Designing Brand Experiences - Case Study Example

Brand Audit Name Course Tutor Date Brand Inventory The increased globalization and advancement in technology has led increase of competition in the market over the years (Kotler & Armstrong, 2010). Such factors have made contemporary managers understand the importance of building strong brands. Companies which have not taken this heed, has been overtaken in terms of competition and market share. One of the strongest brands today is Starbucks Coffee which has maintained this status over the years (Davis, 2008). This is actually a culmination that is built on a solid foundation. Starbucks Corporation is a global coffee corporation with headquarters in Seattle, US. It was established in 1971 and has since grown to become the biggest coffeehouse business worldwide (Starbucks, 2014). Its growth over the years has made it open and operate its 23,306 stores across 65 in the world. Being the leading coffee house itself gives a strong message that Starbucks is the strongest brand in the coffee sector in the world. According to the Starbucks website (2014), the company outlets serve cold and hot coffee, micro-ground instant coffee, whole bean coffee, full leaf teas, snacks and pastry. It is in 1971 when three friends, Jerry Baldwin, Zev Seigel and Gordon Bowker came together to establish Starbuck (Garza, 2010). Motivated due to love of coffee and exotic teas, the three contributed money worth US$ 1,350 and borrowed US$ 5,000 from an investment bank to start an outlet known as Starbucks Coffee, Tea and Spice in Seattle, US. According to Thompson & Strickland (n.d), they later changed the name to Starbucks Coffee Corporation. According to Garza (2010), it is believed that Starbucks was named given to the store after it was enthused by a poem “Moby Dick” written by Herman Melville. In the novel, there was a character called Mary Coffin Starbucks, which brought about the romance aspect in the book. According to the company Starbucks website (2014), the founders understood that the name would evoke romance of the high seas and also to bring back the tradition of seas faring of the early merchants. Coffee is normally associated with romance, love and seduction, making couples to fall for coffee. However, early merchants also loved to hold some business deals over the coffee. The name did not just celebrate rich coffee tradition, but also resulted to a feeling of rapport building (Garza, 2010). As such, the founders wanted to win business people, hence came with such name. This is also backed by the fact that Washington is a business and transportation center where different people meet on a daily basis. In a nutshell, it is a strategic place. The Starbucks Coffee started as a single store brewing products and providing high quality coffee and expanded to multiple locations to become the leading coffee roaster in Washington in early1980’s (Datamonitor, 2005). Its positioning as the first coffee house in Washington gave it a competitive advantage to stamp its presence and win the heart of many coffee lovers in that location. Population of Washington has continued to grow over the years, and is being ranked as the most populous state among the 50 known states. Thompson & Strickland (n.d) contend that traffic has been considered major factor when choosing locations. Such population has played a big role in the growth of Starbuck as a strong brand. As stated before, the company has expanded to six continents of the world and continues to increase its stores (Starbucks, 2014). The company has been able to increase its customer base. According to Schroeder & Salzer-Mörling (2006), the company also use its logo to differentiate its products from that of its competitors. The company logo is represented by a two-tailed mermaid inside a circle which bears a store name. The two-tailed mermaid is also known as a siren (Thompson & Strickland, n.d.). The company has streamlined this logo considerably over the years. This siren aspect was based on Greek mythology. The original version was done on the basis of "Norse" woodcut seen in the 16th century (Starbucks, 2014). In this logo, the siren was represented by topless mermaid with e double fish tail. In the Greek mythology topless was used to lure fishermen. In Starbuck perspective, they were using topless mermaid and associating with female sexuality to attract clients to their coffee (Datamonitor, 2005). This process is called Brand Autopsy. In such doing, they were able to create their brand in the consumer mind. However, this process drew a lot of criticism mainly from media, prompting them to change (Davis, 2008). The logo was also Brown in color. The change was made which lasted between 1987 and 92. Garza, (2010) claimed that in the change recommended by Howard Schultz, the company covered the breasts of the siren and also changed the color from brown to green which nodded the Alma Mater of its three initiators. The last change in the logo was done in 2011 where the company removed Starbucks wordmark which surrounded the siren, enlarged the image of the siren, and made it green (Starbucks, 2014). Today, it appears more visible and attractive to coffee drinkers across the globe. Packaging has also been used to draw customers to the business. In fact, most strong brands today use packaging to appeal consumer of their products. Starbucks is one such brand. Serwer (2004, p.15) pines that the cups and mugs used at the outlets are branded with the appealing company logo bearing the name. Miller & Coffin (2004, p.240) assert that customers have become conscious to environmental conservation, hence are attracted by the track record of a company based on its effort environment. In an effort to redirect its cups from the landfills and save the earth which experience global warming, Starbucks Company which makes nearly three billion mugs and cups for global customer stream every year has embraced the recycling and now package its products in cups which are 100% recyclable since 2012 (Starbucks, 2014). The increase in competition from Nestlé, Procter & Gamble and Kraft General Foods has made Starbucks to rethink its marketing strategies to solidify its position in the market. Starbucks Corporation has created a marketing mix that has produced a remarkable success for the past 40 years (Garza, 2010). Starbucks is one of the top advertisers of coffee worldwide. Starbucks (2014) states that in 2009, the company used more than $56 million on promotion; this is an increase of $11 million compared to what the company used the previous year. Starbucks relies on partnership on its advertising. The company uses strong brands through partnership to help market its brand. Brands that Starbucks has partnered with include Apple Inc., Frappuccino, Kraft Foods, PepsiCo, United Airlines, Barnes & Noble Booksellers and Dreyer’s Grand Ice Cream among others. In 2006, Starbucks partnered with Apple Inc., to work together on marketing and selling music in "coffeehouse experience" deal (Davis, 2008, p.22). The company also relies on the word of mouth advertising to increase its customer base, hence improving its sales. Starbucks (2014) posits that the company is also very active in social media such as Facebook, Twitter and Instagram among others where they engage customers with offers. Starbucks’ growth in terms of online presence has been manifested by increased performance of the stock with an increase from $10 to $76 from 2009 to date (Starbucks, 2014). The company advertises its products in TVs and billboards to help create awareness of its existing and new products. In 2009, Starbuck partnered with MSNBC to market its products in the morning news program and Morning Joe was presented as the "brewed by Starbucks" (Garza, 2010). In addition, the logo of the show was changed to incorporate Starbucks’ logo. Starbucks Corporation has been greatly successful in creating an international name through strategic marketing, without being seen to be only interested in profits but through maintaining brand reliability. The management led by the CEO Howard Schultz has cultivated the principle that purchasing a Starbucks Coffee signifies a landmark in customers’ life and holds a recognized brand for high quality and romantic culture across the globe (Davis, 2008). Brand Exploratory In this front, the report looks at Starbucks’ brand awareness, brand associations and competitive positioning. Brand awareness Starbucks has been able to create strong brand awareness to ensure consumers of coffee are in a position to name its brand when talking about coffee experience (Keller, 2013, p.67). Brand strategies argue that brand awareness strengthens with proper marketing strategies. Before a consumer ascertains the perception of what the brand is, the company has to make them aware of it. Keller (2013, p.68) believes that marketing endeavors of building brand awareness is done so as to create the brand in the minds of the consumers. Brand awareness encompasses two forms including brand recognition and brand recall (Staisch, 2007, p.28). Brand recognition is the simplicity with which customers are capable of recognizing the brand on the basis of the past exposures and experience to be sure of the brand association. A research done by Forbes in 2007 claimed that 90 percent of coffee consumers are able to recognize Starbucks logo, hence their outlets in every part of the world (Cateora & Graham, 2007). The name has also been around for a long time and is recognizable by both coffee consumers and non consumers. The recognition is improved by the fact that the company has many outlets bearing the company logo and the name of the company. On the other hand, brand recall is linked with the capability of customers to name a brand when called upon do so (Staisch, 2007, p.28)). The company has a coffee feeling that whenever a consumer sees a coffee advertisement on TV, they are able to recall Starbucks coffee. This aspect has also been perfected by the company brand mantra which states that the Starbucks “Rewards Everyday Moment” (Starbucks, 2014). Whenever a consumer sees such advertisement they are able to recall the brand in their minds. This brand awareness aspect is more important for Starbucks because it enables customer to make up their mind and stick to the product before even purchasing them. Brand associations According to Landa (2006), Brand association perspectives which are stronger emerge as the degree of awareness improves because the brand turns out to be more noticeable. Positive brand associations have been a determinant of the attitude of Starbucks customers for many years. The name of the company was inspired romantic poem “Moby Dick” and tradition of sea faring (Garza, 2010). Hence, Starbuck coffee has been associated with romance, coolness and business activities. Davis (200, p.21) argues that high quality coffee is regarded as a luxury product which is mostly purchased by consumers with high disposable income. Hence, Starbucks Coffee brand is associated with Starbucks are high quality, prestigious and sophisticated. In the regard, it is the upper class and few middle people who can afford coffee. However, such attributes can also be bad for business because it excludes poor people from the brand. In one of the research carried out by entrepreneur magazine in 2004 on brand awareness and brand association, 91 percent of the people interviewed recognized Starbucks, 68 percent believes Starbucks is of high quality while 48 percent thinks the brand excludes some consumers (Datamonitor, 2005). Competitive positioning Garza (2010) claimed that Starbucks faces a strong competition from this lucrative coffee industry, both in the US and global market. The strong competition comes from its Costa Coffee, Hills Bros. brand, Maxwell House, Dunkin Donuts, Folgers, McDonald‘s and Caribou Coffee among others (Davis, 2008). Costa coffee from UK poses a major threat as the second largest coffee house in the world. All these firms specialize on quick-service outlets and coffee shops. Starbucks understands that its clientele select amongst retailers basically in terms of product quality, price, service and convenience. According to Thompson & Strickland (n.d), Distribution and pricing strategies demonstrate that Starbucks positions as a high quality brand. Also, over the years the company has distinguished itself as a premium coffee restaurant targeting upper and middle class who have disposable income (Keller, 2013). Recommendations The brand audit of this Coffeehouse has revealed that Starbucks is outstanding and strong brand which holds considerable brand equity. However, the brand faces threat and opportunities which must be addressed to make it maintain or gain competitive advantage in the coffee market. Studies have demonstrated that low class people do not consider Coffee similar to upper and middle class people. However, most of these people who want to feel the “Rewards Everyday Moment” as the Starbucks brand mantra states. As such, the company should consider this market segment to increase its profits and even to dispel the brand association with the rich. Starbucks scramble for a market share with close substitutes such as tea, other beverages such as Coca-cola, Pepsi, minute maid and juices among others. Some of these beverages are cheap compared to Starbucks coffee; hence some middle class experiencing low disposable income may neglect Starbucks for other brands. Therefore, Starbucks ought to leverage its better value retention be able to compete with other brands which are outside its product category. Expansion has been a sign of growth to Starbucks and also a strategy to lock out competitors out of a market and take gain competitive advantage. However, in some instance, the company has put up more than one outlet in one location. However, if this practice is not controlled, the company will let some of its outlets to cannibalize the other leading a loss. Conclusion Starbucks is currently enjoying the dominance of coffee industry due to its strong brand and global presence. The company has continued to use its strength to increase its market share over the years. However, the brand is now threatened with increased competition, high prices of coffee bean, brand association with the rich people and close substitutes. There are several opportunities that Starbucks can still exploit comprising of trying to invest in successful and similar markets, and creating joint venture and partnership with established companies in new markets to increase brand awareness. References Cateora, P. R., Graham, J. L. (2007). International Marketing. New York: McGraw-Hill Irwin. Datamonitor. (2005). Starbucks Corporation Company Profile. Retrieved September 28, 2014 from http://www.investor.reuters.com/data/files/Company%20Profile%20Samp le%20for%20Reuters.pdf Davis, R. (2008). The people vs. Starbucks. New Internationalist, 410 (1), 21-24. Garza, G. (2010). The history of Starbucks. Catalogs.com. Retrieved September 28, 2014 from http://www.catalogs.com/info/food/the-history-of-starbucks.html Keller, K.L. (2013). Strategic Brand Management: Building, Measuring and Managing Brand Equity, 4th Ed. Pearson. Kotler, P. & Armstrong, G. (2010). Principles of Marketing, 13th Ed. Upper Saddle River, NJ: Prentice Hall. Landa, R. (2006). Designing Brand Experiences. Thomson Delmar Learning, c2006: CliftonPark, New York. Miller, A., & Coffin, J. (2004). Measuring Marketing Effectiveness and Value: The Unisys Marketing Dashboard. Journal of Advertising Research 44, 237–243. Serwer, A. (2004). Starbucks Taking on the World. Strategic Direction, 20(7), 13-25. Schroeder, J. E., & Salzer-Mörling, M. (2006). Brand Culture. Routledge: New York. Starbucks. (2014). Starbucks Official Website. Retrieved September 28, 2014 from http://www.starbucks.com/ Thomson, M., Maclnnis, D. J., & Park, C. W. (2005). The Ties that Bind: Measuring the Strength of Consumers Emotional Attachment to Brands. Journal of Consumer Psychology, 15, pp. 77-91. Thompson & Strickland (n.d.). Strategic Management - Concepts & cases. Retrieved September 28, 2014 from http://www.mhhe.com/business/management/thompson/11e/case/starbucks.html Staisch, I. (2007). A Brand Audit on the L’Oréal Brand. University of Stellenbosch, 1-94. Read More