entered George Sherman Union. 102 out of 119 sets of data are valid, which include 41 male respondents and 61 female respondents, aged from 19 to 27. Analysis After the results were collected, our team evaluated the constructs. With SPSS, we developed numerals for each measurement. We marked those low in the degree of a construct as 1 and those high in the degree of a construct as 5. With this standard, we marked the measures that were reverse-coded based on our constructs definitions. After this step was done, we were able to input the data into variables labeled by their constructs definition. With those labeled variables, we analyzed the reliability of each construct. Using Cronbach s Alpha as a reliability coefficient, we successfully cleaned the data and took out the construct that was not reliability. Most of our constructs came out as reliable to excellently reliable, with only one construct (Cognitive resources demands) taken out because of its Cronbach s Alpha. With SPSS, we calculated the mean, median, mode, and standard deviation to get a broad idea of every construct. Each dependent variable and predictor was analyzed with frequency calculated by SPSS. The frequency was calculated under a 95% confidence interval. The frequency of a data set enabled our team to see the pattern of how responses skew to, so that some trends could be linked to specific coffee consumption behaviors. Those trends and patterns were recorded as the evidence to make recommendations for Starbucks. In order to generate the pattern to the whole population, our team planned to calculate correlation along with probability of error. The correlations were calculated between every dependent variable and construct. The correlations that are larger than 0.19 with a p-value less than 0.05 were picked out because the relationships were strong and statistically significant. The relationships between coffee consumption behaviors and predictors were the most essential for 32

33 our team to generate the recommendations for Starbucks to attract more college students to consume coffee in their stores. VIII. Results Analysis of Reliability For the construct Price Perception, it was based on the five-point Likert scale. The Cronbach s alpha reliability is which is good after we removed the item I am willing to pay a higher price for products of good quality. For the construct Health Benefits, its Cronbach s alpha reliability is which is good and it was based on the five-point Likert scale. For the construct Knowledge of Stores Price, its Cronbach s alpha reliability is which is excellent and it was based on the five-point Likert scale. For the construct Cognitive Resources Demands, we removed the whole construct since we found that its Cronbach s alpha reliability was , which was negative, even after reversing code and deleting the item It requires very little effort to buy a cup of coffee. We realized the data we collected about this construct might not be valid and reliable. For the construct Food Salience, its Cronbach s alpha reliability is which is excellent and it was based on the five-point Likert scale. For the construct Environment Quality, its Cronbach s alpha reliability is which is excellent and it was based on the five-point Likert scale. For the construct Menu Design, its Cronbach s alpha reliability is which is excellent after removing the item I prefer coffee shops that have complicated menu design because I want more options when ordering and it was based on the five-point Likert scale. 33

34 For the construct Intention to Download Coupons, its Cronbach s alpha reliability is which is excellent and it was based on the five-point Likert scale. For the construct Similarity to Other Customers, its Cronbach s alpha reliability is which is very good and it was based on the five-point Likert scale. For the construct Attitudes towards Brands, its Cronbach s alpha reliability is which is excellent after removing the items There is a specific coffee brand that I like and The brand fits my life. For the construct Satisfaction with Shopping Experience, its Cronbach s alpha reliability is which is excellent and it was based on the five-point Likert scale. For the construct Innovation Ability, its Cronbach s alpha reliability is which is excellent and it was based on the five-point Likert scale. For the construct Loyalty to the Stores, its Cronbach s alpha reliability is which is excellent and it was based on the five-point Likert scale. For the construct Justice Efficacy, its Cronbach s alpha reliability is which is very good after removing item I believe that purchasing fair trade won t do much in terms of helping those in need and it was based on the five-point Likert scale. For the construct Social Media Usage, its Cronbach s alpha reliability is which is excellent and it was based on the five-point Likert scale. Table 2: Reliability of Constructs Construct Cronbach s Alpha Number of items Items Removed Price Perception 0.656(Good) 3 I am willing to pay a higher price for products of good quality. 34

35 Health Benefits 0.698(Good) 4 None Knowledge of stores price 0.808(Excellent) 4 None Cognitive resources demands (Not valid) 2 It requires very little effort to buy a cup of coffee Food Salience 0.893(Excellent) 4 None Environment Quality 0.812(Excellent) 4 None Menu Design 0.804(Excellent) 3 I prefer coffee shops that have complicated menu design because I want more options when ordering. Intention to Download Coupons 0.832(Excellent) 4 None Similarity to Other Customers 0.768(Very Good) 4 None Attitudes towards Brands Satisfaction with Shopping Experience 0.809(Excellent) 2 There is a specific coffee brand that I like & The brand fits my life (Excellent) 3 None Innovation Ability 0.880(Excellent) 4 None Loyalty to the stores 0.835(Excellent) 4 None Justice Efficacy 0.732(Very Good) 3 I believe that purchasing fair trade won t do much in terms of helping those in need. Social Media Usage 0.835(Excellent) 4 None Analysis of Frequency We analyzed the frequency of our 7 dependent variables and 14 constructs in order to monitor the pattern behind each variable. For dependent variables, our team obtained the 35

36 percentage of the respondents that were likely to purchase coffee from a specific brand. For each construct, the frequencies measured multiple coffee consumption behaviors. When calculating frequencies, we separated the degrees of measures into three parts: low to very low of the degree, moderate, and high to very high of the degree of the constructs. With this method, the trend of a construct was clearer and more effective. After we got the frequencies of the constructs, our team calculated the sampling errors to generalize the proportion into a population by utilizing the formula: SE (P) =! "#! $ 1.96 Constructs The first construct was Price Perception. It intended to measure the respondents intention to seek out low price. Out of 119 of our respondents, 54 (47.8%) of them thought that this statement sometimes or definitely describes them, which means they tend to seek out low price when shopping. The construct has a mean of 3.42, a median of 3.33, and a mode of Our team calculated the sampling error at a 95% confidence interval to generalize the proportion to the population, which is ±9%, indicated a 95% confidence interval at 38.8%-56.8%. This result indicated that more college students intend to seek out low price when shopping. The second construct was Health Benefits. Our team designed this construct to measure college students degree of concerns about health-related consequences when drinking coffee. Out of 119 of our respondents, 42 (38.5%) of them thought that this statement sometimes or definitely describes them, which means they care about health-related consequences when drinking coffee. The construct has a mean of 3.08, a median of 3.25, and a mode of The calculated sampling error at a 95% confidence interval to generalize the proportion to the population is ±8.7%, indicating a 95% confidence interval at 29.8%-47.2%. This result 36

37 demonstrated that relatively more college students care about health-related consequences when drinking coffee. The third construct is Knowledge of Store Price, which means a customer s understanding level of the price in different stores for a specific product. The construct is measured in a five-point Likert scale, with a mean of 2.83, a median of 2.75, and a mode of 3. Out of 119 of our respondents, 39(34.8%) of them thought that this statement does not and doesn t really describes them, which means they does not have high knowledge of store price. The calculated sampling error at a 95% confidence interval to generalize the proportion to the population is ±8.6%, indicating a 95% confidence interval at 26.2%-43.4%. This result indicated that relatively more college students don t have abundant knowledge about the price for a specific product. The next construct is Food Salience, which means a customer s desire level for drinking coffee. The construct is measured in a five-point Likert scale, with a mean of 2.72, a median of 2.75, and a mode of 1. Out of 119 of our respondents, 48 (44%) of them thought that this statement does not and doesn t really describes them, which means they do not have high desire for coffee. The calculated sampling error at a 95% confidence interval to generalize the proportion to the population is ±8.9%, indicating a 95% confidence interval at 35.1%-52.9%. This result indicated that relatively more college students don t consider coffee as non-resistible. The next construct is Environment Quality, which means the degree of concerns about instore environment. The construct is measured in a five-point Likert scale, with a mean of 3.49, a median of 3.5, and a mode of 4. Out of our 119 respondents, 64(61.5%) of them thought that this statement sometimes or definitely describes them, which means they concerns a lot about instore environment when purchasing coffee. The calculated sampling error at a 95% confidence 37

38 interval at ±8.7%, indicating a 95% confidence interval at 52.8%-70.3%. The result indicated that a great number of college students expect in-store environment to be great when purchasing coffee. The next construct is Menu Design, which means a customer s preference of simple menu design. The construct is measured in a five-point Likert scale, with a mean of 3.02, a median of 3, and a mode of Out of our 119 respondents, 38 (34.2%) of them thought that this statement sometimes or definitely describes them, which means they concerns a lot about in-store environment when purchasing coffee. The calculated sampling error at a 95% confidence interval at ±8.5%, indicating a 95% confidence interval at 25.7%-42.7%. The result indicated that relatively more college students prefer simpler menu design over complicated menu design. The next construct is Intention to Download Coupons. This construct measures the intention for a customer to download coupons online. It s measured in a five-point Likert scale, with a mean of 3.01, a median of 3, and a mode of 3. Out of our 119 respondents, there was no pattern found for this construct, because all the responses were evenly distributed. The next construct is Similarity with Others, which measures a customer s belief of similarity with other customers. We surveyed 119 people based on the five-point Likert scale and we found the mean was 3.04, the median was 3 and the mode was 3. We noticed that 54 people, which was 50.9% of all participants, have the neutral belief about the similarity. The sampling error at 95% confidence interval was ±9% and the range would be 41.9% to 59.9%. These 38

39 indicate around half of college students have no idea whether they are similar to other customers or just do not care about it. The next construct is Attitudes towards Brand, which measures the degree of positive attitudes consumers hold towards brand. We surveyed 119 people based on the five-point Likert scale and we found that the mean was 3.94, the median was 4 and the mode was 5. We found that 77 people, which was around 66.7% of all participants, have high to very high degree of positive attitudes towards brand. The sampling error for 95% confidence interval was ±8.5% and the range would be 58.2% to 75.2%. These indicate that more than half of college students have very good and positive attitude towards one brand. The next construct is Satisfaction with Shopping Experience, which measures customers satisfaction with their shopping experience. We surveyed 119 people based on the five-point Likert scale and we found that the mean was 3.71, the median was 4 and the mode was 4. We also noticed that 76 people, which was around 71.7% of all participants, have high to very high satisfaction towards their shopping experience. The sampling error for 95% confidence interval was ±8.1% and the ranger would be 63.6% to 79.8%. These indicate that most college students satisfy with their shopping experiences. The next construct is Innovation Ability, which measures a customer s belief about the company s innovation ability. We surveyed 119 people based on the fivepoint Likert scale and we found the mean was 3.49, the median was 3.5 and the mode was 3.5. We noticed that 67 people, which 39

40 was around 63.2% of all participants, have strong to very strong belief about the company s innovation ability. The sampling error for 95% confidence interval was ±8.7% and the range would be 54.5% to 71.9%. These indicate that more than half of the college students believe the certain company has the innovation ability. The next construct is Loyalty to Stores, which measures customers tendency to return and recommend the brand to others. We surveyed 119 people based on the five-point Likert scale and we found the mean was 3.75, median was 4 and mode was people which was around 76.2% of the all participants, have high to very high tendency to return and recommend the brand to others. The sampling error for 95% confidence interval was ±7.7% and the range would be 68.5% to 83.9%. These indicate that most college students would like to attach themselves to certain brand and become loyalty customers. The next construct is Justice Efficacy, which means a customer s belief that fairtrade coffee can help others. We surveyed 119 people based on the five-point Likert scale and we found the means was 2.95, median was 3 and mode was 3. There were 32 people which was around 28.8% of the participants who had weak and very weak belief, 29 people which was around 26.1% of the participants who had strong and very strong belief, whereas 50 people which was around 45% of the participants did not care about whether the coffee is fair-trade or not. Although most people did not care about fair trade, around 32 people, 28.8% of all participants, had weak or very weak belief about this. The sampling error for 95% confidence interval for these 32 people is ±8.1% and the range would be 20.7% to 36.9%. These 40

41 indicate that most people do not care about whether purchasing fair-trade could help others or not or just have little awareness about it. Our last construct is Social Media Use, which means the degree of using social media to follow up with the brand. We surveyed 119 people based on the fivepoint Likert scale and we found the mean was 2.65, median was 2.5 and mode was 2. There were 42 people which was around 40% of the participants who had very low or low degree of using social media to follow up with the brand. The sampling error for 95% confidence interval for people who had very low and low degree was ±8.8% and the range would be 31.2% to 42.8% applied to the population. These indicate that more than one third of students hardly ever use social media to follow up with the brand. Dependent Variables Our first dependent variable is Likelihood to purchase at Starbucks. We surveyed 119 people based on the fivepoint Likert scale and we found the mean was 3.98, the median was 4 and the mode was out 119 people were likely and very likely to purchase at Starbucks, which 41