1. STARBUCKS CUSTOMERS’ ATTITUDE AND
BEHAVIOR TOWARDS PRICE OF COFFEE
Group members:
Lauren Basilone 001-17-7681
Rachel Hogue 001-73-2749
Benedetta Piva 001-95-5364
Eiman Rahimi 001-82-9559
Lorena Rivas 001-95-9132
Asia Usry 001-68-4987

2. AGENDA
 Introduction
 Hypothesis
 Sampling
 Data Analysis
 Conclusion

3. INTRODUCTION
 Research Problem
• The attitude of consumers in relation to the intention of drinking
coffee at Starbucks is not only related to the price of this, if not many
more than other factors such as quality and service offered by the
company.
 Literature Review
• Brand attitude does not have a direct affect on revisiting intention.
• The effect of brand attitude on customers’ revisiting intention is
dictated by customer satisfaction
• Starbucks has failed attempt to create a better relationship between
the customer and the company

4. INTRODUCTION (CONTD.)
What gaps our study can fill:
• Studies about Starbucks customers’ attitude and behavior
towards price of coffee were not found.
• We can contribute with this study explaining the relationship
between these two factors and giving recommendations to
the company to help solving the problem.
 Research Objectives
• Find if price influence customers’ attitude and purchase
intention.
• Find if gender play a part in how much a customer spends on
coffee.

5. INTRODUCTION (CONTD.)
 Research Questions
• What is the customer attitude toward Starbucks’ coffee?
• How would decreasing price impact customers’ attitude
and purchase intention?
• Does gender play apart in how much a customer spends
on coffee?
 Research contributions
• Our study is unique because there have not been any
studies conducted on US students.
• Relation between coffee price and consumer attitudes has
not been tested in past studies.
• Our study can help Starbucks improve their service and
relationship with its consumers and increase loyalty.

6. HYPOTHESIS
 Question 1
 What is the customer attitude toward Starbucks’ coffee?
 Hypothesis 1
 Customers’ attitude toward Starbucks’ coffee is low
price (comparing with their major competitors such as
Dunkin’ Donuts)
• This will determine the customers’ current attitudes towards
to price of coffee.
• If there is a high percentage of respondents who think
Starbucks coffee is high priced then Starbuck might want to
consider promotional incentives, discounts or a price cut.

7. HYPOTHESIS (CONTD.)
 Question 2
 How would decreasing price impact customers’ attitude
and purchase intention?
 Hypothesis 2
 Customers’ purchase intention will be significantly
higher with 10% price cut.
• This hypothesis was developed in order to measure
customers’ buying behavior in relation to price reductions.

8. HYPOTHESIS (CONTD.)
 Question 3
 Does gender play apart in how much a customer
spends on coffee?
 Hypothesis 3
 Amount of money spent at each Starbucks visit is
independent of gender.
• We had an interest in understand the gender roles of
purchasing coffee.
• Since we focused on participants between the ages of 16-
24 we wanted to know if women or men purchased more
coffee than the other.
• Determining whether there is a relationship, Starbucks can
market and advertise better to the gender and age that
purchases coffee the most.

9. SAMPLING METHOD
 Participants
• We selected 60 participants randomly. Our target audience
was coffee drinks ages 16-24.
• Coffee drinkers were targets mostly to benefit our research
results to help find solutions to the hypotheses.
 Questionnaire Design
• Assortment of question types and scales such as: nominal
scale, interval scales, rating scales, Likert scale, and
itemized category.

10. SAMPLING METHOD (CONTD.)
• The survey questions involving answers on a scale, agree-
disagree, important-non important.
• A couple of open-ended questions
 Procedure
• Survey made on KwikSurveys.com and posted online to
make it more accessible
• We were able to reach more respondent in this way

11. RESULT
 Data coding
• Nine questions were coded from our survey and put into a
table.
• Most of the questions that were coded consisted of close-
ended questions, with the exception of one open-ended.
• The range values given to each answer provides key
information of the value to be entered for each response.
• Generally open-ended questions are more difficult to code

12. EXAMPLES OF CODING
3. Which place do you frequent the most for purchasing
coffee?
o McDonald's
o Dunkin' Donuts
o 7-Eleven
o Starbucks
o If others, please list __________________________
• Most Frequent Place for Purchasing coffee:
0=McDonald's 1=Dunkin' Donuts, 2=7-Eleven,
3=Starbucks
• Other for “Place purchased” : 4=Home, 5= Other
coffeehouse

13. EXAMPLES OF CODING (CONTD.)
20. Please indicate your age
o 16-24yrs
o 25-34yrs
o 35-44yrs
o 45-54yrs
o 55-64yrs
o 65 or older
• Age Indication: 0=16-24yrs 1=25-34yrs 2=35-44yrs 3=45-
54yrs 4=55-64yrs 5=65+

15. FIRST STEP ANALYSIS: SIMPLE TABULATION
• Constructed simple tabulations for:
Question 8 “Approximately how often do you visit
Starbucks?”
Question 13 “About how much do you spend at Starbucks
per visit (not including tip)?
• These questions are designed to measure the most
important construct in this study: customer’s purchasing
behaviour toward Starbucks.
• Question 8 shows the customers’ purchase frequency and
Question 13 indicates the customers’ monetary purchase
quantity.

17. FIRST STEP ANALYSIS: SIMPLE TABULATION
(CONTD.)
• The variable responses for Question 13 started at less than
$3 dollars and went up to $11.
• 50% of respondents spend between $3 to $5 every time
they visit Starbucks and just 1% of them stated that they
normally spend $11 or more in their purchases.
• Question 8 was asking about the frequency of visits.
• Available responses: never, occasionally, monthly, weekly,
1 to 3 times a week, and daily.
• The answer “Occasionally” was the most chosen with
39.34% of respondents.

18. FIRST STEP ANALYSIS: CROSS-TABULATION
• We used cross-tabulation to analyze the relationship
among gender and the amount of money spent at each
Starbucks visit.
• It is important to know if purchase expenditure varies
depending on the gender, so in the future, Starbucks could
use different strategies or promote different products to
reach the two groups in different ways.
• 24 males and 36 females participated in the survey.

20. FIRST STEP ANALYSIS: CROSS-TABULATION
(CONTD.)
• The most popular response was “$3 to $5” among both
genders: 13 males and 17 females.
• Since there are more females answering “$3 to $5” than
males, this shows that females are more likely to spend
that amount of money at Starbucks.
• This is true also for greater amount: for response “$6 to
$10” we had 10 females and 9 males, for response “$11 or
more” we had 1 female and no males.

21. RESULT – HYPOTHESIS TESTING
o Hypothesis testing is the use of statistics to
determine the probability that a given hypothesis is
true
o Managers often make decisions based on statistical
tests using data, whether from a controlled
experiment or an observational study
o The choice of an appropriate probability distribution
depends on the purpose of the hypothesis test.
Depending on whether the focus of hypothesis
testing is mean-parameter or variance-parameter,
we can use: Z-dist, T-dist, and chi-square, F-dist

22. FIRST HYPOTHESIS
Customers’ attitude toward Starbucks’ coffee is low
price.
• Here, we want to test whether customers agree with the fact
that Starbucks coffee is low priced or high priced.
• Since the population variance and mean are unknown the
appropriate method for this test is:
Single-mean, Two-tailed, Unknown  T–test

23. FIRST HYPOTHESIS - STEP 1) BUILD HYPOTHESIS
 Ho: = a; a =1
(hypothesized value of population mean) ---- Null
 Ha: a; a =1
(alternative hypothesis) ---- Alternative
Note: 1 refers to “strongly disagree” in coded question
12B.
 Test the hypothesis at significance level of 0.05
(determined by the group)

24. FIRST HYPOTHESIS - STEP 2) CALCULATE TEST
STATISTICS
 Information we know:
X= 1.20; N=60; Sx =1.0954; α=0.05
 Type of test we need:
single-mean, unknown , two-tailed  t–test
 Test Statistics Calculation:
Standard error of sample mean: σX=0.1414
The test statistics: tcalc= 7.0721

25. FIRST HYPOTHESIS - STEP 3) FIND THE CRITICAL
VALUE TDF, Α/2
 Significance level α=0.05
 Degree of freedom DF= N-1 = 60-1 = 59 60
tdf,α/2 = t60,0.025=2.000
Note: since this a two-tailed test, we use α/2 instead of α
to find the critical.

26. FIRST HYPOTHESIS - STEP 4) TEST HYPOTHESIS
 Decision Rule:
If |tcalc|> tdf,α/2  Reject H0
If |tcalc|≤ tdf,α/2  Accept H0
 Conclusion:
Since |tcalc|=7.0721 > t11,0.005 = 2.000  We REJECT H0.
 Through this testing we found that customers do
not feel that Starbucks’ coffee is low priced.

27. SECOND HYPOTHESIS
Customers’ purchase intention will be significantly
higher with 10% price cut.
• We want to test whether 10% cuts in the price will induce
customers to buy more or less coffee.
• Since we don’t know the population variance and mean, the
appropriate method for this testing is:
Single-mean, Two-tailed, Unknown  T–test

28. SECOND HYPOTHESIS - STEP 1) BUILD
HYPOTHESIS
 Ho: = a; a =5
(hypothesized value of population mean) ---- Null
 Ha: a; a =5
(alternative hypothesis) ---- Alternative
Note: 5 refers to “strongly agree” in coded question 15C.
 Test the hypothesis at significance level of 0.05
(determined by the group)

29. SECOND HYPOTHESIS - STEP 2) CALCULATE TEST
STATISTICS
 Information we know:
X= 3.52; N=60; Sx =1.3477; α=0.05
 Type of test we need:
single-mean, unknown , two-tailed  t–test
 Test Statistics Calculation:
Standard error of sample mean: σX= 0.1740
The test statistics: tcalc= -8.5057

30. SECOND HYPOTHESIS - STEP 3) FIND THE
CRITICAL VALUE TDF, Α/2
 Significance level α=0.05
 Degree of freedom DF= N-1 = 60-1 = 59 60
tdf,α/2 = t60,0.025=2.000
Note: since this a two-tailed test, we use α/2 instead of α
to find the critical.

31. FIRST HYPOTHESIS - STEP 4) TEST HYPOTHESIS
 Decision Rule:
If |tcalc|> tdf,α/2  Reject H0
If |tcalc|≤ tdf,α/2  Accept H0
 Conclusion:
Since |tcalc|=|8.5057|>t11,0.005=2.000  We REJECT H0.
 This hypothesis testing showed that a price
reduction of 10% in Starbucks’ coffee would not
please our customers.

32. THIRD HYPOTHESIS
Amount of money spent at each Starbucks visit is
independent of gender.
• We want to test whether the amount of money spent at each
Starbucks visit is independent of gender or there is an
association between these two.
• Therefore, the appropriate method for this testing is:
Chi-square test on independence

33. THIRD HYPOTHESIS - STEP 1) BUILD HYPOTHESIS
 H0: Amount of money spent at each Starbucks visit
is independent of gender
 H1: There is an association between Amount of
money spent and gender
 Test the hypothesis at significance level of α=0.05

34. THIRD HYPOTHESIS - STEP 2) CALCULATE TEST
STATISTICS Χ2
 Observations (O1 --- O8): calculated from data.
 Expectation (E1 --- E8): calculated from PA, PL, and
sample size N.
PL1=0.4 PL2=0.6PA1=0.16
PA2=0.50 PA3=0.32 PA4=0.02
E1=3.84 E2=5.76 E3=12
E4=18 E5=7.68 E6=11.52
E7=0.48 E8=0.72
 Test Statistics: χ2 = 3.41

35. THIRD HYPOTHESIS - STEP 3) CRITICAL VALUE Χ2V,
Α
 DF: v=(L-1)*(A-1)=(2-1)*(4-1)= 3
 χ2df,α= χ23,0.05=7.81

36. THIRD HYPOTHESIS - STEP 4) TEST HYPOTHESIS
 Condition:
Under H0, χ2 ~ χ22
if χ2> χ23,0.05  Reject H0
if χ2≤ χ23,0.05  Accept H0
 Therefore:
χ2=3.41<χ23,0.05=7.81  ACCEPT H0
 Our studies suggest that amount of money spent at
each Starbucks visit is independent of gender.

37. CONCLUSION
 Rejection of all hypothesis
 Recommend a more in-depth study
 Promotional incentives
 Focus groups, target age groups
 Study of what causes customers to return

38. Thank you and Questions