Global Marketing - Maotai Expand in the UK - Research Proposal Example

ANALYSIS OF GLOBAL MARKETING: MAOTAI EXPAND IN UK Table of Contents Maotai Expand in the UK 2 1.0 Introduction 2 2.0 Background 3 3.0 Aim and Objectives 7 4.0 Literature Review 8 4.1 Maotai in China 8 4.2 Global marketing 9 4.3 Marketing China’s Maotai 10 4.5 United Kingdom Wines market 11 5.0 Research Design 14 6.0 Data Collection methods 16 7.0 Ethical Issues 17 8.0 Research Plan 18 8.1 Organization of the study 18 9.0 Project Plan 18 10.0 Bibliography 22 Maotai Expand in the UK 1.0 Introduction Maotai traces its roots back in Southwest China which is believed to have an exceptional climate other than its vegetation that is the reason why Maotai has a peculiar taste. Being the first Chinese wine to be produced in large scale, Maotai has gained fame within the country and internationally. According toTadla (2007), between1644 and 1911, the wine realized a 170 tons output. Expanding business to international levels is majorly meant to reduce competition and taking advantage of other opportunities that have not been explored. In recent years, increasingly fierce competition in domestic spirits consumption market in China and limited market space has contributed to diversification of some conditional spirit enterprises which begun eying international markets. Most companies are expanding production to international levels as a way of diversification. Local markets are crowded with more producers joining and therefore increasing competition. International markets provide opportunities for expansion and productivity. The Wines and spirits market in the United Kingdom is among many international markets with high potential for investors. China’s Maotai intends to expand into the UK market and increase productivity while introducing the Chinese culture in UK (Landsperger, 2009). This paper aims at discovering the opportunity for Maotai to expand and occupy the UK market. This research gives a clear understanding of Maotai, how marketing is done in the UK, highlights consumer behavior, cultural marketing and other marketing methods to effectively integrate existing resources and solve problems. In order to make Maotai acceptable by consumers in UK and build real value of the brand in the UK market, it is important to understand the market and possible consumer behavior towards Maotai. This will give wine producers an upper hand in forming core competitiveness of enterprise marketing. The conclusion of the paper provides a recommendation on whether it is wise or not to expand production of Maotai into UK market or not. 2.0 Background China has a long history of wine and spirits brewing especially Zunyi in Renhuai province. This has grown to be a Chinese culture heritage, also is regarded as one of the Chinese nation "epitome". Maotai became a national liquor in 1915after being named in San Francisco during the Panama-pacific exposition. Other medals won by Maotai include the 1985 and 1986 medals at the International exposition in Paris making international awards fourteen and twenty awards domestically since china became a republic. Initiatives for the Chinese spirits and wines to explore international markets started long ago. In 2011, Wuliangye and Hongloumeng joined hand to improve product appearance in Seoul, South Korea. Wuliangye also held a tasting named ‘World wine Wuliangye-Meet in Seoul’ in Seoul. The opening up of Chinese wines and spirits to foreign markets made a good start. However, the path of the internationalization of Chinese spirits is not optimistic. The expansion to overseas market is also walking slowly. According to Cao (2004), Cao, a Chinese poet for over one thousand years ago in his poem ‘Three Kingdoms’ sung out a poem that ‘How dispel melancholy, only has the Duking.’ And the poem is for the world universal appeal. It is evident that the Chinese people love spirits already penetrated the bone marrow. However, it is absurd that as a major power exporter of spirits, China has not fully penetrated the international market, especially the UK market. According to the latest figures, Maotai mainstream market almost disappeared in the UK. With the acceleration of China's industrialization process, the Chinese spirits industry has achieved rapid and sustained development. But at the same time, facing the expansion of the industry scale of production capacity has been a challenge since consumer market is relatively saturated. The limitation of national industrial policies and other kinds of market competition factors in spirits industry effect on consumption. Maotai moved its focus from domestic market to international market, and strive to broaden the spirits products of export channels. International influence of the Chinese traditional culture has grown over the years and more people globally are adopting these cultures. This might make it easy for Maotai to penetrate international markets, especially in UK (Landsperger, 2009). Throughout the world wine market, wine competition will eventually be seen as a culture of competition. The wine market territory size, which means they represent the size of the cultural influence. Concentrated wine culture, each wine has a deep culture of their geographical and ethnic background. Brandy was full of romance and passion of the French nation while Whiskey represented nobility among people ofEngland and Vodka was considered by the Russian nationals as straightforward and staunch. MakingMaotaiand internationally consumed wine other than its consumption in China will require creation of a consumer culture to adapt to the country of destination. As the largest export volume of Chinese spirit brand, Maotaican be used as reference. Experts point out that, for Chinese spirits to successfully penetrate the international mainstream market;it must go through innovation and try to solve the barrier in the process of development. Challenge is also opportunity. Because of Chinese spirits unique process technology and product quality standards with the international consumer market requirements have bigger difference. In addition, overseas marketing network construction, need a lot of manpower, financial resources to support, huge cost, and short-term market return is not significant, long-term market returns more difficult to predict. This makes the most spirits enterprises to counsel. Penetration of the Chinese spirits to foreign markets consumers can be facilitated by a number of factors. The first one is lack of spirit standards in foreign countries. Lack of bulk spirits into the foreign currency markets is also an added advantage for exploring. Third, spirits lack recognitioninternationally and creation of awareness will create a memory on consumers if Maotai is introduced as the initial wine for sensitization. According to Wang (2005), China's spirit culture in a foreign country is well known to the consumers’ memory since China hasheld its spirit culture for thousands of years. Therefore, strengthening the spread of Chinese spirit culture and experience, and integration of the Chinese spirit consumption blend into life of foreign consumers might be easy. This is an important guarantee for the Chinese spirit can eventually establish in foreign markets and cause sustainable development. Whisky and imported wine has rapid development in the Chinese market, because the Chinese are sensitive promoting products and culture. Gradually, consumption of alcohol developed into a way of life of the people. To some extent, foreign spirit and imported wine is largely derived from the culture to promote success. That is to say, Chinese spirit in the process of internationalization had better to learn foreign wine’s culture marketing, experience marketing, lifestyle marketing, and other aspect in China. 3.0 Aim and Objectives To discuss how to subdivide and identify British consumer groups and develop them intoMaotai’s loyalty consumers from the perspective of consumer behavior. To provide some references and suggestions on how to improve the core competitiveness and brand building for Maotai expand in the UK. To improve product visibility and popularity to enter the UK market, cultivation of Maotai loyal consumer groups and gradually establish a brand by increasing Maotai market share in the UK To distinguish the market life cycles of Maotai from a consumer's point of view and develop specific strategies according to the different stages of market characteristics. To select a concrete method of market entry of Maotai according to the characteristics of the market and market position in the United Kingdom. To determine how Maotaiwill complete the marketing differentiation strategy so as to meet consumer demand measures. 4.0 Literature Review 4.1 Maotai in China Maotai is one of the three great spirits all over the world which has over eight hundred years history. LI (2011) states that, Maotai is the earliest daqumaotai-flavor spirit with a kind of natural organic food which makes full use of advantaged natural environment made by the scientific unique traditional process of carefully brew, storage and blending. Most researchers believe that its taste is derived from the vegetation and cool environment in China. In 1915，Maotai got the gold medal and award on the Panama World Exposition. After 1949, the spirit won more prizes and was exported to all over the world. Since then,Maotai has been hailed among the world famous spirits and recognized as the glory of China. In addition its quality,the spirit remains to be unchanged for decades. China Wine & Spirits Competition has made a summary to the style of Maotai, with its prominent flavor, elegant and exquisite and mellow with a long finish. Over 110 kinds of aroma of Maotai and the empty cup after drinking always gives a long lingering fragrance that make people enjoy (Chevalier & Lu, 2010). 4.2 Global marketing A new marketing environment usually requires some rethinking of how to apply basic principles of good marketing. The principles might be applicable, but effective execution requires adjustments. Not all mature markets are the same from a marketing perspective, regardless of how similar they seem on the surface. Marketing in a high growth market in a newly industrialized economy is not the same as marketing in a high growth market in a mature economy. There is less stress on technology and product innovation and more on generic market development for existing products (Nielsen & Heller, 2012). Svensson (2002) states that, global marketing organizations would strive exclusively to ‘maximize standardization, homogenization, similarity, concentration, dependence, synchronization, and integration of marketing activities across markets’. Global marketing organizations on the other hand would also have an enlightened recognition that global consumers differ in their consumption behavior from culture to culture. Markets are about people, not products. There may be global products, but there are not global people. They may be global brands but there are no global notifications for buying those brands (World Trade Organization, 2007). As the world economy becomes increasingly cross-cultural, marketers are confronted with the challenges of marketing and managing in multicultural marketplaces. In the coming decades, as businesses explore new markets globally, it is vital that researchers on consumer behavior and managers get an enhanced understanding on how consumer behavior is influenced by culture. According to Kiefer & Carter (2012), customer needs and wants are influenced by culture which has an impact on consumer motivation. This leads to different patterns of behavior, values attached to products, different decision-making, forms of communication and different forms of retailing and other intermediaries. 4.3 Marketing China’s Maotai The initiatives to make spirits international aim at building brand and create a stable access to growth and profits. The key is to meet the effectiveness to consumers and creating a culture of Loyalty among consumers. Nielsen and Heller (2012) state that, understanding and meeting the psychological needs of consumers and increasing consumers' satisfaction and loyalty depends on the enterprise brands ability to win the market share so as to attract consumers' repeated consumption of spirit. At present, some white wine enterprise not in terms of strategy in the development of loyal consumer groups. Attracting customers’ attention to purchase is dependent on powerful promotion of the product. This allows it to sink in the memories of potential consumers. The effect of this method depends on the view of the marketing target consumer groups, therefore very passive. On the other hand, enterprises in the market operation, products in the market development and product life cycle cost accounting directly affect the marketing strategy and market. According to Samli (1995), most spirit enterprises research is not enough and can only lead to failed decision, blindness of market promotion or high marketing costs and increased burden in the enterprise. Therefore, in addition to cultural marketing, consumer behavior analysis is introduced into the spirit marketing strategy so as to understand the effective psychological needs of consumers. In the huge segment of target consumers and consumer groups, taking targeted strategies and measures work effectively. Especially on the basis of understanding consumer demand, adjusting product research and development strategy and producing products that meet customer satisfaction will be productive. Make more harmonious relationship between enterprises and consumers so as to improve the success rate of product development and brand building (Nielsen and Heller, 2012). 4.5 United Kingdom Wines market Wine and spirits consumption in the United Kingdom has increased over the years. As a small island, the UK is heavily dependent on the import of food and raw materials for manufacturing purposes. The level of imported, manufactured foods has been steadily rising and during 1985 the United Kingdom imported more manufactured foods than it exported (Alan West, 1989).According to Vinexpo (2013), the British wine and spirits Market expanded and provided more opportunities for wine produces. The Nation was second largest in light wine consumption globally, after the United States in 2011. The same year, Britain was ahead of China and the United States in light wine importation, appearing second largest on the global list after Germany. It became the top world market that imported still light wines and the top retailer in volumes of wine sold. 2012 marked Britain market for wines and spirits over Germany as the leading market for importing sparkling wine. However, consumption of wine in UK reduced by 4% in 2011 compared to 2007. In 2011, UK attained a 138.65 million 9 litre consumption incidences. Research indicates that there is a possibility for a decline in consumption by 3.66% between 2012 and 2016. Consumption is currently being shifted to better quality wine by UK consumers due to the high taxes levied on alcohol and changing tastes in consumption. This increases opportunities for investment by producers of high quality wine, locally and internationally (Casini et al, 2008). An important feature in mature markets like that of UK is the need for market segmentation. In mature markets customers are increasingly particular, with well-developed preferences; they are eager to satisfy varied and idiosyncratic tastes. According to Belu (2008), the ability of firms to target increasingly narrow niches of the market increases accordingly. Most mature markets show slow growth apart from some high-technology markets. Customers in such markets are pampered by strong domestic and global companies who compete intensely for customer satisfaction. Although some of these markets are still protected by trade barriers, customers are able to choose from among the best products in the world and tend to be confident about their ability to make informed purchases decisions, such as, separating high value from high price. The fragmentation of the UK wines market presents an opportunity, but also a headache for the foreign entrant like Maotai from China since it is a mature market. According to Markman&Phan (2011), the opportunity lies on the fact that there will often be a part of the market that has yet to find the kind of product desired. With the large populations of Europe, North America, and Japan, even small such niches may represent a large enough market. The problem is that the foreign entrant, in this case China’s Maotai, has to spot these niches. The stereotypical descriptions of the consumers in these markets will be misleading, and conventional wisdom has to be shunned (Schiffmanand Kanuk, 2004). For many foreign entrants from Third World countries, it is tempting to enter mature markets with low-end and inexpensive product. This may be unavoidable for them, but over the longer run such a strategy tends to be tries developing the requisite know-how and labor skill to become the new low-wage producer (Belu, 2008). Most people have ‘an automatic and unconscious tendency to refer to thought framework, which is mainly tied to national culture, to interpret situations, evaluate people, communicate, negotiate or decide which attitude to take. This is often unconscious attempt to compare other cultures through one’s own culture is referred to a as the ‘self-reference criterion’ (SRC). SRC might pose challenges in seeking new markets, assessing how consumers may behave in them, and in deciding on the elements of the international marketing mix. To use the four-step approach effectively, marketers need to know their own cultures and that of the target countries (Mühlbacher, 2006). 5.0 Research Design This research involves theoretical method in carrying out feasibility studies so as to figure out how Maotai marketing strategy will operate in the UK market. The research is based on results in the reference and analysis of Wuliangye’s overseas expansion, combined with the experience of Maotai in the marketing and product development. It tries to analyze the strategy of overseas markets with a combination of consumer behavior and cultural marketing perspective. The first step of the research involves gathering analysis, literature and data from previous studies. The introduction and background of this research gives a clear view of the main issues in research topic other than research purpose and meaning. This will be done with the view of reading and analyzing to understand the hypothesis made in the previous research. Second step of the research design involves ananalysis of the status quo and existing problems of Maotai in marketing in China and abroad. This focuses on Chinese spirit industry market situation and development trend. In addition, this research to determine of future trends of Maotai in the UK market, which is the basis of this dissertation research. Step three will bebased on the analysis of consumer behavior research methods to explore the general process of spirit consumption decision and the special characteristic of the formation process of consumer inertia and consumer psychology consumer standard. First analyzed the positive significance of establish the brand by the loyalty of consumers. And then explore the formation process of the loyalty of consumers in the spirits consumption. Analysis of spirits consumption characteristics of the consumers at different stages, to provide a basis for Maotai to develop competitive strategies targeted in the UK market. Step 4 finalizes research and involves an analysis ofstudies aimed to put forward the importance and necessity to developing marketing strategies based on consumer behavior analysis.According to the analysis ofMaotai case and the present status of UK spirits industry, starting from the consumer behavior analysis of competitive strategy into UK market. Finally put forward at different stages of market how to use different marketing strategies; At the same time also analysis the function of "central market", center the principles of market access and the development of specific measures. The final part of the research will involve a general assessment and conclusion on whether Maotai will get into the UK market. 6.0 Data Collection methods Data for this study will be sourced secondarily from the publications and online. Data acquired involves analysis of literature published by previous researchers. Online sources will involve current reports and news on Marketing, China’s Maotai, and situations in the UK wines and spirits market. Data will be limited to aspects affecting wines and spirits in the two countries. Data on behavior characteristics of liquor consumption in the United Kingdom, the formation of positive significance from the brand of loyal consumers and the general process of the formation of loyal consumers will be acquired strictly from studies and books on UK market. How to identify and segment target consumption group in the consumer groups and training customer into loyal customers; Maotai how to make use of cultural marketing choice into the UK market and how to carry on the effective combination of marketing strategy in different stages of product. 7.0 Ethical Issues The word “ethics” in the research context refers to rules, principles and standard of conduct that apply to the analysis (Hair, 2011). Being a research that involves gathering data and analyzing it all forms of confidentiality and accuracy will be adhered to. Ethical issues in the research will be limited compared to primary sourcing from respondents since data that will be analyzed is based on secondary sources and from released audited reports from respectable sources. However, the research will adhere to any form of confidentiality that is likely to be encountered during thestudy. Plagiarizing of works written by previous researchers will also be avoided. Any previous work that will help in the development of the research will be mentioned in the text and also in the references. The sources acquired will only be used as references and to gain understanding of the research topic. Any information acquired will therefore be analyzed and written according to my understanding and not in exact words of the previous researchers or authors. 8.0 Research Plan 8.1 Organization of the study The dissertation will be organized in a number of chapters. Chapter 1 will give an introduction of the study. Chapter two will provide the study background of Maotai and the two marketing countries (China and UK). Chapter 3explore a literature review of the study on culture and consumer behavior as influencing consumer decision, Maotai in China, Marketing, global marketing and the UK wines and spirits market. This section will also explain marketing models. The methodology or research design will be presented in Chapter 3 and Chapter 4 will present ethics, estimation results, and analysis, discussion, and policy recommendations. 9.0 Project Plan A Gantt chart provides a brilliant way of planning and tracking a project. The Gantt chart will also identify clearly which jobs have to be carried out first and ensuring it is achieved within a tight schedule (Hiller & Singleton, 2005). The literature and review of the subject areas, as well as collection and interpretation of all the data will be carried out between the months of October and November. Analysis of the collected data and writing of observations and argument will be done between December and early February 2014. A period of three weeks will be set aside to submit an initial draft and get appropriate feedback to make amendments in possible areas that might have been omitted or where corrections need to be made. Although part of the key literature research has already been carried out, the majority of investigation is yet to be completed and for that reason the Gantt chart below indicates the proposed level of work to be done will start from the month of October. October November December January 2014 February 2014 March 2014 Week Activities 5 12 19 26 2 9 16 23 30 4 14 21 28 4 11 18 25 2 9 16 23 30 6 13 Literature Review Submit Project Proposal Holiday Exams Data collation Analysis Data Create Arguments based on analysis Submit draft Receive feedback Submit final report 10.0 Bibliography Cusson, A 2013, The British Wine and Spirits Market with a Look Forward to 2016 from the VINEXPO Study: the wine market in UK. VINEXPO. Retrieved from: http://www.vinexpo.com/site_medias/cms_page_media/210/UKANG.pdf Casini, L., Cavicchi, A & Corsi, A. M 2008, "Trends in the British wine market and consumer confusion", British Food Journal, Vol. 110 Iss: 6, pp.545 – 558 Nielsen, A.C, & Heller, A. L 2012, Consumer-Centric Category Management: How to Increase Profits by Managing Categories Based on Consumer Needs. John Wiley & Sons retrieved from: http://books.google.co.ke/books?id=y3jtvP9Ln1gC&printsec=frontcover&dq=understanding+consumer+needs&hl=en&sa=X&ei=sJs2UqqKMIWrhQfw34DQCw&ved=0CDkQ6AEwAg#v=onepage&q=understanding%20consumer%20needs&f=false Samli, A. C 1995, International consumer behavior: its impact on marketing strategy development. Westport, Conn, Quorum Books.Retrieved from: http://www.worldcat.org/title/international-consumer-behavior-its-impact-on-marketing-strategy-development/oclc/246762470 Markman, G., & Phan, P. H 2011, The Competitive Dynamics of Entrepreneurial Market Entry. Cheltenham, Edward Elgar Pub. Retrieved from: http://public.eblib.com/EBLPublic/PublicView.do?ptiID=767144. Svensson,G 2002, ‘Beyond global marketing and the globalization of marketing activities’, Management Decision, 40(6), 574-83 Alan West, 1989, Marketing overseas.-(M & E handbooks), Longman Group UK Ltd. World Trade Organization, 2007, WTO’s World Trade Report 2007. Six Decades of Multilateral Trade Cooperation: What Have We Learnt? Geneva: WTO. Schiffman, L. and Kanuk, L 2004, Consumer Behaviour, 8thedn., Englewood Cliffs, NJ: Prentice-Hall. Doole, I. and Lowe, R 2004, International Marketing Strategy: Analysis, Development and Implementation.4thedn., London: Thomson Learning. Cao, L 2004, ‘Optimizing the International Business Relationship: The Case of the Ventilation Industry in China and Europe’, Unpublished PhD thesis, Leeds Metropolitan University, Leeds Belu, M 2008, Strategies of Entering New Markets.The Romanian Economic Journal. Retrieved from: http://www.rejournal.eu/Portals/0/Arhiva/JE%2027/JE%2027%20-%20Belu%20Caragin.pdf Hiller, D and Singleton, R. G 2005, Project-Management with Gantt-Charts. Open office organization. Retrieved from: http://www.openoffice.org/documentation/HOW_TO/spreadsheet/gantt_pm.pdf Hair, J. F 2011, Essentials of business research methods. Armonk, N.Y., M.E. Sharpe. Mühlbacher, H., Dahringer, L., &Leihs, H 2006, International marketing: a global perspective. London, Thomson Learning. LI, Z 2011, Chinese wine. Cambridge, UK, Cambridge University Press. Wang, J 2005, Locating China: Space, Place, and Popular Culture: Volume 2 of Routledge Studies on China in Transition. Routledge, London. Tadla, E 2007, How to live & do business in China: eight lessons I learned from the Communists. Victoria, B.C., Trafford. Landsperger, J 2009, The impact of New World wines upon the UK market. GRIN Verlag. Chevalier, M., & Lu, P. X 2010, Luxury China market opportunities and potential. Singapore, John Wiley & Sons (Asia).Retrieved from: http://site.ebrary.com/id/10510232. Read More