Market Research

The purposes of market research are:

• To determine where a product is most likely to be successful. This includes the type of person most likely to purchase the product, the environment most conducive to selling the product, and other factors.

• To determine the needs and desires of identified market segments. These segments are different in terms of demographics (their age, cultural aspects, etc.) and geographical (location) aspects. A product that is enthusiastically purchased by one segment may be rejected by another segment.

There are two basic approaches to market research: qualitative and quantitative.

Qualitative research seeks to focus in more detail on what the consumer is actually thinking and feeling about the product. Such things as “ drivers of liking” (is the coffee purchased more for the caffeine or the flavor?), habits of usage (first thing in the morning, several cups throughout the day, etc.), purchasing habits (by the drink in a food service location or bean/ ground purchase for home consumption), and typical usages (espresso, drip brewing, etc.). A typical market quantitative test is a focus group, where a small number of individuals try products under controlled conditions and their actions observed. Qualitative market research uses a small number of individuals and examines their responses in great detail. One of the most important choices to make in designing an effective test of this sort is choice of panelists, who should represent the targeted market segment.

Quantitative research focuses on the numbers of consumers that will respond to a product. Example of a quantitative market research test is are (1) to submit two samples to consumers and ask which one is preferred or (2) submit a questionnaire to a chosen demographic. To get significant results, hundreds of consumer responses are needed.

“Drivers of Liking:”

One of the most important issues of any consumer test is why a product is preferred. The aspects of a product that cause a positive response in a consumer are known as “drivers of liking.” Given the complexity of the beverage coffee, it is difficult to pinpoint why a one coffee is more successful than another. Is it the aroma or the flavor? The warmth or the caffeine?

A major consideration is how and when the beverage is consumed. If a cup of coffee is gulped in a hurry on the way to work, one consumer may not notice the flavor of the coffee in as much detail as a consumer who has a morning ritual in which they sit down and enjoy a cup with breakfast. The habitual usage of cream and sugar will also affect the consumers’ perception of the coffee.

Yet another issue is the strength of the coffee. Higher quality coffees tend to be milder, with more sweetness, less bitterness and astringency, and fuller body. When the coffees used in brewing are of higher quality, a stronger brew can provide positive higher impact that will be noticeably different than competing products. However, even the best coffees can be brewed too strong. Cheaper coffees must be brewed light so that the bitterness will not be overwhelming, but consumer response towards these light brewed “dishwater” coffees has lessened in recent years.

Expert Tasters and Consumer Responses

Consumers tend to respond in terms of “like, dislike, neutral” responses. They may not be able to express the reasons behind their preferences and almost never use the terms as expert tasters would use them. However, expert tasters have an important function to play in consumer research.

The function of an expert taster is to objectively determine the flavor profile of the coffee. From this flavor profile, buyers can purchase green coffees that will meet these requirements and roasters can use those green beans to consistently manufacture a product recognized by the consumer. The expert taster must also bridge the gap between consumer preferences and the flavor profile that will meet those needs.

The first step is to gather consumer data. Full consumer tests as described above can only be afforded by large companies. However, there are some steps that the small operator can take towards getting valuable consumer data. The “secondary” sources are produced by research companies who have large staffs dedicated to research and analysis. These reports typically cost hundreds or thousands of dollars depending on how highly specialized the report.

The small operator can achieve meaningful results by observing their business, keeping careful records, and regularly evaluating those records. Point-of-sale systems can assist in gathering this data, but most small businesses have data gathering systems in place that can be used. The small business operator also has the benefit of noticing details due their more intimate association with the business. For instance, Paul Songer noticed at his coffee shop in Boulder that Sumatra Mandheling brewed coffee sold out much more quickly on snowy days. Who knows why?

The second step is to have an expert panel objectively determine a flavor profile of the coffees involved. Statistical methods can then be employed to make reasonable conclusions regarding the interaction of consumers and the coffee products.

One common method of detailing consumer response to samples is the Principal Component Analysis (PCA). The data is first prepared by selecting the flavor attributes that are most important to the flavor profiles of the samples. These attributes are correlated to one another. The flavor attribute correlations are illustrated in terms of angles between the components. If the angle between attributes is small, the flavor attributes correlate (when one attribute is found, the other is found as well). If the angle between two attributes is close to 180°, the attributes have a negative correlation (when one attribute is found, the other is not found). If the angle between the 2 attributes is 90°, they have no correlation.

Sales of products can also be quantified by such methods. These correlations create a space on which the samples can be mapped as points. An example can be seen below.

From this diagram, it can be observed that coffees which are more acidic and have fruit/floral/sweet profiles sell best at Location 2, while Location 1 sells a larger percentage of Central and South American coffees. Customers at Locations 3 and 4 have similar preferences and prefer heavier body and flavor profiles that are more earthy and nutty. This information can be used to determine what new products to introduce or promote and can be useful to profile the demographics of customers who patronize the locations to determine what will be preferred in new locations under consideration with similar demographics.

Songer and Associates, Inc. can assist in actionable market research in these ways:

• Design of experiments that combine consumer and expert taster data

• Interpretation and analysis of secondary data resources

• Data mining of information available through point-of-purchase or other retail record keeping systems