A Research Proposal on Evaluation of Starbuck's Brand Equity

Introduction:

Effective brand management strategies are indispensable needed for a long run success of an organization especially in the case of competitive environment. Before planning and implementing these strategies it is very important to assess the current position of firm’s brand that where we are. This current position of your brand can be assessed through brand equity. Brand equity is the collection of assets and liabilities of a brand and linked to the brand identity that shows the added value in the mind of consumer that company had earn from the past performance of its brand (Aaker, 1991). Evaluating brand equity provides insight information in this respect that leads a manager in appraising the effect of their marketing strategies on their customers’ responses and how brand equity can be exploit while developing their marketing strategies. This evaluation process also explores the significant factors and sources that contribute to the brand equity in term of both positive and negative aspects and ultimately affects the performance of a firm. So discovering these potential sources is critical as these sources can increase brand equity that ultimately increases the purchase intention and the product preferences of their consumers (Cobb-Walgren et al., 1995).

This study tries to investigate and evaluate the brand equity in the context of Starbucks which is a worldwide known coffee brand. Customer based brand equity approach is been used in this respect as considering both the firms and their potential stakeholders like their customers provide more useful investigation and evaluation of their brand equity and customer based evaluation also provides an inside information about the perception and strength of your brand in the market (Brown, et. al, 2006). Standing at 4^th place among the most dominant brands of the world in 2005 and attaining 5^th place among the companies of Fortune in 2006 in a survey of most admired American firms along with a brand equity of worth $6.2 billions in 2006 makes Starbucks a considerable choice for applying brand equity evaluation models in practical context (Baldi &Trigeorgis, 2007). Multidimensional varieties of coffee with different flavors and increasing range of its foods and beverages product line along with its excellent environment and services like WiFi and mobile applications etc. make its brand unique from its competitors and other coffee makers. So this study tries to answer that whether these incentives and efficient service providing worth for the company or not and if yes then what are the potential drivers and sources that increases the firm’s brand equity for their strategic marketing point of view by using customer based brand equity model.  

A common agreement exists among the researchers that it is the consumer’s words and actions that evaluate the brand worth for an organization. Though different approaches is been used by different researchers in evaluating brand equity of a firm but still they all are harmonized at a same point of view that key source of brand equity is the knowledge of your brand in the minds of your customers. So we can say that it is the feelings, beliefs, thoughts, experiences etc in the mind of your customer that explain the brand worth of your product and the differential effect of consumer responses to different brands or unbranded same product (Keller, 1993). We try to explore two fundamental band knowledge dimensions i.e. Brand Awareness and Brand Image in the context of Starbucks store. We will use model proposed be Aaker to measure brand equity for a firm (1996). He categorizes brand equity measure into five major categories that was further sub categorized in to a total of ten measures. These five major categories are given below

1. Brand Awareness
2. Brand Association
3. Brand Loyalty
4. Perceived Quality
5. Market based measures

First four categories are related to the consumer of that brand while the last category evaluates the brand worth according to its market performance. Its integrated customer based and marker based brand equity evaluation approach provides a better evaluation model in this respect. Analysis will be done through a questionnaire and data will be collected from both organizational members and from its consumers as well.

Problem Statement:

To evaluation the customer based brand equity for a coffee brand “Starbucks” known world wide due to its high quality and emotional attachment with their customers is the area of research for the project.

Literature Review:

During 1980s the concept of Brand Equity emerges and a number of advertising practitioners used it for their decision making (Fayrene & Lee, 2011). Aaker has defined brand equity as a set of assets and liabilities that relates to the brand identity (brand name, logo, sign etc) and shows the strength of that brand in the mind of its consumers (1991). A number of researches show the significance of brand equity. High brand worth increases the probability of successful extension along with elasticity against the promotional force from their competitors and also makes it difficult for competitive access to the market through creating barriers (Farquhar & Peter, 1989). A positive significant relationship was also found between the brand equity and stock returns (Aaker & Jacobson, 1994). Brand management is not only restricted to marketing fields but its sphere has also been expanded to cultural areas and can bring changes to all the areas of our daily life including economical, social, educational and even religious matters (Kapferer, 2008). So brand equity is also a multidimensional area of study that not only restricted to the marketing areas but also effects to a wider range of cultural activities. Searching through Google with Keyword of “Brand Equity” will bring more than 20 million results that show the significance of the construct and interest of researchers to explore. Though a frequent scientific literature is been found in developing brand equity constructs but the emphasis is on developing general and traditional concepts and models of brand equity evaluation rather than a practical implication with customers and financial integrated models in this respect (Virvilaite & Jucaityte, 2008). This study provides a practical implication of evaluation of brand equity for a well known and world wide coffee brand i.e. Starbucks. Evaluation of brand equity approaches has been categorized into two major groups on the basis of their usage. One is financial based brand equity approach while other is customer based brand equity approach.

Financial Based Brand Equity:

As brand Equity is one of the most important intangible assets for an organization and its assessment and evaluation is needed for the accounting purpose that can be required at the time of Mergers and Acquisitions in determining the real price of that Merger or Acquisition and balance sheet purposes, so financial based evaluation of brand equity will be used in this respect (Keller, 2003). Financial approach contains two evaluation methods i.e. direct brand evaluation method and Price comparison method. In first method all expenses that incur in developing and crating brand will be used to evaluate brand equity while on the other hand in second method brand equity is been evaluated by comparing the prices your brand product with other brands or unbranded products in same category (Zostautiene & Marcinkeviciene, 2005).

Customer Based Brand Equity:

On the other hand customer based evaluation of brand equity is needed for strategic purposes when managers want to know the potential responses from their customers against their marketing strategies (Keller, 2003). Our focus in this study is the customer based brand equity evaluation. Strength of words, thoughts and image in the mind of consumer about your product shows the potential brand worth of your product and it can be evaluated by identifying significant sources of brand equity that create positive and/or negative impact of your brand in the minds of consumer (Keller, 1993). Almost all the researchers are agreed on this notion that brand equity is the knowledge in the mind of consumer for your product. A number of researchers had defined customer based brand equity in different ways. Customer based Brand Equity is an assortment of behaviors and relations among the consumers, channel members and organization linked to that brand and leads to produce better performance in term of margins and sales volume that confer a sustainable competitive advantage (Leuthesser, 1988). It was Aaker also known as pioneer of the construct that develop a five attribute model to evaluate the customer based brand equity for a company (1991). He proposed brand awareness, brand associations, loyalty, perceived quality, and other brand assets as potential source of brand equity. Customer Based Brand Equity is the unspoken differential valuation of a brand by consumer as compared to other brand or no brand products as brands provide an indication to the quality, image and reliability for that brand product (Swait et al, 1993). Keller has define brand equity as the degree of differential impact on the responses of consumers’ preferences and purchasing intentions because of brand knowledge as a set of brand associations to that brand in their minds (2003). He divided brand knowledge into two major categories i.e. brand awareness and Brand image. Customer’s ability to recall the product and his recognition of product at the time of need came under the concept of brand awareness while on the other hand a set of associations are used to study the potential sources of brand equity (Keller, 2003). He agued to use both indirect approach that uses potential sources of brand equity for evaluation and also the direct approach that considers the outcomes of brand equity that how customer will response against their marketing strategies. He uses both qualitative and quantitative set of association in this respect. Lessar at al. has defined following five dimensions of customer based brand equity (1995).

1. Performance
2. Social image
3. Value
4. Trustworthiness and
5. Attachment.

According to him these are five different dimensions of perception in the mind of consumer regarding your brand. He argued that it is the perception about that brand in the mind of consumer that differentiates your brand with other or unbranded products within same product line.

On the other hand Aaker uses ten brand measures to which he categorizes into five major categories given as below (1996).

1. Brand Awareness
1. Brand Awareness (Recall and Recognition)
2. Brand Association
1. Perceived Value
2. Brand Personality
3. Organizational Association
3. Brand Loyalty
1. Price Premium
2. Satisfaction / Loyalty                                        
4. Perceived Quality
1. Perceived Quality
2. Leadership
5. Market based measures
1. Market Share
2. Price and distribution Indices

We also use the ten brand measures model for its practical implication in the case of Starbucks as it provides useful customer based and market based dimensions in evaluating the brand worth for the cafe.

Starbucks:

In U.S there are 83 percent of adults who know about Starbucks and about 85 percent of Starbuck’s consumers suggest other to use same brand (Baldi &Trigeorgis, 2007). Its high quality coffee along with other complementary products makes Starbucks as a unique product and not only its products but also the place provided by them after home and work develops emotional attachment with their customers that creates a pleasant image about the brand in the mind of consumer. It was shown in the statement of Keller (2000) that “Starbucks is not just a cup of tea”. Currently cafe is providing a range of coffee, foods and beverages product with different services like Wifi.

Objectives:

1. A practical implication of Customer based brand equity
2. To Evaluate Customer based brand equity for Starbucks by using ten brand knowledge measures proposed by Aaker (199.6)
3. To study the potential sources of brand equity that can affect brand knowledge in the minds of consumers in both positive and negative manners.

Significance:

1. As Starbucks is world wide known and popular coffee product and characterize with master brand (first movers) and had a brand worth of $6.2 million at the end 2006 makes it worthy to study and evaluation of brand equity for this brand.
2. Different sources and perspectives will provide insight information for the marketing practitioners.

Theoretical Framework:

In this section I will discuss that how this research project will be completed. In this section I have defined our dependent and independent variables followed by hypothesis development. Ten brand measure model proposed by Aaker is been used to evaluate the brand equity for Starbucks (1996). The strength of each relationship will define the critical dimensions for Starbucks’ brand equity and leads manager into a better decision making as it will tell about potential contributor to the brand equity and also will help in determining their customer’s response towards their marketing strategy.

       References:

Aaker, D. A. (1996), “Measuring brand equity across products and markets”, California Management Rev. 38 (spring): 102-120.

Aaker, D.A., R. Jacobson. (1994), “Study shows brand-building pays off for stockholders”, Advertising Age 65(30): 18

Aaker, D.A. (1991), “Managing Brand Equity”, New York: Free Press

Baldi F. &Trigeorgis L. (2007), “A real options approach to valuing brand leveraging options: how much is Starbucks’ brand equity worth?”, Retrieve from

                http://69.175.2.130/~finman/Reno/Papers/StarbucksBrandValuation.pdf

Brown et al. (2006), “Identity, intended image, construed image, and reputation: an interdisciplinary framework and suggested terminology”, Journal of the Academy of Marketing Science, Vol. 34 No. 2, pp. 99-106

Cobb-Walgren et al. (1995), “Brand equity, brand preferences, and purchase intent”, Journal of Advertising, Vol. 24 No. 3, pp. 25-40

Farquhar, P.H., Han J.Y and Ijiri Y. (1991), “Recognizing and Measuring Brand Assets”, Marketing Science Institute, Cambridge, MA

Kapferer, J. N. (2008), “The new strategic brand management: creating and sustaining brand equity long term”, London: Kogan Page.

Keller K. L. (1993), “Conceptualizing, measuring and managing customer-based brand equity”, Journal of Marketing 57(1): 1-22

Keller, K. L. (2003), “Strategic Brand Management”, 2nd edition, Upper Saddle River, NJ: Prentice Hall

Keller, K. L. (2000),.”The brand report card”, Harvard Business Rev, Jen.-Feb, Reprint number

Lassar et al, (1995), “Measuring Customer-Based Brand Equity”, Journal of Consumer Marketing, 12(4): 11-19

Leuthesser L. (1988), “Defining, measuring and managing brand equity: A conference summary”, Report #88-104, Cambridge, MA: Marketing Science Institute

Swait, et al. (1993), “The equalization price: A measure of consumer-perceived brand equity”, International Journal of Research in Marketing, 10: 23-45

Virvilaite, R., & Jucaityte, I. (2008), “Brand valuation: viewpoint of customer and company”, Engineering

Economics, 1 (56), 111-119

Zostautiene, D., & Marcinkeviciene A. (2005), “Brand as a means of identifying the importance of trade firms marketing activities”, Economy and Management: Issues and Perspectives, 5, 419-423

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