Free drink for YOU?

This short and simple advert by Starbucks is brilliant in conveying its message- At Starbucks, we are different because we are not impersonal! Using a friendly voiceover and cute animations, the advert pointed out that in this impersonal world, Starbucks would be writing your name on your cup of coffee rather than reduce you to a latte or mocha. Now when your drink is ready, you no longer experience the usual loud shout (close to a yell most of the time) of “One latte!” On the contrary, imagine the personal touch and smile that comes along with “Jason, your latte is ready!”  Although we may not think that this is a significant change, Starbucks is trying to personalise the customer’s coffee buying experience and research has shown that personalisation has many benefits.

Personalization has been shown to increase sales.  By personalising MMS messages to 1,200 customers in the US, BMW improved conversions by 30% and netted a cool $500,000 in revenue. This is because personalisation helps to build close relationships with customers and this helps to develop familiarity. There exists research to support the principle of familiarity. Fang, Singh and Ahluwalia (2007) instructed participants to read a five page article and told them that they would be required to answer questions related to the content of the article after that. While they read the article, they were exposed to different advertisements that were presented at the top of the article. Subsequently, it was found that the more times the advertisement was presented, the higher it was rated on a preference scale.

In addition, using the rule of reciprocity, the advert proceeded to ask: how about we buy you a free drink? Kunz and Woolcott (1976) sent Christmas cards to a sample of strangers and found that the majority of them sent cards back despite not knowing who had sent the cards to the. The marketing team at Starbucks must have believed that by doing so, customers would feel obligated to return the favour and buy products from them in the future. Besides that, the advert cleverly presented the offer of a free drink as an opportunity for the customers to introduce themselves, enticing them to accept the offer since it seems like a good reason to accept the offer. 

Last but not least, by only offering the free drink for one day, Starbucks is using the scarcity principle. We usually assume that the less available an item is, the more valuable it is (Lynn, 1989). Worchel, Lee and Adewole (1975)’s study provides evidence for the scarcity principle. They asked 200 female undergraduates to rate the value and attractiveness of cookies that were either in abundant or scarce supply. It was found that cookies in the scarce supply condition were rated as more desirable than in the abundant condition.

To summarise, not only is Starbucks trying to personalise coffees for their customers, they have also employed the reciprocity and scarcity principles to great effect. Would you pick up a YOUR free drink?

References

Fang, X., Singh, S., & Ahluwalia, R. (2007). An examination of different explanations for the mere exposure effect. Journal of consumer research, 34, 97-103.

Kunz, P.R. & Woolcott, M. (1976). Season’s greetings: From my status to yours. Social Science Research,5, 269-278.

Lynn, M. (1989). Scarcity effects on desirability: Mediated by assumed expensiveness? Journal of Economic Psychology,10, 257-274.

Worchel, S., Lee, J., & Adewole, A. (1975). Effects of supply and demand on ratings of 

object value. Journal of Personality and Social Psychology, 32, 906-914.

Jason Hong (2nd post)