Economics is defined as the study of how rational consumers make decisions in the face of scarcity. But how do passion, emotion, and heart (non-scientific concepts) impact a logical world? Baylor University has conducted research on the emotions of entrepreneurship, and says “…research might examine how emotions influence the whole entrepreneurial process, particularly what happens ‘in the middle’ between opportunity identification and exit…” The essay examines why certain business people succeed and others don’t, depending entirely on how their emotions interact with the market place.
Warren, a fellow student in our economics class, has a particular passion for our school’s Coffee Cart. Warren is on Student Council, and is extremely driven to help the Council’s Coffee Cart succeed, and to see it continue in the future. “What we’re trying to do with the Coffee cart is revamp its’ image to get a wider consumer base, serve more people, and maximize profits. Other than that we’re also trying to branch out and offer a healthier option, [than] the [Treat Trolley offers].” Warren has expressed to our economics class the difficulty of combating supply and demand, changing people’s tastes and preferences, and how to battle competition.
One of the main problems the coffee cart faces is competition: the musical theater Treat Trolley. The Treat Trolley offers an array of snacks, “7/11” style, ranging from hostess donuts, to Cup-of-Noodles. Not only does the Treat Trolley appeal to the snack-crazed minds of high-schoolers, it also appeals to their wallets. Every snack the Treat Trolley offers is only $1.00, as opposed to every cup of coffee at the Coffee Cart being $2.00. In addition to the Treat Trolley undercutting the Coffee Carts’ prices, all of their supplies are 100% donated, making the Treat Trolley 100% profit, with no variable costs. The Coffee Cart faces a difficult decision: drop their prices, add new products, or try to change the way people think about the Coffee Cart.
But in order to change the way people think about the Coffee Cart, Student Council needs to change people’s tastes and preferences. One of the ideas is to make the Coffee Cart a “high-end” option. It could be marketed as a high-class option for upperclassmen, and could serve a market that the Treat Trolley does not: healthy options. It is very important to know your market when selling, and to know which markets are not being sold to. The Coffee Cart also can open up at times when the Treat Trolly is closed: in the morning. Most people have stopped drinking coffee by lunchtime, and the market might be more productive at before-school hours. This could even open up the possibilities of serving breakfast foods, fresh donuts, and other breakfast beverages. In addition to marketing to an underserved market, the Coffee Cart needs to ensure that they are marketing at all. Due to all of the hubbub surrounding the Treat Trolley, it seems as if people have forgotten about the Coffee Cart, and it has fallen to wayside. It is important to stay on the forefront of people’s minds, and not to let the Treat trolley drown out the other competition.
But competition, marketing, and people’s tastes aside, it all comes back to supply and demand. Currently, the Coffee Cart has a surplus of k-cups due to a lack of demand, and the Treat Trolley is begging for more and more donations from parents to serve the demand of the customers. The Coffee Cart is facing excess supply, and the Treat Trolley is facing excess demand. As consumers, we can decide which product is more economical for us: the $1.00 snack, or the $2.00 coffee, but the invisible hand of the marketplace will always set the prices.
We can see how the logical decisions of consumers shape the market at our school, and how the Coffee Cart needs to change its’ business model to be more profitable. But at the same time, there is still an emotional side to this story. Warren, even in the logical world of economics, is still making decisions based on his passions. If this love for the Coffee Cart wasn’t there, it likely would have already gone out of business. It is impossible to completely remove emotion from the marketplace, for the consumer, or the producer. If someone absolutely loves hot drinks, the higher price of coffee is worth it for the superior product. And even if a Coffee Cart isn’t profitable anymore, the passion of a student can change everything.