Free Coffee: More Expensive than You Might Think

Friday, December 5, 2014

In order to encourage shoppers to sign up for their store card, an upper class supermarket devised a fantastic incentive: free coffee. Many would praise that plan as brilliant. Preparing large quantities of coffee isn't particularly expensive, and what shopper wouldn't enjoy a free cup of joe?

Therein lies the problem. The upper class shoppers aren't there to save a few dollars. They're there because they want to be surrounded by an exclusive cadre - their fellow shoppers.

That's not to say that the free coffee didn't attract anyone. Quite the opposite! It attracted the very people the supermarket needed to exclude: price sensitive consumers from lower down on the economic totem pole.

Suddenly the supermarket was faced with two problems: an influx of customers who were only there for the free coffee and a decrease in the number of their targeted customers who were repulsed by the types of customers that the free coffee attracted.

This tale of woe leads to the obvious conclusion: free isn't free. Every tweak to a business model will have consequences on a business', well, business.

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