Isn't this just an excuse?
Why do we need people to be sophisticated to appreciate something good? To me, this means that enjoying something good requires some sort of education. This would then infer that quality is qualified. Goodness is not based, then, on internal substance, but on external opinion or consensus.*
When examining St. Louis, I do notice a much smaller number of successful restaurants and cafes that are able to survive from the merit of their core products. Most great drinking establishments also supply something to eat. Great eating establishments have broad menus. There are, however, quite fewer people living in St. Louis than the more "sophisticated" markets (New York, San Francisco, Portland, London). This results in a lower demand for these core products, so purveyors must offer a wider array of products to stay afloat. These smaller markets cannot support as many of these small, simple concepts.
The secondary result seems to be then, that people are less exposed to such products – at least in a way that demonstrates quality. For instance, there are many places to get coffee in St. Louis, but few places that support themselves solely on that product, therefore the most commonly consumed coffee is that made with sub-standard brewing methods because the purveyor's attention is focused elsewhere. This leads to many fewer people actually being exposed to quality products, which leads to slower growth of a product. I believe this really accounts for our lack of so-called "sophistication."
To break it down˚:
lower population = fewer people that demand quality coffee experiences
fewer people that demand quality coffee experiences = fewer sustainable coffee-focused purveyors
fewer coffee-focused purveyors = slower growth rate of people that demand quality coffee
higher population = more people that demand quality coffee experiences
more people that demand quality coffee experiences = more sustainable coffee-focused purveyors
more coffee-focused purveyors = higher growth rate of people that demand quality coffee
So, the rate at which customers actually are exposed to quality coffee experiences greatly increases in higher-population areas and increases the percentage of people in that population that demand quality coffee experiences. It's a sort of beast that feeds itself (sustainable).˚˚
What I'm getting at here is that markets perceived as more "sophisticated" really just have a much more exposure to quality, focused products (specifically coffee in this case).
What makes this hard to see is that we have true shit-slingers on both sides of the game. People too focused on sophistication** to work in these smaller markets and people in these smaller markets too stuck in unsophistication*** to want to something better. These opinions can be really distracting and can quickly dissuade anyone from doing a better job at exposure. Also, exposure is often only thought of in terms of buying advertising.
So, how do we measure if increased exposure works in smaller markets? Also, how do we make it sustainable? Exposure does not always demand cost, but it certainly will help. Is there a way to make exposure in a smaller market just as sustainable as the high-population model above works? Immediately, I think of social media and online grass-roots type efforts as potential tools. I've also seen some nice examples of businesses trading customer bases through sharing spaces (like a pastry case) or events without needing to remove focus from their core products. I'm curious to hear your thoughts. Anyone have a good example of a smaller market with a booming coffee or specialty product market?
My thoughts turn to small communities that have produced great music over the last 20 years - specifically Chapel Hill and Omaha. Both are small communities with many fewer artists than cities like New York or San Francisco, but the quality of music and art being produced was substantial, especially when compared to larger markets. These cities were producing nearly as many (if not more) notable artists as larger population markets like New York and San Francisco. I'm not sure either of these "music scenes" were/are sustainable, but I'd argue quality, when it comes to music, is much harder to measure in an objective matter.
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*I do accept that people sometimes need a great guide to access flavors within very concentrated or unusual food & drink like coffee, espresso, whiskey....even beer & wine for folks closer to the legal minimum age
Stereotypes of these type of people:
**"I can't believe he wore flip-flops and a cut-off shirt into my restaurant."
***"Don't give me none of that frothy bullshit, just give me a damn coffee."
˚assuming x% of any random population demands quality coffee.
˚˚anyone know if there is an economic theory similar to this....I'm unlearned.
Network effect theory might interest you:
ReplyDeletehttp://en.wikipedia.org/wiki/Network_effect
Also, see social proof:
http://en.wikipedia.org/wiki/Social_proof
For coffee to achieve the sustainable goal you described, the "coffee trendsetters" must persuade some critical mass of consumers that valuing the coffee experience and product is acceptable and normal behavior. How to go about doing this is probably a bit more elusive.
-Ghosts of 461-C
Thanks for the tips, Ghost.
ReplyDeleteYou bring up a good point and thanks for sharing those theories. I'll did into them. Any viewpoints from an Economists end as to what defines quality? We have doctrines in the coffee industry instilled by industry-formed groups (Q-scoring) and coffee-philosophers (Illy), but I'm wondering where Economists come down. Is quality defined solely by consumer behavior, or is there a "good" that people are drawn to, regardless of worth?
Suppose quality is a construct existing in the minds of consumers…
ReplyDelete1. Can you shape consumers’ perception of quality to match with the product you sell?
2. Can you anchor this perception to only your product (and not the competing product)?
3. Can you motivate consumers to act on their perception and buy your product?
The challenge of defining quality is its subjective and relative nature can make it difficult to reach consensus on definition; however, you are on the right path with Q-scoring and Illy. It matches my understanding that industry groups identify and use best practices and benchmarks to define quality relative to a particular product or service.
Organizations then measure themselves against these standards to determine if they are meeting the generally accepted definition of quality. Furthermore, industry groups often issue certifications to organizations that meet or exceed the quality standards. The certification is meant to signal quality to consumers. For more on this topic, here is an online book titled The Economics of Quality, Grades, and Brands:
http://www.bowbrick.org.uk/Quality/Quality%20Grades%20Brands.doc
Economics is about decision making. For your purposes of quality coffee experiences, I think you will enjoy exploring the fields of behavioral economics and neuroeconomics. Both explore the question, “How and Why do people make irrational decisions?” Marketers eat this stuff up. For example, have you ever noticed that wrist-watch advertisements always have the watch showing the time as “10:10”? Why? Because the consumer’s brain associates “10:10” as a happy face which generates goodwill towards the advertised product. Strange, but powerful.
http://en.wikipedia.org/wiki/Behavioral_economics
http://en.wikipedia.org/wiki/Neuroeconomics
Charlie Munger boils down theory into practical bits. He has several talks posted across the internet. Here’s one:
The Psychology of Human Misjudgment
by Charles T. Munger
http://www.beearly.com/pdfFiles/Munger10112005.pdf
I suppose this all raises some interesting questions about all things specialty coffee. It seems like you are doing a lot of things right. What do you see as the next steps for the industry to sustain itself?
The Network Effect really points to what I'm getting at here. From reading the article, it seems like "Critical Mass" is the crux I am chasing. Whereas larger markets may have hit this point and now have a healthy, self-sustaining quality-coffee market, we in smaller markets are still struggling to make up this critical mass of consumers.
ReplyDeleteRegarding Social Proof: I think this is why many people try Specialty Coffee, and also the reason why so little "coffee" is on "Specialty Coffee Menus." Too often, we see new customers brought into a specialty coffee location, but then get served a sub-par product. A consumer believes they should be part of this movement, but is not satisfied with the ill-prepared products. What should they then do? Add sugar! This has resulted in a culture of businesses that now really sell sugar disguised as specialty coffee.
This backs into my earlier argument that quality must be defined outside of consumer behavior. Consumers are often served something marketed as "quality," but that doesn't actually hold any natural or certified quality. The route I see most truly quality-driven companies headed to solve this issue is toward transparency. They are literally marketing the dollar, cents, and trade practices they use to procure and produce these great drinks.
Let's suppose quality is a construct existing in the minds of consumer...
1. How do we match that with our (as an industry) perception of quality, given that our perception of quality is driven by our first desire to provide good products and service, with a desire to make money not exceeding that first desire.
2. I think we do want to anchor that perception to products that consist of this quality. Our market is not nearly congested, yet, though, so we really are hoping our competition will do the same. For example, Starbucks just announced that they are beginning a big push to buy better coffees, brew them by higher standards, and sell them for a higher price. This is great news for me! More people are going to be exposed to what I do and this should drive business for Kaldi's.
3. I think motivating customers to act on this perception has less to do with marketing and more to do with acknowledging that their perception of quality is aligned with yours. I would go so far as to wanting to reward these customers for being "right." To me, they are. We reward this loyalty/alignment by offering value-added services and events for our customers.
Anyway - getting back to your points on behaviors. I think this is really where I am out of the loop. There are plenty of things I could probably be doing in this area that would work well without sacrificing the desire to provide good products and services. Some time spent there may be much more worthwhile than spending countless hours trying to sample and talk people into quality – at least in terms of trying to reach that critical mass. Thanks for all the good feedback.
-Mike