Did you know that Starbucks, the world’s largest coffeehouse chain, has a language of its own?
That’s right! The Starbucks baristas, the people who make and serve coffee here, use many interesting slang terms to communicate with each other. For example, a "blonde roast" is a light roast coffee, and a "red eye" is a coffee with a shot of espresso added. Some of these terms are even known to the customers like "tall", "grande", "venti", and “trenta”, which are used to refer to the different coffee cup sizes.
The Starbucks Corporation is a multinational chain of coffeehouses and roastery reserves founded in an American city called Seattle. With more than 36,000 stores in 80+ countries, Starbucks has grown immensely from just a coffee bean store to a very successful coffee shop brand that serves several millions of customers every single day.
In this article, we’ll look at how Starbucks developed a strong value foundation and well-thought-out marketing strategies like olfactory branding, loyalty programs, and brand partnerships, to reach a stage where people look at it as a brand that cares deeply about the people and the planet. Let’s dive straight away into Starbucks’ Branding Case Study.
You may consume this article in the form of a video on Brandzpree's YouTube channel...
A Brief History of Starbucks
Before we move into the specifics of Starbucks’ branding, let’s just quickly go through some of the key moments in the history of the Starbucks brand:
1971
In 1971, Starbucks was founded in Seattle's Pike Place Market by 3 partners - Jerry Baldwin, Zev Siegl, and Gordon Bowker, as a store that sells high-quality coffee beans, teas, and spices for its customers to take home.
1982
In 1982, a person called Howard Schultz joined Starbucks as the director of retail operations and marketing.
1983
In 1983, Schultz visited Milan, Italy where he fell in love with the city’s espresso bar experience and returned to the US with the vision of creating the same with Starbucks.
1987
In 1987, Il Giornale, the coffee shop company founded by Schultz after leaving Starbucks in 1985, acquired Starbucks and established itself as the Starbucks Corporation.
1995
In 1995, a very popular line of blended beverages called Frappuccino was born. Fun Fact! The Frappuccino was invented by accident when a barista was trying to create a new drink for a coffee tasting. They blended coffee, ice cream, milk, and chocolate syrup together, to create the now-popular beverage.
2000
In 2000, just 4 years after opening its first store in Japan, Starbucks opened up its 3000th store through its expansion into various parts of Asia and Australia.
Over the years, as a result of the brand’s expansion into various markets around the world and into newer product categories, Starbucks grew to become known as one of the major players in the global food and beverage industry.
Starbucks' Brand Strategy
Starbucks is believed to be a people’s brand. The brand believes that it is not in the coffee business serving people but rather, in the people business serving coffee. This caring and nurturing image of Starbucks is primarily a result of having a community-focused brand strategy as its core foundation.
The mission statement of Starbucks is “to inspire and nurture the human spirit - one person, one cup, and one neighborhood at a time.”
Throughout its strategy, the brand focuses on providing the best customer experience, looking after the well-being of its employees, and doing good for the planet.
As a matter of fact, did you know that Starbucks refers to its baristas or employees as “Partners”?
This is because the brand believes that all Starbucks employees are equally important as the brand itself, and are truly partners in the sense that they have a great impact on the company's success and brand image. And, to look after the health and well-being of the partners, the company provides them with health insurance, stock options, and many other benefits along with free coffee, of course!
Starbucks strongly believes in the pursuit of doing good. Its vision statement is “to elevate our partners, customers, suppliers, and neighbors to create positive change in the areas where we can make the biggest impact”. The brand looks at these 3 areas, in particular:
Promoting Sustainability: by reducing carbon emissions, waste production, and increased use of recyclable materials.
Strengthening Communities: by promoting inclusivity amongst partners and creating a welcoming atmosphere for warm interactions amongst customers.
Creating Opportunities: by hiring veterans, military spouses, and refugees, and through supporting the educational ambitions of partners.
Starbucks targets a fairly broad demographic of people, which can be divided into coffee enthusiasts who have immense love for coffee, young adults who are either college students or working professionals, and families who are looking for a warm and welcoming place.
Brand Architecture of Starbucks
Starbucks mainly has a Branded House Architecture, that is, most of its coffee-based product offerings are under the Starbucks brand name. In addition to these, Starbucks has a few sub-brands that cater to specific non-coffee product lines as well. Let’s get a deeper look at the brand architecture of Starbucks:
1. Core Brand
Starbucks, the core coffeehouse brand that is associated with a welcoming environment, a sense of community, and the hot or cold drinks served in-house, is the core identity of the brand.
2. Starbucks Reserve
Starbucks also has a premium extension called Starbucks Reserve, within which there are Starbucks Reserve Roasteries which are more like a theme park than just a coffee shop. These are large-sized experience centers with coffee bars with tastings, cocktail bars, and areas to observe the roasting and brewing processes. These locations also roast, package, and ship coffee to all other nearby Starbucks stores as Starbucks Reserve products.
3. Starbucks Evenings
Starbucks Evenings is another brand extension that specifically focuses on alcoholic beverages and small-plate food, and is mainly dedicated to people looking for an after-work or evening social experience.
4. Starbucks VIA Instant
Starbucks VIA is a sub-brand for Starbucks' line of instant coffee products that provides a convenient way to enjoy their coffee on the go or at home.
5. Other Non-Coffee Brands
Starbucks has multiple brands that it acquired over the years with a dedicated focus on non-coffee products like Teavana which specializes in tea products, Evolution Fresh and its range of fresh juices and smoothies, La Boulange which specializes in French-inspired pastries and breads, and Ethos Water which is a brand of bottled water.
The primary competitors of the coffeehouse brand are fast-food chain brands like Dunkin’ and McDonald’s that offer their own line of coffee-based drinks along with a similar cafe-like experience. Nestle could be considered as another popular competitor which particularly competes with Starbucks’ instant coffee products. Apart from these famous brands, Starbucks is always in constant competition with local cafes and bakeries already present in all the new locations they tap into.
Brand Partnerships by Starbucks
One of the interesting branding strategies that helped in growing Starbucks is brand partnerships. In fact, Starbucks could be considered a case study on co-branding strategies. Let’s look at some popular brand partnerships that Starbucks is known for:
1. Kraft Foods, Arla Foods, Barnes & Noble
In its growing era, Starbucks partnered with Kraft Foods and Arla Foods to extend its brand presence to grocery stores worldwide. Similarly, the brand had partnered with Barnes & Noble for a presence in its bookstores.
2. PepsiCo and Nestle
Starbucks has partnership deals with PepsiCo and Nestle to help market and sell their Starbucks RTD (Ready-to-drink) beverages like Starbucks Refreshers, Starbucks Discoveries, and Starbucks Frappuccino beverages in various locations around the world.
3. Spotify
Interestingly, Starbucks and Spotify are quite popular partners that have a strong win-win strategy. Starbucks customers had been offered free access to Spotify Premium, which is still offered to all of Starbucks’ employees even today. Spotify also features a dedicated Starbucks playlist on its mobile app.
4. Starbucks India
In order to enter into newer markets, Starbucks partnered with various brands. For example, Starbucks has a joint venture with the Indian conglomerate TATA Group, called TATA Starbucks Private Limited which owns and operates Starbucks outlets in India.
5. Arizona State University
Standing true to its values, Starbucks has been in partnership with Arizona State University for a long time to help facilitate educational opportunities for all of its employees.
Related article: What Are The 9 Types of Branding You Should Know About?
Starbucks' Brand Identity
For a small retail business to grow into such a recognizable brand, Starbucks’ unique and heritage-driven brand identity has played an as important role, if not more, as its brand strategy.
The name Starbucks was inspired by a character from Herman Melville's novel called “Moby Dick”. The founders of the then-retail business believed that the name reflected the romance of the high seas and the tradition of the early coffee traders.
Even the Starbucks logo, which features the twin-tailed Starbucks Siren revolves around the idea of the ‘romance of the high seas’, metaphorically at least! The mermaid illustration is enclosed in a circular shape which helps create a sense of unity and community.
Related article: What Are The 9 Types of Logo Designs?
Interestingly, the original logo, the very first one had a topless version of the mermaid, but the design was updated in 1987 to make her more modest and in alignment with the changing societal norms.
Starbucks' packaging design, from coffee bags to cup sleeves, everything consistently features the brand logo and the brand colors. Starbucks’ brand color palette consists of a family of greens and a few neutrals. The iconic Starbucks Green is an inviting color that represents the freshness of nature. And, the white brand color provides a clean and classy contrast to the vibrant green.
Starbucks is a great example of retail branding. The brand is popular for its warm and welcoming store design created using natural materials, warm lighting, cozy seating, and a fairly spacious interior with on-brand posters and signage.
Did you know that Starbucks is probably the most successful “third place” brand?
A ‘third place’ is a term in sociology that refers to a public space that’s distinctly different from the two usual social environments - the home and the workplace. And, over time Starbucks has established itself as a true ‘third place’ as a result of its warm interactions, inviting environment, strong brand values, and memorable customer experience. In fact, the brand pays so much attention to detail that the Starbucks employees are given rigorous training to help translate what the brand believes in, into how the employees behave.
Starbucks' Marketing
The marketing methodologies employed by Starbucks consist of a number of interesting and note-worthy strategies.
Starbucks’ brand voice consists of both functional as well as expressive messaging. The functional side of communication consists of clear and to-the-point language accompanied by simple and playful visuals. The expressive side of things on the other hand uses fresh and joyful language accompanied by colorful and artistic visuals.
Starbucks uses something called Sensory Marketing to attract newer customers. In particular, it uses two strategies called Olfactory Branding and Sonic Branding.
Olfactory Branding of Starbucks
Olfactory branding uses the power of smell to ensure an authentic brand experience. Starbucks employs this strategy by using the refreshing aroma of fresh coffee to attract customers to their coffeehouses. It’s believed that they even moderate the serving of breakfast with eggs and cheese sandwiches because that could alter the smell of fresh coffee.
Sonic Branding of Starbucks
Sonic branding, on the other hand, uses the power of sound to establish a strong brand connection. There is no sweeter 'sound' in the world than our own name, and that’s exactly how the baristas at Starbucks greet the customers. Even when the order is ready the barista calls out the customer's name, which makes the customer feel special. The barista’s sweet small talk coupled with the background sound of coffee machines greatly improves the brand’s recall value.
While the advertising campaigns of Starbucks don't really stand out as much when compared to the other big guys, it has implemented some innovative practices to build up the brand community that it’s known for.
To start with, the brand hosts periodic events like coffee tastings, barista classes, and community service initiatives for the coffee lovers community.
There have been a few promotional campaigns by Starbucks that have turned into annual phenomena:
1. Starbucks Red Cup
For example, the Starbucks Red Cup started in 1997 is now a Christmas tradition where Starbucks’ drinks are served in cups with a red background and various festive designs instead of the regular white cups.
2. Starbucks Pumpkin Spice Latte
Similarly, the very famous Starbucks PSL or Pumpkin Spice Latte is a seasonal drink that leads to a large number of store visits during the fall season every year. It has its very own fan community in the form of a Facebook group as well.
My Starbucks Idea
To strengthen the community further, the brand launched an open innovation platform in 2008 called ‘My Starbucks Idea’. Though it was discontinued after a decade, it was a very successful modern take on a suggestion box. Customers and fans of Starbucks could post, discuss, and vote on interesting ideas that they would love to see Starbucks implement. As a matter of fact, Starbucks VIA instant coffee, the Starbucks Evenings program, free WiFi at all its stores, and the Starbucks mobile app, were some of the great ideas that came out of it.
Starbucks Reward Program
Speaking of the mobile app, the brand has a loyalty program for its customers called the Starbucks Reward Program. When you register for this program, you start receiving ‘Stars’ for every dollar you spend on your drinks. These Stars can then be redeemed for stuff like free food and free drinks. Thus, ensuring that the brand gets a guaranteed repeat business.
Fun fact! As a result of the mobile app and the rewards program, people tend to preload their Starbucks account with a certain amount of money to ensure a smooth and convenient payment process. This led to Starbucks having a deposited total of more than 85% of all American banks. All this money is practically an interest-free loan that Starbucks can use anytime for its expansion.
This is the reason why a lot of business experts today look at Starbucks as a bank rather than just a coffeehouse chain.
Conclusion
While there have been a few failures while entering new markets and a few little PR controversies along the way, Starbucks now stands at the very top as a brand that loves its employees, its customers, and the planet alike.
Interestingly, Starbucks has had an impact on the Real Estate industry as well!
There’s this fairly popular concept in the Real Estate world called ‘The Frappuccino Effect’. It says that the value of a real estate property increases significantly when it’s closer to a Starbucks cafe. According to a 2015 study by Zillow, homes that were within a short walk of Starbucks saw an increase in value of about 96% between 1997 and 2014 as compared to the US average of 65% during that time period.
The reason for this could be that Starbucks has grown to have such immense brand value that when people see a Starbucks, they might perceive the neighborhood to be improving or becoming safer, which is known to be a top reason for buying a home.
Here are a few reads you might find interesting:
留言