Talisa-Louise Maulgue University of Auckland 5/21/2009
MKTG 717 Brand Research Proposal
Word Count: 1,492
Starbucks is a multinational company who purchase and roast whole coffee beans. They sell these along with a variety of hot and cold beverages, food, teas and coffee accessories. The head office is in Seattle, USA, which is also the location of the first store. The company’s net profit for 2008 is $316.8 million; however profits have decreased by 77% in the first 2009 quarter (New York Times, 2009). Starbucks was voted one of the best retail environments by Brand Channel in 2009, with comments like “The right blend of flavors in the decor, service, product, sensory experience with a shot of neighborhood authenticity”. MANAGEMENT PROBLEM
Starbucks’ stores are closing and quarterly profits have fallen by 77% (Jargon, 2009). Howard Stultz, Starbuck CEO says “We know customers are looking for meaningful value...” (Jargon, 2009), however it appears that many people do not value the Starbucks brand. In fact they go out of their way to avoid drinking a “Frappacino” or “Cinnamon Dolche Latte” or basic cup of coffee. To these people, Starbucks offers no value; in fact they devalue the brand and the product. But the question is why? "Stores no longer have the soul of the past and reflect a chain of stores vs. the warm feeling of a neighborhood store" (Shultz, 2008 cited in Quelch, 2008). Shultz may be right. Many people are beginning to feel that Starbucks has become a representation of the homogeneity of American culture (Wardle, 2005). Wardle (2005) feels that Starbucks are only interested in efficiney and profits, not about culture and the uniqueness of a local coffee shop. This view seems to be express by many people, with over 400 Facebook groups dedicated to hating Starbucks and many websites blogs and forums stating just this. This “hatred” towards Starbucks has lead many people to not only avoid the brand, but also create negative word of mouth and anti-brand websites, which can potentially harm brand value (Krishnamurthy and Kucuk, 2008). Therefore the management problem Starbucks are facing is:
MKTG 717 Brand Research Proposal
“Why do people avoid the Starbucks brand?”
Lee, Motion and Conroy’s (2008) study on brand avoidance defines brand avoidance as “as the incidents in which consumers deliberately choose to reject a brand”. They revealed that there are three types of brand avoidance, experiential, identity and moral brand avoidance (outlined in Appendix I). The first kind of brand avoidance (experiential) is caused by negative experiences with the brand that do not meet expectations. Identity brand avoidance develops when the brand images is dissimilar to the consumer’s identity. The last type, moral brand avoidance, occurs when a consumer’s beliefs and ideas are not aligned with the brand’s values. This occurs especially with social issues and the brand, for example Fair Trade, being “green” or child labour. In addition to the types of brand avoidance Cherrier (2008) study on anti-consumption finds that there are two types of identities associated with choosing not to consume brands. The first is Hero identity, which are the individuals who are opposed to society as it exists now. This identity related to the “discourses against exploitative consumption” and domination of power in the economic system. Interestingly enough (Lee, 2007) in his thesis finds this identity in subject “AR” (see Appendix II), who shows his opposition to Starbucks, stating it’s a “monopoly” where everything is “uniform”. Cherrier (2008) also discusses the second identity (Project) as on which rejects consumption on the basis of freeing oneself and finding their own space, where issues of inclusion in a groups are not culturally determined. There the “cultural...