Starbucks Data Analysis

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Starbucks Data Analysis

  1. 1. 1 Data Analysis & Descriptive Statistical Summaries Christopher Mowbray Yusuf Kara Mike Dee Philvie Daniel Tomas Maldonado
  2. 2. 2 As a marketing research team we have conducted a survey questionnaire where we were able to gather valuable qualitative and quantitative information about Starbucks Coffee shops. Starbucks has recently closed over 600 stores in the past few months. Our purpose for conducting this survey was to find out the struggles that Starbucks faces to ultimately support our insights with representative evidence. After visiting many Starbucks locations in the city of Boston to gather our projected sample size of 100 surveyors, we have come to some interesting findings and feel much stronger discussing the problems that Starbucks faces and the reasoning for so many closures in the United States. Our team’s survey consisted of both qualitative and quantitative questions. We purposely put in a few qualitative questions to let the customers talk about in depth any issues that they may have with Starbucks that maybe our research team did not cover in the questionnaire. This way we can get as much information as possible. According to the mixed answers from the surveyors we have come to the conclusion that people living in the city are less satisfied with Starbucks than the people who live in the suburbs. This is a huge issue especially because the majority of Starbucks locations are found within major cities and areas with high population density. We have come across some reasons why the employees are dissatisfied with Starbucks and can make an inference that it has to do a great deal with the customer service from the employees. For example, a good amount of dissatisfied people said that the employees are not well trained, they are incompetent, and are talking to each other behind the counter, making people wait longer than expected. A further issue that has risen from the qualitative data is the fact that customers are unhappy with the size of Starbucks. They believe that Starbucks café’s are becoming smaller and smaller in size. With this decrease in store size it only frustrates the customers when it becomes crowded. Many customers said that Starbucks is supposed to be a
  3. 3. 3 place where people pay more money to receive hedonistic feelings with the products they purchase and the store they are hanging in. As a research team we decided to generate the qualitative data and interpret it first so that we can have some insight as to what type of questions we should pay attention to. This qualitative data is very useful although it does not provide us with powerful enough influence to be able to describe to the population. By conducting the quantitative questions we can specifically get data to backup certain issues in detail that were discussed above. Considering that we had multiple issues about the customer service of Starbucks we decided to run a T-Test to determine important information such as the average quality of customer service. Before we conducted the analysis we created our own hypothesis that thought the average quality of customer service was less than or equal to somewhat unsatisfactory service. When we calculated the one-sample statistics we found that the average was in fact very satisfactory. Before we could say this was acceptable we had to look at the 95% confidence interval and determine if the whole interval was above zero, and in fact it was. This step process holds true for every t-test given. With this in mind we have a good idea that the test statistic falls within the rejection region but we first need to calculate it. After calculating it we ultimately find that our hypothesis falls within the rejection region and it is safe to say that the customer service seems to be ok. We also created a frequency table for only the customers who were very satisfied or felt that the service was superior. We found that 66% of people had positive feelings about customer service, leaving 44% with undecided, poor or average answers. With this interpretation you can see that Starbucks could in fact try to improve their customer service a bit more. See Exhibit 1
  4. 4. 4 Another issue that we as a group felt may have an effect on the store closings was the overall satisfaction of Starbucks coffee. We generated some statistics and realized that 55% of respondents had positive feelings about their coffee, whereas 44% had neutral or negative feelings. We were surprised with these findings because as a research group we were given the impression that Starbucks has better quality based on the reason their prices are higher than others. This is in fact a problem that Starbuck’s faces and they should either work on improving their coffee satisfaction or end up lowering the price, which could switch other café’ regulars who go to places such as Dunkin Donuts to become Starbucks customers. See Exhibit 2 It seems overly obvious that Dunkin Donuts is Starbuck’s main competitor today. We as a group wanted to find out if Dunkin Donuts had any impact and if so how much of an impact on the profitability of Starbucks. To do this we created a simple frequency chart with an accompanied histogram to answer this question once and for all. We determined that 42% of our surveyors prefer Starbucks over Dunkin Donuts. This statistic is HUGE and most definitely reveals to us that Dunkin Donuts has a lot to do with the downsizing of many Starbucks locations lately. A total of 55% think that Starbucks is either the same as Dunkin Donuts, worse than Dunkin Donuts, or they were not sure. We would like to mention that these test statistics are reasonable and with little to no error. See Exhibit 3 Now that we understand that Dunkin Donuts has a large effect on the profitability of Starbucks, we wanted to get an idea of why that statistic holds true. What makes Dunkin Donuts such a huge competitor in this market? First, we wanted to get a general frequency distribution based on certain attributes that customers felt were important when purchasing a coffee. Supported in our depth interviews and focus group study we realize that there are a few attributes that make up a good coffee. These attributes are best quality, looks good and price value. We
  5. 5. 5 wanted to know which attribute was preferred the most in terms of importance for the customer’s coffee. In SPSS we came to the conclusion that 55% prefer Best Quality, 28% prefer Price Value, and 7% prefer Looks when it comes to purchasing a good coffee. See Exhibit 4 Technically this statistic means nothing until we can group it with the customer’s preference of either Starbucks or Dunkin Donuts. Once we have found both preferences we can combine them and create an independent sample tests and cross tabulation to see if they are correlated or not. For example, we created a test and found that people who prefer to go to Dunkin Donuts also feel that price value is the most important, and for people who prefer to go to Starbucks feel that Quality is most important when it comes to purchasing their coffee. As you can finally see, price value of customers is very important and should be recognized by Starbucks to try to generate lower priced products. See Exhibit 5 We currently have processed all the factors that we thought would have some implications or problems with Starbucks’s success, although we still feel that one more test would suffice to ensure our recommendations. For example, our research hypothesis was that we believed the reasoning for so many Starbucks closings is mainly because of the location density of the café’s. We believe as a Research Group that there are too many Starbucks locations that are too close to each other. They are only taking away from their own profits. This is called cannibalism. We decided to conduct some analysis on several questions that were posted within the questionnaire. For example, “How do you feel about Starbucks Location”? Is one of the questions. We sense that determining the frequency of people who thought that Starbucks was inconvenient would be a good start and benchmark for further studies. The statistics show that 74% of people replied with a positive answer describing that the café’s are very convenient. Now we understand that this statistic is not false but we have to take into account the fact that
  6. 6. 6 these people could be situated in different areas and based on the area in which they live in their answers may vary. In lieu of these issues we decided to conduct an independent T-test to gather group statistics. For instance, based on our studies we have customers that live in three different areas: Rural, City, and Suburb. We wanted to obtain information about whether or not this setting of where the person lives has any power or correlation about how they feel about the locations of Starbucks. After getting back the group statistics we found a great difference between the different areas. For example, the average of the people living in the rural areas believed that Starbucks locations are not very convenient, whereas the people living in the city thought that Starbucks locations were very convenient. The average number of people living in the suburb said that Starbucks locations were fairly neutral to somewhat convenient around their area. This analysis tells us a great amount of information about where Starbucks should strategically distribute their café’s and whether or not they have too many in one area. See Exhibit 6 All of our analysis can be found in the available exhibits on the following pages. Based on our calculations we can safely describe the problems that Starbucks faces without a doubt and if we were asked to show evidence we now have proof to do so. In order for Starbucks to become a successful business and regain their status and stores they will need to improve on their customer service a bit more and also the satisfaction of their coffee. Furthermore, today it seems as if Dunkin Donuts is doing well in the market. Based on the studies the people who go to Dunkin Donuts prefer price over quality when it comes to their coffee. Starbucks should realize this and understand that price value is a very large population, especially in today’s economic crises. It has been proven that Starbucks has an abundance of locations that are too close to each other in the cities whereas they lack locations in rural and some suburb areas. Starbucks should
  7. 7. 7 shut a few café’s down in the city and spread them out to areas where there are no Starbucks at all. This may create a better name for them and also may not seem as annoying to the customers. It is safe to say that location, customer service, price and the coffee itself is the main problem for the shutdown of many Starbucks locations across the United States.
  8. 8. 8 EXHIBIT #1 One-Sample Statistics Std. Std. Error N Mean Deviation Mean The Quality of the customer service you received at your last 100 3.7000 .68902 .06890 visit with Starbucks was? One-Sample Test Test Value = 2 95% Confidence Mean Interval of the Sig. (2- Differenc Difference t df tailed) e Lower Upper The Quality of the customer service you received at your last 24.673 99 .000 1.70000 1.5633 1.8367 visit with Starbucks was? Frequencies Statistics The Quality of the customer service you received at your last visit with Starbucks was? Valid 100 Missing 0 Mean 3.7000 Median 4.0000 Mode 4.00 The Quality of the customer service you received at your last visit with Starbucks was? Valid Cumulative Frequency Percent Percent Percent poor 1 1.0 1.0 1.0 somewhat 2 2.0 2.0 3.0 satisfactory Average 31 31.0 31.0 34.0 Very Satisfactory 58 58.0 58.0 92.0
  9. 9. 9 Superior 8 8.0 8.0 100.0 Total 100 100.0 100.0 EXHIBIT #2 Frequencies Statistics How satisfying is Starbucks Coffee? Valid 98 Missing 2 Mean 3.5510 Median 4.0000 Mode 4.00 How satisfying is Starbucks Coffee? Valid Cumulative Frequency Percent Percent Percent
  10. 10. 10 Valid poor 3 3.0 3.1 3.1 somewhat 4 4.0 4.1 7.1 satisfactory Average 37 37.0 37.8 44.9 Very Satisfactory 44 44.0 44.9 89.8 Superior 10 10.0 10.2 100.0 Total 98 98.0 100.0 Missing System 2 2.0 Total 100 100.0 EXHIBIT #3 Frequencies Statistics Based on your experience how does Starbucks coffee compare with Dunkin Donuts coffee in terms of taste? Valid 97 Missing 3 Mean 2.0103 Median 2.0000 Based on your experience how does Starbucks coffee compare with Dunkin Donuts coffee in terms of taste?
  11. 11. 11 Valid Cumulative Frequency Percent Percent Percent Valid Starbucks is better 42 42.0 43.3 43.3 than Dunkin Donuts Starbucks is the same as Dunkin 22 22.0 22.7 66.0 Donuts Starbucks is worse 23 23.0 23.7 89.7 than Dunkin Donuts Not sure 10 10.0 10.3 100.0 Total 97 97.0 100.0 Missing System 3 3.0 EXHIBIT #4 Frequencies
  12. 12. 12 Statistics Which of the following attributes are important to you? Valid 97 Missing 3 Mean 2.6392 Median 3.0000 Mode 3.00 Which of the following attributes are important to you? Frequenc Valid Cumulative y Percent Percent Percent Valid looks good 7 7.0 7.2 7.2 price value 28 28.0 28.9 36.1 Best quality 55 55.0 56.7 92.8 not sure 7 7.0 7.2 100.0 Total 97 97.0 100.0 Missing System 3 3.0 Total 100 100.0 T-Test Group Statistics Rank the following Std. Cafe's from best (1) to Std. Error worst (6). N Mean Deviation Mean
  13. 13. 13 Which of the Dunkin Donuts 32 2.3750 .83280 .14722 following Starbucks attributes are important to you? 44 2.7727 .56501 .08518 EXHIBIT #5 Statistics Starbucks coffee shops are too close to each other. Valid 97 Missing 3 Mean 2.7526 Median 3.0000 Mode 3.00 Starbucks coffee shops are too close to each other. Valid Cumulative Frequency Percent Percent Percent Valid strongly disagree 15 15.0 15.5 15.5 2.00 24 24.0 24.7 40.2 3.00 38 38.0 39.2 79.4 neutral 10 10.0 10.3 89.7 5.00 10 10.0 10.3 100.0 Total 97 97.0 100.0 Missing System 3 3.0 Total 100 100.0 Group Statistics
  14. 14. 14 Rank the following Std. Cafe's from best (1) to Std. Error worst (6). N Mean Deviation Mean Starbucks coffee Dunkin Donuts 33 2.8788 1.13901 .19828 shops are too Starbucks close to each 42 2.4762 1.01784 .15706 EXHIBIT #6 Group Statistics What type of setting Std. Error do you live in? N Mean Std. Deviation Mean How do you feel about Rural 3 4.3333 .57735 .33333 Starbucks locations? City 75 2.2400 1.35407 .15635 Independent Samples Test Levene's Test for Equality of Variances t-test for Equality of Means Sig. (2- Mean F Sig. t df tailed) Difference Std. Error Diff How do you feel Equal about Starbucks varianc 2.64 locations? es .108 2.654 76 .010 2.09333 9 assume d Equal 5.686 2.973 .011 2.09333 varianc es not
  15. 15. 15 assume Group Statistics What type of Std. setting do you Std. Error live in? N Mean Deviation Mean How do you feel City 75 2.2400 1.35407 .15635 about Starbucks Suburb locations? 20 2.8500 1.66307 .37187 Independent Samples Test Levene's Test for Equality of Variances t-test for Equality of Mea Sig. (2- Mean Std. F Sig. t df tailed) Difference Diffe How do you feel Equal about Starbucks variances 1.239 .269 -1.704 93 .092 -.61000 locations? assumed Equal variances not -1.512 26.102 .143 -.61000 assumed

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