An Empirical Study on Customer Satisfaction, Perception,

and Brand Image in Starbucks Coffee in India, Asia

Rudresh Pandey1, Varsha Ganatra2, Sonali Jamnik3, Pragya Goel4, Priyanshi
Goyal5, Chian Lee Xuan6, Daisy Mui Hung Kee7, Hee Hui Mein8, Lim Xiao En9, Lee
Jen Zen10
Vivekanand Education Society's College of Arts, Science and Commerce 2,3,5
Sindhi Society, Chembur, Mumbai, Maharashtra 400071, India
ABES Engineering College1,4
Ghaziabad, Uttar Pradesh 201009, India
Universiti Sains Malaysia6,7,8,9,10
Jln Sg. Dua, 11800 Penang, Malaysia
Correspondence Email: rudresh.pandey@abes.ac.in
ORCID ID: 0000-0002-2501-1019

ABSTRACT

This study focuses on the brand image, experience, quality, and services offered by
Starbucks that will bring customer loyalty from customer satisfaction. The study analyzes
how customer loyalty and brand experience affect the quality improvements of Starbucks
Coffee as corporate brands play a vital role in achieving higher company’s performance,
like sales. It makes more incentives to satisfy the potential customers and develops a
drawn-out relationship with them. This study concludes that companies with higher
customer loyalty and satisfaction tend to have higher market share, and move further by
cost reduction. Therefore, companies could substantially pay attention to all of these
variables to have an everlasting profitability as this will lead to gain competitive
advantage in the market.

Keywords: Brand Image, Customer Satisfaction, Competitive Advantage, Experiences,

Potential Customers, Profitability, Relationship Building, Success

INTRODUCTION

Starbucks Corporation is an American coffee house. Its headquarter is in Seattle,

Washington. Starbucks Coffee aims to operate in different countries and reach over 70
countries in the early 2020. Generally, Starbucks Coffee serves hot and cold drinks,
pastries, and snacks in their stores.

Zev Siegl, Jerry Baldwin, and Gordon Bowker are the founders of Starbucks coffee. In
the 1980s, Howard Schultz owned the coffee shop after he went to Milan. There were
more franchises opened by Schultz in the United States. Recently, coffee exists as an
important element of people’s daily life. We all can freely go to coffee shops to enjoy
some coffee and desserts. We could also socialize and interact with other people in the
coffee shops.

Starbucks Coffee is the largest international coffeehouse chain with more than 30,000
stores across the world. It decided to expand their business in India in 2011. Hence, they
collaborated with a local company, Tata Global Beverage, to compete with other coffee
shops in India. They were both under a 50:50 joint management and became “Tata

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Starbucks Private Limited”. In India, they named it “Starbucks Coffee Tata Alliance”. The
first Starbucks Coffee shop in India was opened on 19 October 2012, located in a two-
levels store in Mumbai. Over the years, they expanded their business and opened more
stores across India. There have been about 191 Starbucks Coffee stores in India until
the year 2020.

Starbucks decided to enter India’s market since they were seeking a new market. India
has the second largest population in the world with a high development market. The
“Starbucks Coffee Tata Alliance” also focuses on customer preferences by modifying
their menu and adding in some local flavors to the products they sell to boost their sales.
For instance, they launched local foods such as cottage cheese rolls and chicken tikka
Panini in their stores to attract more customers. The coffee beans they used are also
sourced in India.

Starbucks is the biggest coffee company in the world providing unique and exclusive
experience through their services and products to their customers. Its premium quality
coffee helps it to position itself in the market. For example, “Tazo Tea” was introduced in
India to specially attract tea lovers. Starbucks Coffee monitors the production step by
step from to ensure its good quality. Furthermore, clear mission and objectives are
provided to their employees to encourage their collaborative work to achieve goals.

All efforts to increase customer loyalty and satisfaction create a strong customer base.
Premium services and products provided provide unique experience to customers and
they are willing to pay more for the enjoyment. Therefore, Starbucks uses value-based
pricing strategy, allowing them to earn more through good quality beverages and foods
along with great customer service. Addedly the following PESTLE analysis could bring
another insight about strategies to devise.

Firstly, the political features of Starbucks. Politics is about acquiring resources as it gets
more political attention from the west and in other resource countries. The political
stability in the country must be one of the considerations of the organization. Secondly,
the economic features of Starbucks. The global economic downturn is Starbucks' main
foreign economic campaign. The company is facing the rising costs of labors and the
number of labors. The decrease in net income and inflation has impacted Starbucks
directly from an economic aspect. The exchange rates of local currency, the environment
of economic markets and the company tax rate build some pressure on Starbucks.

Thirdly, the social and cultural aspects of Starbucks. Starbucks has to make a trade-off
between offering products at a cheaper price or to maintain its high quality as the selling
point. Socio-cultural levels of human education in the local market could also affect
Starbucks as this factor will affect the choice of locals on purchasing products. The fourth
factor is Starbucks' technical features. Starbucks Coffee is a great place as consumers
are benefited from Starbucks technological convenience. Youngsters and working adults
may experience free and smooth networking in Starbucks coffee shops. It made a
strategic move by partnering with Apple through the distribution of discount coupons to
help it ride the wave easily. Starbucks also enables mobile payments for the company to
introduce Wi-Fi capabilities in its stores.

The fifth is the natural feature of Starbucks. Starbucks’ business will trouble the activists
and international legal teams. They also have an impact on environmental laws and
regulations, disasters in coffee-producing countries and other environmental emissions

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at the global level. Lastly is Starbucks legal feature. Companies want to work for the
public environment and contribute to compliance with government rules as Starbucks
imports consumer goods. The management of the company must not be against any
laws and rules in the business and trade markets. This PESTLE analysis is the evidence
that the external environment of the company is stable.

This study focused on brand image, customer loyalty, and customer satisfaction in
Starbucks Coffee in India. These aspects are believed to be the key for Starbucks Coffee
success in the highly competitive business markets. The basic marketing concept is to
provide customer satisfaction by fulfilling their needs and therefore their high satisfaction
increases the customer turnover rate and bring customer loyalty. This study investigates
the impact of customer satisfaction and customers loyalty on Starbucks Coffee in India.
Thus, this study finds out the relation among the brand image, customer satisfaction, and
customer loyalty and indicates the level of how they are associated.

Brand image refers to customer’s perception towards a brand (Keller, 1993). It reflects
the perceptions of consumers and their feelings towards a specific good (Amstrong,
Kotler, & Opresnik, 2020, p. 250). Partially, it has a significant positive effect upon the
sales volume increase of SME’s products (Niode & Hinelo, 2020). The brands and equity
of a company are noble as it is hard to be copied. However, there might be differences
from one brand to another as the brand outlines the organization’s value (De Chernatony,
1999). The trade between consumers and company does not limited to the products as
it also represents the company’s value (Ind, 1997).

According to Amstrong et al (2020), customers form expectations about the product

offered in the market in terms of value and satisfaction. Therefore, customer satisfaction
is obtained when their expectation reached what they have imagined. Customer
satisfaction will positively affect the organization through repeated purchase and brand
loyalty (Angelova & Zekiri, 2011).

Brand experiences is categorized into four different aspects, including educational,

entertainment, escapist entertainment and esthetic. These aspects are related to
customer loyalty and the strong relationship between these two variables is proven.
Customer’s good experience creates a strong brand image to the organization, leading
to customer loyalty.

Customer loyalty deals with as brands, services, and store loyalty and it is important for
maintaining a code of conduct (Dick & Basu, 1994). Customer loyalty also means the
strategy that creates mutual or definite common rewards to benefit companies and
customers in many aspects (Reichheld & Detrick, 2003). One of the benefits is that
companies could increase the revenue and sales of the product. It is clearly mentioned
that with loyal customers, companies can maximize or earn huge profits since loyal
customers are completely willing to earn or purchase more frequently, spend money on
trying new and innovative products or services and recommend the products and
services to others (Reichheld & Sasser, 1990). Thus, loyalty directly links to the success
and profitability of a company (Eakuru & Mat, 2008). Therefore, loyalty is a described
attitude-behavior relationship that allows integrated investigation as a result of customer
loyalty (Dick & Basu, 1994).

Potential customers are those who are capable of becoming the future customers of an
organization. According to Chen, Liu, & Chen (2016), potential customers are searched

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and analyzed in specific market segments either through the real world or internet.
Identifying the correct potential customers and providing them with services and products
that could meet their needs will help to create a brand value to them therefore making
them satisfied with and loyal to the brand.

Competitive advantage can be defined as the benefits gained by a company when they
have a large market position with less competitors. To get competitive advantage,
companies must ensure that they are working something special and irreplaceable
(Ghemawat & Rivkin, 1998). Starbucks keeps their position in the international market
by distinguishing their products with extremely good services and products. This makes
them create a quite valuable economy in the market.

RESEARCH METHOD

This research was carried out by various data collection techniques or methods. Mainly,
the techniques were filling out questionnaires, documentation studies, charts, and
tables. A questionnaire was more preferred since it is considered as a more structured
technique to collect data consisting of a series of multiple questions that can be
answered by the respondents easily. Questionnaires which are also considered as an
interview format, can be illustrated as measurement of an instrument containing multiple
questions to obtain various information from respondents. The population in this study
completely include consumers who make purchases at Starbucks Coffee who are
strongly or likely keen towards consuming Starbucks coffee.

The major reason behind choosing a questionnaire is due to its high level of assurance
of the validity and credibility aspects embedded through the collected database on it as
it insistently focuses on thinking about the instruments of the questionnaire that best
suits this survey and research. The main reason behind this stops on one of the most
valuable attributes of having no biasness or partiality. However, it is probably impossible
to achieve a particular goal of no-biases by some different research paths, like focused
group discussion and interview method etc. It can definitely cause the visual clues
expressed by guided researchers and that would definitely affect and guide the attitude
of respondents more and less.

Primary data is considered as one of the pure methods of collecting data. In this study,
the researchers gathered and obtained data through distributed questionnaires to the
respondents. The results obtained from questionnaires were analyzed to find out the
exact views and true opinions of the customers regarding their satisfaction, brand
experience and service quality affecting their loyalty. This study collected the primary
data through information from questionnaires filled in by 105 respondents.

The primary data of this research was collected from surveys on loyal customers of
Starbucks Coffee. In this questionnaire, there are qualitative and quantitative questions
created for the respondents to fill in. One of the sections was presented with Likert scale
of 1 to 5, to rate their agreement range from strongly disagree to strongly agree. There
is also an open-ended question asking about their opinion and suggestion which require
critical thinking skills of the respondents.

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 RESULTS AND DISCUSSION

Table 1 below shows results abstracted through a well-designed and conducted survey
on customer satisfaction and experiences of Starbucks products. A questionnaire survey
was conducted and answered by 105 respondents. The survey form was distributed into
two sections: demographic and questionnaire. This questionnaire comprised multiple
choice questions and open-ended questions. In the open-ended questions, the
respondents were expected to provide their valuable comments, suggestions, and
recommendations for further improvement of Starbucks products and customer service.
The objective behind these questions was that the customers can state or express
anything they felt missing or their expectation from Starbucks.

Table 1. Survey Result Summary

Characteristics Category Frequency Percentages

Gender Female 75 71.4%

Male 30 28.6%

Age Below 20 years old 12 11.4%

20-29 years old 90 85.7%
30-39 years old 3 2.9%
40-49 years old 0 0.0%
50 years old and above 0 0.0%

Occupations Student 94 89.5%

Employed 7 6.7%
Unemployed 4 3.8%

Have you heard of Yes 94 89.5%

Starbucks Coffee No 8 7.6%
before? Maybe 3 2.9%

Source of Information Friends/ Family 64 61.0%

About the Product Members/ Colleagues
Social Media 33 31.4%
Ads in the mobile app 3 2.9%
(excluding social media)
Newspapers/ Magazines 4 3.8%
Online Search 1 0.9%

Customers’ Favorite Coffee 35 33.3%

Product Frappuccino 28 26.7%
Chocolate cream chip 23 21.9%
Others 19 18.1%

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Likelihood of Customer Extremely Likely 25 23.8%
to Recommend Moderately Likely 41 39%
Starbucks Coffee to Neutral 22 21%
Friends or Colleagues Moderately Not Likely 6 5.7%
Not At All 11 10.5%

Overalls Customer Very Satisfied 31 29.5%

Satisfaction or Satisfied 39 37.1%
Dissatisfaction Level Neutral 23 22.0%
Dissatisfied 6 5.7%
Very Dissatisfied 6 5.7%

Customers’ Review on Extremely expensive 41 39.0%

Price of Beverages Expensive 39 37.0%
Reasonable 21 20.0%
Cheap 0 0.0%
Extremely Cheap 4 4.0%

Customers’ Rate to The Very Satisfied 45 42.9%

Starbucks Product Satisfied 33 31.4%
Quality Neutral 20 19.0%
Dissatisfied 5 4.8%
Very Dissatisfied 2 1.9%

Customers’ Perception Very Satisfied 38 36.2%

of Starbucks Customer Satisfied 44 41.9%
Service Neutral 17 16.2%
Dissatisfied 4 3.8%
Very Dissatisfied 2 1.9%

Changes of Customer Much More Favorable 20 19.0%

Perception More Favorable 40 38.1%
Neutral 33 31.4%
Less Favorable 6 5.7%
Much Less Favorable 6 5.7%

The Frequency of Very Often 13 12.4%

Starbucks Promotion Often 27 25.7%
Neutral 42 40.0%
Rarely 15 14.3%
Very Rarely 8 7.6%

The Frequency of Everyday 0 0.0%

Customers Purchase Once a week 5 4.8%
Two or three times in a 7 6.7%
week 11 10.5%
Once in a month 9 8.6%
Two or three times in a 56 53.3%
month 17 16.2%

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 Rarely
Customers’ Favorite Never 54 51.4%
Starbucks Service 24 22.9%
Dine In 14 13.3%
Drive-thru 27 25.7%
Online Ordering Apps
Factors that Attract the All above 11 10.5%
Customers to Buy 54 51.4%
Starbucks Coffee’s Healthy 37 35.2%
Product Tasty 44 41.9%
Unique Drinks 33 31.4%
Good Environment 5 4.8%
Good Service 16 15.2%
Reasonable Price
Customers’ All above 48 45.0%
Recommendation to 16 15.0%
Improve Their Reduce the price 10 10.0%
Satisfaction Promotion 2 2.0%
Improve customer 3 3.0%
service 10 10.0%
Open more stores 16 15.0%
Improve interior design
Others
No

The survey was answered by 105 respondents consisting of 71.4% females and 28.6%
male. Most of them were between 20 to 29 years old. By occupation, the majority of
respondents (89.5%) were students.

Table 1 also shows that 89.5% of the respondents have already heard of Starbucks
Coffee before. Based on the data, Starbucks has successfully gained attraction and
attention from the majority of people.

A total of 61% of respondents got the information about Starbucks Coffee’s products
from their friends, family members and colleagues. Besides, 31.4of the respondents
knew Starbucks Coffee from social media such as Facebook and Instagram. This implies
that friends, family members, and colleagues play major role in sharing the information
about Starbucks Coffee.

According to the results of the survey, 33.3% of the respondents favorite Starbucks’
coffee, 26.7% of the respondents like its Frappuccino. This illustrates that to increase
customers’ satisfaction, Starbucks Coffee should come out with the new flavor of coffee
and Frappuccino.
Most of the respondents (39%) are moderately likely to recommend Starbucks coffee to
their friends or colleagues, while 23.8% of the respondents strongly will recommend to
their friends or colleagues. However, 10.5% of the respondents, will not recommend
Starbucks products to their friends.

Furthermore, we found out that 29.5% of the respondents are very satisfied with the
overall performance of Starbucks and 37.1% of the respondents are satisfied with it.

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Also, 22% of the respondents were neutral, and only 5.7% of them are dissatisfied and
very dissatisfied with the overall performance of Starbucks. The results clearly indicate
that Starbucks is doing great to fulfil customers’ needs.

The results of the survey also shows that 39% of the respondents agreed that the price
of Starbucks beverages is extremely expensive. Similarly, 37% of the respondents also
think that the price is expensive. However, 20% of them were neutral while only 4.0% of
the respondents think that the price is very cheap. This leads to a conclusion that there
is a need to reduce the price so that the customers can enjoy the beverages at a more
reasonable price.

Moreover, the results of the survey shows that 42.9% of respondents are very satisfied
with the quality of Starbucks Coffee while 31.4% of the respondents are satisfied with it.
We can conclude that the quality of Starbucks Coffee has obtained their customers’
satisfaction and Starbucks should maintain its quality to satisfy customers’ needs in the
future.

Table 1 also illustrates that 44 respondents (41.9%) were satisfied with Starbucks
customer service, 38 respondents (36.2%) are very satisfied with the service provided.
This shows that the majority of customers are satisfied with Starbucks customer service.
Addedly, 38.1% respondents changed their perception of Starbucks to be more favorable
in the past three months. Only 19% out of 105 respondents have changed their
perceptions to be extremely favorable and 31.4% of them have neutral opinions. The
respondents with a lower interest in Starbucks in the past few months occupy 11.4% of
the total respondents.

Besides, 13% of the respondents think that Starbucks very often does promotion while
25.7% of believed that Starbucks often does promotion. Most of them (40%) were
neutral. However, 15 respondents (14.3%) and 8 respondents (7.6%) agreed that
Starbucks Coffee rarely and very rarely does promotion.

By the frequency of customers purchasing Starbucks Coffee’s product, 53.3% of the

respondents rarely buy bought Starbucks’ product while 16.2% of them have never
purchase Starbucks’ product. Additionally, 4.8% and 6.7% of the respondents buy
Starbucks’ product once a week and two or three times in a week respectively. Similarly,
10.5% and 8.6% of them buy Starbucks’ product once in a month and two or three times
in a month respectively. However, none of them will buy Starbucks’ product every day.

In addition, the survey shows that 51.4% of the respondents love Starbucks dine in and
25.7% of them love all Starbucks services (dine in, drive-thru and online ordering apps).
This indicates that most of the customers were quite satisfied with all options provided
and most of them prefer to dine in.

The survey also shows that “Tasty” (51.4%) is the most chosen factor that attracts
customers to buy Starbucks coffee’s product. The second highest chosen factor is “Good
Environment” (41.9%), followed by unique drink (35.2%) and good service (31.4%). This
signifies that tasty and unique beverages, good environment and service satisfying the
customers’ needs are the factors that keep the customers’ loyalty to Starbucks.

For improving Starbucks customer satisfaction, the respondents have provided several
recommendations. Among the price reduction, promotions, improved customer service,

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more store availability, special interior design and others, 45% of the respondents
pointed the price reduction since most of the people or students cannot afford Starbucks
beverages. A total of 15% of the respondents suggest Starbucks have more promotion
such as special promotion for students. This concludes that price is the most common
issue for the people not buying Starbucks products.

Based on the result presented in Table 1, as most of our respondents are students, they
thought that the price of beverages in Starbucks is extremely expensive, and this might
be the reason more than half of the respondents rarely purchase Starbucks products.
Therefore, affordable price should be Starbucks major consideration to attract low-
income group of customers.

Moreover, Starbucks Coffee can do more promotion to attract customers, such as Buy 1
Free 1 at a certain period of time. Also, they can do promotion specialized for students.
For instance, when students show their student cards, they get 15% off from the total
amount. This could attract more customers as recently youngsters like to hang out with
friends after their class. They will usually choose some coffee shops they could afford.

India has a total area of 38287 million km². Currently, there are 191 Starbucks stores in
India and there are many potential markets to be explored. Starbucks should focus on
expanding its market by opening more new stores in cities such as Nashik. For example,
Starbucks owns up to 300 stores in Malaysia in November 2019. Compared to countries
like Malaysia, India has a larger area for the company to expand its market. With that,
Starbucks should choose more strategic locations to expand its potential markets in the
respective country. This will make more local people are able to access Starbucks and
enjoy the services. This also could improve their brand image as more residents
recognize this brand not only by advertisement but also by their own experiences.

Additionally, Starbucks should open stores with unique interior designs or with elements
that are different from the other stores. They can be unique from the menu perspective
or from the design of the building. This could attract travelers and youngsters who like to
check in themselves at unique cafe shops. Besides that, it is significant to create a
relaxing and enjoyable environment that matches the lifestyle that the brand promotes.
This idea is suggested to correlate with the survey that shows a good environment is one
of the important factors that attracts customers to buy Starbucks’ products. It is believed
that Starbucks is able to kill two birds with one stone if it opens more stores with unique
elements in other locations in India.

Professional training and workshops should be continuously provided to ensure the

quality of front-desk customer service in Starbucks. Customers stress on the quality of
service when they relate their satisfaction with a certain brand. Most of the Starbucks
customers chose to dine in and enjoy their meal in the shop. They focus on the buying
experience other than the taste of food. Therefore, employee training plays an important
role as it provides the employee with the correct way to serve the customers and improve
their skills in making food and beverages. For instance, a customer will leave a good
impression on a shop when they have employees with a good attitude. It is proved that
a good impression from customers will lead to higher customer satisfaction and thus
increasing the loyalty of the customer.

Starbucks Coffee has been using a value-based pricing strategy to maximize their profit.
It is also called customer-based pricing as the price is set on how much of the target

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consumers believe it is worth. Starbucks uses this strategy because they can set higher
prices compared to the competitors which they believe their customers are willing to pay
for. Starbucks Coffee is confident that the unique products and services provided satisfy
their customers and make them loyal to the brand. However, Starbucks Coffee is
suggested to reduce the price of their products as there are some consumers who
complained about the expensive Starbucks menu prices. Price reduction may attract
more customers to try Starbucks Coffee, yet there is a risk to do so. For Starbucks’ loyal
customers, value matters more than the price. A sudden reduction in price will affect their
perception of Starbucks as a high-quality brand that provides premium products and
services. Starbucks which is often graded as a premium and high-class coffee brand
could not afford to risk the brand being perceived as a low-quality brand which will affect
the loyalty of customers. There is a risk of losing more loyal customers than having a
chance of gaining new customers if Starbucks reduces the price.

Some customers complained that Starbucks Coffee’s stores are far away from their living
area and it takes a long time for them to buy a cup of coffee or having difficulties to have
a relaxing time with their family and friends at the stores. To solve this problem and
increase customer satisfaction, we suggest opening more Starbucks Coffee’s stores in
every area in India to expand the business. This is because it is necessary to satisfy the
huge demands as India is a country with a vast population. However, there is a risk to
open more stores as it could make the operating cost higher decreasing the profit.
Starbucks Coffee needs to pay a lot of fees such as construction fees, maintenance fees,
utility fees, and labor fees. Cost is an important factor that needs to be considered when
opening more stores.

CONCLUSIONS

This research investigated individuals' perception and satisfaction in delivering the brand
(Starbucks) influence and service quality that is directly connected with customers’
loyalty. This study has a great emphasis on the corporate brand image of Starbucks
which may affect customer satisfaction. Therefore, with respect to this research, it is
clearly defined that Starbucks needs to be more focused on some issues with the
purpose of building a strong everlasting relationship with the customers and mutually
profitable relationship in the market. Customer satisfaction is described as a variable that
indicates how good their brand experience is. Starbucks, which is recognized to be the
world's reputed brand, has a definite standard to increase their service quality, brand
image and individual satisfaction. By conducting regular surveys to get to know more
about customers, Starbucks can fulfill their needs that change from time to time and this
will increase customer satisfaction in the future.

As if we contrast with other techniques, we believe that our method of doing analysis is
more appropriate for our decision making. At some time, we can state that customers
can be convinced by the quality of product, and the customer service provided by the
company. From the survey we did, we found that most of the customers are satisfied
with the quality of product and customer services provided by Starbucks. However,
some of them are not satisfied with the price as it is too expensive, Starbucks, thereby,
should maintain its product quality with reasonable prices to attract more customers.

There are several alternatives the researchers provided to improve Starbucks services
and gain more customers based on the survey. Starbucks should do more promotion
and reduce the pricing to attract more customers from different classes. Subsequently,

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to expand their markets and reach out more customers, Starbucks is suggested to
expand their stores in more strategic areas. Besides, special stores with unique interior
designs can pique the interest of more customers as well. Starbucks also needs to
provide professional training to their employees to serve the customer better and
therefore improving customer satisfaction. In conclusion, Starbucks has to be innovative
in ideas and also focus on quality control and beware of risk that could happen to achieve
their-long term targets and grow the company.

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