CUSTOMER SATISFACTION ON PREMIUM COFFEE SHOP

CONSUMPTION IN THE COVID-19 PANDEMIC (CASE STUDY IN

INDONESIA)

NOVI HARYATI, YAFI ALAM SYAH, ROSITA WIDYA PUTRI

Department of Socioeconomic Faculty of Agriculture, Universitas Brawijaya, Indonesia

Email : noviharyati@ub.ac.id

ABSTRACT
The emergence of the contemporary coffee drink consumption phenomenon, which has increased in
recent years, has made many coffee-based beverage businesses popular and have tough market
competition. However, Covid 19 pandemic has made huge changes and also to the consumer behavior. To
be able to survive this condition, a long-term strategy in marketing management is needed to be able to
stay in the market. This study aims to measure the 4P's marketing mix's effect on consumer satisfaction
with processed coffee beverage products. This study uses Structural Equation Modeling PLS (SEM-PLS)
to analyze the effect of the 4P marketing mix on customer satisfaction. The data obtained in this study by
interviewing 409 respondents with a purposive method. This study's findings are the 4P marketing mix
(Product, Price, Place, Promotion) has a positive and significant effect on consumer satisfaction, and
product variants have the most significant influence in increasing consumer satisfaction with processed
coffee beverage products.

Keyword : Consumer satisfaction, marketing mix, coffee drink product, premium coffee, SEM-PLS.

Introduction and Literature Review

Customer satisfaction is the key to the success of an organization or business so that it can be said that
customer satisfaction is the goal of marketing management activities for a product of the organization or
industry (Hill & Wright, 2000). Fulfilling customer satisfaction by providing what they want from a
product can also encourage consumers to loyalty to a brand of the product (Bayunitri, 2017). Therefore,
customer satisfaction is a long-term strategy for companies to be successful and survive for a long time.
Because of its significance to the company's success, research on customer satisfaction has been widely
conducted and has become a popular research topic in marketing management. Several studies have
shown that satisfied consumers are less price sensitive, competitive, and loyal to the brand longer than
dissatisfied consumers (Erciş et al., 2012; Rahmah et al., 2018).

As the COVID-19 pandemic results in permanent behavioral changes by consumers, the conceptual
framework will begin to manifest itself into reality (Zwanka and Buff 2020). According to He & Harris
(2020), Covid-19 could potentially change how we see the world, the ways in which we think, and how
we conduct our lives. Notwithstanding the human tragedy of lost lives, broken families, and scarred
communities, the economic and social changes caused by a pandemic-driven lockdown will constitute a
cultural legacy which will live long in our memories and those of future generations. The pain is personal,
emotional, psychological, societal, economic, and cultural; and it will leave scars. This pandemic has
altered people's lives and wreaked havoc on the global economy. While the long-term effects of COVID-
19 are yet to be determined, its immediate impact on retailing is significant. Retailers of essential goods
such as food, groceries, and healthcare are experiencing increased demand opportunities for serving
consumers at home, while facing challenges of inventory, supply chain management, delivery, and
keeping their facility a safe environment (Roggeveen and Sethuraman 2020).

Marketing mix is a combination of product or service strategies, distribution, promotion and price that are
used to generate exchange rates and reach target markets (Išoraitė 2016), specifically plays a role in
helping business owners to form a framework for marketing their products (Baker 2008). The purpose of
the marketing mix is to meet consumer needs (Oflac et al. 2015) making the product or service produced
differentiates it from other products or services so that it influences prospective buyers to choose their
product. The marketing mix has an important function for an industry in the decision-making process by
policy makers to stay afloat in market competition.

The 4P concept is an old concept but it can be said to be able to explain the attributes of a product in a
simple way, and is still often used by business owners to define the marketing strategy of the product
being marketed. The components of the marketing mix are Product, Price, Place, and Promotion or
commonly known as 4P (Aghaei et al. 2014; Doucette and McDonough 2002; Išoraitė 2016; Oflac et al.
2015).

Problem Statement

Coffee in Indonesia is an important commodity. This is because several regions have high production, as
well as a promising market share. Based on data from the International Coffee Organization (ICO)
Council in the coffee year period of September 2019, the share of Indonesia's consumption level among
producing countries in the Asia and Oceania region is the highest, such as 13.5 percent. In the same year,
the share of Indonesia's consumption level in the world was the 5th highest, amounting to 2.9 percent.
Seeing the data on Indonesia's high coffee consumption, the Ministry of Agriculture through the
Directorate General of Plantation continues to commit to boosting coffee production.

This rapid growth of coffee consumption is triggered by the current coffee trend and new product. This is
opening the opportunity for coffee business to grow. It can be seen from the example, iced coffee that is
processed with modern coffee makers and mixed with fresh milk with added palm sugar, vanilla syrup,
bubble, and biscuits. The emergence of this contemporary coffee shop is rampant in almost every region.
One of the indications is an increase in the search for contemporary coffee brands on the Google site. The
search for the Kulo Coffee brand has increased starting February 2018, only two months since the shop
started operating. Following is Kopi Kenangan and Kopi Janji Jiwa, which have started to be sought by
the public online in September and October 2018.

Coffee shop business trends changed due to the Covid-19 pandemic. The existence of social restrictions
during the pandemic meant that cafes were no longer visited as meeting places or work locations.Food
and Beverage (F&B) consultant Renaldy Wicaksono said the coffee shop business before the Covid-19
pandemic was very promising because it had become part of the consumer's lifestyle. But now consumers
are turning to coffee at home due to social restrictions. This is why marketing strategy is also changing.
This research aims to understand the effect of marketing mix to customer satisfaction in premium branded
coffee.

Methodology
This research used a quantitative approach which was carried out in the cities of Malang, Surabaya, and
Jakarta from October to December 2020. The sampling technique in this study was a non-probability
sampling approach with a purposive method to 406 respondents who were consumers of processed coffee
products from brands. well-known in Indonesia, among others; Excelso, Maxx coffee, Kenangan Coffee,
Soe Coffee, Kulo Coffee, Janji Jiwa Coffee. This study uses a questionnaire which is divided into two
parts; the first part is the characteristics of the respondents including sociodemographic, education,
occupation, age and income. The second part contains about this research. The research variables used in
this study are components of the 4P marketing mix; Product, Price, Place, Promotion. This research
questionnaire was written in Indonesian to make it easier for respondents to fill out the questionnaire
using a Likert scale of 1-5 (1 = strongly disagree, 2 = disagree, 3 = neutral, 4 = agree, 5 = strongly agree).
The validity of the questionnaire was analyzed using WarpPLS 7.0 with a model of four independent
variables (Product, Price, Place, Promotion) and one dependent variable (customer satisfaction).

Findings
The total number of respondents was 406. 79% of them came from outside Malang City, while 17% are
from Surabaya and Jakarta. The education background of the respondents is dominated by high school
graduates with a population of 73% of respondents, 14% of undergraduate degrees, 7% of undergraduate
degrees, and 3% of junior high school and diplomas respectively. Of the total respondents, 66% are
students, 27% are not working, 4% are employees/entrepreneurs while housewives, freelance workers,
each 1%. The total population of respondents aged 15-20 years is 43% and 20-25 years old is 53%, while
the number of other populations is not more than 7 people. From the data on the characteristics of the
respondents, the results show that the population of respondents is dominated by income below 500,000
by 51% and above 2,000,000. by 35%. From the respondent's characteristic data, it can be concluded that
consumers of processed coffee drinks are in great demand by students aged 15-25 years and 20-25 years
with an income of IDR. 500,000 to an income of more than IDR. 2,000,000. Measurement of variables
and indicators can be seen in table 1.
Table 1. Research Variables
Measurement definition
Variable Scale
Exogenous variable
X1 Product X1.1 I bought the product because the product has many choices (flavor or size or Likert
shape variant)
X1.2 I bought the product because it has an affordable price
X1.3 I think the product service has a high standard in the Covid-19 Pandemic
(clean and healthy)
X1.4 I bought the product because the product has many choices (flavor or size or
shape variant)
X1.5 The restaurant staff used safety mask and give great hospitality although it is
in the Covid-19 Pandemic
X1.6 I bought a product because it strictly adheres to technical specifications / is
well certified
X1.7 I buy a product because the product is categorized as an innovative food
product
X2 Price X2.1 I think the price of the product is affordable Likert
X2.2 I get a discount when I buy a product especially during pandemic
X2.3 I can pay by credit card or other payment options that prevent me to touch or
hold cash (lead to virus spreading)
X2.4 I think that the product is competitively priced with other products
X3 Place X3.1 The shop location is a great residential place and strict queuing rules due to Likert
the pandemic
X3.2 I think the location of outlets/shops is accessible because it is close to the
business center
X3.3 The location of the outlet/shop has open hours that match the needs of
consumers in the pandemic condition
X3.4 Market locations can be accessed easily
 X3.5 Outlets provide food and a safe place to dine in during covid-19
X4 Promotion X4.1 Active promotions are carried out by outlets through product information Likert
X4.2 Communication through social media makes me interested in buying products
X4.3 I feel that the advertised product is in accordance with what I consume
(advertising does not deceive me)
X4.4 Advertisements delivered through communication media are very interactive
and interesting
Variable Endogenous variable Scale
Y1 Consumer Y1.1 I am generally satisfied with the products I consume Likert
satisfaction
Y1.2 I think that the products I consume match my expectations
Y1.3 I think that the product I consume is perfect in all aspects of (clean and tasty)

This study aims to analyze the effect of the 4P marketing mix on consumer satisfaction in processed
coffee drinks. Hypothesis testing is done using WarpPLS 7.0 software. from the results, it is found that
the P-value for each variable has a highly significant value, this is in line with Solimun et al., (2017) If the
p-value is ≤ 0.10, it is said to be weakly significant, if the p-value is ≤ 0.05, it is said to be significant and
if the p-value is ≤ 0.01 it is said to be highly significant. In table 6, it can be seen that each hypothesis has
a positive and significant relationship (Baker 2008; Wensley 2012).

Figure 1. Hypothesis Testing of Structural Equation Modelling

Table 1. Path coefficient and P-value

Path coefficient P-value Keteragan

Products on consumer satisfaction 0.323 <0.001 Accepted
Price on consumer satisfaction 0.231 <0.001 Accepted
Place on consumer satisfaction 0.186 <0.001 Accepted
Promotion on consumer satisfaction 0.216 <0.001 Accepted
Sumber : Data Primer Diolah (2021)
Based on the results of hypothesis testing in this study, it can be concluded that:
1. Hypothesis 1 based on the analysis has a P-value <0.001 and a path coefficient of 0.323 indicating that
H0 is rejected and H1 is accepted, and has a positive and significant effect on customer satisfaction.
2. Hypothesis 2 based on the analysis has a P-value <0.001 and a path coefficient of 0.231 indicating that
H0 is rejected and H2 is accepted, and has a positive and significant effect on customer satisfaction.
3. Hypothesis 3 based on the analysis has a P-value <0.001 and a path coefficient of 0.186 indicating that
H0 is rejected and H3 is accepted, and has a positive and significant effect on customer satisfaction.
4. Hypothesis 4 based on the analysis has a P-value <0.001 and a path coefficient of 0.261 indicating that
H0 is rejected and H4 is accepted, and has a positive and significant effect on customer satisfaction.

From the results of testing these hypotheses, it can be seen that the overall strategy in the marketing mix
is very significant for customer satisfaction. Premium coffee must still attach importance to the 4Ps
without one being considered more important or more dominant than the other. Because the four of them
are related to each other. So that, despite the crisis, in consumer behavior the marketing mix strategy must
pay attention to these four things.
Implications

A. Policymakers
All countries, without exception, have experienced crises in various sectors, including the coffee
sector, as a result of the spread of Covid-19. Closing borders across borders and social
restrictions have disrupted supply and demand chains. As a result, supply cannot be channeled
and consumption is depressed. However regarding to the result of the research, the opportunity
of coffee shop as a business is still promising because more of it is Small and Medium
Enterprises. The SME sector has a role in providing this significant foreign exchange
contribution. To date, there are 1,204 processed coffee IKM business units scattered throughout
Indonesia. Here are some implications need to be done by policy makers.
1. The Ministry of Industry needs to continue to spur the growth of the domestic coffee
processing industry. This is in line with downstream steps that can increase the added value of
Indonesia coffee commodity. In addition, this effort also encourages the growth of small and
medium industry players (SM) in the processed coffee sector as well as increased employment
up to the national economy.
2. In a situation like this, it is very important that all parties work together, from the government,
industry players, Indonesian technology companies to the community. So that economic
activity continues amid the Covid-19 pandemic.
3. National Economic Recovery Program (PEN) channeled by the government through national
Bank. The presence of cash injection assistance from bank made the business not only able to
survive in the midst of a pandemic, but also to grow until there were plans to create branches
abroad. To be precise, Perth, Australia, ”said Coffee owner Dave Julian Soepriyadi at his
place of business on Jalan Sarimanis, Bandung City.
4. The Community Empowerment Program for the Indonesian UKM Bangkit scheme from the
Ministry of Research and Technology / National Research and Innovation Agency of the
Republic of Indonesia. The program is designed for universities to be involved in economic
recovery after the Covid-19 pandemic.

B. Food and Agribusiness Managers

The Covid-19 pandemic has hit businesses in various sectors including coffee shops. As a result,
business actors are making changes to survive in the midst of a pandemic. Some coffee business
experienced a decline in sales.
1. Increasing online Sales. On the bright side, however, is an increase in online sales as an
alternative. For example, Although, until now, it has not been able to cover the income that is
usually obtained offline. This was experienced by the Kopi Kenangan coffee shop. Dine in
can be almost zero, but the increase in orders occurs on online delivery platforms. However,
online sales even though it is high cannot cover the dine-in income.
2. Product innovation. As the example, premium coffee that has brand Pak Deni's Coffee has
been marketed via Instagram and sold 10-25 packages of coffee. However, after the drip
coffee business started, the biggest obstacle, was product introduction. Not only concocted
coffee, coffee business actors can also sell coffee powder or beans. The church can also sell
various other snacks that are suitable to accompany coffee drinks.
3. Business adjustments are made by making coffee products. This has to be done to increase
sales for example in one-liter packs.

C. Agribusiness Profession
The COVID-19 pandemic has also had a significant impact on farmers as coffee agribusiness
actors in Indonesia. Coffee farmers have been severely affected by the Covid-19 pandemic.
Although coffee production is high, there are obstacles due to decreased absorption. Some of the
implications are as follows.
1. Processing the product before the coffee is marketed. Business actors and coffee farmers can
process their products first before selling them to the market. This aims to get around the
reduced demand for coffee during the pandemic. For example, coffee entrepreneurs can
innovate by selling coffee blends that consumers can brew at home by consumers. coffee
producers and farmers can also process their products so they can be stored longer.
2. Indonesian Coffee Seed Program. Community participation is very important in order to
participate in supporting the sustainability of local coffee productivity through the Seeds for
Indonesia program. Seeds for Indonesia is a seed procurement program for Single Origin
Nusantara farmers. This program is also a form of Otten Coffee's support for the government's
efforts to encourage the growth of the coffee industry during the pandemic.
3. Strengthen institutions by forming cooperatives. This is one of the solutions so that the current
problems of coffee farmers can be overcome, including difficulties in selling coffee products,
to financing factors.

Conclusion
The results of this study indicate that consumer satisfaction with processed coffee products is influenced
by the 4P marketing mix, Product, Price, Place, Promotion. In addition, price has a positive and
significant effect on consumer satisfaction with processed coffee products. The results of the analysis
show that the product has the strongest influence on customer satisfaction, while place has the weakest
effect on customer satisfaction. The product and the quality of the product itself have a strong influence
on customer satisfaction. But that does not mean that other aspects are not important, all components in
the 4P marketing mix must be considered carefully in order to be able to meet consumer satisfaction in
the market segment of processed coffee beverage products.
This study contributes to the literature on what affects consumer satisfaction with the product. This study
also contributes to marketing managers, especially in the contemporary coffee industry, in order to
develop marketing strategies to increase consumer loyalty through fulfilling customer satisfaction who
have bought the product.

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