Market Study about Coffee

Table of Contents

1. Executive Summary

2. Problem Definition

3. Research Design
3.1. Secondary Data
3.2. Primary Data
3.3. Sampling and fieldwork

4. Analyzing the Coffee Market in Hungary
4.1. Development of the Coffee Market Over Time
4.2. The Consumers
4.3. The Brands

5. Focus group interview
5.1. Drinking habits
5.2. The brand party of the middle ages
5.3. The innovative game
5.4. What would make you try a new coffee brand?

6. Questionnaire
6.1. Pre-test Arrangement
6.2. Results of the Pre-test

7. Timing and Budgeting

8. Limitations

List of tables and graphs

Table no.1: The 20 most popular food products with the Hungarians adult population- Percentage of respondents

Table no.2: The 20 food products most often consumed by the Hungarian adult population-Average of weekly frequency

Chart no.1: Consumption of FMC-Goods in Hungary 2003

Chart no.2: Grouping Consumers

Chart no.3: The Coffee Brands

Chart no.4: Main Goals in Innovation of Different Brands

Chart no.5: Matching roles and brands

table no.3: Summary of the corrections

Appendix
1. Pre-test of the questionnaire
2. Revised version of the questionnaire
3. Pictures from the focus group
4. The answers of the brand party
5. First results with SPSS

Bibliography

- Szalay László: Főleg a fiatalokra figyel a kávépiac, Élelmiszer, 2003 szept.
- McDonald's moves to tap coffee craze in Hungary, Reuters, 06.18.03,
- http://www.tns-global.hu/needscope/?Container=fo4_al1_7
- http://www.forbes.com/home_asia/newswire/2003/06/18/rtr1003455.html
- www.gfk.at/research_data/free_download/files/PRESS/etkszaltsajtotENG.pdf.
- http://www.kave.lap.hu/
- http://www.douweegberts.hu/decs/pages/des.asp?PagecRef=121&Mid=121&siteid=decs-retail&Locale=HUHU1
- http://www.douweegberts.hu/decs/pages/des.asp?PagecRef=21&Mid=21&siteid=decs-retail&Locale
- http://www.ksh.hu/pls/ksh/docs/
- http://www.sric-bi.com/vals

1. Executive Summary

Our challenge was to introduce a coffee brand into the Hungarian Market called “all continents”. This coffee is for a young target group who like experience connected with a Hungarian image. During our research the following question: Will this launch succeed in the market that we have chosen?

Therefore, we focused on the existing Hungarian coffee market; it`s consumers, drinking habits and competitors. To study this we used secondary research, a focus group interview and prepared a questionnaire.

Firstly, we focused on the consumers. Coffee is a popular product and very frequently consumed in Hungary. The overall consumption of coffee is increasing as well, especially young people tend to buy more coffee. Furthermore, the consumption of this group is still growing.

Secondly, we looked at the drinking habits. Our target group especially liked mixtures and there is willingness in their attitude towards trying new things. Also, they use coffee not only for the functional reason to wake up, but also for social reasons and having fun.

Thirdly, we have looked at our competitors. Nescafe represents the spirit of youth by offering specialties. Segafredo is well known for its dynamism and strength. Tchibo is the brand that is lively and well known worldwide. Jacobs stands for the harmony of with variety of flavors. Douwe Egberts has a static image. Omnia is the virtue but is also less dynamic. Julius Meinl represents just quality but in a static way.

Now we will try to give advise for the launch. There are good reasons, why the introduction of “all continents” could be successful.

As we just explained, that young people are an important, increasing target group and the drinking habits are on the way to change, or are already changing. People want to try new things and drink coffee for a variety of reasons. Furthermore, we see a lack in the positioning image of the existing competitors. Nescafe is for young, experiential people, but it is not Hungarian. Brands with a Hungarian image are Douwe Egberts and Omnia. But their images have gone out of fashion and our target group did not like them. In conclusion, there is no brand, which has the image of a Hungarian brand for young, experiential people.

In addition to our research we recommend to consider the analyze of the three remaining P´s: price, place and promotion.

2. Problem Definition

Our challenge, that we have chosen, is to launch a coffee brand on the Hungarian market. We are an old-established Hungarian company, which wants to diversify in the coffee market. Our budget is large enough to successfully enter the market. However we are not sure if our brand should be introduced as a Hungarian one.

Our brand is called “All Continents”. It is a box, which contains five “flavors” of coffees coming from different continents. This is a high quality coffee; the beans from all the best coffee producers have been selected. The flavors as well as the savor are excellent thanks to a complex blend of coffee beans. The main benefit is that it allows people to sample coffee from all over the world and to create their own coffee by blending the different flavors themselves. This coffee is also top of the range and is a luxurious one.

The coffee is for experiential, individualistic and worldly wise people or people who want to be like that. It is experiential by mixing the sorts. It is individualistic because each person can mix it in his own relation. It is worldly wise because of the five continents.

‘Will the introduction of a new brand be successful?’ is a relevant management decision problem. But it is not our job. It is not possible to predict if the brand will be successful in the real market and what will be the optimal 4P’s. Our job is to answer a research question, which the manager needs to make a better decision based on facts. The researches are background information for the decision but not the decision itself. They are more like a recommendation.

These research questions should be specified:

- the environment, a surface of the existing brands and competitors in the coffee market in Hungary (see chapter 4)
- if a brand with the characteristics of “all continents” already exists
- a surface of situations where and reasons why you drink coffee
- what are the interests of the experiential people on coffee
- if experiential people can imagine to buy “all continents”

Normally, a product needs a good connection through all four P’s “product, place, promotion, price” to be successful. They have to fit, and the research can give recommendations. But to focus on a problem and get good results, we want to choose only the product-idea to do the research.

3. Research Design

In order to successfully launch a new product, it is important to do a research. First of all, to be sure that the product answers to a need or creates a new need for customers.

The research is complete and gives better results if it uses both “primary data” tools and “secondary data” tools.

3.1. Secondary Data

By the expression “Secondary data” tools that enable to find the global trends of a market, the statistics of goods consumption (in the case of the launch of an eatable product), and more widely any figures giving an idea of the general habits of the consumers are meant.

In our we can use the results of previously conducted surveys that we can find with the help of the TARKI and of the KSH (Hungarian surveys institutes) or directly by asking the other coffee companies which sometimes give figures and statistical information about the coffee market on their website.

These tools are very important. You cannot launch a product successfully if you do not know the general trends of the market before. Moreover, you have to know your future competitors because you must identify the biggest actors of the market if you want to be able to beat them or at least to take some percentage of market-share from them.

The surveys institutes regularly conduct researches about a lot of subjects and it is almost sure to find a survey answering to any research problems, especially about consumption habits of a country’s customers.

If the researches from the TARKI or the KSH do not answer to a particular question or if you may need specific answers, it is a good idea to search on the Internet because some people may have already done the researches you need. Our team decided to research in any possible way to be able to provide the best answers to the problems raised by the introduction of a new coffee brand on the Hungarian market so we used both surveys institutes researches and researches on the Internet. This enabled us to find a lot of relevant information on the Hungarian coffee market, its main actors and its particularities.

But Secondary data tools are not enough and once you have learnt general information about the market, it is very important to research directly the customers in order to know their personal expectations.

3.2. Primary Data

To learn the expectations of the customers, the two most relevant methods are the focus groups method and using questionnaires.

Focus groups: Our team decided to put the emphasis on this method because it is the one that provides the best information on the customers. We chose respondents that best apply to the target aimed by the new product from “All Continents”.

The main advantage of the focus groups is that both surveyors and respondents are relaxed, they have time to ask or to answer to the questions so the answers may be more precise and relevant than with a questionnaires survey and also more open: they can say what they want and they do not have to press their answers into categories. This amount of time also enables to listen to the consumers´ very personal needs about their coffee consumption habits and what do they expect from a coffee brand. Thank to these answers, “All Continents” will be able to provide a product answering to these needs and expectations and which will appear to the consumers as a brand that really “listens” to them. This will create a close relationship between the brand and its consumers, who will feel confident to the brand and this confidence will probably lead to a very good brand loyalty. And as it is well known, loyalty from the consumers is very important for any brand because it is easier to find new customers than to earn their loyalty.

But only questioning a focus group is not enough so our group decided to do a questionnaire as well.

Questionnaires: In addition to the focus groups, it is also very important to conduct a questionnaires survey for several reasons. Firstly because the secondary data researches (TARKI, KSH, etc.) may not answer to a particular question and in the questionnaire, you can add any question you may find relevant to know your future customers and to learn their very particularities. Secondly because in the focus group the amount of respondents is limited and the costs are quite high but with the questionnaires you can survey hundreds of people and learn general trends. As a matter of fact, questionnaires enable us to get more representative answers, because the sampling is much wider than with focus groups.

The main advantages of questionnaires are: they are simple to administer, data are reliable and the results are less variable thanks to the fixed response questions. But their main disadvantage is that respondents may be unable or unwilling to answer to some questions.

Questionnaires and focus groups give much more useful information when used together.

To sum it up, we can say that we have used every source of information available. We are convinced that any source when used alone is useless alone but if we combine all of them, that is how we find the best and the most relevant information which can give success to a product.

3.3. Sampling and fieldwork

It is important to think about the distribution of the questionnaire to the respondents.

The scientific process of reaching the respondents is called sampling. For sampling, we have to define the population, determine the sampling frame, select sampling technique and determine sample size. There is no ultimate sampling technique. It depends on the specific project and objectives.

1) Define the population: Our potential consumers are all Hungarian people. Every Hungarian should be a potential respondent of our questionnaire. Normally you should not reach individuals but households because not everybody buys coffee products for themselves. The decision is rather made by the person who does the shopping for the household. But we want to have a connection with experiential people, so we choose individuals as respondents.
2) Sampling frame: This topic deals with a database, where all potential households are listed. In Hungary, there is an office, called “Népességnyilvantartó Hivatal”. We will go there and we will buy a random sample of persons from only a few regions of Hungary as we will discuss in the next topic.
3) Sample technique: In our quantitative research, we want to have a representative sample. But at first, we will consider the survey method.

We want to choose the In-Home-Interview. This provides a high quality of data because of a high response rate and a high possible diversity of questions, but also immense costs. Especially when we want to reach persons all over Hungary and additionally when nobody is there and the interviewer has to come more than once. We want to decrease these costs through the sampling technique.

As a sampling technique we want to choose the cluster sampling, a probability technique. First of all, we divide Hungary into regions, for example the departments of Budapest. Out of these, perhaps 30 regions, we choose randomly five regions. Out of these five regions, we buy the database of a random sample of respondents. Firstly, we suppose that each region will have nearly the same number of inhabitants. Out of these we randomly choose through a software program about 260 households for each region. Then we send our interviewer to these persons. The interviewers have to try at least two times. After that they are allowed to leave this address out.

4) Sample size: We want to reach 1050 people to decrease the error probability to a relatively low level. We have chosen this relatively large sample size, because we want to consider especially our target group of experiential people in detail and want to have here also a small error probability.

If we have five regions, we need 210 respondents from each region. If the response rate is about 80% (data from class), we need to question 263 people to have the results of 210 people for each region.

This will be the procedure, if we have regions with a similar number of inhabitants. But in reality, it is almost never the case. Different regions have different number of inhabitants. The solution to this problem is easy: To weight the respondents per region with the share of the inhabitants of the whole Hungarian people.

In conclusion, we get a representative survey of all inhabitants in Hungary with high quality and less cost than a simple random sample.

Afterwards in the fieldwork, we want to motivate and control the interviewer by an interviewer training. We will tell them to follow exactly the questions and add nothing else either to answer questions and clarify the question in a neutral way. For controlling we will send one test-respondents, who evaluate our interviewer. His/her questionnaire we will naturally take out of the data analysis.

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