Chapter I

INTRODUCTION

This chapter presents the background and rationale of the study, the statement of

the problem, the theoretical and the conceptual frameworks, the scope and delimitation of

the study, the significance of the study, and the definition of terms used in the study.

Background and Rationale of the Study

Coffee shop business in the Philippines is a lucrative venture due to its high

demand and booming industry. With over 2,752 café and coffee shops in the country

(2020 data from PSA), it’s evident that we are a nation of coffee enthusiasts. Coffee

consumption is a common habit among nine out of 10 Filipino households consuming

coffee regularly. The latest Philippine coffee statistics reveal that in 2020 alone, about 3.3

million 60-kilogram bags were used. It has grown up to date. The demand for specialty

coffee is on the rise in the Philippines. Consumers are becoming more discerning about

the quality and origin of their coffee beans when they’re at the cafe counter. Today’s

trend is offering unique and high-quality specialty coffees from startup brands or coffee

franchise in the Philippines. A coffee shop that can tap into this new desire and behavior

of consumers has the highest potential to attract coffee connoisseurs. The Philippines is a

country of coffee enthusiasts, with nine out of 10 Filipino households consuming coffee

regularly. The latest Philippine coffee statistics reveal that in 2020 alone, about 3.3

million 60-kilogram bags were used. It has grown up to date (Tampon,2023). Filipinos

are expected to consume 3.78 kilograms of coffee per person by 2025. The Philippines is

the second-largest consumer of coffee in Asia (Macdonnel,2023). Moreover, the country

has one of the world's largest youth population with a median age of 23 years which
prefers coffee over tea. As a result, the consumption of coffee in the country is

experiencing a growth rate of 6% annually (IMARC,2019).

The entrepreneurial mindset of Filipinos to dwell of what’s in demand in the

market resulted to the proliferation of Coffee Shops in the market. The increasing

competition and the changing tastes of Filipinos determined what brand created high

acceptance. This market potential and the rising of the specialty coffee market, cafe

owners and baristas in the Philippines have begun to create new beverages and mix and

match ingredients to cater to the increasing taste changes of their target audience

(Tampon, 2023).

The mixture of various aromatics creating layers of new coffee flavors and

presentations. This drove the market expansion on the consumption of the product by

coffee loves alone. What made Coffee shops a favorite relaxing place for young people

was the increasing influence over the non-coffee drinkers. The new breed of

connoisseurs kept the coffee culture alive. Coffees and Teas became just like any other

beverages taken anytime of the day as a thirst quencher or for socialized drinking. As the

Coffee market fast becoming a congested market, Shop owners need to have strategies to

present its uniqueness and develop competitive edge over other shops. They need to have

an identity or brand equity in the minds of customers.

A strong brand identity can significantly impact customer loyalty and drive repeat

business, making it a critical aspect of any successful marketing strategy. One of the

primary ways that brand identity impacts customer loyalty is through its ability to create

an emotional connection with customers (Meshram,2023). Customer focused means

concentrating on how every interaction helps the customer, rather than how it helps your

business (Afshar,2023).

The fad of coffee drinking also reached the shores of Roxas City. From the

traditional that coffee drinking was more confined on older people, what filled the tables

of Coffee Shops were young professionals and students. Yelp (2023) reported that there

were 10 best Coffee Shops in the City of Roxas. Speaking of being the best means

something is unique and different why these places frequented by most young

professionals and students may have their own strategy to entice customers.

The scenario presented had drawn the interest of the Researchers to seek a deeper

understanding on the connection between the type of coffee product served and the

service quality of the coffee shop operating in Roxas City in drawing customer to their

stores. Thus, this study was conducted.

Statement of the Problem

Generally, the study was aimed to determine how Coffee Shops in Roxas City

created their name in the market. The problem of the study arose from the reality that

branding is essentially important for specialty coffee shops where customers are looking

for more than just coffee drinks. Also with so many Coffee Shops proliferating in the

City, customers wanted something unique to complete their coffee drinking experience.

Specifically, it seeks to answer the following questions;

1. What is the socio-demographic profile of the respondents?

2. What is the characteristics of the Coffee product served based on the following

parameters?

a. Brand name
 b. Consistency

3. What is the extent of customers patronage and revisits as a whole when

assessed in terms of;

a. Pricing

b. Costumer Service

c. Place ambiance and amenities

4. Is there a significant relationship between coffee branding and customers’

loyalty among the respondents?

Hypothesis of the Study

1. There is no significant relationship on the coffee branding and customers

loyalty among the respondents.

Theoretical Framework

This study was taken from three Customer Satisfaction theories. Value percept

Theory, Value Percept Disparity Theory and the Equity Theory. The Value Precept

Theory postulated that customer satisfaction can be seen clearly in many of the recurrent

types of cases, such as cases involving brand switching, cases involving the failure of

trial products, and cases involving the purchase of services. A common characteristic in

such cases is that consumers base their evaluations on products, services, and brands that

are absent from their initial perceptions. Value-Percept Disparity theory has also been

applied to explain why consumers value some brands, products, and services over others,

even if these other brands, products, and services are more highly expected (e.g.,

Westbrook 1992)(as cited by Rana,2022).

 The Equity theory in customer satisfaction is the idea that individuals require

consistency between what was expected and what was experienced. Consistency between

both sides of this equation is key to providing customers with a positive customer

experience. Learning how to manage expectations and consistently deliver an experience

that meets and exceeds them builds goodwill and trust, which leads to strong customer

satisfaction (Rana,2022)

Conceptual Framework

The conceptual framework of this study assumes that the independent variable

consisting of the socio-demographic profile of the respondents established the

relationship on the components of every independent variable and dependent variables.

In this section, it shows the conceptual paradigm to present the figure of the

study which shows the relationship between the independent variable and the dependent

variables knowing the demographic profile in terms of age, sex, monthly allowance,

educational level and location; including the Coffee Shop Branding and Its Impact on

Customers Loyalty in Roxas City in terms of coffee branding and customers loyalty.

Independent Variable Dependent Variables

Socio-demographic Profile Coffee Branding in terms of;

 Age  Brand name

 Sex  Consistency

 Monthly allowance

 Educational Level
Customers Loyalty in terms of;
 Location
 Pricing

 Costumer Service

 Place ambiance and amenities

Figure 1. Schematic diagram showing the relationship among the variables used in the

study

Scope and Delimitations of the Study

This study focuses mainly on the relationship between coffee branding and

customers loyalty in Roxas City. This study used a descriptive-correlational research

design that considered selected students in Roxas City for school year 2023-2024.

The dependent variables of the study were limited to the coffee shop branding and its

impact on customers loyalty among the respondents. The independent variable was the

socio demographic profile in terms of sex, age, monthly allowance and educational level.

Significance of the Study

The researcher anticipates that the finding of the study should be beneficial to the

following:

Student Customers. This study will utter their opinions and set standards that

will lead to the positive improvements of certain business in order to progress their small

business, they are stating suggestions what they are going to pay attention and enhance

positive outcome to them.

Employer. The results of the study it will ensure to the customers that the service

quality will help their small business with the help of employers to the manager and the

owner, they are securing for the good organization of the business and showing good

presence to the customers future research Because of this study, it will serve this as the

reference and improve their study also

 Manager. This study will know the viewpoints of their customers when it comes

from their service quality. They are managing the small business when the owner is out,

so they are overseeing what is happening recently to their business.

Future researchers. This research may serve as a guide to future studies

regarding this topic.

Definition of Terms

The different terminologies used in this study are defined as follows;

Brand name. A brand name or trade name is a name (usually a proper noun)

applied by a manufacturer or organization to a particular product or service (Richard

Nordquist, 2019).

Operationally, it refers to the trademark of the product.

Coffee Branding. This is the study involves brand image has played a significant

role in distinguishing among companies and a powerful marketing tool (Park & Park,

2019).

Operationally, it refers to the branding of the product and its popularity.

Consistency. Consistency is one of the biggest factors to accomplishment and

success ( Byron Pulsifer, 2020).

Operationally, it refers to the consistency across all touchpoints, including the in-

store experience, packaging, social media and advertising.

Customers Loyalty. This define as the repeat purchase intention in question

should also be supported by customers recommending the companies’ products or

services to others as well as paying more on the products or services signals loyalty to

these companies (Ha and Jang, 2010).

 Operationally, it refers to an ongoing positive relationship between a customer

and a business.

Customers Service. Service quality was defined as the adaptation to client

demands in delivering a service (Chakrabarty et al., 2007)

Operationally, it refers how you serve the customers.

Place ambiance and amenities. Physical appeal is related to the layout or

architectural context of service place including aesthetic and functional

component (Heide et al., 2007)

Operationally, it refers to the view and vibe of the place.

Pricing. Amount of money that has to pay by consumer to get the product or

service (Sharma K 2018).

Operationally, it refers to a process of fixing the value that a manufacturer will

receive in the exchange of services and goods.

REFERENCES:

AFSHAR, V., (2023), How To Improve Customer Focus

https://www.salesforce.com/blog/customer-focus

MACDONNEL, K., (2023), 15 Coffee Consumption Statistics in the Philippines 2023:

Interesting Facts! https://coffeeaffection.com/coffee-consumption-statistics-in-the-
philippines

MESHRAM, A.,(2023) The impact of brand identity on customer loyalty

https://www.linkedin.com/pulse/impact-brand-identity-customer-loyalty-
RANA, J. (2022), 7 Most Important Customer Satisfaction Theories
https://@revechat.com

TAMPON, V. (2023), Why Coffee Shop is a Good Business in the Philippines,

https://hillsandvalleys.ph/why-coffee-shop-is-a-good-business/

Internet Sources

https://www.imarcgroup.com/philippines-coffee-tea-capsules-market-driving-young,
2019

https://www.yelp.com/search?cflt=coffee&find_loc=Roxas+City%2C+Capiz, 2023