Consumer Decision Making Process: Buyer Behavior in Coffee Industry

This report delves into the consumer decision-making process within the coffee industry, specifically examining buyer behavior in the Australian market. It begins with an introduction to the importance of consumer satisfaction and the role of a proper market mix. The report then presents a case study on the instant coffee culture and coffee consumption trends, contrasting instant coffee with latte coffee. It analyzes the consumer decision-making process, including problem recognition, information search, evaluation of alternatives, purchase, and post-purchase evaluation. The study highlights the differences in coffee consumption between Sydney and Melbourne, as well as the preferences for instant versus latte coffee and their revenue generation. The conclusion emphasizes the importance of understanding consumer behavior for business success and recommends that managers evaluate their product offerings to align with consumer desires and provide comprehensive product information. The report uses data from IBISWorld, Mordor Intelligence, Inside Small Business, and Statista to support its findings.

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Table of Contents
Introduction...............................................................................................................................................3
Case study: Consumer behavior in the coffee industry..........................................................................4
The instant coffee culture......................................................................................................................4
Coffee consumption trends...................................................................................................................4
Deep dive into the Consumer Decision Making Process.........................................................................6
Recognition of the problem...................................................................................................................6
Information search................................................................................................................................6
Evaluation of alternatives.....................................................................................................................6
The actual purchase of the product......................................................................................................7
Post buying evaluation..........................................................................................................................7
How instant coffee consumption compares with nitro coffee.................................................................7
Conclusion..................................................................................................................................................9
Recommendation.......................................................................................................................................9
References................................................................................................................................................10
Consumer Decision Making Process: Buyer Behavior

Consumer Decision Making Process: Buyer Behavior 3
Introduction
Consumers are the focal point of every business establishment. The ability of a company
to completely meet and satisfy the consumer of a particular product within the company’s
product line would greatly determine the success, position and possible directions taken by the
said company. Silk and Shoenberger (2018) note that for a company to achieve consumer
satisfaction, there must be development and execution of a perfect product market mix. In this
perspective, a proper market mix presents the consumers with a variety of product opportunities
in such a manner that consumers are able to get what they desire (right product) within the right
time, the right place and at a perfectly right price. The company owes the consumers this right
through the proper market mix (Greg, 2017).
Consumers are at the center of the decision-making process in determining what product
to buy, from who and at what price (Martindale and McKinney, 2017). This decision of the
consumers to determine their purchasing behavior is often referred to as consumer buying
behavior. The consumer buying behavior gives an in-depth analysis of the consumer
characteristics when deciding to buy a product. It, therefore, addresses the question about why
customers buy the products they buy, those factors that contribute to certain purchases
consumers make, and what would influence a consumer to change behavior towards a purchase
of a particular product (Thomas et al, 2018).
This report will therefore focus on the consumer purchasing behavior of a product from a
coffee industry (instant coffee), analyze the trends therein in the purchase of this product,
identify key observations and patterns while purchasing the product and also critique the
behavior exhibited by consumers while purchasing this select product in comparison to another
product in the same industry.

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Case study: Consumer behavior in the coffee industry
The instant coffee culture
According to IBISWorld (2016) report on the coffee industry performance, the Australian
coffee industry has seen massive growth over a five-year period of time. This growth has been
largely attributed to diversified characteristics of the coffee consumers in the Australian market
(Stenback, 2017). Coffee consumption is considered a culture in the Australian market and the
love of coffee is far much reaching which has benefited the coffee industry and contributed
greatly to the growth of the market over a five-year period of time as identified by IBISWorld
report of 2016, (Kwong, 2018).
Coffee consumption trends
The coffee industry in Australia is dominated by three different product lines. According
to the IBISWorld report of 2016, the products in the industry include instant coffee, latte coffee,
land the expresso among other beverages. Instant coffee forms the main product traded by coffee
and café shops. The buying trends for coffee in Australia is differentiated into two broad
categories; according to Mordorintelligence.com, (2019), coffee consumption is classified either
as instant coffee and/or freshly brewed coffee. 25% of coffee consumers prefer instant coffee
consumption to freshly brewed coffee.
Cold drip coffee commands a greater demand as compared to other types of coffee.
Coffee drip is made a drop at a time to limit the acidity and bitterness of the coffee and to
encourage a subtle taste. Consumers, therefore, flock much of the café shops that produce the
cold drip coffee such as Krimper and Manchester Press more often than other shops offering
other coffee products. However, there is relative competition between cold drip coffee and nitro
coffee, which is said to be poured from a tap and has almost similar taste and feel of the beer.

Consumer Decision Making Process: Buyer Behavior 5
Nitro coffee is foamy and has a creamy texture which makes consumers prefer it with a little
drop of milk plus sugar in order to reduce the bitterness. This type of coffee gives the consumers
a new taste of coffee and when they want uniqueness and new drinking experience.
Research by Inside Small Business (2015) establishes a critical trend in the consumption
of coffee by consumers in the Australian coffee market and café. The research points out that
consumers of Sydney origin are wake up early to grab their coffee than their counterparts from
Melbourne. This is due to the difference .in peak times for coffee sales in the two great regions.
Sydney coffee shops peak their sales at 8.00Am while Melbourne coffee shops peak their sales
by 9.30 Am. The research also points out the purchasing power between different states in
Australia. Queensland is inhabited by coffee diehards who are said to be willing to pay more for
their coffee than those in the areas of Victoria.
Figure 1: Coffee consumption trends in Sydney and Melbourne; Source: Inside Small Business

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Deep dive into the Consumer Decision Making Process
The consumer decision-making process follows a 6 stages map process. It is however
notable that from the actual consumer behavior experienced while shopping for coffee products,
for instance, does not necessarily follow the six stages of consumer decision making process
concept.
Recognition of the problem
Coffee consumers are made aware of the product they need through a stimulation
process. Consumers are attracted to a product for example by the manner in which the company
provides the relevant information on that particular product. Better still, hunger and thirst could
also act as stimuli for coffee purchase and consumption. Stimuli act the initial trigger for any
decision that a consumer makes (Farooq, 2016).
Information search
After identifying and establishing a need worth satisfying, consumers often move into the
second stage of the decision-making process which involves searching and gathering information
regarding the product they desire. With regards to searching product information by consumers,
presence of alternatives for the product in mind would bring skeptical thinking hence they would
do a thorough search before they commence spending on the product (Mehrguth, 2018).
Evaluation of alternatives
Consumers are skeptical about alternatives. In this stage, they weigh out the alternatives
and determine the best product that can satisfy the need they seek. The evaluation is based on the
information of the product such as its price, quality, quantity and any available value addition on
the product. This will enable the consumer to get the best product at an affordable price.

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The actual purchase of the product
This is a critical stage in the decision-making process of the consumer. The consumer is
at liberty to choose and make a purchase for a product s/he desires. They also have the liberty of
choice of where to buy the product desired from. This is based upon his/her needs and wants
which are often stimulated by the product information and recommendations made by the selling
companies (Juneja, n.d).
Post buying evaluation
In this phase the consumers make and evaluation based on the ability of the product they
purchased in satisfying the intended need. The satisfaction is evaluated on how useful the
product is and value generated from the product with respect to the need. In the event the product
fulfilled the need of the consumer, this is the genesis of consumer loyalty to that product (Frekel,
2013).
How instant coffee consumption compares with latte coffee
There are various types of coffee consumed in the Australian market. Cafes and other
coffee shops offer variety of products depending on consumer tastes and preferences. Apart from
instant coffee whose market is largely dominated by Nestle (Mordor Intelligence, n.d), latte
coffee which is a mixture of expresso and steamed milk forms a very competitive product.
Mordor Intelligence (n.d) points out that latte, which is characterized by a frothy beer like
appearance, gives coffee lovers a sense of fulfillment. 75% of Australians prefer latte coffee as
compared to 25% of instant coffee lovers The foamy texture allows consumers to add less milk
and sugar which is said to reduce the bitterness in the coffee. It is also preferred by consumers
due to its health benefits as compared to other forms of coffee. For unique drinking experience,
the texture gives consumers a different taste all together when compared to Ready to Drink

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(RTD) coffee, also known as instant coffee. According to IBISWorld (2016) both instant coffee
and latte coffee which are often served hot sell better in colder seasons such as winter. Due to the
growing coffee consumption culture in Australia, latte coffee a form of Nitro coffee which is
prepared and poured from a tap with a beer mouth feel, commands a bigger market share when
compared to other coffee products, tea and other beverage in a five-year period (Teoh, 2016).
This type of coffee contributes to a higher revenue generation as compared to instant coffee.
IBISWorld report of 2016 also points out that coffee has become significantly sophisticated and
retained the lead on the beverage of choice especially with the café and coffee shop lovers
(Huffpost Canada, 2014).
Figure 2: How express coffee compares with instant coffee in revenue generation: Source:
Statista Report

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Figure 3: How latte coffee compares with other coffee products in consumption: Source: The
2018 Square Australian Coffee Report

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Conclusion
In conclusion, therefore, consumer buying behavior is a great determinant of the success
of any company. It is important that any organization that seeks success in a business
environment considers giving out relevant information regarding the products they are offering
into a market in an appealing manner that makes consumers easy in the decision-making process
when considering purchasing a product. The presence of product alternatives would pose a great
challenge in the event a company fails to be precise but informative enough about their products.
Otherwise, the decision-making process is a theoretical framework that treats consumers to be a
perfect mix but given a real-life scenario, the consumer behavior does not necessarily follow in
the five stages of the decision making framework.
Recommendation
After the careful analysis of the consumer behavior in regards to decision-making process
while considering to purchase a product, managers need to carry out an evaluation of their
product and determine if that product is what consumers desire and the need it will satisfy in the
market. The managers should also determine the best product description which ensures
complete product information given to the consumers since consumers have a varied choice of
alternatives to a company product. Proper product mix should be a viable option for managers so
as to have a proper product base that gives an array of alternatives to choose from by consumers.

Consumer Decision Making Process: Buyer Behavior 11
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Inside Small Business. (2015). Coffee consumption in Australia - which, where when and how
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Consumer Decision Making Process: Buyer Behavior 12
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