Extended Essays 2021

Promotion

When expanding into new markets, an adequate promotional mix will use a combination of both above-the-

line, a paid form of promotion; and below-the-line promotion, a more direct communication to the desired

market 15 . During its expansion into Australia, Starbucks rarely employed above-the-line promotion. Instead,

maintaining that its stores are the core of the business and that it was necessary to build the brand through

advertising or promotion. Starbucks also makes use of point-of-sales promotion by promoting products such

as mugs in stores and using signs to advertise new products 16 .

Although this approach to marketing saves a lot of money and avoids advertising clutter, only using below-

the-line promotion tactics such as word-of-mouth to promote its product is likely a crucial error when

expanding into Australia. Advertising and promotion was essential to communicate the Starbucks message,

especially in a market as competitive as Australia, with a discerning consumer whose loyalty often lies with a

specific barista. Thus, Starbucks ’ failure to make use of above-the-line promotion and commercial marketing

contributed to its failed expansion into Australia.

15 Kotler, P. and Armstrong, G. (2018). Principles of Marketing . 5th ed. Harlow: Pearson Education Limited, 16 Schultz, H. and Gordon, J. (2019). Onward : how Starbucks fought for its life without losing its soul . New York, Ny: Rodale.

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