The Decoy Effect

 

How adding a new option might change our perception of the existing options

What is the Decoy Effect about?

“[…] when we are choosing between two alternatives, the addition of a third, less attractive option (the decoy) can influence our perception of the original two choices.” (The Decision Lab)

It is also called the “asymmetric dominance effect.” Here is why: the decoy is an option that’s clearly worse than the target option (so it is dominated by the target), while it’s not completely dominated by the competitor 

“[…] when we are choosing between two alternatives, the addition of a third, less attractive option (the decoy) can influence our perception of the original two choices.” (The Decision Lab)

It is also called the “asymmetric dominance effect.” Here is why: the decoy is an option that’s clearly worse than the target option (so it is dominated by the target), while it’s not completely dominated by the competitor option.

The Story of The Economist

Originally, they introduced 2 subscription plans:

• 1 year online-only $59
• 1 year online + print $125

Most subscribers chose the first option, so they added a third plan, the decoy: 1 year print-only for $125. Now the other $125 option (online + print) was a no-brainer: the decoy successfully made the target option more attractive. As result, sales increased by 43%.

Dan Ariely, author of the fantastic book, Predictably Irrational, repeated this pricing strategy as an experiment at MIT: he showed these subscription options to 100 MIT students:

• 16 student chose the online-only
• 0 (zero) student chose the print-only
• 84 student picked the online+print

Then, he removed the decoy option, the results clearly showed that it influenced decision making a lot:

• 68 students chose the online-only
• 32 chose the online+print

Everything is relative

Here are some quotes from Ariely’s book, Predictably Irrational:

“Let me start with a fundamental observation: most people don’t know what they want unless they see it in context.”

“[…] humans rarely choose things in absolute terms. We don’t have an internal value meter that tells us how much things are worth. Rather, we focus on the relative advantage of one thing over another, and estimate value accordingly”

Ariely uses the Ebbinghaus illusion of relative size perception to demonstrate that everything is context-dependent: there are two circles of identical size, but the one on the left (see my sketch) appears to be bigger, since it is surrounded by smaller circles, while the one on the right seems to be smaller, since there are much bigger circles next to it.

Key takeaways

Decoys are about asymmetric differences based on comparative values, e.g. price and quality (see the original paper by Huber, Payne & Puto from 1982: Adding asymmetrically dominated alternatives: Violations of regularity and the similarity hypothesis).

A decoy:

• influences decision making
• works subconsciously
• adds a new reference point (see: Loss Aversion)

Recommended reading & useful links

Huber, J., Payne, J. W., Puto, C. (1982). Adding asymmetrically dominated alternatives: Violations of regularity and the similarity hypothesis. In: Journal of Consumer Research, 9(1), , 90–98

Predictably Irrational

Huber, J., Payne, J. W., Puto, C. (1982). Adding asymmetrically dominated alternatives: Violations of regularity and the similarity hypothesis. In: Journal of Consumer Research, 9(1), , 90–98

Predictably Irrational, Revised and Expanded Edition: The Hidden Forces That Shape Our Decisions by Dan Ariely

https://tinyurl.com/mrxjdfvs

25 Insights of 2025

 

Introduction

The year has been a whirlwind of both uncertainties and optimism. So where do we go from here? From data-backed research by leading business institutions around the globe, here are 25 insights from the year 2025. Stay informed with these trend developments in business strategies, macroenvironment shifts, consumer behaviors, technological advancements, product evolution, and talent landscape, and reference them to support and enhance your future decisions.

Business Strategies

2025 highlights a clear tension between technological ambition and realized value. Organizations continue directing meaningful portions of digital transformation budgets toward AI, yet much of the expected impact remains unreached. This gap is pushing leaders to tighten ROI discipline, monitor performance more systematically, and clarify where value is truly created.

Data monetization is rising quickly – expanding business models and accelerating the pressure to prove returns. At the same time, executives prioritize innovation while investors emphasize financial resilience, widening the need for clearer value narratives and balanced capital decisions.

Amid this, product organizations that anchor choices in customer outcomes – rather than delivery volume – consistently outperform. With Gen AI creating multiple possible futures, resilient strategies now rely on pressure-testing assumptions and ensuring value-centered decision-making across the enterprise.

Macroenvironment Shifts

Macroenvironment shifts reveal a landscape shaped by fast-moving technology, geopolitical realignment, and evolving societal expectations. Tech continues to act as the strongest tailwind, accelerating AI adoption, digitization, and data-led growth. At the same time, rising regulatory complexity, trust erosion, and workforce transitions create meaningful headwinds that require organizations to redesign operating models.

Geopolitical changes are redrawing trade corridors, exposing sectors to uneven upside depending on scenario outcomes – whether baseline, diversification, or fragmentation. These dynamics are already reshaping global manufacturing strategies, with regions evaluated through new tradeoffs in cost, speed, stability, and labor availability.

In response, organizations are turning to emergent structures – platform models, enterprise agility, and decentralized networks – to stay resilient, align operations to uncertainty, and position themselves for long-term competitiveness.

Consumer Behaviors

Consumer behavior is shaped by a widening tension between rising expectations and uneven brand execution. Customers want AI-powered personalization, seamless experiences, and greater transparency, yet satisfaction lags significantly – especially in data handling and automated support. This trust gap elevates privacy assurances as a core component of brand value.

AI-led interactions, however, demonstrate clear performance upside, driving lower bounce rates, higher engagement, and stronger revenue per visit. As digital journeys improve, measurement also evolves. New metrics such as the "attention quotient" and "commercial quotient" help brands understand how fragmented focus and platform sophistication translate into monetization potential.

Underlying these metrics is a shift toward attention-based segmentation. Seven distinct consumer groups now display markedly different spending behaviors, media habits, and responsiveness to advertising. Notably, top media consumers do not always equate to top spenders, underscoring the need for precise targeting and content strategies that match true commercial value rather than raw consumption volume.

Technological Advancements

Rapid advances in AI infrastructure, intelligent systems, and cybersecurity are creating both opportunity and operational pressure for organizations. A three-pronged capability stack is emerging: Architect technologies lay the foundation with confidential computing and AI-native platforms; Synthesist capabilities such as multi-agent systems and domain-specific models elevate intelligence; and Vanguard capabilities address future risks through digital provenance, geopatriation, and advanced cyber defense.

These advancements also reshape IT economics. While Gen AI may initially increase expenses, it can address up to half of IT costs and deliver meaningful efficiency gains when deployed thoughtfully. As spending reallocates toward AI-powered platforms, IT evolves into a strategic multiplier that reduces technical debt, strengthens shared capabilities, and accelerates business value.

Yet a critical caution underscores these developments: ROI projections often overlook technical debt, which can erode or even reverse expected benefits. Organizations that account for this early – and invest in modernization alongside innovation – can protect returns and position their technology strategy for sustainable impact.

Product Evolution

Products are driven by a shift from generic "smartness" to more intentional value delivery. Three buyer personas – Purpose Seekers, Comfort Seekers, and Efficiency Seekers – now shape product expectations, each prioritizing different advantages such as time savings, sustainability, or healthier living. Understanding these segments has become essential for creating differentiated, resonant value propositions.

Trust also plays a defining role. Consumers reward companies that pair innovation with strong data responsibility, with "Trusted Trailblazers" earning higher satisfaction and greater household spending than providers perceived as either overly aggressive or too cautious.

Despite rapid innovation cycles, many users feel disconnected from new features. While personalization and improvements are appreciated, a majority express that updates arrive too quickly or fail to address real problems. This tension highlights the growing need for product strategies that balance innovation velocity with meaningful, user-centered progress.

Talent Landscape

AI adoption is accelerating faster than workforce readiness, widening gaps between required and available skills. Shortages in areas like data science, machine learning, and algorithm development threaten momentum unless organizations scale focused skilling, reskilling, and mobility programs. Workers value AI's speed benefits yet still prefer human quality for judgment-driven tasks, reinforcing the need for hybrid workflows that balance efficiency with expertise.

Strong managers amplify the impact of scarce technical talent. High performers deliver outsized productivity gains and improve alignment across roles, while practices such as better role–skill matching, lateral paths, and rotational assignments increase retention of AI-native employees. Organizations that prioritize capability development and people leadership will be better positioned to sustain progress in an AI-driven labor market.

https://tinyurl.com/mw22cn6a

CPG giants are seeing stronger growth in self-care, supplements, and skincare

For years, the biggest players in CPG (Consumer Packaged Goods) and FMCG: Unilever, Nestlé, Kraft Heinz built their empires on food. But now? They’re making a massive pivot..if you had told me 5 years ago that these brands would be pulling back from food, I would’ve raised an eyebrow.

-Unilever is cutting loose its $8 billion ice cream division, choosing to focus on higher-margin beauty and wellness.

-Nestlé is doubling down on health-science-based nutrition as food brands struggle with pricing power.

- CPG giants are seeing stronger growth in self-care, supplements, and skincare than in traditional food categories.

The global personal care market is expected to hit $758 billion by 2030, while processed food growth slows.

Why This Shift?

1. Margins in food are shrinking. Consumers are trading down, private labels are winning, and inflation-wary shoppers aren’t absorbing cost hikes like they used to.

2. Health & wellness are driving premiumization. Customers will pay more for skincare, supplements, and functional beverages—but not for basic pantry staples.

3. Brand loyalty in food is eroding. Over 50% of consumers are comfortable switching food brands based on price, but loyalty remains strong in beauty, healthcare, and wellness.

Winning Brands Are Already Moving:

-L'Oréal’s skincare division posted 9.1% revenue growth last year, while traditional CPG food brands saw single-digit declines.

-The Coca-Cola Company is investing in functional drinks and non-carbonated wellness categories to stay relevant.

-PepsiCo’s biggest success? Gatorade’s expansion into hydration and performance-based drinks, not soda.

CPG Leaders:

✅ Stop thinking of food as the core driver of growth. Instead, align with evolving consumer behavior.
✅ Invest in personalization, self-care, and functional health. That’s where demand (and pricing power) is strongest.
✅ Rethink your brand mix. Is your portfolio weighted toward categories that will still be relevant in 5-10 years?

So, here’s my question to FMCG execs: Are you future-proofing your brand strategy or just managing decline?

https://tinyurl.com/5d8s5ytn

Something's happening in CPG.
The legacy giants are dramatically under-pacing the market, while a new generation of startups is sprinting ahead.

This isn't just a quarterly anomaly. It's a fundamental shakeup.
The old playbook—brute-force distribution and massive ad budgets—is broken. The power has shifted from the brand to the consumer.

In our latest newsletter, we dive into the why:

1. Consumers are now Curators: They demand transparency and trust.
2. Agility is the new Scale: Startups can innovate in weeks, not years.
3. Connection is the new Currency: Community is beating traditional advertising.

This CPG shakeup is a lesson for every industry, from food & bev to healthcare. The old guard is learning that their greatest strength (massive size) has become their greatest liability.

https://tinyurl.com/yc2h7rtn

Principles of Marketing. 3. Consumer Markets and Purchasing Behavior. Part 4.

 

Ethical Issues in Consumer Buying Behavior

All purchase behavior is in some sense ethical, involving moral judgment. For example, a consumer is concerned about the abuse of human rights in a foreign country, so corporate involvement in that country may be a factor in the consumer’s purchasing decisions. Similarly, consumers concerned about animal rights may consider whether a cosmetic product has been tested on animals. For example, in one 2017 survey, 32 percent of US cosmetics consumers reported that they would “very likely” stop purchasing their favorite brand if the manufacturer tested on animals.22

Ethical Consumerism

Economic theory suggests that consumers seek to maximize utility (the total satisfaction received from consuming a product or service) at the lowest cost possible, so it follows that firms that have higher costs of production will be driven out of the market. Recently, more and more firms have started using “ethical” labels as a means of product differentiation, a marketing strategy in which a brand identifies the one thing that makes it genuinely different from competitors and then leverages that notion in its branding and messaging. But what does this look like in action? Let’s take a quick look at one popular brand that honed its differentiation strategy and succeeded as a result.

Like many fast-food chains, Chipotle (see Figure 3.13) focuses on the quality of its ingredients above all else. One of the brand’s hallmarks is that it works with family farmers within a 130-mile radius of each of its locations and attempts whenever possible to source local and sustainably raised ingredients. Additionally, Chipotle eliminated genetically modified (GMO) foods from its menu, citing public concerns about the safety of genetically modified ingredients.23

Figure 3.13 Chipotle works with family farmers and has eliminated genetically modified foods as a way to differentiate itself in the market. (credit: “Chipotle” by JeepersMedia/flickr, CC BY 2.0)

Marketing in Practice

Ethics and Corporations

Hundreds of companies are known for being ethical, including Patagonia (more information later in this chapter), TOMS, and Conscious Coffees, among others. Read about five examples of truly ethical companies and how they are working to make an impact in their markets.

Business Insider provides a list of the most ethical companies in the world. Do any of the companies on this list surprise you? Are there companies missing that you think should be included?

What corporate ethical decisions are you aware of that have positively impacted a company’s brand? Here are 10 examples where companies made the ethical decision.

Many consumers research companies before making a purchasing decision. Is the ethical footprint of a company important to you? Does it impact where you purchase products and services? Why or why not?

Are You an Ethical Consumer?

At its most basic level, being an ethical consumer simply means choosing goods that are ethically sourced, produced, and distributed. Ethical consumerism has become something of a buzzword over the last decade, and organizations are taking notice of consumers’ expectations in terms of social and environmental practices. Consider some statistics to better understand how consumers put ethical consumerism in practice:

• According to a Statista poll, 90 percent of US survey respondents indicated that they would boycott a brand if they discovered that the company was engaged in irresponsible business practices.24
• Research from Mintel, a market research firm, indicates that 56 percent of US consumers indicate that they would no longer do business with organizations they believe to be unethical.25
• A recent survey showed that consumers seek a match between their beliefs and those exemplified by the organization. According to the survey, an overwhelming 72 percent of respondents indicated that they purchase goods and services from companies with beliefs similar to theirs in terms of environmental preservation and child labor.26

By choosing brands that align with their values, consumers are voting with their pocketbooks. Modern consumers are more than willing to take their business elsewhere if they perceive a disconnect between their values and those of the organization, and they will likely share their sentiments on social media.

Marketing in Practice

Consumer Ethics

Do consumers care about ethics when making a purchasing decision? You can find marketers on both sides of the fence on this hotly debated topic. Some studies show that consumers are interested in products that align with their values. Other studies show that consumers aren’t interested. According to an article from Kellogg Insight (a publication from the Kellogg School of Management at Northwestern University), current research by Jacob Teeny, an assistant professor of marketing at Kellogg, suggests that consumers care.

This Jason Garman TEDx Talk focuses on ethical consumerism and the power of having a choice and a voice through purchasing decisions.

Are you new to ethical shopping? Watch this video to learn the basics about shopping ethically. Also check out this article to learn specific reasons for being an ethical consumer.

This hotly debated topic is becoming a larger part of the conversation in marketing with the increase of eco-friendly products on the market. It’s important in your marketing work that you’re aware of the discussion, as it will help you to become a great marketer.

Companies with a Conscience

Patagonia

Figure 3.14 Patagonia is known for its ethical leadership and environmental mission. (credit: “Trekkin!” by Pierce Martin/Zach Dischner/flickr, CC BY 2.0)

If you’re looking for a company that’s a leader in environmental and social responsibility on many fronts, look no further than Patagonia, a designer of outdoor clothing gear for the “silent sports”—climbing, surfing, skiing, snowboarding, fly fishing, and trail running (see Figure 3.14). Just start with Patagonia’s mission statement: “Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis.”

In addition to being fair-trade certified for all of its sewing production, the brand knows and publicly discloses all of its first-tier suppliers and is actively working to map out the rest down to the farm level for the raw materials used in its gear. Many consider Patagonia to be an outdoor brand, but it offers products in many categories, from sundresses to skinny jeans.27

A large portion of the company’s products are made from recycled materials or raw organic cotton. Plastic soda bottles are made into fleece jackets, guayule plants are made into wetsuits, and they take back worn-out Patagonia products that consumers return to the store at no charge and then recycle them into their supply chain. Look no further if you want to be an ethical consumer!28

Read more about Patagonia’s environmental responsibility program.

Chapter Summary

This chapter defined consumer markets and consumer buying behavior and discussed the buyer’s black box, the concept that attempts to mark the pattern consumers follow when making a purchase decision. It also categorized consumer buying behavior into four types: complex buying behavior, dissonance-reducing buying behavior, habitual buying behavior, and variety-seeking buying behavior.

This chapter also looked at the cultural, social, personal, psychological, and situational factors that influence consumer behavior and scrutinized the stages of the consumer decision process. Finally, it examined the role of ethics in consumer buying behavior and discussed ethical consumerism.

Key Terms

4Ps

the “marketing mix”—product, price, promotion, and place

attitudes

a learned set of emotions, beliefs, and behaviors developed toward a particular brand, object, person, thing, or event

beliefs

ideas that a person holds as being true

buyer’s black box

a model used in the study of the buying behavior of consumers

cognitive dissonance

the mental conflict that occurs when a person’s behaviors and beliefs do not align; also referred to as buyer’s remorse

complex buying behavior

the consumer buying behavior that occurs when the consumer is highly involved with the purchase and perceives significant differences between brands

consumer buying behavior

the actions taken by consumers before buying a product or service

consumer decision process

the process through which consumers become aware of and identify their needs, collect information on how to best solve those needs, evaluate alternative options, make a purchasing decision, and evaluate their purchase

consumer market

a market where consumers purchase products and/or services for consumption

cultural factors

a set of values or ideologies of a particular community or group of individuals that include culture, subcultures, social class, and gender

culture

the pattern of learned and shared behavior and beliefs of a particular social, ethnic, or age group

dissonance-reducing buying behavior

any activity aimed at decreasing the tension or feelings of discomfort and unease that accompany an unfamiliar purchase

economic situation

a measure of a consumer’s income and financial situation

environmental factors

factors such as music, lighting, ambient noise, and smell that can either discourage or encourage a consumer’s purchase decision

family

a group of persons united by ties of marriage, blood, or adoption, or those who live in the same household

gender

the socially constructed roles, behaviors, and norms of individuals, which vary between societies and over time

habitual buying behavior

consumer buying decisions made out of “habit” and without much deliberation or product comparison

heuristics

mental shortcuts that allow people to solve problems and make judgments quickly and efficiently

learning

the acquisition of knowledge or skills through experience, study, or being taught

life cycle stages

various stages in a human’s life, including fetus, baby, childhood, adolescence, adulthood, and elderly

lifestyle

the habits, attitudes, tastes, moral standards, economic level, etc. that together constitute the mode of living for an individual or group

Maslow’s hierarchy of needs

a theory of motivation by Abraham Maslow which states that five categories of human needs dictate an individual’s behavior

motivation

the process that initiates, guides, and maintains goal-oriented behaviors

occupation

an activity or task with which one occupies oneself, usually the productive activity, service, trade, or craft for which one is regularly paid

perception

the manner in which sensory information is organized, interpreted, and consciously experienced

personality

the combination of characteristics or qualities that form an individual’s distinctive character

product differentiation

a marketing strategy in which a brand identifies the one thing that makes it genuinely different from competitors

reference groups

groups that consumers compare themselves to or associate with

roles

the set of norms, values, behaviors, and personality characteristics attached to a status

selective attention

the process of directing one’s awareness to relevant stimuli while ignoring irrelevant stimuli in the environment

selective distortion

a tendency of people to interpret information in a manner that supports what they already believe

selective retention

the tendency of people to retain only part of the information to which they are exposed

social class

a group of people within a society that possesses the same or similar socioeconomic status

social factors

factors that are prevalent in the society where a consumer lives

status

the relative social, professional, or other standing of an individual

subculture

a cultural group within a larger culture, often having beliefs or interests at variance with those in the larger culture

variety-seeking buying behavior

the buying tendencies of consumers who do not have a high involvement with a product when there are significant differences between brands

Applied Marketing Knowledge: Discussion Questions

1.

What sort of purchasing behavior do you, as a student, exhibit? Do you stop by a convenience store and buy a soda on the way to class? This is convenience shopping behavior, and the business is located, conveniently, in your daily pathway. Do you sometimes buy a different beverage, perhaps an energy drink or a bottled iced tea? You’re exhibiting variety-seeking behavior. When the time came for you to choose your college, what sort of shopping behavior did you engage in?

2.

You belong to many membership groups. You might be a member of the college soccer team or sing in a choir. Right now, you likely aspire to join the group of college graduates. Why is it so important for marketers to know which groups consumers have joined or refer to when making purchases?

3.

Businesses send you thousands of marketing messages each day through the radio, TV, Internet, billboards, and bus benches. You sort through these messages, perhaps unconsciously, and decide which ones to pay attention to. This is called selective attention. Which messages are most influential right now in your life as a student? Messages regarding your social life? Personal life? Psychological factors relating to your motivation to try a new product? Cultural factors such as gender-related products? A situational factor such as a flat tire? Where would you find an example of each message?

4.

Provide a recent example of a purchase you made and describe your progress through the stages of the consumer decision process model.

5.

You just locked your door and are heading out to get a haircut. How do these two needs—safety through the locked door and esteem through the haircut—fit with Maslow’s hierarchy of needs? Why is this hierarchy helpful for marketers in understanding human needs and resulting buying behavior?

Critical Thinking Exercises

1.

Research has shown that consumers’ buying behavior changes over time, reflecting their age or stage of the family life cycle. Visit Salesfloor.com and read the summaries this site offers on age-based shopping habits. Do you agree with research findings that despite being bombarded with digital content, Zoomers still prefer to stop in store? Do you research products thoroughly through search engines, reviews, and social media before purchasing? Explain why you agree or disagree with this study’s conclusions about generational buying behavior.

2.

One way consumers evaluate alternatives is by identifying the “bundle of attributes” of a product or service. Assume that you’re in the market for a new smartphone. What would that bundle of attributes look like? In other words, what attributes do you consider important, and how would you rank the importance of these features on a scale of 1 to 5, with 5 being the attribute of greatest importance and 1 being the attribute of lowest importance? Some attributes are already listed, but you can add your own attributes as well. Complete Table 3.2 with your rankings.

 

Attributes Considered	Importance of Attribute
Storage
Battery Life
Processing
Price
Ease of Use
Durability
Camera Quality

Table 3.2 The Bundle of Attributes

3.

Delve into McDonald’s, a company mentioned at the beginning of this chapter. Does McDonald’s have an environmental sustainability statement? If so, list evidence showing how McDonald’s carries out this policy.

Building Your Personal Brand

Knowing yourself well is essential to helping you identify your personal brand. How would you characterize your personal brand right now? Is it what you want it to be?

There are numerous free tools to help you gain self-awareness. The Careers in Marketing section earlier in this chapter lists numerous resources that you could try. Or you can try this short personality assessment that is similar to the Myers-Briggs Type Indicator. After you complete the assessment, your personality information will be revealed. You’ll learn if you’re extroverted or introverted, thinking or feeling, sensing or intuitive, and judging or perceiving. The results are shown as a four-letter acronym (for example, ENFP or ISTJ), and there are 16 possibilities that could arise.

Is the outcome a surprise to you, or is it as expected? Does it help explain some of your friendships, how you approach your studies, or the feelings you have? Keep your personality type in mind as you gain better understanding of yourself and others, and especially as you begin to develop and express your personal brand.

What Do Marketers Do?

Have you ever wondered where analysts gather consumer behavior data and how they make sense of it? One way to find out is to ask someone who currently does this job. Using LinkedIn, conduct a search for data analysts in your geographic area and invite one or more to connect with you through the LinkedIn platform. Once connected, send a message to each one telling them who you are and that you’re a marketing student. Request a 15-minute phone conversation with them to ask them about their job. Come prepared to the phone conversation with a list of questions you want to ask. Be prepared to go off script and ask questions that come to mind on the spot. You can learn a lot about various marketing careers, and you can make great contacts by simply asking the right questions! What questions do you want to ask? You might consider some of the following:

• How did you get started in this area of marketing?
• Where do you collect data from, and how do you complete an analysis?
• What happens after you conduct an analysis?
• Do you help make marketing decisions based on your analysis?
• What areas of the company does your analysis impact?
• What specific courses did you take to prepare you for this job/career?

Closing Company Case

Wired Coffee Bar

Figure 3.15 Recognizing an opportunity to open a coffee shop in a small community where none existed, Wired Coffee Bar was launched. (credit: reproduced with permission of Wired Coffee Bar)

During high school and college, Lisa worked in an upscale retail boutique. On the mornings Lisa opened the store, she grew to love the deep, rich smell of the coffee that would permeate the air from the local gourmet food store across from the boutique. Her love for coffee only deepened as she experienced local cafés throughout her travels while in college. In the back of her mind, she glamorized opening her own café.

Throughout her early thirties, Lisa looked at locations, talked with coffee entrepreneurs, developed business feasibility studies, and dreamed of one day having her own place. One big problem was finding the right geographical area where a small, independent coffee shop would be successful.

After moving for the fifth time, Lisa realized the new, growing community where she now lived with her two small children lacked one important thing—good coffee. The town was rapidly expanding and was the fastest-growing community in the state of Tennessee. This might be the time and place to revisit the idea of a coffee shop.

Every feasibility study Lisa completed pointed to the need for strong community support. This new town had two important ingredients—college students and a burgeoning population. The area was abundant with many different church denominations; a few small, local colleges; and some new international businesses that had recently relocated to the community.

With no coffee shop in the town, Lisa believed her concept could be successful. Currently, if you wanted a coffee, the nearest place to grab a cup was a Starbucks, which was over 20 minutes away. Starbucks made specialty coffee mainstream, but it seemed that sitting down to enjoy a cup of coffee was becoming a thing of the past. As more and more people began grabbing their coffee from the drive-through, could a community coffee bar with a wide variety of seating options and complimentary Wi-Fi be successful?

Going forward with the idea, Lisa began to develop Wired Coffee Bar. Prior to opening, Lisa went to every local community event and provided free coffee for people to sample. Once the community had a taste of the coffee and an expectation for the opening, there was an eager clientele waiting in line on the first day of business. One customer even hugged Lisa to thank her for bringing coffee to the community.

The concept took off, and soon Lisa was a purveyor of fine coffee. Wired Coffee Bar was widely supported by the community. The local churches loved to meet for a coffee drink and connect with friends and neighbors. Throughout the day, business was conducted at the tables over a coffee, and into the evening hours college students gathered to study and talk with friends.

If you looked at the clientele throughout the day, you could see the “grab and go” customers who came every morning to get their mochas, lattes, and cappuccinos. Into the late-morning hours, the tables filled up with business meetings—builders and their new clients, PTA groups, pharmaceutical sales reps strategizing for the day and grabbing coffee for customers, and moms meeting for coffee before picking up kids at school. As the afternoon wore on, the seats would fill up with high school students meeting with tutors and friends to complete homework. The later evening hours had every seat filled with college students doing class projects or just “hanging out” with friends.

Wired Coffee Bar had a focused niche of coffee and community. The menu wasn’t complex. It featured just coffee—hot, iced, and frozen. Wired also offered a variety of teas that could be served hot or iced. Along with the drink options, customers could choose from a selection of sweet or savory locally baked muffins, scones, quiche, cookies, and coffee cakes. But Wired was not a restaurant; they were a true coffee bar.

With a regular and steady customer base, Wired could see the busier times happening when school was in session, and then summers saw a lighter revenue stream as the college students left and the local families took summer vacations out of town. The coffee business definitely needed the local support to offset the vacation schedules of the college students.

Just as Wired Coffee Bar was hitting its stride, new coffee shops started to enter the once-dormant community. Each new coffee location offered a drive-through, something Wired Coffee Bar never wants to be—fast-food coffee. As Lisa looked at ways to create more business, provide good coffee, and differentiate from the masses, she wondered if her concept could survive the hustle and the need for quicker service and a less laid-back atmosphere.

For further resources, visit the company website. They also have a Facebook page and an Instagram account (@getwiredcoffee).

Case Questions

1.

What type of consumer buying behavior are consumers exhibiting when they are buying coffee?

2.

Consumers are faced with many different influences when they are making purchasing decisions. What social influences have the greatest impact on the decision to purchase coffee from Wired Coffee Bar? What personal influences have the greatest impact?

3.

What situational factors may influence consumers to purchase from Wired Coffee Bar versus Starbucks?

4.

How might Wired Coffee Bar further differentiate itself from other coffee bars as consumers search for alternatives in their buyer decision-making process?

References

1. Daniel Campos, “Committing to the Core: How McDonald’s Innovated to Survive (and Thrive) During the COVID-19 Pandemic,” Digital Innovation and Transformation (February 10, 2021), accessed August 04, 2021, https://digital.hbs.edu/platform-digit/submission/committing-to-the-core-how-mcdonalds-innovated-to-survive-and-thrive-during-the-covid-19-pandemic/.

2. MSG Management Study Guide. (n.d.), accessed August 4, 2021, https://www.managementstudyguide.com/cultural-factors-affecting-consumer-behaviour.htm.

3. “What Is Social Class?” (n.d.), accessed March 7, 2022, https://udel.edu/~cmarks/What%20is%20social%20class.htm.

4. Editor, “Women vs. Men—Gender Differences in Purchase Decision Making,” zoovu Blog (July 16, 2019), accessed September 19, 2021, https://zoovu.com/blog/women-vs-men-gender-differences-in-purchase-decision-making/.

5. Kendall (@kendalljenner) • Instagram photos and videos (n.d.), accessed March 7, 2022, https://www.instagram.com/kendalljenner/.

6. Leo Messi (@leomessi) • Instagram photos and videos (n.d.), accessed March 7, 2022, https://www.instagram.com/leomessi/.

7. Statista Research Department, “US Population by Generation 2019,” Statista (September 19, 2021), accessed March 7, 2022, https://www.statista.com/statistics/797321/us-population-by-generation/.

8. “The Online Shopping Habits of Today’s Baby Boomers,” SkuLocal (November 12, 2018), accessed June 13, 2022, https://www.skulocal.com/insights/the-online-shopping-habits-of-todays-baby-boomers/.

9. Statista Research Department, “US Population by Generation 2019,” Statista (September 19, 2021).

10. Consumer Insight: Generation X-fona. (n.d.), accessed March 7, 2022, https://www.fona.com/wp content/uploads/2019/03/0319-FONA-Consumer-Insight_Gen-X.pdf.

11. Statista Research Department, “US Population by Generation 2019,” Statista (September 19, 2021), accessed March 7, 2022, https://www.statista.com/statistics/797321/us-population-by-generation/.

12. Shannon Ciricillo, “What Are Millennials Buying: The Gen Y Shopping Guide, The Hub (July 7, 2019), accessed August 4, 2021, https://thehhub.com/2019/07/07/what-are-millennials-buying-the-gen-y-shopping-guide/.

13. Ibid.

14. Kendra Cherry, “What Is Personality?” verywellmind, accessed August 4, 2021, https://www.verywellmind.com/what-is-personality-2795416.

15. Sallie B. Middlebrook, “Personality and Related Characteristics That Affect Consumer Buying Behavior,” ToughNickel (January 8, 2013), accessed March 7, 2022, https://toughnickel.com/industries/Buyer-Characteristics-and-Consumer-Behavior.

16. Sam Carr, “How Many Ads Do We See A Day? 2021 Daily Ad Exposure Revealed!” PPC Project (May 12, 2021), accessed August 4, 2021, https://ppcprotect.com/how-many-ads-do-we-see-a-day/.

17. Mithun Sridharan, “Selective Perception Marketing: How Can Big Data Help?” Think Insights (March 7, 2022), accessed June 13, 2022, https://thinkinsights.net/digital/selective-perception-marketing-big-data/.

18. Lars Perner, “Consumer Behavior: Attitudes,” University of Southern California Marshall (n.d.), accessed March 7, 2022, https://www.consumerpsychologist.com/cb_Attitudes.html.

19. “How Grocery Store Lighting Impacts Customer Decisions,” Stratus (May 13, 2021), accessed September 28, 2021, https://www.stratusunlimited.com/news/how-grocery-store-lighting-impacts-customer-decisions/.

20. Humayun Khan, “How Retailers Manipulate Sight, Smell, and Sound to Trigger Purchase Behavior in Consumers,” Shopify Retail Blog (April 25, 2016), accessed June 13, 2022, https://www.shopify.com/retail/119926083-how-retailers-manipulate-sight-smell-and-sound-to-trigger-purchase-behavior-in-consumers.

21. Dana Severson, “Theories of Situational Factors That Influence Customers,” Chron. (November 21, 2017), accessed August 4, 2021, https://smallbusiness.chron.com/theories-situational-factors-influence-customers-78765.html.

22. Statista Research Department, “Share of US Consumers Who Would Stop Purchasing from Cosmetics Companies That Test on Animals as of April 2017,” Statista (April 26, 2017), accessed September 28, 2021, https://www.statista.com/statistics/753362/cosmetic-animal-testing-attitudes/.

23. Herosmyth Staff, “9 Perfect Brand Examples of Why It Pays to Differentiate,” Herosmyth (February 24, 2020), accessed June 13, 2022, https://www.herosmyth.com/article/9-perfect-brand-examples-why-it-pays-differentiate.

24. Yaqub M., “20+ Fascinating Ethical Consumers Statistics Need to Know in 2022,” Renolon (January 18, 2022), accessed March 7, 2022, https://www.renolon.com/ethical-consumers-statistics/.

25. Ibid.

26. Ibid.

27. Cory Baldwin, “Ethical, Sustainable Brands You Can Really Trust,” Vox (August 22, 2017), accessed August 4, 2021, https://www.vox.com/2017/8/22/16171338/ethical-sustainable-fashion-brands-where-to-buy-sustainable-clothes.

28. Reasons We Love Patagonia. (n.d.). accessed August 4, 2021, from https://www.wearedore.com/photos/reasons-we-love-patagonia/.

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