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0 Data Analysis & Descriptive Statistical Summaries Christopher Mowbray Yusuf Kara Mike Dee

Starbucks Data Analysis

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Page 1: Starbucks Data Analysis

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Data Analysis & Descriptive Statistical Summaries

Christopher Mowbray

Yusuf Kara

Mike Dee

Philvie Daniel

Tomas Maldonado

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As a marketing research team we have conducted a survey questionnaire where we were

able to gather valuable qualitative and quantitative information about Starbucks Coffee shops.

Starbucks has recently closed over 600 stores in the past few months. Our purpose for

conducting this survey was to find out the struggles that Starbucks faces to ultimately support

our insights with representative evidence. After visiting many Starbucks locations in the city of

Boston to gather our projected sample size of 100 surveyors, we have come to some interesting

findings and feel much stronger discussing the problems that Starbucks faces and the reasoning

for so many closures in the United States.

Our team’s survey consisted of both qualitative and quantitative questions. We purposely

put in a few qualitative questions to let the customers talk about in depth any issues that they

may have with Starbucks that maybe our research team did not cover in the questionnaire. This

way we can get as much information as possible. According to the mixed answers from the

surveyors we have come to the conclusion that people living in the city are less satisfied with

Starbucks than the people who live in the suburbs. This is a huge issue especially because the

majority of Starbucks locations are found within major cities and areas with high population

density. We have come across some reasons why the employees are dissatisfied with Starbucks

and can make an inference that it has to do a great deal with the customer service from the

employees. For example, a good amount of dissatisfied people said that the employees are not

well trained, they are incompetent, and are talking to each other behind the counter, making

people wait longer than expected. A further issue that has risen from the qualitative data is the

fact that customers are unhappy with the size of Starbucks. They believe that Starbucks café’s

are becoming smaller and smaller in size. With this decrease in store size it only frustrates the

customers when it becomes crowded. Many customers said that Starbucks is supposed to be a

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place where people pay more money to receive hedonistic feelings with the products they

purchase and the store they are hanging in.

As a research team we decided to generate the qualitative data and interpret it first so that

we can have some insight as to what type of questions we should pay attention to. This

qualitative data is very useful although it does not provide us with powerful enough influence to

be able to describe to the population. By conducting the quantitative questions we can

specifically get data to backup certain issues in detail that were discussed above.

Considering that we had multiple issues about the customer service of Starbucks we

decided to run a T-Test to determine important information such as the average quality of

customer service. Before we conducted the analysis we created our own hypothesis that thought

the average quality of customer service was less than or equal to somewhat unsatisfactory

service. When we calculated the one-sample statistics we found that the average was in fact very

satisfactory. Before we could say this was acceptable we had to look at the 95% confidence

interval and determine if the whole interval was above zero, and in fact it was. This step process

holds true for every t-test given. With this in mind we have a good idea that the test statistic falls

within the rejection region but we first need to calculate it. After calculating it we ultimately

find that our hypothesis falls within the rejection region and it is safe to say that the customer

service seems to be ok. We also created a frequency table for only the customers who were very

satisfied or felt that the service was superior. We found that 66% of people had positive feelings

about customer service, leaving 44% with undecided, poor or average answers. With this

interpretation you can see that Starbucks could in fact try to improve their customer service a bit

more. See Exhibit 1

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Another issue that we as a group felt may have an effect on the store closings was the

overall satisfaction of Starbucks coffee. We generated some statistics and realized that 55% of

respondents had positive feelings about their coffee, whereas 44% had neutral or negative

feelings. We were surprised with these findings because as a research group we were given the

impression that Starbucks has better quality based on the reason their prices are higher than

others. This is in fact a problem that Starbuck’s faces and they should either work on improving

their coffee satisfaction or end up lowering the price, which could switch other café’ regulars

who go to places such as Dunkin Donuts to become Starbucks customers. See Exhibit 2

It seems overly obvious that Dunkin Donuts is Starbuck’s main competitor today. We as

a group wanted to find out if Dunkin Donuts had any impact and if so how much of an impact on

the profitability of Starbucks. To do this we created a simple frequency chart with an

accompanied histogram to answer this question once and for all. We determined that 42% of our

surveyors prefer Starbucks over Dunkin Donuts. This statistic is HUGE and most definitely

reveals to us that Dunkin Donuts has a lot to do with the downsizing of many Starbucks locations

lately. A total of 55% think that Starbucks is either the same as Dunkin Donuts, worse than

Dunkin Donuts, or they were not sure. We would like to mention that these test statistics are

reasonable and with little to no error. See Exhibit 3

Now that we understand that Dunkin Donuts has a large effect on the profitability of

Starbucks, we wanted to get an idea of why that statistic holds true. What makes Dunkin Donuts

such a huge competitor in this market? First, we wanted to get a general frequency distribution

based on certain attributes that customers felt were important when purchasing a coffee.

Supported in our depth interviews and focus group study we realize that there are a few attributes

that make up a good coffee. These attributes are best quality, looks good and price value. We

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wanted to know which attribute was preferred the most in terms of importance for the customer’s

coffee. In SPSS we came to the conclusion that 55% prefer Best Quality, 28% prefer Price

Value, and 7% prefer Looks when it comes to purchasing a good coffee. See Exhibit 4

Technically this statistic means nothing until we can group it with the customer’s

preference of either Starbucks or Dunkin Donuts. Once we have found both preferences we can

combine them and create an independent sample tests and cross tabulation to see if they are

correlated or not. For example, we created a test and found that people who prefer to go to

Dunkin Donuts also feel that price value is the most important, and for people who prefer to go

to Starbucks feel that Quality is most important when it comes to purchasing their coffee. As

you can finally see, price value of customers is very important and should be recognized by

Starbucks to try to generate lower priced products. See Exhibit 5

We currently have processed all the factors that we thought would have some

implications or problems with Starbucks’s success, although we still feel that one more test

would suffice to ensure our recommendations. For example, our research hypothesis was that we

believed the reasoning for so many Starbucks closings is mainly because of the location density

of the café’s. We believe as a Research Group that there are too many Starbucks locations that

are too close to each other. They are only taking away from their own profits. This is called

cannibalism. We decided to conduct some analysis on several questions that were posted within

the questionnaire. For example, “How do you feel about Starbucks Location”? Is one of the

questions. We sense that determining the frequency of people who thought that Starbucks was

inconvenient would be a good start and benchmark for further studies. The statistics show that

74% of people replied with a positive answer describing that the café’s are very convenient.

Now we understand that this statistic is not false but we have to take into account the fact that

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these people could be situated in different areas and based on the area in which they live in their

answers may vary. In lieu of these issues we decided to conduct an independent T-test to gather

group statistics. For instance, based on our studies we have customers that live in three different

areas: Rural, City, and Suburb. We wanted to obtain information about whether or not this

setting of where the person lives has any power or correlation about how they feel about the

locations of Starbucks. After getting back the group statistics we found a great difference

between the different areas. For example, the average of the people living in the rural areas

believed that Starbucks locations are not very convenient, whereas the people living in the city

thought that Starbucks locations were very convenient. The average number of people living in

the suburb said that Starbucks locations were fairly neutral to somewhat convenient around their

area. This analysis tells us a great amount of information about where Starbucks should

strategically distribute their café’s and whether or not they have too many in one area. See

Exhibit 6

All of our analysis can be found in the available exhibits on the following pages. Based

on our calculations we can safely describe the problems that Starbucks faces without a doubt and

if we were asked to show evidence we now have proof to do so. In order for Starbucks to

become a successful business and regain their status and stores they will need to improve on their

customer service a bit more and also the satisfaction of their coffee. Furthermore, today it seems

as if Dunkin Donuts is doing well in the market. Based on the studies the people who go to

Dunkin Donuts prefer price over quality when it comes to their coffee. Starbucks should realize

this and understand that price value is a very large population, especially in today’s economic

crises. It has been proven that Starbucks has an abundance of locations that are too close to each

other in the cities whereas they lack locations in rural and some suburb areas. Starbucks should

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shut a few café’s down in the city and spread them out to areas where there are no Starbucks at

all. This may create a better name for them and also may not seem as annoying to the customers.

It is safe to say that location, customer service, price and the coffee itself is the main problem for

the shutdown of many Starbucks locations across the United States.

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EXHIBIT #1

One-Sample Statistics

N MeanStd.

Deviation

Std. Error Mean

The Quality of the customer service you received at your last visit with Starbucks was?

100 3.7000 .68902 .06890

One-Sample Test

Test Value = 2

t dfSig. (2-tailed)

Mean Differenc

e

95% Confidence Interval of the

Difference

Lower UpperThe Quality of the customer service you received at your last visit with Starbucks was?

24.673 99 .000 1.70000 1.5633 1.8367

FrequenciesStatistics

The Quality of the customer service you received at your last visit with Starbucks was? N Valid 100 Missing 0Mean 3.7000Median 4.0000Mode 4.00

The Quality of the customer service you received at your last visit with Starbucks was?

Frequency PercentValid

PercentCumulative

PercentValid poor 1 1.0 1.0 1.0 somewhat

satisfactory2 2.0 2.0 3.0

Average 31 31.0 31.0 34.0

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Very Satisfactory 58 58.0 58.0 92.0 Superior 8 8.0 8.0 100.0 Total 100 100.0 100.0

EXHIBIT #2Frequencies

StatisticsHow satisfying is Starbucks Coffee? N Valid 98 Missing 2Mean 3.5510Median 4.0000Mode 4.00

How satisfying is Starbucks Coffee?

Frequency Percent Valid Cumulative

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Percent PercentValid poor 3 3.0 3.1 3.1 somewhat

satisfactory4 4.0 4.1 7.1

Average 37 37.0 37.8 44.9 Very Satisfactory 44 44.0 44.9 89.8 Superior 10 10.0 10.2 100.0 Total 98 98.0 100.0Missing System 2 2.0Total 100 100.0

EXHIBIT #3FrequenciesStatistics

Based on your experience how does Starbucks coffee compare with Dunkin Donuts coffee in terms of taste? N Valid 97 Missing 3Mean 2.0103Median 2.0000

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Based on your experience how does Starbucks coffee compare with Dunkin Donuts coffee in terms of taste?

Frequency PercentValid

PercentCumulative

PercentValid Starbucks is better

than Dunkin Donuts42 42.0 43.3 43.3

Starbucks is the same as Dunkin Donuts

22 22.0 22.7 66.0

Starbucks is worse than Dunkin Donuts

23 23.0 23.7 89.7

Not sure 10 10.0 10.3 100.0 Total 97 97.0 100.0Missing System 3 3.0

EXHIBIT #4

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Frequencies

Statistics

Which of the following attributes are important to you? N Valid 97 Missing 3Mean 2.6392Median 3.0000Mode 3.00

Which of the following attributes are important to you?

Frequenc

y PercentValid

PercentCumulative

PercentValid looks good 7 7.0 7.2 7.2 price value 28 28.0 28.9 36.1 Best quality 55 55.0 56.7 92.8 not sure 7 7.0 7.2 100.0 Total 97 97.0 100.0Missing System 3 3.0Total 100 100.0

T-TestGroup Statistics

Rank the following Cafe's from best (1) to worst (6). N Mean

Std. Deviation

Std. Error Mean

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Which of the following attributes are important to you?

Dunkin Donuts 32 2.3750 .83280 .14722

Starbucks44 2.7727 .56501 .08518

EXHIBIT #5Statistics

Starbucks coffee shops are too close to each other. N Valid 97 Missing 3Mean 2.7526Median 3.0000Mode 3.00

Starbucks coffee shops are too close to each other.

Frequency PercentValid

PercentCumulative

PercentValid strongly disagree 15 15.0 15.5 15.5 2.00 24 24.0 24.7 40.2 3.00 38 38.0 39.2 79.4 neutral 10 10.0 10.3 89.7 5.00 10 10.0 10.3 100.0 Total 97 97.0 100.0Missing System 3 3.0Total 100 100.0

Group Statistics

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Rank the following Cafe's from best (1) to worst (6). N Mean

Std. Deviation

Std. Error Mean

Starbucks coffee shops are too close to each

Dunkin Donuts 33 2.8788 1.13901 .19828

Starbucks 42 2.4762 1.01784 .15706

EXHIBIT #6

Group Statistics

What type of setting do you live in? N Mean Std. Deviation

Std. Error Mean

How do you feel about Starbucks locations?

Rural 3 4.3333 .57735 .33333

City 75 2.2400 1.35407 .15635

Independent Samples Test

Levene's Test for Equality of Variances t-test for Equality of Means

F Sig. t dfSig. (2-tailed)

Mean Difference Std. Error Difference

How do you feel about Starbucks locations?

Equal variances assumed

2.649

.108 2.654 76 .010 2.09333

Equal variances not assume

5.686 2.973 .011 2.09333

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Group Statistics

What type of setting do you live in? N Mean

Std. Deviation

Std. Error Mean

How do you feel about Starbucks locations?

City 75 2.2400 1.35407 .15635Suburb 20 2.8500 1.66307 .37187

Independent Samples Test

Levene's Test for Equality of

Variances t-test for Equality of Means

F Sig. t dfSig. (2-tailed)

Mean Difference

Std. Error Difference

How do you feel about Starbucks locations?

Equal variances assumed

1.239 .269 -1.704 93 .092 -.61000

Equal variances not assumed

-1.512 26.102 .143 -.61000