I.

Executive Summary

The coffee-shop industry has been undergoing substantial

change during the latter part of the twentieth and early
part of the twenty-first century, reflected by continuous
changes in consumer behavior. The aim of this study is to
improve the understanding of the reasons behind
customers choice in coffee shops around Vigan. The
findings concluded that most respondents visit coffee
shops with friends, with locally branded coffee shops the
preferred choice. Consumer motivations to branded coffee
shops are most influenced by three factors: past
experience/ familiarity; convenience of location/travel;
and friends and family. With friendly staffs, high quality of
coffee and food, good atmosphere and good reputation
are the most important aspects for coffee shops.
The coffee shop industry is a near-perfect competitive
market because there are many competitors, many
consumers, and low costs of entry and exit. However,
despite the numerous coffee shops in Viganincluding
Teaza Cafe, Boni Cafe, and InfiniteaCoffee Break enjoy
most market share and market power. Coffee shops carry
products that are branded, affordable and acceptable to
extensive consumer segments: house blends and
specialty coffee, hot and cold signature drinks, light meals
(pastas, waffles, sandwiches), and baked goods (cookies,
pancake, cakes). A privately-owned coffee shop in such a
competitive market must offer all of the aboveand
more. We will analyze the performance of small private

coffee shops in Vigan, competing against many other food

service providers, all of which sell coffee, light meals,
baked goods, or other substitutes.

II. Introduction
Coffee Break Vigan is determined to become a daily
necessity for local coffee addicts, a place to dream of as
you try to escape the daily stresses of life and just
a comfortable place to meet your friends or to read a
book, all in one. With the growing demand for high-quality
gourmet coffee and great service, Coffee Break will
capitalize on its proximity to the University campuses to
build a core group of repeat customers. Coffee Break will
offer its customers the best prepared coffee in the area
that will be complimented with pastries.
Coffee Break will make its best effort to create a unique
place where customers can socialize with each other in a
comfortable and relaxing environment while enjoying the
best brewed coffee or espresso and pastries in town. They
will be in the business of helping customers to relieve
their daily stresses by providing peace of mind through
great ambience, convenient location, friendly customer
service, and products of consistently high quality. Coffee
Break will invest its profits to increase the employee
satisfaction while providing stable return to its
shareholders.

Coffee Break will capitalize on the strong demand for

high-quality gourmet coffee. The owners have provided
the company with sufficient start-up capital. With
successful management aimed at establishing and
growing a loyal customer base, the company will see its
net worth doubling in two years. Coffee Break will
maintain a healthy 65% gross margin, which combined
with reasonable operating expenses, will provide enough
cash to finance further growth

III. Research Methodology

Given the nature of the research, formal quantitative data
collection using questionnaires was deployed. Target
market analysis highlighted the most prominent
influential factors, internal and external motives and
pushes and pulls factors. This establishes what factors
influence consumer perceptions, behavior and purchase
intention. Providing explanation as to why do they prefer
such coffee shop maintain their position within their
industry, this research addresses the lack of research in
this field, benefiting coffee shop businesses seeking
competitive advantage or improvement. Providing insight
to customer attitudes and perceptions, it proposes
realistic prospects for coffee shops, like Teaza Caf, Boni
Caf, Infinitea and other coffee shops around vigan.
'Surveys are, arguably, the most important source of
information for tourism analysis, planning and decision
making. Questionnaires are components of survey work

its purpose here is to obtain reliable and valid data on the

research subject.

IV. Findings and Conclusion

Reviewing this exploratory study, we suggest that
consumer motivations in choosing coffee shops are
influenced by the following three factors: past
experience/familiarity, convenience of location, and
friends and family. This research reveals that social
influence is a strong motivator in consumer choice and
purchasing behaviors to coffee shops that are more
convenient to go. This research also identified some
similarities between factors perceived most important
from the consumer perspective for local and international
coffee brands. The most important factors for a local
coffee brand were, in order, friendly staff, high quality of
coffee and food and good atmosphere. Whereas the most
important factors for an international coffee brand were,
in order, high quality of coffee and food, good reputation

and friendly staff. Respondents indicated high quality

coffee and food and friendly staff were important for
coffee shops.
In addition, this research reveals that significant
associations did exist between motivation and social
demographics such as age and gender; women were
more motivated by the popular and thriving atmosphere
of the coffee shop than men. Whereas age presented
larger
differences
between
motivations
avoid
crowds/noise', 'somewhere new/different' and 'brand and
reputation'. This research could be used for coffee shop
businesses seeking to target a specific audience.

The findings suggest theories and literature on brands,

motivation and influential factors is applicable to branded
coffee shops, theory concerning local brands as leading
competitors endorsing qualities and traits superior to
those of international brands. Quality perception is
important for determining brand purchase and can
explain consumer behavior to branded coffee shops.

V. Proposed Strategies Plan

Vision of the business is to consistently maintain highquality coffee in our shop, delivering quickly and correctly
the customers order. In house, we commit to a friendly,
comfortable atmosphere for customers to enjoy their
beverages and home-made baked goods and sandwiches.
We are dedicated to serving the customer with a smile,
satisfaction guaranteed. Value Proposition Coffee Break
Vigan is characterized by a customer intimacy value
discipline, which is unusual for a commodity product. We
sell only the highest quality coffee beans, ensuring
theyre organic, shade grown, and Fair Trade coffee. We
add an edge to our market by not only selling specialty

coffee drinks, but also by selling whole beans, sandwiches

and baked goods as well. All of our products including
cups, food packaging and cleaning supplies are
environmentally friendly, compostable or recyclable. Your
drinking experience is distinguished by intimate, timely
and knowledgeable service, in a sophisticated and
comfortable atmosphere, with a product that delivers
satisfaction through our consistency of quality, great taste
and environmentally friendly business.
Coffee Breaks target market includes professional and
working class citizens who will appreciate affordable,
good quality coffee on their stay at the shop or on their
way to work.

We are going to keep our coffee prices low on drip coffee

and specialty drinks, in order to compete with other
coffee shops around vigan and our price plan is
significantly lower than their menus. We will sell bags
Coffee Beans for 650 pesos for people to use at home or
at the office, continuing our support of Fair Trade coffee.
Also, we plan to sell specialty sandwiches and baked
goods, such as cookies, waffles, and pan cakes, made in
house. The sandwiches prices starts at 50 pesos to 100
pesos and the baked goods will range from 60 pesos to 85
pesos. For the drinks, size 12 oz. 16 oz. 20 oz. Beverage
Iced Coffee 55 pesos for 12 oz. 70 pesos for 16 oz. and 85

pesos for 20 oz. For Frozen Drinks 90 pesos for 12 oz. and
105 pesos for 16 oz. For Hot drinks, 40 pesos, for 12 oz.
and 60 pesos , for 16 oz.

VI. Proposed Budget

Coffee Break Vigan is operating in an industry capable of
supporting high gross margins. Variable costs in
relationship to per-unit revenues are low. Variable costs
are equal to roughly 25% of per-units revenues. It is our
hope that as we move into the future and continue to
build relationships with our suppliers, this value will
decrease further, approaching a value of 20%.

Revenues for the first year of operation are based on an

almost 10% growth rate from month to month. This is an
aggressive estimate, but we feel that our strong emphasis
on marketing will have positive results. Annually, beyond
the first year of operations, we're predicting a growth rate
of roughly 10%. We'll have a better idea of potential
growth rate beyond year one as we make our way
through our first year. The plan will be updated as we
receive more information.
The
marketing
budget
will
consistently
equal
approximately 20% of sales. One of our strongest
strengths is our marketing and brand building capabilities,
and the aggressive marketing budget is a reflection of the
importance we attribute to our marketing activities.
Currently, the marketing budget beyond year one remains
set at 20% of sales. It is our hope to increase this budget
should sales and efficiencies of scale allow us to do so.

Our marketing expenses are tied directly to our sales

revenue. As sales increase, the marketing expenses will
increase. Currently our marketing expenses equal roughly
20% of sales, and we hope to increase that value in the
future. Our programs will be monitored for efficiency and
return on investment. Most notably, we want to pay close
attention to the value of the "Customer Happiness
Representative." This component of our marketing budget

is expensive, and we want to track the value of the

program to make sure we're optimizing our budget.
Periodically, we will survey our customers to determine
the effectiveness of our programs, and we'll adjust the
marketing mix appropriately based on our findings.

Coffee Break: Customers choice in Coffee Shops

around Vigan
In Partial Fulfillment of the Requirements
For the Subject Operation Research

Submitted by:

Diana Rose Dictaan

Submitted to:

Generose Foronda
Instructor

October 20, 2015

Table of contents
I. Executive Summary

II. Introduction
III. Research Method Used in the
Study
IV. Findings and Conclusion of the
Study
V. Proposed Strategies Plan
VI.Proposed Budget
VII.
Bibliography