Extended Essays 2021

Place

‘ Place ’ is concerned with the distribution channel, the path taken by a product from the producer to the

consumer. Australians are used to sophisticated, quality coffee beans, usually from Far North Queensland. In

the US, Starbucks acquires coffee using a hybrid marketing distribution channel, meaning a combination of

direct and indirect channels to reach the same target market segment 17 . A direct distribution channel varies

from the typical one as it is owned and managed by the company itself to supply the market directly through

its company-owned and licensed stores. However, in Australia as seen in Figure 3, the channel of distribution

is simpler, with the coffee chain employing a direct marketing channel, meaning at the time of Starbucks’

expansion there were no intermediaries or other distributors. However, although these coffee beans were cost

effective, they were nowhere near the quality that Australians were used to. This may have led to Australia’s

underwhelmed response after experimenting with the Starbucks coffee experience, hence contributing to its

failure in Australia.

Figure 3 Starbucks Marketing Channel in Australia (Pride, 2018)

17 Pride, W. (2018). Marketing Principles, 3rd Edition . 3rd Asia Pacific Edition ed.

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