CONSUMER PROFILE AND THEIR SATISFACTION OF

HIMALAYAN JAVA (COFFE HOUSE)

Nabin Shakya
Ace Institute of Management
Exam Roll No. 16570157
PU Registration Number: 2016-2-57-0083

A Graduate Research Project Submitted to

Ace Institute of Management
Pokhara University

Submitted for the degree of

Master of Business Administration

Kathmandu
September, 2019
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Table of Contents
CHAPTER 1-INTRODUCTIO

N
1.1 Background of the Study.......................................................................................1
1.2 Statement of Problem............................................................................................3
1.3 Objectives of the Study.........................................................................................3
1.4 Research Questions...............................................................................................4
1.5 Research Hypothesis.............................................................................................5
1.6 Significance, Scope and Limitations of the study.................................................4
CHAPTER 2-REVIEW OF LITERATURE AND CONCEPTUAL FRAMEWOFK
2.1 Introduction...........................................................................................................6
2.2 Reviewof Conceptual Perspectives.......................................................................6
2.3 Review of Related Policies.................................................................................13
2.4 Review of the Literature.....................................................................................18
2.5 Conceptual Framework.......................................................................................21
CHAPTER 3- RESEARCH METHODOLOGY
3.1 Introduction.........................................................................................................22
3.2 Approach of the Study and Research Designs....................................................22
3.3 Population of the Study and Sampling Decision................................................22
3.4 Data Collection Tools.........................................................................................23
3.5 Confirmation of Validity.....................................................................................23
3.6 Socio-Ethical Compliance...................................................................................24
3.7 Instrumentation of Data......................................................................................24
3.8 Data Analysis Method and Tools........................................................................24
3.9 Expected Outcome of the Study..........................................................................25
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Chapter 1- Introduction
1.1 General Background
Along the democratic movements in the early 1990s and present on-going federal
estate reformation in Nepal, the nation has received more emphasis with tangible
results in the process of overall economic liberalization. At this outset, alike other
sectors, the entire spectrum of hospitality industry has achieved quiet significant
development resulting in evolution of a number of chain hotels and restaurants in
most of the urban and touristic destinations. As a result, there has been quite a lot
change in the process of offering services to the guests and the competition also has
been piling up along the sectoral development of the entire hospitality industry. At
this point, the providers of hospitality services should have better idea about their
consumers and the selective preferences across different categories of consumers. In
this respect, the idea of conducting a consumer profiling survey of a selected chain of
a coffee house would be considered worthwhile.
In the last twenty years, Kathmandu has been the only happening place, where there
used to be very few small restaurants in past. Travel Nepal (2012) has revealed that
the coffee houses and restaurants were not well-developed and the trend of visiting
the restaurants was not as of present times. These days, the culture has developed as
such that the people seem to enjoy the luxury of eating and dining, highlighting on the
3Cs – Comfort, convenience and choice. A cluster of shops has turned into shopping
arcade and malls, the trend and style of eating has also changed with the introduction
of a wide variety of cuisine and style dinning. The international franchise and the
local restaurant consumers these days have become foodie and lavished.

One scholar has suggested that the Nepalese people drink tea rather than coffee and
tea is still the favorite national drink but more recently, the drinking habit of coffee
has increased, particularly in Kathmandu (Dhakal 2010). This scholar has claimed
that coffee has been a must in the restaurant menu for the consumers. According to
this scholar, the coffee is one of the most consumed beverages world-wide and coffee
drinking has become a regular habit of the people in all contexts today. This scholar
has further added that in 2010, there were about 100 coffee houses in Kathmandu,
which increased to about 300 in 2013 indicating further increase in course of time.
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Different scholars have claimed that the habit of drinking coffee has increased
significantly in Nepal. Giri,and Khanal (2013) have empirically concluded that the
market for coffee is growing by almost 20 percent every year, and this growth has
been fueled mainly because of the changing lifestyle of the people and increasing per
capita income along with an increase in the number of coffee outlets.

At the same time, many coffee houses have been in operation in Kathmandu which
include Himalaya beanz, Coffee Talk Nepal, Magic Beanz, Annapurna Coffee Shop,
La Dolce Vita, Himal Latte Coffee, Road House Café, and even smaller restaurants
also randomly serve coffee to their consumers. Among these coffee houses,
Himalayan Java is the forst specialty coffee house of Nepal and now it has become an
international franchisee coffee house with at least 13 outlets in Nepal and 3 of them
abroad.

Nepal is located between 80 degrees Ease latitude and 26 degrees to 30 degrees North
longitude. Nepal has a much diversified climate and topographical conditions,
comprising of the highest peak of the world, and to the lowest of 60 meters at
Kechnakalan in Jhapa. Naturally, Nepal has been divided into three geographic belts –
Himalayan, Hilly, and Terai regions. The hilly region of the country occupies almost
64 percent of the national territory, followed by 17 percent Terai and 19 percent
Himalayan regions respectively (Himalayan on Top Organic Coffee State, 2015).

According to Himalayan Java (2015), Nepal produces coffee in one of the highest
elevation in the world. The coffee beans are of Arabica variety, mix of bourbon and
typical and wet processed and the annual coffee production is approximately 650 tons
and coffee processing is done in old fashioned way. The coffee beans produced in
Nepal are consumed in the Nepalese market and are exported to few other countries.

As the consumption of the coffee has increased it has now been produced in different
districts of Nepal. Hopefully, there is better understanding of coffee by the consumers
and the coffee growers in Nepal. Since the coffee houses have started mushrooming in
Kathmandu, understanding about the market and consumers has been major concerns
for the coffee houses and restaurant operators.

At the same time, a few scholars have claimed that the drinking habit of coffee has
increased in the Nepalese society. Thus, the people responsible for the management of
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the coffee houses and restaurants must know their consumers on the basis of their
demographic attributes, their preferences and choices of drinking coffee and
consuming food items, and to evaluate the present service made available.

In this respect, customer profiling is the act of performing detailed customer analysis
to gain insights by building more reliable understanding about the consumers. Collica
(2007) has analyzed it in respect with 5Ws – Who, What, Where, When and Why?
Who are the customers? What do they want? Where are the consumers from? When
do they want? Why do they want? According to this scholar, through customer
profiling having diagnoses on the WH questions; the firms will be able to know their
consumers and will be able to know their consumers and will be able to tailor their
products or services accordingly as per the customer needs. Further, this scholar has
added that the act of customer profiling is one of the ways to understand the
consumers, their preferences and hopefully, to match the market demand by means of
customized delivery of supplies as per the needs.

1.2 Statement of the Problem

In this study, the present researcher was mainly concerned to establish a detailed
profile of consumers of Himalayan Java with respect to their demographic
distribution, overall level of their satisfaction on services offered and major
products or services consumed across different outlets of Himalayan Java. For
this, the present researcher considered a two-fold statement of the problem that
reads as –
a. How can customer satisfaction be improved by location of Himalayan Java?
b. How satisfied are the customer with ambience?
c. Does reasonable coffee pricing in Himalayan Java increase the satisfaction
among its customers?
d. How satisfied are the customer currently with the quality of coffee at
Himalayan Java?

1.3 Research Objectives

The primary objective of the present study is to establish a detailed consumer profile
of Himalayan Java. More specifically, the present study was further aimed to –
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a. Explore the detailed consumer demographic profile of Himalayan Java in

respect with their age-group, gender, nationality of origin, level of
educational attainment and professional line of involvement,
b. Identify the major consumption of products or services by the different
consumers across different outlets of Himalayan Java, and
c. Evaluate the overall level of customer satisfaction on Himalayan Java
offerings across the different outlets.
1.4 Significance, Scope and Limitations of the Study
This research would serve instrumental to generate valuable knowledge for
various franchisee coffee houses, restaurants and coffee house management as
well as to the learners of tourism and hospitality services. This research will help
the coffee house manager to identify their target markets, customer demography
and consuming habit of the consumers across different segments.

It is an academic inquiry to accomplish the academic requirements and the

research has been carried out while studying Master of Business Administration
(M.B.A) degree at Ace Institute of Management. The present research was
conducted in the few selected outlets of Himalayan Java at Kathmandu, Nepal
with the help of small size of consumer survey comprising of 120 respondents.

The present research has been heavily confined to only a few operating outlets of
Himalayan Java – Civil Mall, Basantapur and Mandala street. The data collection
process was facilitated by the management of Himalayan Java to perform
consumer survey while they were at the outlets.

Such a study would have covered multiple coffee houses with relatively larger
sample size, even beyond the Kathmandu valley. Additionally, the present study
was focused on only consumer profiling component.
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1.5 Research Hypothesis

A number of hypotheses were set to make the study more systematic and scientific.
Following are the key hypothesis set for necessary causal research design execution:
Hypothesis 1 (H0): There is no significant relationship between demographic
background of customers and their level of overall satisfaction on services offered
at Himalayan Java.

Hypothesis 2 (H0): There is no significant relationship between convenient

location of the outlet with customer satisfaction on Himalayan Java offerings.

Hypothesis 3 (H0): There is no significant relationship between ambience of the

outlet and their level of satisfaction on coffee house services.

Hypothesis 4 (H0): There is no significant relationship between good coffee with

their perceived level of satisfaction.

Hypothesis 5 (H0): There is no significant relationship between reasonable price

with their perceived level of satisfaction.
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CHAPTER 2-REVIEW OF LITERATURE AND CONCEPTUAL

FRAMEWORK
2.1 Introduction
The prime purpose of conducting review of literature was to get familiar with the
required theoretical and conceptual grounds of interest of the present study. For
this, the chapter as a whole has been developed in four sections. The first section
presents with the review of related conceptual perspectives, followed by review of
important policy documents related to present study in the second section of the
chapter. Similarly, the third section contains the review of related studies
conducted in the Nepalese and international contexts. Finally, on the basis of
overall conceptual and theoretical learning gained through the review of literature
from different perspectives, the present researcher has developed a conceptual
framework of the study in the fourth section. This conceptual framework of the
study serves as the basis of governing the overall ongoing study in a conceptually
grounded manner.

2.2 Review of Conceptual Perspectives

As the main part of review of literature, this section has provided with a closer
study of various theoretical and conceptual aspects related to the present study.
For this purpose, the present researcher fount the works of Kotler, Bowen and
Makens (2002), Kotler, Armstrong, Agnihotri and Haque (2013), Stanton, Etzel
and Walker (1994), Ettahawi (2012), Kotler and Armstrong (2009), Karthikeyan
(2013), Kharel (2012), Riley (2012), Bakers (2000), Jansel (2009), Wu, Lin and
Yang (2009), Owyang (2011), Devkota (2006), Chang (2010), Basnyat (2015) and
Bhasin (2015) as more reliable sources of learning to supplement the overall body
of knowledge of the present researcher in the chosen area of study.
On defining the ‘market place’ in a more realistic manner (Kotler, Bowen, &
Makens, 2002; & Kotler, Armstrong, Agnihotri, & Haque, 2013) have stated it as
a physical place where buyers and sellers gather to exchange the goods and
services. These scholars have further stated that in today’s hospitality industry,
there are sellers such as Burger King, MacDonald’s, Kentucky Fried Chicken
(KFC), Starbucks, Stella, Haagen Daz, Dunkin Donuts, etc. and the buyer may
comprise of the consumers and consumers representing different backgrounds. In
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real form, the consumers or consumers for whom these sellers strive to work
comprise the markets for different institutions (Kotler et al., 2002)

Since there are many buyers and sellers in the present market, the organizations
are moving away from mass marketing and focusing on product-variety or
product specification to target their consumers. According to these scholars, the
target marketing finds better marketing opportunities and allows the organizations
to develop right products for right targeted consumers. These scholars have added
that target marketing is the form of micro-marketing and customized marketing.
In other words of these scholars, micro-marketing is the process of understanding
the needs and wants of narrowly defined geographic, demographic,
psychographic, or behavior of the consumers. Similarly, customized marketing is
the adaptation of the organizational offerings as per the needs of specific
consumers or buyers (Kotler et al., 2002; & Kotler et al., 2013).

Other scholars have stated that some characteristics correlate positively with
companies performing well in customer relationship management, for example,
excellent products, and excellent management and knowledge of consumers.
These scholars have further suggested that by knowing consumers better,
organizations can precisely invest in valuable consumers and reduce the cost spent
on poorly performing consumers. According to these scholars, the basic
component of customer knowledge comes from a customer profile that is obtained
by the use of a database and data mining technologies used in organizations.

Building customer profiles is one of the most popular strategies used in knowing
more about consumers. In summary, using a customer profile is the technique
which converts raw information about consumers into the strategic-support
knowledge that reinforces the value of goods which companies to offer to them.

Further, Stanton, Etzel and Walker (1994) have emphasized on three core
elements of marketing as the needs to satisfy the consumers, money to spend on
the products and the willingness to spend by the consumers. These scholars have
added that the market consists of consumers with different needs, buying
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preferences, or product-wise behavior. Similarly, the scholars have classified

target marketing into the market as a single unit and varied units.

Kotler et al. (2013) have stated that target marketing evaluates the market
segment, attracts and selects one or more segments that generate customer value
and satisfaction. The scholar has added customer segments targets the niche
market and competes other organizations. Another scholar has recognized that
market segmentation is the process of dividing the market into distinct groups of
buyers according to the demography, geography, psychographic and behavioral
classifications with potent for special separate products (Eltahawi, 2012).
According to this scholar, it results naturally due to the different preferences and
choices of the people. This scholar has further added that the purpose of market
segmentation allows sales to focus on the subset and most likely to divide a broad
targeted market into subsets of consumers, businesses, countries that are perceived
to have, common needs, interests, and priorities, and then designing and
implementing strategies to target their needs and wants.

Other scholars are of the opinion that the major variables of market segmentation
include geographic, demographic, psychographic and behavioral classifications
(Kotler, & Armstrong, 2009). These scholars have added that the demographic
segmentation categorizes the market into smaller groups based on variables such
as age, gender, family size, income, occupation, education, religion, rage,
nationality, etc. the customer needs, wants and usage rates varies with the
demographic variables.

Another scholar has identified that an organization spends a lot of its time to find
the right expert at the right time in the right context and the idea of profiling and
maintaining an updated list of domain and technical experts is a mantra for
success. There are many organizations who have earned the benefits of an
enterprise-wide expert profiling initiative (Karthikeyan, 2013). A scholar, Kharel
(2014) has further stated that customer profiling serves as an instrumental tool for
any marketer or business entity to understand in depth about the respective
consumers and their various behavioral patterns, eventually leading to know their
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needs, wants, demands and motivations favoring demand of various goods and
services on offer of a firm.

Further, Riley (2012) has stated that a customer is a person or an institution who
obtains goods and services form organizations. According to this scholar, the term
consumer means the final consumer, who consumes the final product or goods.
For example, the parents buying lunch box snacks are probably the agents on
behalf of school-age children. The parents can therefore be described as the
intermediate consumers and the child as the end consumer – the ultimate user of
the product or service. This scholar has claimed that the consumers can be
classified into two types – internal consumers and external consumers whereby
the internal consumers are members that contribute towards the service provided
to external consumers and internal consumers may be colleagues, managers,
supervisors, staffs in functional departments.

Similarly, Bakers (2000) and Kotler et al. (2013) have claimed that the process of
understanding customer profiling as a description of information of the customer,
understanding their backgrounds and behavior. These scholars have added that the
customer profiles are essential in market analysis as it supports the businesses in
saving time and money by highlighting the real potential consumers. Further,
these scholars have claimed that customer profiling intends to describe different
categories of consumers and can be utilized as a tool to identify the wants and
demands of the consumers to improve services and customer satisfaction.
Similarly, according to these scholars, effectively performed customer profiling
helps in effective customer analysis and more importantly, the customer profile
data and consumer segmentation analysis offer the insights on customer needs,
wants and their classifications.

At the same time, other scholars have explained customer profiling as a process of
allocation of an organization to its specific target audience and gaining knowledge
of customer buying decisions and patterns, their preferences, knowing more
selectively the profitable consumers and understanding their personal and family
demography. Another equally important terminology is positioning which is
concerned with creating, communicating and maintaining distinctive differences
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that would be valued by the consumers (Wu, Lin, & Yang, 2009). Further, these
scholars have added that customer profiling builds a basis for marketers to
communicate with the existing consumers to offer them better services, retain, and
penetrate in the niche market for new consumers. Further, theses scholars have
added that assembling or collection of information on consumers, such as
demographic and personal data which prospect new consumers for using external
sources is part of customer profiling. In this respect, Owyang (2011) has quoted
seven elements of customer profiling data as discussed below:

Demographic data: It enables an efficient way to create age, gender, nationality,

etc. about consumers profiling and their choice of preferences of product and
services.

Product data: It is the most commonly used data in e-commerce websites. It is

used to match similar products, cross-selling and up-selling of the products.

Psychographic data: The consumers generally e-mail the service experienced

good or bad, where the consumers express their happiness or sadness. The
customer reviews can provide the opportunity to develop or improve the products
and services provided by the host to the consumers.

Behavioral data: Basically behavioral data can be categorized in two types. They
are Customer Relationship Management (CRM) and e-commerce systems. The
customer’s behavior can be analyzed by the consumption of product and services
and the digital breadcrumbs that users are leaving in social networks using a
variety of web techniques from cookies, Facebook, and products to them that
match their previous behaviors will yield a greater conversion.

Referral data: Consumers are emitting their recommendations for products

positively and negatively. The ratings and reviews implicitly though gestures like
button to their social network. Vendors like bazaar voice offers a suite of tools for
customer feedback and intelligence, zuberance fosters positive word of mouth
through positive ratings, and expo- TV is a catalyst for conversation using video
reviews.
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Location data: Location based technology and services emerge for consumers to
emit signals where they are using mobile devices, this data helps to triangulate
context around location and time for brands to reach the consumers. The
Foursquare checking and the associated contextual advertisements that emerge to
users to social media sites, consumers can both locate on or emit their location, in
exchange for contextual information the consumers can see awareness hub which
means client is able to surface influencers by location in Foursquare Perspectives.

Intention data: The most volatile data type holding great opportunity to predict
what consumers will do in the future. The wish lists, social calendars, and
aspiration websites like Plan Cast, 43 things that allow consumers to broadcast
their future plans. Savvy marketers will harness explicit content and serve up the
right messages in advance – as well as poach from competitors.

According to Kotler and Armstrong (2009), another element of customer profiling

is using multiple segmentation bases where marketers rarely limit their
segmentation analysis to only one or a few variables. Other scholars have claimed
that coffee is the most consumed beverage world-wide. The coffee was introduced
in Nepal by a hermit, Mr. Hira Giri in 1938. He bought the seeds of coffee from
Sindu Province of Myanmar, the then Burma and planted in Aapachour of Gulmi
district for the first time in Nepal. Considering the response of enthusiastic
farmers, interest of people on coffee and favorable climatic conditions for
cultivation, Ministry of Agriculture decided to launch Coffee Development
Program in Nepal. The government also supported the farmers technically and
financially. The coffee was cultivated in about 39 districts of the middle hills of
Nepal (based on personal conversation with Devkota, M. on March 16, 2016,
while delivering a lecture on History of Coffee in Nepal).

Himalayan Java is the first coffee specialty franchisee of Nepal owned by Mr.
Gagan Pradhan and Mr. Anand Gurung. It was established in 1999 and since then,
the coffee house has been expanded from national to international markets. It has
been promoting Nepalese coffee industry and local grown coffee in the
international markets. Himalayan Java has been exporting coffee to different
 12

countries such as the United States of America (USA) and in the European
countries (Chang, 2010).

According to Basnyat (2013), besides coffee, Himalayan Java adds with 2Cs –
communication and community and has completed the trinity of what defines a
true coffee house – Coffee, Communication and Community. According to this
scholar, coffee culture in Nepal is getting more and more popular. “A good
number of consumers visit our restaurant to have our coffee”, added Devkota
(2016).

Market segmentation allocates the organization to get advantage over their

competitors in the marketplace by enabling them to concentrate resources on
clearly identified opportunities. It helps in segmentation, targeting and positioning
of the consumers. In this respect, Bhasin (2015) has quoted benefits of market
segmentation as follows:

Focus of the company: Segmentation is an effective method to increase the

focus of the firm on the market segments. The organization must have better focus
and definitely on organization will have better returns in the future. Numerous
automobile companies have started focusing on small car segments, company
changing its focus for better returns. Thus companies base their strategy
completely on a new segment which increases its focus and profitability.

Customer’s retention: To retain the consumers by providing a great customer

experience. Customer retention and customer loyalty correspond to repeated
behavior, where loyalty reflects relationship development and retention reflects
relationship continuation. Customer retention is an essential part of the customer
relationship, and customer experience management follows customer’s retention.
Customer retention can be encouraged through the life cycle of a customer.
Customer retention is the activity that a selling organization undertakes in order to
reduce customer defections. Successful customer retention starts with the first
contact with a customer and continues throughout the entire lifetime of a
relationship.
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Better communication: The feedback of the customer helps the company to

identify the targeted market and products. Communication cannot be possible
without knowing the targeted market. If an organization do not know their
consumer’s market segment, their demography, psychology, then it would be
impossible for communication.

Increase in competitiveness: The organization focus increases, competitiveness

in that market segment will increase, if the organizations focus in young
generation consumers, brand recall and equity. The market share of the
organization might increase if the chances of a new competitor entering might be
low and thus brand loyalty will definitely increase. Thus market segmentation also
increases competitiveness of a firm in holistic view.

Market expansion: Geographic segmentation and demographic are type of

segmentation where expansion is immediately possible. If an organization has a
market strategy on the basis of geography and demography, then one must cater to
a particular region and can immediately expand to a nearby region. In the same
way, if organization targets consumers based on their demography then an
organization can expand in similar products. Segmentation plays a crucial role in
expansion. It is impossible to expand an organization without market expansion.

2.3 Review of Related Policies

For the purpose of making the present work thoroughly aligned or grounded with
the relevant policies, standards, universal norms and system requirements, the
present researcher found it highly relevant to review a number of documents
which included Tiwari (2010), Government of Nepal ([GON], 2003), GON
(2004), Kentucky Fried Chicken ([KFC], 2015), Peterson (2014) and Shrestha
(2012) as the pertinent sources for the review of such policy perspectives.

GON (1994, as cited in Tiwari, 2010) has come up with twenty-year plan,
1994/95 – 2014/15 with an aim to provide policy level inputs to promote
commercialization of a number of agriculture products including coffee. Further,
Tiwari (2010) has recognized that coffee as a high value crop and has a great
scope for producing in mid-hills in Nepal. Agriculture Perspective Plan (AAP)
 14

emphasizes paradigm shift from subsistence farming to commercial farming by

subsequent use of ecological principals and policies.

Additionally, GON (1997; & 2002, as cited in Tiwari, 2010) in its ninth and tenth
five-year plans has focused on increasing the production of coffee and as a high
value crop as well as a means of employment generation as well as promotion of
agricultural biodiversity and environment. The ninth five-year plan has initiated
the Pocket Package Commodities (PPC) for high value cash crops, whereas the
tenth five-year plan has provisioned up to 50 percent subsidy on sampling to the
farmers.

GON (2004) in its agricultural policy has emphasized the promotion of organic
farming in both general commodities and commercial commodities and its
accreditation so as to confirm global acceptance of such production coffee, being
a commercial commodity, such a policy in place would serve instrumental in the
process of marketing and promotions of Nepalese organic coffee globally.

GON (2003) has come up with National Coffee Policy, 2003 in line with the
intention of National Tea and Coffee Development Board Act, 1992 for the
development of coffee as a reliable source of income for enhancing the
opportunity of employment and earning of foreign currency by increase of private
sector in production, processing and commercial transaction of coffee with
sustainable and systematic utilization of available resources and opportunities in
the country.

The main objectives of National Coffee Policy, 2003 include promoting the
export of coffee with a view to substitute the import, helping in poverty
alleviation by generating income and employment opportunities, helping in the
mission of environment conservation by expanding the coffee plantation
throughout the country, and making coffee enterprises more sustainable and
attractive (GON, 2003).

Further, GON (2003) has provisioned with at least four working policies to
promote coffee and such policies include production and processing, marketing
 15

and trade promotions, institutional arrangements, and provision of coffee

development fund. The subsequent outlines have been depicted from such
policies:
Production and Processing
1. Development and dissemination of modern and improved technologies
will be done in coordination with the Government and private sector
through the establishment of research center, service-center and
improvement of the present coffee development centers.
2. Land revenues shall be levied according to the existing regulation.
3. Commercial coffee cultivation area will be given priority for infrastructure
development like road access, electricity, irrigation, communication, etc.
4. Facility shall be provided on import of machinery and tools for coffee
processing industry.
5. Necessary skilled human resources shall be developed for coffee
cultivation and processing.
6. Attractive national logo shall be promoted for exportable coffee items.
7. Machinery tools required for coffee processing shall be encouraged to
produce within the nation.
8. Facilities and subsidies provided through this policy can be withdrawn if
found they are not being used according to aforesaid objective.
9. All individuals and organizations involved in commercial coffee farming,
coffee export/import and coffee trade should be registered with the Nepal
Tea and Coffee Development Board (NTCDB).
10. Public and private owned land shall be provided on lease for Coffee
cultivation.

Marketing and Trade Promotion

1. Co-ordination with foreign missions shall be established for coffee export
promotion.
2. Facility of export without letter of credit will be granted on such exports
comprising the total amount not exceeding US $30,000 in one shipment.
3. To substitute the import, priority will be given to domestic coffee for the
fulfillment of internal demand.
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4. Organic production of coffee shall be promoted by organizing different

promotional programs and campaign highlighting the importance of
organic farming.
5. Approval from the Board is necessary while exporting the coffee from
domestic market as well as importing from abroad.

Institutional Arrangements
1. Entrepreneurs, farmers, industrialists and employees involved in national
coffee industry shall be encouraged to participate in coffee related national
and international seminars, fairs and exhibitions.
2. Board will continuously focus on research and Technological
Development of coffee in co-ordination with private sector as well as
national and international organizations.
3. To maintain and improve the quality of coffee, appropriate improvement
works will be carried out.
4. Board will recommend to the concerned departments to obtain the required
facilities for coffee trade and promotion.
5. Promotions for educational tours, training and higher educational
programs will be commended for the development of coffee industry in the
country.
6. Coffee information system will be established at central level for
collection and dissemination of information like plantation area,
production, export, import, etc.
7. Coffee related individuals shall be encouraged to participate on coffee
marketing, coffee development planning, rules / regulation formation.
8. Board will inspect, monitor and evaluate the coffee farmers and traders so
as to award the best performer.
9. Coffee pricing committee will continue till the coffee market come into
competitive stage.
10. Establishment of coffee enterprise is open to all national and international
Investors.

Coffee Development Fund

The national Coffee Policy also has a provision of smooth operations of the
institutionalized intervention of coffee development by means of a defined
 17

provision of funds established through the different sources and it has been
provisioned that the fund received from different national and international
agencies could be used for the purpose of research and development aimed at
the development and promotion of Nepalese coffee.
Kentucky Fried Chicken (KFC) has a culture of collecting personal information from
the consumers for the purpose of customer profiling which has been firmly respecting
the privacy of consumers. The information assists KFC to participate in a promotion,
competition, promotional activity, survey, market research or customer behavioral
activity. The subscription to mailing list or following social media pages of KFC
helps the management to know the preferences of food of the consumers. The
information of customer includes, name, postal address, email address, telephone
number, and date of birth, age and occupation (KFC, 2015). KFC has an operating
policy whereby the personal information is recorded when a customer places an order
through telephonic conversation or electronic ordering system, the information of
consumers include name, postal address, email address, telephone number, date of
birth, age, preferences of food, previous order information, IP address and credit card
details.

Another scholar Peterson (2014) has claimed that Starbucks has several policies that
both baristas and consumers consistently misunderstand, which almost always ends
with an unhappy patron. Similarly, this scholar has further quoted the four most
policies.

The refill policy: Starbucks offers unlimited free refills, no matter what the
drink was ordered by the consumer and as long as a customer is inside the
store the customer is a Starbucks rewards member.

Charges for soy milk: Starbucks charge extra money for soy milk. Despite the
rule change, if consumers are adding soy milk to coffee as a creamer, and
using less than four ounces, the customer should not be charged.

The camera policy: Starbucks consumers are free to snap as many photos as
they want inside stores. But they should ask for permission before featuring
baristas in their photos. This policy has not always been understood by
Starbucks employees and partners.
 18

The personal cup discount: Starbucks offers a ten cent discount to consumers
who bring their own mug or tumbler to the store. Sometimes, consumers get
annoyed when they don’t get bring it. The policy does not allow for a discount
for using the Starbucks mug.

Shrestha (2012) has performed a closed review of organic agriculture practice policy
keeping at the center. The coffee promotion program and this scholar has
acknowledge the level of Government support to promote organic coffee export
claiming that the Government machinery were appealing enough to the firms
specializing in this sector of business.

2.4 Review of the Literature

To understand more empirically the applied aspects of coffee house operations and
customer profiling in such contexts the present researched could identify the works of
Svala (2016), Holmes (2012), Hui Han and Monirul (2012), Cooper-Marcus and
Francis (1998), Kharel (2014), Burge (2013), Serpa (2016), Junnifer, Lesie, Mattock
and Shahnifar (2010), Mishra (2016), Ratels (2013) and Mancini (2009) as more
pertinent sources of learning about the realities in operating the coffee house services
in different contexts. The subsequent reviews provide with detailed perspectives in
this respect.
Working on market segmentation as a tool for consumer profiling, Svala (2016) has
recommended that the customer of coffee should be considered as one of the universal
tools of market analysis and segmentation for the institutions aspiring for greater
market share and competitive advantage in the happiness economy of coffee
consumption in colleges. In a study, this scholar has used as many as three bases of
customer profiling – classification of users (students or faculty), life span (teenagers
or adults), and professional status (office workers or others) in another study, Holmes
(2012) has executed a customer profiling survey of the coffee houses on the basis of
their demographic segmentation. This study has attempted to categorize the customer
demography on the basis of their age and gender and performed a comparative
analysis of their preferred location of coffee houses and confirmed that the youth
consumers consume more coffee compared to that of adults.

Hui Han and Monirul (2012), on assessing the consumer perception of private label
brands promoted through the outlets in Korea, have observed that such brands were
 19

quite able to each corner of the market place. This study has further revealed that the
brands could not materialize the prospect of transforming their first time buyers into
long-term loyal consumers due to lack of customized services. In this context, these
scholars have suggested the firms not to focus too much on promotional activities that
create more price sensitivity among the consumers. Rather, these scholars have
recommended focusing on hands-on approach to customized services to the
consumers during their visit to the outlets.

Two scholars have claimed that the coffee houses should be promoted as peaceful
places, at the same time with more visible attractiveness of the locations so as to
attract the consumers to visit their time and again (Cooper-Marcus, & Frances, 1998).
According to these scholars, the experience of place has to be unique to each
individual and should be directly related to their lived experiences, attachment to a
place is feelings that emotionally bind people to a particular place which is directly
related to the places – coffee lovers to a quiet and peaceful place, humans to the earth
– to their own history and memories, to their families and larger community.

A scholar in a more recent work, kharel (2014) has claimed that the evolution of
superstores and department stores in the country resulted in remarkable evolution and
established itself as an important economic contributor. Similarly, this scholar has
claimed that as a result of evolution of more superstores, the attitude and expectation
of people towards shopping has totally changed over the time. On performing
customer profiling of Bhatbhateni Superstores, this scholar has considered a number
of demographic variables as the bases of analyses. Such variables include gender, age,
and educational level of attainment, nationality, professional line of engagement and
social status of the consumers surveyed for research.

Burge (2013) has recommended that the consumer motivation towards branded coffee
includes the factors like past experience/familiarity, convenience of location, and
friends and family. In addition, this scholar reveals significant associations exist
between motivation and social demographics such as age and gender, e.g., women
being motivated by the popular and thriving atmosphere of the branded coffee shop
than men. Whereas age has larger differences between motivations, e.g., support local
brand, avoid crowds/noise, somewhere new/different and brand and reputation.
 20

Serpa (2016) has revealed that the customer profiling is the understanding of the
customer identity and buying behavior. In this study this scholar has revealed that the
customer buying behavior depends upon their needs, options and choice. Similarly,
this scholar has recommended progressive profiling as it allows collecting additional
information and data over the course of multiple customer demography and their
behavior.

Junnufer, Lesie, Mattock and Shahinfar (2010) have recommended customer

classification into demographic segmentation based on their age, gender, educational
attainment, their preference of location and food items. In this study, these scholars
have revealed that Starbucks has dominant features towards coffee industry by
promoting and educating consumers to drink coffee and food items. Similarly, these
scholars have suggested that location, parking, environment and convenient location
attract the consumers to the coffee house. This study has confirmation that the
consumers’ values taste more than price and they are willing to pay for higher
quantity. According to these scholars, the young generation customer preferences
differ from the other age group of customer with 65 percent of Canadian adults
consuming coffee on daily basis with high preference of plain black coffee.

Mishra (2016) has revealed that the study of Café Coffee Day (CCD) is the chain of
cages relating the agricultural business, business in retail, logistics, infrastructure and
investments. This study has claimed that CCD business model that focuses on growth
strategy, operational challenges, real state, manpower and it analyses the inputs along
the parameters of customer value proposition, profit formula – revenue model, the
cost structure, margins, inventory turnover, key resources – people, partnerships,
brand and the key processes. Further, this study has added the importance of customer
value propositions and communication with consumers, multiple channels and
formats, nurturing of manpower, sound systems and process.

Ratels (2013) has explained the emphasis on coffee, food items, customer buying
behavior and customer segmentation categorized based on age, gender, profession,
nationality, their preference and the most visited days of the coffee house. Further
scholars have added customer segmentation is the best tool for customizing the
targeted consumers. At the same time, Mancini (2009) has explained that classical
marketing is the application of customer segmentation. It is the strategy that drives
 21

aspects of business and effectiveness of the firm. This scholar has claimed that
developing a framework for achieving customer loyalty to identify best consumer
segments, creating top targeted groups and detailed life cycle and behavior, deploy
enterprise-wide strategies taking in account, measuring effectiveness and adjust
strategy to maximum rate of return.

2.5 Conceptual Framework

On the basis of overall review of related conceptual perspectives, policy documents
and related research publications as discussed above and also in line with the general
background governing the present research, the present researcher has developed a
conceptual framework of the study as presented in figure below to make the whole
journey more systematic, scientific and theoretically grounded.

General Customer Demography

Consumer Buying Behavior
1. Age
2. Gender 1. Chain house visited the most
3. Nationality 2. Alternative to Himalayan Java
4. Educational level 3. Perceived level of quality
5. Professional Background
4. Problems faced in the outlets
5. Expected solutions

Deduction of consumer profiling of coffeehouse

Above figure reveals that the present research was conducted with a vision to
establish a complete consumer profile of Himalayan Java in respect with their
demographic distribution based on age, gender, educational level of attainment,
professional line of engagement, marital status and nationality. Similarly, the present
study also aimed at identifying the consumer preference of consumption of different
food items served at Himalayan Java, in addition to intention for consuming a variety
of coffee items served in this coffee house. Similarly, the present study also has
attempted to establish the overall level of consumer satisfaction of delivered service
quality.
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Chapter 3 – Research Methodology

3.1 Introduction
Research Methodology is the main body of the study; it is the way to solve the
research problem systematically. Therefore research methodology is the research
method or techniques used throughout the entire study. In other words, research
methodology is the process of arriving at the solution of problem through planned and
systematic dealing with collection, analysis and interpretation of facts and figures.

3.2 Approach of Study and Research Designs

To make it a technically sound work, the research was conducted using a blend of
qualitative and quantitative research approaches. As part of qualitative research, a lot
of review of literature was performed to understand the local and global realities in
the field of coffee house business, and on the other hand, as part of quantitative
approach of work, the present researcher used a survey method of data collection with
an aim to establish the consumer profiling of Himalayan Java.
As it applies to the universally accepted, scientific research endeavor, it was
performed as a blend of exploratory, descriptive and causal research designs. As part
of exploratory research design, the present researcher used extensive review of
literature and personal observation as well as expert suggestions with an aim to
establish a more realistic problem definition, research questions and working
hypotheses. Similarly, as part of descriptive research design, a consumer survey was
accomplished with an aim to establish the consumer profiling of Himalayan Java. For
this purpose, a set of structured survey questionnaires was used to gather the
statistically descriptive information pertaining to revealing the actual status of
consumer profiles of Himalayan Java. Finally, using the cause and effective
relationship testing between various constructs of observation, relevant statistical
testing were performed in the form of test of hypotheses which included Chi-square
test and ANOVA.

3.3 Population of the Study and Sampling Decision

The main population of the research comprise of the individuals and institutions that
have coffee drinking or other food experience at Himalayan Java. Normally, the youth
population engaged in various professions irrespective of their nationalities represents
such a population. However, there was no exact database established by the company
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regarding various people visiting their outlets, neither the present researcher could
find any agencies that had established such database. Thus, the exact number of
population of this study remained unknown to the present researcher.
Since the exact population of the study was unknown, the present researcher used
non-probability sampling method. Within this method, the present researcher used
convenience sampling technique to select the sample respondents. For this, primarily
two approaches were undertaken – 1. Visiting the guests of the coffee house at its
different outlets with prior permission of the outlet management and interviewing
them, and 2. Interviewing to those general public within the friends circle and local
communities, who reported to have visited Himalayan Java more recently for the
purpose of either drinking coffee or any other food.

3.4 Data Collection Tool

For the purpose of primary data collection through consumer survey modality, the
present researcher developed a set of more structured questionnaires which comprised
of two sections. The first section of the survey questionnaires includes the personal
information of the respondents comprising of gender, age, nationality, and marital
status, education level of attainment and professional line of involvement. Similarly,
the second section has been composed of structured questions to reveal consumer
perceived level of quality of services offered by the different outlets of Himalayan
Java and a number of other related questions structured around the main purpose of
the study and conceptual framework. These sections also content a number of semi-
structured and fully open-ended questions.
3.5 Confirmation of Validity
For the purpose of conformation of the validity of the different constructs and
methodological approached taken into account of this study, the present researcher
has used the construct and content validity mainly form two perspectives. First, the
construct validity has been confirmed in reference with the replication of various
variables of observation taken into account by different scholars while conducting
similar researches in the past. The present researcher has used similar constructs of
the observation as depicted by the past researchers. Second, the content validity has
been confirmed by the help of expert inputs on judgment of sufficiency of the variety
of information to be gathered and its intensity of analyses so as to establish a
universally generalizable customer profiling of a coffee house chain.
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3.6 Socio-Ethical Compliance

The present researcher was quite concerned to make the overall research work socio-
ethically as sound as possible. The present researcher did not pressurize any of the
respondents for participation, nor had excessive requests for responding the forms
fully. The purpose was well communicated and consent for participation was sought
before proceeding with data collection. No personal anonymity of any of the
respondents was disclosed.
While administering the research interviews, the respondents were not at all
compelled to participate. Rather, they were humbly requested and the people having
personal reservation against participation were just left out from further consideration
in sampling.

3.7 Instrumentation of Data

Instrumentation can be basically explained as the tools used in data collection and
analysis. A well-structured questionnaire will be prepared as the main instrument of
the data collection for this study. The questionnaire will be most carefully designed as
well as pre-tested so that it could best serve the purpose of this study. The
questionnaire will be divided into two parts. It will have the classification questions
and the research questions. The classification question will help to collect the personal
information like gender, age, income and education. The research questions will help
to collect information on the research topic. The questionnaire contains Likert scale
(summated scale) as well as multiple-choice questions. The questionnaires will be
distributed to 125 Himalayan Java Customers. The objectives of the research,
meaning of the question and the way of filling them up were explained before getting
response from the respondents.
In order to analyze the collected data, SPSS and Microsoft Excel will be used. These
tools were used for tabulation and calculation of the data collected from the field.

3.8 Data Analysis Method and Tools

In order to carry out the analysis, SPSS tool will be used. The response collected from
the respondents will be coded and entered into the SPSS worksheet. All the different
questions like ‘multiple response’ and ‘Likert scale’ will also be coded as per the
rules.
 25

After the coding, the appropriate analysis will be done on the data collected. Various
statistical tools will be used to draw inferences from the collected responses.

After that, the data will be copied on to an Excel Worksheet where the tables obtained
from SPSS will be refined and then used to interpret the results. Also, necessary
graphs and charts will be drawn using the Microsoft Excel in order to find out the
answers. The graphs and charts will be presented in this report along with
explanations so that conclusions can be drawn which are necessary for the research
purpose.

All the distributed questionnaires will be collected to make them applicable for
presentation and analysis. Presentation of data will be done on tabular form, simple
bar-diagram and pie charts.

As the nature of the study is confined to a particular area, some statistical and
descriptive tools will be used. Since the study is based on quantitative data, mainly the
descriptive analysis will be made to draw some conclusion of the study.

 Percentage (%): It is mathematical tool which represents the portion of any

variables in terms of its total. In the present study, percentage has been used to
obtain actual number of respondent’s preference.

 Diagram and graphs: These are the picture tools, which helps to know the
true picture of the different variables in the absence of complicated formulae
and equation.

 Hypothesis Testing: Hypothesis is a statement about the relationship between

two or more which needs to be investigated for the truth. If the relationship
between two or more variables act as hypothesis predicts, then the hypothesis is
supported.

3.9 Expected Outcome of the Study

The expected outcome will certainly answer the research questions and objectives.
The entire hypothesis will be tested and relationship between all the variables and
satisfaction will be defined.