Report on Major Coffee Houses in the United Kingdom - Research Paper Example

The market for coffee and coffee products in the United Kingdom is one of the largest sectors that attracted the attention of scholars as well as entrepreneurs. The sector is getting more and more attention as they are growing fast and have high potential in future. Many players, domestic as well as international have entered the market and have faced stiff competition one another for acquiring major share in the market and enjoy the fruits of the industry's prosperity. In the efforts to acquire the market, the leaders in the industry have introduced many innovations in their products and services and that became the reason for further development of the industry in the country. Major players such as Starbuck have started opening outlets at every nook and corner of the country to gain popularity and pose threats to its competitors. The competition has become so deadly with more and more entrants joined the market and started their innovative style in product and service. However, recent research findings show that "after a prolonged period of consistent year-on-year growth, much of the coffee shops market is now entering a phase of consolidation, as consumers and operators alike hunker down in reaction to the current economic recession" (Coffee Shops - Current and new strategies for success). Moreover, the trend in the market has also changed from conventional outlet to pubs and fast food especially among youth. At this juncture, this research paper explores the status of the coffee industry in the United Kingdom by means of a variety of methods such as PESTILE Analysis. The study covers the PESTILE analysis of four major players in the coffee industry of the country. The coffee houses selected for the present study are Starbucks, Caffe Nero, Costa Coffee, and Coffee Republic. The study begins with the prepaprartion of a perceptual positioning map and its relevance. The study covers those coffee shops where coffee is a major item of sales and majority of the consumers visit the shops to consume branded coffee because of their loyalty to the brands. The research is not confined to a particular type of coffee. Instead, it includes different types of coffee products such as cappuccino, latte, mocha. For the purpose of the research coffee shops include venues such as individual stores, kiosks and concessions. It is also to be noticed that the research does not cover other coffee establishments such as in-, tea shops, store cafs or traditional cafs, restaurants, and sandwich shops. The study takes a sample survey among 30 coffee consumers of various brands. It seeks to explore that how the consumers of various coffee products rate their brands and what motivate them to buy their brands. Objectives of the Study The ultimate objective of the present study is to identify the key players in the coffee industry in the United Kingdom and to examine how they have become the major players among the consumers. Specifically, the objectives can be briefed as below: 1. To identify the various factors that contribute to the success or otherwise of the four players in the coffee industry; 2. To identify the four key attributes that consumers may use to select the brand, company or product for purchase; 3. To determine where consumers place each of the four main competitors suing the four key attributes. A Brief Account of the Profile of Selected Companies Starbucks Established in the year 1980 by Howard Schultz, Starbucks is a large coffee retailer conglomerate having around 11000 cafes spread across 40 countries around the globe. The main reason for the company's success has been its focus on quality and highest beverage processing standards including selection of the best coffee ingredients. The raw materials that go into making the coffee are extracted from the best Arabica coffee beans and there are no mixtures or additives. The coffee beans supplied to the customers are fresh with an original taste, aroma and strength for enhanced drinking pleasure. Customers include people from all walks of life. Some of them are so taken by the taste that they visit an outlet 15 to 20 times a month and a few 'fanatical' ones make it a point to visit it every day (Bonding with Customers), Coffee Republic Coffee Republic, established in 1995, one of the leading coffee shops in the country has a wide network of coffee outlets and vast number of customer support. Since its first shop opened in South Molton Street by one brother and sister-Bobby and Sahar Hashemi- has conquered many milestones and has grown to one of the most sought after and well acclaimed coffee brand in the UK. The firm has expanded its operations to major foreign courtiers like Malta, Dubai, Bulgaria, Kuwait, and Turkey. The brand is known for its perfect blend, which, they argue, are sourced from different countries and is roasted at their roaster in Milan. Caffe Nero Founded by Gerry Ford in 1997, Caffe Nero is one of the U K famous coffee shops having a vast number of customer supports. The firm has the vision "to bring a premium, continental-style Caf to Great Britain" (History). And the founder wanted the company "to be authentically Italian, serving very high quality Italian coffee and fresh, deli style food in a neighbor-hood setting with a friendly, relaxing atmosphere" (History). Over a period of one decade, the firm has grown from one shop to 360 stores with nearly 3,000 employees. Costa Coffee The company was formed in 1971 by pouring its first cup of tea at 9 Newport Street, London, by Sergio and Bruno Costa. The firm argues that it has been maintaining highly pleasing and happy atmosphere at all its shops. In its journey from nowhere to what it is today, many milestones would have been crossed. It sources beans from different countries such as Colombia, Vietnam and Kenya. It is the only coffee shop in the country to claim the control over the entire process of coffee making from start to finish. PESTLE Analysis Variable Construct Impact on the Firms Political Inter-country relationships/attitudes Since there is expansion to foreign countries, foreign laws and legislation will have an impact upon the firms Government policies Government, both local and foreign policies also have an impact upon the firm Economic Home market lobbying/pressure groups The increased competition and pressure from lobbying groups Socio-cultural Consumer attitudes and opinions With changes in the socio-cultural factors, customer attitudes and opinions on their brands change Technological Competing technology development Many changes have occurred over the last few years Legal and Regulatory Employment law Employment law is subject to change from time to time to protect the right and interests of employees Ecological and Environmental Environmental issues International National Local Unless the ecological and environmental issues are taken care of, the firm's sustainability may be adversely affected Perceptual Mapping Perceptual mapping is a method by which the customer's perception about their brands is mapped on a scale. It is the means by which customer preferences are plotted on a graph with appropriate grades or rate given by them. It helps a firm to identify a strategic positioning of its brands in the market (perceptual mapping). "It has been used as a strategic management tool for about thirty years now. Perceptual mapping helps to communicate the relationship between competitors and the criteria used by your consumers while making purchase decisions. Perceptual maps, being simple graphic figures, can pave the path for all types of organizations towards strategic thinking and trigger discussions for further action" (What are Perceptual Maps). Perception mapping as the very name indicates plots customers' perception of their brands and therefore it may change from customer to customer and from place to place. Based on the survey results, the perceptions of customers about their four coffee shops have been plotted on the map as seen below: Figure No. 1 Customer Perception Mapping of Quality and Price Figure No. 1 Customer Perception Mapping of Cleanliness and Service Analysis of Customer Response The study has collected data from 30 respondents to research their brand preferences and arrive at some logical conclusions. The data collected have been through a questionnaire using five point likert scale. It uses mainly four attributes such as price, quality, cleanliness and service for analysis. The data collected have been analyzed using SPSS software package and put in tables and figures. Each table and figure has been explained with illustrations. Table No. 1 Sex-wise Distribution of Respondents Sex Frequency Percent Female 16 53.3 Male 14 46.7 Total 30 100.0 Figure No. 1 Sex-wise Distribution of Respondents Table No. 1and Figure No.1 exhibit the gender wise frequency distribution of visitors of coffee shop. The data do not show the preference of any coffee brand by respondents. It is clear from the table that majority of the respondents are female, which accounts for around 53 percent of the total respondents. Table No. 2 Age-wise Distribution of Respondents Frequency Percent Less than 18 6 20.0 Between 18 and 30 11 36.7 Above 30 13 43.3 Total 30 100.0 Figure No. 2 Age-wise Distribution of Respondents Table No. 2 and Figure No. 2 show the visitors of coffee shops fall mainly under three age groups. The lowest group (less than 18) accounts for 20 percent and 18 to 30 age group accounts for around 37 percent and above 30 groups has the maximum number of visitors. It indicates that majority of coffee shop visitor fall in the age group of above 30. Table No. 3 Respondents' Frequency of Visit Frequency Percent Most Frequently 9 30.0 Frequently 10 33.3 Once in a while 4 13.3 Occasionally 5 16.7 Rarely 2 6.7 Total 30 100.0 Figure No. 3 Respondents' Frequency of Visit Table No. 3 and Figure No. 3 exhibit how frequently respondents visit coffee shop. It is evident from the table that majority of the respondents visit coffee shop frequently. Those who most frequently visit the shop accounts for 30 percent, while those who visit once in a while accounts for around 13 percent. It is worth notable that those who rarely visit coffee shop accounts for around 7 percent only. Table No. 4 How do Respondents Visit Coffee Shop Frequency Percent Alone 14 46.7 With friends/relatives 16 53.3 Total 30 100.0 Figure No. 4 How do Respondents Visit Coffee Shop Table No.4 and Figure No.4 describe how the coffee shops are usually visited by respondents. It is clear from the table that majority of the visitors visit coffee shop with friends or relatives. It accounts for around 53 percent. Those who visit alone accounts for around 47 percent. Table No. 5 Respondents' Rating of Cleanliness Frequency Percent Very High 14 46.7 High 5 16.7 Reasonable 5 16.7 Low 4 13.3 Very Low 2 6.7 Total 30 100.0 This table illustrates how the customers rate their brands in terms of cleanliness. The table depicts that around 47 percent of customers rate their brands as very high in terms of cleanliness. The percent of customers who rate cleanliness as high and that rate cleanliness reasonable remain same. It is also clear that around 7 percent of the customers are not satisfied with very low rating and around 13 percent are not satisfied with low rating. Table No. 6 Respondents' Rating of Quality Frequency Percent Very High 12 40.0 High 10 33.3 Average 4 13.3 Low 4 13.3 Total 30 100.0 This table exhibits how the customers rate their brands in terms of quality. The table depicts that around 40 percent of customers rate their brands as very high in terms of quality. The percent of customers who rate quality as high is 33 percent and that rate quality as average comes to 13 percent. It is also clear that around 13 percent of the customers are not satisfied with very low rating and no customer is fully dissatisfied with very low rating. Table No. 7 Respondents' Rating of Price Frequency Percent Very High 10 33.3 High 8 26.7 Reasonable 9 30.0 Low 2 6.7 Very Low 1 3.3 Total 30 100.0 This table illustrates how the customers rate their brands in terms of price. The table depicts that around 33 percent of customers rate their brands as very high in terms of price. The percent of customers who rate price as high is 27 percent and that rate quality as reasonable remains 30 percent. It is also clear that around 7 percent of the customers are not satisfied with low rating and around 3 percent are not satisfied with very low rating. Table No. 8 Respondents' Rating of Service Frequency Percent Very High 9 30.0 High 10 33.3 Average 9 30.0 Low 1 3.3 Very Low 1 3.3 Total 30 100.0 This table shows how the customers rate their brands in terms of service. The table illustrates that 30 percent of customers rate their brands as very high in terms of cleanliness. The percent of customers who rate cleanliness as high amounts to around 33 percent and that rate cleanliness as average comes to 30 percent. It is also clear that around percent of the customers are not satisfied with very low rating and that with low rating remain the same. Table No. 6 Association of Respondents' Age and Frequency of Visit Frequency of Visit Total Most Frequently Frequently Once in a while Occasionally Rarely Age Less than 18 Count 2 1 1 2 0 6 % within Age 33.3% 16.7% 16.7% 33.3% .0% 100.0% Between 18 and 30 Count 2 6 0 1 2 11 % within Age 18.2% 54.5% .0% 9.1% 18.2% 100.0% Above 30 Count 5 3 3 2 0 13 % within Age 38.5% 23.1% 23.1% 15.4% .0% 100.0% Total Count 9 10 4 5 2 30 % within Age 30.0% 33.3% 13.3% 16.7% 6.7% 100.0% Table No. 6 illustrates in detail the association between the age of respondents and their frequency of visit at coffee shop. It is seen that the maximum number of customers who visit frequently fall in the age group of 18 to 30. It is clear from the table that customers who most frequently visit their coffee shops fall in the age group of above thirty. It accounts for around 39 percent of total number of respondents with that age. Those who are less than 18 years old occasionally visit and most frequently visit their coffee shop come to same percent, i.e., around 33 percent. It is also seen from the table that no respondent within the age group of less than 18 and above 30 rarely visit their coffee shops. Conclusion Coffee shops have a place of prominence among the populace of the UK. They have become a part and parcel of the daily of many from all walks of life and from different age groups. The research findings show that a lion's share of respondents is frequently visiting their brand coffee shops to have coffee. Majority of the customers prefer their brands in terms of price, quality, cleanliness and service. It is also found that the age of the customers and frequent visit of coffee shops are associated. References Bonding with Customers, Starbucks Corporation, Student resources, Viewed March 4, 2009, from< http://www.mhhe.com/business/management/thompson/11e/case/starbucks-2.html> Coffee Shops - Current and new strategies for success, Coffee Shops - UK - February 2009, Mintel Oxygen - Your guide for future success , viewed March 4, 2009, from, History, Caff Nero, Online, Viewed March 4, 2009, 'Perceptual Mapping', Learn Marketing. Net. Online. Viewed March 4, 2009, from, What are Perceptual Maps, Market Research and Analysis, Viewed March 4, 2009, from, Appendix Questionnaire 1. Name of the respondent : 2. Sex: Male Female 3. Age: Less than 18 Between 18 and 30 Above 30 4. Marital status: Married Single 5. How often do you visit coffee shop Most Frequently Frequently once in a while occasionally very occasionally 6. How do you visit the shop Alone with friends/relatives 7. How do you rate the cleanliness of the shop Very High High Reasonable Low Very Low 8. How do you rate the quality of the brand Very High High Average Low Very Low 9. How do you rate the price of the product Very High High Reasonable Low Very Low 10. How do you rate the service at the shop Very High High Average Low Very Low Read More