Starbucks Essay: Overview & Challenges In Singapore Market.

Question:

Discuss about the Brand Management of Starbucks Company.

The Starbucks Company was established in the year 1971 where the first store was opened in Pike Place Public Market in Seattle, USA. Before the company was opened, the consumers had to purchase the coffee from the supermarkets, which got changes after the company opened its store and sold freshly roasted beans of coffee to the consumers. The company was taken over by an employee known as Howard Schultz who became the head of the operations and started selling the espresso beverage, which turned out to be a huge success for the company (Chua and Banerjee 2013). The company at the beginning had only 17 outlets in Seattle and presently runs about 5690 outlets in more than 20 countries. The main product of the company was to change the vision of the consumers in purchasing coffee beans to a cup of espresso beverage, which has become a premium product. It is one of the fastest growing brands in the world due to the huge success that it got by selling the coffee to the consumers (Mason, Cole and Goza 2017).

The mission statement of the company is that it will help in providing a better environment of work so that the employees can treat each other with dignity and respect. The company also takes care of purchasing the best quality of coffee beans so that it can deliver the best coffee experience to its customers (Sam and Cai 2015). The company keeps the environment in mind and takes necessary steps so that it can conserve the environment that is surrounding its stores along with the local communities. The company also provides a better level of service to the customers so that it helps in building up of the loyalty among the customers (Boone 2017).

The company is currently facing severe issues in the Singaporean market with respect to the shortages in staff. The local manpower of the country does not wish to invest their time in the companies that would pay them a low wage or as per the rate within the country, which is affecting the brand of the company. The establishment of the quotas that are present in employment has limited the company in bringing foreign workers within the country, which poses as a disadvantage for the company, as the local managers may not be able to communicate with the customers in a better manner, which may affect the brand (Snell et al. 2017).

Challenges in the Singapore Market

The increase in the rental by almost 9 percent within the country has reduced the percentage of the profits for the company, as they have to pay a high rent so that they can remain operational within the country (Mohamed Nasir 2016). The rise of competitors in the Singaporean market such as the The Coffee Bean has resulted in decreasing the sales for the company. The rival company is one of the major companies that are offering stiff resistance to Starbucks with respect to the price that the consumers need to pay for the coffee. This factor is also affecting the brand value of the company. Another major challenge that the company is facing is with respect to the increase in the cost of production within the market. The improvement in the standards of living of the customers has created an impact on the cost of production to be increased, which has reduced the margin of profit for the company (Orta et al. 2015).

The company positions itself in the ‘high price, better quality’ so that the target customers can get a better experience with respect to the coffee that is being provided to them. With respect to the customers who are coming within the store of the company, they require the best quality of coffee according to the price that is being set in the company. The company provides better in-store experience to the customers, as they hire the employees who undergoes rigorous process of training so that the customers can be satisfied (Paharia, Avery and Keinan 2014). This unique selling proposition (USP) helps the company in differentiating the products so that the company can gain a competitive advantage over the rival companies. The company provides better service to the customers such as free Wi-Fi connections and cozy environments so that the customers are willing to spend more time within the organization. This helps the company in building up of loyalty with the customers. This helps the company in selling more number of products, as the customers will spend more time within the store, which will help in increasing the profits of the company (Lee, James and Kim 2014).

The identity of the brand will help the company in creating the product in a distinguished manner so that the customers would be able to identify the product with the company. The identity of the brand helps the company in bringing the customers close to its products so that it can help the customers in purchasing the product from the company. The Starbucks Company has built up a better brand identity in the market, which has helped in bringing more number of customers in to its stores so that the profit can be increased (Susanty and Kenny 2015).   

Staff Shortages

The identification of the company can be done with the logo that the company uses, which shows the mermaid from the fictional character of Moby Dick. The mermaid is often represented as the best and most good looking girls in the world, which states that the coffee that is being produced by the company is the best in the world. The customers associate the logo with the brand, which helps them in getting a better brand experience when they visit the stores of the company (Robinson 2016).

The company communicates with the consumers through various methods such as advertising, publicity, proper usage of media, and promotion of sales. The company advertises its products through the print as well as through the electronic media. The company promotes its product extensively through the advertisements in television and newspapers and magazines, which helps the company in communicating with the customers. The launching of new products in the market are done by inviting the loyal customers so that they can taste the products on a priority basis, which helps the company in getting valuable feedbacks about the product (Cleff, Lin and Walter 2014). These feedbacks help the company in renewing the products as well so that it can suit the preferences of the customers. The promotion of the products of the company is done through loyalty cards that are provided to the customers so that they can get an additional discount on the products when the card is shown to the employees (Kang and Namkung 2017).

The company also sponsors certain events such as charity events and recycling of waste products with the help of customers, which helps in spreading awareness among the local communities. This helps the company in communicating with the customers in a better manner, as they feel a part of the organization, which will help in associating the brand value with them. The company has an efficient public relations team, which helps them in maintaining a better relation with the customers as well as informs the customers about the latest products and services that are being offered by the company (Huang et al. 2014).

The primary characters that will help the company in getting success in the market is the strategy that it will use in retaining and creating better customer chains in the market. The use of consistent branding has helped the company in communicating in a better manner with the customers by the identification of the logo of the company. The logo on the coffee cup helps the customers in associating any person who is carrying it, which means that there is a presence of the store in the nearby area (Cheng 2015).

Rental Increases

The use of the internet has been made in a customized manner by the company so that it can help the customers in getting a better experience from the brand. The web sites of the company has helped the customers is getting a better access to the accounts and check their reward points so that it can be redeemed when the customers may want it. The use of the videos in the website of the company helps them in educating the customers about the message that the brand wants to convey among the customers (Wu and Wu 2017).   

Another feature that the company uses is that it integrates the channels of media such as the customers receive mails and messages on their computers and phones respectively. The advertisements are visually oriented so that it can provide valuable information about the offers that are being given by the company. The content of the advertisement is more of educating the customers with the information rather than promoting the brand. The use of social media has also allowed the company to gain popularity among the customers. The company is present in websites like Twitter and Facebook, which has provided them the base to interact with the customers on a daily basis (Li 2016).

The company provides a better mobile experience to the customers as well, as the company has its own application, which the customers can install in their smart phones and get to know about the products in a detailed manner. This helps the customers, as they do not need to visit the store to learn about the new product, as the information is available to them on their phones (Ronald and Amelia 2017). The presence of the application allows the customers to make the payments to the company without carrying the loyalty card, as the application automatically updates itself with the information (Voigt, Buliga and Michl 2017).

The company keeps a separate entity for collecting the ideas that are being provided to them by the customers. The experience with respect to the brand is the development of the ideas that are being presented to the company by its customers as well. This helps the company in knowing the likes and dislikes of the customers and act accordingly so that the preferences of the customers can be given priority. The feedbacks that are provided by the customers help the company in designing better ideas with respect to the advertisements so that it can grab the attention of maximum number of people (Glowik 2017).

Rising Competition

The brand equity of the company is closely associated with the understanding that is based on cognitive neuroscience, which helps the customers in making better decisions. It helps the company in measuring the elements that will help them in building loyalty among the customers. The equity of the brand and the loyalty of the customers are important because it plays an important role in establishing a personal bond that is emotional in nature with the customers. Brand loyalty is important for the company, as the customers who are loyal to the company will try to purchase the product from the same company repeatedly and will help in generating revenue for the company (Keller 2016).

The assets and the liabilities of the company have to be linked with the customers so that it can help in building up the equity of the brand by linking the logo and the symbol that is being used by the company. The logo of the company helps in attracting more number of customers, which helps in having a positive equity of brand. The company needs to develop strong brand equity so that the consumers can know the product that the company is offering, which will help in affecting the consumption of the products that are being offered by the company (Christodoulides, Cadogan and Veloutsou 2015).

Figure 1: Brand Equity of Starbucks

(Source: Datta, Ailawadi and van Heerde 2017)

The equity of the brand that is based on the consumers for the company is dependent on various factors such as the varieties that are being offered by the company to the customers with respect to the products and the ways in which the product is being served. The company provides its product based on the different locations where the store is located such as the product is mainstream within the city where the customers are known to prefer a particular type of product. The everyday customers of the company have a different requirement, which helps the company in serving them in a better way (Napoli et al. 2014). The other type of customers such as groups of friends or colleagues enjoys a different variety of product that may be fashionable in nature. These varieties that are being offered by the company helps in building the brand equity among the consumers, which further helps in generating better revenue by selling the products on a frequent basis (Han, Nguyen and Lee 2015).

Figure 2: Brand Equity model by Keller

(Source: Keller 2015)

Keller in the year 1993 mentioned that brand equity helps in attracting the attention of the managers and the researchers who are concerned with the market in developing intangible assets for the company in a better manner. The equity of the brand can be classified in to different perspective such as from the perspective of finance, customers and employees. The customer based equity of the brand is based on the psychology of the customers and is cognitive in nature (Harrington et al. 2017). This is a dominant character, which is thoroughly studied by the market researchers so that it can help in developing better products for the company and increase the profits of the company. The concept that is related to the equity of the brand based on customers helps the company in making better decisions regarding the selling of the products, which will help them in grabbing the attention of the customers. The concept becomes positive in nature when the company feels that the customers favor the company and is well associated with the products that the company is providing to them. The positive attribute of brand equity based on customers help the company in increasing their revenues in the longer run along with the willingness of the customers to try the different Medias that the company uses in advertising their products (Keller 2015). This helps the company in setting a competitive price to its products so that it can sell in a better manner within the market. The equity of the brand is created on the basis of the closeness that the company have with its customers, which helps in affecting the sales of the product offered by the company.

The association of the customers with respect to the company according to Keller depends on the information that is provided to the customers with respect to its price and the attractive packaging methods, which is used for the product. Apart from this, the use of the imagery that is identifying the type of customers who will be using the product will help in selling the product in a better manner. Another important feature is the usage imagery, which states the situation in which the customers are likely to use the product that is being offered by the company. The company also provides the services at a faster pace for the customers who have issues with respect to time, which helps in providing a greater impact on the necessity of the product for the consumers (Keller 2014).

The association of the brand with the customers helps the companies in rising above the competitive brands that are present in the same market, as the choice of the customers are more inclined towards the particular brand. This helps the company in gaining a Unique Selling Proposition, which helps them in attaining more number of customers so that the product can be sold in a easy manner (Sheng and Hartono 2015).

The Starbucks Company tries to raise the awareness of its products within the customers by choosing different media that will help the customers in knowing about all the products that the company offers. It helps the company in keeping its customers up to date so that it can help in generating better revenues for the company, as the chances of purchasing the products will increase to a great extent. The company takes the help of its mobile application that it has developed so that the customers can be educated in a better manner about the products of the company. The customers on installing the application can view the ingredients that are used in making a particular product so that they can place their order according to their level of satisfaction. The design of the logo of the company helps the customers in associating themselves with the product that the company offers to its customers. The use of the social media on an extensive manner by the company has helped in reaching the customers in a better manner so that they can get to know about their products (Keller and Brexendorf 2016).

This activity along with the invitation that is sent out to the loyal customers during the launching of the new products helps the company in getting better reviews about the product from the customers. The feedbacks that are provided by the customers helps the company in designing their products according to the preferences of the customers, which will help in selling of the products in an efficient manner (Harrington et al. 2017).

The performance of the company is good in the market, as it uses the latest technologies that are available in the market to communicate with its customers in an effective manner. The use of the methods of communication helps the company in interacting and associating the brand in a better way with the customers. The use of the marketing tools such as advertisements helps the company in presenting their products in a better manner to the customers (Han, Nguyen and Lee 2015). The company maintains a strong performance in the market because of the extensive communication pattern that the company uses to educate the customers about the products. The use of the advertisements both print and electronic helps the company in managing its brand in a better way among the customers.    

The resonance of the brand is good in the market, as more number of customers is being able to purchase the product without taking the suggestions from the employees, which shows that the customers are familiar with the products that are being offered to them. The use of the extensive advertisements has helped the company in raising awareness among the customers, which has helped them in increasing the sales of the products (Robinson 2016). The customers of the company are now well versed with all the products, which helps them in efficiently making the decisions in choosing the right product at a given period. The use of the mobile application has helped the customers in educating themselves about the ingredients that are being used in the product and the absence of the loyalty cards that are provided by the company whenever they make a purchase. The points those are present in the loyalty card helps the customers in getting additional discounts from the company at the time of the purchase, which helps in promoting the brand (Napoli et al. 2014).

The manager of the company has to improve the brand equity that is based on the customers, as it will help in increasing the loyalty of the brand among the customers. The customers will be able to feel that they are more loyal towards the brand if the managers of the company try to achieve greater equity by providing some of the customers with a smaller amount of shares of the company. The company will be less vulnerable in the competitive market if it tries to increase its brand equity in a positive manner, which will prevent the customers from trying out the other companies that deals with the similar products as of Starbucks. The recession period that the market may currently face will not create a negative impact on the company, as with the increase in the brand equity, the customers will rely upon the products that are being offered by Starbucks.

The managers of the company through the means of effective communication methods will be able to increase the positive side of the brand equity among the customers, which will enable the company to maintain a premium price in the market than the rival companies. The reaction of the customers has to be inelastic in nature, which will not affect the increase or the discounts that are being provided by the company. The inelastic nature of the responses from the customers will help in increasing the prices of the products while the elastic response from the consumers will help in decreasing the prices. The managers of the company needs to evaluate all the necessary communication  tools that are available within the market so that it can help in creating a positive image about the brand, which will be beneficial for the company in the long run. The advertisements that will be made by the company needs to have a better reach among the market so that the customers will be able to associate the brand with themselves, which will help in increasing the equity of the brand among the customers.

The positive equity of the brand among the customers will help the company in licensing its products in the market, which will restrict the competitive companies in copying the product and offering it at a lower price. It will help the company, as the customers will be loyal towards the brand, which will help in increasing the sales of the company and help in making better profits. The managers of the company will be able to introduce new products in the market, which will help in increasing the chances of extending the brand among the customers. The logo of the company needs to be advertised in a better manner by the managers so that it can help in retaining the customers and they can associate with the brand on seeing the logo.

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