Starbucks Branding Report – First Value Stage – Marketing Program Investment
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Brand Value Chain – The below diagram is a typical model of brand value chain. It follows the process of developing a brand. There are two lines in this model, first line shows the various stages of developing the value of company and the second line consists of the multipliers which strengthen the relationship between the stages. Generally there are four value stages and three multipliers in a brand value chain model but for explaining the case of Starbucks we have excluded the fourth stage and the subsequent multiplier.
First Value Stage – Marketing Program Investment
This stage is where the development of a brand starts. The company invest in different marketing programs like advertising, research and developments, new product introductions, training of the employees, publicity etc. Starbucks concentrated on giving its customers not just a coffee but also an experience attached to it. They developed new products just for the customers even when it was against the core rules of the company, in doing that they went beyond the traditional roots. In example of non-fat milk coffee, the company was very strict in providing this type of coffee because it was not traditional and they said “Its not who we are.” But due to the growing demand of the product they accept all the problems like managing the more than one type of milks without slowing the operations and provided the non-fat milk coffee. In another similar case of Frappuccino management refused a cold beverage because it wasnt a true coffee drink in their opinion. When they realised they are losing customers to the competitors who were providing cold and refreshing coffee drinks Starbucks started experimenting in the same field and customers liked the new addition.
While choosing the locations at the start, Starbucks didnt have enough funds so they opened their stores near local famous stores so that both the stores can coexist with each other. They provided visible locations and modified the stores according to the city providing the artworks on mugs, t-shirts etc. They didnt want their customers to leave the store without coffee or to wait too long so they opened more and more stores.
For employees they developed 24 hour training programs for knowledge of coffee, brewing the perfect cup and customer service. They provided health insurance to all employees including part-timers. They created a family instead of just employees. For partners with at least six months at store, they offered the stock option plan so that they can give their ideas to management and to make them feel right and responsible. This helped them to create a satisfied partner base.
First Multiplier – Program Quality Multiplier
The impact of these marketing programs on customer mind-set will depend upon their quality. Relevance, distinctiveness, clarity and consistency are the main four magnitudes on the basis which quality of programs is judged. The marketing program of Starbucks was very clear which was to provide its customers an experience with coffee. They provided premium European coffee experience to USA. They were very consistent in their quality of product, despite the change in quality of raw materials or location of store the taste was same everywhere: the taste of coffee in New York was similar to coffee in London.
They showed their creativity in modifying their store according to the culture of the company and by adding features like signature music from famous musicians; they differentiated themselves from the competitors.
Second Value Stage – Customer Mind – set
This stage includes the elements which affect the mind-set of the customer about the brand like feelings, logo, beliefs, emotions etc. The main dimensions are 5 As: awareness, activity, attitude, attachment and association.
Starbucks created awareness in customers by opening number of stores in every area so that customers can consistently see and feel the brand with added benefit of handling the increasing traffic and serving the customers in better way. They gave their customers a third place beside office and home to chat and hang-out.
They made sure that their brand associates with the coffee experience so that when thinking about Starbucks customers visualise ambient place with pleasant aroma of coffee and with fine music. They associated their offering with their logo which they changed from time to time. Until 2011 the logo carried the text Starbucks Coffee which they changed to the siren image only without any text to notify that they have moved beyond coffee increasing their offering way outside their core business. They started selling ice-creams, cold beverages etc. and they are planning to add beer and wines to their product ranges as well.
They involved their customers in various activities during consumption of coffee. They put trivia games on the chalk-boards, offering books and music. The customers said that the reason they come to Starbucks was to discover something new. They attached the emotions with the brand. They made people to think Starbucks as a fun filled place.
Second Multiplier – Marketplace Condition Multiplier
In terms of competition superiority Starbucks was always ahead of the competition. In mid of 2000s the Starbucks was the largest coffee chain in US with more than 8000 stores whereas the closest rival Caribou Coffee had merely 300+ stores. By the end of 2010 the Starbucks increased its stores to 11000+ in US alone and 17000+ all over the world and its still the largest coffeehouse chain in world. More number of store meant more brand awareness in customers and better services.
At first they targeted the true coffee lovers which came from the vision of CEO Howard Schultz when he saw people crazy about coffee in Italy, and then they widened their targeted customer area as they made people addicted to their ambience, atmosphere. Then they added more generalised products like cold beverages, ice-creams and hot meals to capture more number of customers. With this they strengthen their position in market.
Third Value Stage – Market Performance
Customer mind set affects how customers are reacting to the product in the market.
Starbucks created an image in their customers mind that people are ready to pay the premium price for a coffee. They have attached so many things with the coffee like music, aroma and the environment that now people instead of paying normal price for the same coffee they are paying premium prices. Starbucks expanded very successfully. Their core business was hot coffee but on customers demand they developed cold beverages