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Presentation given to the CEO of Lungarotti wine company as a final project for a Comparative Global Business Cultures course. The presentation outlines our proposed international business strategy for the company and focuses on marketing.
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LUNGAROTTIcreatività, territorio, tradizione
Rossella CarpinoPaige Hannah
Zach McCarthy
April 10th, 2008
Presentation Overview• About Lungarotti
– Company Culture
• SWOT Analysis
• Cultural Profiles– Trompenaar’s Cultural Dimensions– Lungarotti’s Markets: Current & Emerging
• Marketing Strategy – Existing Markets– Emerging Markets
April 10, 2008
Lungarotti
• Power Culture at the top– Senior Management
• Role Culture– Underneath Senior Management
• Switch to Task Culture to manage expansion– Creativity– Teamwork – Horizontal structure
April 10, 2008
SWOT Analysis:Strengths
• Good re-use of facilities and resources available
• Aspects of culture used as support for sales
• Lungarotti brand carries a respected name– Awards– DOC
• Well-developed, wide-range product line
• Sold in 45 countries worldwide
• Name is beyond wine– Vineyards, factory, 5-star hotel, museum, olive oil– Le Tre Vaselle website is translated into English,
Spanish, Portuguese, Russian, Chinese and Japanese
April 10, 2008
• Lack of communication between agents and home base
• Power culture on top, Role culture on the bottom
• Passive PR– Agents to do the marketing– Relying on word of mouth for opportunities abroad
• Global Strategy: Thinking too small
• Webpage not in GermanApril 10, 2008
SWOT Analysis:Weaknesses
• Expansion Wine Therapy
• Potential of internal employees • Marginal costing to get into new markets
• Creating specific wines for other markets
• Becoming the Italian wine for emerging markets
• BrandyApril 10, 2008
SWOT Analysis:Opportunities
• Competition from Chile, Australia, New Zealand, France
• Successor Issues
• Culture can hinder innovation and expansion
• Competition gains advantage in emerging markets
• Domestic wines
April 10, 2008
SWOT Analysis:Threats
Cultural Profiles:Trompenaars’ Cultural Dimensions
• Universalist/Particularism• Individualist/Communitarian• Neutral/Emotional• Diffuse/Specific• Achievement/Ascription • Internal/External Control• Sequential/Synchronic
April 10, 2008
Marketing Strategies
April 10, 2008
Current Markets• European Union– Italy– Germany– UK
• United States
Emerging Markets
• China• India• Japan• Russia
Focus Strategy
Marketing Strategy:Focus Strategy
• Narrow Market
• Tailor marketing mix to these markets
• Looking to gain a competitive advantage
• Good for small companies
April 10, 2008
Existing Market:Italy
Characteristics• Particular• Communitarian• Affective• Diffuse• Ascription• Internal• Synchronic
Doing Business• Relationships are very
important– Relationships before
schedule
• Superiors are respected• Time is approximated
– Being late with good reason is OK
• Show emotions very openly
• Very little personal space • Use of proper etiquette • Work and Personal lives
not separatedApril 10, 2008
Existing Market:European Union
• Italy, Germany, UK
• Competitive Advantage
• Continue current operations
• Closer contact with agents
• Widespread marketing across EU
• Website translation into German
April 10, 2008
Existing Market:United States of America
• Increase in Price
• Internet Sales– PayPal Capability– Distribution Centers– Distributor Personally Delivers
• Partnerships with Hotels
• Improve motivation and relationships with sales personnel– Use of Marginal costing – Build Motivation of sales force
• Marketing Lungarotti over competitor’s wines– No screw top in USA– Certified with DOC– Premium Italian Wine
April 10, 2008
Emerging Market:China
• Target Market: Upper-class wealthy individuals– More millionaires per capita – The wealthy are westernized– Wine is becoming more popular
• Personal Status and brand image are extremely important
• Wealth concentration in few cities:– Shanghai– Beijing– Guangzhou
• Heavy direct marketing is essential
• Asia Distribution Solutions: main importer of western beverages
April 10, 2008
– Chengdu– Ningbo– Dalian
• Located in Southwest China
• Huge emerging market– One of the most important economic transport and
pharmaceutical centers in China
• More tea-houses and bars than Shanghai
• Laid back attitude– Enjoying life– Similar to Italians
• France and Australia already showcasing wine– March 20th: Australian wine showcase
April 10, 2008
Emerging Market:Chengdu, China
Emerging Market:China
Characteristics• Particular• Communitarian• Neutral • Diffuse• External• Ascription • Synchronic
Doing Business• Appointments are
important• Long decision making
process• Group is most
important, but rank is highly valued– Senior Executives lead
• Punctuality • No use of large hand
movements or personal contact
April 10, 2008
Emerging Market:China
Price• Expensive –
Communicate Luxury– Room for 60% price
increase in large distribution areas
• Selling to top 10%• Marginal Costs
– Only using variable costs and profit
– Use marginal costs to expand
• Fixed Costs constant (70%)
Product• High Quality Wines
– White wines towards women
• Wine Therapy• Brandy Line
April 10, 2008
Emerging Market:China
Place• Business & First Class of
Airplanes– Singapore Airlines– DragonAir– Cathay Pacific Airline
• Luxury Hotels• Upscale Social Scenes• The “Big Six” Cities
– Hong Kong: VinExpo– Chengdu: Important trade
center• Two Biggest Importers:
Montrose Food & Wine, ASC Fine Wines
• Lungarotti Distribution in major cities
Promotion• Push image of Lungarotti
wines– Lungarotti is the wine to drink– Associate with Status– Health Benefits, Wine Therapy– Awards, DOC
• Heavy Marketing– No Agents– “Impression on brand has
become the main reason for consumers’ purchasing actions.”
• VinExpo in Hong Kong (May)• 2008 Olympics• White wines for Women
April 10, 2008
Emerging Market:India
• Target Market– Upper-class individuals: Wine is consumed in top
2%– Wealth Concentration: Mumbai, Bangalore, Delhi– Westernized group– Media is now portraying women who drink wine as
sophisticated
• Growing interest in wine, especially among the wealthy– Developing Tastes– Wealthy are westernized– Wine is a sign of sophistication
• Less domestic production as tastes improve
• Typically prefer still winesApril 10, 2008
Characteristics• Particular• Communitarian• Neutral• Specific/Diffuse• Ascription • Internal/External• Synchronic
Doing Business• Hierarchy plays a key
role• Use appropriate titles• Must build relationships• Appointments are
important (made in advance)
• Punctuality• Slow process for
business transactions
April 10, 2008
Emerging Market:India
Emerging Market:India
Price• Expensive – Selling to
top 2%• Marginal Costs
– Only using variable costs and profit
– Use marginal costs to expand
• Fixed Costs are Constant (70%)
Product• Currently like sweet
wines, but tastes are developing
• Sparkling and rose wines target the affluent
• Luxury Good
April 10, 2008
Emerging Market:India
Place• 80% of wine sales accounted for
by major cities– Mumbai– Bangalore– Delhi
• Business & First Class on Airplanes
– Jet Airways– Cathay Pacific Airlines
• 5-Star Hotels, upscale restaurants, pubs and bars
– Accounts for 63% of volume sales
• Lungarotti Distribution Centers
– Wine storage in India is a problem
Promotion• Lungarotti is a luxury
wine– Awards, DOC
• Heavy Marketing– No agents
• Show women drinking wine (sign of sophistication)
• Wine Magazines – Sommelier India recently
featured Lungarotti
April 10, 2008
• Target Market: Upper-class wealthy individuals– The wealthy are westernized: education, travel– Wine is becoming more popular
• Food capital of the world– Upscale Italian Restaurants– Hobby is finding new restaurants
• Drinking is very popular; socially accepted
• French wines currently valued
• Wealthy are westernized– Western Education, Travel– Willing to Westernize some behaviors
• World Wine Day– Lungarotti participated per request of Japanese Princess
April 10, 2008
Emerging Market:Japan
Emerging Market:Japan
Characteristics• Universal • Communitarian• Neutral• Specific• Ascription• Internal• Synchronic
Doing Business• Teamwork is important
– Always deal with team, not individuals
• Hierarchy is respected• Formalities, procedures• Don’t show feelings
– Silence is a virtue
• Value relationships and harmony
April 10, 2008
Emerging Market:Japan
Price• Expensive – Selling to
top tier• Marginal Costs
– Only using variable costs and profit
– Use marginal costs to expand
• Fixed Costs are Constant (70%)
Product• High Quality Wines
– Red Wines– Accompany Italian
Meals– Enjoy sweet wines
• High status product• Brandy Line
April 10, 2008
Emerging Market:Japan
Place• Japanese Italian Restaurants• Business & First Class of
Airplanes– ANA All Nippon Airways
• Luxury Hotels• Upscale Social Scenes• Major Cities
– Tokyo– Yokohama – Osaka – Nagoya – Kyoto
• Supermarkets, Wine Stores
Promotion• Push the image of
Lungarotti– Lungarotti is the wine to
have– Associate with status– Awards, DOC
• Heavy Marketing– No agents
• Males in mid-30s– Need convincing
• Young Japanese Women• Joint ventures with upscale
Italian restaurants and hotels
April 10, 2008
Emerging Market: Russia
• Target Market:– Young, wealthy individuals– Highest number of billionaires per capita
• Domestic Wine Production is falling
• 30% Wine consumption increase per year
• Increasingly health conscious– Drink higher quality wines
• Growth of specialty wine storesApril 10, 2008
Emerging Market: Russia
Characteristics• Particular• Individual/
Communitarian• Affective• Specific• Ascription • External• Sequential/Synchronic
Doing Business• Openly show feelings• Work and personal lives
separated• Punctuality
– Indicates how serious one is
• Formality observed• Simple, straightforward
presentation• Rude to reject
invitations
April 10, 2008
Emerging Market: Russia
Price• Selling to upper class
– Young, extremely wealthy males
• Marginal Costs– Only using variable costs
and profit– Use marginal costs to
expand
• Fixed Costs are Constant (70%)
Product• Want seemingly
expensive luxury Wines
• Semi-dry red wines
April 10, 2008
Emerging Market: Russia
Place• Major Cities
– Moscow– St. Petersburg – Tomsk
• Business & First class of airplanes– Aeroflot– S7
• Specialized wine stores, Kiosks, Supermarkets
• Upscale Hotels, Restaurants
• Lungarotti Distribution Center in major cities
Promotion • Very fine Italian wine • Push Awards & DOC
Certification• Heavy Marketing
– No agents
April 10, 2008
Final Thoughts
• Organizational Cultural Changes– Role culture to a task culture
• Success in Existing Markets– Continue current operations– Small improvements
• Success in the Emerging Markets– Market as a luxury good– Get rid of distributors in emerging markets– Do the marketing yourself– Pay careful attention to cultural
dimensions April 10, 2008
April 10, 2008
LUNGAROTTIcreatività, territorio,
tradizione