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Loyalty Program, Store Satisfaction and Starbuck’s Brand Loyalty Among the
Millennial

Article  in  Journal of Computational and Theoretical Nanoscience · August 2017

DOI: 10.1166/asl.2017.9489

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 RESEARCH ARTICLE
Copyright © 2017 American Scientific Publishers Advanced Science Letters
All rights reserved
Printed in the United States of America Vol. 23, 7420–7423, 2017

Loyalty Program, Store

Satisfaction and Starbuck’s
Brand Loyalty among the
Millennial
Ahmad Armim Ramadan 1 , Jati Kasuma 1 * , Yusman Yacob 2 ,
Irwan Shahrinaz 1 , Dayang Hummida Abang Abdul Rahman 1
1
Faculty of Business Management, Universiti Teknologi Mara Sarawak
2
Postgraduate, Faculty of Business Management, Universiti Teknologi Mara Sarawak

The topic of brand loyalty is one of the main attraction and concerns among researcher nowadays. The purpose
of this research is to examine the relationship between loyalty program, store satisfaction and brand loyalty of
Starbucks’ millennial customers in Sarawak. The independent variables involved in this research are loyalty
program and store satisfaction while the dependent variable is brand loyalty. The foundations of loyalty
program, store satisfaction and brand loyalty were assessed using a validated questionnaire. A total of 200
respondents of Starbucks’ millennial customers participated in the survey. The empirical results indicate that the
loyalty program was found to be significant with strong correlation and positive relationship with brand loyalty.
Also, the relationship between store satisfactions was found to be significant with very strong correlation and
positive relationship with brand loyalty. The main contribution of this paper has provided empirical evidence
about the relationship between loyalty program and store satisfaction on brand loyalty. Moreover, it reveals the
factor that influences most on brand loyalty of Starbucks’ millennial customer in Sarawak is store satisfaction.
Areas for future research are also discussed in this research.

Keywords: Brand Loyalty, Loyalty Program, Millennial, Store Satisfaction.

1. INTRODUCTION extending from expertise, executives and even adolescents.

A globalized market and borderless flow of information have
resulted in an increased of customer expectations and intense
competitive pressures in term of profitability, quality and
consumer loyalty since they are the trendy expressions in
today's business situation that spark interest to the organization
in attracting and retaining customers 1. The term trend signifies
a general development or changes in situation or ways of
peoples are behaving at the current time.
Based on the current trend in the world today, “hipster” had
grown to be trendy suddenly in the past few years and they
brought together the culture of drinking coffee among
youngsters. Due to this trend, many coffee houses emerge
throughout the world. The place that was once filled with
seniors now is full of youngsters. Coffee house or café are
terms for a place that basically serves espresso and other hot
refreshments. The first café was established in Italy in 1645. At
that point, in 1652, the café pattern spread into England and
further abroad 2. The coffeehouse has gotten to be propensity in
present day society. It is constantly gone by a differing swarm
Presently, café offers the things in its menu as well as a climate
that makes individuals feels solace capable.
While in Malaysia, coffee was first introduced in the late 18th
century when it was still under the rule of British. It has existed
in Malaysia for some 200 years and since then the number of
coffee cafes in Malaysia is booming due to the trend of coffee
culture3. One of the partners for Ministry of Coffee cafe, Michael
Tan stated that Malaysian started to enjoy the lifestyle since the
penetration of global chain outlets such as Starbucks, Coffee
Bean and Gloria Jean’s3. He also stated that one of the very
reasons in opening the cafe is due to the fact of different coffee
taste yearn by working class adults and the teenager with their
hipster crazed lifestyle.
The coffee culture is expected to grow continuously. The
Starbucks’ loyalty program delivers big outcomes for the
company. A rewards program which is My Starbucks Rewards
was launched in 2009. The reward program gives their loyal
coffee lover free drinks or food based on the number of stars that
they manage to earn4.

∗ Email Address: jatikasuma@hotmail.com

7420 Adv. Sci. Lett. Vol. 23, No. 8, 2017 doi:10.1166/asl.2017.9489

Adv. Sci. Lett. 23, 7420–7423, 2017
By using Starbucks’ mobile application, all the customers can
view their rewards online and even can pay for their coffees using
their phones. In Malaysia, Starbucks card was introduced during
year 2011 and 1.6 million has been registered up to date.
According to5, “when you visit Starbucks, you will receive more
than just a cup of coffee. At Starbucks, we are going to meet
great people, top-rated music, a cozy and comfortable meeting
place, and sound exhortation on preparing amazing a cup of
coffee at home”.
A child that is born between 1977 and 2000 is considered as
millennial generation. When the Baby-boomers retire, the
millennial will replace them since have diverse characteristic than
any generation before them. Millennial have grown up differently
than any generation before them in a society due to the fact that
this generation were exposed to technology since they were
babies. According to6, starting in 2017, the millennial generation
will have spending power of over $200 billion or equivalent
around $10 trillion in their whole life.
There are nearly about 1/3 of the millennial’ purchasing
decisions based on a brand’s values and a consumer base.
Recently, Starbucks launched a ‘acting locally to create impact
globally’ campaign which met the millennial’ generation desire
towards the social activism6. The consumer base includes both
loyalty program and store satisfaction.
According to7, the Starbucks Public Affairs and Digital
Strategy manager which are Mr. Salleharon Ahmad, he described
that the growth and feedback from the society in Sarawak is very
healthy. Starbucks have received very good response from the
crowds in Sarawak. He also said that Starbucks is becoming a
‘third-place’ choice after home and work. People like coming to
Starbucks to clear up their mind and enjoy the relaxing
atmosphere. Since implementing free wireless connectivity,
Starbucks also started seeing a lot of youths patronizing
Starbucks premises2. When consumers start to become more
demanding, it can be a problem to Starbucks. If they could not
satisfy their demand, they might lose their customer. Starbucks
must ensure that their loyalty program and their stores can make
their customers loyal to the Starbucks brand. The objectives of
this research are to examine the relationship between loyalty
program, store satisfaction and millennial loyalty to a brand.
Then, the research will examine the strength of the relationship
between loyalty program, store satisfaction and millennial loyalty
to a brand.
2. LITERATURE REVIEW
2.1 Brand Loyalty
The concept of loyalty is very well known among researchers in
various disciplines due to its strong impacts to the marketing.
Customer’s loyalty can be developed over time by consistently
meeting and exceeding customer’s expectations8. Brand loyalty
is very important for the future of the business and should be
studied carefully to ensure that the business can create loyal
customers9. Loyal customers are very important to a business
and have strong implication on the business’s profits. According
to10, in different studies, it is proven that attracting new a
customer costs a business about five times more than retaining
the existing one. This makes why brand loyalty and customer
loyalty become very desirable to businesses.
2.2 Loyalty Program
Nowadays, loyalty programs have emerged as a separate retail
strategy, which often managed externally and internally of
RESEARCH ARTICLE
the retailer. Almost all companies are now utilizing the loyalty
program more than before in order to ensure the customer stays
loyal to the company11. This clearly shows that it is not only part
of the retailers’ strategy repertoire, but it has also evolved to
operate independently of traditional strategies such as the store’s
atmosphere, pricing and quality decisions, advertising budgets or
staffing levels within the companies12.
Before, the loyalty program use stamps programs waned and
todays loyalty programs can be seen in a modern resurgence with
the emergence of technology. Most of programs are centered
around on card that a customer is given when signing up for the
program, when scanned at the point of sale, it will contributes
information of their account in a company database tracking their
progress within the program, development toward the program’s
goals and also providing the company specific information about
their purchase preferences12.
2.3 Store Satisfaction
Satisfaction is defines as the consumer’s fulfillment response13.
Satisfaction is a judgment that a product or service feature, or the
product or service itself, whether if it provide a pleasurable level
of consumption-related fulfillment. The consumption-related
fulfillment included the levels of under-fulfillment or over-
fulfillment. There is much debate surrounding the working of
store satisfaction in terms of whether it should be measured as a
global form or be based on separate components of the retailer’s
customer recommendation. In this study, satisfaction refers to the
customer’s satisfaction with the store.
In obtaining the greater specificity, the store or retail offer is
comprised of four dimensions which are the store’s merchandise,
customer service, trading format and customer communication.
Each one of the dimensions is evaluated differently by
consumers14,15. A commercial enterprise dedicated to the
purchase of finished goods and their resale for a profit8. Customer
service includes the level of assistance being provided by the
retailer, the speed of service and the friendliness of worker or
staff. Customer service obviously will add value to a product and
build a strong relationship between the retailers and their
customers.
A trading format is how the business being run. Trading format
encompasses aspects such as the location, layout and atmosphere
of the Starbucks store. Starbucks store are always located at the
strategic places such as at the mall, residential areas and at the
highways. Finally, communication is a two-way process of
reaching mutual understanding, in which participants not only
exchange (encode-decode) information, news, ideas and feelings
but also create and share meaning8. In a simpler word,
communication is a means of connecting people or places. Things
such as catalogues, advertisements and social media newsfeeds
comprise the customer communication elements of Starbucks.
Loyalty Program
Starbucks’
Brand Loyalty
of Millennial
Store Satisfaction
Figure 2.1: Research Framework
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RESEARCH ARTICLE Adv. Sci. Lett. 23, 7420–7423, 2017

Figure above is the proposed framework that would be used for Sig. (2-tailed) .000
this research project. In this research, the researchers are going N 200 200
to determine the relationship between loyalty program, store Pearson Correlation .640** 1
satisfaction and brand loyalty of Starbucks’ millennial customers Brand Sig. (2-tailed) .000
in Sarawak. Loyalty N 200 200
Table 2.1: Hypothesis **. Correlation is significant at the 0.01 level (2-tailed).
HYPOTHESIS
H1 There is a significant relationship between loyalty program Finding shows that the loyalty program and Starbucks’ brand
and brand loyalty of Starbucks’ customers. loyalty of customers has a strong and positive correlation
H2 There is a significant relationship between store relationship with r = 0.640 which indicates the strength of the
satisfaction and brand loyalty of Starbucks’ customers. relationship between each dimension are strong, and the positive
correlation relationship (p value=0.000) is significant at 0.01 level
3. METHODOLOGY (2 – tailed) This means, the objective of this study was answered
as the result shows that brand loyalty of Starbucks’ customers is
A quantitative data based research has been designed, and a influenced by loyalty program offered by Starbucks. Thus,
survey questionnaire was employed as an instrument to collect hypothesis 1 is accepted. This finding was supported by17, by
data. The target respondent for this research is the Starbucks’ stating that loyalty programs can increase brand loyalty by
millennial customer in Sarawak. Stratified sampling method is creating switching costs and avoiding competition.
used for data collection. G-Power analysis software 3.1.9.2 is
used to determine the sample size of this research, the effect size Research Objective 2: Relationship between store satisfaction and
of “f square” 0.15, α error prob 0.05, power (1-β err prob) 0.8 Starbucks’ brand loyalty of millennial
with a number of 2 predictors, based on the result from
G*Power, 68 respondents is the minimum sampling size for this Table 4.2 Correlations Table of Store Satisfaction and Brand
research. Therefore, a total of 300 questionnaires were Loyalty
distributed among the target population but only 200 survey Correlations
questions were given back and can be used to analyze. As Store Brand
suggested by16, sample size larger than 50 and less than 500 are Satisfaction Loyalty
appropriate for most studies. 5 Point of Likert Scale was used to Pearson 1 .757**
assess respondents’ level of agreement. Store Correlation
Satisfaction Sig. (2- .00
tailed)
4. FINDINGS AND DISCUSSION N 200 200
Pearson .757** 1
The highest frequency of the respondent gender with 103 Correlation
Brand
respondents were female (51.5%) and 97 of the respondents
Loyalty Sig. (2- .000
were male (48.5%). In terms of age, the finding indicates that the tailed)
highest age range for this research are those from 21-30 years N 200 200
old which holds the highest frequency of 90 with 45% followed **. Correlation is significant at the 0.01 level (2-tailed).
by those ranging from 20 and below which has a total frequency
73 with 36.5%. The least frequency is from those ranging from
Finding shows that the store satisfaction and brand loyalty of
31 – 40 years old which has a total frequency of 37 with 18.5%.
Starbucks’ customers has a very strong and positive correlation
Out of 200 respondents, 119 respondents or 59.5% of the
relationship with r = 0.757 which indicates the strength of the
respondents have a Starbucks Rewards Card while 81 relationship between each dimension are very strong, and the
respondents or 40.5% do not have the Starbucks Rewards Card. positive correlation relationship (p value=0.000) is significant at
There are 140 respondents or 70% of the respondents went to 0.01 level (2 – tailed) This means, the objective of this study was
Starbucks at least once a week while 44 respondents or 22% of answered as the result shows that brand loyalty of Starbucks’
the respondents went to Starbucks at least twice a week. 12 customers is influenced by store satisfaction offered by Starbucks.
respondents with 12% went to Starbucks three times a week. The Thus, hypothesis 2 is accepted. This finding was supported by a
least is more they went more than four times a week to Starbucks research that stated the brand loyalty of customer is resulted from
which the total frequency of 4 respondents with 2%. their satisfaction with the store and this will protect brand from
competition18.
Research Objective 1: Relationship between loyalty program and
Starbucks’ brand loyalty among millennial Research Objective 3: The strength of relationship among loyalty
program and store satisfaction towards Starbucks’ brand loyalty.
Table 4.1 Correlations Table of Loyalty Program and Brand
Loyalty The linear regression test of the model disclosed that R Square of
Correlations the model is 0.567. It illustrates that 56.7% of the variance in the
Loyalty Brand Brand Loyalty of Starbucks has been significantly explained by
Program Loyalty Loyalty Program and Satisfaction in this research. Meanwhile, the
Loyalty Pearson 1 .640** remaining 43.4% cannot be explained. That means there were
Program Correlation other factors that can determine their Brand Loyalty of Starbucks.

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Adv. Sci. Lett. 23, 7420–7423, 2017
Table 4.3: Regression Analysis
Model Summary b
Mode Std. Error
l R Adjusted R of the
R Square Square Estimate
a
1 .567 .571 .48670
.759
a. Predictors: (Constant), Mean Loyalty Program, Mean Store
Satisfaction
b. Dependent Variable: Mean Brand Loyalty of Starbucks
Table 4.4: Standardized Coefficient Based on Beta Value
Coefficient*
Standardized
Model 1 Coefficient t Sig.
Beta
(Constant) 1.974 .050
Mean Loyalty Program .089 1.135 .258
Mean Store Satisfaction .658 8.768 .000
a. Dependent Variable: Mean Brand Loyalty of Starbucks
The result shows all the independent variables had
relationship with the dependent variable. According to Sekaran
2010, the significant below of p < 0.05 is generally accepted
conventional level in social science research. The finding
shows one p-value for Store Satisfaction is below 0.05 and
Loyalty Program is above 0.05. This shows that the variable
named Loyalty Program is not significant to the research.
Based on the standardized coefficients, the Store Satisfaction
represents the highest Beta Value of 0.658 followed Loyalty
Program with 0.089. This estimation of Beta Value notifies the
amount of increase in Brand Loyalty that would be predicted
by a one unit increase in the predictor namely Store
Satisfaction, and Loyalty Program. Thus, it shows that Store
Satisfaction leads to the most critical effect size towards
Starbucks’ Brand Loyalty followed by Loyalty Program.
5. CONCLUSIONS AND RECOMMENDATIONS
This study was conducted due to the popularity of brand loyalty
of millennial towards certain brand. Result shows that loyalty
program and store satisfaction are positively related to brand
loyalty towards Starbucks. Store satisfaction is found to having a
very strong relationship towards brand loyalty as compared to
loyalty program indicate a strong relationship. Store satisfaction
is found to have the highest effect size as compared to loyalty
program. In addition, the 56.7% variance explained the effect of
those dimensions towards brand loyalty of Starbucks. As
recommendations, more variables need to be explored in
determining the best variable that can increase brand loyalty.
Hence, to give wider perspective the trends across cultures in
other countries could be established. These factors can be
considered as areas for future research.
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Received: 14 November 2016. Accepted: 23 November 2016.
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