An internationally recognized brand with over 16,800 locations worldwide and is valued at $5.23 Billion as of 2005 (source: cafemakers.com/brand_recognition.html) Prepared by Florence L [Fashion Marketing Critic]
Starbucks started its journey back in 1971, and has since grown to serve millions of sociable coffee-goers from around the world. With more than 16,800 locations across the globe as of 2009, Starbucks is still the dominant player in the ﬁeld of upscale coffee houses for mainstream customers. You ask: “How can they be ‘upscale’ but cater to mainstream customers at the same time?” To make a comparison to the fashion industry, upscale brands does not mean that mainstream customers cannot afford it, it means the pricing is within reach, and the urge to purchase a Starbucks coffee over a Tim Horton’s cup of coffee is in the branding. Would a woman rather carry a Guess handbag over a Gucci one? Would men prefer a Toyota Corolla over a Maserati convertible? There is value to branding, and Starbucks’ brand value is worth $5.23 Billion.
OVER THREE DECADES OF PRODUCT INNOVATION
To tell the entire story of Starbucks branding would be an endeavour that at least requires a thousand page novel, which I am not prepared to write at this point. This is why I am focusing on the product branding strategy that Starbucks has used in different geographical locations. It certainly shows that they understand the idea of “think globally, act locally”. There are four markets that I have selected: North America, China, Japan and Europe. I will cover different products, collector’s edition items that are tailored speciﬁcally for that market. Issues range from product innovations based on logistical considerations, branding considerations and adhering to cultural tastes.
WHY IS STARBUCKS CONSIDERED A FASHION BRAND?
Let’s face it. We buy Starbucks coffee because of the cup. Well, not that their cups are made of fully recycled material and all that environmentally sustainable talk that marketers would have us believe, but because of the brand on the cup. Celebrities are pictured with a Starbucks cup in magazines, and Starbucks is positioned as a cooler hangout place than say, Tim Hortons. With major coffee houses in Canada, Tim Hortons is for cheap coffee (McDonald’s McCafe will have something to say about that in the next months with their FREE coffee), Blenz is for studying and Starbucks is for hanging out with friends. Starbucks ran a bit of a risk offering free wi-ﬁ at their locations, but with a time limit on wi-ﬁ usage, it discouraged people from staying there, taking up seats and not generating proﬁt for the company. Customer turnover is extremely important for any physical location with limited seating. Another argument may be that most customers take their coffee to-go instead of sitting and chatting; this happens mostly in the morning, where I personally sat at a counter and counted 73 cups of coffee being sold between 7am to 8am at a Richmond location in British Columbia, Canada. I would consider Starbucks to be a high street coffee brand; not exactly niche and luxury, but deﬁnitely mainstream and high street pricing.
WHAT PUTS STARBUCKS IN FRONT OF OTHERS?
The company’s marketing is great, but more importantly they have also successfully established a global operations and logistics network - what we would call economies of scale in business. To name a few factors that solidiﬁes their ground in the industry: • Over 15,000 locations worldwide, with signiﬁcant improvements in supply chain efﬁciencies in international markets generating a 119% operating margin increase; • Highly visible sustainability measures including its support for fair trade coffee, farmer loans and incentives, youth engagement, energy and water conservation, 100% recyclable cups and green building. From its corporate moves to its daily...