Starbucks

Starbucks Coffee Company, founded in 1971, is the largest coffee chain globally and a market leader, headquartered in Seattle, USA. Such success is attributed to Starbucks’ ability to identify and address the external STEEPLE factors. However, Starbucks seems to have lost its brand image as an exclusive and luxury coffeehouse despite industry leadership. Starbucks carefully positioned its brand image as exclusive and luxury, where quality and personal attention matters, described as “a warm feeling of a neighborhood store.” However, the company lost its image as an exclusive and luxury brand when it embarked on the rapid expansion (Tu & Chang, 2012). This STEEPLE analysis identifies two factors that contribute to successful growth strategies for luxurious and upscale brands, using a Starbuck case study and its brand image. The two factors include economic and social factors.

Luxurious, Exclusive Brand Image Factors and How to Cultivate Them While Growing

Economic Factors

The past few decades have witnessed unmatched demand for luxury and exclusive brands by international consumers worldwide, from the US, Japan, China, East Asia, Europe, and developing economies such as Africa and South America. This is evidence by the increased acceptance of global luxury and exclusive brands such as Starbucks globally. Starbucks’s upscale cafe’ cool’ is exported worldwide, from Canada to Taiwan (Thompson & Arsel, 2004).  Economic factors such as the rise in middle class globally have contributed immensely to the increased demand for exclusive and luxurious brands internationally, hence Starbucks’ global expansion strategy.

The coffee market had seen gradual expansion since the 1990s when Starbucks began operations, with the company playing a key figure in the market transformation under the Starbucks revolution, which transformed the pleasure-seeking coffee from a classic status symbol into a mainstream consumer good, creating an American coffee shop market. Since then, the coffee market has expanded from merely 200 freestanding coffee shops in 1990 to over 14,000 coffeehouses in the US and Starbucks owing approximately 30% of the market share (Thompson & Arsel, 2004). The expansion of luxury and exclusive brands such as Starbucks indicates increased consumer purchasing power, intensified by the rising middle class globally.

Socio-Cultural Factors

Luxury and exclusive brands have succeeded and established their reputations in the global markets over the past centuries. Most luxury brands’ global strategies are designed to expand and follow developed economies and precede the trends in developing markets, and Starbucks is no exception. Social-cultural factors play a significant role in such’ brandscapes.’ Because of its market dominance and hyper-aggressive expansion model, Starbucks’ brandscape is increasingly entrenched and entangled in broader cultural anxieties over what critic term as branding of culture by multinational corporations. The global giant coffeehouse has become a cultural icon for various predatory intentions, rapacious excesses, and cultural homogenization, which social critics link to global-wielded by multinational companies (Thompson & Arsel, 2004). The factors have significantly contributed to shaping global brands’ perceptions, including Starbucks, in local markets.

Starbucks’ success in the global markets is attributed to a hegemonic brandscape, a cultural model of ‘service-scape” structured and linked together by expansive, figurative, and competitive interactions to a dominant experiential brand. This hegemonic brandscape offers a collection of objectified meanings of service-scape and material goods atmospherics, which consumers can easily incorporate into their worldview and can be put into varieties of identity-constructive uses (Thompson & Arsel, 2004). Culturally, luxury consumers are interested not only in the product or service, but the image or the symbolic meaning of the product. Starbucks could export its exclusive cafe’ ‘cool’ culture globally in developed economies, attracting high-end consumers.

Starbucks’ cultural influence spreads beyond its corporate catalogs, Websites, and the 6,500 coffeehouses or retail outlets. The company’s revolution has crystalized and proliferated a form of third-place experience, what social critics term as coffee shop patronage. Starbucks has shaped ideas and cultural expectations of what a coffee shop should look like for decades, the décor and the luxury (Thompson, & Arsel, 2004), making it stand out among competitors such as McDonald’s. 

How Luxurious, Exclusive Brands Can Grow Without Losing These Aspects

Modern luxury and exclusive brands transform their offers to satisfy the changing market dynamics, including consumer tastes and preferences globally, and Starbucks is not an exception. Corporate transformation entails fundamental changes that may alter the company’s relationships with stakeholders, including customers. It may involve new value proportions, including a difference in how product and service offerings are delivered (Rouse, 2005). Starbucks ‘ hyper-aggressive expansion strategy resulted in a high cannibalization rate among its stores, reducing sales and revenues (Thompson & Arsel, 2004). The company’s brand image and culture of exclusivity, quality, and personal attention described as “a warm feeling of a neighborhood store” were also lost when Starbuck became known as a widely available store. Brands possess their outlooks, resources, and identities (Patwardhan & Balasubramanian, 2011). Such perspectives can only be improved or lost in the process of transformation.

Some of the methods luxury and exclusive brands can adopt to avoid losing their established brand image amid transformation and growth are maintaining transparency and authenticity of their brands. Luxury consumers are looking for complete authenticity, the real thing, which traces from the origin of the brand. The element of rarity also should play amidst the growth of the luxury brand. Do not make the brand too common or available everywhere as Starbucks did.

This STEEPLE analysis has explored economic and socio-cultural factors’ contribution to successful growth strategies for luxurious and upscale brands. Starbuck Coffee Company is used as the case study. Starbucks has experienced significant expansion and growth marked by the growing middle class globally. However, the company seems to have lost its authenticity amid the transformations.

References

Patwardhan, H., & Balasubramanian, S. K. (2011). Brand romance: a complementary approach to explain emotional attachment toward brands. Journal of Product & Brand Management.

Rouse, W. B. (2005). A theory of enterprise transformation. Systems Engineering, 8(4), 279-295.

Thompson, C. J., & Arsel, Z. (2004). The Starbucks brandscape and consumers'(anticorporate) experiences of glocalization. Journal of Consumer Research, 31(3), 631-642.

Tu, Y. T., & Chang, H. C. (2012). Corporate brand image and customer satisfaction on loyalty: An empirical study of Starbucks coffee in Taiwan. Journal of Social and Development Sciences, 3(1), 24-32.