I often listen to sales people describe how they were not awarded business due to the price. These students describe how they always lose to the lowest bidder and never get the business. This discussion leads me to question; is everything you buy or sell just a commodity?
I did not have to look far to see this is not true, so what is it that makes a person want to get in their car and drive to a coffee shop and pay $2.65 - $6.00 for a cup of coffee they could make at home for around .16? Same beans, same coffee, different cup. If anything is treated as a commodity, shouldn't it be coffee?
I investigated what made this phenomenon occur, and this is what I found.
Starbucks was one of the first to offer espresso based coffee. Blue Ocean Strategy, or competitive differentiation?
Blind Taste Test
Blind taste tests showed average Americans prefer McDonald's coffee or Dunkin Donuts coffee over Starbucks coffee.
Buyer perception of Quality
Even though the coffee is comparable, psychological triggers are making us feel we are getting something special.
Unique naming of different types of coffee
Pikes Peak, Blonde Roast, Sumatra? Why are these names for coffee? Maybe these names inspire us to associate our coffee experience with fantasy, travel, and exotic places?
What is different about the environment?
The music in each shop takes us back to yesteryear. The barista makes a single cup a coffee you can have your way, each cup of coffee has your name on it. You are called by name each time you order's ready. Studies show there is no sweeter music than the sound of our names. Each shop always seems so crowded. Is this by design to create an intimate atmosphere? Why is the lighting dim? Cozy, comfortable environment?
Can you put a price on these intangible experiences? The answer is yes. Do you know why you are paying dollars for something you could have bought for pennies? Considering the number of repeat customers, I would say most people are ok with paying it.
It takes an effort to create a unique buyer experience, but if you are willing to design your unique buyer experience, you will never be left selling a commodity again- even coffee.
When to Say "When", A Guide to Letting Go of Losers