Assignment 2 - Coffee Shops in San Francisco

Introduction:

A set of friends (Josie and Joe) each own a coffee shop in the bustling county of San Francisco, CA. Joe's coffee shop is found in the northern part while Josie's shop is in the southern part of the county. Although in the same industry these friends want to maximize their customer regions without infringing on each other's business. They have asked me to come up with a report showing where their customers are, where they are coming from and also where some of their main competitors are located. The results of this report are below:




San Francisco County
Date: October 8, 2015

To: Joe Cino - Owner of Cup o' Joe
      Josie Brewer - Owner of Josie's Jitter Juice

From: Nicholas Berg

Subject: San Francisco Coffee

Using the customer information you sent me I was able to do some data analysis and come up with some information that will help you understand your customer base better and allow you to grow that customer base without infringing on each other's shops. I was also able to come up with some maps representing your competition. I hope you find my analysis enlightening, if you have any questions feel free to contact me for further information. Good luck with both of your businesses.

In order to have a basic idea of your primary customer base I created a map (Figure 1) showing both of your business in relation to one another and your customers based on the data I was provided. I also included the mean center for each of your shops. The mean center is close to your shops as it represents the center of all your customers for each shops. This makes sense because most people travel to the coffee shop that is closest to them.

Figure 1 - Map featuring both coffee shops and their primary customers.

 Joe for the purpose of distinguishing the two coffee shops your shop is listed as Store 1 and Josie your shop is being represented as Store 2.

As you both may know you two are not the only places that sell coffee in San Francisco county. I also made a map highlighting other business such as other coffee shops and doughnut shops as well. This data can be found represented in (Figure 2) below.

Figure 2 - Competition of the two coffee shops.

Looking at this map can tell us a couple of things and give us some direction on where you each should focus on expanding your customer base. Joe (Shop 1), you have a lot of competition directly east. I'm sure you are well aware of this but fortunately to the north and west of you there is opportunities for growth as there is a lot less competition. In these directions the density of competition is much less. Josie (Shop 2), fortunately for you there is not nearly as much competition in the southern part of the county. You have opportunities to expand your customer base in all directions without infringing on Joe.

Simply knowing the location of your customers can give you a lot of information and be informative but by using the data you provided I was able to create a sort of buffer showing you the percentage of your customer bases in three different levels (Figure 3).

Figure 3 - Customer base broken in to 3 levels.

Looking at this map can tell us a number of things, first and foremost you can see that neither of you are infringing on each other and have separate customer bases for the most part (excluding outliers).  The second thing we can gather is the outreach of your customer base. Josie you have a significantly larger amount of outreach more than likely due to the lack of completion around you. Joe your customer region is much more dense and compact.

The last aspect we can look at is the amount of time it takes for your customers to reach you based on walk distance. (Figure 4)

Figure 4 - Walk distance to each shop.

This map breaks your customer base down in to distance from your shop. The yellow represents a half mile, the red one mile and the purple one and a half miles. These are all acceptable distances to walk especially in a large city such as San Francisco.

Conclusion:
Using the maps is a great way to visualize your customers have an idea on where you want to grow and further each of your businesses. You can see that there is also a lot of stiff competition out there in a very populated area. Joe in the 0-80% ring in (Figure 3) there is over 145,000 people living there alone. Josie in that same ring for your shop there is a little bit over 160,000 people. These are all possible customers and should be treated as such. It also important to look at the demographics for the people in your area so you are priced competitively with the shops near you and appropriately for the incomes of your prospective customers. Josie your customer base has a much larger average income of almost 30k higher than the customer base of Joe's. You may have opportunities to raise your prices just based on that alone. Based on the information above, Josie you have the greatest opportunities of growing your business and customer base. That is not to say you don't have potential as well Joe but you are up against a lot more competition near you and the lower population and income. My best advice to you Joe is offer an item that is not widely available from your competitors and separate yourself from the pack while not alienating your current customer base and focus on gaining customers west of you.