Empirical Study of Space Localization Approach on Brand Attitude: The Case of Starbucks in South Korea

2. 1. Localization strategy

Amidst the rapidly growing global market, it is important for global companies to simultaneously pursue both standardization and localization strategies (Bartlett & Ghoshal, 1989) and to find and deliver an optimal level of both (Buzzell, 1967; Fayerweather, 1969). From the perspectives of companies seeking to globalize, standardization and localization are opposite ends of the strategic spectrum. Standardization strategy is based on the concept of the universal global market, proposed by Levitt (1983), and allows a greater possibility to reach an economy of scale through a unified approach (Kim, 2009) and gives the benefit of cost reduction for the company (Ryans Jr. & Ratz, 1987). On the contrary, localization strategy is based on the view that one communication style cannot satisfy diverse consumers due to geographical and cultural differences (Jeong, 2009). It gives global companies a competitive advantage through tailored efforts that address the specific needs and preferences of local consumers. In discussions of standardization-localization issue, a lopsided strategy has been criticized for its limitations and the universal understanding is that global companies are at best to strive for an optimized equilibrium of both strategies that effectively respond to the situation of the local market and the company itself (Buzzell, 1967; Fayerweather, 1969, Douglas & Wind 1987).

2. 2. Space identity

In the context of a corporation, its identity can be categorized into a corporate identity, a brand identity, and a space identity, according to its scope and nature. Corporate identity embraces the overall image of the company that integrates the company’s personality, skills, products, markets, businesses, mission and vision into one consistent image (e.g., Schmitt & Simonson, 1997). Brand identity is a combined image of brand associations that companies wish to deliver to their target consumers. Its purpose is to induce ideal associations in the minds of their consumers to ultimately enhance their brand image (e.g., Aaker, 1991; Aaker, 1996). Space identity is the consistent and unified expression of a brand’s image in threedimensional spaces, whose purpose is to yield intended brand attitude through positive brand experiences that differ from competitors through various elements within a space (e.g., Kwon & Chang, 2012). Corporate identity includes brand identity, which includes space identity.

Today, the role of space identity has evolved from merely a place that provides services and products to a place that delivers a brand’s image (Lee, 2013). In particular, the importance of space design and the resulting space identity is growing as a key marketing strategy to cope with the diversifying and segmenting consumer needs in response to the changing societal environment. In building an ideal space identity, brand image needs to effectively be integrated in the space to induce a desired brand attitude (Lee, 2013; Budelann, Kim, & Wozniak, 2010).

2. 3. Brand attitude

What consumers associate with when they recall a brand is a critical factor that determines the long-term relationship between the consumer and the brand (Fournier, 1998). Keller (1993, 1998) defined brand image as “perceptions about a brand as reflected by the brand associations held in consumer memory.” Brand associations, as defined by Aaker (1991, 1996), are anything that is connected to the brand in the memory. Among the elements that make up brand associations, brand attitude influences consumers’ purchasing behavior and loyalty, and is defined as the general evaluation a person has of the brand (e.g., Aaker, 1991; Keller, 1998).

3. 1. Field research

As discussed, the ultimate goal of a space identity is to build a positive brand image. Successful application of localization strategy in the visual elements of a space will increase familiarity and favorability of the brand in the minds of consumers. This study classified the elements of space identity in accordance to the purpose and the nature of the research, with reference to preceding research on culturally adapted visual expressions in the formative features of spaces (Jang & Choi, 2010; Oh & Lee, 2007; Lee & Choi, 2006; Jun & Nam, 2005).

Space was analyzed on two dimensions—physical and visual elements—to see “where” and “how” localization strategy was applied in building a space identity. More specifically, physical elements were divided into structural elements, which include walls, partitions, floor, and ceiling, and object elements, which include furnishings and decorative objects.

To see how each localized spatial component was visually expressed, its traditionality of the visual form was analyzed on three grounds—motif & pattern, material, and color. These three variables were adopted and modified from a preceding study (Jun & Nam, 2005) that researched on the expressive tendency of Korean traditionality in contemporary interior spaces. First, Korean traditional motifs and patterns are forms that represent Korea’s traditional appeal, sentiments, humor and elegance. In this particular field research, traditional motifs and patterns are mostly portrayed as the ribs of doors and partitions or as actual photographs or paintings of ancient Korea. Traditional materials are mainly wood, stone, Korean paper, traditional roof tile and metal, and traditional colors include brown, taupe, off-white and gray, the natural unpainted colors of those traditional materials. Of course, the colors of Dancheong are traditional colors of Korea, but within the scope of the research sites of this study, those colors were not observed in their space design. Table 1 summarizes the components of the field research analysis and Table 2 shows an example of field research result for the case of Starbucks Anguk branch.

Table 1

Analysis table of space components

Table 2

Example - Starbucks Anguk

3. 2. Survey research

Survey questionnaires were constructed to investigate four broad categories: image associations induced by localized space identity, consumer attitude toward localized space identity, brand attitude, and demographic statistics. The specifics of the questionnaires are described in Table 3.

Table 3

Survey variables

3. 3. Research model

This study, which explores the effects of localized space identity on consumer attitude, consists of two stages. First, the study extracts the specific image associations induced by localized spaces by conducting a factor analysis on emotional adjectives evaluated by visiting consumers. Then regression analyses are carried out to verify the hypotheses that the image associations induced by localized spaces positively affects consumer attitude toward the brand space, which in turn positively affects consumer attitude toward the brand itself. The research model is diagrammed as in Figure 1.

Figure 1

Research model

H1. Space image induced by localized space identity positively affects consumer attitude toward the space.

H2. Consumer attitude positively affects consumer attitude toward the brand.

3. 4. Demographic characteristics

Table 4 summarizes the demographic characteristics of the survey respondents. Regarding gender distribution, 44.1% were male and 55.9% were female. Regarding age distribution, 20 to 29 make up the largest portion of 60.0%, 30 to 39 make up 20.6%, 40 to 49 make up 13.5%, and 50 and up make up the remaining 5.9%.

Table 4

Demographic characteristics

3. 5. Reliability analyses

The average Cronbach’s alpha of the five items that measure brand attitude was 0.920, so the items were overall reliable. Also, the Cronbach’s alphas when each of the five items were deleted all slightly reduced so we can deduce that all five items are appropriate to be used in statistical analysis.

The average Cronbach’s alpha of the five items that measure space attitude was 0.877, so the items were overall reliable. However, the Cronbach’s alpha increases to 0.894 when the item “I prefer to come to this particular Starbucks even when there is another Starbucks nearby” is deleted. Hence, only four items excluding the item of consumer loyalty toward a specific store were used in statistical analysis.

The average Cronbach’s alpha of the sixteen items that measure space image was 0.901, so the items were overall reliable. However, the Cronbach’s alpha when the items “I feel accustomed to this space” and “This space feels oriental” are deleted increases to 0.908 and 0.903, respectively. Thus, it is reasonable to use the remaining fourteen items in measuring space image.

Table 5

Cronbach’s alphas of brand attitude, space attitude, and space image

4. 1. Field research result and cases of localized space identity

In observing the five research sites that most prominently incorporated localization strategy in their space identity, the frequency of using walls and screens were much higher than that of using floors and ceilings amongst structural elements. This may be due to the fact that walls and screens cover larger areas and are more visible and thus give the advantage of efficiently inducing positive space experience through differentiated approaches despite where customers seat themselves within the space. Between the two object elements, the frequency of using decorative objects were higher than that of using furnishings. Considering that all Starbucks stores are not franchised but are directly managed, preparing decorative objects that well represent the traditional history of the local area may be far more cost effective than furnishing a particular store with, say, chairs and tables that differ from other stores. Such is also reflected in the unique case of Samcheongdong where furnishing was used in localization approach as additional furnishing such as cabinets and shelves were added instead of replacing on a large scale.

Regarding the visual elements, in most cases of the observed localized approaches, wood was by far most widely used as ribs of walls and screens or as rafters. Metal was fairly often used but mostly in small scales as hinges or handles of wooden components. Usage of roof tiles and stones were also observed in few cases. Most of the traditional materials used were left unpainted to reveal its natural colors. The warm natural woody colors, the hints of golden metallic decorations, and the solemnity of the dark grey tone of roof tiles work in harmony to create a rather cozy, peaceful, yet luxurious aura in comparison to the ordinary store identity of Starbucks stores.

Table 6

Field research result summary

4. 2. Factor analysis on space image

In result of the factor analysis done on the fourteen adjectives to measure space associations induced by localized space identity, three common factors were extracted. The first factor includes ‘sophisticated’, ‘stylish’, ‘luxurious’, ‘attractive’, and ‘classy’. The second factor includes ‘familiar’, ‘comfortable’, ‘fond’, ‘warm’, and ‘peaceful’, The third factor includes ‘amusing’, ‘unique’, ‘interesting’, and ‘exotic’. In this light, the space images formed by consumer perception from experiencing localized space identity can be categorized into three factors—stylish, comfortable, and unique.

It is also interesting to place these images deduced from localized Starbucks locations directly alongside the general images consumers have of Starbucks found in preceding researches. In comparison of space images of brand coffee shops, Starbucks and its space design were found to be associated with the images of luxury, relaxation, and modernism (e.g., Yoo & Jin, 2010; Lee & Park, 2012; Han, Oh, & Choi, 2014). As the images of stylishness and luxury may be considered to belong to the same category, as well as comfort and relaxation, then we can deduce that the key difference between the images consumers have of localized and standardized Starbucks spaces lies in the images of uniqueness and modernity. This is rather plausible considering that the localized strategy adopted by these Starbucks locations was to incorporate the traditional values of Korea into their space design, which would indeed reduce the associations of modernism and give rise to the impression of uniqueness.

Table 7

Rotated component matrix of space image variables

4. 3. Regression analyses

The three space images of stylishness, comfort, and uniqueness induced by localization approach were all found to positively affect consumer attitude toward the space. In analyzing individual significance levels, the image of comfort was found to most strongly affect consumers’ space attitude with the value of beta 0.524, followed by the image of stylishness with beta 0.300 and the image of uniqueness with beta 0.225. Thus, space attitude is most significantly and positively affected by the consumers feeling peaceful and at home when experiencing localized space identity.

Table 8

Regression result of space image on space attitude

Next, consumer attitude toward localized space identity was found to positively affect consumer attitude toward the brand itself with the value of beta 0.354. Thus, when global companies successfully induce positive space attitude through effective localization approach, the consumer attitude toward the brand itself will also enhance positively.

Table 9

Regression result of space attitude on brand attitude

4. 4. Further analysis

Survey respondents were additionally asked to rank the top three touchpoints that they feel most strongly deliver Korean traditionality from a list that included the structural and object elements of spatial components. When weighted frequency analysis was conducted on the responses, consumers were found to feel and experience traditionality from the walls, the decorative objects, the screens, the ceiling, the furnishing, and the floor, in that order.

Recalling from 4.1, the field study of the five research sites revealed that the frequency of cases in which localization approach was applied in space design was the highest for the walls and decorative objects, in equal frequency, followed by the screens, then the ceiling, furnishings, and floor were observed the least in equal frequency. Table 10 implies that the touchpoints where consumers actually feel Korean traditionality parallel the actual localization applications in their order of frequency. That is, when global companies apply localization approach in their spatial components using traditional motifs and patterns, materials, and colors, consumers in reality enjoy and feel their effects fairly evidently, which ultimately induce positive attitude toward the space and the brand itself, as statistically proved in 4.3.

Table 10

Frequency table of elements that induce Korean image