Global Market Significance of Kuwait Coffee Shop Brand - Essay Example

?Can a Coffee Shop Brand Developed in Kuwait Become Significant in the Global Market? Globally, coffee has always been a refreshment drunk by many under different circumstances; when cold, as a welcoming drink to a visitor etc (Fullerton, 2005). In the US, coffee shops are usually situated in public areas where access is easy and the market is ready for the product being offered. In Asia, particularly Kuwait, which is predominantly inhabited by Arabs, many are fond of coffee and as a result it is possible that a coffee shop built and developed in Kuwait can flourish with ease. In addition, the growing technological market can help in the growth of the coffee shops globally as many can view its profile online and eventually visit the place and feel part of the achievement. This project proposal tries to prove the critics wrong and assert that a coffee shop developed in Kuwait can become internationally significant with its line of products. In Kuwait, a US born coffee shop called Starbucks International is among the leading coffee vender shops (Fullerton, 2005). The main advantage held by Starbucks International is the specialty it offers to its customers, making it a unique coffee shop. In essence, for a coffee shop developed in Kuwait to flourish, it has to offer unique services, and this differentiation of products will result in its popularity nationally, and Kuwait being among the top tourist destinations it will eventually gain global recognition. Currently, there are hundreds of coffee shops in Kuwait, which is a challenge to any ambitious individual or group that intends to go into the coffee shop business. Mission The coffee shop company has to set a clear mission that will see it create a humble place, unique enough to ensure comfortable socializing of customers, a relaxed environment that is destruction free as they enjoy their coffee (Giovannucci and Ponte, 2005). The company intends to reach out to the world through opening of numerous branches that offer the same services at affordable prices. In addition, it will work towards investment of the profits realized so as to keep faith with its employees and shareholders (Giovannucci and Ponte, 2005) Problem Definition According to Golding and Peattie (2005), going into the coffee shop business will mean that the company comes with suitable strategies to ensure production of quality coffee that is unique from the other coffee shops. Different people have different preferences and tastes; thus, since the company intends to have branches worldwide a study will have to be conducted on coffee preferences and tastes of different people in influential markets. As Fullerton (2005) argues, the task faced is to investigate and come up with ways in which a coffee shop can be developed in Kuwait and extend its services across the world. Topic Relevance According to Golding and Peattie (2005:158), Arabs are fond of coffee, which forms a basis for the development of a coffee shop in an Arabic country. In addition, with the current Freedom of Movement, Arabs are all over the world. This does not mean that Arabs are the only target market since many other non-Arabic people love coffee (Holmes, 2004). The coffee shop, once in place, expects to fetch revenue approximating from ?500,000 in the first year of its operation to ?800,000 by the fifth year. According to Holmes (2004), the company will have to maintain its gross profit margin above 50% and maintain reasonable expenditure in its operations for it to achieve these targets. Research Objectives The new coffee shop has its business objectives just like any other business would have (Giovannucci and Ponte, 2005). In its birth year, the company’s expectations are; i. To be named by the customers and/or local restaurant guide as the best coffee shop locally. ii. Maintain a gross profit margin that is above 50% so as to realize its profit targets. iii. Realize immediate profits right from the first month of its operation. iv. Capture a local market of over 50,000 people in the first month of operation. Key Success Factors For the company to be successful, a number of issues have to be observed and put in place (Golding and Peattie, 2005). They include; i. The appearance of the coffee shop should attract the customers at first sight, and its internal design should permit efficient service provision and avoid congestion. ii. Hire highly qualified personnel bearing unique coffee preparation techniques, and offer training to the other staff in the same line of coffee preparation and customer attendance. iii. Install top-notch marketing strategies to capture both local and international markets (Giovannucci and Ponte, 2005). Products Offered The coffee shop is to sell its customers with coffee of the highest quality and uniqueness in Kuwait and the world at large. In order to realize this, ingredients of the highest quality and most qualified personnel will have to be used and employed respectively, with strict adherence to the instructions/guidelines (Bacon, 2005:499). To accompany the espresso drinks, a variety of salads, pastries and sandwiches will be sold to the customers. This is aimed at maximizing the sales of the products to a higher margin so as to realize higher profits as per the company objectives (Holmes, 2004). Literature Review Coffee Experience and the Behavioural Patterns of Buyers Hsu and Hung (2005) define consumer buying behaviour as those trends or patterns taken by those who buy the products for personal consumption, which mainly comprise of households and individuals. According to Andaleeb and Conway (2006:3-11), consumers vary the world over in terms of age, income levels, education, taste and preferences. These patterns have a great impact on the nature in which a product is presented to the different consumers. IIED (2005) went ahead and identified a number of factors that influence the behavior of consumers, namely; cultural, psychological, social and personal, which companies are not in control of, thus a need for cautious assessment so as to come up with an effective plan for the marketing of the products. Brand Loyalty According to Bacon (2005:503), consumer brand loyalty is “a favorable attitude toward and consistent purchase of a particular brand”. Jayne and Dipboye (2004:412) argue that repurchasing a product is not enough evidence of brand loyalty; rather, it incorporates both behaviour and attitudes, as a function. Ankomah and Yiridoe (2006) identified four consumer categories; hardcore loyal consumers who only buy a particular product, brand switchers buy products depending on price and other situational factors, new users of a product, and finally the non-users of the same products. According to Coyles and Gokey (2002:81), the most considerate section of the consumers is the hard core and brand switchers. Loyalty to a product may be as a result of the brand name (ICO, 2007) which earns a company trust from consumers based on their advertising techniques and the quality of the product itself. Holmes (2004) believes that company and consumer relationship is a key factor to clear assessment of what both parties expect, which gives the corporation a solid idea of how its services can be furthered. According to Jayne and Dipboye (2004:416), the major weakness associated with these studies is that they both focus on product brand and neglect the issue of the consumer service, which may result in certain inconveniences as different consumers prefer different modes of service. The EKB Model This a framework of reference model developed by Engel and Blackwell (1982) that aids learners in the study involving identification of the factor influence, motivation of consumers and their decisions in products to buy Kardes, Muthukrishnan and Pashkevich, 2004). It investigates: i. Problem recognition – usually driven by thirst, it covers the situational factor of consumer’s buying patterns i.e. what situation makes a consumer want a certain product (Saunders, Lewis and Thornhill, 2003:205). It involves those who adore fashion, those who drink the coffee to stay awake or maybe increase their efficiency at work (Kardes, Muthukrishnan and Pashkevich, 2004). ii. Search – According to Schiffman and Kanuk (2004), it covers the location of the coffee shop, the population of the coffee shops in the region, which greatly affect the buying decisions of the customers. The atmosphere at the shop also contributes to their decisions (Karjaluoto, Karvonen, Kesti, Koivumaki, Pakola, Ristola and Salo, 2005:57). iii. Alternative evaluation – It covers three aspects (Andaleeb and Conway, 2006:3-11): Brand name’ s great influence to buyers decisions, the taste and preferences that each customer holds and requires maximum satisfaction, and the quality of the services provided by the coffee shop which directly affects the customers’ satisfaction. iv. Choice – as Karjaluoto et al. (2005:60) reveal, it also covers two aspects: effective promotion of the products being offered is key player in persuading and motivating consumers to buy the products, and the price at which the products are set influence the buying trends of the customers. As Karjaluoto et al. (2005:71) state, values are often seen as the foundations of the attitudes people usually have e.g. freedom, pleasure and happiness. On the other hand, heroes are societal icons who impact people differently. According to Ankomah and Yiridoe (2006), heroes have great influence on consumer behavior as some people may want to buy a product only because it is associated with a particular hero or icon. A coffee shop developed in Kuwait can gain dominance in the home country within the first year of its operation if all the above mentioned aspects are observed and followed keenly. A suitable example is the launch of Starbucks in Hong Kong in May 2000, and by the end of the year, 9 coffee houses were in place, which rose to 24 at end of 2001 and by the end of 2005, a massive 65 Starbucks coffee houses were in different regions of Hong Kong (Bacon, 2005:507). Research Methodology Qualitative Methods Exploratory research. This type of research is aimed at exploring the market situation to provide an insight and a concrete understanding for the possible set up of the coffee shop and other outlets (Karjaluoto et al., 2005:75). It helps the researcher to develop the project hypothesis, establish right of way for the next set of research and developing problem approach insights. A case study method is to be adopted in this case (Drejer, 2002). Quantitative Method Descriptive Research. For this matter, surveys and interviews are to be conducted so as the quantitative descriptive data can be obtained (Andaleeb and Conway, 2006:5). As Kim, Forsythe, Gu and Moon (2002) suggested, this type of project will require detailed information about the market before setting up the shop, thus the quantitative research methods will be suitable for this type of study. Data Collection Methods Sampling Population: this is the community in the expected setup location. Sampling technique: stratified sampling. Sample size: 100 people. During the study, the probability sampling technique of stratified sampling will be employed so as conclusive data about both the population and the research problem are heterogeneous (Agrawal, 2009). The entire population is to be in two segments: the locals and the visiting and/or Internationals. According to Kim et al. (2002:491), the major reason for this segmentation is i. The two groups have different spending capabilities. ii. The coffee shop experience of the two is also different. The Sampling Process The sample size is 100, so, based on the two segments, a total of 70 locals and 30 non-locals are to be selected randomly. Measurement and Scaling This study will employ varying scales in measurements, ranging from nominal, ordinal to interval. The 5-point Likert scale is much preferred for accuracy and unbiased results (KPMG Ltd., 2005:301). Questionnaire A questionnaire is to be designed and handed to the locals. The questions in the questionnaire are posed in a manner that will ensure construct and comfortable soundness (KPMG Ltd., 2005:371). Interviews Since the coffee shop is new in the market, interviewing of the locals about their view of a new coffee shop is necessary so as to determine a suitable market place for the shop (Lau, Chang, and Liu, 2006:7). In addition, the interviews can involve the kind of coffee that each interviewee prefers and for what reason so as to know the customer taste and preferences (Hsu and Hung 2005:364). Data Analysis From the graph above, it is expected that the sales of the company grow from ?500,000 in the first year to around ?800,000 in the third year. According to Mermelstein, Abu-Shalback and Linda (2006:21), this is to be achieved greatly through the sales made during the period. According to the data collected, coffee beverage and retail beans and pastries food cost is estimated to be around 25% and 50% respectively (Dow Jones). Propinquity to the desired market will dictate most of the sales made during certain periods of the year. The chart above shows the company’s projected sales for the current and subsequent years to come. Coffee beverages are expected to fetch most of the sales, with a rise from ?24,000 in first month to around ?35,000 in the 12th month (Mermelstein, Abu-Shalback, and Linda, 2006:31). Similarly, the growth in sales of coffee beans, pastries etc. are expected to rise (Moskowitz, Katz, Krieger and Cappuccio, 2007). Project Plan and Schedule The company expects to maximize on the high demand for coffee in Kuwait. The company has raised enough capital to start the business without any problems, and with successful management that aims at establishing quality customer loyalty in place, the company’s net worth will be expected to double in the next three years (Naresh:109, Ramesh:76-77). The company intends to maintain the profit margin to above 50% so that when combined with operating expenses that are reasonable, it will further its growth in the future and establish itself in the global market (Rivas, 2004). Project Schedule (Whan: 243-249) 2012 August September October November Tasks: 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 5 Hours Project Requirements 112 112 112 42 338 Project Design 44 55 110 110 329 Testing 55 77 112 88 332 Integration and Testing 44 66 110 112 110 16 8 648 Write Customer’s Menu 88 88 116 Write Final Report 810 110 110 330 Demonstration 112 112 Hours 112 112 116 77 115 117 116 114 110 112 110 16 18 118 110 110 112 2205 References Agrawal, R. (2009) Marketing Review (Cafe Coffee Day), vol. 9, no. 3, pp. 251-271. Andaleeb, S. & Conway, C. (2006) “Customer satisfaction in the restaurant industry: an examination of the transaction-specific model”, Journal of Services Marketing, vol. 20, no. 1, pp. 3-11. Ankomah, S. & Yiridoe, E. 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IIED (2005) From bean to cup: how consumer choice impacts on coffee producers and the environment. London, Consumers International & International Institute for Environment and Development, pp. 1-64. Jayne, M.E. & Dipboye, R.L. (2004) “Leverage to improve business performance: Research findings and recommendations for organizations”. Human Resource Management, vol. 43, no. 4, pp. 409-425. Kardes, F.R., Muthukrishnan, A.V. & Pashkevich, V. (2004) "On the Conditions Under Which Experience and Motivation Accentuate Bias in Intuitive Judgment", in T Betsch & S Haberstroh (ed.), The Routines of Decision Making, Lawrence Erlbaum Associates, Mahwah, NJ, pp. 139-157. Karjaluoto, H., Karvonen, J., Kesti, M., Koivumaki, T., Pakola, J., Ristola, A. & Salo, J. (2005) “Factors Affecting Consumer Choice of Mobile Phones: Two Studies from Finland”, Journal of Euromarketing, vol. 14, no.3, pp. 59-82. Kim, J., Forsythe, S., Gu, Q. & Moon, S.J. 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How often do you visit a coffee shop monthly? 1< 1-3 3-5 >5 3. With reference to a scale of five, how was your coffee shop experience? Very bad Very good 4. Which among the below factors influence your decision regarding choice of the coffee shop you visited? Setting Brand Image Range of products Location Service 5. Do you have a special coffee place/shop that you visit regularly? Yes No 6. From your coffee shop experience, were you satisfied with the range of products being offered at your favourite coffee shop? Very Satisfied Completely Dissatisfied 7. After your first visit to a coffee shop, how often do you visit the same coffee shop or any other coffee shop? 1< 1-3 3-5 >5 8. How did you learn of the coffee shop you visited? Friend Media Internet Self 9. Do you serve coffee with other foods or strictly coffee? Strictly Coffee With other foods 10. From the coffee shop you visit, how do you rate the quality of service? Very bad Very good Read More