There ain't no such thing as a free lunch!

There ain't no such thing as a free lunch!

Procaffeinate is an extremely popular location among university students; I could place a pretty safe bet that students living in Leamington Spa have been or have at the very least heard about this quaint café. Owing to its very cosy atmosphere, attentive staff and trendy décor, Procaffeinate is a great place for meeting with friends and doing university work. Indeed, whenever I walk past the café on my way to university, I can safely say that I have not once seen it empty. Considering the fact that it has a periphery location in Leamington, it is fascinating that people make the effort to travel all the way to the café, often just for a cup of tea. Yet what is the root cause of its success? Why do people choose Procaffeinate over other cafés and give it so many rave reviews online? Possibly, the answer lies in the humble piece of toast.

To explain succinctly, Procaffeinate offers a free, do it yourself toast service and provides a selection of complimentary jams to spread on the toast. Typically, freebies like this are uncommon among high-end cafés and this got me thinking: surely the café loses money on snacks that have to be purchased if there is a free, and I have to say delicious, snack option with hot drinks? Interestingly, after having a conversation with a waitress at the café, I found the opposite to be true. According to the waitress, not only do people choose Procaffeinate over the rival café across the road, but also the sales of cakes etc. remain surprisingly high. She stated: “the toast doesn’t cost us anything and only benefits the business.”

Evidently, offering a complimentary product to customers is a powerful tactic that is applied by businesses when intending to get more from customers in the future (Rudzki & Li, 2007). Companies that are aware of the best ways to exploit free goods gain a competitive advantage over those companies which do not. Additionally, according to previous research, free samples have been highly effective in increasing sales long-term as well as holding a greater retention of customers (Bawa & Shoemaker, 2004). Now, let’s review in-depth the mechanisms behind the success of free goods and how exactly being offered a free piece of toast upon a visit to Procaffeinate makes clients return again and again, ready and happy to spend money.

Firstly, it can be argued that by offering an initial concession (free toast) owners of Procaffeinate are hoping to stimulate a return concession (recognition and sales). According to the rule of reciprocation, we feel obliged to repay what others have provided us with (Cialdini, 2007). As reciprocation is an adaptive response, we feel the urge to repay even when provided with a favour that we didn’t ask for. Just like being faced with an irresistible free toast opportunity, you didn’t ask for it, but it’s there so why not?

The effectiveness of the reciprocation technique has previously been evident in increasing restaurant tips. In the study by Rind and Strohmetz (1999), the mean tip percentage has improved in cases where a helpful message has been added on the back of the receipt. In the Procaffeinate case study, receiving free toast creates a sense of obligation to return the favour. Customers returning the favour may manifest itself in making Procaffeinate their preferred location for hot drinks, talking about the café with friends, or writing a particularly positive review online – all of these are evidently desirable outcomes for the business. Luckily, the rule of reciprocation may spur unequal exchanges. The seemingly expensive, high-quality bread, jam and butter may seem to be a big favour for the client, whereas in reality, toast doesn’t cost anything in comparison to the long-term commitment to the organisation it unconsciously creates in the minds of Procaffeinate visitors.

Additionally, items offered for free can be seen as influencing consumer behaviour via the process of eliminating buyer’s regret (Ahmetoglu, Furnham & Fagan, 2014). When people do not have to spend anything on an item, it has been shown that they overvalue the product (Shampanier et al., 2007; Chen et al., 2012). According to Shampanier, Mazar and Ariely (2007), free goods produce an especially positive effect and are generally found to be associated with positive valuations (Chandran & Morwitz, 2006; Darke & Chung, 2005; Nunes & Park, 2003). As a result, positive associations can create a generalised liking of Procaffeinate. According to the liking principle, we comply with requests and feel obliged to those we like (Cialdini, 2007). In line with the Tupperware Party Effect (Cialdini, 2007), research has previously determined that a social bond is likely to significantly influence the purchase of products (Frenzen & Davis, 1990). Therefore, liking lovely people who have made you feel comfortable and did you a favour, increases the pressure to come again, buy more and spread information about Procaffeinate as a wonderful place.

Similarly, the foot-in-the-door technique (FITD) aims to make people comply with a large request by firstly getting the person to comply with a small request (Cialdini, 2007). In the case of Procaffeinate, customers are first expected to comply with a small request – trying free toast. Then, customers are expected to comply with larger requests like publicity (promoting the café to others) and sales (buying products such as cakes). Consequently, such requests like: “Come again” or “Tell your friends about us”, are more likely to be successfully implemented by Procaffeinate visitors as a result of complying with the initial, easily achievable request of having toast. Therefore, application of the FITD is likely to result in an increase in sales and popularity. This process can, therefore, explain the large number of exceptionally positive reviews online. These can in turn result in an attraction of additional clients due to the rule of social proof.

To conclude, restaurants and cafés use numerous influence techniques to affect consumer behaviour, increase sales and promote their business without any great cost. It seems like free goods contribute to much of the success of Procaffeinate. Ultimately, this blog post has reviewed how something as simple as a complimentary piece of toast can influence consumer behaviour without the consumer even being consciously aware of it. In reality, nothing is ever free: “the only free cheese is in the mousetrap.” - Gage (2006).

References:

Ahmetoglu, G., Furnham, A., & Fagan, P. (2014). Pricing practices: A critical review of their effects on consumer perceptions and behaviour. Journal of Retailing and Consumer Services, 21(5), 696-707.

Bawa, K., & Shoemaker, R. (2004). The effects of free sample promotions on incremental brand sales. Marketing Science, 23(3), 345-363.

Chandran, S., & Morwitz, V. G. (2006). The price of “free”-dom: Consumer sensitivity to promotions with negative contextual influences. Journal of Consumer Research, 33(3), 384-392.

Chen, H., Marmorstein, H., Tsiros, M., & Rao, A. R. (2012). When more is less: The impact of base value neglect on consumer preferences for bonus packs over price discounts. Journal of Marketing, 76(4), 64-77.

Cialdini, R. B. (2007). Influence: The psychology of persuasion. New York: Collins.

 

Darke, P. R., & Chung, C. M. (2005). Effects of pricing and promotion on consumer perceptions: it depends on how you frame it. Journal of Retailing, 81(1), 35-47.

Frenzen, J. K., & Davis, H. L. (1990). Purchasing behavior in embedded markets. Journal of Consumer Research, 17(1), 1-12.

Gage, R. (2006). Why You're Dumb, Sick and Broke... And How to Get Smart, Healthy and Rich!. Internet Profit Kit.

Nunes, J. C., & Park, C. W. (2003). Incommensurate resources: Not just more of the same. Journal of Marketing Research, 40(1), 26-38.

Rudzki, R. E., & Li, S. (2007). The economic paradox of the “freebies” phenomena: How and why companies give stuff away for free. Direct Marketing: An International Journal, 1(4), 180-194.

Rind, B., & Strohmetz, D. (1999). Effect on restaurant tipping of a helpful message written on the back of customers' checks. Journal of Applied Social Psychology, 29(1), 139-144.

Shampanier, K., Mazar, N., & Ariely, D. (2007). Zero as a special price: The true value of free products. Marketing science, 26(6), 742-757.