Brand equity in the context of coffee shops (including online coffee shops) refers to value of the brand of coffee as perceived by consumers.

Here we're definining a coffee shop to be any establishment that primarily markets and sells coffee, and the applicability of brand equity doesn't really change that much regardless of whether you're operating an in-person coffeehouse or selling coffee online.

If a coffee shop brand consistently delivers on its promises, and regularly provides a positive customer experience than over time it will build positive associations with its brand in the eyes of consumers.

In this article we'll explain how the concept of brand equity can be used to help market your coffee.

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What Do We Mean By Brand Equity?

On way to think of Brand Equity is as a measure of Consumer Satisfaction. Consumer satisfaction is the end result of all the coffee shops business practices, culture, and internal process and how well they ultimately lead to positive customer experiences. 

Brand equity is the value or worth we attribute to the results of all our efforts to satisfy the customer.

So it makes sens that if you're trying to improve or develop Brand Equity for your coffee shop or online coffee store you'll need to do that by first marketing your company and communicating its values and promises. Following that, critically, you will also need to meet the expectations your company has set.

dimension

The Four Dimensions Brand Equity

To *intelligently* build brand equity, a cafe owner will likely find it helpful to understand the main drivers of brand equity from the perspective of the customer.

The question many marketers have asked themselves over the years is: What makes customers actually care and insist on purchasing a product from a specific brand? 

David Aaker, sometimes referred to as "the Father of Modern Branding,” is an award winning brand strategy specialist who conceptualized the answer this question. Basically he argued that the answer can be transformed into five different types of brand equity "drivers" and we'll outline them as follows:

 

Brand Awareness

 

In this context Aaker explains that brand awareness can be thought of as the "Anchor" to which all the customers associates can be attached. 

The first level of brand awareness is of course just making sure customers know your coffee, coffee shop, and/or coffee website exist.

More elaborate forms of awareness would include knowing what your business purpose is, and what differentiates it. For instance when you think of ordering coffee in sizes referred to as Tall, Venti, and Grande you probably think of Starbucks (at least in English speaking countries like the United States.) Starbucks has built not only initial awareness of their brand, but associations to it.

 

Brand Loyalty

 

To better explain how Brand Loyalty works, Aaker also developed the "Brand Loyalty Pyramid". The pyramid is constructed as follows:

 

  1. Switchers
  2. Satisfied Buyers
  3. Satisfied Buyers with Switching Costs
  4. Brand Likers
  5. Commited Buyers
brand-loyalty-pyramid

As the pyramid illustrates, the lowest level of brand loyalty is "switchers". These are consumers who aren't loyal to *any* brand, and likely view coffee as a commodity. They will be more price sensitive because they don't really care what brand they buy from, and we'll simply take from the best offer they can find.

The high point of the pyramid consists of customers who are proud to associate themselves with the coffee brand. They feel the business is consistent with their own values, and are happy to make their association with the coffee they purchase and/or who they purchase it from.

 

Brand Quality

 

Brand quality measures the perceived value of the brand in the eyes of customers. This can be obviously demonstrated in how we think of "gourmet coffee" vs other coffee brands. Specialty or gourmet coffee is perceived to be substantially different than, say, Folgers coffee. The important implication of perceived quality is it allows you to command a higher price. If the perception of quality is enforced, customers will be willing to pay more.

 

Brand Associations

 

Brand association overlaps slightly with brand quality. But the key difference is that Brand association measures how meaningful the brand is.

Consumers will develop associations and meanings with the brand independantly, as that's human nature. So the consideration here is to think about the associations you want customers to build with your brand and execute to make that happen.

This happens a number of different ways, but some of the common drivers of brand association include:

  • Imagery used.
  • Partnership and affiliations.
  • Symbols, color palettes, and overall "personality" communicated in marketing, packaging, and servicing.

For proof of how this can impact coffee brands, you can consider a market research study conducted by Imane Bouzidi, a neuro-marketing researcher at Copenhagen Business School. She performed a behavioral study of coffee consumers perception of the taste of coffee for different coffee brands, and concluded: 

"When the respondents were told that they were drinking a certain brand, it showed that their
expectations and sympathy for this brand affected, how they experienced the taste. In cases where
they had expressed positive pre-assumptions and associations towards a certain brand it also
showed, that they found the specific brand sample to be better in taste. This pattern appeared to
apply very strongly to Starbucks. Even though the Baresso sample (which stood next in row) in all
cases included the exact same coffee, the majority all preferred the taste of the Starbucks samples.
This clearly indicated that Starbucks has a high effect on the Danish consumers motivation systems,
response and choice."

pyramid

Keller's Brand Equity Model

Keller’s Brand Equity Model, often referred to as the Customer-Based Brand Equity (CBBE) Model, also makes use of a pyramid to conceptualize the brand equity model.

Kevin Way Keller is a Professor of Marketing at the Tuck School of Business, and he developed the model to illustrate that a "strong" brand can be one defined as one that has created a brand image that is compelling to customers, and has accomplished that by facilitating consistent and positive customer experiences. Keller has been published in places like the Journal of Marketing and Journal of Marketing Research. His focus has been on Market research - which is the art and science of performing consumer behavioral studies that surface actionable insights - specific to brand strategy.

He elaborates that each experience with the brand should leave the customer with positive thoughts, and feelings.

Once that's been done, he argues that the customer's impression of your brand will be communicated to other potential customers.

Here's a look at the pyramid:

Keller’s Brand Equity Model

Brand Identity – Who Are You?

 

This is step 1. The coffee business seeks to develop brand "salience" within it's targeted base of consumers. People looking for coffee need to understand that you can provide coffee. 

Simple enough, but it's also crucial to make sure your targeted customers correctly identify what you can provide them. Yes, they can purchase coffee from you, but can they purchase it online? Can they depend on a reliable return policy? Can they get free shipping etc.?

 

Brand Meaning – What Are You?

 

Here's where the customer understands what the brand stands for and what its values are.

This is built through imagery and performance ("performance" here means how well you fulfill customers needs).

The brand meaning is conveyed through those dimensions, and the lasting impression can often be summarized, in the minds of customers, as whether or not your brand is considered "dependable", or "sophisticated", or any number of adjectives customers might associate with brands that differentiate them and communicate their values.

 

Brand Response – What *About* You?

 

This has to do with how your brand is "judged". Is your coffee in some way uniquely suited to customers needs? (think of things like Strava CBD infused coffee etc..).

Is your business credible? If you are concerned with fair trade and sustainable coffee practices, how do you "walk the walk", so to speak?

 

Brand Resonance – What About You and Me?

 

Brand "resonance" is the highest point on this brand equity pyramid. It's as ideal a state as you can achieve with a customer and you can say it's been attained when customers feel a deep attachment to the brand.

This is often shaped by community associates with the brand. For instance "coffee collectives" like Philadelphia's Coffee Friends often form around a community of barista's, coffee roasters, and customers. Coffee shops and brands associated with those communities often develop a high brand resonance with their customers.

paper-cup

Examples of Brand Equity in the Coffee Industry

Not surprisingly examples of brand equity applied to the coffee industry are going to include Starbucks.

Here's some illustrations of how brand equity is built and leveraged by them:

Starbucks changed its logo in 2018 - removing the tagline “Starbucks Coffee”. Why? Because they knew they had developed so much brand equity that they could likely apply it towards non-coffee related ventures. According to Statista, in 2020 Starbucks made more money than ever ($5.38 Billion) from products not directly categorized as beverage or food:

starbucks chart

"Other" here includes royalty and licensing revenues, ingredients, and serveware etc.. 

This shouldn't come as a surprise as Starbucks has been extending their brand since 2008 when they partnered with Pepsi to retail their "Doubleshot Energy" drinks:

starbucks-doubleshot

"Other" here includes royalty and licensing revenues, ingredients, and serveware etc.. 

This shouldn't come as a surprise as Starbucks has been extending their brand since 2008 when they partnered with Pepsi to retail their "Doubleshot Energy" drinks:

Another great example of how they operationalize brand equity is in their brand loyalty / rewards program. They launched their mobile / rewards app quite a few years ago, but according to Numerator "47% of Starbucks guests visit the chain at least once a week; for app users, this number was 71%".

Numerator-Starbucks-App

Starbucks isn't simply using an app to give discounts. They are using the app to facilitate a better customer experience. You earn redeemable discounts everytime you make a purchase and you are encouraged to use them before they expire so you can keep your "high status" membership.

Hopefully this clarifies how brand equity, admittedly a sometimes vague concept, can apply to businesses generally and coffee businesses more specifically. Brand equity should be thought of as the ultimate goal - something to strive to build incrementally over time. If launching a coffee shop or coffee website that means initially giving some thought to the business values and the promises you want to make your customers.