Starbuck’s CEO, Howard Schultz, asked an interesting question, “What would happen if one takes the high-quality coffee from Starbucks and connects it with the charm and atmosphere of European cafes?”1 (Mangold, 2013). A good question always leads to a good insight. Starbucks, commenced its business in 1971, has revolutionized the coffee business and created a new market by offering exceptional quality coffee from around the world. It becomes the world leader in the premium coffee market with more than 19,000 stores around the world in 62 countries. However, by 2008, the firm was rapidly losing customers to other competitors who also offered fresh-brewed coffee such as Pacific Coffee and McDonald’s café. This triggered Starbucks to rethink what customers really wanted from a coffee shop and extended connections with them beyond the coffeehouse. Hence, a journey into social media began.
This paper is to explore how Starbucks utilizes the social media platform to enhance its brand equity
Social Media is termed that customers are now ‘social customers’ and every interaction is an engagement and collaboration between company and customer. Social media is defined as “the technological component of the communication, transaction and relationship building function of a business which leverages the network customers and prospects to promote value co-creation.”2 (Andzulis, J. M, Panagopoulos, N. G., Rapp, A., 2012).
The social media has revolutionized the traditional branding paradigm which tightly managed the image through controlled communications to create dominant brands and hence cultivate loyalty and profits. Traditionally, marketing communication entailed significant financial investment in advertising and promotion budgets in order to gather marketplace attention and develop loyalty and repurchase of the brand. Once customers develop a preference for a brand, they will patronize it because of assurance of product quality and the brand’s ability to connect to their self and aspirations.
With the advent of the Web 2.0, customers shift the preference and behaviour and like to create content and share information via social networking site such as Facebook, Twitter, blogs and wikis. Facebook was the first social network to surpass 1 billion registered accounts. Twitter had over 284 million monthly active accounts (Statista, 2014)3. The rise in popularity in the use of social media has transformed the traditional one-way marketing communication from the marketer to customers with some feedback from the opposite side and has created a paradigm shift. (Appendix A). Interaction between firms and customers has increased dramatically4. (Kohli, C., Suri, T., & Kspoor A., 2014). Against the background, we will see the change of Starbucks interaction with the customer from the traditional communication to the social media communication.
To help understand the changing interaction between Starbucks and customers, a conceptual 3-M (Megaphone, Magnet and Monitor) framework5 (Gallaughter, J. & Ransbotham, S., 2010) was analyzed (Appendix B). The framework explores how each individual social website will promote social-media based customer communication. In brief, Megaphone Communication represents firm-to-customer communication through accounts directly controlled by the business. Facebook, Twitter or YouTube all make it easy to setup an account to directly publish and communicate with followers. The Magnet Communication is meant to “magnetically” draw people into a business’s social presence which is indeed customer-to-firm communication. The Monitor Communication is customer-customer interaction. The “share”, “like” or “tweet” etc commonly found in the social media constitutes this digital “word of mouth” communication. Using this framework, we may be able to assess how Starbucks utilizes the social media strategy.
From Traditional to the Social...
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