International Expansion Strategies of Russian Standard Vodka - Dissertation Example

? Russian Standard Vodka: An Analysis of the International Expansion Strategies into the UK Markets – Research Proposal Your Degree Your Professor's Name Your University Overview Russian Standard Vodka was launched in Russia in 1998 (Grigorian, 2002). That year was the height of the Russian financial crises (De Vries, 2002). After the Soviet Union collapsed in 1991, Russia went through a period of administrative chaos which affected various sections of the economy. “There were fluctuations, breakaways, a fall in the Ruble and a massive fall in quality standards” (De Vries, 2004 p124). This trend is somewhat logical because the collapse of the USSR led to the independence of various states that were part of the Soviet Empire. This came with a lot of unstructured changes and decisions. Some of the problems were connected to the inefficiencies inherited from the Commuist regime. Others were as a result of the transition from the one-party bloc of nations to a free market economy. As the crises increased, the Russian currency fell drastically and quality standards that had gone through a period of strain under Soviet rule were absolutely inadequate. Thus, one of the Russian entrepreneurs named Roustam Tarik decided to include something in his portfolio that could withstand the economic pressures (De Vries, 2004: Grigorian, 2002). In 1998, Tariko's company, Roust Holdings decided to consolidate his hold on something that could be identified with Russia and could be produced according to high standards (Grigorian, 2002). “Tariko wanted to set up something that could be to Russia what Coca Cola is to America, Mercedes Benz is to Germay and Sony is to Japan” (De Vries, 2004 p125). Roust Holdings therefore settled on a Russian Vodka brand that people could identify with their country. They also sought to connect their brand to the highest standards. This led them to seek to reconnect their Vodka brand to the Russian Royal family that was ousted by the Communists in 1917 (De Vries, 2004). Thus, Russian Standard came with two important elements: national pride and high quality (Grigorian, 2002). The name 'Russian Standard' created the notion that the vodka brand was the definitive and original brand. Russian Standard came with the inherent attribute of being the pacesetter in the world of premium vodkas. Also, the equation of Russian Standard Vodka to the Czar's regime gave it an image of royalty and originality. Thus, the inherent elements of Russian Standard was based solidly on a foundation of internationalisation. Thus, from the onset, Russian Vodka was destined to be appropriate for the international markets. Russian Standard immediately became popular amongst tourists who were visiting Russia because they found it appropriate to purchase the product as a symbol of Russia from the duty free airport shops (Grigorian, 2002) Roust et al managed to promote the Russian Vodka brand overseas between 1998 and 2002 (Barton et al, 2003). Russian Vodka was quickly sold in ten European markets within a year after it was launched in Russia (Grigorian, 2002). This could be connected with the positioning of the product and its popularity as a symbol of Russia. Russian Standard later found its way onto the UK markets where it has been a successful product for all this while (Russian Standard Website, 2007). Ever since it got onto the UK markets, Russian Standard has become a major alcoholic brand that has been really appreciated by the public. In 2009, Russian Standard announced a ?1.2 million marketing campaign that was meant to recruit another 45,000 customers to enjoy the product (The Drink Report, 2009). This group of 45,000 users are meant to add up to Russian Standard's initial strength of 27% of the demand for Vodka in the UK (Grigorian, 2002). This shows that the Russian Standard expansion drive into the UK has been extremely successful. This is quite unusual for a foreign business in the UK market. The success of Russian Standard is something that must be observed. Research Objectives This research seeks to examine the reason behind Russian Standard's success in its international expansion strategy into the UK. It will seek to answer how and why Russian Standard managed to attain such a huge market share in the UK in such a short period of time. The thesis will attain this end by attempting to meet the following objectives: 1. An evaluation of the elements of the market entry strategy employed by Roust Holdings in expanding Russian Standard into the UK markets 2. An examination of the critical success factors that were observed and upheld by the various units and departments of Roust Holdings in the expansion of Russian Standard into the UK 3. An evaluation of the role played by country image structures in enhancing sales and consumer perceptions of UK buyers of the product. The research will therefore use various tools in formal research and blend qualitative tools to study the strategy used by Roust holding. It will investigate the standards and expectations that were placed before the top-level management of the departments of Russia Standard Vodka. Finally, the research will attempt to examine customers' needs and expectations and how these needs and desires were met by Russian Standard vodka. Background Russian Standard currently controls 60% of the global markets for Russian premium vodkas (Lenderman, 2009). It has expanded to 70 countries around the world and had manufactured over 2.1 millions bottles as at 2010 (Lambert et al, 2010). “Roustam Tariko launched the world's first premium Russian vodka made according to the exact standards of chemist, Dimitri Mendeleev's 1894 formula for authentic vodka” (Russian Standard Website, 2012). The founder of the company that produces Russian Standard vodka prides himself in his ability to replicate the exact content of the original and authentic vodka created by Dimitri Mendeleev. Mendeleev was the inventor of the periodic table which is common in chemistry and registered the patent of the original vodka in the late 1800s (Davis, 2008). Roustam Tariko's company, Roust Holdings has established a $60 million state-of-the-art distillery in Russia that provides a large stream of Russian standard products for export (Russian Standard website). Russian Standard vodka was promoted aggressively through the media and entertainment outlets around the world In Europe, Russian Standard was promoted through TV commercials, sponsorships and events. Russian Standard's uniqueness and different premium brands were linked to Moscow and Imperialist Russia rather than the despised Soviet identity. Clearly, the Russian origins played a serious role in the international choice of customers around the globe. Laroche et al (2003) identified that “country image is a three-dimensional concept consisting of cognitive, affective, and conative components”. This means that country image provides a strong mental and psychological image that lasts in the minds of consumers and influences their decisions. Russian Standard entered the UK in October 2007 (Russian Standard Website, 2012). The vodka's main expansion system was through strategic partnerships with UK marketers and distributors. In terms of promotion, Russian Standard entered partnerships with popular brands like Victoria's secret and sponsored the Eurovision song contest in 2009. In August 2008, Russian Standard appointed MyAgency UK in London to promote and market its brand in the UK (Owen, 2008). The partnership was a multi million Pound arrangement that gave MyAgency the right to promote and market the Russian Standard Vodka brands throughout the country. Also, Russian Standard's expansion drive was supported by a tradition of a reliable distributor. According to Talking Retail (2012), Russian Standard entered its first distribution contract with First Drinks Brands for the first four years of its entry into the UK market. However, from 1st January, 2012, it changed over to Whyte & MacKay. MyAgency UK launched one of the main marketing drives for the promotion of Russian Standard vodka called Meet the Russian Standard. This led to a collection of promotional events and activities meant to unleash the brand and promote Russian Standard across the UK. Meet the Russian Standard was meant to help build brand image awareness amongst the British publlic. According to My Agency UK (2012), Meet the Russian Standard campaign led to over one million consumer contacts in the UK. It pushed the Russian Standard vodka to number two in terms of selling vodka brands in the UK. Russian Standard vodka was only second to Smirnoff which has been a popular brand in the UK for a very long time. Clearly, it is a great marketing success for Russian Standard vodka to meet the high targets that it set. It is not easy anywhere in the world for a business to move from one country and enter another and take over a huge chunk of the market share. The success of Russian Standard vodka on the UK markets is one that seem to come with vital lessons for international business and brand expansion and the growth of sales in foreign regions. This is the main essence of this research. This research seeks to identify the key factors that led to the successes of Russian Standard vodka in the UK. It draws upon major pointers and indicators in the processes to conclude upon the winning strategies in the market entry of Russian Standard. Methodology The research methodology section is meant to outline the strategies that will be employed to enquire into this topic. It will give details about the data collection, data analyses and interpretation of results and findings. The research design will be based on important components of the research question identified in the research objectives. The first objective will be to examine the strategies employed by Roust Holdings in the expansion into the UK markets. Secondly, the research will examine the critical success factors that were observed by the various components and units that took part in the international expansion drive. The third and final objective is to examine the relevant factors that caused consumers to build preferences for Russian Standard vodka in the UK. Introduction The research will begin with an introduction that will be based strongly on the components of this proposal. It will give a summary and details of the actual activities that will be undertaken during the research. It will outline important pointers and activities of the research. Literature Review The second chapter will focus on the collection of definitive terms from secondary sources. This will involve a critical review of important elements of key words and concepts including strategy, international expansion, consumer perceptions amongst others to create the basis for the entire research. The literature review will define the framework within which the research will be conducted. The findings from these secondary sources will become the basis for the entire research and the context within which the other components of the research will be carried out. Data Collection Data to be compiled at this phase will include primary sources. It will focus on data and information that can be gathered from people who were strongly involved in the expansion. Stakeholders to be engaged in the data collection system will include managers, departmental leaders and consumers of Russian Standard. The first phase of the data collection will involve an interview with a top level manager of the marketing company that promoted the entry of Russian Standard into the UK markets. It will involve the compilation of information and ideas about the various strategies and plans related to the expansion of Russian Standard. Only one top-level manager will be interviewed in this section. The interview has the advantage of giving a first hand account of what actually happened. The limitation of interviews is that it cannot capture everything that occurred during the expansion. However, the questions will be structured in a way that the most crucial activities would be discussed. The second phase will include the collection of information about the main factors that were considered in the expansion of Russian Standard into the UK. It will involve the collection of data by up to seven key managers who played important roles in the growth of Russian Standard to the UK. The main managers will include amongst others, managers from MyAgency UK, First Drinks Brands, Whyte and MacKay Distributors and other important and vital partners that played a major role in this expansion. The data collection will involve be done through the distribution of questionnaires to these top level managers. The questionnaires will be open ended questions and will demand a wide range of information from managers. The third phase of the data collection will involve the extraction of information about UK customer preferences. It will involve questions about the main factors that led to the sales preferences amongst UK customers for Russian Standards. This will seek to collect information from a different classes of consumers to identify what caused them to choose Russian Standard vodka instead of the other popular brands. The sample for this phase will be 50 UK consumers who have used Russian Standard in the past. They will be made to ask questions in an online survey. The survey questions will be close ended questions. Data Analysis The interview conducted with the person in a top level position will be summarized. The summary of the responses from the interview will be compiled and important pointers presented as part of the research findings. The open ended questions of the middle ranked managers about the expansion to the UK will be collated. This will be done through the summary of the response of each question. Finally, the results of the survey sent to consumers will be compiled statistically. It will be presented in the form of tables and charts to give a visual impression of the responses of the consumers in relation to each question asked. Discussions The research will undertake evidence based analyses of the various findings that will be attained in the research. This will be in a phenomenological analyses of the observation and evidence that will be gathered in the research. It will be based on a balanced analysis of the various components of the research that will be noted. The writer will strive for objectivity and use an existential approach to analyse every component of the research. Each finding is going to be weighed against the dominant authoritative rulings and ideas to come up with a view which will be examined in the interpretations section of the research. Interpretations The summary of the interview with the top level manager will be in the form of the diagnosis of a marketing strategy. It will include a system of deducing the strategy used in the expansion. This will be done by identifying the vision, objectives and overall activities that were conducted in expanding Russian Standard to the UK. The responses of the middle ranked managers will form the deduction of the critical success factors for the expansion drive. It will include specific factors that were important for each and every department I the internationalisation of Russian Standard into the UK. Finally, the statistical trends in the responses of the consumers will be employed to theorize on the issues at hand. The dominant trends and responses will form a generalisation of the main consumer preferences that contributed to the success of Russian Standard in the UK. Time-scale The research is estimated to take a total of seven weeks. During the weeks, certain activities will be conducted. Week/Activity 1 2 3 4 5 6 7 Introduction Literature Review Survey Question Design Data Collection Data Analysis Interpretation Compilation Value of Research The research is in partial fulfilment of my Masters Degree. After going through the taught course for some time, this is a requirement that adds up to the marks that I have attained in the course. The research will add up to my credits and enable me to meet the mandatory requirements for the Masters Degree. Secondly, I hope to establish some important blueprints in International business strategies. I hope to use this research as an avenue for the study of trends in International Business and then apply them to real-life cases to support my progression in my professional career. Finally, I hope to add up to knowledge by conducting this research. I hope to identify strong correlations and trends and compile the final research, which can be used for future generations for their academic and practical benefits. Limitations of The Research The main limitation of this research is that it is mainly qualitative in nature. This means that subjectivity is a major factor in the entire research. The risk with this is that what one respondent might say about a given thing could be different from what another respondent might say about the same thing. This is because opinions differ and people's perceptions are not the same. Thus, the research will hope to promote some kind of consistency by attempting to ask questions that would provide responses that could be as measurable as possible. The second limitation of this research lies in the fact that there might be some generalisations in the research. These generalisations might not be universal because there is a large sample risk. This is because there is a risk that the people interviewed in the consumer section might not sufficiently represent the universal views of consumers in the UK. To prevent this, care will be taken in selecting the respondents for the survey. References Barton Dominic, Newell Robert, Wilson Greg (2003) Dangerous Financial Markets: Managing in Financial Crises. London: John Wiley & Sons Ltd Davis William (2008) The Rich: A New Study of the Species London: Totem Books. De Vries, Manfred Kets (2004) The New Russian Business Leaders Surrey: Edward Elgar Publishing. Grigorian Vadim (2002) Russian Standard Vodka: Strategies for Global Branding & Expansion into the US Markets Fontainebleau Cedex: INSEAD Lambert Surhone, Tennoe Miriam & Henssonow Susan (2010) The Russian Standard Vodka Berlin: VDM Verlag. Laroche Michel, Papadoupoulos Nicholas, Heslop Louise & Mourali Mehdi (2003) “The Influence of Country Image Structure on Consumer Evaluations of Foreign Products” in International Marketing Review Vol. 22 No 1. Lenderman, Max (2009) Brand New World. London: Collins Publishers MyAgency UK (2012) Meet the Russian Standard Available online at: http://www.myagency.co.uk/case-studies/meet-russian-standard. Accessed: 22nd February, 2012. Owen Jane (2008) “Russian Standard Vodka: Lateral Thinking” Guardian Newspaper. Available online at: http://www.guardian.co.uk/letsgetcreative/lateral-thinking Accessed: 22nd February, 2012. Russian Standard Website (2012) Success Stories Available online at: http://www.russianstandardvodka.com/#/en/the-house-of-vodka/success-story/ Accessed: 22nd February, 2012. Talking Retail (2012) Russian Standard Vodka Joins with Whyte & MacKay Available online at: http://www.talkingretail.com/products/product-news/russian-standard-vodka-joins-with-whyte- mackay. Accessed: 22nd February, 2012. The Drink Report (2009) Russian Standards Invests ?1.2 million in UK Campaign Available online at: http://www.thedrinksreport.com/full.articles/spirits.folder/full.0609_RussianStandard.html Accessed: 21st February, 2012 Read More