Advise Moet Chandon in the Chinese Market - Case Study Example

Advise Moet Chandon in the Chinese market Introduction China is the fastest growing economy in the world. This phenomenal growth in the Chinese economy has encouraged many international suppliers to enter into the Chinese market and try out their strategy. With this rapid growth of the economy their consumption pattern has also increased. China is now the world’s fastest wine consumption country in the world. Some Prestigious French wine producing companies have already invested in Chinese vineyards. This shows that the French companies are interested in the growing Chinese market. One such French winery company is Moët & Chandon. In today’s world for a company to be successful they have to invest heavily in marketing and formulate marketing strategy which would help them boost up the revenues. China’s digital space has increased recently. Companies are trying to increase their presence in the Chinese market not only through regular marketing campaigns like in advertisement in TV, but they are looking beyond that like use of digital marketing. Digital marketing is essentially making use of electronic devices like tablets, computers, cell phones etc. which can capture more eyeballs in today’s Digital environment. One major component of digital marketing is Internet marketing. In this paper, the digital strategies will be focused which Moët & Chandon can take to run their business and also the opportunities and limitation of such strategies in the Chinese market (Shambaugh, 2013). The key objective of this study is to explore the Moët & Chandon’s potential in formulating a successful digital strategy for their wine business in the Chinese market. Literature Review In the current global scenario of economic uncertainty, China is experiencing a slowdown in its GDP growth rate, though compared with most other developing nations it is relatively stable. But concerns are mounting among the companies outside China who wants to invest there. The Chinese local wine-producing companies have enhanced their quality of wines and many have even joint ventured with foreign companies. It has been seen that the Chinese market is very much price sensitive as far as the wine is concerned. Still there is a huge sales potential for premium brand products and products of mid-price category. France is one of the top suppliers of bottled wine both in volume and in value. It basically dominates the premium segment of bottled wine. There has been a significant change in the behavior of Chinese consumer. They have become more affluent, more tech-savvy and they have more purchasing options than ever before. Majority of the Chinese consumer has now started to regard the Internet as an integral part of their shopping. Now, they focus on value of the products as more importantly than the price they have to spend. They are happier to spend more bucks in exchange for brands which they can trust than purchasing large amount low priced products or services. It has been seen that the Chinese consumer prefer French and foreign brands compare to lower priced domestic brands (Wertime and Fenwick, 2011). Due to huge accumulation of wealth and increasing spread of digitization in China, it makes this market an attractive one for both domestic as well as multinational companies. But with moderation of China’s economic growth these companies must also change their strategies in the market. China is a huge market which will define consumer culture at global scale. So, for any effective marketing strategy, the company must first understand and embrace its lifestyle and desires (Holloman, 2013). In China wine drinking is considered as much more healthy compared to spirits and also somewhat trendy and the popular choice being the red wine. In China Young urban business professionals consume the wine most at bars and hotels. The main cities of wine consumption are Shanghai, Guangzhou and Beijing. The retail stores are now stocking up imported wines which increases their revenue as a result the retail sector is growing as a whole. On special Occasions or at a banquet, people give imported wines as a gift to impress their guests. Imported wine is considered as healthy and it also indicates a certain social status. It is regarded as a fashionable trend nowadays. Gift giving and presentation of the gift is considered as a matter of prime importance in China. They sometimes purchase wine as a tasteful and elegant gift for others to enjoy. The gift boxes holds significance as gift packaging is done in a wooden display box which may include two bottles of wine and wine glasses. During the festival times of the year gift items are the top sellers among premium wines (Noppé, 2012). Over the past decade wine sales have doubled in Asia with China and Japan both accounting for 80 per cent of the total market share. China has started to import wines in the last 15 years but the consumers have started to develop taste and preference for a particular brand only recently. There has been around 7% annual growth in wine consumption from 2001 to 2006 in China, while the global demand grew by just 1% during the same period. For any company who want to implement a strategy it needs to take a look at the value which a Chinese consumer will receive because among the Chinese consumer value acts as a crucial differentiator. The Chinese consumers focus more on features like consistency, reliability and product integrity. They take price as a secondary consideration (Keillor, 2007). In the Chinese market, the domestic supply of wine couldn’t meet the demand that they face, hence many wine producers try to blend the imported wine with the limited domestic wine. This compromises on its overall quality. Consumer knowledge of wine and its appreciation has improved but still they remain relatively unsophisticated, as a result there is a limited demand on the domestic wine producing companies. In China the consumer selects wines based on quality and brand loyalty instead of price and taste. Hence it is clear that the Wine industry has much potential for any company if it can formulate and implement successful business strategy (Webley, Jiang, Balmer and Ridley, 2010). In China there has been a rapid rise of digitalization. According to Social Media World Asia 2012 China was among the top countries in Social media usage. The Internet served as the main communication platform for the users. It was the growth of online games which led to the growth of social media in China. These social media channels are good for the marketers to “talk to those who have a heavy purse”. The Social media presence will depend on the telecommunication infrastructure which will determine the Internet bandwidth. Chinese people now use extensively digital devices even in less developed western and central areas. China boasts of being the world’s most mobile phone user and Internet users. This can help a company in its branding activity which is considered as crucial to any marketing strategy. It is through this social media presence which a company can reach out to customers and present their product to them in a more elegant fashion. More and more company is trying to use the social media like Facebook, Twitter which any consumer can access from any digital medium (Youngs, 2013). Methodology The Methodology adopted here is qualitative research methodology and secondary data collection methodology. Qualitative research Qualitative research methods are used mainly in social sciences and in market research. When it is required to explore new problems, then it is important to know the people’s perspective about the problem. It can also be used when one has encountered an unstructured issue or when the standard measurements can be misleading. For example in market research one can be confronted with the problem of collecting reliable data which is intimate and confidential in nature. Sometimes a Qualitative method can give results which can be used in Quantitative study. Qualitative researchers basically gather in-depth understanding of human behavior and the causes of such behavior. It basically deals with the why and how part of the decision making, not just what, where, when. It is helpful in doing exploratory research. In this paper it is important to look at the opportunities and limitation of developing a digital strategy in the Chinese market for Moet Chandon. Therefore, it exploratory research method is most suitable method for this study. Also the research objective of this study requires an answer “WHY” the strategies adopted are advantageous or disadvantageous. Hence, Qualitative research has been selected for this research study (Merriam, 2009). Data Collection Secondary data Collection refers to the pre-existing data which have already been collected by other researchers in the past may be for the similar or for different objectives. Secondary data has the attraction of being unbiased and natural. As the study will also be dealing with digital strategy of an organization in Chinese market which requires past data like reach of digital medium in the market, percentage of people using digital medium in everyday life, time spent in social networking sites which can be collected from Chinese governmental sources and which are reliable in nature hence it will be using Secondary data collection method. Analysis and Findings Opportunities of developing a digital strategy in the Chinese market In today’s world for a consumer-facing company digitization is must. With the spread of e-commerce and increasing use of social media in day-to-day lives of Chinese consumers the use of social media can really help catch more eyeballs for Moet Chandon. If the company has to increase their presence in Chinese market they must first build their Chinese audience, and to do that they have to reach the potential customers. Then through the use of the digital medium Moet Chandon can help the prospects find the best products and services so that they can purchase the same and get converted to active consumers. But the process doesn’t end there, they have to build on a long term relationship with the customers and hence engaging the consumers is the key. The entire process can be developed and executed across well-known digital media. Since Chinese consumers have accepted social media and are doing their shopping online, E-commerce implementation by Moet Chandon for the wine industry will give the consumer the chance to select their brand of choice. Also they can know the problems faced by the consumer and get the problem solved much more quickly. Using social networking sited like Facebook where the company can share new information like new wine available at the stores, the new ad etc.. The company can encourage the consumer to crate and share content within their social networking sites about the wines they are drinking. It will do a self-branding of the product. Through social media engagement Moet Chandon can build additional data about consumer profiles. By deploying IT support seamlessly in mobile and social media will help the consumer to see easily access the content. The Company can develop specific strategies for key retail partners to address key drivers of mutual success. It will keep the retailers also happy. Rating of the products can be done in the social media. Based on the rating they receive they can upgrade their products. Any type of lacuna on the part of the company can be known quickly and corrected based on the reviews of the consumer. This will increase the consumer satisfaction level and also the profitability of the company. With the advent of smartphones and tablets it is becoming very helpful for selling wines to restaurants and retailers because it the salespersons to have detailed information about the products like benefits, price etc at their fingertips. There are numerous videos about processing wine in the internet which talk about the latest vintage and the wine makers have full access to these. As a result the shoppers can make their decisions to buy wine in the store itself. Hence digital marketing efforts which include mobile, social media, video, as well as search marketing, are becoming increasingly important (Smith and Mitry, 2008). Limitation of developing a digital strategy in the Chinese market The main challenge that Moet Chandon faces is effective implementation of the digital strategy. Though the Company has gone to great lengths in building company-level digital assets like databases, websites, and social media presence, still they might not be able to reach all the consumers in China. The company might be able to penetrate the Tier-1 and Tier-2 cities, but it is the small towns and villages where they might have different needs and wishes. To fulfill their wishes they must first-build first-class go-to-market capabilities like extending their sales and distribution network at first since in rural areas it might not be possible for them to reach the people using digital medium (Bobik, 2012). For Moet Chandon it can be difficult to cope up with diversities of Chinese culture. It is said that, social media has a language of its own and if you can’t learn it, you don’t belong to it. Hence they have to learn and inculcate the values within. Being in a ‘social business’ will impact every function of a business be it marketing, PR, communications or even supply chain. Basically any function that deals with employees will be affected. So they have to deal with this issue. Government of China may put a curb on social media which will hamper their branding to a great extent. There have been instances of banning of certain social networking sites in China before by the government. The era of land grabbing and easy wins in China is coming to an end. As consumers are growing more sophisticated they will be seeking premium brand segment which will suit their taste and style. In this context presence of premium brand segment like wines of Moet Chandon will help to satisfy the consumer demand. This will lead more premium brand company to enter into the Chinese market. As a result the Wine market in China will continue to grow. The only problem that the companies will be facing is to get themselves acclimatize to the new values and culture of the Chinese tradition. As more digitization takes place in China more and more people will be able to find the wine of their choice. Hence the Wine industry will become the fastest growing sector in China. Conclusion and Recommendation Digital strategy in Chinese market is a good way to build brand recognition. In this era of digitization where everyone is carrying a digital devices like smartphones, laptop, etc. it would be foolish not to take the opportunity to increase the brand awareness through the social networking sites and through other mediums available at their hands. By doing this Moet Chandon will be catering to the needs of the people because Chinese consumers want premium brand wine according to their taste. They believe it will relieve their tension. Hence it is safe to conclude that Moet Chandon should formulate a digital strategy for their wine producing business in China. Moet Chandon has to keep in constant touch with the consumer through the use of social media presence. It can be both a boon and a bane. By properly listening to the suggestions and catering to the complaints the company can achieve customer satisfaction quickly. But it has to keep in mind that an unsolved problem can also give a bad reputation to their name. Hence it is upto Moet Chandon to decide how to use the digital strategy according to their advantage. References Bobik, M. (2012). Entering the Wine Industry in China, Norderstedt: GRIN Verlag. Holloman, D. (2013). China Catalyst: Powering Global Growth by Reaching the Fastest Growing Consumer Market in the World. New York: John Wiley & Sons. Keillor, B. (2007). Marketing in the 21st Century. New York: Greenwood Publishing Group. Merriam, S. (2009). Qualitative Research: A Guide to Design and Implementation. New York: John Wiley & Sons. Noppé, R. (2012). Retrieved from: http://www.capewineacademy.co.za/dissertations/Rise-of-the-Dragon-The-Chinese-Wine-Market-Raymond-Paul-Noppe.pdf. Shambaugh, D. (2013). China Goes Global: The Partial Power. New York: Oxford University Press. Smith, D. and Mitry, D. (2008). The Business of Wine: A Global Perspective. Oxfordshire: Copenhagen Business School Press DK. Webley, P., Jiang, S., Balmer, B. and Ridley, L. (2010). Retrieved from: http://www.dpi.vic.gov.au/agriculture/investment-trade/market-access-and-competitiveness/markets/china/china-wine-market. Wertime, K. and Fenwick, I. (2011). DigiMarketing: The Essential Guide to New Media and Digital Marketing. Singapore: John Wiley & Sons. Youngs, G. (2013). The Digital World: Connectivity, Creativity and Rights. New York: Routledge. Read More