Market entry Methods
Selecting a market entry method into the Chinese market requires knowledge of the existing competitors. The entry method should consider the language and cultural barrier that exists between the Australian and the Chinese people. Some of the market entry methods taken into consideration include appointing agents, direct export, licensing a Chinese company to produce and sell the wine (Bennett & Blythe, 2002). Wolf Blass Black Label wine needs a market entry method that will ensure its distribution in major cities within China successful. The direct export method requires the company to set up shops and distribution networks within China. Moreover, this method requires the company to train different workers on use of Chinese language. Taking these risks in a new market would result to the business taking a longer time before registering returns on invested capital.
Appointment of agents to sell the Wolf Blass Black Label wine was seen as a significant mode of entry into the competitive Chinese market. A mode of choosing the agents was developed to make sure that the best was picked. One of the requirements is that an agent is not supposed to deal with competing goods (Sengupta, 2011). These include other brands of wine that compete with Wolf Blass Black Label. The agent is required to have a shop in the mainland China that has been operational for the past ten years. The available shop space creates an already established outlet for sale of wine. The existence these outlets in multiple locations means that they understand those market segments well. The agent mode of introducing the product has a disadvantage that the agent might put enough effort to make sales. Another problem can arise where the agent decides to deal with competitors goods cutting on the already established market.
Another method taken into consideration is contracting where manufactures of Wolf Blass Black Label contracts a Chinese company to produce the wine within China. One advantage of this mode is that the company will enjoy the advantage of employing cheap labour within China. This translates to lower production costs and as a result, the wine product becomes more competitive. Contracting will save the business the cost of exporting wine to China. Direct importation would require the business to pay custom duties of 16% on the cost of the product that would be passed to the consumers of the wine. The major challenge of contracting is that the mother company will receive fewer returns from such an agreement (Tielmann, 2010). This results from the need of sharing profits with the company that is being contracted. Profits generated by the contracted company once shared will be taxed by the Chinese government before being sent back to Australia.
The contracting mode of entry into the foreign country is the best method that suits the Wolf Blass Black Label. The contractual joint venture reduces cost of production while providing an already existing market. It also reduces the process of obtaining multiple licences before trying to introduce a product into the Chinese market. The method reduces the risks that exist to Wolf Blass International like losing their investment in the Chinese market because of lack of proper knowledge on the Chinese market. The contractual method will only require provision of the mode of production to the company that will be producing the Wolf Blass Black Label.
R3
Marketing Strategy
Introduction
China, having a population of 1,330,045,000 people in 2008, requires multiple market strategies because of diversity of life style (Cui and Geng, 1997). The nation’s land mass is divided into different sections like mainland china and areas like Hong Kong. The marketing strategy to be employed in mainland china will be different from that used in areas like Southern China. Marketing strategy on pricing will be used where the prices of Wolf Blass Black Label might have a lower price than competing brands. Market segmentation will be employed where different prices will be charged for the same brand in different markets. Division of markets will take place in form of urban centres and rural areas. Segmentation will also be based on rich and poor estates. Mixture of the different marketing strategy will ensure that customers can purchase the wine at affordable prices (Proctor, 2000).
Market segmentation
The vast land of China and economic difference in the different regions makes a good place for segmentation on geographical basis. China will be divided into 7 segments for purposes of marketing. The segmentation will divide China into South, Northeast, North, Central, Southwest, East, and Northwest (Batson, 1996).
The southern region that includes Hong Kong is seen as one of the most prosperous regions within China. Consumption of foreign goods in this region is seen to be high. The population living in this area consists of people earning a high income. Considering these facts, this makes the region a good market that fetches high prices. The wine has a high possibility of fetching favourable retailing prices in this area than other regions in China.
The Central China region also known Zhong-yuan is made up of agricultural practising communities. This region gets perennial floods which makes people in this region lag behind in poverty. Communities living in this region have no extra money to spend on imported products. To enter such a market, the price of wine should be reduced. This is because setting high prices in this region will make people perceive wine as a luxury way above their means. The company has less probability of making sales in this market. One of the strategies would be to supply products to markets like South China that have a high probability of generating quick return on investment.
Northeast, North, Southwest, East, and Northwest markets seem less feasible when comparing the economic standards of the people living in these regions. These regions seem to lag behind economically therefore pose a higher risk to the company.
The business should concentrate on the Southern China region which seems to have higher chances of generating returns on investments.
Product promotion Strategy
Entry of Wolf Blass Black Label wine as a new brand in China requires advertising after making a placement of the product in Chinese shelves. This is done by ensuring that all channels used by competitors to place their products in the market are incorporated in the promotion strategy. The placement can be through ensuring the product is within supermarket shelves and wine agencies within China. Placement ensures that when people learn about the product, purchasing it would be easier because of its availability within the market. The Chinese have a controlled social media, therefore ruling out use of social media like Facebook to advertise the wine. One of the advertising media to be used is the newspaper. Millions of newspaper copies are sold each day and with this realisation, placing adverts in the newspapers has a better chance of generating sales. Newspaper adverts will be targeting the age group of people aged from 30-45 who make the biggest population of newspapers readers. Having covered a bigger population of the working class another advert will be placed on China’s Cable television. This nation has 139 million cable TV subscribers, translating to 11 per 100 persons (China Statistics, 2012). Use of cable TV ensures that adverts will be placed at the peak hours when news is being read. Though such periods require a lot of money to advertise, a larger number of viewership is reached by the advert within the shortest possible time (Handlechner, 2008). The advert placed on cable TV should not come before or after a competitor’s product. Avoiding competitors’ product ensures the advert has a higher probability of generating sales.
Marketing within the cities will involve setting up billboards within roads and railway stations. More than half of the Chinese city population uses the train or bus to and from job. Placing the boards at train stations will allow people to come across the adverts as they await to board the train. The use of billboards will generate lots of sales among the city dwellers who have a higher likelihood of consuming the wine than the less fortunate persons living in rural areas. The text should be written in Chinese symbols to ensure that all Chinese citizens are able to receive the message being communicated.
Sampling
Chinese communities are always conservative about consuming foreign and new products, however, this is beginning to change as China is becoming more Westernised. To popularise the brand, a sampling campaign should be carried out in the major cities within China. Sampling should start in Beijing where major bars and restaurants are found. The company should approach owners of these bars and restaurants and ask them to stock Wolf Blass Black Label wine. It should also provide samples to customers within these bars in attempting to popularise the wine. Choosing of bars and restaurants as the place to distribute samples is guided by the fact that these are the areas where majority of potential clients can be found. Sampling the product improves its credibility because clients will have a chance to rate the new wine. Sampling will allow the business to collect first hand data on the new market. The information can help the company in making decision on how to package or make changes to the way the brand is distributed (Cheltenham, 2012). China being a huge country cannot be covered through a sampling marketing strategy. The cost incurred to support sampling can be so high leading to the need of combining sampling with other marketing strategies of introducing the product in the market.
Product Strategy
The Wolf Blass Black Label wine package will be changed to give it an image that resembles Chinese culture. The first task would be to translate the name of the wine to a Chinese name reflecting the great walls of China. The image on the bottle will be the ‘Great Wall of China,’ which will require permission being obtained from the Chinese government. The reason for having the Great Wall of China on the label is to make sure that the Wine is seen to be a powerful brand than other existing brands in the market. The wine should have a slogan depicting strength. The slogan will be “strong like the great walls of China”. Having the Great Wall of China on the bottle will guide those who easily forget the names of the wine to relate it with the wall. Such a slogan ensures that the superiority of the wine is seen from the brand name together with the slogan itself. In addition to this, the label should reflect the lucky and prosperous colours of the Chinese culture; red and gold. Red is considered as luck in the Chinese culture and gold represents prosperity and growth.
Alternatively, giving the wine a Chinese name ensures that customers will not have a hard time trying to remember the name of the wine. Having an English name on top of the bottle would mean that the wine is supposed to be consumed by only those who know English within China. This would have a negative effect on the brand in that it would be associated with the few elites. Sale of a brand requires it being associated with the local people. The wall label will make the local Chinese agree to be associated with the wine.
Conclusion
The mixture of marketing strategies ensures that the business is able to generate enough incomes upon an initial entry in the market. The product strategy ensures the product is able to sell without generating any problem to the consumers in terms of remembering the name and description. The market segmentation strategy ensures that the company does not make supplies to areas that will not consume the wine. Some of the areas lagging behind economically are seen to bear higher risks in terms of making purchases leaving them for future entry. Sampling of the product will improve on rating and raise consumers’ confidence in the product. Buyers in any market will not use a new product that they have never heard of its use anywhere. Combination of marketing strategies with the multiple advertisement models will ensure smooth entry into the Chinese market.
Reference List
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