Marketing Research Group Project
Smart Phone
MKTG 6051: Marketing Research
Group Member:
Palka Sharma
Ning Yu
Joseph Nayquonabe
Jenny Hong Jiang
Nicole Newville
Table of Contents
Executive Summary ............................................................................................................ 3
Introduction ......................................................................................................................... 3
Research design .................................................................................................................. 4
Results ................................................................................................................................. 5
Recommendation .............................................................................................................. 11
Appendices ........................................................................................................................ 11
1
2
2
3 Executive Summary
1 page. This is a one page non-technical summary of the whole project, including the
methodology used and major findings/implications.
4 Introduction
Smartphone, once a device relegated to corporate executives, is experiencing rapid
growth in the consumer market and is changing the landscape of information and media
consumption. According to an AOL and Universal McCANN report, in the US, there are
currently over 63 million smartphone users with access to mobile web. Smartphone
makes information delivery anywhere, anytime become a reality. The entrance of Apple
and Google into the smartphone market accelerated the development of mobile
applications. Mobile applications provide companies such as Barnes & Noble, Target,
Whole Foods with a new way to reach their customers. “There is an app for it” becomes a
popular slogan among tech enthusiasts.
Caribou Coffee, the second largest coffee retailer in the US, is considering strategies to
better reach and serve its customers on smartphones. The company has a website that can
be accessed on smartphones but it is not optimized to fit the screen size of smartphones.
Starbucks, Caribou’s largest competitor, recently launched an iPhone application which
allows customers to locate stores and order on the phone. In response to competition,
Caribou needs to decide whether it should launch a mobile website that is easy to
navigate on smartphones or develop its own smartphone application. What are the most
important features to smartphone users? As the smartphone platform competition
intensifies, Caribou also needs to decide if it should focus the resource to develop the
application for one platform or multiple platforms such as iPhone, Android and
3
Blackberry. A marketing research is needed to provide necessary information for
managerial decisions.
Some other issues such as the infrastructure, logistic changes needed and associated costs
to implement the new service on smartphones, though important to the marketing
decisions, are not addressed in this research.
5 Research design
There were many sources of exploratory research that were reviewed for the project
(included in Appendix). The data on the prevalence of Smartphone use was encouragingThere are about 270 mm US Smartphone subscribers, of which 63 mm access mobile
web and 19 mm that access mobile web on a weekly basis. This indicates a strong
consumer base for mobile web and its applications. 53% of Smartphone users act on
advertisements on their mobile web, and 24% make actual purchases via such
advertising. This shows that mobile advertising is influencing purchase behavior. In
addition, 80% of iPhone users use mobile applications. All this data indicates a promising
market for mobile web applications, and if the Caribou Coffee application is advertised
efficiently, it will aid in expanding the consumer profile of the coffee retail chain.
The primary data collection was first conducted via a focus group approach.
There were five participants selected for the focus group. The selection criterion was
mainly respondents that currently owned a smart phone. Of the five respondents, three
had iPhones, and the other two respondents had a Palm Pre and a Google MyTouch
phone. The questions for the focus group discussion (appendix) were divided into two
sections. The first section aimed at collecting the respondents’ perspectives on
preferences in using mobile webpage versus using mobile web applications. The second
4
section narrowed down to feature preferences for a Caribou Coffee application. Some of
the key takeaways from the focus group discussion included the widespread preference
for a free downloadable application, the ease of finding about new applications from
friends and advertisements, the frequent use of mobile web and mobile applications via
the Smartphones. All the insights from the focus group were valuable in designing a
thorough questionnaire for the survey.
An online survey tool was used to administer the survey, Zoomerang. The survey
was sent to xx participants, of which we had 53 respondents. The targeted population for
the survey was random, selecting participants who owned a Smartphone, and those who
did not own a Smartphone. The reason for selecting a random population, irrespective of
owning a Smartphone, was to gain perspective on the wants of consumers who could
offer their ideas on preferences for mobile applications as well as mobile web
information for Caribou Coffee. It is important to note that given time constraints and in
order to meet the requirement of the project, it was efficient to select a random
population. Another assumption is that the results of the survey are representative of the
overall population.
6
Results
To create the best user experience for Caribou customers several tests were
conducted using the survey results. This section will identify the best mobile platform
(web vs. application), the most important features, and examine any differences in mobile
usages between handset types. Additional tests were conducted to determine how the
availability of a mobile tool would influence customer behavior.
5
The first research objective is to identify if a mobile web site or a smartphone
application, is better in serving Caribou customers on smartphones. Two questions were
provided in the survey to ask respondents’ experience in finding information on mobile
web site and smartphone applications using five-value interval scale from Very Easy
(code as 2) to Very Difficult (code as -2). A t-test was done to identify if there is
statistical difference between the average difficulty in finding information through the
mobile web and finding information through the smartphone applications.
phone type
web/app
Mean
P value
All phones
web
App
0.44
0.72
0.032
iPhone
web
app
0.78
1.04
0.13
Other phones
web
app
0.08
0.41
0.044
Table 1: Average user experience in finding information on the smartphone
From the results above, we can conclude that for all smartphone users, it is easier
to find information through smartphone applications than through mobile webs. The
smartphone applications give user more control and provide information in a more
structured way so it is easier to navigate. However, for iPhone users, the difference
between mobile web and application is not statistically significant. It is obvious that
iPhone users have fewer difficulties finding information on their phones than other
smartphone users. The likely reason for this response is the iPhone’s superior web
browser with multi-touch technology enables users to zoom and easily navigate the
mobile web with their fingers.
The second research objective was to identify which features should be included
in the Caribou mobile web experience. Respondents were asked to rank a list of features
and then were asked whether they are likely to consider shopping more at Caribou if the
features are provided. The importance of each feature was then analyzed to compare the
6
response between those who are likely to shop more at Caribou and those who are not.
The test results indicate that the store locator is the most important feature, followed by
coupon, store menu and order in advance. The respondents generally think games and
links to other applications such as iTunes or Facebook are not important. Further analysis
indicates that there are statistically significant difference in response between those who
are likely to shop more at Caribou and those who are not regarding menu, coupon and
order in advance features (as shown in Table 2).
Features
Store Locator
Menu
Coupon
Order In
Advance
Mean for all
samples
1.581395349
2.11627907
1.744186047
2.348837209
Likely to shop
more at Caribou
mean
p value
No
Yes
No
Yes
No
Yes
No
Yes
1.54
1.59
1.54
2.31
2.09
1.62
2.91
2.16
0.426388006
0.035652488
0.045789392
0.027943407
Very Import = 1, Import = 2, Neutral = 3, Not very important = 4, Not at all important = 5
Table 2: Feature evaluation
The Store Locator is deemed the most important feature among the respondents;
however, there is no statistical difference between the two groups. This is probably
because the feature is so essential and common in applications that people tend to take it
for granted. The results also show that people who are likely to shop more at Caribou
tend to put more importance on Coupon and Order In Advance features than those who
are unlikely to shop more at Caribou. It is puzzling, though, that people who are unlikely
to shop more at Caribou seem to give Menu more importance. Even though the difference
is statistically significant, it does not indicate a causal relationship. One of the reasons
could be that the non-loyal Caribou customers who are less likely to visit the Caribou
store give more importance to menus as they are less familiar with what Caribou offer.
7
Based on the results of the first two tests it is clear that Caribou should develop a
mobile application instead of a mobile web experience. An application provides a better
user experience for a wider range of mobile devices. Additionally mobile applications
are able to take advantage of native handset features like GPS which allow users to map a
route to the nearest store based on their current location. Because there are five primary
smartphone operating systems (OS) a third test was run to determine which OS to
develop for first.
The third research objective was to determine if mobile application usage is the
same across all handset types, in order to determine which to develop an application for
first.
Table 3: Survey respondents by type of smartphone
8
Because 57% of respondents indicated they owned an iPhone handset we elected to test
the iPhone application usage against all other smartphone handsets. For this test we
examined the number of applications downloaded and installed based on handset type. A
T-test was used to compare the iPhone users to other Smartphone users.
Mean
P(T<=t) twotail
iPhone: # apps installed
Other Smartphone: # apps installed
18.94
6.35
0.00066365
Table 4: Average applications installed on iPhone compared to other Smartphone handsets
The results indicate that the average iPhone user downloads 12 more applications
than other Smartphone users. Based on the heavier application usage of the iPhone users
we conclude that the first version of the mobile application should be created using the
iPhone development package.
In reviewing the features to include in the iPhone application, one requires that
store locations update their POS systems to support mobile ordering. Due to the
incremental cost associated with this installation we created a test to determine if iPhone
users are more likely than other handset users to order Caribou products using their
mobile device. We conducted a Chi-Square Test to determine if there was a statistically
dependent relationship between the handset type and the likelihood of ordering coffee on
their mobile device.
Actual
Very Likely
Likely
Neither Likely nor Unlikely
Unlikely
Very Unlikely
Column Totals
NoniPhone
iPhone
2
7
11
2
3
25
Row
Totals
3
11
8
2
0
24
Expected
5
18
19
4
3
49
Very Likely
Likely
Neither Likely nor Unlikely
Unlikely
Very Unlikely
Column Totals
Chi Test
iPhone
2.55
9.18
9.69
2.04
1.53
25
NoniPhone
Row
Totals
2.45
8.82
9.31
1.96
1.47
24
5
18
19
4
3
49
0.337355
Table 5: Relationship between likelihood of ordering coffee using a mobile device and handset type
9
This test revealed that Owning an iPhone handset does not make a person more likely to
order coffee using their mobile phone. If the incremental costs associated with adding
this feature to the mobile application exceed our budget for Phase I, consider issuing an
application software update with this feature in the future when funds become available.
The second set of tests was designed to evaluate the potential impact of the
smartphone application on Caribou customers. Our fourth research objective was to
determine how the ordering feature of the application would affect loyal vs non-loyal
Caribou customers. The analysis of the test results indicates that loyal Caribou customers
are more likely to order coffee on smartphones than non-loyal Caribou customers (results
shown in Table 3).
Mean
P value
loyal Caribou
non-loyal Caribou
customers
customers
0.833333333
0.096774194
0.005403418
Very Unlikely = -2, Unlikely = -1, Neither Likely nor Unlikely = 0, Likely = 1, Very Likely = 2
Table 6: Loyal Caribou Customers vs. Non-loyal Caribou Customers.
Based on this test it is clear that the application will benefit loyal Caribou customers but
it is not likely to attract non-loyal Caribou customers.
Finally we reviewed the new application’s order feature and the likelihood of it
increasing Caribou customer shopping frequency. We conducted another Chi-Square
Test to determine if there was a statistical relationship between these two variables.
Actual
Very Likely
Likely
Neither Likely nor Unlikely
Unlikely
Very Unlikely
Column Totals
App Will
Increase Caribou
Shopping
Frequency
4
14
11
3
0
32
App Will Not
Increase Caribou
Shopping
Frequency
Row Totals
0
4
3
17
5
16
1
4
3
3
12
44
Expected
Very Likely
Likely
Neither Likely nor Unlikely
Unlikely
Very Unlikely
Column Totals
Chi Test
App Will
Increase Caribou
Shopping
Frequency
2.91
12.36
11.64
2.91
2.18
32
App Will Not
Increase Caribou
Shopping
Frequency
Row Totals
1.09
4
4.64
17
4.36
16
1.09
4
0.82
3
12
44
0.033744714
Table 7: Relationship between likelihood of using new order feature and Caribou Shopping Frequency
10
Our research indicates that there is a statistical relationship between people who would
use the order feature and an increase in their shopping frequency. Based on the results of
the final two tests the benefit of adding the order feature would be better servicing loyal
Caribou customers and also increasing overall frequency of customer visits.
7
Recommendation
US mobile Internet users has grown from 37 millions to 63 millions from 2008 to 2009
with 107% year to year growth rate. The rapid growth of mobile internet and application
users presents great market potential to the retailers. The smartphone technology has also
matured to allow users to perform online transaction at anytime and anywhere. Caribou’s
major competitor, Starbucks, is trying to seize this market opportunity and has launched
two mobile web applications, “myStarbucks” and “Card Mobile”, to allow their
customers to order online, locate the store, and virtually pay for their drinks from their
smartphones.
Facing both the market opportunity presented by Smartphone users and the threat by
Starbuck, Caribou can’t afford to ignore the smartphone users’ needs. Based on the
marketing research study we have conducted, we recommend Caribou to develop
smartphone application to address smartphone users’ needs in two phases. The purpose of
the recommendation is to improve the customer experiences and increase smartphone
customers visits to the stores.
7.1 Phase I – Standalone iPhone Based Application
During phase I, we recommend Caribou to develop and launch a smartphone application
on iPhone platform within six months. Our survey results indicated that the average
iPhone user downloads 12 more applications than other Smartphone users within one
11
month period. Since iPhone users intend to use more smartphone applications than the
other smartphone users, the first version of Caribou mobile application should be
developed on iPhone platform. The data collected in both focus group and survey
indicates that the user find it easier to find information through smartphone applications
than mobile website. Therefore, Caribou should launch the standalone mobile application
to deliver the customer services via smartphone.
The following four major features are the high priority features which should be included
in the phase I development:
Store Locator: The store locator is deemed as the most important feature among the
survey respondents. The store locator needs to be integrated with the iPhone's GPS to
detect any Caribou’s location and provide customers the directions to Caribou’s store. It
should also allow the customers to contact the store through a “one-button” push.
Order in Advance: This feature will have more impact on existing loyal Caribou
customers than the non-loyal Caribou customers. The survey results indicate that loyal
Caribou customers are more likely to order coffee on smartphones than non-loyal
Caribou customers. The order in advance feature will allow the smartphone users to order
the drinks via smartphone before they arrive to the store. This will reduce the customer
waiting time and improve the customers satisfaction.
Mobile Coupons: The mobile coupon is another very attractive feature to the customers
based on the survey result. The program aims to increase customers visits and recognize
and reward the loyalty of Caribous' regulars. The coupons will be delivered to user’s
smartphone and the user will use the smartphone to scan the coupons. The main purpose
12
of this feature is to reward loyal Caribou customers with discount and prizes and attract
the new customers to Caribou.
Online Menu: The survey results revealed that the online menu is more important to the
customers who are unlikely to shop at Caribou. It is an interesting finding. It could be that
the non-loyal Caribou customers view menus more important as they are less familiar
with Caribou product.
7.2
Phase II – Standalone Android Based Application
Depending on the success of the first app in trial cities, the company will decide whether or not to expand the
service to other markets. Based
on the feedback from the phase I launch, Caribou should
consider to conduct a second market research study to focus on Android smartphone
users. Since Android platform is just launched less than a year, there is not enough data to
indicate whether the platform will be widely adopted yet. But it is worth to monitor the
Android smartphone usage.
8 Appendices
Research Objective 1:
Determine if a mobile web site or a smartphone application, is better in serving Caribou
customers on smartphones.
Survey Questions Used: 7&8
Hypothesis:
H0: The average difficult of finding information is the same between mobile web and
mobile application.
Ha: The average difficult of finding information is different between mobile web and
mobile application.
Results:
All phone users:
t-Test: Paired Two Sample for Means
Web
App
13
Mean
Variance
Observations
Pearson Correlation
Hypothesized Mean
Difference
df
t Stat
P(T<=t) one-tail
t Critical one-tail
P(T<=t) two-tail
t Critical two-tail
0.44
0.72
1.149388 0.899592
50
50
0.464822
0
49
-1.88462
0.03271
1.676551
0.06542
2.009575
iPhone users:
t-Test: Paired Two Sample for Means
Mean
Variance
Observations
Pearson Correlation
Hypothesized Mean
Difference
df
t Stat
P(T<=t) one-tail
t Critical one-tail
P(T<=t) two-tail
t Critical two-tail
Web
App
0.777778 1.037037
1.25641 0.883191
27
27
0.373232
0
26
-1.15804
0.128688
1.705618
0.257376
2.055529
Other phone users:
t-Test: Paired Two Sample for Means
Mean
Variance
Observations
Pearson Correlation
Hypothesized Mean
Difference
df
t Stat
P(T<=t) one-tail
Web
App
0.083333 0.416667
0.775362 0.775362
24
24
0.457944
0
23
-1.78113
0.044052
14
t Critical one-tail
P(T<=t) two-tail
t Critical two-tail
1.713872
0.088104
2.068658
Conclusion:
Reject H0 for all phone users and other phone users. Do not reject H0 for iPhone users.
For all phone users, mobile applications are statistically easier to find information than
mobile webs. However, for iPhone users, the difference is not statistically significant.
Overall, iPhone users have much less difficulties finding information on their phones
than other smartphone users.
Research Objective 2:
Identify which features should be included in the Caribou mobile experience.
Survey Questions Used: 23 & 24
Hypothesis:
For each feature:
H0: The average importance is the same between those who are likely to shop more at
Caribou and those who are unlikely to shop more at Caribou.
Ha: The average importance is different between those who are likely to shop more at
Caribou and those who are unlikely to shop more at Caribou.
Results:
Feature
Mean for
all
samples
response
to Q24
mean
p value
store locator
game
menu
trivia
coupon
pay via
phone
order in
advance
iTune
Facebook
1.58
4.02
2.12
2.74
1.74
3.09
2.35
3.16
3.35
No
1.55
Yes
No
Yes
No
1.59
4.64
3.81
1.55
0.42638
0.0062793
Yes
2.30
0.035652
No
Yes
No
Yes
No
Yes
No
Yes
No
Yes
3.09
2.62
2.09
1.63
3.55
2.94
2.91
2.16
3.27
3.12
0.15052
0.045789
0.073203
0.027943
0.36394
Conclusion:
The most important features are store locator, coupon, menu and order in advance. Game,
link to iTune and link to Facebook are not important to most users. Store locator, even
though the most important feature, does not show statistical difference in importance
between the two groups. Those who are likely to shop more at Caribou tend to put more
importance on coupon and order in advance feature than those who are unlikely to shop
more at Caribou. It is puzzling that those who are unlikely to shop more at Caribou put
more importance on menu. This could be because they are mostly non-loyal Caribou
customers who are less familiar with what Caribou offers.
Research Objective 3:
Determine if mobile application usage is the same across all handset types, in order to
decide how many versions of the application to create.
Survey Questions Used: 2 & 9
15
No
Yes
3.36
3.
0.48245
Hypothesis:
H0: The # of app download is the same between iPhone and other phones. (Average the
same)
Ha: The # of app download is different between iPhone and other phones. (Average
different)
Results:
t-Test: Two-Sample Assuming Equal Variances
iPhone: # apps installed
Other Smartphone apps installed
Mean
18.94
6.35
P(T<=t) twotail
0.00066365
Conclusion:
Reject Ha, the average iPhone user downloads 12 more applications than other
Smartphone users. The heavier application usage of the iPhone users indicates that the
first version of the mobile application should be created using the iPhone development
package.
Research Objective 4:
Determine if iPhone users are more likely than other smartphone users to order coffee
using their mobile device.
Survey Questions Used: 2 & 26
16
Hypothesis:
H0: Handset type and likelihood of ordering coffee using application are independent.
Ha: Handset type and likelihood of ordering coffee using application are dependent.
Results:
Chi-Square Test
NonRow
Actual
iPhone
iPhone
Totals
Very Likely
2
3
5
Likely
7
11
18
Neither Likely nor Unlikely
11
8
19
Unlikely
2
2
4
Very Unlikely
3
0
3
Column Totals
25
24
49
NonRow
Expected
iPhone
iPhone
Totals
Very Likely
2.55
2.45
5
Likely
9.18
8.82
18
Neither Likely nor Unlikely
9.69
9.31
19
Unlikely
2.04
1.96
4
Very Unlikely
1.53
1.47
3
Column Totals
25
24
49
Chi Test
0.337355
Conclusion:
The Chi-Square Test revealed that p>alpha therefore reject H0. Owning an iPhone
handset does not make a person more likely to order coffee using their mobile phone. If
the incremental costs associated with adding this feature to the mobile application exceed
our budget for Phase I, consider issuing an application software update with this feature
in the future when funds become available.
Research Objective 6:
Determine if there is a relationship between a person’s willingness to order products via
the phone related to the mobile application and an increase in shopping more frequently
at Caribou.
Survey Questions Used: 24 & 26
17
Hypothesis:
H0: New order feature and likelihood of increasing Caribou Shopping Frequency are
statistically dependent.
Ha: New order feature and likelihood of increasing Caribou Shopping Frequency are not
statistically dependent.
Results:
Chi-Square Test
Actual
Very Likely
Likely
Neither Likely nor Unlikely
Unlikely
Very Unlikely
Column Totals
App Will Increase
Caribou Shopping
Frequency
4
14
11
3
0
32
App Will Not
Increase Caribou
Shopping Frequency Row Totals
0
4
3
17
5
16
1
4
3
3
12
44
App Will Increase
App Will Not
Caribou Shopping Increase Caribou
Expected
Frequency
Shopping Frequency Row Totals
Very Likely
2.91
1.09
4
Likely
12.36
4.64
17
Neither Likely nor Unlikely
11.64
4.36
16
Unlikely
2.91
1.09
4
Very Unlikely
2.18
0.82
3
Column Totals
32
12
44
Chi Test
0.033744714
Conclusion:
The Chi-Square Test revealed that p<alpha therefore reject Ha. There is a statistical
relationship between people who would use the order feature and an increase in their
shopping frequency. Therefore if Caribou is looking for new ways to increase the
frequency of their customers’ visits, they should prioritize this feature in the development
plan
________________________________________________________________________
____________
Additional Test not used in Results Section
Objective:
Determine if there is a relationship between a person’s willingness to order products via
the phone and the number of applications they downloaded to their smartphone.
Survey Questions Used: 9 & 26
18
Hypothesis:
H0: Number of applications downloaded and likelihood of ordering Caribou products via
mobile application are statistically dependent.
Ha: Number of applications downloaded and likelihood of ordering Caribou products via
mobile application are not statistically dependent.
Results:
19
Chi-Square Test
Actual
None
Very Likely
Likely
Neither Likely nor Unlikely
Unlikely
Very Unlikely
Column Totals
1-5
0
3
4
1
0
8
Expected
None
1-5
Very Likely
0.67
Likely
3.00
Neither Likely nor Unlikely
3.17
Unlikely
0.67
Very Unlikely
0.50
Column Totals
8
Chi Test
6-10
2
6
1
1
1
11
11-20
0
2
6
0
1
9
6-10
0.92
4.13
4.35
0.92
0.69
11
0.75
3.375
3.5625
0.75
0.5625
9
21-50
1
5
4
0
0
10
Row
Totals
50+
1
2
3
2
1
9
0
0
1
0
0
1
4
18
19
4
3
48
Row
11-20
21-50
50+
Totals
0.833333
0.75
0.08
4
3.75
3.38
0.38
18
3.958333
3.56
0.40
19
0.833333
0.75
0.08
4
0.625
0.56
0.06
3
10
9
1
48
0.647908
Conclusion:
The Chi-Square Test revealed that p>alpha therefore reject H0. There is not a statistical
relationship between people who would use the order feature and the number of
applications they download to their phone.
20