Starbucks is one of the most recognizable brands in the United States (US) and other countries around the world. Founded in the early 1970s, the company has grown from a small Seattle-based franchise to be one of the most formidable brands in the coffee and beverage industry (Starbucks Coffee Company, 2020). The firm is not a restaurant but rather a corporation, which operates a vast network of coffee houses around the world. Building on its networks, the company is now the largest coffeehouse in the world, buoyed by a good record of quality and a strong brand positioning strategy (Starbucks Coffee Company, 2020).
This progress demonstrates the importance of branding in fuelling Starbucks’ success, as a basis for understanding the role of branding to organizations and their customers. Data was collected from secondary research because of the logistical difficulty associated with conducting a primary study based on the expansive nature of Starbucks’ operations. The emphasis of the study will be on finding out how Starbucks uses internet marketing as a key (Marcom) instrument for its operational planning activities.
Branding is an important tenet of marketing because it represents a company’s perceived value to its customers. Relative to this statement, Müller (2018) and Kuehn (2016) define branding as a company’s decision to develop a name, symbol or design that would resonate with its customers. Based on its role in shaping consumer views, organizations often use branding strategies to, among other reasons, increase sales, create awareness about a product or improve customer loyalty (Gürhan-Canli, Sarial-Abi and Hayran, 2018; Rubio, Villaseñor and Oubiña, 2015).
Branding also allows consumers and companies to have a common set of expectations to be met by both parties (Srivastava and Thomas, 2015; van Everdingen, Hariharan and Stremersch, 2019). Therefore, it acts as an interconnected platform where organizations and their customers interact to create a common understanding of the value of goods and services exchanged.
Understanding the importance of branding demands a review of the role of consumer psychology in predicting purchasing behaviors because these interactions define a brand’s value. Consumer psychology also stretches to the perceptions that employees have towards their bosses because they are the first point of contact between a business and its customers. Premised on this strategic role played by “people” in determining a brand’s value, several researchers have explored different theories that try to predict buyer behavior, human resource outputs and market functionality (Stoyanov, 2017; Rubio, Villaseñor and Oubiña, 2015). However, Maslow’s hierarchy of needs theory stands out because it adopts an in-depth understanding of how people’s cognitive processes help to explain brand power.
The aforementioned theory plays a critical role in explaining the role of branding to consumers because it underscores the intrinsic motivations underpinning human behaviors. It suggests that a company’s branding strategy should not only focus on the mechanical aspects of its performance but also on what the branding message means to the consumers (Interbrand, 2020). In support of this statement, proponents of Maslow’s hierarchy of needs believe that people’s behaviors are mainly influenced by instinctual impulses and not mechanical compulsions, such as reinforced behaviors (Conlon, 2018).
The implication of this statement on understanding the impact of branding on organizations is that the concept is subjective because the instinctive value is not standardized. However, proponents of Maslow’s hierarchy of needs theory contend that people often follow a one-directional desire to master themselves through production or consumption activities (Interbrand, 2020). This level of personal gratification and attainment is at the highest cadre of Maslow’s hierarchy of needs structure (self-actualization) highlighted in figure 1 below.
Based on the above model, companies should formulate branding strategies that meet one or all of the five levels of human needs identified above. Alternatively, adopting the hierarchy of needs theory in brand-led organizations means that consumers will be in a better position to understand their brand purpose (Conlon, 2018). Consequently, they will feel like they are a part of “something bigger,” as opposed to being a passive consumer (Gürhan-Canli, Sarial-Abi and Hayran, 2018). In the same breadth of analysis, the same branding power that influences consumer perception is useful to companies because it helps them feel empowered to deliver on their promises to customers.
Broadly, by communicating the meaning of a company’s brand to the public, employees and customers become better invested in the organization’s goal and purpose. Furthermore, if their needs are met, they are likely to tap into their intrinsic motivations to fulfill a larger purpose or mission (Conlon, 2018; Fitzpatrick, 2017; Jackson, 2018). Overall, the competitive nature of the food and beverage industry makes it possible to undertake the Starbucks case study by understanding how the corporation has used its marketing tools to enhance its brand effectiveness. Recommendations on how to improve the company’s marketing communication strategy will be provided in section 4.0 after the case analysis below.
Analysis of Chosen Brand (Case Analysis)
Brand communication is an integral part of most marketing plans because it determines their effectiveness. Stemming from this role, managers use various branding platforms to shape the perception or image that consumers develop about their products or services (Molyneux, 2019). To this end, Gürhan-Canli, Sarial-Abi and Hayran (2018) say that brand communication is an effective management tool for defining the image a customer develops about a product or service at every point of engagement. The most commonly used marketing communication tools in the food and beverage industry are sales promotion, advertising, direct mail marketing, internet marketing and personal sales (Andrews and Shimp, 2017; Molyneux, 2019). Starbucks uses internet marketing as its main communication tool.
Starbucks’ digital marketing plan has been centered on the need to promote the quality of interactions with its customers. In other words, the company’s management sees this Marcom tool as an instrument for directly communicating with its customers (PYMNTS, 2018b). Independent research reports have shown that when this digital marketing strategy is customized to suit internal and external environmental dynamics, it heightens the effectiveness of marketing campaigns because of increased levels of engagement and enhanced personal experiences (PYMNTS, 2018b). Starbucks has used this plan to expand its customer base.
For example, it has improved the company’s brand visibility by reaching a growing number of reclusive customers who do not want to visit the physical store to order a cup of coffee by setting up a virtual ordering platform. This strategy has been responsible for about 12% of Starbucks’ total operated sales (PYMNTS, 2018a). Starbucks has also used its digital marketing strategy to enhance brand loyalty by introducing digital coupons to reward its most loyal customers. For example, the “Frappuccino Happy Hour,” which is popular among most of the company’s young customers was developed from this initiative and has increased the rate of repeat purchases because members can buy products at a discount (PYMNTS, 2018a). It has also contributed to the growth of the company’s customer base.
Most of the internet marketing strategies adopted by Starbucks have successfully improved the effectiveness of the firm’s brand positioning strategy, especially among young clients. For example, they have helped the US company to stay relevant among millennials who are increasingly more concerned about the convenience and experiences of their product purchases (Blancero, Mouriño-Ruiz and Padilla, 2018). Furthermore, they are concerned about the purpose of a brand to their lives and the contribution of their purchases to the realization of personal goals (Blancero, Mouriño-Ruiz and Padilla, 2018).
Starbucks’ digital marketing strategy has helped it to stay ahead of the competition in addressing these unique market developments. For example, the company was able to increase its consumer base by more than 1.6 million people through a digital coupon strategy (PYMNTS, 2018b). The coffee chain also observed that most of its customers were buying more products than traditional customers did. Detailed estimates show that their purchase volumes are about 30% higher than the “average” customer (PYMNTS, 2018a). Therefore, the firm’s digital marketing strategy has played a key role in boosting its sales and cementing its brand positioning as a market leader.
Building on these gains, Starbucks’ internet marketing strategy has been optimized to increase consumer experience. This strategy has been applied in its company website and social media pages where there is a keen emphasis to present positive and reinforcing images that portray the brand as a superior product. For example, its green signature color is anchored in its social media pages and website. These branding successes are partly responsible for the company’s leading positioning in the food and beverage industry (Trefis, 2016).
Supporting this impressive market performance is the fact that Starbucks has become the fifth most respected brand in the world (Subramaniam, 2020). This performance means that this brand continues to be profoundly strong, relative to competitor performance.
A significant percentage of the success can be attributed to its strong social media presence in four common platforms: Twitter, Instagram, Facebook and YouTube. Collectively, they have increased the brand’s following online. For example, Twitter is the company’s main internet marketing platform, which has more than 11 million followers (Subramaniam, 2020). This group of potential customers gets regular updates from the company in real-time. As of January 2020, the Seattle-based company tweeted more than 200,000 times communicating different activities, progresses and changes made to its operations (Subramaniam, 2020).
Starbucks’ social media presence has also created a lot of attention among its followers for improving the quality of communications between the company and its customers. This change has happened by embracing social media, which has made communication with customers more reliable, honest and intuitive. In this regard, internet marketing has significantly contributed to Starbucks’ effectiveness in maintaining its position as the leading coffeehouse.
This report has highlighted the role of branding to consumers and companies alike. The Starbucks case study provided an in-depth understanding of how the concept has been used to maintain market dominance for the Seattle-based company. Its main marketing communication tool is internet marketing, which the company has used to generate a market buzz and increase its sales. Additionally, Starbucks is increasingly relying on this tool to protect the brand value it has built over the years through its innovative digital reward programs aimed at improving relations with loyal customers.
These strategies have collectively contributed to supporting the company’s market leadership position. Furthermore, they have played a role in boosting its image as a reliable, honest and transparent company. Although significant progress has been made in leveraging Starbucks’ digital capabilities to boost sales and improve its corporate performance, the company still needs to implement new strategies to improve the effectiveness of some of its plans. The subsection below outlines a raft of recommendations for consideration.
One of the primary activities that Starbucks needs to undertake in redesigning its branding strategy is to define the target market more clearly. So far, its digital marketing strategy has not been focused on a specific group of customers (Jackson, 2018). However, it needs to pay more attention to young people who are aged between 16 and 35 years because they are the new market of coffee lovers. Starbucks’ internet marketing strategy needs to generate content and market communications that appeal to this demographic because millennials are a growing population that spends much time in coffee shops studying, socializing or working.
Additionally, Starbucks should create better quality and engaging content for its internet marketing campaigns, as opposed to the generic material that characterizes most of its advertisements. The quality content needs to be authentic and “catchy” because of the need to appeal to the interests of young people highlighted above. Such content should be witty and accessible on social media platforms where users can share it to generate more buzz. This strategy would enrich the company’s current internet marketing strategy and make it more appealing to the target market. This focused view of branding strategy should eliminate most of the confusion that defines its existing marketing strategy.
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