Coffee House Rules Marketing

As a recent college graduate with no marketing sense whatsoever, way back in 1982, I heard a story on NPR about the new coffee-shop craze hitting America. The announcer described the typical venue, a selection of coffees and some light pastry fare. They were compared to a Viennese Coffee House from the turn of last century. Interesting I thought until the radio announcer mentioned the coffee was going for $0.73 per cup and, pausing for effect, no refills. I had to laugh having just left a donut shop in my neighborhood where I had a couple of donuts and three cups of coffee for total of $0.54, the refills were, of course, free.

But the joke was so on me. No one goes to a coffee shop for an economical coffee. The stuff at home is really cheap and most work places offer it at no charge. Folks go to coffee shops for the same reason they pay top dollar for alcohol at a bar, for the experience, that human need for collecting with like minded humans, to be seen, for a change of scenery.

This is an important understanding for a shop owner. Customers will pay the premium for the experience. The product is a backdrop, an excuse. The coffee or tea or beer or wine is an excuse, a focal point for the experience. The shop owner is very much like a theater owner. You as shop owner are providing a place, a reason to gather. Charge accordingly.

Charging accordingly is another point to consider. The $3.00 happy hour Guinness I had at the local Irish pub was exactly the same product as the $9.00 Guinness I had literally on the other side of the parking lot at the fancier rooftop bar. The decor appeared to cost about the same. The atmosphere, however, was way different. As an owner, you have to decide what market you're after, high margin but fewer customers are the larger market not willing to pay the premium. These two bars made their claim and both seem to be doing quite well.

As for the customer, they may head to the upscale place to meet folks in a similar economic group. They may be looking for a wealthier husband or well funded cougar. I tend to find the patrons at the $3.00 Guinness bar friendly, less pretentious and more honest than the trendier upscale place. So, I hang out there. You may feel more comfortable with Kennedy's and Bushes at the other bar. Point is, the booze is secondary to what motivates the customer. Understand this and compete accordingly.