Marketing Initiatives of Inniskillin Wine Company and Its Internationalisation Strategy in Canada - Essay Example

?BM3615 - Global Marketing Table of Contents Overview 3 Question One: Environmental Factors Affecting Inniskillin 3 Question Two: Initial International Marketing Strategy 7 Question Three: Market Expansion and Entry Modes into American and European Markets 8 Question Four: Global Marketing Plan 10 Reference 13 Overview The case study is about the global marketing initiatives of the Inniskillin wine company and its internationalisation strategy in Canada and abroad. It can be mentioned that the global marketing is quite complex, widespread and expansive. In the context of global marketing organisations, it is of the notion that global consumers tend to contrast in their consumption behaviour from one culture to another. There are many factors such as the changing consumers’ demographics and expectations, the nature of competitions and the advent of technologies that affect the operations of a firm among others. Question One: Environmental Factors Affecting Inniskillin The environmental factors play a significant role in the business and in a country’s growth. The numerous factors that will be discussed in this context are political factors, economic factors, social factors, technological factors, environmental factors and legal factors (Jones & Hirasawa, 2008). Political Factors It can be mentioned that the political as well as the legal factors have been favourable for the success of the Inniskillin. After the end of the prohibition on sales of the alcohol, most of the companies have built their reputation in Canadian market of spirits and beers. Despite the wine market remaining sectioned, the market seemed to be expanding because of the Vintners Quality Alliance (VQA) that assists in maintaining the standard as well as the quality control. This can assist the Canadian wine to achieve more recognition in the global market especially for the production of the Icewine. It has been apparent from the case study that because of the permission that Vincor received from the North American Free Trade Agreement (NAFTA), the company was capable of being the biggest wine shop in the country of Canada. It permitted Vincor to set up its own shops whilst the other small wineries were capable of selling only at the government-owned stores since they had limited options from the Liquor Control Board of Ontario (Jones & Hirasawa, 2008). The company was capable of gaining competitive advantage because of its own distribution channel in Canada. It was further apparent from the case study that domestic prices of the wine of the wineries in Canada were controlled by the government monopolies for getting their wine listed so that they can distribute as well as sell their wines. This led to low-sales volumes as well as restricted the options available in exporting, tourism activities along with the restaurant trade. Economic Factors The economic factors have been quite favourable for the Inniskillin. The reasons behind this have been the rising incomes as well as the rise in the consumption rate of the wine in terms of values and sales. The industry sought the global pressure of consolidation. However, Inniskillin undertook expansion strategy and thus enjoyed the benefits of economies of scale via acquisition so that it can produce cheap wines and thus achieve recognition in the domestic as well as global markets. It has further been apparent from the case study that because of the economic activities that have been concerned with the agriculture in Canada, the production of better quality European Vinifera has been possible (Jones & Hirasawa, 2008) Social Factors It can be mentioned that the taste and the preference of the consumers evolve on a continuous basis. With the rise in the income, the consumers were becoming more concerned regarding the taste. The premium wines became popular at the expense of low tier wines. It was because of the evolving consumers’ awareness regarding the premium brands that helped Inniskillin to enhance their product quality (Jones & Hirasawa, 2008) Technological Factors It was identified from the case study that Bricks scale was used by the Icewine producers for the purpose of determining the quality of the product. This helped the company to maintain the quality and thus win the hearts of people of Canada (Jones & Hirasawa, 2008) Environmental Factors It has been observed that Icewine was manufactured by taking out the drop of sweet juice - that is rich in sugar, acids as well as extracts that have been left on the grapes after it has frozen on the vine. In Canada, grapes are ripen fully by the month of October. They were not touched and were covered with the protective net until and unless the first deep freeze took place during the winters in Canada. In the month of January, the temperature of Canada would decline to 14 0F that would be used to freeze the grapes to solid and thus make them ready to harvest. The climate of Canada seems to be ideal for the production of grapes since the temperature that was required was 8 0F to 14 0F while that of Canada has been 14 0F (Jones & Hirasawa, 2008) Question Two: Initial International Marketing Strategy Roger Provost has been the Executive Vice President of Vincor International since the year 1996. His main responsibility was to make Vincor known globally. The company had very little exposure to international markets. Prior to joining Vincor, Roger Provost worked for congac company Courvoisier in France as a Director in International Marketing. Roger Provost came to realise the popularity of the Icewine among the Japanese and therefore decided to advertise the product in Japan heavily, but did not permit it to be made available in Japan except in the duty-free outlets where there were quite a few Japanese consumers. As a focus in relation to distribution, the connection that existed between the increased consumers expenditure upon the luxury goods in duty-free stores by the Japanese people along with the increasing popularity among the Japanese tourists regarding the Inniskillin products were the strategies to be followed in the global-travel retail channel. In order to gain high margin, it was important for the company to increase the existing price of US$30 per bottle for Icewine in Canada to US$65 per bottle. Therefore, the company decided to create a new product and as a result it created high-quality Icewine. The packaging of the bottle was also enhanced. Roger Provost decided to keep the price of the newly created wine same in all the duty-free retail stores. It was noted in the case study that no one was allowed to sell the product at discounted price. Differential pricing strategy was offered to the customers. It was further found that the company seem to have spent huge money in the public relation campaign in Asia Pacific region. The company participated in numerous trade shows and therefore advertised heavily in duty-free trade publications. The company also focused upon the training and tasting strategies at management level as well as floor level so that the company has trained personnel and they are capable of making the consumers aware of the Inniskillin as well as Icewine products (Jones & Hirasawa, 2008) The main advantage that the company received by applying the strategy had been that it was capable of attaining huge profits in duty-free stores. Inniskillin Icewine is in direct competition with the premium Scotch Whiskies as well as Cognacs because of the strategy that it has followed. The strategy adopted by the company assisted it to make the brand popular among the international consumers. The main weaknesses as identified from the case study have been poor international strategy that Vincor had prior to the development of the new strategy. Canada was not considered as the producers of wine which had been one of the weaknesses hindering the successful operation of the company (Jones & Hirasawa, 2008) Question Three: Market Expansion and Entry Modes into American and European Markets It has been evident from the case study that after the success with the DFS Group, more duty-free operators demanded the Inniskillin products. Vincor saw the need of expansion with the increasing demand for the product. A new reserve line was created by Inniskillin to sell the product exclusively to the DFS Group. The product line was also extended that included ultra-premium Icewine products. The parent company named as Vincor also gave entry level ice wines to the suppliers that were sold with different names and were priced as low as US$ 40. It can be analysed that the company has been expanding its operation so as to achieve competitive advantage and to maintain its position in the market place. With such expansion the company can expect greater profits and thus it can aim at increased market share (Jones & Hirasawa, 2008) It has been found from the case study that the company decided to enter into the US market since the country was the highest consumers of wine in terms of volume and value. The company tried to recruit the sales personnel who had proper knowledge regarding the cities in the US where alcohol consumption has been more prevalent. It was found that best restaurants in the US were targeted for the supply of the wine. A glass made of crystal was developed by Riedal and thus both Inniskillin and George Riedel were benefited. Inniskillin gave free glasses to restaurants serving the Icewine that helped to promote the Riedel glasses and Riedel conducted tasting with the Icewine glass that helped to promote the Inniskillin. It can be analysed that Inniskillin seemed to have adopted good strategy to make the brand popular among the consumers of the US (Jones & Hirasawa, 2008) Numerous marketing events conducted by the company assisted it to make the brand popular in the country of the USA. It has been observed that the Inniskillin brand has been ordered by the celebrities that depicts the popularity of the brand in the USA. The entry mode of the brand in the USA can thus be analysed as being quite profitable to the company. After the EU agreement to relax the prohibition of the supply of sweet wine imports from Canada, it was a sign of victory for the Canada wine industry. It can be analysed that the company had entered into the country at the right time. The reason behind this has been that the legal environment of Europe is favourable for Inniskillin and thus the company could benefit to a greater extent since they were capable of exporting the wines to other parts of the world as well (Jones & Hirasawa, 2008). Question Four: Global Marketing Plan In light of the fact that the company was facing numerous challenges and threats from its competitors, it is important to develop a global marketing plan for the Inniskillin in way that can assist the company to overcome the challenges and thus maintain its position in the market. It has been noted from the case study that the company faced the challenge of competition from the Domaine Pinnacle and La Face Cachee de la Pomme that created cider products and the company has been selling its products in a similar product design as that of the Inniskillin. It can be stated that since the Inniskillin has been pioneer in the ice wine sector, it does seem to be feasible for the company to expand into the production of the cider. Expanding into other areas of the Icewine would bring new challenges to the company in terms of finance, marketing and human resource. However, until and unless Inniskillin takes the challenge of entering into this new ice category, the competitors might take away its position in the market. It can be mentioned that in light of the challenges faced by the Inniskillin from the two companies, it can focus more upon the production of the cider. Initially, Inniskillin needs to focus upon the domestic market for its cider product to check the customers’ preferences and to gain customers awareness. On finding good response from the domestic market, the company can as well expand its operations into the other countries abroad where it sells its ice wines. By expanding its operation into countries that do not have cider products, the company can gain competitive advantage. The packaging of the product needs to be paid due attention and thus protected by means of copyright act. This will strongly assist the company to prevent from the counterfeiters. The numerous ways need to be identified to introduce the technology into the production of the high quality of wine. The company as well needs to identify the new distribution channels so that the product can reach the target market in a convenient manner. The weaknesses of the competitors need to be identified which can help Inniskillin to improve their performance. The pricing strategy needs to be revised so that the competitors are not capable of competing with that of new created Inniskillin cider products. In order to penetrate into the market with the new cider product, the company can follow the penetration pricing strategy. Penetration pricing strategy is one of the most widely used strategies for the new entrants into the market. In this context, the prices of the products are kept quite low so that they can attract the customers. After gaining the brand awareness and recognition, the company can follow other pricing strategies as well e.g. premium pricing strategy can be adhered. It has been evident that for 375 ml bottle of ice cider, Pinnacle Ice Cider was retailing in Canada at the price of C$32.95 that has been C$10 less than the price for an entry level Icewine. Inniskillin can charge C$31.55 for a 375 ml bottle that will attract the customers towards the brand. Since the company has been pioneer in the Icewine category, brand image is not going to be a problem for the newly created cider products. Free gifts can be offered at the restaurants, the way by which it used to provide for the sell of the Inniskillin Icewine. This will help to accelerate the sales of the cider in the country. Furthermore, the company can target bars and pubs and the retailers selling other brands as well for the sales of the cider products. This will help the company to generate more sales. Promotion of the cider products needs to be paid due attention. Heavy advertisement in Canada needs to be conducted and in markets abroad for making people aware that Inniskillin has came into the production of the cider products as well. 20 sales personnel need to be appointed who are trained professionals and have an expertise into marketing of the wine. Proper training will be provided to them so that they can learn about the company’s culture and thus understand the goals of the organisation. Campaigns can be held where the consumers will be provided with an opportunity to taste the product for free. This will help the company to gain the feedback and thus it can focus upon the improvement of its product’s quality. Quality of the product needs to be paid due attention so that Inniskillin is capable of marketing itself as the leader in terms of provision of quality products. After having gained success in the domestic arena, cider can be effectively marketed in the countries abroad. However, only those countries can be chosen that have greater possibility of success for the cider products of Inniskillin. PESTEL analysis needs to be considered prior to entering the new markets abroad. It will help the company to understand the macro environment factors that may affect the operations of the cider in markets abroad. Furthermore, modes of entry into the new markets need to be considered and due attention needs to be paid to whether the company will enter into foreign markets by means of joint venture or by means of mergers and acquisitions. Reference Jones, G. & Hirasawa, J., 2008. Inniskillin and the Globalisation of Icewine. Harvard Business School. Read More