How A Small Coffee Shop Beats The Corporate Giant…
Even Though They Charge Twice As Much
Can an underdog really compete against a corporate behemoth?
The owner of this coffee and tea shop is either a masochist or brilliant. I’m leaning towards brilliant.
They opened a year ago. What made this venture interesting is the location.
The area attracts upscale customers. That’s a good thing since they’re expensive.
On the negative side, who do you think faces them across the street? That’s right. Starbucks. This upscale coffee and tea shop opened long after the Starbucks planted its roots, at least ten years.
It sounds crazy. It may even sound like a masochist approach to business. Yet, her business thrives. People line up for their $5 tea and their $4 regular coffee. Not only do they compete with a Starbucks they charge more money.
How do they do it?
They decided not to compete with Starbucks. On every measure that matters, they follow a different path.
A regular cup of coffee at Starbucks is $2. They charge almost $4. By charging such a premium, they’re making a statement.
We are different.
Their tea prices are even more outrageous. I bought a $5 tea yesterday. They craft their own proprietary blend. You cannot get it anywhere else. That’s supply and demand at work.
During my visit yesterday, I noticed the owner training a new employee. She demonstrated how to do a perfect pour over coffee. Her attention to detail astounded me. Every little nuance flaunted her passion for her work. They prepare their drinks with care. They take their time. Customers who spend this kind of money on coffee and tea expect that level of attention.
They use proprietary blends for their tea. They source their coffee from small growers. It’s hard to find these beans outside of this store.
Here is where they really set themselves apart. When you buy tea, they don’t serve it to you in a cup — unless you get it to go. They provide you a small tray, a pot, strainer and a small ceramic cup. They serve their coffee in a similar fashion. This appeals to those who wish to experience their beverages, not just consume them.
You CAN win against a larger competitor. You just can’t beat them at their own game. Instead, play a different game. Find a slice of the market ignored by the big players.
This shop does not serve people looking to grab a quick cup of cheap coffee. They chose an upscale neighborhood. They serve those who share the same love of coffee and tea.
The formula is simple. The execution is challenging.
Start with a general look at your market. What desires go unmet by current providers? What would be hard for them to replicate?
Let’s look at this case study example
Market: Coffee and Tea shop
Desires Not Served: Upscale experience, high-end sourcing
Difficult To Replicate: Does not scale at high volume
To execute on those desires you need to create that upscale experience. That can be challenging and expensive. They also needed to source their ingredients. Finally, there is the one piece that makes it all work — a customer base that desires what you sell.
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