Artisanal products are booming – Here’s how companies are cashing in
Newswise — Researchers from Concordia University and HEC Montréal have published a new article in the Marketing Review this explains how the evolution of markets towards more aesthetic and artisanal concerns – whether it is the search for the perfect espresso or the creation of a visually complex tattoo – results from the interactions between artisanal and commercial enterprises .
The study, to be published in the marketing magazine, is entitled “A practical perspective on market evolution: how artisanal and commercial coffee companies are expanding their practices and developing their markets” and is written by Pierre-Yann Dolbec, Zeynep Arsel and Aya Aboelenien.
Barber, beer, coffee, perfumes, meat, hand soaps, tattoos and even ice cream. The craft movement is everywhere. It seems like everything is now becoming artisanal, boutique, personalized and handmade. How did we get here and how can businesses take advantage of this trend?
Take the coffee market. Dolbec explains that “in this market, as in others, craft businesses aim for aesthetic perfection while commercial businesses seek to maximize their profits. For example, craft cafes target coffee connoisseurs by tailoring brewing recipes to specific coffee beans to perfect the taste of the coffee. Commercial companies are targeting mainstream consumers by creating products that can be efficiently produced for profit, such as sweet treats like Pumpkin Spice Latte.
Artisanal and commercial enterprises innovate and mutually adapt their innovations to their respective objective of aesthetic perfection or profit maximization. For example, commercial ventures such as Dunkin’ have borrowed from cottage industries and automated the production of ‘craft’ coffee. In contrast, craft cafes have aesthetically enhanced the Pumpkin Spice Latte, using craft syrup and selected spices that ideally match the taste characteristics of a specific coffee bean.
Over time, innovations and adaptations between artisan and commercial businesses have led to many new products and ways of making coffee and have led to the expansion of artisanship in the marketplace. Coffee is widely marketed as artisanal, consumers have become connoisseurs and baristas are artisans. The quest for aesthetic perfection by craft businesses is also caricatured in advertisements such as McDonald’s “Madness,” which pokes fun at the overly complicated ways of preparing coffee in craft cafes.
So how can businesses take advantage of the craft movement? Arsel says, “It depends on whether it’s commercial or craft businesses and their targeting strategy. In addition to being driven by aesthetic perfection or profit maximization, the study proposes that craft and commercial enterprises may target narrow or broad consumer preferences. Specialty companies target narrow consumer preferences while generalist companies target general consumer preferences.
“By crossing objectives and targets, our study proposes four types of businesses: craft specialists, craft generalists, trade specialists and trade generalists. The strategic implications depend on the companies’ targets and objectives. Craft specialists can innovate or adapt innovations by focusing on the characteristics of their narrow target and striving for aesthetic perfection,” adds Aboelenien. For example, craft specialists market products that promote the search for the best possible coffee, such as KRUVE, which manufactures coffee strainers to create very precise and uniform grinds that improve the taste of espressos.
Craft generalists also seek aesthetic perfection, but target broader consumer preferences. One example is Colonna Coffee, which offers instant coffee and coffee capsules that contain award-winning coffee from specialty roasters and cater to consumers who vary in their coffee expertise. These consumers may desire aesthetically pleasing coffee, but lack the skills, knowledge or products to create it themselves. Craft generalists have introduced products that bridge differences in expertise, such as specialty coffee pods or specialty instant coffee that aim to simplify the pursuit of aesthetic perfection for a wide range of consumers.
Business enterprises focus on maximizing profitability. Unlike artisanal businesses, achieving aesthetic perfection is not a concern. At the time of its introduction, Nespresso represented an example of a commercial specialist: it targeted a niche segment of consumers interested in paying a premium to simplify coffee making, with less attention to coffee quality compared to craft businesses. Over time, the expansion of coffee pod and machine options to suit nearly every market taste has transformed the company into a commercial generalist.
Commercial generalists focus on broad targets. For example, Dunkin’ and McCafé together have around 40% of the market share of out-of-home coffee consumed in the United States, although coffee may not be their core business. Commercial generalists can use automation to cater to a wide range of consumers while maximizing profitability. For example, 7-Eleven introduced touchscreen coffee and beverage machines for customers to “be their own barista.” the CSP Daily News explained how 7-Eleven is taking inspiration from the artisan movement while freeing its employees from having to make coffee, contributing to higher productivity and margins.
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