measuring brand equity: the perspective of starbucks

DIKTI ACCREDITED SK NO. 30/E/KPT/2018 ISSN: 1693-5241 825

Measuring Brand Equity: The Perspective of Starbucks’ Customers

825

JAM18, 4Received, August ‘20Revised, September ‘20

October ‘20November ‘20

Accepted, November ‘20

Journal of AppliedManagement (JAM)Volume 18 Number 4,December 2020Indexed in Google Scholar

Corresponding Author:Astrid Puspaningrum, Facultyof Economics and Business,Universitas Brawijaya, Email:[email protected], DOI: http://dx.doi.org/10.21776/ub.jam.2020.018.04.20

MEASURING BRAND EQUITY: THE PERSPECTIVEOF STARBUCKS’ CUSTOMERS

Astrid PuspaningrumFaculty of Economics and Business, Universitas Brawijaya

Abstract: This study aims to analyze brand loyalty in mediating the effect of brand associa-tion and brand awareness on brand equity. The population of this study is customers ofStarbucks Coffee in Malang City, with a sample of 160 respondents. The data was analyzedusing Structural Equation Modeling. The results showed that brand association and brandawareness influenced brand equity, and brand loyalty was able to mediate the effect ofbrand awareness and brand association on brand equity. To increase brand loyalty, whichin turn leads to brand equity, the management team of Starbucks Coffee has to provide astrategy in building brand awareness and brand association. Future researchers can de-velop this study by adding more variables, for example, is brand trust.

Keywords: brand association, brand loyalty, brand equity, brand awareness

Cite this article as: Puspaningrum, Astrid. 2020. Measuring Brand Equity: The Perspectiveof Starbucks’ Customers. Jurnal Aplikasi Manajemen, Volume 18, Number 4, Pages 825–833.Malang: Universitas Brawijaya. http://dx.doi.org/10.21776/ub.jam.2020.018.04.20

As time goes by, peoplelifestyle has changed, espe-cially those who live in a city.One example of a modernlifestyle we often foundnowadays is hanging out ata coffee shop or cafe.Starbucks Coffee is a coffeeshop chain from Seattlewhich is based in Washing-ton, United States. The larg-est company of coffee shopin the world is StarbucksCoffee. Not only does it sellvarious drinks such as cof-fee, espresso-based hotdrinks, and many more drinksboth hot and cold, but alsosells snacks, coffee beans,and cups. Starbucks coffee

has 15,012 stores in 44 countries. In 1971, the firstStarbuck coffee has been opened by Jerry Baldwin,Gordon Bowker, Zev Siegle in Seattle. In 1987, thefirst Starbucks outside Seattle has been opened inVancouver and Chicago, while in Tokyo it alsoopened its first branch outside North America.

In Indonesia, the Starbucks coffee chain is op-erated by PT Mitra Adiperkasa Tbk. Starbucks isalready available in 12 cities in Indonesia, with morethan 150 outlets (starbucks.co.id, 2018). StarbucksCoffee has a very strong image in its consumers’minds and is considered a part of the modernlifestyle. Starbucks Coffee itself targets the upper-middle class; therefore, the price is quite expensive.Nevertheless, keep repurchasing their products; thishas encouraged Starbucks Coffee to expand mas-sively and start opening new branches in variouslocations. Initially, Starbucks Coffee only opened itsoutlets in shopping centers or malls, currentlyStarbucks Coffee began to reach places which are

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close to universities; this is because the majority ofStarbucks customers are teenagers

Competition in the coffee shop industry requiresStarbucks Coffee to maintain its brand to competefor and maintain market share. The strategy theyapplied is building strong brand equity. A brand thatis strong and has ‘value’ will be able to build brandequity, which then can be an advantage of the brandcompared to other brands (Kotler and Amstrong,2018)

One of the elements forming brand equity be-sides brand awareness is a brand association (Chen,2001) and (Tong and Hawley, 2009). The associa-tion not only existed but also possessed a degree ofstrength. Brand linkage will be stronger if it is com-municated through a lot of experiences or appear-ances. Various associations that consumers remem-ber can be strung and form a brand image in theirminds. Different results were found in the studieswhich were conducted by Gil et al. (2007), Sasmitaand Suki (2015), and Sucahyo (2017). They foundevidence that brand association did not affect brandequity.

There is a contradiction in the effect of brandawareness and brand association on brand equity.Therefore, it is interesting to re-examine brand loy-alty as a mediating variable. According to Kotlerand Armstrong (2018), Brand loyalty is consideredas the extent to which customers show a positiveattitude towards a brand, have a commitment to aparticular brand and are willing to continue to buyback the product in the future. In their research,Idrees, et al. (2015), defined brand loyalty as a con-sistent consumer preference to make purchases on

the same brand for a specific service or productcategory.

The determination of brand loyalty as a medi-ating variable based on the results of previous stud-ies on the effect of brand association and brandawareness on brand loyalty and brand equity.Dhurup et al. (2014), Akhtar et al. (2016), and Gil etal. (2007) proved that brand awareness affects brandloyalty, while Alexandris et al. (2008) and Gil et al.(2007), found evidence that brand association af-fects brand loyalty. The effect of brand loyalty onbrand equity was evidenced by Tong and Hawley(2009), Shabbir et al. (2017), and Gil et al. (2007),that brand loyalty affects brand equity.

The results Inconsistency of previous empiri-cal studies and phenomena above, this study exam-ines brand loyalty as a mediator of the effect ofbrand awareness and brand association on brandequity, which was developed in one model.

LITERATURE REVIEWBrand Equity

Brand equity is a series of assets and liabilitiesassociated with its name, symbol, and brand, whichdecreases and increases the value provided by ser-vices or goods to the company’s customers or com-pany. Kotler and Keller (2016), stated that brandequity is added value provided to services and prod-ucts. It can be reflected in the way customers act,feel, and think concerning brands, as well as in theprofitability, market share, and price provided by abrand to companies.

According to Aaker (2004), brand equity is aset of brand assets and liabilities associated with abrand, its symbol, and name, which decrease or in-crease the value provided by a service or good toits customers or the company. According to Kotlerand Keller (2016), brand equity-based to the cus-tomer can be defined as the difference in the im-pact of brand knowledge on customer responses tothe brand. A brand can be said to have positive cus-tomer-based brand equity if customers react to cer-tain products more positively. On the other hand, abrand can be said to have negative customer-basedbrand equity if the customer reacts negatively to

Brand equity is formed due to brand aware-ness, which is the skill of a prospective purchaserto recall or recognize that a brand is part of a spe-cific product category. Overall, brand equity dependson the level of awareness achieved by a brand(Rajh, 2005, Shabbir et al., 2017, Świtała et al., 2018,Ilias et al., 2020, and Kim et al., 2008). Differentresults were found in the studies which were con-ducted by Tong and Hawley (2009), Setiawan andHarris (2020), and Gil et al. (2007), that brand aware-ness did not affect brand equity.



the brand’s marketing activities in the same situa-tion.

Brand LoyaltySchiffman and Kanuk (2004), has stated that

brand loyalty is the most expected result of a studyon customer behavior. Brand loyalty is directly af-fected by customers’ dissatisfaction/satisfaction withthe brand that has been accumulated in a certainperiod. Brand loyalty is the extent to which a cus-tomer shows a positive attitude towards a brand,intends to buy it back in the future and has a com-mitment to a particular brand. (Mowen and Minor,2002).

Brand loyalty measurement consists of mea-suring attitudes and measuring customer behaviortowards a brand. Measuring customer attitudes to-wards a brand involve all customer feel about theproduct and brand as well as their tendency to buythe product and brand. Behavior measurement re-lies on the response of customer behavior to a stimu-lus that aims to promote certain products and brands.Therefore, this measurement will involve the threecomponents of attitude, namely cognitive, affective,and conative; it will also involve action (Schiffmanand Kanuk, 2004). Tong and Hawley (2009), re-vealed that brand loyalty is measured using threeindicators, namely consumer loyalty to brands, brandsatisfaction, and recommendations. According toAaker (2004), brand loyalty can be measuredthrough behavior, switch cost, satisfaction, likingbrand, and also commitment.

Brand AwarenessIn a company, brand awareness is a very im-

portant element of equity because brand awarenesscan directly affect brand equity. if consumer aware-ness of a brand is low, then brand equity will alsolow. Aaker (2004), stated that brand awareness isthe ability of a prospective buyer to recognize orrecall that a brand is part of a certain category ofproduct. Overall, the brand awareness role in brandequity depends on the awareness level that isachieved by a brand. Brand awareness has fourlevels that are, brand Unaware, Brand recognition,brand recall, and Top of Mind (Aaker, 2004).

Brand AssociationBrand association is memory or everything in

customers’ minds that is related to a particular brand(Aaker, 2004). Such association not only existed,but it also possessed a degree of strength. Basedon a lot of experience, appearance, or whatever isshared and used to communicate with customerswill make a connection with a brand will be stron-ger. Various associations that stick in a customer’smind can form a brand image. According to Aaker(2004), there are several indicators of brand asso-ciation, namely relative price, competitors, productclass, and personality, or lifestyle.

HYPOTHESES DEVELOPMENT

brand equity.Aaker (2004), stated that brand association can

provide consumer benefits, which in turn will giveconsumers specific reasons to buy the product of aparticular brand by showing its strength. Apart fromthe benefits provided by the product to consumers,this specific reason also comes from a strong andpositive relationship between related informationabout a product that sticks in the consumers’ mindsand a good strategy and brand management of aproduct. Chen (2001), as well as Tong and Hawley(2009), found some evidence that brand affectsbrand equity. The second hypothesis is obtained fromthe empirical studies results in this research are asfollows:

Kotler and Keller (2016), assumed that brandawareness plays an important role in building cus-tomer-based brand equity. High brand awarenesswill increase brand equity, because, with high brandawareness, the brand will have a greater opportu-nity to be selected by customers in the purchasingdecision-making process, which ultimately leads toincreased revenue, lower costs, and greater profitsfor the company. Rajh (2005), Kim et al. (2008),Shabbir et al. (2017), Świtała et al. (2018), andIlias et al. (2020), found evidence that brand aware-ness affects brand equity. Hypothesis obtained fromthe empirical studies results in this research are asfollows:H1 Brand awareness has a significant effect on


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H2 Brand association has a significant effect onbrand equity.Gil et al. (2007), Dhurup et al. (2014), Akhtar

et al. (2016), proved that brand awareness affectsbrand loyalty. The effect of brand loyalty on brandequity was proved by Tong and Hawley (2009),Shabbir et al. (2017), and Gil et al. (2007), that brandloyalty affects brand equity. The third hypothesisfrom the empirical study results in this study is asfollows:H3 Brand loyalty mediates the effect of brand

awareness on brand equity.Alexandris et al. (2008) and Gil et al. (2007),

found some evidence that brand association affectsbrand loyalty. The effect of brand loyalty on brandequity was proved by Gil et al. (2007), Tong andHawley (2009), Shabbir et al. (2017), which brandloyalty affects brand equity. The fourth hypothesisfrom the empirical study results in this study is asfollows:H4 Brand loyalty mediates the effect of brand as-

sociation on brand equity.

METHODPopulation and Research Sample

The population of this study was Starbucks

Coffee’s customers in Malang City. The populationtaken in this study is infinite, meaning that the sizeis very large that it cannot be known with certainty,so 160 Starbucks Coffee customers were taken tobe the sample in this study.

Variable OperationsVariable Operations are elements of research

that describe how to measure a variable containingindicators that allow researchers to collect relevantdata for these variables. The operational definitionof the variables and their indicators can be seen inTable 1 below:

Data AnalysisThis study has used SEM (Structural Equation

Modeling) analysis techniques was uses in this study.A T-test was conducted to check whether there isa direct effect or not. With a significance level = 5%. The criteria for acceptance of hypothesistesting are as follows: if the probability < 5%, thenH0 is rejected; H1 is accepted, and if the probability> 5% then H0 is accepted; H1 is rejected. Mean-while, to find whether there is an indirect effect ornot, the total effect is compared with the direct ef-fect. If the total effect is greater than the direct

Variable Indicator Source

Brand Association Relative price Dhurup et al. (2014), Akhtar et al. (2016)LifeStyle/personalityProduct classCompetitors

Brand Loyalty Consumer loyalty Tong and Hawley (2009) Shabbir et al. (2017)Consumer satisfactionRecommendation

Brand Equity Perceived quality Tong and Hawley (2009), Shabbir et al. (2017), Gil et al. (2007).Perceived valueImageTrustworthinessCommitment

Table 1 Variable Operations

Brand awareness Unaware of brand Shabbir et al. (2017), Świtała et al. (2018), Ilias et al. (2020)Brand RecognitionBrand RecallTop of Mind



effect, then brand loyalty is a variable that mediatesthe effect of brand awareness, brand association,and brand loyalty on brand equity.

RESULTSBased on the questionnaire filled in by the re-

spondents (Starbucks Coffee’s customers) inMalang, the data on respondent characteristics,starting on sex, age, and occupation were as fol-lows:

Based on Table 2 above, it can be seen thatStarbucks Coffee’s customers in Malang City aredominated by male students aged 15-30 years old.This condition shows that the market share ofStarbucks Coffee in Malang City is dominated bystudents. In this modern era, hanging out at cafesor coffee shops has become a lifestyle. One of thecafes or coffee shops which become a favorite placeto hang out is Starbucks Coffee.

Individual Characteristics Percentage (%) Number of People

Based on Sex Female 40.6 65Male 59.4 95

Based on Age (years old) 15 – 30 70 11231 – 40 20.6 33> 41 9.4 15

Based on Occupation Student 75.6 121The employee of Private Company 15.6 25Civil Servant 8.8 14

Table 2 Respondent Characteristics

Analysis Results of Goodness of Fit SEMThe theoretical model in the conceptual frame-

work is considered to be fit if it is supported byempirical data. In accordance with the results of

the SEM analysis, to determine whether the hypo-thetical model is supported by empirical data, thetest results of the goodness of fit overall model ispresented in Figure 1 below.


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Based on the results of the Goodness of Fittest presented in Figure 1, overall, it can be seenthat all the criteria show that the model is good andhas met the cut off value; therefore, the model isconsidered feasible and can be used in this research,so that it can be explored and discussed further.

Results of Hypothesis TestingSEM (Structural Equation Model) was analyzed

using AMOS 6.0 to test the hypotheses proposed

by the researcher. Critical ratio (Cr) from the resultof output regression weight was used as a basis fortesting the hypotheses. The research hypothesis willbe accepted if the p-value < of significance by 5%,then the null hypothesis is rejected. The results ofhypothesis testing are presented in Table 3 below

The effect of brand awareness on brand loy-alty generates an estimated value of 26.6%; theeffect of brand association on brand loyalty resultsin an estimated value of 27.9%. The overall rela-

Effect between Variables Estimate Through Brand Loyalty Total Effect

brand awareness brand loyalty 0.266* - 0.266brand associations brand loyalty 0.279* - 0.279brand awareness brand equity 0.429* 0.266 x 0.334 = 0.088 0.517brand associations brand equity 0.279* 0.279 x 0.334 = 0.093 0.372brand loyalty brand equity 0.334* - 0.334

Note: * p < 5%

Table 3 Results of Hypothesis Testing

tionship is at a significance level of 5%. Therefore,the stronger the awareness and association towardsthe brand, the higher consumer loyalty to StarbucksCoffee.

The effect of brand awareness on brand eq-uity produces an estimated value of 42.9%; the ef-fect of brand association on brand equity results inan estimated value of 27.9%, and the effect of brandloyalty on brand equity results in an estimated valueof 33.4%. The overall relationship is at a 5% sig-nificance level. Therefore, the stronger the aware-ness, association, and consumer loyalty to the brand,the higher the brand equity of Starbucks Coffee.

The indirect effect of brand awareness on brandequity through brand loyalty has a total coefficientvalue of 0.517; it is greater than the direct effect ofbrand awareness on brand equity (0.429). This in-dicates that brand loyalty can mediate the effect ofbrand awareness on brand equity.

The indirect effect of brand association on brandequity through brand loyalty has a total coefficientvalue of 0.372; it is greater than the direct effect ofbrand association on brand equity, which is amounted

to 0.279. These results indicate that brand loyaltycan mediate the effect of brand association on brandequity.

DISCUSSIONThe Effect of Brand Awareness on Brand Eq-uity

Based on the results of hypothesis testing, it isproved that the brand equity of Starbucks Coffee isinfluenced by brand awareness and brand associa-tion. These results indicate that the higher the cus-tomer awareness level towards Starbucks Coffee,the higher the brand equity of Starbucks Coffee.This means that the brand equity of Starbucks Cof-fee is formed by customer awareness of StarbucksCoffee through unaware of the brand, such as be-ing able to distinguish Starbucks Coffee from othercafé brands. Related to brand recognition, StarbucksCoffee is one of the brands which first come to thecustomer’s mind when they hear ‘café’. In termsof brand recall, Starbucks Coffee is a café that canbe recognized easily, and in terms of top of mind,



people can recognize the logo of Starbucks Coffeeeven from afar.

Effect of Brand Association on Brand EquityThe results of hypothesis testing prove that

brand equity is influenced by brand association.Therefore, the higher the level of customer asso-ciation in recognizing the brand of Starbucks Cof-fee, the higher the level of brand equity. This meansthat brand equity is formed by customer associationin Starbucks Coffee brand through a relative price;for example, Starbucks Coffee offers a discount.Regarding lifestyle/ personality, Starbucks Coffeeis always full of visitors. Related to product class,Starbucks Coffee provides diverse products, goodambiance, and atmosphere; and related to competi-tiveness, Starbucks Coffee competes with othercafes.

These study results are in line with Aaker(2004), which brand association can provide con-sumer benefits, which in turn will give consumersspecific reasons to buy the product of a particularbrand by showing its strength. Apart from the ben-efits provided by the product to consumers, this spe-cific reason also comes from a strong and positiverelationship between related information about aproduct that sticks in the consumers’ minds and agood strategy and brand management of a product.Chen (2001), as well as Tong and Hawley (2009),found some evidence that brand affects brand eq-uity.

Brand Loyalty Mediates the Effect of BrandAwareness on Brand Equity

Based on the results of the analysis, it is foundthat brand loyalty can mediate the effect of brand

awareness on brand equity. This result means thatthe respondent’s brand awareness towardsStarbucks Coffee that reaches the top of mind ismanifested in the ability to recognize the logo ofStarbucks Coffee even from afar, leading custom-ers to be loyal to the brand and keep visitingStarbucks Coffee. The role of brand awareness incontributing to brand loyalty has an impact on brandequity because Starbucks Coffee has a good ambi-ance and atmosphere, so many people love to hangout there.

These study results are also consistent with thestudies which were conducted by Gil et al. (2007),Dhurup et al. (2014), and Akhtar et al. (2016), whichproved that brand awareness affects brand loyalty.The same results were also found by Tong andHawley (2009), Shabbir et al. (2017), and also Gilet al. (2007), that brand loyalty affects brand eq-uity.

Brand Loyalty Mediates the Effect of BrandAssociation on Brand Equity

Brand loyalty can mediate the effect of brandassociation on brand equity. This means that brandequity is formed by the role of customer associationin the brand of Starbucks Coffee through a relativeprice; for example, Starbucks Coffee offers a dis-count. It leads customers to be loyal to the brandand keep visiting Starbucks Coffee. The role ofbrand awareness in contributing to brand loyalty hasan impact on brand equity because Starbucks Cof-fee has a good ambiance and atmosphere, so manypeople love to hang out there. Gil et al. (2007) andAlexandris et al. (2008), proved that brand associa-tion affects brand loyalty. The same result was alsofound by Gil et al. (2007), Tong and Hawley (2009),and also Shabbir et al. (2017), that brand loyaltyaffects brand equity.

CONCLUSIONS AND RECOMMENDA-TIONSConclusions

Brand awareness and brand association affectthe brand equity of Starbucks Coffee. This meansthat the brand equity of Starbucks Coffee will in-crease if customers have a high level of awareness

The results of this study are in accordance withAaker (2004), brand awareness is the ability of aprospective buyer to remember or recognize a brandas part of a certain product category. Overall, therole of brand awareness in brand equity depends onthe level of awareness achieved by a brand. Rajh(2005), Kim et al. (2008), Shabbir et al. (2017),Świtała et al. (2018), and Ilias et al. (2020), foundsome evidence that brand awareness affects brandequity


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Brand association and brand awarenessplay an important role in increasing brand equitythrough the level of customer loyalty to the brand.This confirms the theory which was developed byAaker (2004). He divided brand equity based on 5main elements, namely brand loyalty, brand asso-ciation, perceived quality, and brand awareness. Toincrease brand loyalty, which ultimately builds brandequity, the management team of Starbucks Coffeeshould provide a strategy in building brand aware-ness and brand association.

Future researchers can develop this study byadding more variables, for example, is brand trust.

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