Coffee Yana CherepashenskayaChristina Huang

Lianna LamElizabeth Merklinger

Group K

● Price○ $1○ $3○ $5

● Brand○ Starbucks○ Dunkin Donuts○ McDonalds

Coffee Attributes● Flavor

○ Hazelnut○ Caramel○ Regular

● Wait Time○ 2 minutes○ 4 minutes

Fractional Factorial Design

● Google Forms● 41 Respondents ● 9 Questions

Our Survey

# Ratings Price Medium $3

Price High $5

Brand Dunkin

Brand McDonalds

Flavor Caramel

Flavor Regular

Wait time Long 4 minutes

1 3 0 1 1 0 0 1 0

1 7 1 0 0 0 0 1 1

1 5 1 0 0 1 1 0 0

1 9 0 0 1 0 1 0 1

1 7 1 0 1 0 0 0 0

1 3 0 1 0 1 0 0 1

1 7 0 1 0 0 1 0 0

1 8 0 0 0 1 0 1 0

1 10 0 0 0 0 0 0 0

Sample Results Codified

Regression Output

/R2 Sig F/P-value Sig level Result

R2 0.2553 3.738E-20 0.05 Significant

Price (Medium ($3)) -1.422764228 5.281E-05 0.05 Significant

Price (High ($5)) -2.829268293 6.614E-15 0.05 Significant

Brand (Dunkin Donuts) -0.87804878 0.012 0.05 Significant

Brand (McDonalds) -2.544715447 1.639E-12 0.05 Significant

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Regression Output-Explained

P-value Sig level Result

Flavor (Caramel) -0.105691057 0.761 0.05 Not significant

Flavor (Regular) -0.195121951 0.575 0.05 Not significant

Wait time (Long (4 minutes))

-0.410569106 0.174 0.05 Not significant

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Regression Output - Explained

● Randomly generated three scenarios not originally given by the fractional factorial design

1) $3, from Dunkin Donuts, Caramel flavor, 4 minute wait time 2) $5, from Starbucks, Hazelnut flavor, 4 minute wait time3) $1, from McDonalds, Hazelnut flavor, 2 minute wait time

● Coded new scenario using dummy variables● Calculated expected utility based on Utility equation

Expected Utility

Scenario Scenario # Description Expected Utilities

New 1 $3, from Dunkin Donuts, Caramel flavor, 4 minute wait time

5.16

New 2 $5, from Starbucks, Hazelnut flavor, 4 minute wait time

4.715

New 3 $1, from McDonalds, Hazelnut flavor, 2 minute wait time

5.41

Expected Utility Results

Scenario Scenario # Description Expected Utilities

Survey 4 $5, from Dunkin Donuts, Regular flavor, 2 minute wait time

4.053

Survey 5 $3, from Starbucks, Regular flavor, 4 minute wait time

5.949

Survey 6 $3, from McDonalds, Caramel flavor, 2 minute wait time

3.904

Expected Utility Results

Scenario Scenario # Description Expected Utilities

New 1 $3, DD, Caramel, 4 min 5.16

New 2 $5, Starbucks, Hazelnut, 4 min 4.715

New 3 $1, McDonalds, Hazelnut, 2 min 5.41

Survey 4 $5, DD, Regular, 2 min 4.053

Survey 5 $3,Starbucks, Regular, 4 min 5.949

Survey 6 $3, McDonalds, Caramel, 2 min 3.904

Expected Utility Comparison

● Expected market shares for 6 scenarios can be calculated using market share equation and expected utility values

Expected Market Share

Scenario Scenario # Description Expected Market Share

New 1 $3, from Dunkin Donuts, Caramel flavor, 4 minute wait time

17.42%

New 2 $5, from Starbucks, Hazelnut flavor, 4 minute wait time

11.16%

New 3 $1, from McDonalds, Hazelnut flavor, 2 minute wait time

22.36%

Expected Market Share Results

Scenario Scenario # Description Expected Market Share

Survey 4 $5, from Dunkin Donuts, Regular flavor, 2 minute wait time

5.76%

Survey 5 $3, from Starbucks, Regular flavor, 4 minute wait time

38.34%

Survey 6 $3, from McDonalds, Caramel flavor, 2 minute wait time

4.96%

Expected Market Share Results

Scenario Scenario # Description Expected Market Share

New 1 $3, DD, Caramel, 4 min 17.42%

New 2 $5, Starbucks, Hazelnut, 4 min 11.16%

New 3 $1, McDonalds, Hazelnut, 2 min 22.36%

Survey 4 $5, DD, Regular, 2 min 5.76%

Survey 5 $3,Starbucks, Regular, 4 min 38.34%

Survey 6 $3, McDonalds, Caramel, 2 min 4.96%

Expected Market Share Results

● How much are customers willing to pay for lower wait time?

● 4 minutes wait time → 2 minutes wait time?

● Customers are willing to pay $0.58 for lower wait time

Willingness to Pay

P=$0.58

● Increasing brand recognition while while keeping a low price is very important to garner coffee purchases○ Price & brand are relatively the most important attributes to

purchasing coffee (RI > 40%)○ Wait time and flavor are less important (RI <10%)

● We should improve on our study with other attributes and bigger sample size

○ R2 is significant, but it is only a 0.255○ Our model accounts only for a small amount of variation in

Coffee Purchase Utility

Conclusion

Questions?