In 'Wired to Care' Dev Patnaik narrates an interesting anecdote on how the coffee industry ruined their own long term prospects for short term benefit.
The coffee market in the United States had been growing every year in the post world war era. In 1953, a killer frost destroyed a large part of the Arabica bean crop and prices for the raw material skyrocketed. In a bid to keep costs under control Maxwell House considered blending the cheaper but bitter tasting Robusta beans with the Arabica beans - just a small percentage at first. They conducted extensive Market research and found that most consumers did not notice the difference in taste between coffee made from pure Arabica and the blended product. After these encouraging findings from Market Research, Maxwell House took the decision to blend Robusta beans into the coffee.
Every year, giving in to cost pressure, Maxwell House, and also Folgers and Hills Brothers, started to increase the percentage of Robusta in the blend. To give them credit, extensive market research was conducted at each stage to ascertain if the consumers could tell the difference between the previous blend and the new blend with even more Robusta. At each stage, consumers failed to notice the marginal difference.
A decade later, in 1964, demand for coffee in the United States dropped for the first time. Of course, the companies conducted more market research to find out of consumers were drinking less coffee, but regular coffee drinkers were consuming no less coffee The issue was that the average age of coffee drinkers was rising; meaning younger customers were not drinking coffee.
What had happened you see was that when younger consumers tasted coffee for the first time, now with a predominantly Robusta taste than Arabica, they could not imagine why their parents would drink this foul beverage.
So much for trusting Marketing Research.
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