What is coffee, really? Hot water run through some ground, roasted beans. What’s a soft drink? Carbonated sugar water. Pretty simple stuff, really. Yet, people are willing…nay, eager to pay $4 for a cup ‘o Joe at their local Starbucks, and $2 or $3 in a restaurant for a Coke or Pepsi.

What makes people willing to pay a premium for something with such a small cost of goods, and little inherent value?

I hate to harp on this “perception” thing (again) but people perceive that Starbucks coffee is better than Folgers, and they’ll pay more for it (plus the “experiential” thing that the Starbucks store represents).  In a restaurant, when you want a Coke, you pay for it – without stopping to think that you can buy a case of Cokes at Sam’s Club for the same money you spend to buy a 12 oz. Coke while dining out.

Now THAT’S marketing.

The truth is, blind taste tests have shown that users prefer thing like (shudder! gasp!) instant coffee to the pricier stuff, over and over again. In fact, in many tests, the pricey coffee scores were pretty low.

Is expensive, Starbucks coffee really better than the cheap stuff? Only if you think it is.

Why would you think it is? Because you’ve bought the marketing story that Starbucks is telling. As a marketer, that’s like the two-sided coin – crisis/opportunity. There’s crisis there – “their stuff is really better than our stuff!” and opportunity – “if our story is better than their stuff, we’ll sell more, regardless.”

In this uncertain (at best) economy, we need to remember that marketing works. Don’t lose faith. And don’t panic. Several years ago, David Letterman had Rush Limbaugh on his show. At one point in the interview, he looked at Rush and asked, “do you ever wake up in the morning and wonder, is today the day they’re gonna figure out that I don’t know what I’m doing?” Now Letterman is a liberal smartass, and he asked the question to try and embarrass Rush. It didn’t work. Limbaugh replied that all talented people feel that way. I believe this is because that, if you are talented, your skills come easy to you, and you don’t feel as though what you do is difficult – or special. The trick is to learn to capitalize on your skills and yet not lose perspective. When you know what you’re doing, marketing seems…well…obvious. It seems like little more than common sense. (if common sense is so common, why is there so bloody little of it?) Marketing is magic, in a way. Magicians know how their tricks work – and realize they are not magic, but skill. Marketers are the same way. It’s vital that we don’t lose sight of the fact that we are in a business where a little magic makes the difference between a brand or campaign that works – and one that fails. When you wanna talk how to sell water strained through roasted beans for $4 a cup, the value you add is strictly marketing.

This entry was posted on Monday, October 20th, 2008 at 10:56 am and is filed under marketing.You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.