The ‘Cup of Coffee Theory’ is drawn from Seth Godin’s writings on the changing perception of purchasing reward experienced by consumers at different stages of an economic cycle. Perception refers to the internal process of selecting, organising and interpreting information in order to create meaning. A number of factors may influence this process, and the meaning making experience is highly effected by experiences in our personal, social and psychological states.
In a period of economic instability, consumers limit emotional based purchases. Items such as food, petrol, and other such essentials may be slightly affected by lower consumer sentiment, however it is the products which return a high reward value on purchase which suffer. High reward value items include non-essential luxury items, spanning from body lotions, perfumes and clothing to eating out, home entertainment systems and motor vehicles. When engaged in an actual or prospective emotional based purchase, consumers use justifiers to rationalise the purchase, and during times when economic rationalisation wins out over emotional rationalisation, it is the retailer who suffers.
So how can the retailer influence the consumer’s emotional rationalisating in the product purchasing decision? Godin examples a cup of takeaway coffee. During the good times, consumers receive a high reward value from the purchase of a $4 coffee from the local cafe. The consumer receives a higher reward value from being able to easily spend $4 on a non essential product. The reward value of the product does not change when the economic environment changes. The consumer will still buy the product, albeit perhaps less frequently, but now upon purchasing, the indulgence is ‘front of mind’; we recognise the indulgence for what it is and we still feel good about it because now we view it as a ‘treat’ or because we feel we ‘deserve’ it.
This examples the consumers variance in perception activation when rationalising emotionally based purchase decisions in two different economic environments. Next week I will extrapolate this theory, and show how retailers can tune into consumers variance in purchasing reward perception and build customer business and loyalty in a time when most consumers are tightening the purse strings.