Coffee Bean Buyer Survey Analysis

Background

Coffee is an integral part of not only people's daily routine, but also a dramatic aspect of the US economy. In an economic sense, coffee and coffee related products accounted for $225 billion, or about 1.6% of the U.S. GDP (National Coffee Association, 2017, 1). Around 62% of Americans consumed coffee daily in 2017 (National Coffee Association, 2017, 1), and this mass consumer market begs a look into the aspects of what the demographics of this market consist and the reasons people decide to choose the coffee beans they purchase.

Survey Process and Demographics

Survey Distribution Methodology

An online survey, hosted on Google forms between May 22 and 24, was used to poll the opinions of respondents' reasons for purchasing the coffee beans that they do. 175 participants responded to the survey within this time frame. The factors to be polled in the survey were determined after a conversion with M. Evans, co-owner of One Line Coffee in Columbus Oh., discussing contributing factors to coffee bean sales witnessed in his shops. To keep participation high, only 11 questions were used for this survey, each of which holds a distinct purpose to the primary goals of the research. The collection method utilized a Likert scale in several questions to distinguish the importance of each possible contributing factor to the purchasing of coffee beans. Brand name, price, and packaging aesthetics were each set to a scale of 'extremely important' to 'not at all important'. Two questions were included to determine a person's most and least important reasons to buy coffee beans, which further strengthened the initial Likert questions. Ethical and environmental concerns in the farm to shop pipeline were accounted for via a question asking the importance to the respondent of 'fair trade' and 'direct trade' qualifications of the beans.

Beyond simply discovering important factors on coffee bean sales, the survey also polled respondents on two further market concerns: willingness to pay and specific region of preference. These two questions were included to determine possible actionable applications from the results of the survey. The hopes of including such information is that there will be a correlation between one or more contributing factors and the consumers purchasing habits.

Sample Demographics

Three questions focused on particular demographics of the sample group: Gender, age, and frequency of coffee bean purchasing. Of the sample group, 61% identified with female, 38% male, and < 1% non-binary. Regarding age, the sample group covered all ranges, yet with a large proportion (45.2%) falling between the ages 25 and 34. The questionnaire also misses a significant proportional of the far ranges of age; Namely the Over 65 and under 25 groups.

The buyer frequency-of-purchase question allowed for the participants to be distinguished amongst high volume buyers and low volume buyers. 62.1% of the participants fall within the 'low volume buyer', or purchases coffee beans once a month or less. The remaining 38.9% purchased coffee between two and four times a month.

Weaknesses of Survey and Sample Group

Sample Size

With the massive amount of coffee drinkers in the U.S. and limited time frame/lack of funding, the sample size is not completely appropriate for the population it is looking to represent. As stated above, 62% of Americans drink coffee daily, 59% of which accounted for 'gourmet coffee drinkers (National Coffee Association, 2017, 1)- the target market for this poll. The most recent, accurate estimate of the U.S. populations being 323 million (US Census Bureau, 2017), this finds a target population of the survey at ~118 million. The confidence interval for the sample group correcting representing the population sits at 7.41. Given the high margin of error, some skepticism must be retained when reviewing the results. Further, the disparity in age proportions may incorrectly weigh the results, under- or over-representing particular age ranges within the sample.

Question Concerns

There is an uncomfortably large amount of subjectivity involved in consumer purchasing factors, and it is hard, if not impossible, to cover all aspects of the subject. A small question size was used to increase the survey completely percentage, and therefore the most pressing factors were chosen rather than an exhaustive list of all possible reasons. Furthermore, the ordinal factors of a Likert scale, while allowing powerful and quick review of the data, cannot completely cover all possible ranges of a participant's subjectivity.

Possible Bias

It must also be stated that all self-assessment surveys are prone to some innate biases. Factors as unassuming as the phrasing or even the order of the questions can play a factor on a respondent's reply (Pew Research Center, 2017). Neutral terminology and structure was utilized to minimalize this concern as much as possible. Social desirability bias was another particular issue that may affect the results: "[Participants] may face a conflict between a desire to conform to the definition of good respondent behavior, which says that one should tell the truth, and a desire to appear to the interviewer to be in the socially desirable category" (Theresa DeMaio, 1984, 258). The trade specifications question of this survey which regards fair trade and direct trade importance, quite directly, revolves around the ethical and environmental concerns of the buyer, and therefore may be suspect to this bias.

Results show about two-thirds of buyers consider these qualifications a factor when purchasing coffee beans, yet more controlled research would be needed to determine if any social-desirability bias may have played on this conclusion.

Results

Likert Scale and Importance Results

Evaluating the Likert scale results provide a view of the importance buyers place on each unique factor. Below depicts peoples' opinions on brand name, price, and packaging aesthetics.

Brand name and price's means both sit right above moderately important, with aesthetics coming in a far last place. To test a hypothesis that age plays an important role in a person's reasons for choosing beans, the same graph is presented below, splitting age at 35 years old.

Price and brand name stay steady at their moderately-very important levels, while age plays a contributing role in a persons' importance of packaging aesthetics [Chi-Squared Test: 10.904, df = 1, p-value = < .01, CI = (.1, .39)]. While aesthetics stays in last place for these three factors regardless, younger people seem to place more weight on it than older.

Although trade specifications and location of shop were not included in the Likert due to questionnaire size limitations, they were options on the overall most/least important questions to see what affect they play in a person's opinion.

Price is most important to the sample group with brand name in a close second, which is in agreement with the Likert results above. Packaging aesthetics, once again, come in dead last in regard to importance of buying. The least important factors resulted in almost an exact invert of the above graph, and therefore will not be included.

Demographic Subsets

Splitting the data up into demographic subsets allowed for a deeper look at possible differences between coffee bean buyers and how different factors weigh on them.

While maybe hard to read, the above graph shows that there is little difference between the female and male coffee consumer. The sole glaring difference is seen in the importance of the location of the shop: Apparently, men are less likely to travel to buy their coffee beans, but not significantly. [Chi-squared test: 1.2549, df = 1, p-value = 0.26, CI = (-.05, .26)]

The age demographic is an interesting one, and while there is little a slight difference seen in other factors, there is a massive difference in the buyer's willingness to pay.

While difficult to get too precise as the data is ordinal rather than continuous, this translates to a rough regression equation estimate of: [willing to pay = $18 - .75(age bracket)]. Age bracket = age group the buyer falls under, beginning with under 18 @ 1 and 65 or older @ 7. The result: the older a person is, the less willing they typically are to spend more for coffee beans.

Most important factors can be added to figure the reasons an age group spends what they do.

While the chart above is messy and difficult to read, it displays a very interesting look at how age, willingness to pay, and most contributing factors relate to each other. Unexpectedly, older people pay less and list price as their most important factor when purchasing beans. The younger generations, who typically will pay more, overwhelmingly base their decision on brand name.

Business Implications

The business implications differ highly based on the demographic the business is looking to target. If a shop is looking to sell to an older demographic, working on ways to lower the price of the beans will keep the customer coming back, as this is their primary concern when purchasing. For a younger demographic, investing in brand recognition and brand-quality associations will be a powerful contributor to increasing sales. Further, if the primary market-base for a shop is on the younger end of the spectrum, they are typically willing to spend more for these brand-recognized beans, and more in-depth research into these areas could be beneficial. The next step would be to conduct a controlled, experimental research into what affects consumers' view of a brand.

Region

Thanks to the region question in the survey, which coffee bean regions to stock on shelves can also be determined via the results. As blends are very rare to be considered a favorite, and about a third of the respondents reported not placing any importance on any particular region, the three specific regions can be the point of focus here. As many people will, apparently, buy any region, this allows the business to focus investing in specific, single-origin beans. Below informs that Central and South America and African and the Arabian Peninsula are the most sought after. Beans from the South Pacific and Islands should be less of a concern for the company.

Focus on the Frequent Buyer

One final implication of this research is that frequent buyers are willing to spend more on coffee beans, albeit only slightly.

This slight increase is magnified when looking at it from a monthly sales perspective. Setting 'high volume buyers' (>=2 times a week) and 'low volume buyers'(monthly or less) at a normalized bags/month level results in: high volume– 212.5, low volume- 108. Although the willingness to pay is slight (~$1), we can find the income difference between these two groups. High volume = (212.5 * $16) =$3400, low volume = (108 * 15) = $1620. From the sample group, high frequency buyers account for ~68% of total monthly sales. Unfortunately, more in-depth research and analysis on who these 'high-volume buyers' are is needed.

References

DeMaio, T. (1984). "9 Social Desirability and Survey Measurement: A Review." Surveying Subjective Phenomena,__2. Retrieved from JSTOR Online Catalog.

National Coffee Association. (2017). "Daily Consumption Up Sharply." National Coffee Association USA – News Release. Retrieved from http://www.ncausa.org/Portals/56/PDFs/Communication/NCA_NCDT2017.pdf ?ver= 2017-03-29-115235-727

Pew Research Center. (2017). US Survey Research – Questionnaire Design. Retrieved from http://www.pewresearch.org/methodology/u-s-survey-research/questionnaire-design/

United States Census Bureau. (2017). "Quick Facts – United States." US Census. Retrieved from https://www.census.gov/quickfacts/table/PST045216/00