Case - A New "Joe" on the Block
Joe Brown 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' highpriced 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 joe. 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 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 St. Louis, Missouri, were interviewed and asked to list the coffee shop they frequented 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.
Joe 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 Joe ponders how to go about starting "A Cup of Joe," 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.
Questions
1. What are the top three key decisions faced by Joe?
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 Joe consider in trying to weigh the merits of their results?