Out of the Box

Smelling the Coffee

By Menachem Lubinsky on September 28 2007

You’ve heard the expression of “wake up, smell the coffee!” It is used by people to describe a situation where there is a perception that someone may not be paying attention to changing realities. A financial columnist used the phrase recently to urge President George W. Bush and the Republicans to pay attention to a declining economy, mostly due to the home mortgage situation. He warned that the cause may ultimately have a much greater effect than the Administration thinks.

Marketers know this expression only too well, particularly as they watch companies who fail to realize changes that may affect their bottom line. These changes they speak of are trends and developments that affect people’s lives, whether it is the invention of the automobile or laser surgery. Speaking of coffee, we live in an age where people are prepared to pay as much for a cup of coffee as they would for a whole jar. They would rather go to a coffee shop and pay $4 or so for a cup than brew the coffee in a pot at home for a fraction of the cost. Now if you are Sanka, Maxwell House or Folger’s, you’d better be thinking about the future of your business.

Your options are rather intriguing. You can invest large sums of money into marketing but that is unlikely to change the evolving consumer habits. You can diversify into new and exciting products, but that may be fraught with risk and there is no certainty of success. Or you can solidify your base, albeit smaller than in the past. In some markets around the world, coffee manufacturers have actually gone into the business of opening their own branded shops to compete with the coffee shops.

Now let’s assume that your marketers were savvy and saw the trend of buying coffee in a shop before it actually became as popular as it is. You would probably be thinking of some kind of intervention that can forestall the trend. You might be advertising the health benefits of home brew versus the coffee shop products, assuming that you can make the case. Or you could simply conclude that there is nothing you can do to change the situation. You prepare yourself for downsizing, accepting a smaller market share and planning for solidifying that share.

Irrespective of what course you take, you are infinitely better off if you do smell the coffee because there is at least a chance that you can adapt to the changes. This was the case for a small chain of photo shops that made its money in the ‘80’s and ‘90’s on the classical development of film. But with digital photography and home developing looming, the chain sensed that it might soon be in trouble. The two young owners from the Midwest thought about their choices, which ranged from figuring out how to service the new technology to closing the business.

The photo shops chain ultimately decided to expand their services to photo restoration, processing photos that are e-mailed, creating albums, and a whole range of other computer-related services that made them more relevant to the contemporary photo buff. They also banked on the notion that they would retain at least half of their traditional base who would continue the classical development of their photos.

A noted marketing professor recently debated a colleague about the value of fighting trends. They argued whether the concepts of appealing to the customer’s sense of the authentic and the original could successfully compete with the “new and different.” One professor whipped out a pizza ad that spoke of 34 different flavors and 20 different toppings while the other played the role of a competing pizza store who touted the virtues of their Sicilian pizza chef who has not tampered with the original cheese and crust concept of pizza.

In truth, there is validity to both arguments. Line extension and the development of new products is one of the most effective ways to grow a business. As much as the average consumer is resistant to change and is comfortable with the “known,” they also have a sense of adventure, exploring the new and different. Offering pizza with all those choices is certainly a worthwhile endeavor.

But the consumer also favors the original and unadulterated version of products that have been proven over time to be tasty or effective. There is a sense of confidence in the Italian chef that his pizza is “the real thing,” and thus enables the original flavor to compete against the new and different.

Marketers know that despite the comfort level of consumers with certain products, they will always take an interest in products and services that simplify life. Simplification can mean cost-saving or it can spell efficiency. The ability of people to be their own travel agents has severely cut into the traditional travel agent’s business. The customer might be “potchking” with travel reservations, either because they save money or have the ability to carve out their own itinerary.

But every industry like the coffee manufacturers has to constantly smell the coffee to make sure that they are in tune with lifestyle changes that can make their offerings obsolete. Better still, the smell could give them that sixth sense as to when a new opportunity arises. So the next time someone says to you, “wake up and smell the coffee,” you will hopefully be able to respond that you know the smell well and are quite awake.

Out of the Box is a collection of strategic marketing articles that Lubicom has published on various topics, trends and ideas in the marketing world. The articles have been published in the Hamodia weekly newspaper circulated on three continents to a readership of well over 100,000.

The name, "Out of the Box" is a term used frequently in business nowadays to describe creative thinking that is not the norm. It is meant to help a business pull away from the pack or separate oneself from the competition. It is to some extent fraught with risk, simply because it is not the run of the mill thinking, but it is at the same time the key to reaching the next opportunity.