The Coffee Experience and Consumer Buying Behaviour: A Comparative Case Study on Coffee Brands and Factors in Buying Behaviour Of University Students
Category : Case Studies Samples, Consumer Process, Marketing Mix
The Coffee Experience and Consumer Buying Behaviour: A Comparative Case Study on Coffee Brands and Factors in Buying Behaviour
Of University Students
Today’s high competition in international business environments allows the globalisation of consumer taste. The needs for marketer to develop the products (brands) or services to meet the consumer buying and consumption behaviour affect organization of all industries. In Asia, food and drink is one of the industries which have been affected by the western culture including Coffee drinking.
Coffee has become one of the most popular hot drinks around the world; Hong Kong is no exception. Hong Kong, as a cosmopolitan city is no longer foreign with global coffee brands like Starbucks, Pacific Coffee, and others. The convergence of various nationalities that flock their way to the region is tantamount to the presence of popular global brands that they use to purchase. Coffee shops both local and international in nature are thriving drivers of the food and beverage industry. In Hong Kong, a coffee experience is considered to be culturally related. Eastern traditions indicate tea drinking as part of familial gathering or just mere socialization. In Hong Kong, coffee shops are always occupied by people of various races for the purpose of drinking or conversing over a cup of coffee. Today, the traditional coffee experience expanded its potentialities as well as target market. University students are now very much inclined to a coffee experience in their most favorite coffee shop.
In order to gain the competitive advantage, one of the most important components is to determine and then manipulate on factors influencing buying and consumption behaviour. It is widely recognize that consumers can be considered as the fuel of any business venture. Not only that they are the ones who purchase the products and/or services of the firm, consumers may choose particular product (brand) not just because it provides the functional or performance benefits expected, but also because it can be used to express consumers’ personality, social status or affiliation (symbolic purposes) or to fulfill their internal psychological needs, such as the need for change or newness (emotional purposes) (Kim et al, 2002).
Moreover brand loyalty is also recognized as consumer’s conscious or unconscious decision which expressed through intention or behavior to repurchase a brand continually. To identify the factors which reinforce those habits and attitude will contribute the firm developing their competitive branding strategies.
Though there have been numerous consumer researches in the past linking factors that affect consumer buying behavior, the variables of these factors may not be applicable to all products and markets. In such case like emerging market trend of coffee consumption among the younger generations in Hong Kong, it is essential to conduct a consumer research study to this particular market segment in order to better understand the consumers buying behavior. Also this will serve as an innovative source of marketing information that may change the usual coffee business setting
2. Research Problem and objectives
With the purpose to investigate the precise factors that affect attitude and buying behaviour of two types of consumers – Hard-core Loyal Buyer and Brand Switching Buyer – among university students in Hong Kong towards the selection of top two coffee house brands. From so many consumer-related research studies in the past as well as the changing consumer culture in coffee consumption, it is essential to focus research topics on particular areas that deemed to be lack of up-to-date research to indicate what the precise needs of this segment.
Primarily, this study aims to compare top two famous Coffee House brands in relation to the factors that effect consumer buying behaviour. The main investigation is to find out what the most important factors two above consumer types have in mind when buying coffee. Specifically, the research objectives include the following:
I. Use EKB model to identify the common factors which will be investigated in this study. The framework will be shown in Figure 1- 3.3
II. Examine and Identify the precise factors that affect consumers in buying coffee and have significantly different between hard-core loyal buyer and brand switching buyer of target samples
III. To investigate the important brand preferences that influence the coffee buying decision of target samples both hard-core loyal buyer and brand switching buyer
IV. To find out the important factor that influence the consumer motivation in being brand loyalty of target samples.
3. Literature Review
3.1 Consumer Behaviour
Consumer behaviour and consumer decision-making have become prominent research topics in the various fields of consumer science in recent years (Fullerton, 2005; Stern, 2000; Anurit et al, 1999). Generally, consumer behaviour is defined as the behaviour or activities that consumer engage in when selecting, purchasing, and using products and services so as to satisfy needs and desires. Such activities involve mental and emotional processes, in addition to physical actions (Schiffman & Kanuk, 2004, p.8).
The important of consumer behaviour is deeply rooted in the marketing strategy. Virtually, all decisions involved in developing an effective marketing mix for a product or service rely on thorough knowledge of the consumers who comprise the target market (Mullen & Johnson, 1990 p.16). Understanding the behaviour of the consumer can help marketers anticipate reactions to changes in the marketing mix, or determine whether new products are likely to be adopted.
Understanding buyer behaviour is one of the more perplexing tasks confronting every business owner. The difficulty arises from the heterogeneity of buyers, from their brand loyal or being groups of individuals who differ from one another. But differences notwithstanding, consumers do share attitudes, opinions, reactions, and desires at various times. Business experience, marketing research, theoretical constructs and models, and trial-and-error methods help to find some of the common denominators. This study aims to identify a pattern of behaviour among its chosen respondents.
3.2 Consumer Brand Loyalty
Brand loyalty is widely understood to be the ultimate goal a company set for a branded product. In today’s highly competitive environments brand loyalty is being a key factor to make a critically valuable contribution to organization. It is defined by Wilkie (1994) as “a favorable attitude toward, and consistent purchase of, a particular brand”. Repurchase is not sufficient evidence of brand loyalty as it has been described as a behavioural response and as a function of psychological processes (Jacoby and Kyner, 1973). Brand loyalty is a function of both behaviour and attitudes.
In order to understand the factors to drive consumer brand loyalty, it is necessary to understand the basic of consumption relationships. Douglas (2006) suggested that consumers who more involved with a particular brand are also more committed and therefore more loyal to that brand. Loyalty level to brand, Lau et al (2006) cited from Evans et al 1996 that there are four categories of consumers: Hard-core loyal consumers – buy this particular brand name; brand switchers – choose and buy the products or brands depending on pricing, situational factor and others, new users and non-users. But the last two groups, especially non-users, tend not to be loyal to any brand. Therefore the two types: hard-core loyal buyer and brand switching buyer will be the main focus in this paper. Additionally, brand switchers are the most interesting group in today marketing perspective.
3.3 Factors Affecting Consumer Buying Behaviour
The consumers’ perception of a product highly affects its decision on what product to buy. The decision process is influenced by the information available to the consumer and the way in which the consumer processes that information. The decision process is also influenced by the consumer's beliefs, attitudes, and intentions as well as many other individual characteristics.
Product characteristics include the extent to which the product's probable performance can be assessed by visual inspection and its complexity, that is, the number of decisions the consumer is required to make about it. Consumer characteristics include experience with purchasing the product, and the kinds of criteria the consumer uses in judging the product. The evaluative criteria are shaped by the consumer's beliefs, attitudes, and perception of risk in the purchase.
Research on sensation and perception, product attribute, product quality, service quality, categorization, information search, memory, attitude and behaviour, attitude formation and formation and satisfaction have been undertaken to understand consumer behaviour (Kivela, 1997; Jacobs, Latham & Lee; 1998, Andaleeb & Conway, 2006). As stated by (Karjaluoto et al, 2005; Hsu& Hung, 2005; Lau et al 2006; Ankomah & Yiridoe, 2006), attitudes towards purchase behaviour are believed to be shaped by many factors such as direct experience with the product, information acquired from others, price, nature of business, satisfaction, exposure to mass media and etc.
In this study, to identify the factor influence the consumer motivation and decision in buying behaviour, EKB model: Problem recognition, Search, Alternative evaluation and choice which originally developed by (Engel and Blackwell, 1982) is a framework of reference. Factors which are being investigated under EKB model are as followings;-
· Problem recognition
Situational Factor: i.e. Fashion-conscious (Being sociable), Stay awake or to increase work efficiency, motivated by thirst, etc.
Location: Location and number of shops are crucial in buying decision.
· Alternative evaluation
3. Brand name: The prestigious brand name and their brand image are easily able to attract consumers to purchase the products
4. Taste: Each customer has their own preference on different taste and aroma
5. Service Quality: Service quality will directly affect customer satisfaction.
6. Price: Consumers are willing to pay a premium price for their favored brand
7. Promotion: Effective communication can persuade and motivate the buying behavior.
Hence, the framework used in this study is as Figure 1
Figure 1. Research model of factor affecting consumer behaviour
This study aims to identify the presence of such factors using the case of coffee brand and experience of top three coffee brands in Hong Kong.
3.4 Coffee Experiences in Hong Kong
Aside from the local coffee shops and restaurants that offer traditional coffee experience among people, international coffee brands are present among business streets in Hong Kong. The popularity of brands is seen to be the most compelling factor that contributes to the emergence of contemporary coffee experience.
Starbucks, according to its business website “made its debut in Hong Kong in May 2000 with the first store launched at Central's Exchange Square, followed by Hysan Avenue in Causeway Bay. By the end of 2000, there were nine Starbucks coffee houses and the store count reached 24 by the end of 2001 and 60 by end of 2005. Starbucks now has opened near to 65 stores in Hong Kong. Starbucks coffee shops are now located at commercial, shopping & entertainment and residential areas across Hong Kong”. The brand is a joint venture between Starbucks Coffee Company International and Maxim's Caterers Ltd., a premier catering conglomerate in the region.
Similarly, Pacific Coffee’s mission “to provide the perfect cup, anywhere, anytime” is proudly Hong Kong. This is said to be the answer to the Starbucks challenge with almost 40 outlets in the city. The first outlet opened in 1992 and was located in the Bank of America Tower in Central, Hong Kong. The group is owned by Chevaleir Pacific. With its inviting environment with comfortable seating, wireless internet access, enjoyable music, a broad array of food, and coffee beverages, it was awarded the Best Coffee in Hong Kong.
The culture of coffee brands and experience is an interesting area of empirical exploration. Thus, this research case study hopes to explore deeper on the coffee buying behavior among university students. As stated, its main goal is to identify the most important factors consumers have in mind when buying coffee (i.e. brand name, taste, price, location, convenient, atmosphere, and others) in either of the mentioned brands.
4. Research Methodology
Population and Sample Size
The population of this research constitutes a total of 200 respondents. Such respondents are randomly selected but must be categorically attending higher education programmes (i.e. higher diploma, undergraduate, and postgraduate) in a Hong Kong college or university.
A structured attitude questionnaire using Likert scale (Barnett, 1991) is applied in the research. Informal interviews are also facilitated, if possible.
Data are gathered through survey method. This will serve as the primary source of data collection. Meanwhile, secondary data include related literature about the subject of the research. Since this is a combination of quantitative and qualitative research approaches, the researcher opted to access all potential sources and means of data collection so as to have variety and extensiveness.
The initial questionnaire will be pilot tested among 20 university students who are spotted in either of the two coffee shops. This is to ensure the maximum clarity of questions. Aside from demographic data, there are six (6) identified factors that affect consumer buying behavior and under them are (5) attitude statements in which they will indicate degree of agreement or disagreement.
The researcher will use inferential statistics (through SPSS) in order to draw a concrete conclusion. Inferential statistics is use to be able to know a population’s attribution through a direct observation of the chosen population or simply the sample. This is because it is easier to observe a portion or a part than observe the whole population. However using a sample has also its own disadvantages; hence, there is a need to choose the most suitable sample from any population. Result of the study will be put in tables and graphs for easy understanding of the findings of the research.
The main objective of this research is to identify the common factors that affect consumer buying behaviour of university students when it comes to coffee brand and experience. Due to the increasing competition of coffee businesses in Hong Kong, the conveyance of this timely case study will serve as imperative evaluation on the coffee shop business in the region as well as emerging and specific consumer consumption among the chosen respondents.
Background of Top five Coffee brands in Thailand
Starbucks, according to its business website www.starbucks.co.th, made its debut in Thai consumer in July 1998 at Bangkok. As of June 2007, there are 97 outlets in Thailand: 78 in Bangkok and 19 in major urban cities. Starbucks Thailand is a wholly owned subsidiary of Starbucks Corporation.
Coffee World, www.coffeeworld.com, founded in 1997, is now owned by the Thai controlled venture capital firm Global Investment Partners (GIP) and GRI, a European investment and business development company. It runs 60 outlets in Thailand; 46 outlets in Bangkok. Coffee world has steadily grown locally with shops in university campuses and shopping centers like Siam Square, targeting teens, students and shoppers (The Nation Newspaper April 4, 2006)
94c Coffee, www.94coffee.com, is under administration of Ultimate Beverage Product Co., Ltd. the affiliated company of K.V.N. Import Export (1991), the “Aroma" coffee producer for more than 40 years. They started the business in 2001 and now have 39 outlets: 33 and 6, in Bangkok and other provinces respectively.
Black Canyon Coffee, http://blackcanyoncoffee.com. Black Canyon (Thailand) Co. Ltd. was established in 1993. Since its founding in Bangkok, Black Canyon has grown to more than 160 branches located throughout Thailand at every major shopping centers around the country, as well as many fuel stations on major highways.
Banrei Coffee, http://www.banriecoffee.com, Local Thai coffee house brand by “Oak Bab Reina (Thailand) Co., Ltd.” was established in 1997 with now 29 outlets in Bangkok and 57 outlets in other provinces.
· Books and Journals
1. Andaleeb, S. & Conway, C. (2006), “Customer satisfaction in the restaurant industry: an examination of the transaction-specific model”, Journal of Services Marketing, vol. vol. 20 (1), pp. 3-11
2. Ankomah, S. & Yiridoe, E. (2006), “Organic and Conventional Food: A Literature Review of the Economics of Consumer Perceptions and Preferences”, Final Report, Organic Agriculture Centre of Canada
3. Anurit, J., Newman, K. & Chansarker, B. (1999), “Consumer Behavior of Luxury Automobiles: a comparative study between Thai and UK Customers”, Discussion Paper, London: Middlesex University Business School.
4. Barnett, V. (1991), Sample Survey principles and methods, London: Hodder.
5. Douglas, N., (2006), “An Examination of How Product Involvement Affects Brand Loyalty”, A thesis, New Zealand: Auckland University of Technology.
6. Engel, J.F. & Blackwell, R. D. (1982), Consumer Behavior. 4th ed. Hinsdale: The Dryden Press.
7. Fullerton, G. (2005), “Impact of Brand Commitment on Loyalty to Retail Service Brands”, The Canadian Journal of Administrative Sciences, June 2005. Available at http://findarticles.com/p/articles/mi_qa3981/is_200506/ai_n14905427.
8. Hsu, J. & Hung, W. (2005), “Packed coffee drink consumption and product attribute preferences of young adults in Taiwan”, Food Quality and Preference, vol. 16 (4), p. 361-367
9. Jacobs, F. A., Latham, C., & Lee, C. (1998). The relationship of customer satisfaction to strategic decisions. Journal of Managerial Issues, vol. 10(2), pp. 165+.
10. Jacoby, J. & Kyner, D. (1973), “Brand Loyalty vs repeat purchasing behavior”, Journal of Marketing Research, Vol. 10, No. 1, p. 1-9
11. Karjaluoto, H., Karvonen, J., Kesti, M., Koivumaki, T., Pakola, J., Ristola, A. & Salo, J. (2005), “Factors Affecting Consumer Choice of Mobile Phones: Two Studies from Finland”, Journal of Euromarketing, vol. 14 (3), pp. 59-82
12. Kim, J., Forsythe, S., Gu, Q. & Moon, S. J. (2002). Cross-cultural consumer, Values, needs and purchase behavior. Journal of Consumer Marketing, vol. 19 (6), pp. 481-502.
13. Kivela. J. (1997), “Restaurant marketing: selection and segmentation in Hong Kong”, International Journal of Contemporary Hospitality Management, vol. 9 (3), pp. 116-123
14. Lau, M., Chang, K. & Liu, W. (2006), “The Brand Loyalty of Sportswear in Hong Kong”, Journal of Textile and Apparel, Technology and Management, vol. 5 (1), p. 1-13
15. Mullen, B., Johnson, C., (1990). The Psychology of Consumer Behavior. Hillsdale, NJ: Lawrence Erlbaum Associates
16. Schiffman, L. & Kanuk, L. (2004), Consumer Behavior, 8th Edition, Pearson Education Inc., Upper Saddle River, New Jersey
17. Sekaran, U. (2003), Research Methods for Business-A Skill Building Approach, 4th Edition, John Wiley & Sons, NJ., USA
18. Stern, P. (2000), “New Environmental Theories: Toward a Coherent Theory of Environmentally Significant Behavior”, Journal of Social Issues, vol. 56 (3), p. 407-424
19. Wilkie, W.L. (1994), Consumer Behavior, John Wiley & Sons, New York, NY.
http://blackcanyoncoffee.com, August 8, 2007
http://www.94coffee.com, August 9, 2007
http://www.banriecoffee.com, August 9, 2007
http://www.coffeeworld.com, August 8, 2007
http://www.reg.chula.ac.th/statistics/statistics1.html, November 6, 2007
http://www.registrar.ku.ac.th/statistic/total_student.htm, November 5, 2007
http://www.starbucks.co.th, August 8, 2007
http://www.tu.ac.th/org/ofrector/planning/DATAPLAN/datastd/report3.htm, November 5, 2007
www.caltex.com/th, August, 28, 2007
www.euromonitor.com/Hot_Drinks_in_Thailand, August 9, 2007
www.fao.org, August 27, 2007
Search Our Library. Search by Keyword, Author or Title