Tuesday, December 16, 2008
I was checking a student's coffee cup this morning while watching final exams. �There's a Caribou on campus and kids use it all the time. �This one is busy and run by a third party franchisee (Sodexho). �To keep track of the cups and orders, rather than using a screen with cups on it -- like you see at most coffee shops and fast-food restaurants -- the person taking the order simply put letters on the cup of appropriate size. �The barista looks at the cup, interprets the letters and makes the proper drink and calls it out for the student or staff member to pick up.
As I tweeted (how odd that verb!) this morning, the student had�five�marks on it. �Six, if you count the cup's size as a signal, since its size tells the barista how much espresso to brew and milk to heat and froth. �I'm sure one says the type of drink, another maybe the type of milk, but at some point I was stumped to what they meant. �And stumped by how much we want our drinks customized. �
Now of course part of this is Caribou's way of extracting revenues by price discrimination. �(I have followed Tim Harford's advice and ordered the short cappuccino, because that's the strength I like. �A small macchiato is actually preferred, but it costs more.) But to think how we decide to specialize our drinks this way! �And that the market provides that to you. �What people forget is that price discrimination is beneficial to some consumers. �Some will get the product at the low price rather than not at all; others will get a product that it would not have paid to produce and instead get a cheaper product. �
Would my student get the six-marked-coffee if he had walked into a Dunkin Donuts in 1976 (when I was hitting the place every morning on my way to school for "cahffee regulah no sugah and a honey dip"*?) �No, and he might be willing to buy something from DD, but it would not be as good as what he has now, because if it was he could still get it -- or could have, when KK was here (STC has never had a DD, alas.) �
*translation from New Englandese: �coffee with milk and a glazed, raised donut