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CONSUMER PREFRENCES TOWARDS COFFEE IN FAISALABAD CITY

MUHAMMAD ZUBAIR TARIQ 2010-ag-860

A research project submitted in partial fulfillment of the requirement for the degree of

MASTER OF BUSINESS ADMINISTRATION IN MARKETING

INSTITUTE OF BUSINESS MANAGEMENT SCIENES

UNIVERSITY OF AGRICULTURE, FAISALABAD

DECLARATION
I hereby declare that contents of this research report, Consumer preferences towards coffee in Faisalabad city are product of my own research and no part has been copied from any published source (except the references and protocols). I further declare that this work has not been submitted for award of any other diploma/degree. The university may take action if the above statement is found inaccurate at any stage.

Signature of the student

Muhammad Zubair Tariq 2010-ag-860

To The Controller of Examinations, University of Agriculture, Faisalabad

We, the supervisory committee, certify that the contents and form of research project submitted by Mr. Muhammad Zubair Tariq, 2010-ag-860, have been found satisfactory and recommended that it be processed for evaluation, by the external examiner.

Supervisory Committee

1. Chairman

(Dr. Abdul Ghafoor)

2. Member

(Mr. Hammad Hassan)

3. Member (Mr. Adnan Adil)

DEDICATION

I dedicate this humble effort, the fruit of my thoughts and study to my affectionate Parents and worthy, whose love, as deep as the sea, as pure and unsullied lily, and as constant as northern star and whose advices, as valuable as Brazilian diamonds have transformed my dreams into reality.

ACKNOWLEDGEMENT
IN THE NAME OF ALLAH THE COMPASSIONATE, THE MERCIFUL

Blessings are for the Holy Prophet (PBUH) who is the real source of knowledge and wisdom

Credit goes to my worthy supervisor Dr. Abdul Ghafoor, Assistant Professor Institute of Business Management Sciences, who really had to extract and squeeze the time from his tight schedule to supervise me throughout my research work. My heartiest thanks to Mr. Hammad Hassan, Lecturer Institute of Business management Sciences, for his guidance and corporation regarding this project Endeavour. I extend my profound gratitude to Mr. Adnan Adeel, Lecture Institute of Business Management Sciences, for his scholarly guidance and friendly affection towards the completion of this manuscript. Before I finish, I would like to thank my beloved parents, my uncles and my teachers whom I am really indebted to, for their prayers and perpetual encouragement. My friends and group fellows really deserve to be appreciated for sparing me to have this task satisfactory completed.

MUHAMMAD ZUBAIR TARIQ 2010-ag-860

CONTENTS
Sr. No.
1 2 3 4 5 6 7 8

CONTENTS
ABSTRACT INTRODUCTION LITERATURE REVIEW MATERIALS & METHODS RESULTS & DISCUSSIONS CONCLUSIONS & RECOMENDTIONS REFRENCES APPENDIX

Page No. 12
13 20 26 30 52 54

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Chapter No.
Abstract 1 1.1 1.2 2 3 3.1 3.1.1 3.1.2 3.2 3.2.1 3.3 3.4 3.4.1 3.4.2 3.5 3.5.1 3.5.2 3.6 3.6.1 3.6.2 3.4 3.5 4 5 5.1 5.2 Literature Review Introduction

Table of Contents

Page No.
12 13

Problem Statement Objectives of the study 20 26

19 19

Research Methodology Research Approaches Qualitative Research Approach Quantitative Research Approach Data Collection Methods Primary Data Collection Method Survey Sampling Plan Population Sample Size Research tools for data collection Use of Questionnaire Field Work Data Analysis Techniques Use of SPSS software Descriptive Formula of % Assumptions in research Methodology Limitations of Research Study Results and Discussions Conclusion and Recommendations Conclusion Recommendations References Appendix

26 26 26 26 26 27 27 27 27 28 28 28 28 28 28 29 29 30 52 52 53 54 56

LIST OF TABLES Sr. No.

1.1

Tables of Result
World production of coffee (2010-2011)

Page No. 16

4.1

Distribution regarding age of the respondents Distribution regarding Gender of respondents

30 31 32 33 34 35 36 37 38

4.2

4.3

Distribution according to material status of respondents

4.4

Distribution according to occupation of respondents

4.5

Distribution of respondents according to their No. of family members

4.6

Distribution according to monthly income of the respondents

4.7

Distribution according to brand liking by respondents

4.8

Distribution according to respondents preference of coffee over tea

4.9

Distribution according to respondents preference regarding Quality and Price

10

4.10

Distribution according to consumers motivation to enjoy coffee as a hot drink

39

4.11

Distribution regarding consumers taste of brand

40 41 42 43 44 45 46 47 48 49

4.12

Distribution regarding effect of advertisement on brand selection

4.13

Distribution Regarding Price of Favorite Brand

4.14

Distribution Regarding Duration of use of Coffee (Years)

4.15

Distribution regarding use of coffee as a part of daily routine

4.16

Distribution of respondents regarding type of coffee drink used

4.17

Distribution regarding the use of coffee when a person is relaxed or tired

4.18

Distribution regarding coffee as an energy booster

4.19

Factors that influence to purchase coffee or take coffee at coffee bar Distribution regarding the placement at which a respondent enjoys the coffee

4.20

4.21

Distribution regarding reading of ingredients written on coffee tin

50

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ABSTRACT
Coffee is one of the hot beverages having different tastes and colors according to its verities. It has an interesting historic time line and has been used over the centuries. Arabica and Robusta are coffees primary species which have further verities based on these two species. It is one of most trading commodities and is produced in more than 70 countries of the world. Various types of coffee beverages are prepared like Espresso, Cappuccino, Americano and Coffee Latte. Benefits and side effects both are associated with coffee depend on its usage. In Pakistan coffee culture is dominating in many forms due to awareness and in upper class society in spite of this Pakistan is a tea culture. The main objective of the study is to analyze the consumption pattern of coffee in Faisalabad city. Moreover to analyze the demographic, socioeconomic and other factors which impact on purchasing decision of the people. Preferences for different brands of coffee and to examine the health related issues are also the main focus of the study. Using the quantitative research approach the primary data has been collected and analyzed with the help of a questionnaire. The sample size 0f 56 respondents have been selected in the population of Faisalabad city with specific assumptions and limitations. In this research study the data analysis techniques including descriptive formula of percentage and SPSS software has been used. The studies show that majority of the students and high income groups consume coffee on regular basis. Nescafe has more loyal customers and most of the people like coffee on the basis of advertisement and its bitter taste. Other factors like quality and price also have an impact on the usage of coffee as a hot drink. Most of the people consume coffee for getting relaxation and they are also conscious about its health related issues.

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Chapter 1 INTRODUCTION
Coffee is known as the hot beverage with a bitter flavor prepared from the roasted seeds of the coffee plant. It is present in many colors like Dark brown, beige, black and light brown. Coffee is one of the most traded agricultural commodities and is cultivated in more than 70 countries of the world. It can have a stimulating effect on humans due to its caffeine and is one of the most consumed beverages in the world. Coffee has a very interesting historical timeline. There is a myth that coffee may have been first discovered by a herdsman in Ethiopia. He noticed that his goats got more energetic after consuming certain type of berries. He got some of these berries back to the village and it was boiled in water and soon realized its stimulating effects and the rest was history. For some time the Ethiopians kept their monopoly on this crop and kept it a secret. The Dutch eventually in 1616 managed to steal some live coffee trees or beans and managed to grow them in greenhouses in Holland. By 1699 the Dutch were growing coffee at Malabar in India and in Batavia in Java Indonesia. It is the Dutch who are credited to have made coffee so popular by 17th Century and became the main suppliers of coffee to Europe. By 17th century coffee houses opened in Italy, Austria and England. The primary species of coffee, Coffee arabica, originated in Ethiopia and migrated to the rich coffee belts of Brazil, Columbia and other countries. By the 18th Century the French had introduced coffee cultivation to Martinique, and by the end of the century there were between 18 and 19 million coffee bushes firmly establishing Central America and South America as important coffee producers. Coffee is grown on five continents, is consumed worldwide, and is one of the most important commodities traded on the world markets. Today after oil coffee is the most important foreign exchange revenue source for some developing countries and provides millions of jobs and supports many economies worldwide. Coffee is an important commodity that is regularly traded on London and New York stock exchange. At present there is existence of more than 50 species of coffee which is cultivated in the different regions of the world. Coffee varieties are the diverse cultivars derived through selective breeding

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or natural selection of coffee plants. Coffee beans found on different places have different characteristics such as flavor (citrus or earthy), caffeine content, body or mouth feel, and acidity. All these factors reflect the local environment where the coffee plants are cultivated, their method of process, and the genetic subspecies. In this sense, coffee can be considered similar to wine, which also demonstrates clear regional variation. Coffee from a single geographical location is called single-origin There are 2 main varieties of coffee i) Arabica varieties which is famous specie of coffee and is considered that it has rich flavor than Coffea Robusta. Arabica has many different varieties, each with unique characteristics. ii) Robusta varieties, these are not separate varieties of bean, unusual and very expensiv and these beans are collected from the droppings of the Common Palm Civet, whose digestive processes give it a distinctive flavor. (Wikipedia,2010 )

Map of coffee bean production (Arabica and Robusta) Another main aspect of coffee associated activities is coffee culture. It refers to social atmosphere or series of associated social behaviors that depends heavily upon coffee and functions as as a social lubricant. In the late 20th century the coffee culture has dominated in many forms. . People that participate in cafe culture are sometimes referred to as "cafe au laiters" and "espressonites". The style of coffee culture varies country to country and nation to nation.

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Moreover the term coffee culture is also used mostly in popular and business media to describe the deep impact of the market penetration of coffee-serving establishments. Coffee culture is present in many forms like In media, Coffee houses, social aspects including coffee parties and a coffee break. (International Coffee Organization) Coffee is an important commodity and a popular hot beverage. According to estimation over 2.25 billion cups of coffee are consumed in the world every day. Over 90% of coffee production takes place in developing countries and consumption happens mainly in the industrialized economies. Coffee trees produce their best beans when grown at high altitudes in a tropical climate where there is rich soil. Besides location, other factors like the variety of the plant, the chemistry of the soil in which it is grown, the weather, particularly the amount of rainfall and sunshine affect the quality and flavor of coffee. There is variation in quality and taste of coffee due to distinctions between coffees from countries, growing regions and plantations worldwide. Coffee is cultivated in more than 50 countries around the globe and world production of beans can be broken down to 65% in Central and South America, 25% in Asia/Pacific and 10% in Africa

World production of coffee beans (National Coffee Association USA, 2010)

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The following is a table of the worlds 10 largest coffee-producing nations, measured in thousands of bags, for the 2010-2011 crop years. One bag weighs 60 kilograms (132 pounds).

1.1 World Production of coffee (2010-2011)

Sr. No

Country of production

Production (Thousands of bags)

1 2 3 4 5 6 7 8 9 10

Brazil Vietnam Colombia Indonesia India Ethiopia Honduras Peru Guatemala Mexico

54,500 18,725 9,500 9,325 5,100 4,400 4,000 4,000 3,910 3,700 (Bloomberg, 2010-2011

Various types of coffee beverages are produced from Coffee beans and it is considered third consumable drink in the world. Coffee has an energizing effect on human body because of it is very popular as a morning starter. It is positive only in that case if it is taken in small doses. Mainly coffee is available in the powder form known as instant coffee in the market but it may also be taken in the form of roasted beans. This powdered coffee or beans of coffee can be used to make different varieties of coffee beverages. Some common types of coffee beverages include Espresso, it is a very popular drink and prepared in espresso machine in which coffee in the form of beans or powder is mixed up with hot water. Espresso has a strong taste and is famous by the thickness of its forth. Second is Cappuccino, it is another type of coffee drink which is derived from espresso and is made combining equal parts of steamed milk, froth and espresso. It is a sweet, rich drink which can be taken as a dessert. Third is Americano, it is famous coffee drink derived from espresso and is simply made by adding hot water to an already made espresso.

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Americano is a strong coffee drink and people use it with less milk and sugar into it and fourth one is Cafe Latte, it is like the above mentioned types, latte is also derived from espresso and is not very strong but is robust and rich (hub pages, 2012). Numerous studies and scientific researches have been conducted on coffee over the years. Generally speaking, coffee does not appear to cause significant damage to your body and may even help in some situations. According to Dr. Rob Van Dam, writing for the Harvard School of Public Health, if you drink up to six cups of coffee per day, you are at no greater risk of an early death than those who abstain from the drink. Health Benefits of coffee: Reduced risk of Alzheimers disease and Dementia Reduced risk of gallstone disease Reduced risk of Parkinsons disease Cognitive performance (short term recall) Analgesic enhancement (caffeine can help fight pain) Reduced Risk of some Cancers Ant diabetic Liver protection (coffee can reduce the incidence of cirrhosis of the liver) Cardio protective (protects against cardiovascular disease) Provide anti-cancer benefits

Side Effects of coffee: Insomnia Nervousness Restlessness Irritability Anxiety, depression, vomiting, increased urination

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Fast heartbeat Muscle tremor (mayo clinic, 2010)

No detailed study has been conducted on coffee in Pakistan in recently many years and I am going to elaborate all the aspects of coffee market in Pakistan. In Pakistan coffee is used as a hot drink by upper and middle income groups because with increasing poverty and decreasing purchasing power people are more inclined towards tea. In Pakistan small specialty coffee shops and branded retailers have set up their businesses such as Starbucks and Dunkin & Dounts. Moreover Italian and Turkish brands are also proving popular in Pakistan. Younger generation in Pakistan now generally prefers coffee and due to its awareness a competition has arisen in tea market. Main reason for this dominance of coffee culture is that coffee is more helpful in keeping energy levels going than tea ever has been Pakistan is a tea culture. However with time we have seen Pakistan opening its doors to the coffee culture. Coffee culture has been so fast in spreading its wings with new coffee outlets opening left right and centre in Pakistan. These coffee shops have played an important role in introducing coffee to the masses in Pakistan. Professionals in Pakistan who need to be on the go for long hours are fast quitting the frequent tea breaks with fewer coffee breaks. In Pakistani coffee market many varieties of instant coffee mixes are available like Nescafes 3 in 1 Creamer. Ironically tea is considered more difficult now that is how intensely coffee culture has taken over. In addition usage of coffee in everyday products especially bakery products has become very frequent. (Fashion central, 2009) Coffee house culture is relatively new in Pakistan and while in Karachi, coffee shops have been popular even before the millennium, it was local coffee shop Espresso that really made coffee culture come to the forefront and now, there is a coffee shop in practically every lane of Zamzama. But none of them have progressed beyond the hanging out phase. (Express Tribune, 2012)

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In recently many years a growth in use in coffee has been seen in Pakistan because. It is considered that it provides the freshness and keeps the body hot in cold season. A competition has arisen in Pakistani market between coffee and tea now many professionals prefer coffee and take breaks of coffee to make them fit for work. There are many varieties of coffee in the world and also found many coffee varieties in Pakistan. So that means that for a better coffee it is important that you should have a better variety to make it perfect. (Fashion Trends, 2011)

1.1 Problem Statement

Due to increasing habits towards hot beverages people are more declined in use of coffee. There is need of checking Consumer preferences towards coffee in Faisalabad city.

1.2 Objective of the study

1. To study the consumption pattern of coffee in Faisalabad city 2. To examine the socio-economic and demographic factors influencing the consumption of coffee in Faisalabad city 3. To analyze the consumer preferences for different brands of coffee and its quality traits 4. To examine different factors effect on purchase decision of coffee or enjoy coffee at coffee bar 4. To study the health related issues associated with consumption of coffee 6. Taking the suggestions and complaints of the consumer and dealer.

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Chapter 2

LITERATURE REVIEW
Review of the Literature is an integral part of any research study. It plays a significant role in shaping perspective of researching to set the tone of the study. A huge volume of literature is available with regard to coffee background and its related articles, particularly coffee. Here, a brief attempts is being made to explore of the little of the vast array literature resources relating to coffee and its consumer preferences in Pakistan and other countries. Colin (2003) provided a brief view about history of coffee, he stated that people were familiar with espresso, cappuccino, or latte and we love it and need it. The origin of coffee is Ethiopia and Yemen before 600 AD and they discovered the coffee Arabica plant. The coffee cultivation spread vast when Arab traders roasted and drunk coffee in 13 century and until 1600 AD Africa and Arabs had monopoly on coffee production and trading. In middle of 16th century coffee were brought to in Egypt, Syria, Persia and Turkey and then coffee found its way to Vienna, Austria and home of Europe. In the 18th century with the Cafe revolution it causes to change consuming habits in Europe. In 1822, a Frenchman named Louis Bernard Rabaut invented a machine which was formerly used to brewing the coffee and it leads to the inventions of further coffee related technologies and machines. Decaffeinated coffee was first invented in 1903 and the first mass produced instant coffee was invented by an English chemist named George Constant Washington in 1909. In 1962 under the International Coffee Agreement the coffee started to export and in the 21st century, coffee goes through many processes to become the "Double-tall, half-cafe latte" you enjoy today. Clarke (1985) Varnam and Sutherland, (1994) Green coffee is prepared from berries of coffee trees by a relatively complex series of process steps carried out entirely within the producing countries. The fundamental purpose of green coffee processing is the recovery of the beans, by removing the various covering layers and drying to produce green beans with moisture content below 12%. Dry process and wet process, are similar processes including grading, cleaning and polishing are performed.

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Pelsmacker (2005) conceptualized the Consumer preferences for the marketing of ethically labeled coffee. He explained that different customers are attached to different characteristics and marketing practices of ethically labeled coffee, i.e. type of ethical issue, label issuer, amount of information provided, distribution and promotion strategy and branding of coffee related items. Patrick De Pelsmacker selects the sample of 750 Belgium customers and conducted a web based survey. He concluded that different customers give importance to coffee which is ethical labeled and they keep follow the type of ethically label and issue of the labeling. This kind of coffee must be available in every super market of each country and also the availability of non ethical coffee brands. The coffee which is fairly trade labeled must be considered that it has preference over eco- and bio-labels coffee. Labels are issued by the government and mostly consumers prefer the information printed on the packaging. Across different socio-demographic groups the consequences of ethically labeled coffee remains the same and there is very little importance of Out-of-shop promotion of the label and the type of brand. Varnam and Sutherland (1994) explained that commercial coffee has two most important varieties like Coffeea Arabica and Coffea Conephora. These two verities of coffee are known as Arabica and Robusta respectively. They explained that Arabica and Robusta beans are used for making commercial coffee beverages or blends of them. It is considered that Arabica coffee has better quality and taste and is more expensive than that of Robusta. Varun (2008) conducted the study on consumption behavior of coffee in Karnataka, India. He concluded by using 240 randomly selected samples that education, family size, and price per unit of coffee are highly significant with respect to demand of coffee and consumption of coffee in urban areas is 81.70 while its consumption in rural areas is 63.80. . Bru and Nescafe were the two most preferred commercial brands of coffee and people preferred quality, aroma, taste and flavor Quality, aroma, taste and flavor of coffee over the celebrity endorsement and influence by retailers. Around 20 per cent of the doctors give their opinions that coffee acts as a stimulant and also reduces cardio-vascular diseases to some moderate extent. Moreover doctors also suggested that coffee must be used after the age of 16 years. Ricketts et al. (2004) explains the Economic value of tropical forest to coffee production. He suggests that economic forces effect on biodiversity that is characterized by the value of nature, a tricky business from biophysical, socioeconomic, and ethical perspectives. He estimates the

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Value of tropical forest in supplying pollination services to agriculture in regards to coffee because. It is known as one of the worlds most valuable export commodities and is grown in many most bio diverse regions of the world. By use of pollination experiments along replicated distance gradients the coffee yield has been increased by 20 % within one km of forests. The quality of coffee near forests has also been improved by pollination and it has reduced the frequency of pea berries (i.e., small misshapen seeds) by 27 %. . During the period of 20002003 pollination services from two forest fragments (46 and 111 hectares) translated into $60,000 (U.S.) per year for one Costa Rican farm. This value is commensurate with expected revenues from competing land uses and far exceeds current conservation incentive payments. Conservation investments in human-dominated landscapes can therefore yield double benefits: for biodiversity and agriculture. Hilten (2002) presented his views, facts and figures about coffee production worldwide. He explained that Coffee is produced in more than 60 countries of which three accounts for more than half of the world's production: Brazil, Vietnam and Colombia. Arabica coffee, the fineflavored, aromatic type makes up 60-65% of the total production and usually fetches the highest prices. The other variety, Robusta, is easier to produce and is more resistant to disease. Around 75% of all coffee is exported. Only Brazil and Ethiopia enjoy high domestic consumption. The world's annual production is currently around 115 million 60-kg bags or 7 million tones. It takes 420,000 containers (20 ft.) to carry this much coffee. Placed in a row these would stretch over more than 2,500 km. Magee (2009) conducted the study on coffee brand comparisons, according to him a recent coffee brands comparison suggests that some types of inexpensive ground coffee may taste as good --or better -- than higher-priced varieties. Reports magazine tested 13 brands of ground caffeinated 100% Colombian coffee and 6 brands of ground decaffeinated coffee. The report shows that the brands can be compared on the basis of positive taste attributes (such as earthy, fruity, or nutty) and negative ones (like woody, papery, or burnt). Three of the caffeinated brands were on top ranking including Eight Oclock Coffee 100% Colombian and Gloria Jeans and Peets Coffee. Consumer Reports estimates Americans drink roughly 400 million cups of coffee daily. So by switching from coffee that costs 30 cents per cup to coffee costing 15 cents per cup, $60 million a day can be saved. According to Bob Markovich, home editor for Consumer

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Reports suggests that a coffee drinker must purchase the coffee beans himself and grind them fresh at home, this will provide you aromatics along with it and better taste than coffee purchased at a coffee shop. Elaine Magee give the ratings to coffee brands on the basis of "Very Good" Rating, "Good" Rating and "Fair" Rating. Bhumiratana et al. (2011) investigated the Evolution of sensory aroma attributes from coffee beans to brewed coffee. Their study comprise on the effect of roasting, grinding, and brewing of coffee beans on the evolution of coffee named aroma in the form of green coffee beans from the origins of Ethiopia, Hawaii, and El Salvador. They identified and quantified 15 aromatic sensory attributes in the green coffee beans with the use of highly trained descriptive panel. The green coffee beans were roasted beans (light, medium, and dark), ground coffee, and brewed coffee and for every coffee preparation stage Analysis of variance (ANOVA) and principal components analysis (PCA) were conducted. When all coffee beans were carried through to the final brews, the ANOVA showed that green coffee beans had low coffee-related characteristics and comprise on musty, green and sure aromatics. It was also observed that at all stages the light roast was perceived as sweeter and typical coffee attributes like (coffee, roasted, burnt/acrid, and ashy/sooty) which a consumer prefer have the high intensity. The aroma profiles generated were more influenced by the preparation stages and degrees of roasting than the coffee varieties. Cristovam et al. (2000) conceptualized the Gender preference in hedonic ratings for espresso and espresso-milk coffees. According to their research many consumers use the Espresso, cappuccino and latte as the coffee products of their lives and instead of new product development an increase in consumption of these coffee drinks have been observed. Hence they conducted study to meet this need and for this purpose they take the sample of 100 consumers and check the preferences by using six espresso blends of coffee beans. These espresso coffee blends including both espresso and espresso-milk coffees were prepared according to European and North American styles which but this effect was eliminated on addition of milk. The study shows that coffee blends were developed by of target consumer, and end use of espresso which results in the maximum acceptability by target group of consumers. Moreover the consumers have experienced appreciation of coffee character which was due to change in preferences. Geel et al. (2004) studied the Relating consumer preferences to sensory attributes of instant coffee. In their research they took the 11 different sensory profiles of instant coffee in which

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pure coffee, coffee blends and chicory instant drink were included and these were available in South Africa at commercial level. They described and quantified these sensory profiles of instant coffee and then form a relation to consumer preferences for the purpose of instant coffee using preference mapping. They identified the groups of consumers on the basis of consumer preferences and found the results that there are (23%), coffee blend drinkers (30%), general coffee drinkers (37%) and not serious coffee drinkers (10%). From the pure coffee samples they found that pure coffee lovers like the coffee which has astringent, bitter, roasted, nutty and full-bodied flavor and coffee blend lovers prefer the coffee flavor character, but higher sweetness and root flavor. In case of general coffee drinkers it was observed that they take coffee out of habits are less concerned about the specific sensory properties of the coffee. Radhakrishnan (2004) conducted the study on perspectives and prospects of coffee consumption in India. The result indicated that coffee consumption had shown an annual average growth of 2.14 per cent between 1951 to 2003. In absolute terms the off take in domestic market had grown from about 18, 400 tones to about 70, 000 tones during 2003. For various reasons the decade between 1991 to 2000 did not show any noticeable growth in consumption. Most of the earlier growth had come from Robusta than Arabica. Though, during the pool marketing, the period between 1981-90 showed higher volume of consumption (well above 50, 000 MT and peaked about 63, 000 MT) and the highest growth rates were achieved only during the period 19511960and 1971-1980 at a CGR of 7.23 and 3.28 per cent, respectively. Market development in non- traditional areas, consolidating traditional markets, retail space: outlets and distribution, product forms, consumer education and focus on the youth were some of the policies implied by him. Maridakis (2006) conducted the research on consumption of caffeine in regard to its health benefits. He observed that those people who take a cup of coffee one hour before starting exercising having the reduction in pain about 48% in comparison to others. The consumers who took coffee before their exercise showed 26 per cent reduction in soreness. Moreover the Maridakis gave the suggestion that caffeine likely works by blocking the bodys receptors for adenosine, a chemical released in response to inflammation. Muradian and Wim (2005) conducted the study on governing the coffee chain with the role of voluntary regulatory Systems. They explained that in the global coffee chain the crises of coffee

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coincided with the emergence of a number of voluntary regulatory systems and they present the advantages and limitations of such scheme with their impact on the good governance of chain and their implications for the upgrading of farmers. They concluded that a good economic performance cannot be assured with these systems but additionally a proper coordination and harmony is possible between roasters/traders and some growers of coffee that can result in the better upgrading of opportunities for all the stake holders. They also provided the suggestions that how some options are possible for deriving the rents from improved coordination along the coffee chain. Talbot (1997) addressed the issue of market power in coffee markets. He used a different approach named as global value chain analysis. According to his studies he analyzed that with the collapse of the International Coffee Agreement at the end of the 1980s caused an increase in market power and a massive shift of surplus from coffee producing countries to multinationals. According to Talbot, multinational companies exercise market power as buyers of green coffee by holding down prices and as sellers of processed coffee by inflating consumer prices. Tumanan and Joseph (2011) studied a multi-dimensional approach towards analyzing the factors that define place attachment by the Philippines who frequent visit coffee shops within the context of physical, social, cultural and environmental dimensions. They examined that the characteristics of third place are affected by home and work place. The research was conducted by use of 272 random sampling from seven coffee shops, physical and social dimensions defined the respondents attachment to the coffee shops. Data also showed that most of the characteristics of a third place are typified in the coffee shops surveyed and Philippines considered coffee more than just a product.

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Chapter 3 RESEARCH METHODOLOGY

Research methodology is defined as the collection of rules, tools, reliable and orderly ways to study the realities, to reveal the compliance and to obtain the solution to a problem. In this chapter the research methods are used that includes design of research study, Setting of data, Sampling design, research instruments and different events which are used for data collection regarding my research topic. It also includes an explanation of the way in which data analysis completed.

3.1 Research Approaches

3.1.1 Qualitative Research Approach
Research that deals with the quality, type, or components of a group, substance, or mixture, whose methods are applied to respondents in order to determine the quality of respondents responses. Qualitative research is exploratory in nature and uses procedures such as in-depth interviews and focus group interviews to gain insights and develop creative advertising tactics.

3.1.2 Quantitative Research Approach

Quantitative research is about asking people for their opinions in a structured way so that you can produce hard facts and statistics to guide you. To get reliable statistical results, its important to survey people in fairly large numbers and to make sure they are a representative sample of your target market.

3.2 Data Collection Methods: 3.2.1 Primary Data Collection Method:

In primary data collection, the data is collected by the researcher itself by using different methods. The popular ways to collect primary data consist of surveys, interviews and focus groups, which shows that direct relationship between potential customers and the product such as

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interviews and questionnaires. The key point here is that the data collected is unique for the research and, until the research is published, no one else has access to it. Primary data is important for all areas of research because it is unvarnished information about the results of an experiment or observation. In the current research project primary data has been collected by Questionnaire as an instrument. For this purpose 56 respondents were randomly selected from different areas of Faisalabad and even the response of the respondents was taken into deliberation. In this study, primary data plays a very important role for analysis, understanding, conclusion and suggestions.

3.3 Survey:
Survey research is one of the most important areas of measurement and it is an ordinary strategy used in the business research. The broad area of survey research encompasses any measurement procedures that involve asking questions of respondents. Different tools are used for conducting a survey like structures questionnaires, explanation, interviews and its purpose is to get maximum reliable information from the respondent to study the effects of the variables. In this project the survey has been conducted on checking consumer preferences towards coffee in Faisalabad city.

3.4 Sampling Plan:

3.4.1 Population:
A research population is the well-defined collection of individuals or objects having similar and common characteristics and traits. Its the total collection of elements about which we wish to make inferences. The population selected for this research study is the people residing in Faisalabad city.

3.4.2 Sample Size

In the current research project primary data has been collected by Questionnaire as an instrument. For this purpose the sample size of 56 respondents were taken on the basis of simply
random sampling

from different areas of Faisalabad and even the response of the respondents was

27

taken into deliberation. According to simple random sampling every individual in the population have equal chance to be a sample

3.5 Research Tools for Data Collection:

3.5.1 Use of Questionnaire:
Questionnaires are a popular means of collecting data and it is designed in such a way that it can cover all the aspects and opinions regarding research and can clearly demonstrate the behavior of a consumer. Different types of questions have been used in this research project for the formation of questionnaire including Open-ended questionnaire, close ended or Dichotomous questions, Multiple-choice questions.

3.5.2 Field Work

In the current project a field work has been conducted in the survey as a tool for data collection. 56 respondents were approached by personal communication for the filling of questionnaires and for the purpose of data processing and analyzing. The respondents have been directly contacted.

3.6 Data Analysis Techniques:

3.6.1 Use of SPSS Software:
To analyze the data the quantitative analytical tool has been used in this research. SPSS software (Statistical Package for Social Sciences) has been used to analyze the data.

3.6.2 Descriptive Formula of percentage and frequency distribution:

Data has been analyzed by using descriptive formula. In the data frequency distribution and percentage has been used to analyze the data.

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3.4 Assumptions in Research Methodology

Due to time and money constrains the present study was confined only to a sample of 56 coffee consumers Information provided by the respondent is accurate and complete In sampling procedure the selected sample size truly represents the whole population

The sources of the data are the basis, from which the actual required information can be
extracted

4.5 Limitations of the study

Respondents dont provide exact information while filling the questionnaire The time period for conducting the survey is insufficient as the sample size covers only Faisalabad city. Most of the samples consisted on students of UAF Sample size of respondents is incomplete

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Chapter 4 RESULTS & DISCUSSIONS

4.1 Distribution regarding age of the respondents
Age Frequency Percentage (%)

15-21 22-29 30-49 Total

6 37 13 56

10.7 66.1 23.2 100

Results: The analysis shows that 10.70 % of the respondents are at age of 15-21, 66.1 % are at
age of 22-29 and 23.2 % respondents are at age of 23-49 who use coffee as a hot drink.

Discussion: Hence results shows that the respondents who are at age of 22-29 like coffee as a
hot drink and it represents to all the youngsters.

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4.2 Distribution regarding Gender of respondents

Gender Frequency Percentage (%)

Male Female

41 15

73.2 26.8

Total

56

100

Results: From the above table it can be analyzed that 73.2% males and 26.8% females are the
coffee consumers.

Discussion: The results show that the males in Faisalabad city are the major coffee drinker
than females.

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4.3 Distribution according to material status of respondents

Material Status Frequency Percentage (%)

Single Married Others Total

39 16 1 56

69.6 28.6 1.8 100

Results: The above data shows that 69.6% are the unmarried individuals and 28.6 % are the
married who show their willingness to use coffee as a hot drink.

Discussion: According to results the target coffee drinkers are the single individuals who are
not married which represents that they are more declined towards hot beverages.

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4.4 Distribution according to occupation of respondents

Occupation Frequency Percentage (%)

Student Business men Employee Total

35 9 12 56

62.5 16.1 21.4 100

Results: The above table shows that 62.5% are the students, 16.1% are business men and 21.4% are the working employees

Discussion: The results show that students are the youngsters and coffee drink is more
popular than any other group as they are much more influinced by modern life style, as coffee drinking is adopted form wstren culture.

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4.5 Distribution of respondents according to their No. of family members

No. of family members 3 4 5 6 7 8 9 10 11 12 16 Total Frequency 2 7 12 10 9 5 7 1 1 1 1 56 Percentage (%) 3.6 12.5 21.4 17.9 16.1 8.9 12.5 1.8 1.8 1.85 1.8 100.0

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4.6 Distribution according to monthly income of the respondents

Monthly Income 10000-20000 20000-30000 30000-40000 above 40000 Total Frequency 4 4 21 27 56 Percent (%) 7.1 7.1 37.5 48.2 100.0

Results: The above table shows that 7.1% are the individuals whose income is 10000-20000,
7.1% are those who have 20000-30000 Rs. income per month, 37.5% are those who have 3000040000 per month and 48.00 are those who have their income above 40000 Rs.

Discussion: Hence the results show that the coffee as a hot beverage is more popular among
upper class people who are status conscious and they have high incomes.

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4.7 Distribution according to brand liking by respondents

Coffee Brand Nescafe Dunkin & Dounts Bru Others

Frequency 37 5 4 9

Percentage (%) 66.1 8.9 7.1 16.1

Total

56

100.0

Results: From the above data it can be analyzed that Nescafe users are 66.1%, Dunkin and
Dountss users are 8.9% and 16.1% are those consumers who use Other coffee brands.

Discussion: Hence the Nestls Nescafe has more loyal consumers than all the other brands
because it has made its positioning in Pakistan in well manners.

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4.8 Distribution according to respondents preference of coffee over tea

Preference Yes No Indifferent Total Frequency 28 26 2 56 Percentage (%) 50.0 46.4 3.6 100.0

Results: The above mentioned table shows that 50% respondents prefer coffee over tea as hot
drink in Faisalabad, 46% like tea as a hot drink and 4% showed their indifferent behavior.

Discussion: From the above analysis it can be inferred that coffee is considered more
preferable in Faisalabad city, the main reason behind this education of customers and high level of income.

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4.9 Distribution according to respondents preference regarding Quality and Price

Preference regarding Price and Quality Price Oriented Quality Oriented Quality oriented but at reasonable price Frequency 7 24 25 Percentage (%) 12.5 42.9 44.6

Total

56

100.0

Results: The above mentioned data shows that 12.5% respondents are price oriented, 42.9%
are quality oriented and 44.6% coffee consumers are Quality conscious but at reasonable price.

Discussion: Hence the results represent that when a customer will purchase the coffee he will
considered both the price and quality and more of the customers are Quality oriented but at reasonable price.

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4.10 Distribution according to consumers motivation to enjoy coffee as a hot drink

Motives Taste Advertisement Easy Availability Others Total Frequency 25 13 14 4 56 Percentage (%) 44.6 23.2 25.0 7.1 100.0

Results: From the above table and pie chart it can be inferred that 44.6% respondents use
coffee on the basis of taste, 23.2% on the basis of advertisement, 25% on the basis of easy availability and 7.1% respondents on the basis of other characteristic.

Discussion: Hence it can be concluded that the coffee which has better taste that will be more
consumed, since Nescafe is favorite brand of respondents so it has better taste.

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4.11 Distribution regarding consumers taste of brand

Taste of Brand Excellent Good Average Poor Very Poor Total Frequency 15 25 13 2 1 56 Percentage (%) 26.8 44.6 23.2 3.6 1.8 100.0

Results: It can be resulted from above data that according to 27% respondents the taste is
excellent, 44.6 said that taste is good, 23.2% said that taste is average, 3,6% suggest that taste is poor and according to 1.8% respondents the taste is very poor.

Discussion: While using coffee the taste is more preferred and the coffee consumers show
their opinion that the taste of their brand is Excellent and satisfactory.

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4.12 Distribution regarding effect of advertisement on brand selection

Effect of Advertisement Yes No Total Frequency 40 16 56 Percentage (%) 71.4 28.6 100.0

Results:
The above table shows that 71.45 of respondents are affected by advertisement and remaining 29% are not influenced by advertisement while brand selection.

Discussion:
Hence it can be concluded that majority of respondents influenced by the advertisement and the make their purchase decision.

41

4.13 Distribution Regarding Price of Favorite Brand

Price Excellent Price Good Price Average Price High Price Total Frequency 2 27 14 13 56 Percentage (%) 3.6 48.2 25.0 23.2 100.0

Results: According to 3.6% respondents the price is excellent, according to 48.2% price is
good, 25% and 23.2% respondents show that price of their preferred brand is average and excellent respectively.

Discussion: It can be inferred from the above data that if the price of coffee brands is
reasonable than more people will declined to use coffee as a hot beverage.

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4.14 Distribution Regarding Duration of use of Coffee (Years)

Duration 1 2 3 3 4 5 6 7 8 10 16 28 Total Frequency 6 9 1 12 6 6 7 1 2 4 1 1 56 Percentage (%) 10.7 16.1 1.8 21.4 10.7 10.7 12.5 1.8 3.6 7.1 1.8 1.8 100.0

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4.15 Distribution regarding use of coffee as a part of daily routine

As a daily routine Yes Somehow No Total Frequency 14 19 23 56 Percent 25.0 33.9 41.1 100.0

Results: Above given data represents that 25% of respondents use coffee on daily basis,
33.9% use it off and on and 41.1% dont use coffee on daily basis.

Discussion: Hence it can be resulted that 41.1% of respondents dont use coffee on daily basis.
There may be an element of tea as daily routine and the climate situations.

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4.16 Distribution of respondents regarding type of coffee drink used

Frequency Instant Coffee Roasted Beans Others Total 43 12 1 56 Percentage (%) 76.8 21.4 1.8 100.0

Results: Table shown above represents that 77% respondents use instant coffee, 21.4% use
unprepared roasted coffee beans and 2% of respondents use other modes of coffee.

Discussion:
The result will be this that majority of consumers use already prepared instant coffee like Nescafes Creamer because it is convenient to make and remaining use other kinds of coffee.

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4.17 Distribution regarding the use of coffee when a person is relaxed or tired
Factor of Relaxation or Tiredness Yes No Total Frequency 32 24 56 Percentage (%) 57.1 42.9 100.0

Results: Above mentioned data represents that 57% respondents use for the purpose relaxation
or when they got tired and 42.9% of respondents take coffee whenever they feel its need.

Discussion: Hence it can be concluded there is an element of mood in use of coffee and mostly
people use it when they get tired.

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4.18 Distribution regarding coffee as an energy booster

Coffee as Energy Booster Yes No Indifferent Total Frequency 44 11 1 56 Percentage (%) 78.6 19.6 1.8 100.0

Results: The above data shows that 78% respondents feel that coffee boosts up their energy,
19.6% think that it just a drink and 1.8% respondents are indifferent about coffee as an energy booster.

Discussion: Hence majority of the respondents consider that like other hot drinks and other
cold drinks the coffee refreshes them and boosts up their energy.

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4.19 Factors that influence to purchase coffee or take coffee at coffee bar
Frequency Friends Family Colleagues Others Total 24 17 9 6 56 Percentage (%) 42.9 30.4 16.1 10.7 100.0

Results: Above pie chart and table data shows that 43% respondents are influenced by friends,
30.4% are influenced by family members, 16.1% respondents are influenced by colleagues who are employees or businessmen and 10.7% are influenced by other reference

Discussion: It can be concluded that most of the respondents are influenced by a special focus
group named friends, which demonstrates that main coffee drinkers take coffee out of home with friends.

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4.20 Distribution regarding the placement at which a respondent enjoys the coffee
Place to enjoy coffee At office At home At party At coffee bar Total Frequency 6 15 20 15 56 Percentage (%) 10.7 26.8 35.7 26.8 100.0

Results: From the above data it can be analyzed that 10.7% of respondents take coffee at
office, 26.8% at home, 35.7% at party, and 26.8% are those coffee drinkers who take coffee at coffee bar.

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4.21 Distribution regarding reading of ingredients written on coffee tin

Information about ingredients Yes No Total Frequency 38 18 56 Percentage (%) 67.9 32.1 100.0

Results: The above data shows that 68% respondents read ingredients on coffee tin and 32.1%
are those who ignore this factor before purchasing the coffee.

Discussion: It shows that respondents are more brands conscious, educated and purchase the
coffee brand with proper purchase decision. They want to get all kind product features and benefits.

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4.22 Distribution of respondents regarding health benefits or harms of coffee

Health Benefits Yes No Total Frequency 33 23 56 Percentage (%) 58.9 41.1 100.0

Results: From the above facts and figures it can be analyzed that 59% consumers are satisfied
with health benefits of coffee and remaining 41.07% of respondents think that coffee is harmful health.

Discussion: The results show that majority of consumers consume coffee for fulfilling their
need and satisfaction and think that regular cup of coffee is beneficial for health.

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Chapter 5 CONCLUSION AND RECOMENDATIONS

In this chapter the project discusses the significance of research findings, critical issues, problems encountered and future discussion of research. This chapter consists of two main components including conclusions and recommendations.

5.1 Conclusion:
The main focus of the research is to study consumer preferences towards coffee in Faisalabad city and the degree to which consumers are loyal to their favorite coffee brands. The quantitative research approach has been used in this research and data has been collected by use of survey method via a structured questionnaire, further descriptive statistics has been used as data analysis approach. The study focuses that how people prefer coffee over tea where Pakistan is a tea culture. There are number of factors which play an important role regarding preference of coffee. According to facts and figures it can be seen that majority of people in Faisalabad city are the mails who are the coffee consumers. Moreover the study samples are majority of students of universities of age 22-29 and it has been also analyzed that coffee is consumed more by upper class businessmen. Size of family members also leave its impacts in use of coffee, more the family members more will be the consumption of coffee within a family and the families whose monthly income is above 40,000 Rs. they use coffee as a part of their daily life. Nescafe is the only brand which has more loyal customers; the reason behind this is its unique taste, availability and different variants like Nescafe Creamer. As from the result of the survey majority of the people in Faisalabad prefer coffee over tea in spite of this coffee is not a popular drink. It can also been noticed from the study that if the coffee brands are available in better quality but with reasonable price then people will prefer it more. People are more declined to use of coffee on the basis of its better taste than tea. Results concluded that exposure and attractiveness of advertisement has also an impact on brand selection and customer retention and majority of the people are coffee consumers who are using coffee since last 3-5 years, which shows that awareness has been created by advertisement.

52

Another major element in coffee consumption is the price of brand and more of the customers are satisfied with price of their selected brand. Since Pakistan is a tea culture so more of the people dont use coffee on daily basis and if they have to take coffee they prefer to purchase instant coffee like Nescafe Creamer. Another element in use of coffee is that the most of the people use it for being relaxed or when they get tired. Special reference groups mainly friends and family members influence on purchase decision and a large number of people enjoy coffee specially businessmen and teen agers at parties and at home. People want to know about features and benefits and read ingredients on tin before purchasing coffee, moreover the most of people think that coffee is good for health and must be used on regularly basis.

5.2 Suggestions and Recommendations:

Both the methodology and findings are helpful for the researchers to advertise in a better way so that potential consumers can be attracted. More over if the taste and quality is improved then people will decline more in use of coffee. This research was limited in scope of time span and sample size, repeating the study with a larger sample, with multiple times in the future will generate more generalized conclusions. Another suggestion could be to focus on the other category of the value added products relating to coffee such as coffee cake and cold coffee. Many people belong to social classes and there must be a large chain of coffee houses and coffee bars in Faisalabad. Coffee must be sold at reasonable prices so that everyone can enjoy coffee as a hot drink. Awareness must be created in people regarding health benefits of coffee. Make possible the easy availability of coffee on small retail stores. Proper researches should be conducted in order to eliminate the side effects of coffee by the researchers.

53

REFRENCES
Bloomberg (2011), World production of coffee beans measured in thousands in bags per year. Colin (2003), A brief history of coffee. Express Tribune (2012), Coffee house Culture in Pakistan. Elaine Magee (2009), "(Coffee brand and coffee prices may not reflect flavor" Eduarda Cristovam, Caroline Russell, Alistair Paterson (2000), Gender preference in hedonic ratings for espresso and espresso-milk coffees. Fashion central (2009), Trend of coffee in Pakistan. Fashion Trends (2011), Coffee in Pakistan. Hubpages.com (2011), Different types of coffee drinks. Jennifer Warner (2009), How to drink coffee. L. Geel, M. Kinnear, H.L. de Kock (2004), Relating consumer preferences to sensory attributes of instant coffee. Mary Anne R. Tumanan, Joseph Ryan G. Lansangan (2011), a multi-dimensional approach towards analyzing the factors that define place attachment. mayoclinic.com (2011), Health benefits and harms of coffee. Natnicha Bhumiratana, Koushik Adhikari (2011), Evolution of sensory aroma attributes from coffee beans to brewed coffee. Patrick de Pelsmacker, Liesbeth Driesen and Glenn Rayp (2005), Consumer preferences for the marketing of ethically labeled coffee.

Roldan Muradian, Wim Pelupessy (2005), Governing the coffee chain with the role of voluntary regulatory Systems

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National Coffee Association USA (2010), World production coffee beans. Taylor H. Ricketts, Gretchen C. Daily, Paul R. Ehrlich and Charles D. Michener (2004), Economic value of tropical forest to coffee production. Varun T.C (1994), Consumption behavior of coffee in Karnataka, India. Wikipedia.com, History and back ground of coffee" Wikipedia.com (2010), Species and verities of coffee.

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APPENDICES
Appendix 1

Questionnaire
I am as a student of university of agriculture Faisalabad conducting a research on Consumer Preferences towards Coffee in Faisalabad city for my final project. To complete this research I need certain information and your cooperation. This information will be useful only to make correct decision about hot drinks so please answer the entire questions truly. Questionnaire ID: . Interviewer ID: . Location: ______________________________ Date: ___________________ Name: _________________________________ Residence Location ______________________________ Information regarding to Respondent Q1. What is your age? Under 15 years 15-21 22-29 30-49 50-60 Over 60 Q2. Indicate your gender? Male Female Q3. What is your marital status? Single Married Others Q4. What is your occupation? Student Businessman Employee Q5. How many members of your family are? Please indicate numbers: ___________________ Q6: Please indicate your total family income (monthly) Under Rs. 10,000 10,000- 20,000 20,000-30,000 30,000-40,000 Above 40,000

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Other Information: Q7. Which brand do you like to purchase? (a) Nescafe (b) Dunkin & Dounts (c) Bru (d)Others___________ Q8. Do you prefer it over tea? (a) Yes (b) No (c) Indifferent Q9. Your preference in regard to pricing and quality (a) Price oriented (b) Quality Oriented (c) Quality orient but at a reasonable price (d) Other Q10. What motivates you to enjoy coffee as a hot drink? (a) Taste (b) Advertisement (c) Easily available (d) Other Q11. The taste of your favorite brand (Coffee) (a) Excellent (b) good (c) Average (d) poor (e) Very poor Q12. Does advertisement of your preferred brand appeals you? (a) Yes (b) No Q13. The price of your preferred brand is (a) Excellent Price (b) Good Price (c) Average price (d) High price Q14. For how long have you been taking coffee? Answer: __________________________________________________________________________ Q.15 which coffee drinks do you like? (a) Instant Coffee (b) Roasted Beans (c) Any Other (mention here__________ Q16. Is it part of your daily routine? (a) Yes (b) Somehow (c) No Q17. Do you take it whenever you get tire? (a) Yes (b) No Q18. Coffee boost up your energy, do you think it refreshes you as well? (a) Yes (b) No Q19. Who influence you to purchase the coffee or drink coffee at bar? (a) Friends (b) Family (c) Colleagues (d) Others Q20. At which place do you like to go and take coffee? (a) At Office (b) At Home (c) At Party (d) At Coffee Bar Q21. Do you ever read the ingredients written on tin? (a) Yes (b) No Q22. Do you think that coffee is good for your health? (a) Yes (b) No Q23. Coffee boost up your energy, do you think it refreshes you as well? (a) Yes (b) No (c) Indifferent Q24. Will you like to give any suggestion? ______________________________________________________________________________ ______________________________________________________________________________ Thank you and I appreciate you that you spare your precious time in filling of this questionnaire

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Appendix 2

Main coffee houses in Faisalabad

1. Caspians Lounge ST Plaza Basement College Road, Kohinoor, Faisalabad, Pakistan Tel: +92-322-6212341 Listed In: Bars & Pubs, Beverage Rooms, Cafeterias 2. KFC Pakistan Plot 2-D, Commercial D Ground, Peoples Colony, Faisalabad, Pakistan Tel: +92-41-111-532-532 Listed In: Sandwiches, Submarine Sandwiches, Bars & Pubs 3. Pizza Hut - MCR (Pvt.) Limited China Town Bldg, 7- Faisal Road, Civil Lines, Faisalabad, Pakistan Tel: +92-41-111-241-241 Listed In: Fish & Chips, Beverage Rooms, Foods-Ready to Serve

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