One research article showed that customer retention is not based on brand attitude but the satisfaction of the product and service (Ku and Chiu, 2008). If it is discovered that our participants have n low standards of Starbucks coffee and service that could affect the decrease in recent coffee sells. Knowing and understanding the customer’s attitude toward Starbucks can help the Starbucks Corporation correct and improve their product and services. This hypothesis is unique because it was testing through majority students in Atlanta and there are no pervious study performed for this demographics and location.
Since one study reveled that the price of coffee has increased by 200% but that the coffee industry is still striving it could benefit and increase Starbucks sells if there was a price reduction on coffee and specialty drinks (Roby, 2011).
AGENDA Introduction Hypothesis Sampling Data Analysis Conclusion
INTRODUCTION Research Problem• The attitude of consumers in relation to the intention of drinking coffee at Starbucks is not only related to the price of this, if not many more than other factors such as quality and service offered by the company. Literature Review• Brand attitude does not have a direct affect on revisiting intention.• The effect of brand attitude on customers’ revisiting intention is dictated by customer satisfaction• Starbucks has failed attempt to create a better relationship between the customer and the company
INTRODUCTION (CONTD.) What gaps our study can fill:• Studies about Starbucks customers’ attitude and behavior towards price of coffee were not found.• We can contribute with this study explaining the relationship between these two factors and giving recommendations to the company to help solving the problem. Research Objectives• Find if price influence customers’ attitude and purchase intention.• Find if gender play a part in how much a customer spends on coffee.
INTRODUCTION (CONTD.) Research Questions• What is the customer attitude toward Starbucks’ coffee?• How would decreasing price impact customers’ attitude and purchase intention?• Does gender play apart in how much a customer spends on coffee? Research contributions• Our study is unique because there have not been any studies conducted on US students.• Relation between coffee price and consumer attitudes has not been tested in past studies.• Our study can help Starbucks improve their service and relationship with its consumers and increase loyalty.
HYPOTHESIS Question 1 What is the customer attitude toward Starbucks’ coffee? Hypothesis 1 Customers’ attitude toward Starbucks’ coffee is low price (comparing with their major competitors such as Dunkin’ Donuts)• This will determine the customers’ current attitudes towards to price of coffee.• If there is a high percentage of respondents who think Starbucks coffee is high priced then Starbuck might want to consider promotional incentives, discounts or a price cut.
HYPOTHESIS (CONTD.) Question 2 How would decreasing price impact customers’ attitude and purchase intention? Hypothesis 2 Customers’ purchase intention will be significantly higher with 10% price cut.• This hypothesis was developed in order to measure customers’ buying behavior in relation to price reductions.
HYPOTHESIS (CONTD.) Question 3 Does gender play apart in how much a customer spends on coffee? Hypothesis 3 Amount of money spent at each Starbucks visit is independent of gender.• We had an interest in understand the gender roles of purchasing coffee.• Since we focused on participants between the ages of 16- 24 we wanted to know if women or men purchased more coffee than the other.• Determining whether there is a relationship, Starbucks can market and advertise better to the gender and age that purchases coffee the most.
SAMPLING METHOD Participants• We selected 60 participants randomly. Our target audience was coffee drinks ages 16-24.• Coffee drinkers were targets mostly to benefit our research results to help find solutions to the hypotheses. Questionnaire Design• Assortment of question types and scales such as: nominal scale, interval scales, rating scales, Likert scale, and itemized category.
SAMPLING METHOD (CONTD.)• The survey questions involving answers on a scale, agree- disagree, important-non important.• A couple of open-ended questions Procedure• Survey made on KwikSurveys.com and posted online to make it more accessible• We were able to reach more respondent in this way
RESULT Data coding• Nine questions were coded from our survey and put into a table.• Most of the questions that were coded consisted of close- ended questions, with the exception of one open-ended.• The range values given to each answer provides key information of the value to be entered for each response.• Generally open-ended questions are more difficult to code
EXAMPLES OF CODING3. Which place do you frequent the most for purchasing coffee?o McDonaldso Dunkin Donutso 7-Eleveno Starbuckso If others, please list __________________________• Most Frequent Place for Purchasing coffee: 0=McDonalds 1=Dunkin Donuts, 2=7-Eleven, 3=Starbucks• Other for “Place purchased” : 4=Home, 5= Other coffeehouse
EXAMPLES OF CODING (CONTD.)20. Please indicate your ageo 16-24yrso 25-34yrso 35-44yrso 45-54yrso 55-64yrso 65 or older• Age Indication: 0=16-24yrs 1=25-34yrs 2=35-44yrs 3=45- 54yrs 4=55-64yrs 5=65+
FIRST STEP ANALYSIS: SIMPLE TABULATION• Constructed simple tabulations for: Question 8 “Approximately how often do you visit Starbucks?” Question 13 “About how much do you spend at Starbucks per visit (not including tip)?• These questions are designed to measure the most important construct in this study: customer’s purchasing behaviour toward Starbucks.• Question 8 shows the customers’ purchase frequency and Question 13 indicates the customers’ monetary purchase quantity.
FIRST STEP ANALYSIS: SIMPLE TABULATION(CONTD.)• The variable responses for Question 13 started at less than $3 dollars and went up to $11.• 50% of respondents spend between $3 to $5 every time they visit Starbucks and just 1% of them stated that they normally spend $11 or more in their purchases.• Question 8 was asking about the frequency of visits.• Available responses: never, occasionally, monthly, weekly, 1 to 3 times a week, and daily.• The answer “Occasionally” was the most chosen with 39.34% of respondents.
FIRST STEP ANALYSIS: CROSS-TABULATION• We used cross-tabulation to analyze the relationship among gender and the amount of money spent at each Starbucks visit.• It is important to know if purchase expenditure varies depending on the gender, so in the future, Starbucks could use different strategies or promote different products to reach the two groups in different ways.• 24 males and 36 females participated in the survey.
FIRST STEP ANALYSIS: CROSS-TABULATION(CONTD.)• The most popular response was “$3 to $5” among both genders: 13 males and 17 females.• Since there are more females answering “$3 to $5” than males, this shows that females are more likely to spend that amount of money at Starbucks.• This is true also for greater amount: for response “$6 to $10” we had 10 females and 9 males, for response “$11 or more” we had 1 female and no males.
RESULT – HYPOTHESIS TESTINGo Hypothesis testing is the use of statistics to determine the probability that a given hypothesis is trueo Managers often make decisions based on statistical tests using data, whether from a controlled experiment or an observational studyo The choice of an appropriate probability distribution depends on the purpose of the hypothesis test. Depending on whether the focus of hypothesis testing is mean-parameter or variance-parameter, we can use: Z-dist, T-dist, and chi-square, F-dist
FIRST HYPOTHESIS Customers’ attitude toward Starbucks’ coffee is low price.• Here, we want to test whether customers agree with the fact that Starbucks coffee is low priced or high priced.• Since the population variance and mean are unknown the appropriate method for this test is: Single-mean, Two-tailed, Unknown T–test
FIRST HYPOTHESIS - STEP 1) BUILD HYPOTHESIS Ho: = a; a =1 (hypothesized value of population mean) ---- Null Ha: a; a =1 (alternative hypothesis) ---- Alternative Note: 1 refers to “strongly disagree” in coded question 12B. Test the hypothesis at significance level of 0.05 (determined by the group)
FIRST HYPOTHESIS - STEP 2) CALCULATE TESTSTATISTICS Information we know: X= 1.20; N=60; Sx =1.0954; α=0.05 Type of test we need: single-mean, unknown , two-tailed t–test Test Statistics Calculation: Standard error of sample mean: σX=0.1414 The test statistics: tcalc= 7.0721
FIRST HYPOTHESIS - STEP 3) FIND THE CRITICALVALUE TDF, Α/2 Significance level α=0.05 Degree of freedom DF= N-1 = 60-1 = 59 60 tdf,α/2 = t60,0.025=2.000 Note: since this a two-tailed test, we use α/2 instead of α to find the critical.
FIRST HYPOTHESIS - STEP 4) TEST HYPOTHESIS Decision Rule: If |tcalc|> tdf,α/2 Reject H0 If |tcalc|≤ tdf,α/2 Accept H0 Conclusion: Since |tcalc|=7.0721 > t11,0.005 = 2.000 We REJECT H0. Through this testing we found that customers do not feel that Starbucks’ coffee is low priced.
SECOND HYPOTHESIS Customers’ purchase intention will be significantly higher with 10% price cut.• We want to test whether 10% cuts in the price will induce customers to buy more or less coffee.• Since we don’t know the population variance and mean, the appropriate method for this testing is: Single-mean, Two-tailed, Unknown T–test
SECOND HYPOTHESIS - STEP 1) BUILDHYPOTHESIS Ho: = a; a =5 (hypothesized value of population mean) ---- Null Ha: a; a =5 (alternative hypothesis) ---- Alternative Note: 5 refers to “strongly agree” in coded question 15C. Test the hypothesis at significance level of 0.05 (determined by the group)
SECOND HYPOTHESIS - STEP 2) CALCULATE TESTSTATISTICS Information we know: X= 3.52; N=60; Sx =1.3477; α=0.05 Type of test we need: single-mean, unknown , two-tailed t–test Test Statistics Calculation: Standard error of sample mean: σX= 0.1740 The test statistics: tcalc= -8.5057
SECOND HYPOTHESIS - STEP 3) FIND THECRITICAL VALUE TDF, Α/2 Significance level α=0.05 Degree of freedom DF= N-1 = 60-1 = 59 60 tdf,α/2 = t60,0.025=2.000 Note: since this a two-tailed test, we use α/2 instead of α to find the critical.
FIRST HYPOTHESIS - STEP 4) TEST HYPOTHESIS Decision Rule: If |tcalc|> tdf,α/2 Reject H0 If |tcalc|≤ tdf,α/2 Accept H0 Conclusion: Since |tcalc|=|8.5057|>t11,0.005=2.000 We REJECT H0. This hypothesis testing showed that a price reduction of 10% in Starbucks’ coffee would not please our customers.
THIRD HYPOTHESIS Amount of money spent at each Starbucks visit is independent of gender.• We want to test whether the amount of money spent at each Starbucks visit is independent of gender or there is an association between these two.• Therefore, the appropriate method for this testing is: Chi-square test on independence
THIRD HYPOTHESIS - STEP 1) BUILD HYPOTHESIS H0: Amount of money spent at each Starbucks visit is independent of gender H1: There is an association between Amount of money spent and gender Test the hypothesis at significance level of α=0.05
THIRD HYPOTHESIS - STEP 2) CALCULATE TESTSTATISTICS Χ2 Observations (O1 --- O8): calculated from data. Expectation (E1 --- E8): calculated from PA, PL, and sample size N. PL1=0.4 PL2=0.6PA1=0.16 PA2=0.50 PA3=0.32 PA4=0.02 E1=3.84 E2=5.76 E3=12 E4=18 E5=7.68 E6=11.52 E7=0.48 E8=0.72 Test Statistics: χ2 = 3.41
THIRD HYPOTHESIS - STEP 3) CRITICAL VALUE Χ2V,Α DF: v=(L-1)*(A-1)=(2-1)*(4-1)= 3 χ2df,α= χ23,0.05=7.81
THIRD HYPOTHESIS - STEP 4) TEST HYPOTHESIS Condition: Under H0, χ2 ~ χ22 if χ2> χ23,0.05 Reject H0 if χ2≤ χ23,0.05 Accept H0 Therefore: χ2=3.41<χ23,0.05=7.81 ACCEPT H0 Our studies suggest that amount of money spent at each Starbucks visit is independent of gender.
CONCLUSION Rejection of all hypothesis Recommend a more in-depth study Promotional incentives Focus groups, target age groups Study of what causes customers to return