Recent trends in the global coffee business indicate that South Asia is an emerging market for “special flavored” coffees and coffee bars. Coffee Time has identified India, among other South Asian economies, as a bright prospect for new chains. Coffee Time is tasked with conducting secondary and primary research to assist it in determining which cities in which to open chains. Analyzing secondary data allows for a more comprehensive understanding of the various locations throughout India.
Since India is an unexplored market, obtaining direct information on people’s acceptance of coffees with a special flavor and their sensitivity to price is essential. Primary research Customers across North America and Europe were interviewed randomly to determine why they go to Coffee Time (University of Phoenix, 2007). Some customers go for the simple pleasure of exotic coffees from around the world while others enjoy the ambiance of each Coffee Time shop. Coffee Time is hoping for similar success when the company enters the South Asian country of India. The quandary is which city or cities should Coffee time enter into?
Research was conducted in 12 cities in India. The Cities studied were from conservative based Ahmedabad and Hyderabad to the modern cities of Mumbai and New Delhi (University of Phoenix, 2007). The demographics chosen in the decision were categories including: Age, gender, monthly income, and education. The best way to survey for age is stratify the ages into groups. Monthly income is significant because it shows the potential for customers to purchase some of the exotic coffees. Knowing the level of education has its advantages as well, as college age students are likely to frequent coffee shops.
Mumbai has the highest number of colleges among the 12 cities surveyed. The lifestyle of a city was also taken into consideration. Many locations have malls, but how many people frequent these daily and on weekends? The number of theaters and restaurants in the cities also are taken into consideration. City infrastructure is another piece of data taken into consideration when determining the potential store placements. The number of schools, colleges, airport traffic levels, and paved roads are all taken into consideration when determining a city with which to do business. Competition is also taken into consideration.
Are there any other coffee houses in town and how they are fairing? The number of restaurants also may have an affect on the decision (University of Phoenix, 2007). In light of recent events in India, it would be one concern for the Coffee Time Company to weigh the possibilities of terrorism in cities like Mumbai. The tragic events in Mumbai will possibly affect the decision on whether or not to enter the market as. Terrorists have sought western based companies in which to act upon (Fox news. com 2008). Validity and Reliability of Data Both the primary and secondary research data acquired by Coffee Time will be limited by several factors.
The first limiting factor is the lack of data that supports India as an emerging coffee market and shows trends as to where these markets might be strongest. Decisions to obtain secondary and primary research from specific market cities was based on limited information in the form of a matrix that categorized cities with the highest level of class with affluence and those with a modern cultural outlook (University of Phoenix, 2008). The cities presented as potential markets were not supported through comprehensive research that analyzed all cities in India and validated that those listed on the perceptual map are the most likely markets.
For example, the city Jaipur is listed on the perceptual map as being the least modern and with the least amount of affluence but where does that city fall within the country? It would be helpful to see the gap between those listed on the map compared to the rest of India. The second limiting factor is the cost to conduct research. Not enough research dollars available to perform a comprehensive analysis of secondary information of all major cities on the perceptual map which may be beneficial due to the lack of supporting data surrounding the initial targeted cities.
In review of the primary research survey tool one can see that the information can be flawed easily due to language barriers. Because India has 24 major languages the ability to conduct a survey that is 100% reliable and valid may be compromised. Validity and reliability To prove validity one must establish a confidence level in the data. Confidence in data is achieved through a range of values constructed from sample data so that the population parameter is likely to occur within that range at a specified probability. The specified probability is called the level of confidence (Lind 2004, Ch 9).
Due to the lack of data on all cities in India, Coffee Time was not presented with a level of confidence that validates the chosen cities. In order to stand the test of reliability of the data; one must know the sources and the standard deviations in order to make sound projections. Good research also relies on the Empirical Rule which states, “For a symmetrical, bell-shaped frequency distribution, approximately 68 percent of the observations will lie within plus and minus one standard deviation of the mean; about 95 percent of the observations will lie within plus and minus two standard deviations of the mean; and practically all (99. 7 percent) will lie within plus and minus three standard deviations of the mean. ” (Lind et al. ).
The primary research tool that Coffee Time plans to use may lend a higher standard deviation than expected due to the culture and language differences. Finally, the tool was developed without much consideration of the Indian culture evident by the fact that it did not contain specific cultural questions that address the effects of fasting and religious holidays on the coffee market.
Secondary research and Random Sampling Several issues related to the research and random sampling methodologies need to be addressed in order to make sound business decisions. The first is the culture and behavior of the people of India. Do Indians believe in dining out, or are they opposed to this behavior? What is the repeatability of the customers in India? Is it an occasional behavior or is it their pattern to purchase coffee daily?