Coffee Shops In The UK (Marketing Research)

Business Decision Making Process

Business decision making process in a medium sized company is very complex . The reason of it is that any decision made affects the whole organization and its stakeholders. The community also experiences the effects of such decisions especially those involving the changes in prices or influencing the environment. Therefore, before making decisions, it is important to provide a thorough research in order to consider all elements that may influence decision making process. Basically, research enables the organization to understand both strategic and systematic processes that influence the decisions made. It involves weighing options and comprehensively understanding the outcome of the decisions made.

For instance, a decision on introduction of a new product will entirely involve individuals in the product management, marketing research, as well as in finance. After decisions have been made, it is important to develop a system that will assign individual responsibilities with regards to the elements of the new product being introduced. It is vital to maintain a constructive environment that gives possibility for everyone to contribute, hence offer wide variety of views (Cushing 2005, p. 63). As earlier stated, medium companies must weigh the options involved or the alternatives before acting. It also requires testing of the decisions made before they are implemented.

In this case, a medium sized company in London is on the bid to introduce a new product into the market. The product will involve a new coffee based drink for coffee shop customers. As the product coordinator, it is important to carry out the market research to determine trends in the coffee based drinks and their financial performance in the market. It will help determine the potential market for the coffee, as well as the financial viability.

Market Research-Background

Coffee shops have been doing considerably well in the United Kingdom. In 2013, the trends in coffee retail markets showed an increased emotional connection between the consumers of coffee and the producers. It was seen as one way of maintaining the coffee market share. According to Helena Spicer, the Senior Foodservice analyst, coffee shops could still work well if they took the advantage of out-of-home environment to offer hot drinks which will increase the preference of coffee to other drinks. In her report, Spicer continues to state that confidence levels of consumers have been rising since 2013. It is caused by the increased commitment of consumers to the purchase of coffee drinks.

However, there has been increased competition in the coffee market, which has resulted in the growth of range of the product. There has also been a concern of the producers regarding the quality of coffee that is offered by non-specialist at cheaper prices. There is also the challenge of lack of brand differentiation resulting in reduced brand quality (Manson 2007, p. 18). It has posed as a great challenge to the specialist coffee producers in the market. While majority of consumers trust large companies such as Starbuck brands, its reputation has somehow been damaged in 2012/13 as it had issues surrounding its tax payments.

In this regard, operators have developed creative strategies and format to sell their product in order to have a share in the competitive market. It also involves reaching out to new audiences with the aim of increasing the usage of coffee among the consumers. Therefore, the target has been on the added value of the products to penetrate the market. The new target markets have been petrol stations, hospitals, as well as garden estates. With the foreseeable future, coffee shops will have to relook at the high street locations and their market reach with the aim of making them to offer coffee not only as a drink but also as a leisure experience (Gallaugher & Ransbotham 2010).

While joining the coffee market, it is important for one to consider venues where coffee shops are mainly located. Most of these venues are mainly concentrated as individual stores, kiosks, as well as concessions where consumers can easily reach the products (Cushing 2005, p. 121). There are other establishments that also sell coffee which include restaurants, tea shops, as well as cafes. There are also wide verities of coffee offered which includes cappuccino, latte, mocha among other brands available in the European market.

Data Collection

Data collection for business decision making involved the use of both primary and secondary sources of data. The primary methods of data collection involved the use of interviews, questionnaires, sampling, observation, surveys, as well as focus groups. On the other hand, the secondary method involved the use of electronic books and reports done by other scholars. The key reports used in current research include: Mintel market report of 2012 and Helena Spicer, the Senior Foodservice analyst (2013). It was first important to analyse the existing secondary information on coffee shops and its market in London before engaging in primary methods of data collection.

For secondary data, Mintel market report (2012) was used. Mintel report was conducted in 2012 with the aim of getting in-depth analysis of the market trends and information regarding consumer lifestyles, size of market, brands and forecasts, as well as the business and company’s information. It provides rich background information regarding consumer trends in consumer products such as coffee brands. The other report considered in current research was the Helena Spicer, the Senior Foodservice analyst. The study reports that coffee shops could still work well if they took the advantage of out-of-home environment to offer hot drinks which will increase the preference of coffee to other drinks. Spicer continues to state that confidence levels of consumers have been rising since 2013 (Mortimer 2011, p. 92). It is caused by the increased commitment of consumers to the purchase of coffee drinks. She however notes that there has been increased competition in the coffee market which has resulted in the growth of coffee products range. She also notes that both existing and new entrants into the coffee business market have expressed their concern over the quality of coffee that is offered by non-specialist at cheaper prices affecting the quality of products, hence posing as a challenge to new entrants.

To provide primary data to facilitate the business decision making process, a research was conducted where questionnaires were used to collect the quantitative data. 20-25 participants were involved in filling the questionnaires. Specific questions to customers were formulated in order to find the missing data from the secondary sources (Lohr 2002, p. 512). Random sampling was used for this purpose. In this case, every individual in a group of 20 participants was given an equal chance to show and express his/her beliefs and attitudes towards the use of new coffee products. The group offered tentative conclusions to be made, as well as created a representative sample of the region being studied in London.

An electronic survey was also conducted. Such method of data collection was used for clients entering the coffee shops. A quick survey was given to the consumers via a laptop where an easy data was filled. The method was useful because it made it possible to analyse the data further in the study. The data was automatically uploaded in the database and evaluated in relation to collected and existing secondary data (International Coffee Organization 2011). The respondents were also asked whether they were ready to try a new coffee product. However, some questions were personal where the respondent was free to choose whether to answer them or not. The questions were written in chronological order in relation to the topic with some background information provided to enable the respondents fill the questions quickly and accurately.

In this case, company X (representing the company introducing the new product in the market) was chosen as the control company. In this case, both primary and secondary data was collected. The first step was to contact company X and find the relevant information in relation to the operations and product to be introduction among other related data.

A focused group of 6 people was also formed where they were asked questions on their preferred brand of coffee. The focus group gave deeper insights relating to the behaviours and the motivation behind the coffee shop consumers. The age of the participants was between 20 and 30. The group of people was required to visit the Costa company regularly. They were also required to discuss both personal and specific issues.

For secondary data, Mintel market report was used (Mintel 2012). Mintel report was conducted in 2012 with the aim of getting in-depth analysis of the market trends and information regarding consumer lifestyles, size of market, brands and forecasts, as well as the business and company’s information. In addition, an observation was done by visiting local coffee shops to study their marketing mix.

Data Analysis for Business Decision Making Process

The following can be analysed from the data collected that is essential for business decision making, especially when introducing a new product in the market. From the secondary sources, it was evident that the coffee market in the UK is dominated by Costa, Starbucks and Caffe Nero (Manson 2007, p. 12). Their difference is only in name as they offer similar brands of coffee. Their difference is evident in the way they approach their consumers in terms of products and services.

From the secondary sources of data, the following analysis is evident which is vital in business decision making. In the UK, coffee market has been drastically developing. According to Mintel market report (2012), the following was evident. The UK coffee shop turnover has continually shown increase in sales by 6.4 %. According to a report by Allegra Strategies, the branded coffee had a 2.6 billion pounds turnover in 5,531 outlets which stays for a growth in sales by 9.3% and an outlet growth by 5.9%. The report continues to show that the coffee shops and coffee consumption have experienced considerable growth in the last 15 years (Mortimer 2011, p. 67). In fact, coffee shop presents one of the most successful business enterprises in the UK. However, the market is dominated by large scale coffee shop companies such as Costa Coffee with 1,670, Starbucks Company with 790 and Caffa Nero with 560 outlets with several other companies and retail outlets (Manson 2007, p. 56). Therefore, the entry into the market demands a strong brand presence to compete effectively with the already existing companies.

Data Presentation

The methods used for data presentation included tables and graphs.

The following graph represents the major competitors and their outlets in the coffee market which includes Costa Coffee at 1,175, Starbucks at 731 and Caffe Nero at 440.

The table shows that Costa Coffee has the most outlets in the UK coffee market. Therefore, any company entering the market should be ready offer a differentiated product in order to compete effectively with the existing companies. For a medium sized company entering the market, it is important to consider offering alternatives in order to have a share of the market.

The following table represents a questionnaire presented to the respondents at the coffee shops and asked to fill electronically using laptops. The questions were close-ended.

Table 2

	QUESTION	RESPONSE (YES/NO)
1	Do you take coffee at coffee shops?	yes
2	Are you willing to try a new coffee product?	Yes
3	Do you think there is fair competition in the coffee market in the UK?	No
4	Would you buy coffee products from a medium sized company?	Yes
5	Is coffee your most preferred beverage?	yes

The table below represents some of the open-ended questions presented to respondents.

Table 3

	QUESTION	RESPONSE
1	Do you take coffee at coffee shops or at home?	I like to take it at coffee shops.
2	Are you willing to try a new coffee product?	Yes, I am willing to try a new product of coffee because I like varieties.
3	Do you think there is fair competition in the coffee market in the UK?	I don’t think there is fair competition in the coffee market in the UK, since it is dominated by few major companies.
4	Would you buy coffee products from a medium sized company?	Yes, I would buy coffee product from small companies as I believe that they should be given more possibilities to grow.
5	Is coffee you most preferred beverage?	Coffee is my most preferred beverage although I drink other beverages at times.

Recommendations

The following can be concluded from the data collected as recommendations to influence business decision making for a new product entering the market. A new product still has higher chances of exploring the market. It is evident by the fact that more than half of the respondents interviewed attested that they were willing to try a new product in the market. Out of the representative sample of 20 participants in current study, 11 suggested that they could try a new product, as well as change their daily routine coffee drink and try a new one. It evidently showed a small differentiation proving that a new company can still gain a certain percentage of market share (International Coffee Organization 2011). However, the new product should be tailored to meet the needs of certain segment of people. For example, the study showed that most of the young or the youth prefer to take readymade coffee as opposed to instant coffee. As a new entrant into the market, it would be recommendable to target this large pool of consumers.

The business decisions made have a great impact not only on the company but also on the stakeholders. Although market research has been conducted, it is recommended that the stakeholders’ views should be put into consideration before the product is launched into the market (Cushing 2005, p.22). It is important as the market trends change constantly. Most importantly, stakeholders will feel proud to share success, as well as failure in case it occurs.

Another recommendation evident from current study is that there are three main players in the coffee market in the UK. However, there are several other retailers of coffee that are categorized as either specialist or non-specialist. It means that there is intense competition in the market and the new entrants should be prepared to face competition. Although most of the respondents believe that there is unfair competition in the coffee market in the UK, the scale of production also matters (Kumar 2005, p. 17). In this case, large companies will always enjoy economies of scale as they can make decisions swiftly without involving all its stakeholders. It is possible due to the fact that in case of fail, they can all withdraw without affecting much of their operations. This is contrary for small/medium sized companies where a single mistake can led to collapse of the entire business. Hence, medium sized company should have alternatives or several options in relation to the product being introduced in the market.

Lastly, the company entering the market should target places where other coffee producers have not ventured. It implies that it should not only target city centres but also less populated areas such as estates, petrol stations among others where the company can create demand quickly and gain loyalty of the consumers.

Target Market for the New Product

A company introducing a new product must know its target market. It is important as marketing demands target specific segment of customers with a given market price. It creates a sense of attraction with a match to the supply capabilities of the company. In current study, the new company is planning to introduce a new coffee product in the market in London. With intense completion, the company must identify its strong point. It can either focus on the price, branding or among other product differentiation (International Coffee Organization 2011). By the fact that it is a coffee product, it will need to have unique capabilities to explore the market. An aggressive market push is also required in order to attract the city consumers and also compet with giants such as Starbucks. The economic and demographic profile of the target consumers is also important (Kumar 2005). It will enable the company to have certain group of segments such as the students, professionals, families among other consumer segments.

The company should also carry out a SWOT analysis before introducing the new product. It may help the company determine the strengths, weaknesses, opportunities and threats presented in the business as it introduces the new product in the market. It is also important to consider the 7P’s which provide current status of the target market in relation to decisions making in place, people, product, price, promotions, physical presence and the process (Gallaugher & Ransbotham 2010). They depict the marketing mix that is essential in analysing a new product before it gets to consumers and hence predicts its performance in the market.

Conclusion

According to the research conducted, economics in the UK is not the best in the world. However, coffee market has continued to grow. It has been contributed by the consumer’s buying behaviour where less people prefer to buy readymade coffee as opposed to instant coffee. The coffee market is also dominated by major producers as analysed above. Therefore, when a company is planning to introduce a new product in the market, it is necessary that the company performs a thorough market research.

In this case, the coffee product X being introduced into the market by the medium sized company may face competition from the existing products. However, with aggressive marketing and differentiation, the product can still gain a share of the market. It is possible due to the fact that the major player in the market normally deals with similar product with only small differences. Both primary and secondary research shows that there is still more possibilities for new coffee products. The reason for it is that the demand for coffee products is still growing with changing consumer behaviours.

Therefore, with accurate market research and marketing mix knowledge, the product can still reach success and loyalty of customers. However, the differentiation and marketing of the new product should be evaluated with time to avoid a downfall. When a medium sized company fails, such effects are adverse to all stakeholders as opposed to the large companies. The new entrant into the market should also focus on the product quality and price. However, with high cost of production, the product can steadily gain the market share as a result of consumers’ loyalty.