CHAPTER 1

BACKGROUND OF THE STUDY

INTRODUCTION

When people think about tools or something to intake to boost up their energy,

coffee always the top choice for those people to choose. In Davao City, the coffee

culture is growing up rapidly, with many coffee shops popping up across the city. As of

October 2024, Davao City has 347 established coffee shops (Department of Tourism

Davao, 2024). However, the researchers want to know the preferences on choosing

coffee drinks. Analysing customer preferences on how their decision making affect on

choosing strong, balanced or sweetened coffee drinks.

Research on coffee consumer preferences identifies various factors that

influence purchasing choices, reflecting both local trends and wider consumer

behaviours. In Poland, for example, there is a noticeable shift in coffee consumption,

with more people favouring ground coffee as the demand for instant coffee wanes

(Wróblewski et al., 2018). This trend points to a growing desire for higher-quality coffee

experiences and could signal a move toward more specialty and artisanal coffee

products. Globally, several factors drive consumers’ choices when selecting coffee

shops. Gautama Himawan and Rahadi (2020) found that the taste and quality of coffee

are key priorities for most consumers. Additionally, the 0/design of the product, including

packaging and presentation, strongly influences decisions. The overall ambiance of the

coffee shop, such as its atmosphere, comfort, and aesthetic appeal, also plays a

significant role in consumer preferences. Brand loyalty is another major factor, with

many customers remaining faithful to specific coffee brands due to reputation,

marketing, or personal experiences. Moreover, the convenience of a coffee shop's

location and its accessibility impact consumer decisions, as does pricing, which must

align with the perceived value of the coffee. These factors—taste, design, ambiance,

brand, location, and price—combine to create a complex mix that coffee shops must

manage to draw in and retain customers.

This indicates that consumers who regularly drink a coffee may not want to pay

more for specialty coffee. Given our results that increasing awareness of specialty

coffee is positively related to consumer preference for specialty coffee, increasing the

awareness and understanding of consumers about the real meaning of specialty coffee

is important since it can help them appreciate the quality of specialty coffee (Laurico, K.

et. Al 2021). Based on Mendoza's (2019) findings, consumer preferences for coffee

strength in the Philippines are characterized by a significant variation, with some

individuals favoring bold, strong coffee while others opt for milder options. This diversity

in taste underscores the importance for coffee shops to cater to a wide range of

preferences, allowing them to create more inclusive and appealing menus that resonate

with different segments of the market.

In Davao City the number of coffee shops has seen a remarkable increase in

recent years, with dozens of cafes now available for residents to enjoy their daily

caffeine fix. Dabawenyos are presented with a wide array of choices for satisfying their

coffee cravings, ranging from local favorites to international chains. This variety not only

caters to diverse tastes but also fosters a vibrant coffee culture within the city. Despite

this growing selection, the local coffee industry still has significant potential for further

development. Davao City, with its relatively small population, has not yet reached
market saturation, creating ample opportunities for coffee shops to expand and attract

more customers. As consumer interest in specialty coffee continues to rise, the local

market could see even more growth, benefiting both new and established businesses in

the coffee sector (Pantoja, 2021).

The Holy Cross of Davao College’s mission and vision, aligned with research,

emphasize Preferences for Strong, Balanced, and Sweet Coffee Drinks in Davao City,

aligns with the mission and vision of the Holy Cross of Davao College by contributing to

the truth-seeking process through data driven insights into consumer preferences,

which can foster a vibrant and inclusive coffee business community. This research

serves the institution’s goal of social transformation by empowering local coffee

businesses to better meet customer preference, promote servant leadership, and create

economic opportunities that align with the sustainable development goal of "Decent

Work and Economic Growth." By understanding customer preferences, coffee

businesses can provide fair opportunities for growth, while contributing to the economic

and social well-being of the community, all in harmony with the values of justice, peace,

and the integrity of creation.

Although the coffee culture in Davao City is growing rapidly, there is a lack of

research that specifically examines customer preferences for coffee strength and

sweetness. Most existing studies focus on general consumption trends without

exploring the detailed factors that influence individual choices. This research aims to

address this gap by analyzing how preferences for strong, balanced, and sweet coffee

drinks impact purchasing behavior. By providing clear data on these preferences, this

study seeks to improve understanding of customer motivations in the local coffee

market, helping vendors and stakeholders make informed decisions about their

products.

Statement of the Problem

This study aims to determine the relationship between customer satisfaction and

customer preference on selected coffee shops in Davao City. It also aspires to answer

the following questions:

1. What is the demographic profile of the customers on selected coffee shops in

Davao City, in terms of;

1.1 Age;

1.2 Sex; and

1.3 Financial status?

2. What is the level of customer preference on selected coffee shops in Davao

City terms of:

3.1 Brand; and

3.3 Quality?
Conceptual Framework

CUSTOMER
PREFERENCE

1. Promotion
2. Quality

DEMOGRAPHIC
PROFILE

1. Age
2. Sex
3. Financial Status
Theoretical Framework

This study is anchored to the theory of Abraham Maslow on the Hierarchy of

Needs described that you need to motivate customer for them to act. Understanding

how buyers satisfy their needs provide guidelines for marketing actions. Consumers

attempt to match their needs with the products that satisfy their needs. People have

variety of needs including basic physiological needs (food, clothing, shelter); the need

for safety (security, stability of life); the need for relationships with other people (family,

friendship, work group companion); esteem needs (prestige, respect for others).

According to Levy &Weitz (2007) stated from their book entitled “Retailing

Management” that the theory of Martin Fishbein provides a useful way to summarize

how customers use the information they have about alternative products, evaluate the

alternatives and select the one that best satisfies their needs for developing a retailing

strategy. Customers see a retailer, a product, or a service as a collection of attributes or

characteristics. People tend to like objects that are associated with good characteristics

and dislike objects they believe have bad attributes. Fishbein’s theory is designed to

predict a customer’s evaluation of a product, service, or retailer based on its

performance on relevant attributes and the importance of those attributes to the

customer satisfaction.

According to McManus & Olson (2008) as stated from the book entitled

“Consumer behavior and Marketing strategy” that views the customer satisfaction as the

degree to which a product or services provides a pleasurable level of consumption-

related fulfillment. It is the degree to which a product’s performance exceeds the

consumer’s expectation for it. Customer satisfaction is a critical concept in marketing

thought and consumer research. In theory, if consumers are satisfied with a product,

services, or brand, they will be more likely to continue to purchase it and tell others

about their favorable experience with it. If they are dissatisfied they will more likely

switch products or brands and complain to manufacturers, retailers, and other

consumers. Disconfirmation refers to the difference between the two: Pre-purchase

expectations and the Post-purchase perceptions. Pre-purchase expectations are the

consumer’s beliefs about anticipates performance of the product. Post-purchase

perceptions are the consumer’s thoughts about how well the product performed.

Definition of Terms

Customer Preference – refers to consumers' choices to maximize their

satisfaction. Consumers have some degree of control over the type of goods they buy,

but they cannot always choose what they want.

Review of Related Literature

Customer Preference

According to Scott (1978), consumer’s behaviour in a particular time phase

shaped the basis for his consequent actions and attitudes. The significance an

individual ascribed to experiences was of prominence in foreseeing and describing

subsequent actions. The study emphasized that learning from past behavior was not a

simple, spontaneous response but a complicated process in which things learnt from

previous experiences were reliant on many intermingling factors. These factors might be

situational factors, which affect the perception of the consumer and his behaviour in

current as well as future time frame. The study proposed that more research needed to
be carried on the self-perception process and its implications on the behaviour of the

consumer.

Furthermore, Ratchford (2021) observed that widespread study has been done

on the extent of a consumer’s knowledge but much less has been researched upon the

relationship between knowledge and consumer choice. The study investigated these

relationships by considering consumer knowledge as human capita and assumed it to

affect the information search and consumption activities. This framework was used to

explain consumer search behaviour, lifestyle, choices, loyalties and consumption

patterns.

Martin and Morich (2018) stated that theories of consumer behaviour theorized

that consumers always made deliberate decisions regarding the things they purchased.

The authors stated that the choices of a consumer were the result of a clear need and

helped in the determination of the product of choice. The authors also mentioned that

human behaviour either began as an unplanned progression or occurred totally outside

of deli- berate attentiveness. Non-conscious goal search had an impact on the attitudes,

goals and thoughts of the consumer without their attentive minds. In light of the

evidence that unconscious behaviour occurred initially, this article suggested a new

model of comprehending consumer behaviour. This model incorporated both deliberate

and unintentional psychological developments to signify how consumers take decisions

regarding brand purchase in their everyday lives.

Park (1982) observed that price plays a unique role at various stages of choosing

a product. The study stressed that the role of element ‘price’ in choice behaviour is

gene- rally presented, as it is seen in situations in which complete information about

other product traits is available with the consumer. The study recommended that

consumers held different perceptions about price and used it in separate ways.

On the other hand, Laplaca (1974) attempted to separate unit pricing as buying

motivation and attempted to determine its affect on the decision principles of a

homemaker. It was observed that where brands were observed as heterogeneous, the

brand that was priced higher offered a great reduction in the purchase risk. On the other

hand, where customers sup-posed that there was little variance among brands, they

were equally satisfied with all. The author indicated that information about the price

caused more buyers, to picking the product with the lowest price.

It was elaborated by Seiders and Costley (2017) that there survived a new breed

of consumers, which willingly shuffled from one store to the other, taking buying

decisions severely influenced by the price of products. The study observed that

consumers tended to change their reference point for a lower price

Ampuero and Vila (2016) had explored consumer perceptions in order to design

product packaging so that it may help in impressing a consumer. The research exhibited

that consumers were greatly influenced by the packaging of a product while making

purchase decisions.

Bhatt (2017) was of the opinion that it was the size of a product package that

mattered the most these days. The author stated that with an increase in the

competition and the aspirations of the consumers, all companies had started believing

that small is beautiful.

Kumar (2014) focused on the importance of consumer behaviour with regard to

personal care category. It was acknowledged that the main urge of human behaviour,
either individual or organizational, was the fulfilment of its needs and wants. The author

further pointed out that an individual gets impressed by new and tempting ideas and is

ready to spend more for them. It was further recommended that innovation in packing

for the benefit of the companies as he was of the view that attractive packaging had

been able to capture the consumer’s attention by break-ing through the competitive

clutter and could be used as a tool for successful marketing of a product.

McEllany (2018) analyzed the relationship among life cycle, gender, income, age,

perceived time pressure and related it with the buying of convenience type products.

The study, however, found that income became a significant factor in influencing

purchase of convenience products as their prices increased. The study results clearly

indicated that the relationship among income, life cycle and ownership of convenience

products is more complex than expected and cannot be termed as a linear relation-ship.

It was observed that income accounted for a number of significant differences in the

purchase behaviour. As income augmented, so did the tendency of the respondents to

own a convenience product.

Putrevu and Kenneth (2017) investigated the dimensions of grocery search on a

random sample. The study revealed that eight types of search dimensions existed in the

sample. These were printed product evaluations, advertised specials, the number of

stores visited, coupons, com-parison of brands, unit prices, word of mouth and checking

of price tags. The study also highlighted the demographic differences between the

segments and stressed that presence of search characteristics and demographic

profiles can enable marketers to have a better understanding of the type of target
consumers, who are probable to search for their product and in what ways thus

enabling better promotional efforts.

Kancheva and Marinov (2014) examined the role of family members in purchase

decision-making. The authors termed that family decision-making was a complex

phenomena. It was the outcome of personal wants, needs and resources of all the

family members; therefore, any purchase decision taken in a family was collaborative.

Belch and Willis (2021) emphasized that values of the society had undergone a

drastic change due to continuous changes in internal and external factors surrounding

the family. As a result, depleting the equal participation of both the spouse in family

decisions, the wives have come to command an upper hand.

Changco et al. (2019) conducted a study to examine how companies had

embraced sachet-marketing strategies to adapt to the budding demand of consumers.

For the purpose, in-depth interviews were conducted with five marketing managers of

multinational companies such as Procter and Gamble and Hindustan Unilever Limited to

understand how sachets were positioned in the Indian market. The insights derived from

these interviews implied that companies used sachet marketing for increasing the rate

of trials, managing the promotional expenditures, delivering value across market

segments and accomplish-ing product line balancing.

It was examined by Gupta and Mehra (2020) that for enhancing its sales, an

FMCG company might opt for a push or pull strategy. Push strategy included

advertisement, heavy sales promotion and personal selling. The authors pointed out

that the strategy of micro-packs could be used as an effective pull strategy. By providing
the customer the advantage of small quantity at lesser price, the company inspired the

customer to try a product again and again.

Singh et al. (2021) suggested that sachet marketing involved the designing of a

product; it is packaging and finally selling a product in a small pack and a low price to

the consumers. The author pointed out that the emphasis of sachet market-ing was not

just on the design or the pricing of a product but on the whole marketing system, from

packaging to pricing and from distribution to delivery.

Weeks (2022) described in his study that consumers were very careful about

their spending and out of the various strategies that were being employed by the

marketers, the offering of small pack had been the best, but in order to sustain there

was a need to contemplate the expectations, needs and purchase behaviour of

targeted customer.

The foregoing review of literature illustrates that researchers in the West have

paid some attention to purchase decision-making. But, in Philippines, there is dearth of

such studies. Examination of customer satisfaction and preferences for coffee shops

remains a less thoroughly explored area and hardly any comprehensive study has been

conducted so far to abridge the gaps in the existing literature. More specifically,

research is required to answer simple yet pertinent questions related to ‘how do

customer satisfaction relates to customer preference?” Hence, in this regard, this study

is designed to fulfil the needs of hospitality students as well as the academicians.

 CHAPTER 2

METHODOLOGY

This portion encompasses a research design - on which it determines the

proponent's plan on how the study will be conducted, the type of data that will be

collected, the techniques or the means to be used to obtain these data, the reason for

the choice of the subjects, the manner of determining sample size, the instruments to be

used and their validation, and the data analysis scheme which includes the application

of the statistical tools for treatment of data arising from the study.

Research Design

The study will utilize a Descriptive Research Design. According to Williams

(2007), descriptive research is research design used to examine the situation involving

identification of attributes of a particular phenomenon based on an observational basis.

So, this type of research is used to describe and interpret the data being studied based

on fact that is supported by accurate theories. It means that descriptive research is

related to the condition occurs at that time, uses one variable or more and then

investigates in fact. Therefore, this study will analyze the customers preference with

regards to coffee products.

Research Subjects

The respondents of this study will be the customers of coffee shops in Davao

City. The study will use the random sampling. The sample will be divided into
meaningful segments used to determine the sample size of three hundred (300)

respondents for a total population of respondents in Davao City.

This sampling method will be used because it is the most efficient among the

probability designs. Further, this sampling method, although not as rigorous as some

sampling method is necessary, because of its practicality. In addition, care will be used

to ensure that the researcher who will administer the instrument will not influence the

answer of the respondents.

Research Instrument

This study will utilize standardized survey questionnaire. There are three (2)

parts of the questionnaire. The first part of the questionnaire is the demographic profile

and the second part is customer preferences. The questions will be measured in a five

(5) Liker scale

The scale below will be used in evaluating the customer preference of coffee

shops in Davao City.

Range of Descriptive Interpretation

Means Level

4.20-5.00 Very High This indicates that the customer preference

is always manifested.

3.40-4.19 High This indicates that the customer preference is

often manifested.

2.60-3.39 Moderate This indicates that the customer preference

is sometimes manifested.

1.80-2.59 Low This indicates that the customer preference is

rarely manifested.

1.00-1.79 Very Low This indicates that the customer preference is

never manifested
 Data Gathering Procedures

These are the following procedures that were conducted in gathering the research

data:

1. Through the rando, sampling the researchers seek the permission of the

HRD head of coffee shops who are the concerned in this study;

2. After permission, the content of the questionnaire will be explained to the

respondent and administered; and

3. After the questionnaires are retrieved, they will be matched and tabulated in

a spreadsheet program and a statistical program will be used to answer the

research problems.

Statistical Treatment

The statistical tool used in treating the problems are the following:

Relative frequency. This will be used to determine the distribution of

respondents based on their profile that will be gathered.

Mean. This will be used to determine the level of customer loyalty, place

attachment and service quality.

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Dear Respondents:
We are the Hospitality students from Holy Cross College of Davao conducting a
research entitled “CUSTOMER PREFERENCE ON COFFEE PRODUCTS IN DAVAO CITY”.
With this, we would like to ask your permission to answer our survey questionnaire. Rest
assured that the data will be collected be held with utmost confidentiality.
Name: (Optional)

Age: Sex: □ Male □ Female

Monthly Income:
Please answer the following questions and check ( / ) the box using the following scales:

5 - Always The statement is true to me at all times

4 - Frequently The statement is true to me most of the time
3 - Sometimes The statement is quite true to me
4 - Rarely The statement is not often true to me
1 - Never The statement is not true to all

PART II - CUSTOMER PREFERENCE

A. BRAND 5 4 3 2 1

1. International
2. Local
3. Mixed
B. QUALITY 5 4 3 2 1

1. Product Brand Name

2. Brand Experience
3. Online Presence
4. Poster and Signage
5. Brand are recognizable