keithmonaghan.com » Consumer Behavior

Starbucks’ $11,000 Coffee Maker

Keith Monaghan — Tue, 01 Sep 2009 16:59:38 +0000

Can’t see the embedded video? Click here.

The Coffee Giant Gambles With Customer Perception

On a recent trip to the Bay Area I found myself at a restaurant with a Clover coffee maker–the $11,000 machine designed by Stanford engineers to produce a perfect cup of steaming-hot coffee.

So, I ordered a cup. How often do you get to drink an $11k cup of joe? More on that in a minute.

To many of us this sounds ridiculous. How much of a difference can an insanely high priced coffee machine make? How good could it possibly be? Even the best cup of coffee is, well, still coffee.

But maybe there is something to it because Starbucks just bought the company that makes the Clover.

I know, you coffee connoisseurs are thinking, “Starbucks? What do they know about good coffee?” I won’t get into that debate, but consider the following from insight from modern consumer psychologists.

“Whereas economists or marketing strategists might look to numbers—wages or interest levels—psychologists know that something more motivates the consumer purchase trends. They have discovered that often in the most depressed economic times, the sales of luxury items go up.”

Or as Matthew Honen, host of the Wired video about the Clover embedded above, says, “Basically what you’re paying for is a team of Stanford engineers to build this thing by hand. You’re also paying to get an individually crafted cup.”

Hmm… OK, now it’s starting to make sense.

But in a down economy where enough people are abandoning their morning lattes for Starbucks to close 600 stores, is experimenting with uber-quality a good move?

Maybe. Perception is a powerful thing. For many of us hyper-quality coffee isn’t that important, but to some coffee drinkers it is, especially during tough times. And that, I think, is the point of Starbucks’ acquisition. Will it work? Your guess is as good as mine.

As for that cup of Clover coffee I had? Well, it tasted like… a cup of good coffee. Nice, but nothing special. But I’m not the customer for this experience. The big question is are Starbucks customers ready for the Clover?

What about you? Do your expectations affect your feelings about products? How? Have you ever tweaked the perception of a product to increase sales?

Leave a comment or email blog at keithmonaghan dot com.

Thanks for reading.See also:

Scarcity Sells

Keith Monaghan — Wed, 26 Aug 2009 21:06:10 +0000

How Failing to Keep Up With Demand Can Be a Good Thing

Knob Creek’s current ad campaign announces something shocking: they may actually run out of bourbon this fall.

The elegantly zen-like piece (above, click for big version) features a precious last drop of bourbon, the tag line “Thanks for nothing”, and some clever copy:

“For the next few months Knob Creek Bourbon is in a unique situation — our product is so popular that we cannot keep up with customer demand. As a result, our supply will be running low over the next few months, and, in some cases, we may experience temporary stock depletion. But, instead of compromising quality to meet demand, we have chosen to let the supply run low. In deference to Booker Noe and his vision for Knob Creek, we will age all our bourbon the full 9 years. The next batch will be ready in November of this year… Again, with all the success we’ve had, we’ve still come up empty. Thanks for helping make it happen.“

This is brilliant old-school marketing and I love it more than a man should love any ad. Here’s why:

It reinforces Knob Creek’s old world, hand-crafted image: You can’t rush excellence.
It proves they are popular. “Hey, we ran out!”.
It spins “Thanks for nothing” into a positive statement.
Most importantly, it combines two powerful marketing strategies in an elegant way: Scarcity and Social Proof.

Scarcity and social what, marketing guy?

I know, it sounds like marketing gobbledygook, but both approaches are real and based on serious research and Knob Creek does a beautiful job of combining them. How so? Read on.

Scarcity

The best way to make a profit is to deal in something scarce. People want what others can’t have. Crowds and lines generate curiosity. Word-of-mouth about great, but hard to attain, products creates demand (see Social Proof below).

Most importantly, Scarcity forces your true fans, those customers who will do most anything to buy your product, who obsess over it, to talk. They talk about the waiting and the searching and the longing an how it’s driving them crazy and they just can’t wait to get their hands on it already!

And people are talking about Knob Creek (Google Blog Search). In fact, the ad has generated so much interest that they are hosting a webcast on September 1st to explain how the shortage came to be and why their 9-year aging process makes Knob Creek bourbon so special, extending interest in the campaign. Nice.

As effective a strategy as Scarcity is, there’s another, even more interesting, aspect to it: Social Proof.

Social Proof

Simply put, Social Proof is the tendency to look to others for ques on how to behave–monkey see, monkey do, if you will. If Knob Creek is sold out we assume it must be great and if everybody likes it they must know something we don’t.

It’s why companies use celebrities to endorse their products, Amazon features customer reviews and TV shows use canned laughter.

Right or wrong, we often assume others must be better informed and they are acting on experience or privileged information. Often it’s just a mob mentality, group think, following the herd.

And it’s why Knob Creek’s is happy to announce they’ve sold out: If it sold out it must be good. It’s that simple.

Could it Be Even Better?

Knob Creek’s “Thanks For Nothing” ad is word-of-mouth marketing at its best. They’ve highlighted their Scarcity problem without any hype and subtly used Social Proof to show that many people think their bourbon is great. And damn if I don’t want to try it because of that.

But how could they extend this great campaign even further? A few ideas:

YouTube videos featuring customers talking about their frustration with The Wait.
A social media campaign that counts down the days until the next batch is available.
A contest in which a lucky winner gets the first new bottle a few days ahead of the official re-release.

What do you think? How could Knob Creek take “Thanks for nothing” even further? Should they? How do you use Scarcity and Social Proof? Leave a comment or email blog at keithmonaghan dot com.

Thanks for reading.See also:

Smart Talk About Marketing

Keith Monaghan — Wed, 05 Aug 2009 13:38:22 +0000

Good Stuff From Around the Web

Lots of good marketing writing out there despite this being the slow season–end of summer and all. Here are some particularly insightful thoughts found over my morning cup o’ tea. Enjoy.

Jonathan Salem Baskin asks, “Why don’t we focus on making the conduct of our businesses meaningful and useful, and then structure the marketing communications to deliver that information?” Amen to that. Dim Bulb: True Lies
Jeremiah Owyang on the impending “ambient intimacy” of appliances, cars and other machines texting, blogging, and tweeting maintenance alerts. Not sure if I’m ready for my refrigerator to text me. Web Strategy: When Appliances, Pets, and Plants Start to Tweet
Nice piece on the risks of dropping your prices to compete. Bottom line: Think long and hard before giving into the temptation because there may be serious brand-damaging consequences. Are You Dropping Your Prices?
Another post, similar to Dim Bulb’s “True Lies”, on the benefits of embracing honest marketing for your branding strategy. The Edgy Entrepreneur: Marketing and Telling the Truth
There is no shortage of Social Media marketing guides on the Interwebs, but this one nicely sums up much of what you need to know. Web 2.0 + Best Practices = Connecting and creating value
Finally, something good for the soul: 8-year old Emma rocking the house at the 2009 Spring Coffee Shop Jam in Seattle with her song “Snow Day”. Rock on! YouTube: “Snow Day” by Emma

See also:

New E-Book: Marketing in Tough Times – 20 No-Cost Ideas

Keith Monaghan — Wed, 11 Mar 2009 21:40:22 +0000

You know what’s great about the Internet? I mean besides hulu.

For me, it’s putting my work on the Interwebs and hearing from people who find it useful.

I was lucky enough to have that happen with two posts of mine. They’ve been modest hits. Thank you to everyone who read them and responded.

I’ve updated both posts and combined them in a new free e-book about spreading the word without spending any cash: Marketing in Tough Times – 20 No-Cost Ideas. (Direct download here or read it on Scribd).

Give it a read. If you like it, feel free to forward it to someone who could use it, print it out and give it away at a convention or your local coffee shop, or post it on your web site or blog. I’d appreciate it. (And you’ll look like the resourceful and savvy marketer that you are.)

Want more? The new e-books page at KeithMonaghan.com is chock full of great e-books about marketing, courtesy of ChangeThis. All thought provoking. All free to download, read, and share. Check it out.

And thanks for reading.See also:

Video: Renny Gleeson on Anti-Social Mobile Users

Keith Monaghan — Tue, 10 Feb 2009 17:29:55 +0000

A very funny and insightful TED talk from marketer Renny Gleeson about the social sins we all commit with our smartphones. Best line:

“Please, let’s make technologies that make people more human and not less.”

Amen to that.

From the TED web site:

In this funny (and actually poignant) 3-minute talk, social strategist Renny Gleeson breaks down our always-on social world — where the experience we’re having right now is less interesting than what we’ll tweet about it later.

If you can’t see the embedded video, view it on the TED site here.See also:

What Do Consumers Want? Authenticity (Even If It’s Fake)

Keith Monaghan — Thu, 15 Jan 2009 19:05:01 +0000

From the always interesting TED.com, author Joseph Pine answers the age old question, “What do consumers want?”

Customers want to feel what they buy is authentic, but “Mass Customization” author Joseph Pine says selling authenticity is tough because, well, there’s no such thing. He talks about a few experiences that may be artificial but make millions anyway.

Fascinating stuff and well worth fifteen minutes of your time.

TED: What Do Consumers Want?See also: