Starbucks also managed to build its brand with the perception of a complete customer experience by creating a look in their stores that emphasized on comfort in terms of design, colors, furniture, music and even service. The introduction of the coffee shop concept made it a personal treat for the customers and a Third Place after home and office. In addition to diversifying their offering to include brewing machines for the customer to get the same quality coffee brewed in its shops.
Partnerships has also contributed to building Starbucks brand, those partnerships with reputable corporations like United Airlines, Pepsi, Kraft, Dryers and Capitol Record helped Starbucks to create a positive brand image in the market as it successfully managed to utilize the brand name of these well-known companies for promoting for itself as a brand. Those partnerships showed how Starbucks also cares for innovation by offering new products that would grab different customers attention. Starbucks had all the keys for success in building the brand, and one of the main key factors for this success is preserving its core brand values.
Core values are the essence of any brand building and thus increasing customer trust and credibility. Starbucks aimed at investing in both employees and customers. Having a very strong team that feel like owners, with the appropriate training and understanding to the business will surely contribute to the overall customer satisfaction. Starbucks ensured flexibility while dealing with clients demands, focusing more on people ensured building a brand with more loyal customers and reach high level of awareness through word-of-mouth publicity.
I believe that all the previous aspects have contributed vigorously as sources for Starbucks brand equity. It started when Shultz thought that he could preserve Starbucks core value while exposing a wider range of people to the brand. And it was true, making Starbucks a whole customer experience, creating the coffee bars idea with the most suitable atmosphere and collaborating with big brand names has increased Starbucks brand equity, differentiated it from its competitors and thus was the first step on the way of its global growth. Starbucks growth strategy is interesting was a very bold one. Starbucks hit new locations in no time, every resident at the USA will find between every two Starbucks stores another Starbucks. This growth strategy has worked very well at the beginning to build strong brand presence and awareness, to increase sales and deviate competitors. I believe that their growth strategy was very successful on the short run; however it proved as unsuccessful on the long run since rapid expansion of cafes could dilute the Starbucks experience.
Starbucks has announced the closing of 600 stores in February 2007, a leaked internal memo written by founder Howard Schultz showed that he recognized the problem that his own growth strategy had created: Stores no longer have the soul of the past and reflect a chain of stores vs. the warm feeling of a neighborhood store. Starbucks is a mass brand attempting to command a premium price for an experience that is no longer special.
If I would do things differently, I would look closer at my expansion and growth plans and would focus more on maintaining the coffee freshness quality and the stores atmosphere on which I build my brand upon. Maintaining those two pillar aspects will help me sustain positioning Starbucks as the premium coffee with the premium price. Losing those aspects will put me in a competition with other brands that are in a lower level in addition to them selling with lower prices. I will also work on the growth strategy with a slower pace, applying the rules of Slowly but surely so that not to lose my grounds.
I would also focus on monitoring my relationship with customers closely to ensure that theyre not being alienated by my growth. Another thing I would do differently is to focus on sustaining Starbucks core business, even if I introduce new innovated products, my core business should not be touched. Adding another dimension to the brand is perfect but without wiping the original brand identity and message. One mistake Starbucks would have made was thinking of launching the Lifestyle Portal. It would have strongly harmed the Starbucks brand identity.
Starbucks partnerships were very successful in my opinion, it contributed to building a high level of brand awareness, reached customers that might have had no access to Starbucks stores and gave room to Starbucks innovation. Starbucks selected to be associated with strong brand names like Coca Cola, Dryers Grand Ice Cream Company, Barnes & Nobles, Nordstrom, and United Airlines which acted as leverage for their brand name and equity. Those partnerships have proved to be a good strategy after knowing that 14% of Starbucks loyal customers had their first cup of Starbucks coffee on United Airlines flights. . 3
To make a world class global brand, the companies need to work on building brand equity as follows, which was also followed by Starbucks and made it a world-class global brand: 1. Name Awareness This was successfully achieved by Starbucks, through the word-of-mouth publicity, the partnership and the continuous expansion and growth. 2. Perceived Quality Starbucks promises a continuous quality for its customers starting from whole bean quality till the service received. Lately Starbucks was not doing well in terms of this quality and thus had to lower its growth pace to maintain its position in the global market. 3.
Brand Associations Starbucks has managed to associate its brand with other big brand names like Coca Cola, Dryers Grand Ice Cream Company, Barnes & Nobles, Nordstrom, and United Airlines which leveraged its image. In addition to its association with Quality, Uniqueness and Freshness. This is how Starbucks customer associates the brand image in his own mind. 4. Other Proprietary Brand Assets Starbucks uses this in the origins of its coffee, to ensure the customer perceives it as a quality coffee. 5. Brand Loyalty Starbucks has its loyalty programs that directly communicates with customers and offers them benefits.
The above aspects of brand equity are the ones who build a global brand; however global brands might face many hurdles as well in terms of entering new global markets, facing resistance due to prices, high startup costs, fierce competition, cultural differences, wrong targeting or other political or environmental factors. To overcome those hurdles, global brands should perform good and extensive researches on those new markets, the different political situations, environmental situations, and cultures of target customers in each global region and how to reach them.
Even though the brand should maintain the same positioning all over the world, however it should take into consideration that people are different in each area of this planet. The brand should also focusing on one product category, so not to distract the customers, and this would help in its access to the global village and hitting the small planet like what IBM has done. Global brand also succeed if they build on a corporate social responsibility, and let customers feel they care.
Currently in terms of the American market, Starbucks biggest challenge is maintaining its quality, image and experience to be able to support its premium prices. Starbucks got involved in its expansion plans and lost focus of its core values, quality and atmosphere, thus started losing a market share to other competitors. Competition in the American market is fierce, its an open economy, and many small business emerge that can take pieces of the big Starbucks cake. Another challenge for Starbucks is the focus on the product and not distracting themselves in too much innovation that would dilute the meaning of the coffee brand.