Tuesday, August 12, 2008

Costa Coffee UK and Sales Techniques.

I am writing some articles on my laptop here in Costa Coffee, Waterstones, Leeds, UK. I like writing in a cafe because there is no internet and therefore less distractions when writing.

I just ordered a cappuccino and the waitress asked if I would like medium or large. I wanted a small cappuccino so I chose the medium size. When I was charged £4.10 (pastry as well) and got a cup the size of a soup bowl, I realised that I had been cleverly sold a size bigger than I wanted. It was only an extra 40p. But, it was more coffee than I wanted. The annoying thing is that I have made this mistake at Costa coffee several times. I assume it is corporate strategy because they do the same thing in the Oxford branch.

Now, you might be thinking the problem is the stupid customer - i.e. me. I mean if you want a small cappuccino, make sure you ask for it. In my defense, coffee sizes are often confusing. Firstly, they are never in English, on the board we have - Primo, medio and massivo. In Starbucks it is something different like Vende, Grande (I can never actually remember) all I know is that they definitely don't sell something called 'small'.

Costa are probably quite happy because they get an extra 40p when the marginal cost of a medium is probably 0.5p. However, what there marketing strategy forgets is the impact on customer loyalty. I am annoyed with myself for falling for this basic marketing trick of getting you to buy more than you need / want.

You could also argue this is a clever form of price discrimination. A regular would know that you can get small size, which is cheaper. A non regular customer wouldn't find out about the small size and so would end up paying a higher price, but, an infrequent customer is likely to have a more inelastic demand and therefore doesn't mind paying the extra 40p.
  • In this way, Costa are able to sell cheaper coffee to regular customers (with elastic demand) and sell more expensive coffee to infrequent visitors. This is a strategy not just associated with Costa, but, is a fairly common strategy for any multinational.
At the risky of being a grumpy old man - One other observation. Why does the cafe have air conditioning on when it is 15 degrees outside and raining? - My hands are cold. O well, at least I have a nice big steaming bowl of coffee to keep my hands warm!

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