A1. The core product Starbucks offers is “15 minutes of relaxation”. Starbucks wants to help its customers take a relaxed break from their busy lives and enjoy a cup of coffee in a hospitable environment. Starbucks is focused on differentiating itself through an experience which is superior to that offered by the competition.
The actual product is a cup of coffee. When customers think of Starbucks, they often think of a cup of coffee. Starbucks is the leading specialist coffee brand in the world. There are several augmented levels of the product Starbucks offers to the customers. The first is convenience. Unlike the competition in the home market which often requires customers to prepare their own cup of coffee or the competition in Europe where customers usually enjoy a cup of coffee in a shop only, Starbucks offers coffee that is ready-made and can be enjoyed anywhere. Similarly, Starbucks shops do not allow smoking or any other activity that may disturb the overall experience of the visitors. The atmosphere in the shop is infused with pleasant aromas to enhance customers’ experience. Similarly, the baristas are trained and provide personal service to the customers. Since Starbucks places huge emphasis on quality, customers always get high-quality and consistent coffee experience.
A3. As far as brand equity is concerned, Starbucks first changed its logo to one with green color to make it more memorable and recognizable. The company has also strengthened its brand equity by ensuring it offers the same cup of coffee everywhere in the world and offers the same relaxed, smoke-free environment even in countries with heavy smoking culture such as Japan and Italy. Similarly, the company trains all its managers in Seattle in order to ensure that customers receive the same experience everywhere that they have come to expect from the brand.
As far as customer equity is concerned, Starbucks has been able to charge premium prices because it offers them an experience no one else offers. The company has also not been afraid to challenge local norms in international markets in order to offer the highest customer service standards to its loyal customers which also strengthens customer equity. Similarly, the company’s managers and baristas treat each customer with respect and provide personal services which also strengthens customer loyalty to the company.
As far as brand positioning is concerned, first of all the company sought to differentiate itself from the competition on the basis of quality. Whereas others were using robusta beans to save on costs, Starbucks scouted the world for best-quality beans such as Arabica. Thus, Starbucks competes not on the basis of price but quality. Starbucks also doesn’t present itself as merely a coffee seller but as a place of relaxation where a high-quality coffee is only one component of the overall relaxation package. The company also understands the value of convenience that’s why it has carefully selected market segments where time is valuable and customers are not hesitant to pay premium prices for quality and convenience. Whereas coffee shops used to serve coffee in china cups, Starbucks started offering in disposable cups so that customers can drink it on the go. But while Starbucks has kept coffee same everywhere, the company has also responded to local taste by offering complementary products that are popular locally.