Global Marketing Research
Kosta Browne is a popular wine company of California, and it is planning to expand its business worldwide. For this reason the company has to analyze global market and opportunities in order to create a promotional and strategic plan. In order to implement it, the company has to define segments for both local and worldwide markets. In addition to this, barriers and competitors have to be mentioned in the plan. Marketing arrangement is also a significant thing to be discussed in the plan.
Wine is an alcohol beverage, which is made from fruits, mostly grapes. This industry is considered very profitable, and for these reasons different countries, such as Italy, Spain and France produce it. In addition to this, different types of wine exist, for instance, dry, sweet or semi-sweet. The process of making wine can take more than 10 years. For this reason some wines have extremely high price. The world competition in the wine industry is intense enough. There are many international companies, especially in Europe. In addition to this, other alcohol beverages are also competing with wine. For example, Germans prefer beer to wine, while Spaniards drink wine every day.
Kosta Browne winery was found in 1997 by Dan Kosta and Michael Browne in Santa Rosa, California. In 2007, Chris Costello joined the venture and provided it with the money for the company`s development. The company produces different types of wine, such as One Sixteen Chardonnay, Russian River Pinot Noir, Pinot Noir from Santa Lucia and the one from the Sonoma Coast. Its approximate price is $ 50-200 (Who we are, 2013).
Market segmentation for wine industry appeared in Australia with the help of McKinna. Initially, it was based on geographic characteristics of consumers. However, it became more common to divide market segments on consumers` psychographics. 5 possible market segments appeared in Australia: (1) conservative drinkers of wine, (2) knowledge-seeking consumers, (3) typical (usual) customers, (4) experimental and (5) pleasure-oriented drinkers. However, market segments in the USA are divided by main reasons people drink wine: (1) for relaxation, (2) during food consumption, (3) for fun, (4) for social inspiration and (5) for traveling (Elizabeth C. Thach). In addition to this, each country has different concepts of wine drinkers. If the company wants to promote its products globally it has to analyze each country’s concept. The tendencies for alcohol differ all over the world. The company has to make its global strategy match both its brand image (it can be the same target market) and each country’s tendency.
Kosta Browne is oriented on North and South American market segments. Costumers are mostly people who drink wine with the dinner or those who relax after working day or week. These are also people who drink their native wine or tourists who would like to try Californian wine. In addition to this, customers have to possess high enough income, because Kosta Browne is considered expensive. Young people, especially students, who drink wine with their friends, are not able to afford Kosta Browne. However, in comparison with Californian customers, people in Europe may purchase Kosta Browne’s wine in order to try something new.
As for global qualitative acceptance, the quality standards in Europe are significantly high. Their local wine is made according to the countries` requirements. For this reason, an entrance of Kosta Browne’s wine to European market can be challenging. For instance, labeling and classification, documentation, consistency and testing are carefully checked before the entrance to the market. Acceptance on wine making practices can also be challenging for Kosta Browne. For instance, each European, Asian and African country makes its own standards of the minimum ripeness of grapes, alcohol included in a drink, the usage of sugar ((EC), 2008).
Referring to the quantitative barriers, they include subsidies for local companies and tariffs. For instance, European wine companies get subsidies from the tariffs imposed on international import companies. These subsidies give an advantage to the local countries rather than to Kosta Browne. High rates of tariffs also prevent some USA companies from entering an international market (Institute, 2010).
Consumer behavior is a dominant part of business as it defines whether costumer buys an item or not. Globally, it can be determined by brand, taste, price, producer, wrapping, quality, situation, etc. (Lockshin, n.d.). People in each country consume products according to what is usual for them. Conservative drinkers of wine usually rely on the brand and quality; knowledge-seeking consumers trust their tastes; typical (usual) customers look at the price, producer, quality and taste; experimental consumers rely on the situation and wrapping, and pleasure-oriented drinkers rely strongly on the taste, quality and producers. Some segments have similar characteristics and identical promotional tools for them. As for the local market of the USA, people who seek relaxation or pleasure during food consumption usually count on tastes and quality. Those who drink wine for fun, purchase according to the price, wrapping and brand. As for social inspiration, customers rely on the brand, quality, situation and price. Finally, travelers look at producers and price. These customers usually purchase wine in restaurants when chilling with friends as well as in stores when they want to take it out. For this reason, the best sales channel for wine industry is the indirect one (through intermediary), which includes bars, restaurants, lounge bars, clubs, cafes, and stores or supermarkets.
The other barrier for Kosta Browne is an intense competition. Two types of competition exist: direct and indirect competition. Direct one means that wine companies compete in the marketplace. There are also different types of direct competitors: local and international. There is a significant number of French, Italian, Chilean companies in the international and local market, which offer both premium expensive and ordinary cheap wines. Expensive French wines are usually consumed by high-income people at posh dinners, appointments, parties and dating. However, cheap wines are usually purchased by middle-income families who prefer drinking wine every day during the dinner, at family dinner or on holidays. Indirect competitors in the wine industry are those companies, which produce other alcohol beverages, such as beer, vodka, Champagne and others. Beer may be the main competitor of wine in Check Republic as well as in Germany. However, in Italy beer is less consumed. People purchase these drinks in different situations. For instance, when people watch football they traditionally drink beer. However, if their goal is to relax, they prefer wine.
Choosing the right promotional channel is rather challenging for alcohol beverages because alcohol advertising is forbidden in most countries. For this reason investing money in the product placement must be a good idea for creating an international buzz. People all over the world watch American movies. For this reason they will be likely to try the advertised product. It will attract people who think about brand and origin of the product. Sponsorship for some high-level events will also make people aware of the brand. In addition to this, it will highlight that the product is premium and attract people who can afford it. Product demonstrations is another way to promote a product to the new market. It is an important marketing tool mostly for people who are concerned about taste and quality. However, it may attract other customers as well.
Different marketing arrangements exist for international trade; for instance, export, license, franchise, joint venture, or manufacture/production in the country. However, the best option for Kosta Browne wine company is export. It is the most common marketing channel of distribution for wine industry. First of all, it highlights the origin of the product. Second, it allows to be distributed to wholesalers, which then sell wine to the restaurants, lounge bars and stores. The drawbacks are obvious: the limited volume of exports, intense competition with local markets, rigid regulations and no subsidies. These drawbacks limit the desired goals. However, advantages are significant: the image of the brand is not spoiled. The other option is to produce wine in countries. However, it is rather expensive, allowance is needed and it sacrifices the origin of the product. The third available strategy can be a joint venture, which is also a strategic alliance and means that two companies unite in order to achieve the common goal. For instance, Kosta Browne unites with some European or Australian company. It can help to increase sales in some countries but the company would lose its brand and image. It may change dramatically. For some industries it is a great opportunity, but it is not an appropriate strategy for wine industry.
Wine industry is considered rather popular nowadays. Kosta Browne is a Californian company which is willing to compete in the international market. It is positioned as premium wine with the price ranging from 50 to 200 US dollars. Its market segment must possess high income, drink wine in order to relax, have fun and make the dinner tastier. Its main direct competitors are French, Spanish, Italian and Australian wine companies. Its main indirect competitors are other alcohol companies which produce vodka, beer and other alcohol beverages. Promoting this wine to the international market may be difficult. However, right marketing communications, such as sponsorship, product placement and demonstrations can make this strategy successful.