Starbucks - Case Study
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Question 1: What changes in society helped Starbucks become successful?
Answer: Societal changes that helped Starbucks become successful
Starbucks was built on the whim that people might agree to pay a higher price than the market average for a cup of gourmet coffee. Thus, the stores were initially opened at strategic locations where the visibility as well as the customer in-flow would be highest. The primary societal change that helped Starbucks become a successful chain of coffee shops was that there was a marked increase in the number of coffee drinkers, especially in the United States, in the mid-1990s. More specifically, the number of people who opted to brew and drink their coffee at home reduced drastically, as they began to grab a cup on their way to work, or on their way back home. For instance, there were over 166 million drinkers of coffee in the US, which increased massively during the last decade of the 20th century. Coffee drinkers between the ages of 25 to 29 increased their coffee consumption from around 42 to 66 per cent when it came to drinking outside their homes, while 30 to 59 year olds increased their consumption 33 to 46 per cent. Although this percentage for people aged 60 and above was comparatively lower (at 14 to 20 per cent), it still indicated that most Americans had started buying their morning cup instead of spending some extra time to make it at home. The most significant change was within the segment that sourced their coffee from their workplace - the rate dropped drastically as people started drinking coffee from outside their offices, mostly due to the comfortable atmosphere provided by the Starbucks outlets.
Question 2: What strategic factors account for Starbucks' long-term success in building brand equity?
Answer: Strategic factors accounting for Starbucks' long-term success in building brand equity
Brand equity is essentially the value that an organization generates from a product through a name that is recognizable and thereby helpful in distinguishing it from the generic concepts. Starbucks being one of the major entities in the fast-food and coffee shop industries adheres to specific guidelines for creating a sustainable brand equity, as the company recognizes that the employees as well as the customers are important for maintaining its business profitability (Christodoulides and De Chernatony, 2010).
The major factor that has contributed to the brand equity of Starbucks is that coffee drinking has become more of a social phenomenon, as the customers get an amiable place to drink their coffee. Not only is the beverage of a premium quality, but the surroundings also are quite relaxing - they can drink their coffee while chatting with their friends, reading the newspaper, or even while working on their laptops. As indicated by the owner of Starbucks, the outlets have become that third place between their offices and homes, where the people can unwind, relax by themselves, or even spend some time with their friends if they wish to. Many people who would have otherwise spent cash at bars for a few beers now spend time at Starbucks, which can definitely be seen as a positive development. This has helped endear the outlets to the hearts of the people, as Starbucks is seen as a brand that creates value and does not just believe in the commercialization of its products.
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Starbucks also has a set of guiding principles that help the organization measure the extent to which their decisions and operations are being maintained appropriately. In order to maintain a brand equity, the company intends to provide a work environment that entails respect and dignity for all people, given the fact that the workplace is diverse in terms of culture and other numerous dimensions as well. They also strive to stick to the highest standards when it comes to procuring, roasting and delivering the coffee, and they also wish to make a positive contribution to the environment while also increase their profitability as it is the most important way for ensuring the success of the business.
Furthermore, the approach that the company has towards the employees is also rather promising. As indicated by the case study, there are more than 172,000 employees of Starbucks worldwide, and they have very specific and highly specialized training programs that help educate them to be better baristas and better employees on the whole. They hold classes for batches of 300 to 400 workers who are then trained accordingly under courses such as "Coffee Knowledge" and "Brewing the Perfect Cup at Home." These initiatives have also helped build sustainability among the employees, which has contributed to the low turnover rates when compared to any other fast food organization. The employees are taught to remind the consumers to buy fresh beans and to educate them on how tap water might not be sufficient for brewing the perfect tasting cup of coffee. The workers are also encouraged to be upfront and direct with their feelings when it comes to working at the organization. This has given them the chance to be heard, and thus they are taken into consideration whenever any decision is being made. Employees who are eligible can also be included in a benefits package, which provides insurance and other options such as ability to procure market shares or stocks. Furthermore, they have specific guidelines regarding the maintenance and enhancement of self-esteem, and they are taught thoroughly how to handle and listen to customer complaints, and when to call for help. These quality training programs have not only improved the working conditions at the outlets, but has also helped enhance the consumer experience at Starbucks, thereby lending significantly to the company's brand equity.
Higher the brand equity, higher would be the tendency of the consumers to pay extra for the products. This has exactly been the case of Starbucks; the premium quality of coffee, together with the high quality service for both the workers and the consumers have contributed to the value that has been created by the organization (Nam, Ekinci and Whyatt, 2011). This has further enhanced the brand recognition of the company, as millions of people all over the world can easily identify the brand, not to mention that there are thousands of Starbucks stores in multiple countries.
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