COSTA Coffee Shop

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Executive Summary Costa coffee was first poured on shores in 1971 at 9 Newport Street, London, by Sergio and Bruno Costa. Today, just a few meters away from the institute, the Costa Roastery produces the same unique Mocha Italia blend that the Costa brothers worked so hard to create. When you walk into a Costa store you'll notice it's different to other coffee shops. First of all, there's the warm and welcoming atmosphere. Then the great range of authentic coffee drinks, next, the Ferrari of coffee machines. And finally, the most passionate and well trained baristas around. It's this unique combination that makes us stand out from the others, and we're incredibly proud of it. Studying aspects of consumer behavior and also studying what are the factors that impact a particular choice of coffee shop, gave us interesting insights into the coffee culture. Based on these findings, we have recommended activities as well as actions that we think will help Costa Coffee improve its quality and service. Our first step towards collecting data on consumer behavior started on campus, where we studied the psyche of consumers based on their preferences with respect to the coffee shop they liked, their frequency of visit to coffee shops and choice of coffee and non-coffee beverages, their top of mind brand recalls and their awareness levels of Costa Coffee. This study helped us in not only understanding what an average coffee consumer looks forward to, but also made us think of ideas on how to attract a consumer to the coffee shop. Analyzing this set of data gave us a different perspective of what people enjoyed at coffee shops in general and Costa Coffee in particular and what they thought was missing. We also conducted a conjoint analysis, in our pursuit to find out which factor / attribute was the most important when it came to visiting coffee shops. Some of these attributes were the quality, taste, ambience, variety, service and availability. Cafe coffee day stood out as the clear winner in the minds of coffee drinkers who frequent coffee shops. Analyzing results of the surveys and the conjoint analysis helped us identify what Costa Coffee Shop could do on a strategic as well as a tactical level. These recommendations, mostly backed by consumer insights, are not exhaustive but do take into consideration all aspects of drinking coffee at Costa Coffee creating the right levels of quality, quantity, service, availability, strategies to promote Costa Coffee shop as first preference, added services like Television, beanbags, smoking areas, and others which not only lead to increase in awareness of Costa Coffee but also help in strategic brand building. Its all about creating awareness and sustaining a share in the mind of the consumers while at the same time changing and reinventing to the desires of the coffee drinkers!

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Table of Contents Contents Contents......................................................................................................................................4 Background and Objective...........................................................................................................5 Benefit of Research ....................................................................................................................6 3 . RM (Research Methodology)..................................................................................................8 3.1 The Problem Discovery......................................................................................................8 3.2 The Problem Definition.......................................................................................................9 3.3 Exploratory Research.........................................................................................................9 3.4 Data Sources......................................................................................................................9 3.4.1 Secondary Data Source:..............................................................................................9 3.4.2 Primary Data Sources ...............................................................................................10 3.5 Type of Research.............................................................................................................10 3.6 Sampling method ...........................................................................................................11 3.7 Data Gathering................................................................................................................11 3.8 Data Analysis .................................................................................................................11 4. Findings.................................................................................................................................12 5. Conclusion and Recommendations......................................................................................15 Reference..................................................................................................................................16 Appendix....................................................................................................................................16

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Background and Objective As the competition heats up, the coffee-houses attract customers with new drink ranges and lucrative offers as well as services for business and entertainment. From a cultural standpoint, coffee-houses largely serve as centers of social interaction. They offer social members a place to congregate and talk, read, have meetings, or simply pass the time, whether individually or in small groups. It is a favorite pastime of every age group and culture. Popular hangout One part of this change is that coffee-houses now typically serve a large variety of food to go with their beverages. Customers now choose to eat, whether that is a quick snack or main meal, as well as have their coffee. Costa continually updates its offerings with innovative food products and new drink ranges to keep their loyal customers interested and give them something new to sample. Their range includes cakes, sandwiches and salads.

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Problem Discovery To understand the usage patterns and habits of Students regarding their coffee consumption and choice of coffee shop. Also to understand their brand positioning in comparison with other major coffee shops.

Exploratory Research No Exploratory Research is required as the Problem Discovery and Problem Definition are the same

Problem Definition to understand the usage patterns and habits of Students regarding their coffee consumption and choice of coffee shop. Also to understand their brand positioning in comparison with other major coffee shops.

Objective 1 .To identify the usage patterns and habits regarding their coffee consumption and choice of coffee shop 2.To identify the dominant player in international coffee shop chain. 3. To identify the brand positioning of COSTA Coffee shop visa-vie other major coffee shop that students frequently visit. 4. To identify the brand awareness of COSTA coffee shop amongst students. 5. To identify and recommend the scope of improvement (if any) in product and service by the COSTA coffee shop.

Benefit of Research Research broadly helps to assimilate information to assist business oriented decision making in order to: Understand the consumer and market Understand the competition 6|Page

Understand the evolving consumer needs and thus Streamline its offerings to the market (segments)

2.1

Generic Usage Patterns and Habits of Students This research would provide the information on coffee consumption patterns of students.

2.2

Demographic Factors We would get a clear picture of the demographic split up of the coffee-drinkers as well as a detailed analysis of the demographics of its loyal customers. It can thus contribute to the service aspects of their shops in and around IMT.

2.3

Identify specific areas for operational improvements The areas of specific improvement can be recognized using the final open-ended question oriented around the requirements from their favorite coffee shop. This could be beneficial to We in order to make operational improvements.

2.4

Capitalize on the knowledge We can capitalize on the knowledge of experienced companies when entering a new market or niche segment. The dominant player in the market as per the analysis is Cafe coffee day and We (Costa Coffee) can learn from our study to implement appropriate strategy, form the policies that have helped make Cafe coffee day a leading player in the market.

2.5

Introduction of New Flavors of Coffee The consumer habits have been captured to an extent of their preference of coffee flavors so that We may consider introducing these flavors depending on the demand among its consumers

2.6

Introduction of Other Beverages Coffee shops increasingly offer an acceptable social environment in the middleeast and hence knowledge of non-coffee beverages would thus raise its appeal amongst its non-core consumers (IMT).

2.7

Improve Quality The research on the consumers preferences can also be used by We to improve the quality of the coffee. The current perception of quality can be understood by the image battery and improvements be pushed by related feedback from consumers.

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2.8

Investment Potential We can also predict where it should be investing its capital so as to ensure that its investments provide tangible returns. The data can be analyzed in detail to provide such investment potential areas.

2.9

Expansion Prospects The availability of clients coffee shop to the customer has also been gathered and can prove beneficial to We. We can now plan its expansion and also its strategy to open up new coffee shops in terms of size, location and ambience

2.10

Brand Awareness We would know exactly where its brand stands in the IMT market and would be able to plan its future advertising strategy accordingly.

2.11

Identify its niche segment We would also identify its niche segment so that it continues to focus on its niche segment and not lose out to competition in this respect

2.12

Perception We would also know its brands perception in the IMT market and would be able to analyze if its perception matches its marketing strategy. The gap between its marketing strategy and its impact can be bridged if the perception of the consumer is well defined

2.13

Benefits to Client Summary Identify, fund and implement plans that focus on the key factors limiting quality and production. Its focus will be on capitalizing on these demographic, cultural, economical and environmental factors determining coffee consumption and as well as finding scientific means to increase availability of its coffee shop outlets throughout the world. Recognizing, developing and promoting specialty coffee by setting and maintaining quality standards for the industry; investments on coffee, equipment and perfection of craft; and providing education, training and resources to its employees and enhanced business services to its customers.

3 . RM (Research Methodology)
3.1 The Problem Discovery
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To understand the usage patterns and habits of IMT Students regarding their coffee consumption and choice of coffee shop. Also to understand their brand positioning in comparison with other major coffee shops.

3.2 The Problem Definition

To understand the usage patterns and habits of Students regarding their coffee consumption and choice of coffee shop. To understand their brand positioning in comparison with other major coffee shops.

3.3 Exploratory Research

No exploratory research was carried out since the problem discovery was the definition itself

3.4 Data Sources

3.4.1 Secondary Data Source:

Secondary data was gathered to understand the basics of coffee shop business. A variety of secondary information sources was available to us for gathering data on coffee shops, potential product applications and the market place. Secondary data also helped us to gain initial insight into the research problem. Secondary data is classified in terms of its source either internal or external. Internal, or in-house data, is secondary information acquired within the organization where research is being carried out. External secondary data is obtained from outside sources. A thorough research of the secondary data was undertaken prior to conducting primary research. The secondary information provided a useful background and helped us to identify key questions and issues that we have addressed by the primary research.
Sources of Secondary Data used in our research:

Brochures of CCD, Costa and Caribou Coffee Menu Cards of CCD, Costa and Caribou Coffee Links used for gathering the secondary data (enumerated in References Section)

External data sources

Important information worth highlighting: 9|Page

Costa recorded 27% increase in revenue in one year while compared to overall revenue growth of 14.5% for the umbrella body. Like for like sales increase of consistently increased from 2.5% to 8.5% over the year. Profit increased by 54.4% globally, 200% overseas; compared to 28.4% overall (Whitbread) Costa has recorded 34 consecutive quarters of like to like growth. Plans to open up 650 international stores in current FY. Number 2. Worldwide Coffee shop brand

3.4.2

Primary Data Sources

Primary Data Source : Descriptive

The focus of this observation research is general coffee shop behavior of Student. Coffee shop behavior is something that can be readily gathered and it occurs within a short time interval so that research by descriptive method is viable. The Research study focuses on answering the Who, What, Where, When and How questions related to Coffee Shop Preferences of Students and hence the research study is a Descriptive type of Research.

Primary Data Source : Diagnostic

The study also answers why students go to a particular coffee shop? and hence becomes an attempt to investigate why students prefer one coffee shop over other.

3.5 Type of Research

The Research technique used is Quantitative since the analysis should be statistically valid and be able to represent the universe. Since the research study should be able to comment on the students coffee shop preferences as a whole, 10 | P a g e

the method adopted for research should be quantitative. Also since the same set of questions is needed to be asked to all the respondents in the same manner, the interview is structured and hence quantitative. Therefore, a questionnaire is framed and a face to face interview is conducted.

3.6 Sampling method

Sampling is that part of statistical practice concerned with the selection of a subset of individual observations within a population of individuals intended to yield some knowledge about the population of concern, especially for the purposes of making predictions based on statistical inference. Sampling is an important aspect of data collection. The sampling technique used for our research was Non Probabilistic Convenience Sampling. Convenience sampling method is used since the objectives of the research can be met by obtaining basic data and trends regarding the study without complicating the process of data gathering. A Sample size of 50 respondents was chosen and interviewed face to face.

3.7 Data Gathering

The data was gathered from 50 samples. The technique used for data gathering was face-to-face interviews. One benefit that we got from this process is that we could actually gather raw and reliable data directly from our subjects. Although it was time consuming, we yielded very credible results from this data gathering procedure. A face-to-face interview does not bore a respondent and ensures full and accurate data.

3.8 Data Analysis

Analysis of data is a process of inspecting, cleaning, transforming, and modeling data with the goal of highlighting useful information, suggesting conclusions, and supporting decision making. Data analysis has multiple facets and approaches, encompassing diverse techniques under a variety of names, in different business, science, and social science domains. Univariate analysis is carried out in this Research study since only one variable is analyzed at a point. Since the objective is mainly descriptive, univariate analysis served the purpose. A lot of pie charts and bar graphs have been developed basis the analysis that helps analyses the data better. 11 | P a g e

4. Findings
Objective : To identify the usage patterns and habits of IMT Students regarding their coffee consumption and choice of coffee shop

Findings : 4. 1 Majority of the IMT Students visit International chain of Coffee Shops . Their next preferred option is Vending machines

4.2 Majority of the IMT Student prefer to have their Coffee in the morning. Their next preferred time of the day to have coffee is both Afternoon and Evening

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4.3 IMT students usually go to the coffee shop with their friends. If not with friends, they usually go to the coffee shop alone.

4.4 IMT students prefer to order Medium Sized Coffee

4.5 Cappuccino is the most frequently ordered Coffee by IMT students.Their next frequently ordered coffee are Mocha and Espresso

4.6 Barring a few, almost all the student IMT prefer Caffeinated Coffee 13 | P a g e

Findings :

Availability , Ambience, Quality and Taste of Coffee and Quality & Speed of Service are the main reasons why IMT students visit a particular Coffee shop the most.

Objective: To identify and recommend the scope of improvement (if any) in product and service by the COSTA coffee shop. Finding: The improvements and suggestions cited by IMT Students to improve their experience at a Coffee Shop

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More Recommendations in Conclusion and Recommendations

5. Conclusion and Recommendations 1. Costa could also provide incentives to encourage students to come in groups since majority of the students visit coffee shops with friends. For instance, combo meals can be offered so that it attracts students to come in groups and hence the revenue generation can be increased. Furthermore, costa could improve its coffeeshop timings so that it can cater to morning coffee drinkers as the most preferred time of the day to have coffee was morning

2. Since most of the students prefer to have their coffee with cigrattes, Costa coffee could introduce a smoking area in its outlet to cater to smokers.

3. A large percentage ( 64% to be precise )of the IMT students do not buy Coffee shop branded merchandise. Hence Costa need not make any investments in this industry.

4. The preferrence for other beverages has been Hot Chocolate and Juices and hence we recommend Costa Coffee to enhance the taste and quality of its Hot Chocolate and increase variety of juices to attract non-coffee drinkers. 15 | P a g e

5. Availaibility , Ambience, Quality and Taste of Coffee and Quality & Speed of Service are the main reasons why IMT students visit a particular Coffee shop the most. We recommend Costa to concentrate on these areas of improvement. Costa ranked second in availability of its outlets and hence should concentrate on opening more outlets.

6. Costa ranks second in its value for money and we recommend We to reconsider its pricing policies to take this factor into consideration

Reference http://online.hemscottir.com/ir/wtb/pdf/WhitbreadInterims2010_showbook.pdf http://www.bi-me.com/main.php?c=3&cg=2&t=1&id=49442 Appendix Related information: http://www.ameinfo.com/42399.html http://www.ameinfo.com/206921.html

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