Question

Page 1 of 2 Case Study 1 A New “Garcia” on the Block Garcia Gonzalez is ready to start a new career. After spending 30 years as a market researcher and inspired by the success of Starbucks, he is ready to enter the coffee shop business. However, before opening his first shop, he realizes that a great deal of research is needed. He has some key questions in mind. ? What markets in the United States hold the most promise for a new coffee shop? ? What type of location is best for a coffee shop? ? What is it that makes a coffee shop popular? ? What coffee do Americans prefer? A quick trip to the Internet reveals more previous research on coffee, markets, and related materials than he expected. Many studies address taste. For example, he finds several studies that in one way or another compare the taste of different coffee shop coffees. Most commonly, they compare the taste of coffee from Starbucks against coffee from McDonald’s, Dunkin’ Donuts, Burger King, and sometimes a local competitor. However, it becomes difficult to draw a conclusion as the results seem to be inconsistent. ? One study had a headline that poked fun at Starbucks’ high priced coffee. The author of this study personally purchased coffee to go at four places, took them to his office, tasted them, made notes and then drew conclusions. All the coffee was tasted black with no sugar. Just cups of Garcia. He reached the conclusion that McDonald’s Premium Coffee (at about $1.50 a cup), tasted nearly as good as Starbucks House Blend (at about $1.70 a cup), both of which were much better than either Dunkin’ Donuts (at about $1.20) or Burger King (less than $1). This study argued that McDonald’s was best, all things considered. ? Another study was written up by a good critic who was simply interested in identifying the best-tasting coffee. Again, he tasted them all black with nothing added. Each cup of coffee was consumed in the urban location near the inner city center in which he lived. He reached the conclusion that Starbucks’ coffee had the best flavor although it showed room for improvement. McDonald’s premium coffee was not as good, but it was better than the other two. Dunkin’ Donuts coffee had reasonably unobjectionable taste but was very weak and watery. The Burger King coffee was simply not very good. ? Yet another study talked about Starbucks becoming a huge company and how it has lost touch with the common coffee shop coffee customer. The researchers stood outside a small organic specialty shop and interviewed 100 consumers as they exited the shop. They asked, “Which coffee do you prefer?” The results showed a preference for a local coffee, tea, and incense shop, and otherwise put Starbucks last behind McDonald’s, Burger King, and Dunkin’ Donuts. ? Still another study compared the coffee-drinking experience. A sample of 50 consumers in Edinburg, Texas, were interviewed and asked to list the coffee shop they frequented Page 2 of 2 most. Starbucks was listed by more consumers than any other place. A small percentage listed Dunkin’ Donuts but none listed McDonald’s, despite their efforts at creating a premium coffee experience. The study did not ask consumers to compare the tastes of the coffee across the different places. Garcia also wants to find data showing coffee consumption patterns and the number of coffee shops around the United States, so he spends time looking for data on the Internet. His searches don’t reveal anything satisfying. As Garcia ponders how to go about starting “A Cup of Garcia,” he wonders about the relevance of this previous research. Is it useful at all? He even questions whether he is capable of doing any primary research himself and considers hiring someone to do a feasibility study for him. Maybe doing research is easier than using research. Sources: Shiver, J., “Taste Test: The Little Joes Take on Starbucks,” USA Today (March 26, 2008), http://www.usatoday.com/money/industries/food/2006-03-26- coffee_x.htm, accessed July 20, 2008; Associated Press, “McDonald’s Coffee Beats Starbucks, Says Consumer Reports,” The Seattle Times (February 2, 2007), http:// seattletimes.nwsource.com/html/businesstechnology/2003553322_webcoffeetest02. html, accessed July 20, 2008; “Coffee Wars: Starbucks v McDonald’s,” The Economist 386 (January 10, 2008), 58. Questions 1. What are the top three key decisions faced by Garcia? 2. What are the key deliverables that an outside researcher should produce to help Joe with the key decisions? 3. How relevant are the coffee taste studies cited above? Explain. 4. What flaws in the coffee taste studies should Garcia consider in trying to weigh the merits of their results? 5. Briefly relate this situation to each of the major stages of the marketing research process. 6. Try to do a quick search to explore the question: “Are American consumer preferences the same all across the United States?” 7. Would it be better for Garcia to do the research himself or have a consultant perform the work? 8. If a consultant comes in to do the job, what are three key deliverables that would likely be important to Garcia in making a decision to launch the “A Cup of Garcia” coffee shop?

Answer 1

Answered:-
1) The top three decisions faced by garcia gonzalez are:
Location of the coffee shop
Product mix. That is the different varieties of coffee he should serve
Pricing of his coffee
2)
The key deliverables that an outside researcher should produce are following:
Geographical distribution of coffee consuming population which would help Joe in finalizing the place to establish his shop.
Demography of coffee consuming populations along with their preferences to help Joe in finalizing the various varieties of coffee to be sold.
Consumer propensity to buy and the price they are willing to pay for each type of coffee.
3)
The coffee taste studies are not at all relevant as they don’t specify the consumer propensity to pay and also doesn’t inform anything about consumer preferences regarding the kinds of coffee that they are willing to consume.
4) The coffee tastes studies had small sample size and some of them were based on opinions and conjectures rather than data driven analysis and facts.
In some of the studies where facts were used, the sample size was too small and could have skewed the results.
5)
Definitely American preferences for coffee vary across regions.
6)
Three key deliverables:
Where to set up the coffee shop ?
Which coffee varieties to sell ?
What price to be kept for each coffee varieties. ?
7)
GPS technology can be used when the coffee delivery service is introduced by Joe in order to track the delivery person and ensure that delivery happens to the intended recipient and also that delivery happens within specified time.