International Marketing Assignment: Market Expansion Of Accolade Wines UK & USA

Question

Task: Assessment Instructions
What
For this international marketing assignment, you are required to analyse two (2) countries and recommend one (1) of the two countries for an Australian organisation/company to expand internationally. Suggested list of Australian companies to choose from include: Baxter Boots, Blundstone Footwear, Rip Curl, Billabong, Uggs-N-Rugs, Bega Cheese, Australian Vintage Limited wines, Penfolds, Accolade Wine, R.M.Williams, Sukin, A’kin, Vegemite, Holden, Cotton On, Bunnings Warehouse, Crumpler, Blackmores, Boag’s Brewery, Bluescope, Boost Juice, Bulla Diary Foods, Foster’s Group, Tarocash, Darrell Lea, Paspaley Pearl, Sportsgirl. For this assessment students will work in groups of 2 to complete the country assessment report. The final report must be an individual submission. Students must not copy the work of others.
To complete this task, you must prepare the following two (2) documents:
1a. A country assessment worksheet (Country Assessment Worksheet)
1b. A country assessment report for an Australian company (Country Assessment Report)

Note, you will be provided with templates (and further instructions) to enable them to complete 1a and 1b. Refer to templates for further information and instruction.
To finalise these this documentation, you will need to work through all of the following activities 2-9:

2a. Choose two (2) countries that you will research to prepare an assessment for. Gather some initial market intelligence on both of your chosen countries. You will need to collect information from at least two (2) different sources. One (1) of these sources must be through networking activities you take part in. The other source of information can include any of the following:

• trade fairs you visited
• conferences you attended
• professional development activities, such as individual research, courses, membership of professional organisation(s) etc.

2b. State all sources of information and analyse your findings. After analysing the two (2) countries, recommend one (1) of the two counties for the company’s business expansion.

3a. Use at least two (2) forecasting techniques such as top-down and bottom-up forecasting, Delphi Technique, trend projection, to gather scenario planning and survey of buyers’ intentions method to gather intelligence and research from further sources of market intelligence information, in line with legal and organisational requirements. Sources could include:

• DFAT www.dfat.gov.au
• Business advisory services
• Australian Trade Missions with Countries
• www.ibisworld.com.au (IBIS World)
• Career Expos, Dept. of Education and Training, Embassy.

3b. Research at least two (2) commercial services sources to obtain information on value for money and quality of market intelligence. Examples of source you could use include Banks, Financial advisors such KPMG, PwC, EY, Deloitte’s, and private research companies such as A.C.Nielsen, Roy Morgan. Note your sources of information you accessed in the relevant section of your documents.

3c. Based on your forecasts and the information you had available:
• Provide a summary of the emerging international market needs (50-100 words)
• State the advantages/disadvantages of using each technique (in relation to the desired business outcomes) (100-150 words)
4. After collecting all market intelligence, evaluate the information and explain whether it is relevant and applicable to your chosen country and the company’s international activities and business needs including its impact in identifying:
• Core activities, customer base, business values and current business direction
• Marketing and other performance
• Comparative market information
• Changes in technology
• Demographic changes
• Political events
• Social and cultural factors
• Economic trends
• Government activities and legislative changes
• Industry trends

Justify your answers (100-150 words)
5. In the international business objectives section, briefly mention the company’s main activities, their current target market (customer base), business values and current business direction.
6. Based on the information you have collected, document and analyse the strengths (e.g. capabilities), weaknesses (including one example of poor/under-serving of market needs) and critical success factors (e.g. reliance on resources) of the organisation relevant to its international business activity. Summarise the current position of the business in your chosen market, including how competitive (strength) the business is. (150-200 words)
7. Evaluate the businesses ability to compete with existing and potential competitors in the host country (degree of competitive intensity). You will need to look into at least two (2) different competitor products and/or services and provide a summary of how they are performing in the market. (150-200 words)

8. Using trends from data sources identify and analyse any potential opportunities identify advance warning of potential threats or risks within the international business market, e.g. information on new products, services, technology or new international markets. State your sources of information.
9. Identify external factors that may affect the organisation’s international business activity. In your answer, include at least one (1) example of a legal (regulatory context), ethical and environmental constraint (i.e. 3 in total).

Answer

1.0 Introduction
The report discusses the international and market entry of Accolade Wines, an Australian company. The report discusses the attractiveness of the wine market in the United Kingdom and the United States of America, for the company to enter(Lanis, McClure & Zirnsak, 2017). The main purpose of the report is to analyze the cultural, political, social and economic factors of both the markets and choose the most ideal market for the company to expand into(TWO-STAGE, 2020). Once the country has been chosen, an analysis of the micro-environment of the country and the existing and potential risks will also be discussed for the development of strategies for addressing the risks and identifying the strengths and weaknesses of the company.

1.1 Company Overview
Accolade Wines is an Australian wine manufacturing company headquartered in Southern Australia and corporate offices in the city of Melbourne(Smart, 2019). The company is famous for its diverse range of wines and low-cost products, developed for targeting the middle-income group(O'Loughlin, 2020). To meet the rising demand for wines in the e-commerce sector and cash in on the exponential growth of the wine sector, the company has decided to expand into international markets for increased sales and expanding its global presence.

1.2 Business Goals
The main business goal of the company is to expand its global presence through products differentiation and cost leadership(Merli, Preziosi & Acampora, 2018). The business objectives of the company are focused on ethical business practices and improving customer satisfaction levels. The company intends to expand into either the US or the UK due to the potential growth and the opportunities in the market(Parga-Dans, & González, 2018). Moreover, the company intends to focus on direct imports to cut down intermediaries and establish a direct presence in the market. Although the business strategy of the company includes concessions for piggybacking and strategic partnerships provided if the risks are high.

2.0 International Business Opportunities
After the analysis was conducted initially (See, Appendix 1, 2 and 3), the country chosen for the expansion of the company is the US, due to the better market conditions and stability(Santeramo et al., 2019). Moreover, the high sales potential in the retail sector combined with the exponential growth in the e-commerce sector makes the country the top choice for expansion.

2.1 Country Assessment
The initial analysis of the markets in both the US and the UK revealed that the US is a mode idealmarket for Accolade Wine to enter (Benoît et al., 2019). The economic analysis of the market revealed that despite a comparatively lower CAGR growth than the UK, the US market is more well-developed in terms oftransportation and telecommunications infrastructure. Moreover, sales in the retail sector in the US are higher than the sales in the F&B sector of the UK. The socio-cultural markets are similar inboth countries, and the political scenario is similar too. The transparency of commercial laws isalso similar, levelling the playing field. However, the biggest distinction between the markets and the reason for choosing the US is not the level of competition in the market, but the targeted consumer base and the marketing strategies. For example, the company can target retail sales in the US, where wines are sold below 14 dollars a bottle on average, leading to a huge sale. Whereas, maximum wine sales in the UK take place in bars and restaurants where wines are sold at almost50 dollars on an average. Affordability and emphasis on social media marketing made the US a better market choice than the UK.

2.2 Micro-Environment
The company has some internal strengths like maintaining economies of scale for low costs but suffers from restrictions regarding catering to diverse cultural and ethnic groups in the US (Iaiin, îrlea & Kozak, 2018). The company has a record of maintaining customer satisfaction levels, increasing its brand equity in Australia. However, the limited awareness of the brand in the US can be a huge weakness. A digitized inventory management system helps the company in preventing excesses in the supply chain, however, increased bargaining power of the suppliers due to high demand can affect costs of the company (Ristic et al., 2019). The company can enter strategic partnerships or undertake piggybacking strategies for marketing its products successfully in the US.

However, limited knowledge of the distribution system and network in the US can hinder efficient distribution(Gilinsky Jr, Forbes & Fuentes-Fernández, 2018). The company can use social media marketing for marketing its low cost and diverse range of products. However, untested products in the market can increase the risk of product failure. Overall the company needs to conduct efficient and extensive market research before entering the US market and addressing the challenges it will face upon entry.

2.3 Risks Analysis
The company can face some severe risks for expanding into the American market. The changing government can affect political stability and lead to political lobbying in the country, increasing exports and reducing imports (Byrd, Bhadury & Troy,2017). Therefore, the company needs to limit its investments in the country and rely more on local debt for meeting its operational expenses. The increased import tariffs or high logistical costs can also pose a huge risk to the market entry of the company in the US (Morrison & Rabellotti, 2017). Therefore, the company needs to enter strategic partnerships with US companies and distributors for availing tax exemptions and reducing costs.

The company also faces environmental risks like frequent cyclones and tornadoes in the US, which can affect the business of the company. the best way to tackle the risks is insurance and using CSR to address any reputational risks(Wolf et al., 2018). The limited knowledge and expertise of the employees regarding the available technologies in the US can cause service outages in the e-commerce sector and lead to increased costs. Employee training and regular systems' update can minimize such risks. Social influencers from the US can affect sales and income inequality can reduce sales too. Adapting influencer marketing strategies and offering low prices can help in addressing social and cultural risks.

References
Benoît, L., William, A., Lindsey, H., Adrienne, L. F., & Marianne, M. W. (2019). Wine sector: Definitions and nuances from global to country analysis—A comparison between Old World, New World, and emerging wine countries from 2005 to current. In Case Studies in the Wine Industry (pp. 7-32). Woodhead Publishing.https://www.sciencedirect.com/science/article/pii/B9780081009444000021
Byrd, E. T., Bhadury, J., & Troy, S. P. (2017). Wine tourism signage programs in the USA. International Journal of Wine Business Research.https://www.emerald.com/insight/content/doi/10.1108/IJWBR-04-2017-0024/full/htmlfullSc=1 Gilinsky Jr, A., Forbes, S. L., & Fuentes-Fernández, R. (2018).An exploratory study of wine business philanthropy in the USA. International Journal of Wine Business Research.https://www.emerald.com/insight/content/doi/10.1108/IJWBR-01-2017-0006/full/html
Iaiin, T., îrlea, M. R., & Kozak, I. (2018). Actual trends of wine sector in the world and EU.http://dspace.ince.md/xmlui/bitstream/handle/123456789/651/Actual_trends_of_wine_sector_in_the_world_and_EU.pdfsequence=1&isAllowed=y
Lanis, R., McClure, R., & Zirnsak, M. (2017).Tax aggressiveness of alcohol and bottling companies in Australia. Canberra: Foundation for Alcohol Research and Education, 1-32.https://movendi.ngo/wp-content/uploads/2017/08/Tax-aggressiveness-of-alcohol-and-bottling-companies-in-Australia_FINAL_04052017.pdf
Merli, R., Preziosi, M., & Acampora, A. (2018). Sustainability experiences in the wine sector: toward the development of an international indicators system. Journal of cleaner production, 172, 3791-3805.https://www.sciencedirect.com/science/article/pii/S0959652617312994
Morrison, A., & Rabellotti, R. (2017).Gradual catch up and enduring leadership in the global wine industry. Research Policy, 46(2), 417-430.https://ageconsearch.umn.edu/record/164650/files/AAWE_WP148.pdf
O'Loughlin, S. (2020). Top 20: Australia's largest wine companies. Australian and New Zealand Grapegrower and Winemaker, (675), 25-38.https://search.informit.org/doi/pdf/10.3316/informit.136225671495152
Parga-Dans, E., & González, P. A. (2018). From paper to soil: the impact of new EU alcoholic drinks labeling regulations for wine regions. International marketing assignment Journal of Consumer Protection and Food Safety, 13(1), 89-94.https://link.springer.com/article/10.1007/s00003-017-1135-8
Ristic, R., Danner, L., Johnson, T. E., Meiselman, H. L., Hoek, A. C., Jiranek, V., & Bastian, S. E. P. (2019). Wine-related aromas for different seasons and occasions: Hedonic and emotional responses of wine consumers from Australia, UK and USA. Food Quality and Preference, 71, 250-260.https://www.researchgate.net/profile/Lukas-Danner/publication/326555168_Wine-related_aromas_for_different_seasons_and_occasions_Hedonic_and_emotional_responses_of_wine_consumers_from_Australia_UK_and_USA/links/5ca3ee68299bf1b86d60e846/Wine-related-aromas-for-different-seasons-and-occasions-Hedonic-and-emotional-responses-of-wine-consumers-from-Australia-UK-and-USA.pdf
Santeramo, F. G., Lamonaca, E., Nardone, G., & Seccia, A. (2019). The benefits of country-specific non-tariff measures in world wine trade. Wine Economics and Policy, 8(1), 28-37.https://www.sciencedirect.com/science/article/pii/S2212977418300383 Smart, R. (2019). Climate Change: Misunderstanding carbon emissions in the wine industry... at our peril... Australian and New Zealand Grapegrower and Winemaker, (664), 44-46.https://search.informit.org/doi/abs/10.3316/INFORMIT.513064568411123 TWO-STAGE, A. (2020).AMERICAN ASSOCIATION OF WINE ECONOMISTS.https://wine-economics.org/wp-content/uploads/2020/12/AAWE_WP260.pdf

Wolf, M. M., Higgins, L. M., Wolf, M. J., & Qenani, E. (2018). Do generations matter for wine segmentation. Journal of wine research, 29(3), 177-189.https://www.tandfonline.com/doi/abs/10.1080/09571264.2018.1472073

Appendix
Appendix 1
Country assessment matrix/worksheet

Factors to consider

Country A

Country B

A. Economic & trade analysis:

United States

United Kingdom

1. Population statistics (Include

relevance of demographics &

psychographics to company

plans)

40-55 aged group largest base

Accounting for 35% of all sales

More likely to consume wine

than other beverages.

45-64 aged group largest base

Accounting for 26% of all sales

Consumes wine at-least once

a week

2. Economic development

statistics (GNP, GDP, economic growth) and relevance to

company plans)

Contributes 220 billion to the

GDP of the economy

Creates almost 1.73 million

jobs

Annual growth of 9.03%,

CAGR 2020-2025

Contributes 45 billion to the GDP of

the economy

Creates almost 358,000 jobs

Annual growth of 13.14%, CAGR

2020-2025

3. Analysis of transportation and

telecommunication infrastructure

Well-developed tier 1 of

wineries, breweries and

distilleries

Tier 2 of distributors and

truckers’ network

well developed.

Well-developed

communication network

Tier 3 of bars, restaurants and

fine-dining establishments

well-developed

Daily traffic of almost 650 wine

trucks to Europe

Well-developed communication

for B2B transactions

4. General analysis of the

marketing support structure:

a. Distribution and logistics

b. Promotion infrastructure

c. Marketing research suppliers

a. Extensive network of wineries,

wholesale distributors and retailors

b. Well-developed E-commerce

sector for online ordering

c. Marketing data from Roy

Morgan

a. Bars and restaurants account for

more sales than retailers

b. Increasing marketing on

social media

c. Marketing data form PwC

5. Trade trends:

a. Membership in regional and international trade organizations

b. Barriers to trade

a. Membership in American

Wine Society

b. Strict FDA policies on

import of liquor

a. Membership of Wine and

Spirit Trade Association

b. Use of VI-1 forms

restricting imports

Economic & trade analysis conclusion:

Accolade wine can choose to export its wines to either the United States of America or the United Kingdom.

The age group of 40-55 years is the largest consumer of sine in the US, accounting for almost

35% of total sales. Whereas, the Gen X, or the age group between 45 to 64 years of age is the

largest customer base for wines in the UK, accounting for almost 26% of total sales. The commonalities between the largest consumer bases in both countries can provide the company

an opportunity to capitalize on the growth of the wine industry in the US and the UK, by almost

9.03% and 13.14% CAGR respectively. The well-developed distribution base in both countries

can simplify the distributors’ issues of the concerns of the company. The increasing consumption

of wine among the younger generation and the online sales, digital marketing emphasis can

allow the company to enhance its marketing strategies. Marketing data from Roy Morgan in the

US and PwC in the UK provides substantial data to back exports to either country. Membership of either American Wine Society or Wine and Spirit Trade Association can help the company

establish its presence in the US or UK respectively. However, ‘strict FSA rules in the US, and use

of VI-1 forms in the UK restricting imports can affect the business of the company.

B. Political and legal analysis:

Country A

Country B

1. Political stability:

a. Legitimacy of political elite

b. Diversity of ethnic groups with divergent interests

c. Degree of political repression

d. Nationalism

e. Stability of government policies

a. Support to the Republican Party

b. Diverse population and large

migrant population

c. Limited political repression

due to democracy

d. High nationalistic sentiments

e. Extremely stable government

being a democracy

a. Brexit set to affect exports

b. Diverse communities and support

for multiculturalism

c. Colonial history and imperialism

d. High nationalistic sentiments

e. Stable government but

constitutional monarchy

2. Type of legal system

Common Law system

Three legal systems

3. Transparency of the legal

system

Highly transparent

Moderately transparent

4. Degree of ambiguity of

commercial laws

Low

Political and legal analysis conclusion:

The political system in the US is more transparent and less ambiguous than the political

system and commercial laws in the UK. The large presence of migrant and ethnic groups in

both the countries provide ideal opportunities to the company to target a large consumer base.

Highly nationalistic sentiments in both the countries can be a barrier to the export, due to more emphasis on indigenous companies. Stable government and politics in both the countries

safeguard the interest of the company. Transparent legal systems provide clarity of commercial

laws, which can enbale the company to export to either of the countries without any

political interference and red-tapism.

C. Socio-cultural analysis:

Country A

Country B

1. Languages and dialects

(implications for marketing)

English speaking society

2. Family

Mostly nuclear families

3. Social class and status

High social divide in class and

status

High social divide in status

4. Religion, norms and value

systems (implications for marketing)

Most religious groups permit

consumption of alcohol apart

from Muslims

Most religious groups permit

alcohol apart from some

ethnic groups

Socio-cultural analysis conclusion:

The society and culture in both the countries are similar with families being mostly nuclear. Since

English is the most prevalent language; the marketing initiatives will not be hindered. However,

social and status divide witnessed in both the countries can affect sales due to income disparities.

Existence of various religious and ethnic groups who permit consumption of alcohol, barring

Muslims can provide a diverse market to the company.

D. Target market analysis:

Country A

Country B

1.Target consumer analysis

(product use, shopping behavior)

Middle-aged group largest

consumer

Middle-aged group largest

consumer

2. Existing distribution patterns

for product category and

availability of local distributors (wholesalers, retailers, logistics companies)

High retail sales in tier two

High sales in tier three, bars,

restaurants and others

3. Existing promotion patterns for

product category and availability

of local promotion talent and

media

High emphasis on social media

marketing and sponsorships

High emphasis on influencer

marketing through collaborations

NOTE:

1. After researching and analysing the above ‘Target market analysis’, place your conclusion here.

2. Your conclusion should mention briefly all the 3 sub-factors above

Target market analysis conclusion:

The target market in both the countries is similar in terms of target market, existing promotion

patterns and others. The only difference is the percentage of sales in the tiers, with sales being maximum in the second tier in the US, and third tier in the UK. Markets in both the countries

are increasing their digital marketing domains, involving sponsorships and influencer marketing.

The company needs to focus on the volume of sales and the availability of logistical support before choosing either of the countries for export in terms of market analysis.

E. Competitive analysis:

Country A

Country B

1. Degree of competitive intensity

High

2. Competitor marketing strategies

Social Media Marketing

Branding and Ad displays

3. Competitive barriers

(existing and potential barriers

to entry)

Non-tariff barriers

VI-1 certificates

Competitive analysis conclusion:

The US and the UK markets are diverse in terms marketing strategies but similar in terms of

competition which is high in both the countries. The market in the US relies on social media

marketing for boosting retail sales and the market in the UK emphasizes on branding for boosting

footfall in bars and restaurants. Non-tariff barriers in the US and wine import certificates in the UK

can act as major barriers to the import of wine to these countries.

Overall conclusion of (A) to (E):

The initial analysis of the markets in both the US and the UK revealed that the US is a mode ideal

market for Accolade Wine to enter. The economic analysis of the market revealed that despite a

comparatively lower CAGR growth than the UK, the US market is more well-developed in terms of

transportation and telecommunications infrastructure. Moreover, sales in the retail sector in the US

are higher than the sales in the F&B sector of the UK. The socio-cultural markets are similar in

both the countries, and the political scenario is similar too. The transparency of commercial laws is

also similar, levelling the playing field. However, the biggest distinction between the markets and

the reason for choosing the US is not the level of competition in the market, but targeted consumer base and the marketing strategies. For example, the company can target retail sales in the US,

where wines are sold below 14 dollars a bottle on an average, leading to huge sale. Whereas, maximum wine sales in the UK take place in bars and restaurants where wines are sold at almost

50 dollars on an average. Affordability and emphasis on social media marketing made the US a

better market choice than the UK.

Appendix 2

Micro-environment Worksheet