Friday, 5 October 2007

Why am I paying more for coffee?

I found that I am paying more and more for my coffee these day. In an innocent attempt to convince myself that coffee is healthy for me, I switched my daily cup of coffee to a new product line which include healthy ingredients like Ginseng and high-calcium milk in the coffee. How pathetic I am. I might as well bought a ginseng to chew on , rather than mix it in my coffee.

Actually, do you know that coffee is good for health? Coffee can actually cure cancer and good for sun protection. If you have known several crazy coffee lovers, who can drink more than 4 cups per day, and also whom I am happy to acquainted with (or am I? :) ) , you probably hear the previous statement a lot of times.

Maybe I did not find it to be very convincing. So, uncontrollably, I found myself drinking the latest combination, Ginseng and Tongkat Ali ; which cost almost double the prices of the normal coffee from the same brand.

Incidentally, my colleagues were telling me that Tongkat Ali is only meant for men. I read somewhere before it can be used for general health and also for women. But after doing more searches on Google, I found that my colleagues were right - it is more suitable for men and it can increase testosterone levels. Oh my God, no wonder I felt so "manly" these day. LOL .

Luckily (or not), I also read in a report that the herb extract used in coffee has very little health benefits. But I do not know why I am still buying it. Maybe I am not a smart consumer. Or maybe like what Tim Harford had observed, I am one of those who have fallen into the economist trap. Because I love coffee so blindly, I am willing to pay higher prices for it.

Tim Harford, a smart economist, mentioned more on this concept in his book (yes, I am reading this now) and articles on coffee and starbuck.

He said:
The cleverest and most common way to persuade turkeys to vote for Christmas is the “self-incrimination” strategy. To get customers to give themselves away, companies have to sell products that are at least slightly different from each other. So they offer products in different quantities (a large cappuccino instead of a small one, or an offer of three for the price of two) or with different features (with whipped cream or white chocolate or fair trade ingredients) or even in different locations, because a sandwich in a station kiosk is not the same product as a physically identical sandwich in an out-of-town superstore.

And the one who are choosing all these "fancy" products are willing to pay more and actually paying a lot more than what the product is worth. For e.g a white chocolate may cost around 30 cents more. But if you may be paying $3 extra for the coffee with white chocolate (let's say $7 instead of $4 for normal coffee) because you are willing to pay more for a cup of coffee.

What a trick!

Ok, so what type of coffee product I should buy next? Definitely this time, I will make sure I check out the price and think more in an economist way. Oh, and no more Tongkat Ali for me. :)

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