External Environmental Analysis of the Market:
The external environment of the market consists of several factors that provide a direct impact on the company is marketing strategy. In this report, the researcher has chosen the organization Hedonist Wines and discusses all the external factors that will be taken into consideration while entering into the market of China. The external environmental factors are as follows:
Economic Factors: China is one of the emerging wine markets in the world. The consumption of wine is 30% from imported wines. The wine consumption in China has increased from (248.9 mhl to 966.8 mhl) in the last few decades. The current consumption of per capita of china is 1.12 Liters in 2012. The imported wines accounts for over 26% increase in volume sales. Moreover, China is rapidly increasing their rate of foreign wine consumption and creating an appealing market for overseas wine businesses (Hao et al. 2016). The market is developing so it is very much flexible for Hedonist Wines to enter the market and expand their business operations.
Cultural & Social Factors: Chinese consumers are usually wine lovers as they feel that consumption of wine is healthy and has superior possessions on cardiovascular and blood systems. The Chinese consumers beliefs that red wine drinkers are generally modern and sophisticated persons. Being one of the certified biodynamic wine firms in the world, Hedonist Wines will gain a competitive advantage while entering into the Chinese Wine Market and the productivity of the business will increase in the long run (Zheng and Wang 2016).
As the Chinese consumers are fond of red wines the Hedonist Wine organization can simply attract the customers by their ‘Sangiovese Rose’ product. Moreover, by doing this Hedonist Wines will be meet Chinese consumer expectation and deliver product as per their preferences (Iannone et al. 2016).
Technological Factors: There is a huge lack of experience in technology and sound infrastructure in Chinese Wine Market industries. There is also a lack of wine culture and heritage. Technologically the market is poor and the there is a huge gap in the dominance of an international brand in the market (Hao et al. 2016). Therefore, there is a good potential for Hedonist Wines to enter the Chinese Wine Market, as there is a huge platform for growth and expansion. The Hedonist Wine is a more technologically advanced organization than most of the domestic wine companies in China (Hussaien, Siemon and Sayeed 2015). The product offerings and tastes are unique and it will provide greater customer satisfaction than they are getting now from the domestic consumptions.
Political Factors: The Chinese wine industry base is weak and it is on its early phase of industrialization. The government has encouraged the consumers of China to consume more grape wine in order to conserve stocks of rice for the production of food (Cohen, Corsi and Lockshin 2015). This encouragement leads to a consumption of 585 liters of grape wine during the year 1999 to 2004. Since the implementation of China in WTO (World Trade Organization), tariffs and taxes on imported wines have been lowered by the government, which provides external organizations to progress with their business successfully in China (Flint, Signori and Golicic 2016). The import duty on bottle wines is been reduced from 44% to 15% and from bulk wine from 42% to 20% to facilitate growth in Chinese Wine Industry (Hussaien, Siemon and Sayeed 2015).
Moreover, a China Australia Free Trade Agreement (CHAFTA) provides lowering in existing tariffs during sales of wines. All this factors indicates that Hedonist Wines have better chances to expand their business in Chinese market, as the market needs an International Brand. Moreover, there is a huge support from the local government towards foreign companies and the tariffs rate and taxes are also low than other countries so it is beneficial to expand their wine industry in China (Gluckman. 2013).
Competitive Environment: The Wine market in China is basically an extremely concentrated market. The competition prevailing in the Chinese market consists of ChangYu (16%), Dynasty (6%) and Great Wall (17%) with a sales volume of 39% in the Chinese wine market. The domestic wine brands are significantly performing weak in the Chinese market due to the presence of increased imported wines. Competition in Chinese wine industry is fierce in nature but there is also potential of opening for foreign wine producer in the country (Tang, Tchetchik and Cohen 2015). The consumers are more likely to buy from a brand with good reputation. To establish a brand within China it is necessary for Hedonist Wines to have good brand recognition strategy. As most of the consumers in China, get necessary information about imported wines by accessing through online websites. Therefore, it is mandatory for Hedonist Wines to promote the brand online and take proper initiative in co-operation with homely social networks and domestic retailers. The government policies and regulations also boost the interior regions of Chinese wine market that enables china to become a fascinating market for consumption of wines (Mora. 2016).
Educational Factors: The Chinese wine consumers are not so much aware of the wine culture that exists in the world. The consumers have very limited knowledge about the consumption of wine. The government needs to take proper mechanism to educate their customers in term of consumption of wines that will increase the rate of wine consumption. Hedonist Wines can take effective initiatives in rising brand awareness among Chinese consumers by promoting campaigns about the benefit of drinking wines and educate the consumers; this will help them to increase their brand goodwill and efficiency in expanding their business in Chinese Market (Gluckman. 2013).
International Marketing Mix Strategy:
The marketing mix strategy includes (product, price, place and promotion) strategies that an organization must consider before entering into a market place. The marketing mix strategies are as follows:
Product: There are different level of wine consumers in China with different taste and preferences of wines. Most of the Chinese people are fond of red wines as they feel it is very essential in controlling the blood system. Therefore, it is necessary for Hedonist Wines to promote red wines more in the Chinese market and then make relevant positioning based on the target market segment (Palma et al. 2016). The product offering of Hedonist Wines should be unique and provide a deep sense of satisfaction within Chinese consumers. The Chinese market consists of huge consumer potential and it is to be considered as one of the largest markets of imported wines. There is an existence of dominance of French Wines in China, therefore being an Australian Brand Hedonist Wines should do proper research and analysis in their product line before entering the Chinese market. A proper market research will provide Hedonist Wines to understand the prevailing preferences of Chinese consumers and then take proper implementation to create wines as per the choice of Chinese consumers, which will attract Chinese consumers more towards their brand (Palma et al. 2016). After the dominance of French wines the Australian wines sector is also, emerging in china so there is already a strong recognition of the products Australian companies provide in China (Smith. 2013). Therefore, Hedonist Wines just have to distinguish their product from its competitors in terms of flavour, texture and complexity according to the preferences of Chinese consumers to establish their brand successfully (Cohen, Corsi and Lockshin 2015).
Price: The pricing strategies should take into consideration the habits, expectations and perceptions of Chinese consumers. Pricing decision must address the recent market trends and the consumers should able to gain higher value for money as compared to other competitive brands. Price is one of those factors of the marketing mix that indicates quality to the consumers. Hedonist Wines must use market penetration pricing strategies while entering into Chinese market as there are already is a dominance of French Wine brands thus implementing penetration pricing Hedonist Wines will gain a competitive advantage over the existing competitors (Williamson et al. 2016). Chinese consumers prefer sweetened red wines to other alternatives, and the red wine segment is also cheaper as comapred to other wines so Hedonist Wines primary focus is to provide a cheaper wine with unique characteristics to keep the Chinese consumer satisfied (Velikova, Murova and Dodd 2013). The pricing strategies of Chinese wines are high, so by introducing cheaper wines Hedonist wines will be able to gather potential consumers in Chinese Wine Market. International pricing strategies is based on all the external factors, which, includes tariffs, regulations and customs (Hussaien, Siemon and Sayeed 2015). The presence of China Australia Free Trade Agreement provides enough opportunities for Hedonist Wine in providing good pricing strategies with compromising the quality of the wines. This agreement also initiates more foreign organization from Australia to expand their wine business in China as the government of China has lowered their taxes and regulations and increased the growth of wine industry segment of China (Smith. 2013).
Place: To build a strong brand it is necessary to implement right people at the right time with the right product in the right place (Rowley. 2014). Place is all about identifying the market segment and creating proper distribution channel accordingly. In the Chinese Wine Industries the distribution channels consists of off trade channels such as supermarkets, alcohol stores, wine cellars and convenience departmental stores that plays a vital role in the Chinese market (Szolnoki, Thach and Kolb 2016).
Moreover, with the online trend of wine distribution the Chinese consumer will get more transparent and affordable view of the prices of the wines (Velikova, Murova and Dodd 2013). Hedonist Wines can promote their brand of wines through their websites with initiating proper discounts and offers to the Chinese consumer and creating brand recognition among them. Most of the sophisticated Chinese consumer’s trends to purchase wine via online channels that creates a value for money among them. The major online platforms of Chinese wine market are WeChat and Weibo that provides wine education and sales among the consumers. Due to the large population base in China, different consumers have different taste and preferences, the consumers of north china are much fonder of higher alcohol content the consumers prefer wines while in south china lighter wines. The consumers those who are living in coastal areas prefer white wines with stylish bottle shapes and designs. All this characteristic of the population are need to be addressed carefully by the Hedonist Wines before entering into the wine market of china. (Rowley. 2014).
Promotion: Promotion is all about creating awareness of the brand in the eyes of the customer. The Chinese wine industries do not provide enough advertising due to their limited finances. Therefore, Hedonist Wines has an opportunity to create successful promotional campaigns to attract potential customer. Marketing activities in china is quite expensive; therefore, Hedonist Wines should avoid promotional tools like television and advertisements in magazines rather they can invest on advertising on local and regional articles. Promotional strategies also include a press relation that creates advertisements in web magazines and newspapers (Velikova, Murova and Dodd 2013).
Hedonist Wines can also implement marketing opportunity to advertise their products in restaurants, as Chinese people are often visit restaurants and they can meet the product and taste the wine respectively. Promotional activities in Chinese wine markets also include Trade Events that are related to making consumers aware of the significance importance of consumption of Wines (Cohen, Corsi and Lockshin 2015). There are various promotional methods to gather consumers but in the case of Chinese consumers, it is preferable to advertise on social media and provide awareness about the Hedonist Wines in social networking platforms, as most of the Chinese consumers prefer to buy wines through online purchase (Muhammad et al. 2014).
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