Several months ago I had the pleasure of speaking with a gal who helped launch the Keurig line of brewers and K-Cups. She had a daunting task in the midst of a recession: getting people to buy a $150 machine in order to use proprietary coffee pods that cost well over 50 cents per serving. Ground coffee run through a $20 brewer results in a cup that costs less than 20 cents per serving. Who would pay so much more and why?
It’s all about the convenience and the experience. Yes, the pot of coffee is the value option – especially if you have the time to brew it and you plan on drinking the whole thing. As time becomes more valuable so does the convenience factor – enter the single serve that is ready to drink in under a minute. If it is the experience that you are looking for, you will head to a coffee shop and pay well over $2.00 for that same cup of coffee that you could have at home for 20 cents.
Let’s think about a child’s birthday party. You could buy some eggs, flour and sugar to make a cake. Or you could choose the convenience of a box of cake mix to expedite the process. Or you could schedule a trip to Chuck E. Cheese or Dave and Buster’s for the whole experience.
Now translate that to your product or service. Do you provide a commodity (coffee beans, sugar or flour), a value added solution (K-Cup or cake mix) or an experience (coffee shop or adventure venue)? Commodity providers do not seem to ever provide an experience; experience providers, however, have the option to provide commodities – you can buy branded K-Cups or whole beans.
The more of an experience that we can provide to our customers, the more they will enjoy the product that we are providing. The brand loyalty will build and the repeat business will follow. It seems important that we understand what we are selling, to whom we are selling it and why they are buying it.