Price as substitute for quality in unfamiliar territory

In the absence of infor­ma­tion, peo­ple tend to take a price of the unfa­mil­iar prod­uct as a sig­nal of its qual­i­ty, so high prices do not dimin­ish the quan­ti­ty demand­ed very much. When infor­ma­tion is pro­vid­ed, the sig­nalling con­tent of the price dimin­ish­es. As a result, demand becomes more elas­tic. In par­tic­u­lar, informed con­sumers see no rea­son to pay more for the new prod­uct giv­en that it has the same ingre­di­ents as the famil­iar one. The effect of the infor­ma­tion is thus to encour­age more peo­ple to switch from the sub­sti­tute prod­uct to the tar­get one at low prices, and vice ver­sa at high prices.”

That’s an extract from an aca­d­e­m­ic paper (PDF) on the behav­iour of pur­chasers of med­ical prod­ucts in Zam­bia, but you’ll encounter ver­sions of this argu­ment every­where from self-help books on how to sell! sell! sell! to arti­cles in the busi­ness press.

The con­clu­sion often drawn is that, per­haps counter-intu­itive­ly, if you price your prod­uct high­er than the com­pe­ti­tion, many con­sumers will assume yours is bet­ter and worth the extra mon­ey.

Con­verse­ly, if your prod­uct is too cheap, it might seem sus­pi­cious: “Hmm. What’s wrong with it?”

Does all of this also apply to beer?

Twen­ty years ago, we were cer­tain­ly aware of the aura that sur­round­ed Pre­mi­um Lager, and Pete Brown has writ­ten mem­o­rably about the dam­age Stel­la Artois did to its brand by reduc­ing the price.

But drinkers these days have lots more infor­ma­tion to go on, from beer style to ABV, from hop vari­eties to brew­ing loca­tion. All or any of these might over­ride price in the deci­sion mak­ing process.

And, of course the actu­al rela­tion­ship between price and qual­i­ty in beer is com­plex: there are lots of bad expen­sive pints out there, and some real­ly good ones that are rel­a­tive­ly cheap.

Our sus­pi­cion is that price might be a proxy for qual­i­ty in sit­u­a­tions where none of the brands are famil­iar, and the only oth­er infor­ma­tion is price; or (as this paper sug­gests) where the choice is between broad­ly sim­i­lar prod­ucts under the same brand name: Carls­berg, or Carslberg Export?

With all this in mind we find our­selves once again think­ing about the Drap­ers Arms, where not only is brand­ing held at arm’s length but also the price struc­ture is flat. As a result, we’ve prob­a­bly tried a greater vari­ety of beer there than any­where else, even allow­ing for the fact this is where we do most of our drink­ing by default.

Cash or Cashless, the Problem is ‘Only’

Both cash-only and cashless-only are barriers, and both tend to be driven by the needs of the business rather than what works for customers.

We got talk­ing about this in the pub last night because of a poll from the Beer O’Clock Show:

The argu­ments against card-only have been pil­ing up for some time:

  • it excludes the poor­est in soci­ety
  • it dis­crim­i­nates against old­er con­sumers
  • it plays into the machi­na­tions of glob­al tech giants
  • it con­tributes to the track­ing and influ­enc­ing of our behav­iour.

But on the ground, in dai­ly life, we very much under­stand the appeal of pay­ing by card in pubs, bars and bot­tle-shops.

It saves us hav­ing to wan­der round sub­urbs or indus­tri­al estates look­ing for cash machines, and makes it eas­i­er for us to man­age our var­i­ous bank accounts and bud­gets, with every trans­ac­tion record­ed and report­ed.

And not tak­ing cards can be exclud­ing in its own way. One pub­li­can in a cash-only busi­ness recent­ly told us they’d been think­ing about get­ting a card machine pure­ly because they were aware of con­stant­ly turn­ing away young peo­ple who expect­ed to be able to use cards. About half of them were will­ing to find a cash machine and come back, but the rest just moved on down the road.

A lot is made of the cost of pro­cess­ing card pay­ments but depend­ing on the size of the busi­ness, cash can be just as expen­sive to han­dle, and cer­tain­ly less con­ve­nient.  It can require extra staff-hours for count­ing and bank­ing, and needs trans­port­ing, either at con­sid­er­able cost (secure pick­up) or risk, with a mem­ber of staff walk­ing to the bank with a sack of read­ies. (I’ve man­aged cash-heavy con­cerns and write from expe­ri­ence. – Jess.)

The pres­ence of cash can also make premis­es more vul­ner­a­ble to crime or, rather, adver­tis­ing total cash­less­ness can be a good way to deter it.

And some of the objec­tions cash-only busi­ness­es have to cards seem to use to be a hang­over from a decade ago when banks charged a lot more for the ser­vice, and when peo­ple who paid by card in the pub were ama­teurs and freaks.

It used to mean five min­utes of faffing around with sig­na­tures and pin num­bers, hold­ing up the line. Some­times, there’d also be anoth­er minute or two of try­ing to get up to the lim­it for pay­ing by card with­out an addi­tion­al charge – “What are your most expen­sive crisps?” Nowa­days, it’s a quick one-hand­ed tap and done, and its peo­ple fid­dling with coins and wait­ing for change who seem to cause a delay.

Fun­da­men­tal­ly, though, we bri­dle at the idea of busi­ness­es doing only one, or only the oth­er, because it’s con­ve­nient for them, rather than offer­ing both with the con­ve­nience of their cus­tomers in mind.

PUB LIFE: Generally by the Half

Keg taps.

A sad-eyed veteran of perhaps 28 shows a newbie, baby-faced and keen to please, around behind the bar.

The Vet points to the keg taps.

Now, these stronger ones we gen­er­al­ly only serve by the half.”

So I should nev­er serve them by the pint?”

Well, not nev­er. Gen­er­al­ly.”

The Vet leans on the bar and gives a Han Solo smirk.

As long as they’re not rat-arsed, and not act­ing the arse­hole, you can serve them pints. Obvi­ous­ly, if they’re absolute­ly arse­holed, don’t serve them any­thing.”

Cool, cool, yeah, yeah, yeah.”

But if they do insist on a pint, warn them about the price before you pull it, because if they weren’t act­ing like arse­holes before, the might start when you tell ’em it’s eight quid a pint.”

FNG’s eyes pop.

Eight quid?”

Well, like I say, we do gen­er­al­ly serve it by the half.”

News, Nuggets & Longreads 29 September 2018: Runcorn, Rochefort, Rules of the Tavern

Here’s all the reading about beer and pubs that grabbed us in the past week, from PR disasters to art installations.

Last year Kirst Walk­er wrote up a pub crawl of Run­corn’s Vic­to­ri­an pubs with her trade­mark spark; this year, she notes plen­ty of changes, giv­ing the exer­cise a cer­tain aca­d­e­m­ic inter­est as well as pure enter­tain­ment val­ue:

Time for the Lion, where every­body knows your name! Last year’s win­ner was where we we would end the night once more. I didn’t dou­ble up last time but as we’d already had time bonus­es, sam­buc­ca, and sand­wich­es I threw cau­tion to the wind. Alan bought a round of pies like a freak­ing bil­lion­aire and we had a group de-brief with plans to repeat the oper­a­tion next year on the same week­end… The Lion has lost much of its orig­i­nal room lay­out since it was refur­bished and part of it con­vert­ed into hous­es, but it’s still the type of tra­di­tion­al cor­ner pub which is a hub for the com­mu­ni­ty, and in my opin­ion it as bet­ter to try and save the pub than keep the entire sprawl­ing space.

Price list in a pub.

We tend to ignore click­baity brouha­has over indi­vid­ual expen­sive pints these days but Mar­tin Stew­ard at Pur­suit of Abbey­ness has wait­ed for the dust to set­tle before reflect­ing on one such recent inci­dent, pro­duc­ing a slow-cooked opin­ion rather than a flash-fried ‘hot take’:

The most remark­able thing about the price of Ale­smith Speed­way Stout Hawai­ian is not that it is five-times high­er than the price of Rochefort 10, but that it is three-times high­er than Alesmith’s ordi­nary Speed­way Stout… That pre­mi­um buys you some toast­ed coconut flakes, some vanil­la and some rare Hawai­ian Ka’u cof­fee beans, which are indeed three-times more expen­sive than your bog-stan­dard joe… If you can taste the dif­fer­ence after those beans have had beer fer­ment­ing on them, I com­ple­ment you on your sen­si­tive palate. If you think it jus­ti­fies a 200% pre­mi­um, I have a bridge to sell you.

Con­tin­ue read­ing “News, Nuggets & Lon­greads 29 Sep­tem­ber 2018: Run­corn, Rochefort, Rules of the Tav­ern”

News, Nuggets & Longreads for 11 August 2018: Price, Parenting, Popstars

Here’s all the beer and pub related news, opinion and history that’s grabbed us in the past week, from kids in pubs to Never Gonna Give You Up.

First, mon­ey. As part of the pub­lic­i­ty around its Great British Beer Fes­ti­val (last day today) the Cam­paign for Real Ale pub­lished the results of a sur­vey sug­gest­ing that the major­i­ty of British drinkers who expressed an opin­ion find the price of a pint of beer unaf­ford­able.

Cash Money Pound Signs.

There were var­i­ous bits of inter­est­ing com­men­tary around this, from mus­ings on the ques­tion of val­ue from Katie Tay­lor

Afford­abil­i­ty is quite an abstract con­cept, isn’t it? In my expe­ri­ence as some­one who’s lived in extreme pover­ty and in rel­a­tive com­fort and all the incre­men­tal stages of debt, exhaus­tion and errat­ic spend­ing in-between, things like pints come down to how much you val­ue them. They’re not essen­tial – unless you have an addic­tion – and yet as part of our cul­ture they’re a cen­tral point of our social lives.

…to Richard Cold­well’s reflec­tions on the dif­fer­ence between afford­abil­i­ty and pri­or­i­ties:

I think there are many who are mak­ing the choice between going out for a pint and oth­er things… Sim­ple choic­es like; Sun­day after­noon at the local pub with the fam­i­ly or a full day out at the beach with sand­wich­es and maybe an ice cream and a few bob on the amuse­ments. I reck­on it’s about 50 miles from our house to Scar­bro’, so the biggest cost of the day is fuel… Round here, the price of the first round of say, a pint, glass of pros­ec­co, three soft drinks and a few snacks would just about cov­er the fuel costs of a return jour­ney to the sea­side. The sec­ond round would more than pay for the pic­nic and sun­dries and we’ve only been in the pub for about an hour, max.

Jon­ny Gar­rett, mean­while, is unim­pressed with this focus on price which he regards as ulti­mate­ly dam­ag­ing to the image of cask ale:

Per­haps the great­est step CAMRA could take toward restor­ing growth in cask beer would be to invest in train­ing and equip­ment for pubs that show loy­al­ty to cask and price it fair­ly. For some rea­son, this call for qual­i­ty brew­ing falls on deaf ears at CAMRA, who this week lament­ed how expen­sive pints have become. The par­ty line of cham­pi­oning cask above all else appears to include the mil­lions of cheap, dull, vine­gary pints poured across the UK each year. Some of them even at their own fes­ti­vals.

Con­tin­ue read­ing “News, Nuggets & Lon­greads for 11 August 2018: Price, Par­ent­ing, Pop­stars”