Download In a global marketing strategy, achieving

Running head: FINALIZED GLOBAL MARKETING PLAN
Finalized Global Marketing Plan
Tara Appling-Crisp
MKT/562
October 10, 2011
Lorri Cline
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Executive Summary
Whether red, white, rose, or sparkling, wineries across the world provide a range of
varieties and prices from many regions. Most cultures also use wine in a variety of ways from
religious ceremonies to special occasions to a standard beverage with a meal.
California
wineries provide a range of choices based on the desires of the consumer with current
availability reaching only the United States. Globalization of California wines provides these
same options to consumers in other countries, which requires significant research because of the
popularity of European wines such as those local to France, Italy, and Spain. While personal
experience from travel indicates a lack of California wines across Europe, the risk of competition
from other European vineyards may indicate a need for exporting specific blends of wine into
specific markets. Ireland’s recent failure in the wine industry because of climate issues creates a
need for importing wine from other countries. Porter’s Five Forces Model provides five major
areas for study to determine the success of failure of a venture within this chosen market
including rivalry, new entrants, substitutes, buyer power, and supplier power.
A strategic mode of entry also plays a significant role in the success of California wines
for Ireland. According to Johansson (2009), four different modes of entry exist for a company
beginning a new expansion venture for the international market in the form of exporting,
licensing, strategic alliances, and foreign direct investments. Each mode varies based on the
involvement required of the company. In an exporting mode, for example, a company has ecommerce options as well as overseas subsidiary options allowing minimal overseas purchases
with the initial investment. FDI, on the other hand, requires full involvement from the company
and a capital investment for manufacturing plants. Choosing one option or a variety of options
for entry mode allows any company a successful entry into the country of choice. Strategic
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alliances and partnerships prove the best mode of entry for Ireland with production remaining in
California to ensure the quality of the grapes. Understanding consumer behavior, localization,
adaptation, and standardization strategies provide additional knowledge for successful product
globalization. Understanding the decision-making process of any consumer provides the initial
insight into the foreign customer. With further research, consumer behavior in local and foreign
markets reveals similarities and differences useful in the marketing process, whereas
standardization becomes country specific. Implementation of the knowledge of each aspect
reveals to the consumer a company value worthy of a quality product. With California wines
specific to Ireland, creating blends unique to the country and adapting the labeling to meet the
regulation requirements becomes the best strategy for standardization along with adherence to
the four P’s of marketing for the implementation strategy. Significant research regarding country
cultures and areas to create a competitive advantage provide additional information for
segmentation, positioning of the product, distribution strategies, and pricing. Additionally, the
life cycle of the product holds an important factor for pricing and positioning because each phase
of the life cycle requires adaptation. Flexibility in the product for target segment, pricing, and
positioning creates an avenue for further success.
Global advertising and management of the advertising strategy requires an integrated
approach with adherence to different cultures, inclusion of marketing managers in the decisionmaking process, and appropriate promotional strategies. Employing a marketing director to
supervise the department with individual managers for each product, country, or aspect of the
strategy creates a unification of the marketing between countries. Creating a global presence
through media and volume additionally places the California wine in front of the customer on a
consistent basis. Finally, promotional tools such as sponsoring causes and special events such as
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art gallery openings, allows the customer an opportunity to taste the product without a significant
initial purchase.
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Finalized Global Marketing Plan
Competitive environments, global entry strategies, segmentation, pricing, distribution,
promotional tools, and implementation plans all play a significant role in the introduction of
California wine to the Irish market. Consumer behavior studies reveal the desire of the
customer, the thought process before purchase, and feedback following use of the product.
Adaptation, localization, and standardization of California wines to meet Irish standards further
create brand value among the consumer. Finally, advertising strategies and promotions in the
form of sponsorships and strategic product placement create a globalization and marketing
strategy for successful implementation.
Competitive Environment
Porter’s Five Forces Model
Competition in the global market involves a large group of possibilities and requires
significant research prior to market entry. When entering an overseas market, competition
outside the chosen country of Ireland requires consideration as well because France, Italy, and
Spain produce quality wines as well as European Union trade advantages. Porter’s Five Forces
Model “identifies five sources of competitive pressures on the firm in a given industry”
(Johansson, 2009, p. 48). The five areas of study include rivalry, new entrants, substitutes, buyer
power, and supplier power. Each area reveals the viability of Ireland as a new market for
California wine and the potential of exporting a specific California wine to Ireland.
Rivalry. Research of domestic and international competitors requires focus for
successful product globalization. One of the easiest methods of exporting wine to Ireland or any
overseas market requires a third party vendor. According to the California Wine Export Program
(2011), which provides market reports for the world’s leading importers and exporters of wine,
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Ireland neither imports nor exports the product from California or any of the other major
countries within the global wine industry. Although many Irish citizens believe production of
wine within the country becomes impossible because of severe climate changes, others believe a
version of the grape produced in France could withstand the climate (Herault, 2010). However,
the competition with France as one of the world’s leading wine producers would create a high
level of competition for Ireland. Therefore, importing wine from across the globe becomes the
only option for many pubs, restaurants, and spirit stores throughout the country.
California wineries produce the largest amount of wine within the United States creating
a larger potential for success in the export business. After reviewing the online sales options of
the major wineries in California, none currently ship overseas creating an environment of low
competition for developing an export relationship with Ireland. Foreign competitors become the
highest potential for rivalry with France a strong possibility because of geographic location and
the membership within the European Union.
New Entrants and Substitutes. As leading wine producing countries in the foreign
market, France, Italy, and Spain create the greatest threat of new entry or substitution. However,
The Irish Wine Association (2011) indicates that of the 8.7 million cases of wine sold in Ireland
in 2010, only 4% were rose. Additionally, only 15% of wine sold in 2010 came from hotel and
restaurant sales with only 6% in local pubs. Therefore, the specific market to pursue within
Ireland becomes hotels, restaurants, and local pubs with an initial offering of California rose
wines with a sampling of red and white options that differ from those currently offered. For
example, if France provides merlot and chardonnay options, providing shiraz, cabernet
sauvignon, or pinot grigio alternatives in addition to a zinfandel or other rose provides an
extended offering of California’s unique blends.
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The IWA also indicates that Australian produced wines became the favorite of Irish
citizens in 2010 with France trailing as the distant second in popularity. Although an attempt to
enter the market in either of these countries would create significant substitution possibilities,
global options in Ireland reduce that possibility because of the lack of local production.
According to the IWA (2011), Ireland maintains the third highest excise tax on wine within the
European Union. This high tax keeps the risk of import from smaller wine producing countries
low because the financial risk becomes too significant for even a slow introduction of the
product.
Buyer Power and Supplier Power. According to Porter’s Five Forces Model, buyer
power and supplier power can create a strong argument either for or against global expansion. In
the case of strong buyer power, an attempt to have high prices or to increase prices creates
additional competition because the consumer simply purchases another brand. In the case of
supplier power, profit margins realize the effects without a distribution network (Johansson,
2009). Irish guidelines for importing wine from outside the European Union require special
licensing and fees every four months dependent upon the amount of wine imported on a regular
basis. Therefore, increasing prices becomes necessary to cover costs and maintain the desired
profit margin. However, a distribution network within the European Union provides the
opportunity for decreased fees and a competitive price per bottle of wine. Pubs, restaurants, and
hotels frequently sell wine by the glass increasing the potential for additional profit percentages
when dealing with these entities.
Global Entry Strategy
Exporting
Three options exist when considering the exporting strategy as follows:
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Direct through overseas subsidiaries,
Direct through e-commerce, or
Indirect through trading companies (Johansson, 2009).
Direct exporting provides the company more control through hiring middlemen or partnering
with sales subsidiaries. With the direct exporting option, the limited knowledge of the chosen
country remains an issue. However, the hiring of individual agents to oversee each aspect of
direct exporting requires additional resources and funding. Johansson (2009) details six different
areas required for exporting as listed above. The distribution agent holds responsibilities from
finding the distributor to negotiating the contract whereas customs issues become the
responsibility of the shipment agent. Another agent requires an experience with export pricing
and legal issues while needing a fourth agent with currency conversion. Each of these agents
must also deal with the range of documents used for each task. These forms include bills of
lading in foreign and domestic needs, letters of credit, customs declarations forms, and insurance
certificates in addition to the traditional forms of invoices and purchase orders.
The indirect exporting option of using trading companies provides a company little
control including control over the country choice. EMCs, on the other hand, allow the company
to choose the country for business and become responsible for business transactions in the
foreign market with limited commitment terms. If the venture becomes unsuccessful or not as
successful as forecast, ending the venture becomes an easy task. However, assuming the venture
becomes the success forecast in the planning stages, the company loses the ability to learn about
the foreign market and the necessary laws and regulations of doing business in the country of
choice.
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Licensing
An agreement between foreign and domestic companies to produce, distribute, and sell a
product becomes the nature of licensing. Essentially the technology and product created by a
domestic company transfers to the foreign company with an agreement for a certain percentage
of the royalties. According to Johansson (2009), royalties average 5% of the gross revenues.
The advantages of licensing a product allow time for significant market research and knowledge
of the foreign country and an avoidance of tariffs while maintaining a profit from the product
whereas the possibility of the licensee using information for competition becomes a significant
disadvantage. The creation of the licensing contract becomes essential to the agreement to
ensure fair dealings and limitations for both companies involved. The first effort requires
ensuring necessary copyrights and patents take place. The next contractual efforts include
sublicensing rights, performance requirements, auditing expectations, compensation, and
provisions for termination of the contract. Two important forms of licensing and equity options
exist in the form of franchising and original equipment manufacturing (OEM).
Franchising, a form of licensing, creates a situation in which a domestic company allows
a foreign investor or entrepreneur access to products for sale in the overseas market. The
domestic company maintains control of the business dealings as the foreign company pays fees
and royalties based on revenues. The domestic company provides the foreign entrepreneur
marketing strategies and training. Although franchising occurs quickly and inexpensively, the
domestic company receives a small percentage from sales of the product, which leaves little
room for further expansion. Original equipment manufacturing (OEM), on the other hand,
requires allowing a foreign company to sell a domestic idea or product under the foreign brand
name. “OEM is like selling a generic brand, letting another firm put its name on the product”
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(Johansson, 2009, p. 162). The domestic company maintains minimal expense with no future
efforts available to market the product internationally.
Strategic Alliance
Finding an accomplished partner in any foreign country within various networks becomes
the essence of a strategic alliance. With minimal market knowledge, a strategic alliance (SAs) in
at least one of the four areas becomes essential to entry into a foreign country. SAs formulate in
one of four areas including distribution, manufacturing, research and development, and joint
ventures. In a distribution alliance, the domestic company locates a distributor in the foreign
market allowing increased capacities of production for the foreign company and immediate
access to the foreign market for the domestic company. A manufacturing alliance allows the two
different companies to manufacture similar parts and products using the same manufacturer. The
disadvantage to this alliance becomes two different companies attempting to control the
production process with potentially different opinions and management styles.
Joint ventures, viewed as equity-based alliances, involve the “transfer of capital,
manpower, and technology” (Johansson, 2009, p. 166) to a foreign partner with business
experience in the market. Again, a disadvantage becomes the domestic company’s lack of
knowledge about the foreign market and a loss of the opportunity to gain that knowledge. When
sharing information with a foreign company, a risk of antitrust exists because of minimal
knowledge and an uncertainty regarding the financial benefits to the foreign partner.
Approached correctly, the domestic company must obtain significant information about the
foreign partner, ensure contract negotiations cover each step as necessary, and take the
opportunity to visit the foreign country as a learning experience.
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Foreign Direct Investment
Foreign direct investment (FDI) options create a strong advantage in low prices, customer
satisfaction, and production of a quality product. Building new plants or acquiring existing
plants requires an initial capital investment to maintain marketing control. Readily used in
Ireland, by the end of 2009, FDI from the United States totaled $235 billion with 600
subsidiaries in place employing more than 100,000 Irish citizens (US Department of State,
2011). Although FDI appears the preferred method of entry into Ireland, outsourcing outside of
the United States falls under attack because it leads to the loss of jobs for the American
employees. In an already faltering economy, increasing the unemployment rate while aiding
employment in another country becomes an undesirable option. Acquisitions, on the other hand,
create issues of compatibility with a potentially similar product already manufactured by the
company.
Implementation and Standardization Strategies
Consumer Behavior
Successful marketers develop a strategy to meet the needs of the target group better than
the competition through research revealing the buying patterns of consumers. Market research
also consists of defining the problem, research design, measurements, constructing
questionnaires, sampling, fieldwork, and data analysis (Johansson, 2009). One of the goals of
the lengthy amount of research required becomes company value not only for one product but
also future products. Additionally, understanding the decision process of the consumer allows
the creation of an appealing marketing strategy. Several models exist to aid marketers and
researchers in compiling information.
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Kotler and Keller’s five stage model of the buying-decision process (2007) includes
research in problem recognition, information search, alternatives, the purchase decision, and
consumer behavior following the purchase. The diagram below provides details of each step in
the process.
Problem
Recognition
• Consumer recognizes the need for a product
• Marketing strategies invoking interest in a product relayed as a need
• Active searches reveal information about various products of similar
products and the features of all competing brands
•
Marketers use strategic positioning and branding to highlight the assets
Informational
of a specific product over the competition
Search
Alternatives
Purchase
Decision
• Consumer weighs the options and assets of each product for an
informed purchasing decision that meets the need
• Marketers use pricing strategies for similar quality products and
important attributes as the competition
• Social networking and others opinions sought by the consumer
• Situational influences such as finacial capability and any potential risks
• Marketers must reduce any perceived risks and build brand value for the
social networking factor
• Buyer satisfaction or disappointment
• Marketers use communication efforts to reduce dissatisfaction and
gauge areas for improvement
Postpurchase
Behavior
• Marketers provide methods of disposal to protect environmental risks
The buyer decision-making process remains the same for local and foreign customers alike
because consumers are goal-oriented (Johansson, 2009). A consumer realizes a need or desire
for a particular product and seeks out the best availability when considering price, quality, and
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the opinions of peers as shown in the previous model. However, difficulties exist in the search
for information directly from consumers in the form of surveys or questionnaires, personal
communication, or customer feedback following a purchase. Marketers must rely on available
statistics during the decision-making process. For this reason, initial expansion to a country
similar to the home country in culture, behavior, and legal regulations provides a higher degree
of certainty in the consumer research. For example, the European Union consists of 24 countries
including Ireland. The EU provides these countries with a foreign trade agreement with the
United States although the union prefers trade among the 24 countries only.
Standardization
Creating a standardized marketing strategy for a global product allows companies to meet
the needs of customers while keeping the quality of the product and production costs low. As
with any concept, various advantages and disadvantages exist creating the need for research into
other options such as localization or adaptation. The result must create positive financial
performance in conjunction with sustainability of the product in the global environment.
Production, distribution, and marketing strategies become important areas of standardization as
world markets become similar and the desires of the consumer increase. A global product, such
as the rich wines of California, becomes individualized to a specific area with changes to the
marketing strategy within each area.
Localization, Adaptation, and Standardization. Standardization refers to a unique
marketing strategy appealing to the consumers in Ireland, whereas localization and adaptation
require changes to the product and changes to meet the specific legal requirements within the
country. “Product adaptation involves altering the product to meet local conditions or
preferences” (Kotler & Keller, 2007, p. 336). However, adaptation of California wines becomes
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unnecessary because the product holds a natural differentiation from the wines popular to Ireland
that import from Australia, France, and Chile with differences in the grapes harvested in each
area (Irish Wine Association, 2011). Localization, as stated by the Alcoholic Beverage
Federation of Ireland (2011), requires that labeling include the number of units in European
measurements on each bottle as well as a warning for pregnant women. The ABFI also requires
that the company providing the product engage in consumer awareness and education
campaigns. Ultimately, the mix of adaptation, localization, and standardization depends upon
the global market selected. Adhering to the local policies and regulations of that country may
not indicate a need for product adaptation. However, successful infiltration of the product may
require localization in select areas. Standardization, on the other hand, indicates a marketing
strategy identifying the unique differences of the product from others already offered and
adheres to the local policies.
Advantages and Disadvantages of Standardization. With any new product line or
marketing venture advantages and disadvantages require research and discovering. Kotler and
Keller (2006) suggest a lengthy consideration of the following areas to determine revenue
possibilities:
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Product features,
Brand name,
Labeling,
Packaging,
Colors,
Marketing strategy,
Materials, and
Prices.
However, the standardization effort of the marketing strategy becomes significant in the success
of the product. Johansson (2009) provides five important advantages of any standardization
effort as follows:
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Cost reduction,
Improved quality,
Enhanced customer preference,
Global customers, and
Global segments.
When directly related to California wine, improved quality becomes an advantage that need not
be addressed. Production must remain in California because of the time sensitive issue between
harvesting the grapes and producing the various types of wine. The cost reduction comes
through the current advertising on British cable and television because millions of Irish
consumers purchase cable options through Great Britain creating a combined effort for
advertising the product. Worth €6.6 billion in 2010, the alcoholic beverage industry in Ireland
led by 50.7% beer sales. Wine sales represented half of the remaining 49.3%. Only 10% of
those sales imported from the United States with white wine constituting 49% and red wine
following at 47% (Irish Wine Association, 2011). Competitive concerns lead the marketer to a
conclusion of initially importing rose wines because of significant imports from Australia of red
and white wines. However, the most popular imports come in the form of Shiraz, Cabernet
Sauvignon, Riesling, and Chardonnay leaving a variety of other combinations available for
California wines. Creating a blend unique to Ireland provides differentiation from the current
popular varieties. Because the Irish consumer maintains a unique palate for wine of quality and
has experience with California wines in travels to bordering countries, the global customer base
has a natural creation with segmentation focused on those who frequent restaurants and pubs or
stay in hotels within the country when traveling. However, according to the Irish Wine
Association (2011), the majority of wine sold came from independent sprit shops.
Standardization of the marketing strategy in a country with awareness of the product should aim
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to excite the Irish consumer to select California wines and create an increased sense of brand
awareness.
Standardization holds as many disadvantages as advantages. These disadvantages
include off-target segmentation, a lack of uniqueness, issues with trade barriers, and strong
competitors (Johansson, 2009). In relationship to California wine, the uniqueness presents in the
form of the grape quality creating differentiation from the popular Australian wine. The quality
of the grape becomes the promotional difference between the California wines and others
available in Ireland from around the world. For example, the length of time purple grapes
remain with the skin becomes the distinguishing factor for the type of wine created. The longer
the grape stays with the skin prior to pressing, the deeper the redness of the wine. The grapes
that produce white wine varieties stay with the skins for a short period and pressing occurs
almost immediately after harvesting. Additionally, grapes that create red wine varieties soak in
tannins for a certain amount of time dependent on the type of wine intended for production
(Wine.com, 2011).
Off-target segmentation and trade barrier issues also require significant market research
prior to determining the best country market for the product. Because of decreased economic
conditions in 2009, Irish wine sales decreased in 2009 and 2010 by 3.5% creating a questionable
target market for Ireland. A growing concern regarding high excise and domestic taxes exists
because Ireland holds the highest excise tax for alcoholic beverages. However, increasing
domestic taxes within the country would result in consumers choosing to source products from
other countries serving to further increase the excise tax (ABFI Policy Document, 2011). This
creates an issue of cost when considering the import of California wines that require production
in California. Furthermore, when considering the current political and religious issues in
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Northern Ireland, the United States government implemented the 1998 Belfast Agreement
allowing a united Ireland. This agreement changed trade options for the entire country because
of the location of one of the major harbors for distribution, Belfast Harbour in Northern Ireland
(US Department of State, 2011). However, because the wine imports to Ireland primarily come
from Australia and Chile, and the demand for wine continues to increase, the California wine
market produces enough varieties to successfully compete. The potential of using other
alcoholic beverage distributors such as those owned by Heineken or Bacardi Limited, creates the
potential for additional jobs within those companies and eliminates the initial need to locate
subsidiaries while learning more about the country.
Globally Standardized Products. Kotler and Keller (2006) identify 10 important steps
deemed “The Ten Commandments of Global Branding.” These steps listed below aid a
company in starting a global branding process that eliminates many of the disadvantages and
enhances the advantages such as reducing marketing costs and becoming a source of substantial
growth for the company.
1. Understanding similarities and differences between local and foreign markets,
2. Elimination of shortcuts,
3. Adaptation of an existing marketing infrastructure,
4. Diverse communication,
5. Profitable partnerships,
6. Balancing standardization and customization,
7. Global and local control,
8. Ground rules for targets and positioning the product,
9. Measurement systems for strategic decisions, and
10. Design of brand elements.
With significant market research, each of these elements provides a successful globalization
strategy. Research of the wine industry in Ireland specifically reveals that many of the varieties
of red and white wine currently offered include mixes of standard varieties. For example, the
Australian red Shiraz wines include only 75% Shiraz and 25% Grenache and the popular white
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variety of Chardonnay from Australia includes a small amount of Sauvignon Blanc. The same
information holds true for the wines imported from France with Chile the only country to
provide Ireland with pure versions of wines. This information creates unique possibilities for
adaptation of existing wine blends with the globalization of California wines into the country.
Researching the various blends imported from the top two or three importers of wine also allows
California wine blending in new ways unique to Ireland.
Profitable partnerships with companies and distributors currently doing global business
within the country opens initial avenues for success. For example, Heineken International holds
several FDI’s and strategic alliances across 70 countries creating a large market for distribution
and warehousing. Creating a partnership with this popular beer company for initial entrance into
Ireland allows lower costs and association with a beverage that makes up 50.7% of the alcoholic
beverage sales in Ireland (Heineken, 2005). Again this allows time to learn more about the
country through personal experiences and make strategic changes as necessary for increased
profit margins and sole control of the distribution of the product without the need for
partnerships.
Standardization of California Wine for Ireland. Many standardization strategies
include a slight change in the product. However, as previously mentioned, the differences in the
grapes produced in each region importing to Ireland holds a natural standardization of the
product. Creating new blends specifically for Ireland in both red and white varieties further
standardizes the product as well as providing pure forms of the wines. Packaging and marketing
strategies becomes the best area for standardization for the purpose of complying with the
requirements of the Alcohol Beverage Federation of Ireland and the Irish Wine Association. For
example, the IWA requires that consumers be allowed to sample wine prior to a purchase
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opening up a variety of options for marketing strategy when introducing the new brand to the
country. Additionally, the ABFI that governs the IWA requires that companies importing
products show equal concern for preserving the employment of Irish citizens by using
manufacturing and distribution companies indigenous to the area (Irish Wine Association, 2011).
Another local standardization effort and requirement indicates that the unit guidelines for
drinking alcoholic beverages differ for men and women, 21 units for men and 14 units for
women where one unit equals 10 grams (ABFI, 2011). Although not currently in place, socially
responsible issues toward the environment require potential consideration because the
government officials within Ireland have begun these considerations. Successful marketing
strategies around each of these standardization efforts aid in the success of the California wine
products.
Implementation Strategy
A successful implementation plan transfers a marketing strategy into a measurable plan
of action resulting in growth and an increased competitive edge (Pearce & Robinson, 2011). The
four P’s of marketing include product, price, placement, and promotion with a fifth important
aspect in the global environment devoted to packaging. With the top three wine imports to
Ireland coming from Australia, Chile, and France respectively, the California wine products
realize minimal competition because of the different qualities of the grapes and the ability to
provide either pure varieties or new blends. Pricing, on the other hand, requires consideration of
the current pricing in Ireland for by the bottle and by the glass situations. In 2010, table wine
ranged from €7.72 to €8.62 per bottle (Irish Wine Association, 2011). With the recent reduction
in excise duty, the cost per bottle increases an average of €1.97 changing the per bottle range
from €9.69 to €10.59.
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Placement of the California wines requires strategic competition with the current sales in
Ireland. The majority of wine sold by the bottle naturally occurs in local stores with by the glass
sales occurring in hotels, restaurants, and pubs. Creative packaging the meets the previously
mentioned country requirements along with features that include the beautiful landscape of the
country draws the consumer to the attractiveness of the bottles. Offering wine tasting events
within hotels and shops allows the consumer to taste the unique blends prior to a purchase for an
informed decision. Sponsoring or cosponsoring events such as wine and food events held
throughout Europe brings an array of customers throughout the European Union and allows the
potential for food and wine magazines to showcase the products and the event.
Global Segmentation, Positioning, Distribution, and Pricing
Global Segmentation
Through the process of segmentation, market division reveals groupings based on similar
customer wants and expectations. Certain patterns and criteria develop naturally and require
identification in the segmentation process. Peter and Olson (2008) identify specific bases used
for the initial process as follows:
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Geographic such as country,
Demographic such as age,
Sociocultural such as social class
Affective and cognitive such as benefits of the product, and
Behavioral such as media use.
However, customer preferences will differ in some way creating the need for a flexible product.
Termed niche marketing by Kotler and Keller (2007), subsegments and patterns of segmentation
produce increased product offerings, the potential for expansion, and increased revenues.
Homogenous preferences indicate similar preferences among consumers whereas diffused
preferences indicate significant differences. Finally, clustered preferences reveal distinct
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preferences suitable for flexible and profitable product options. Segment identification becomes
a broad spectrum of ideas further narrowed down involving the two-step process of macro
segmentation and micro segmentation.
The segmentation process occurs in two distinct stages Johansson refers to as macro
segmentation and micro segmentation (2009). Macro segmentation, similar to the bases
identified by Peter and Olson, involve general criteria such as socioeconomic status and cultural
aspects. This first phase aids the marketer in the identification of country selection in the
beginning of the expansion project. Several countries will have similar characteristics creating
the need for the micro segmentation stage of the process. In this stage information regarding
specific groups of customers reveals patterns of use, price sensitivity issues, media use, buyer
behavior, and income levels. Through this second phase the specific target customer becomes
clear and the analysis reveals ways the marketer should communicate with the customer within
the target segment.
Marketing Components
A strategic marketing mix consists of the four P's of marketing, product, price, place, and
promotion as well as the four C's, consumer wants and needs, cost to satisfy, convenience to
purchase, and communication. Mixing each of these into a marketing strategy builds brand
equity and awareness. For example, when comparing consumer wants and needs to a product,
careful analysis reveals success in building a product for the customer not for the company.
Additionally, implementing the stages in the product life cycle (PLC), introduction to growth,
maturity, and decline, influences the marketing mix and strategies. Analysis of the four P’s
occurs in each stage of the PLC.
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Growth, Maturity, and Decline. The growth stage builds market share and brand
preference by maintaining competitive pricing, reaching a larger consumer base, acceptance of
the product, and quality assurance. As the popularity of California wine increases, plans to
expand to other regions ensure a strong market share through the maturity stage. In the maturity
stage sales begin to diminish as a company formulates ideas for maintaining market share and
profits. Lower pricing, incentives, and differentiation measures ensure the products PLC
continues. Because California wines maintain global recognition, the addition and creation of
new varieties produces an incentive over the competition in the decline of the PLC. As sales
decline, these additions provide opportunity for a new target market creating customer
sustainability.
Positioning
Positioning in the global market offers brand awareness and allows the marketer to select
the optimal place for the product, which changes with each target market thereby creating the
need for an analysis of the demands within each market to establish a differential advantage.
The needs within each targeted segment differ and require a link to the brand name “to increase
brand loyalty," (Johansson, 2009, p. 190). Involvement in the selection of positioning strategies
includes various stages of a company cycle such as market leader, the market challenger, and the
market follower. Maintaining quality position allows a firm to remain a market leader.
However, the position of market challenger requires a company to implement strategies that
include price advantages, innovative products, and promotions (FAO Corporate Document
Repository, n.d.). Extensive advertising throughout the marketing strategy allows the California
wine product to gain competitive perspective and a market challenger position while paying
close attention to the product space.
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Keegan's Four Positioning Strategies. According to Johansson (2009), Keegan focused
on product and promotion as vital aspects of the marketing mix and developed four basic
positioning strategies. The first, product-communications extension provides methods for
extending an existing product to new country markets. Because of customized products for each
segment, local decision-making and differences between countries disable this concept for a
multidomestic market. The second strategy, product extension-communications adaptation,
involves repositioning a current global product, which includes adapting to cultural, political,
and socioeconomic conditions. Additionally, implementing different communication strategies
serves to meet consumer wants and needs. The third strategy, product adaptationcommunications extension, includes adapting to government policies and regulations, cultural
differences, and patterns of use whereas the final positioning strategy of dual adaptation involves
product localization that reflects host market conditions.
Accepting a Global Brand. Successfully entering the global market requires gaining the
acceptance of the company and the product in the foreign market. California winemakers must
analyze the cultural differences, government policies, consumer demands, and patterns of use to
understand how to best enter the Irish market. Additionally, analysis of the five stages of
development listed below becomes vital to ensuring success and acceptance of the product.
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Idea generation,
Preliminary screening,
Concept research,
Sales forecasting, and
Test marketing (Johansson, 2009).
The current global popularity of California wine requires basing the sales forecast on the success
of recent wine sales from various regions. As previously mentioned, Irish wine sales totaled 8.7
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million cases in 2010 (Irish Wine Association, 2011). California wines also create potential for
versatility through combinations presented as unique to the Irish market.
Distribution
In a global marketing strategy, achieving production efficiency for minimal costs and
mass distribution becomes the goal of a company that provides a product to customers. When
introducing a new product into the foreign market, creating decreased shipping times requires a
modification of the distribution channels currently in place for building brand equity. Therefore,
the marketer must determine how to deliver the new product to the customer through appropriate
channels that meet the needs of the customer as well as keep costs down for maximum profits.
Discovering these channels differs for each market and must be specific to the foreign target
market while creating a competitive advantage.
Competitive Advantages and Available Channels. When entering a new foreign
market, creating and maintaining a competitive advantage becomes vital to the success of the
company goals. Johansson (2009) indicates several issues requiring a solution such as
exhaustive distribution, distribution based on the location of customers, decreased costs,
distributors with knowledge of the new foreign market, and local manufacturing. A decision
regarding the methods for customers to obtain the product such as retail stores, Internet orders, or
wholesalers require research. Each of these areas, if strategically chosen, provide any company
with a competitive advantage through lower costs and a competitive price that still creates the
desired profit margin. Implementing numerous sales avenues further increases the competitive
level. With a prime geographic location, Belfast Harbour in Northern Ireland provides additional
competitive advantages through numerous options for warehousing, shipping channels, and
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distribution of California wines. Therefore, deciding among forming strategic alliances, foreign
direct investment (FDI), full exporting, or licensing becomes an initial requirement.
Optimal Channel for Irish Distribution. Although FDI becomes an appealing frontrunner, California wine production must remain in the United States because shipping grapes
overseas for production affects the quality of the grape and ultimately the quality of the wine.
However, creating strategic alliances with Belfast Harbour for the shipping and warehousing
portion of the distribution process creates a relationship that benefits the harbor with plans for
investments and improvements between 2011 and 2013 (Belfast Harbour, 2011). The sales
options for retail, trade events, pub sales, and restaurant sales allow customers a variety of
avenues for purchasing the product either by the bottle or glass.
Pricing
The close relationship between product price and positioning in addition to the effect on
the marketing mix allocates price as a crucial step to strategic planning. Certain steps require
consideration when determining price:







Developing a marketing strategy,
Making marketing mix decisions,
Estimating the demand curve,
Calculating costs,
Understanding environmental factors,
Setting price objectives, and
Determining price (NetMBA.com, 2010).
The stage of the product life cycle also affects pricing as the life cycle progresses from
introduction through the growth, maturity, and decline of the product. An introductory price
creates incentive to purchase or a low-priced penetration approach. At the beginning of the cycle
the customer’s sensitivity to price becomes inconsequential because of the lack of familiarity
with the product. Therefore, “charging what the market will bear” (Johansson, 2009, p. 476)
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allows a higher skimming price. As demand increases the price adjusts accordingly while
maintaining competitive advantage and quality. When the product matures the price may drop as
the company considers discontinuing or liquidating the product. In the stage of decline, new
features allow customers to maintain interest in the product as the company maintains the ability
to price at a substantial level to prevent liquidation.
Global Advertising
Managing Global Products
Whether introducing a new product into a global market or introducing an existing
product in a new country, management of the process presents quite a few challenges as follows:





Different cultures and time zones,
Increased need for technological communication,
Effective implementation for both foreign and domestic environments,
Balancing different priorities, and
Leadership despite cultural and communication barriers.
An integrated marketing approach creates a situation in which the home country and the foreign
country become part of one global marketing strategy with adaptations to meet cultural needs.
According to Johansson (2009), many companies employ a global marketing director to direct
the entire process. The director position requires the ability to lead the development and
implementation of a global marketing strategy, unify marketing and sales between countries,
allocate resources for global brand development, recruit team members, and manage that team
with leadership and motivation to reach common goals. Gruppo Campari, the parent company of
Skyy Vodka, employs a marketing director based at the corporate headquarters with marketing
managers in Italy, United States, and Brazil for the company spirits brands with a fourth
marketing manager for the other countries combined. A fifth marketing manager for the wine
labels deals with marketing and public relations (Gruppo Campari, n.d.). Bacardi Limited, on
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the other hand, employs a chief marketing officer based in Puerto Rico with a marketing
manager for each of 16 different countries (Bacardi Limited, 2011).
Managing an extensive marketing strategy such as Bacardi Limited and Gruppo Campari
requires certain methods and techniques for success. Johansson (2009) identifies certain
management systems in the form of integration mechanisms that aid in the process. The first,
informal coordination, allows employees to travel to necessary countries and informally share
information gathered from that visit allowing other employees to receive information about
different markets. The second, coordinating committees, allows a more formal aspect of
communication because managers from various countries meet on a regular basis to ensure
global integration between each country. The final method, coordination of staff, begins as an
informal meeting similar to the informal coordination method but eventually becomes an
organized meeting for communications regarding product development, integration of local and
global brands, and the coordination of a global campaign. Heineken Holdings, for example,
includes five operating regions in Western Europe, Central and Eastern Europe, The Americas,
Africa and the Middle East, and Asia-Pacific. The company employs marketing managers for
each region who meet quarterly on a formal basis (Heineken, 2005).
Managing the global product also requires people skills and an understanding of the
necessary organizational structure. “If the organizational structure is the body and the chassis
that hold the car together and the management systems are the engine and the gearbox, people
provide the necessary lubrication that makes the pistons pump and the car run smoothly. And
‘people’ means everybody in the organization, from top management down” (Johansson, 2009,
p. 589). Allowing managers responsible for a specific region or country to take part in the
development and implementation process of the marketing strategy provides an opportunity to
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use knowledge gained regarding the culture and people within that country. Communication
with the country managers additionally enhances the corporate culture for internationally strong
financial and planning systems. According to Johansson (2009), marketing directors and country
managers should communicate and make decisions that comply with company values rather than
relying on the various cultures involved in the strategy. For example, Heineken International
claims marketing innovation, changing needs of consumers, and community involvement in each
country drive the growth strategy (Heineken, 2005).
Global Presence
Creating global recognition and brand equity on an international level begins and ends
with coordinating campaigns, which require minor adaptations for each country, and controlling
costs with advertising funds shared among several countries. Global advertising accomplishes
these goals through uniform campaigns used in several countries with adaptations for language
barriers and regulations. Throughout the process, decision-makers must choose how to allocate
the budget shared by several countries, the best message for cross-cultural markets, and the
media used in the campaign (Johansson, 2009). For example, many citizens in Ireland subscribe
to British television providers that also become available in a variety of other countries including
the United States such as the British Broadcasting Corporation (BBC). An integrated approach
to creating a global presence requires strategy, budget organization, creative messages, and the
use of media. For strategic introduction of California wines, ensuring the labels meet Irish
requirements of units and necessary warnings becomes the first step. Familiarity with many
independent wineries in California may not exist in Ireland. Therefore, an additional labeling
tactic requires mentioning the more recognizable region in California such as Sonoma or Napa
Valley while keeping label images uniform. Creating a label unique to Ireland ensures a
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recognizable label for consumers as well as advertising promotions and an eventual decrease in
costs, which will initially be higher because of the new expansion efforts required.
As with any marketing strategy, creating a global presence and the options for global
advertising contain pros and cons that require consideration before proceeding with the strategy
to allow the marketer to make adaptations as necessary. The main advantage involves the ability
to keep advertising costs down through integrated advertising campaigns allowing international
use of the message chosen for promotions in addition to purchasing promotions in media that
reach an international audience. Johansson (2009) identifies four conditions required for
successful global advertising:
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

A recognizable image across multiple country markets,
Same logo meanings,
Identical or similar product features, and
Similar requirements for use.
Each of these conditions, or the lack of these conditions, creates disadvantages to the global
advertising strategy if localization and adaptation become required elements within several
countries. Costs may become difficult to contain, adaptations to logos or product images may
require localization serving to further increase costs, and product features may require adaptation
to meet the needs of customers. Therefore, global advertising agencies may become a viable
option for the initial introduction of California wines into the Irish market. The agency itself
maintains an international reputation, and locating an agency with alcoholic beverage experience
in Europe or Ireland presents additional advantages. The potential advantages follow:





Development of the message and creative for the campaign,
Access to media worldwide media outlets,
Development of the media schedule,
Budgetary considerations, and
Standardization as necessary (Johansson, 2009).
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The advertising agency RSCG Worldwide currently holds two offices in Ireland as Eightytwenty
4D and Young Euro RSCG. Utilization of these companies for initial entrance into the Irish
market creates a successful implementation strategy for small independent companies such as the
California wineries.
Global Promotion
Upon beginning a global advertising campaign, three areas require consideration specific
to the country market including volume of advertising used within the country, the important
media within the country such as television or print advertisements as well as the important
global media available within the country. The volume of advertising requires consideration of
the budgetary requirements, whereas the media and promotions used require significant research
into the available global options. For example, many American publications such as Time,
Newsweek, Cosmopolitan magazine, and People magazine have European versions published
throughout Europe. Online advertising also reaches the global environment with strategic
placements for each country involved. Sales promotions as well involve in-store promotional
items, sponsorship of events, support of various events and causes, cross-marketing, and product
placement (Johansson, 2009).
In-store promotions and trade promotions such as coupons or gifts with purchase
diminish the fine quality of the wine industry. Another issue with this form of promotion
becomes the effect on the distributor because of the need to provide spirits stores with frequent
deliveries if the wine sells rapidly because of the promotion. Alternatives become strategic
placement of the product in a spirit store with promotional print ads introducing the product and
smaller print ads for table tops in restaurants and pubs. These same inserts created on an even
smaller scale fit inside restaurant menus and hotel room service menus. Sponsorships, on the
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other hand, create a global advertising opportunity that reaches beyond Ireland. A variety of
events related to the arts, media, and sports allow opportunities for global branding and product
introduction. For example, several musicals and art exhibits scheduled to premier in a variety of
European countries including Ireland currently advertise the need for sponsorship. Additionally,
BBC and Derry Entertainment need sponsors for an upcoming show called “Last Model
Standing” (Sponsorscape, 2011). Special causes, such as any heart associations require support
as nonprofit organizations. Supporting events that promote heart health fall in line with wine
production because, in moderation, the antioxidants in red wine aid in the production of good
cholesterol. The European Society of Cardiology promotes several initiatives requiring support
such as The European Cookbook for heart healthy recipes, a perfect match for wine (European
Society of Cardiology, 2011). Product placement, one of the newer aspects of promotion,
involves contacting movie and television producers to include the product in films and television
programs. With the range of films and programs that show a variety of pub, hotel, and restaurant
scenes, this form of promotion requires pursuing assuming an affordable cost exists. The cost
could become the disadvantage of the advertising placement promotion and thus requires
consideration at different points in the advertising strategy.
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References
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