The Quest Has Come to an End!

And so our quest has come to an end! It was a lot of fun to be part of this coffee hunting and we hope we can help you discover the ultimate coffee experience. Lastly, we will present you the five young enthusiastic business students and at the end of the day, your five coffeeholics:

Ultimately, we reccomend you to try them all!!!

They are all an unique experience well worth your time and money. Enjoy your cup of coffee just like we enjoyed ours.

With this, we say goodbye! We hope you enjoy reading as much as we enjoyed writing.

The Hunters,

Andreia Nogueira
Diogo Fortunato
Jennifer Pestana
Joana Rosa
Vincent Cloarec

And the Coffee Beans Award goes to...

We are approaching the final stages of our hunt. After days of delicious coffee tastings, we are able to finally declare who has the competitive edge in this market. All in all, Starbucks seems to stand out from the crowd. The company has the highest market share, meets the customers' preferred dimensions, has two stores nearby and appears to have a clearly and sustainable long-term strategy that we believe it will continue throughout the future. The lack of adaptation previously mentioned as a weakness seems to have little or no impact in the company's ability to lead the market. As this is an international brand known worldwide, standardization is working, since the world is progressively becoming more global and customers, particularly in big cities such as Lisbon, tend to look for and like the same dimensions.

So, what should the other Coffee-Shops do?   

We strongly believe that Jeronymo's Coffee-Shop should reinforce and invest more in its position as THE Portuguese Coffee-Shop as to differentiate themselves since copying it is not a pursuable strategy - occupying the same space in the consumer's mind is not a good idea. Even if the lack of adaptation might not impact a big well known company, this strategy could negatively impact a small company as Jeronymo's Coffee-Shop. 

As far as Brown's Coffee-Shop, they should focus more on customers rather than on products by developing what is called a customer based strategy. They should take advantage of the opportunities they have, as they provide a diversified but still complementary offer within the same well located area (an hotel, a coffee-shop and a burger restaurant).  For example, they could easily offer crossed promotions between the coffee-shop, the hotel and the burger restaurant - if you go to the burger restaurant you get a  discount in your beverage available at the coffee-shop in front. At the same time, it is highly recommendable to invest in a website and a Facebook page that are clear and properly updated to bring awareness to the brand.

Exploring Customer’s minds

For this hunting to be complete, we consider that it is crucial to ask “the real dealers” what do they like and dislike about the Coffee-Shops. Therefore, we have created a Consumer’s Questionnaire (you can find the blank questionnaire at the end of this post) to have an idea of the several dimensions regarding consumer’s level knowledge and involvement about the category and also, their opinion about the store and products themselves. Although, this study is not statistically relevant, due to not possessing enough data (30 questionnaires per store), this study has the main objective of providing general thoughts about the three Coffee-Shops.

Apart from Brown’s Coffee-Shop, these questionnaires were done in-store. We asked the consumers to evaluate several dimensions according to their preferences, so as to better understand the purchasing behavior. Overall, people tend to give more importance to the shop atmosphere, service quality and taste & quality of the products. The attributes with a lower level of consideration were quickness of the service, location and price. The latter, is understandable giving that we are talking about a premium segment whose product purchase doesn’t require a high involvement. Taking into consideration the consumer’s disregard for the price, Starbucks takes advantage of this by charging, on average, a much higher price for their products as we saw previously in Taking a closer look at competition – I post.

Considering now the particular aspects of each store, Brown’s Coffee-Shop seems to be preferred due to its calm and relaxing atmosphere as well as spacious store. Actually, it is classified by several websites as one of the best places to study in Lisbon. The downside aspects mentioned by the respondents were the quality of the service as it is considered rather impersonal and careless. There seems to be a tendency to find the store either online or when walking downtown. Next, regarding Jeronymo’s Coffee-Shop, the respondents found both store and location appealing to visit. Finally, Starbucks’ Coffee-Shop, the stand out aspects were the atmosphere of the shop, the quality and variety of the products.  At Starbucks, there seems to be a perfect match between what clients value more and what the store has to offer.

We also did a brand recall exercise and the results speak for themselves: everyone that answered the questionnaire either at Jeronymo’s or Brown’s, recalled Starbucks, whereas the opposite was not verified.    

Taking a closer look at competition – II

When dealing with competition, companies need to find their way to the top and make sure that they are in the customers’ short list for the longest time possible. To be successful, companies need to differentiate themselves keeping in custody a sustainable competitive advantage.  

First of all, the formation of the employees is quite close for Brown’s and Jeronymo. They both have a constant formation (before and during their work) while Starbucks is using a more progressive formation, starting from baristas to the highest level for a store general manager.

When interviewed, the managers of the three stores gave us an idea of what they considered to be their competitive advantage. So, for Brown’s Coffee-Shop owner their edge relies on their cosy and comfortable environment whereas for Jeronymo’s Coffee-Shop manager is their innovative coffees and finally for Starbucks’ Coffee-Shop manager, it is their customer orientation.

When asked about their customers’ opinions, Brown’s Coffee-Shop owner mentioned that they don’t ask any kind of opinion but he admits they should. Regarding Jeronymo’s Coffee-Shop manager they receive daily feedback and they also have a mystery client per month – someone that belongs to the group and pretends to be a regular customer to evaluate the service with the purpose to improve the relation with the customer. Starbucks’ Coffee-Shop manager explained to us that they have a weekly goal to fulfil, regarding customers’ suggestions to improve: 10 suggestion cards per week, in addition to this they also have a suggestion box where you can leave your comments about the service, the products and the store.

We also wanted to know if they kept track of what competitors were doing and both Brown’s Coffee-Shop and Jeronymo’s Coffee-Shop managers said that they don’t. However, the manager of Starbucks mentioned that it is not a priority but they have it into consideration.

Concerning the promotion policies of the three Coffee-Shops, Brown’s Coffee-Shop doesn’t make promotions, whereas Jeronymo’s Coffee-Shop and Starbucks Coffee-Shop develop monthly promotions created by the headquarters (marketing department) but Starbucks’ Coffee-Shop manager has some flexibility and autonomy to implement some special promotions like 50% discount days, sampling and coffee tastings.

As part of the strategic spectrum one must have clear goals. As it was mentioned before, Brown's Coffee-Shop is detaching from the original concept and focusing on other business. The financial crisis enhanced the downfall process as they are currently struggling for survival. The other two mangers weren't very specif in terms of  goals and objectives but both mentioned that these are established by the companies headquarters. 

Finally, we tried to find out if they have loyal customers and fortunately they all proudly expressed they have. Brown’s Coffee-Shop has every day customers, Jeronymo Coffee-Shop receives visits from foreign clients every time they come to Portugal and Starbucks Coffee-Shop has the policy of asking the customer’s name when ordering and for some loyal customers the beverages start to be prepared as soon as they cross the door.

Taking a closer look at competition – I

After a broader analysis of the competitive environment it’s time to focus on the differences between the three competitors regarding the average ticket, number of weekly transactions, types of customers and best selling products. Therefore, we did an interview with each manager trying to obtain the most crucial information about their stores.

As we can observe, there is a clear market dominance from Starbucks due to its brand awareness, the two stores within the area and also its ability to adapt to seasonality. This adaptation is translated into changing of best-sellers according to the period of the year.

Additionally, we can extract from the table above that when it comes to strategies and more precisely, market segmentation and targeting, Brown's Coffee-Shop appears to be falling into the "everybody's trap", meaning they are trying to be everything for everybody. Whereas Starbucks and Jeronymo seem to be focusing on particular segments of the market and not all of them.

SWOTing Around

As future managers, we need to analyze frameworks to help us understand the competitive environment where these companies are emerged. This analysis will be based on a very well known marketing framework – SWOT – which will identify both internal and external variables (strengths and weaknesses of the companies and opportunities and threats of the market).

In the case of Brown’s Coffee-Shop, we find the store layout to be one of its major weaknesses because when the customer enters the store it is unclear where he should go to make the order as the counter is too far away from the entrance. This is due to the store being the lobby of their hotel and therefore, the reception is the focus of attention. However, they could take advantage of the clients of the hotel.

Adding to the hotel, there is also a Burger house - Brown’s Burgers – that is right in front of the coffee-shop and that uses the same logo which can create confusion among customers. Regarding the strategies of Brown’s, we consider that they are not aligned because they are aiming to target different segments of customers.

As far as the strengths of this shop, the products are very tasty and with good quality, the environment is relaxed and comfortable and it is less crowded when compared with the other coffee-shops which allows the search for quietness among older customers.   

Concerning Jeronymo, it is a small store usually targeted by tourists, being the only one with no free Wi-fi. They belong to one of the biggest Portuguese groups, Jerónimo Martins, but do not take advantage of the group’s brand equity having low visibility.

When compared to its competitors, Jeronymo appears as a medium price coffee-shop as it presents lower prices. Jeronymo is surrounded by typical Portuguese cafes and, as a result people tend to go there to drink normal coffee or beer instead of the usual coffee-shop macchiato or frappuccino. Therefore, there is a tendency to detach from the original concept.

In contrast to others, Jeronymo is more adapted to the Portuguese culture and habits which may be their biggest opportunity. Introducing themselves as THE Portuguese coffee-shop. Plus, it presents a Complement’s book which we found to be rather original and creative.

Starbucks Coffee-Shop is one of the most recognized brands all over the world and the first name that comes to our mind (top of mind brand) when we think about coffee-shops and in Rossio, they kept its layout and tradition. Due to this standardization, we don’t benefit from a distinct experience because if we go to another country we will have similar products and stores – lacking adaptation to the local culture.

Furthermore, Starbucks is very concerned about the environment and society’s care about having a healthy life style. Therefore, they offer several beverages and foods with no lactose, with soy milk or non-fat ingredients. Regarding the environment, they are very proud about their fair trade coffee which increases the final prices with an added value for the consumer but, we are aware that the money is for a good cause.   

Starbucks Coffee-Shop

Our final stop was at the American franchise Starbucks. In downtown Lisbon, Starbucks is well located at both Restauradores - from 8 a.m. to 12 p.m. Sundays to Thursdays and until 1 a.m. on Fridays, Saturdays and Holidays eve -  and Baixa-Chiado - from 10 a.m to 11 p.m. - with two very different shop concepts.

Starbucks Coffee-Shop in Restauradores opened in 2010 and currently employs a staff of 23 extremely well prepared and trained collaborators. What really stands out about Starbucks is their unique and focused customer service that aims at offering a personalized experience - your cup will have your name and possibly a cute happy drawing that elevates the experience to a all new level. 

In what concerns the facilities of this Coffee-Shop in Restauradores, it is located in the traditional architecture of the train station of Rossio. Nevertheless, the interior of the shop is rather modern with comfortable seats and large tables, allowing customers to bring their laptops, tablets and work materials. There is a certain balance between the internal and external design, it is where the Old meets the New!

The portfolio of products offered varies from the traditional coffee drinks to the exclusive beverages of the worldwide brand, including some seasonal special drinks. Regarding the pastries, Starbucks offers you a range of diversified products sold across the globe.

Adding to all of this, the establishments presents to the customers the hypothesis to benefit from free Wi-fi, leave comments in a board and suggestions in a box, read magazines and newspaper, buy coffee and teas as well as merchandising from the brand, free coffee tastings, opportunity to change your beverage in case you don't like how it tastes, 0,4€ discount if you bring your own Tumbler and special promotions. 

What is noticeable about Starbucks is their social responsibility and concern about the environment. The coffee they use and sell is fair-trade and they even let you take the coffee grounds home to use in gardening hobby.

Website: http://www.starbucks.pt/
Facebook Page: https://www.facebook.com/StarbucksPortugal