C212 Marketing Overseas Expansion
A1. Identify 2 products for expansion.
As a partner in Camelback Winery, I have been looking for many opportunities for expansion. The winery has grown from sales and shipping only a few hundred cases a year to shipping nearly ten thousand cases last year. With this growth, we have researched markets around the United States, but have not looked beyond the American shores. The two products that we would like to expand would be
Camelback Hard Cider and Rock Head Whiskey. Both of these products are created and bottled at the
Camelback Winery in Phoenix, Arizona. Camelback Hard Cider is created using apple beer mixed with Rock Head Whiskey and creates a dry sour apply whiskey taste. The Rock Head Whiskey is distilled on location at the Camelback Winery and is made to taste as a traditional American whiskey. Due to the growing demand for American alcohol we would be looking to expand our products to Japan.
A1a. Three methods to determine there is both a need and a global market.
The first method would be to pay for already completed market research from Euromontior
International. By using their completed research, we would be able to identify what the current market is for both cider and whiskey. This information could give us the estimated market share we could take over. This information would also be useful in determining the price point. This price point will help to build a growth share matrix.
The second method would be to have a team visit different areas in Japan to get information. The team will start to gather information by speaking with liquor shop owners to get an understanding of alcohol consumption and purchase. This would also show the market share competitors control and the sales point of the items. Along with speaking with liquor store owners, the team will conduct surveys with liquor store and bar patrons. This will determine the estimated strategic window for introduction of the new products. This method will help to pinpoint possible customers or areas to sale in.
The third method would be to create online surveys via social media. Facebook would be easily usable by identifying users that frequent either liquor stores or bars in the markets we are looking at for expansion. Once users are identified a simple survey could be created and applied to Facebook as an ad. This will target specific users, the information that comes back from the online survey could be received in real time. Also, with the survey being online, people might be willing to answer questions and be honest due to anonymity of online personas.
A1b. One competitive advantage.
Over the past ten years the Japanese have started getting into the non-traditional alcohol markets. They are looking for a good tasting product. Currently there are no Arizona made liquors in Japan. The competitive advantage would come from the location of the winery. Within Japan there is a subculture that idolizes cowboys and the US Southwest. By tapping into this love of all things not just American, but cowboy we could find a niche market share for our two products. Through cultural research we have been able to identify the best locations to market the product. These areas initially would be where the subculture currently flourishes. Once we get a foot hold into the country, we would be able to expand operations based on popularity of the taste of the product.
A1c. Two inherent risks.
The two inherent risk with trying to sell products in Japan would be distribution and production sustainability. The first inherent risk would be distribution. A small company with no connections to Japan it will be hard to get product into certain markets. According to Gordon (n.d.), a large corporation would have more leverage to influence cheaper shipping rates or set up their own distribution network. The best route to import and sale the products in Japan would be to hire a distributor. Due to the small amount of product or low demand throughout the region, it will initially cost a significant of money to get the product to market. As market share grows it will become easier to get the products to market, but it will create another issue. The second inherent risk will come from production sustainability. As increase sales goes up, production will need to be increased. The Rock Head Whiskey takes six months to distill, cask, and bottle. The Camelback Hard Cider requires Rock Head Whiskey to be added during brewing. If the product were to grow faster than expected, it will cause a backlog of supply for a few months. This could make the product hard to come by in Japan. Due to the rarity of the product it could give an advantage of raising pricing. Although a loss of market share may happen because the consumer is not able to find the product and eventually quit looking for the product. The winery will need to increase production to stay ahead of the request for supply. This can be done because whiskey could sit in a cask and wait to be bottled. Cider can be brewed in under five days.
A2. CRM Software
Camelback winery uses Zoho Customer Relationship Management software. Using Zoho CRM gives the company a 360-degree view of customers’ interest and preferences. According to Schniederjans et al. (2012, pg. 3976), “the purpose of CRM as the efficient and effective acquisition and retention of customers through selective initiating, building and maintenance of appropriate relationships that will lead to enhanced profitability”.
A2a. CRM Information
The four primary components of Zoho CRM are Sales Force Automation, Analytics, Performance Management, and Predictive Sales. These four components will help Camelback Winery get and keep satisfied customers. By using the sales force automation module we will be able to track the deal pipeline from initial contact to close. This component of the CRM will allow us to manage the customer account easier by automating different aspects of contact and billing. The second component analytics will give us ways to create reports and charts and allow us to track our key performance indicators. The third component of performance management will allow us to plan for future sales and create tracking of how we are meeting or exceeding quotas. This component will also allow us to create invoices in Japanese Yen versus dollars and will be based on current real time currency conversions. The last component of predictive sales will allow us to develop our and meet production sustainability. This will give us the ability to plan for future production growth to meet market demands. By using Zoho CRM Camelback Winery will be able to use real time information to make future decisions. This will keep the accordion effects to a minimum from production to distribution.
A3. Distribution channels.
Camelback Winery currently uses two methods to deliver products to consumers. The first is through direct distribution and the second is through Arizona Alcohol Distributors Ltd. Neither of these methods of distribution will work in Japan. We will need to add a third method of distribution via an international alcohol distributors. The company we will use is Liquor Mountain based in Tokyo.
A3a. Key considerations.
A major consideration is tariffs. The tariff will be added to the final price of the product and paid by the consumer. Current tariffs could change at any time dependent on the political climate between two different countries. Another consideration would be sociocultural forces. The consideration of these forces would be a positive consideration. Due to the subculture of Japan for all things that are American, it will help to sell the product in the Japanese market. Another consideration would be shipping times. A shipment of alcohol through Liquor Mountain will take between 15-20 days. This length in shipping could cause the alcohol to go bad. Also temperature during shipping can affect alcohol taste. This will be a consideration of when to ship the alcohol. The product will need to ship shortly after bottling. This will give more time to get the product to market before it changes the flavor profile.
A3b. Global supply chains.
The supply chain would only affect the product if there was a bad apple harvest. The apples for the cider are grown in Washington state. If they had a bad harvest it could cause the winery to produce less cider. The supply chain concerns for whiskey would be a bad harvest of barley or yeast. Otherwise the winery would not see to many disruptions from a global market failure.
A4. Major pricing strategy.
Camelback Winery will use nonprice competition. Since both products being brought to this market, there is no comparable competitor. Without having a competitor, it would be hard to base the price off other products. We will be advertising this as a quality and unique liquor. Camelback Winery will be pricing the products to be a prestige product. The Camelback Hard Cider will be priced at $25.00 per bottle and the Rock Head Whiskey will be priced at $45.00 per bottle.
A4a. Cost associated with development and launch.
For both products fixed costs have stayed the same for nearly four years and unless there is a major environmental impact it will stay the same. The fixed cost for the cider is $6.00 per bottle and the fixed cost for the whiskey is $9.00 per bottle. Another fixed cost will be the tariffs, these will add $0.50 per bottle imported into Japan. The variable cost will come in the form of shipping. We will not be able to secure a long-term shipping contract due to small shipments. These price fluctuations will come from the cost of shipping rising and falling due to fuel prices. The average variable costs will be $10.00 per bottle. This will put the total cost for cider at $16.50 and $19.50 for the whiskey per bottle. The markup on the cider will be 66% and the markup on the whiskey will be 44%.
A4b. Consumer acceptance of price.
Through marketing research, it has been determined that at this price point, the consumers will be willing to purchase our alcohol. The price point will move the product out of the everyday consumer and with the uniqueness of the alcohol it will move the alcohol into the prestige product market.
A4c. Competitor prices.
The closest competitors to our products would be from Roughstock Montana Whiskey priced at $95.00 per bottle. The next American whiskey would be in the $25.00 per bottle range. This will give us the opportunity to get into the market and take the mid tier price range.
There currently are no other American hard ciders in Japan. There are Japanese hard ciders, these range from $5.00 per bottle to $50.00 per bottle. With being the only American hard cider on the market it will give us a unique opportunity to grab a part of the market share.
A5. Promotional strategies.
Initially Camelback Winery would be best served by a push policy and as market share grows some areas my be best served by a pull policy. This will be due to initially having limited places to purchase the alcohol, consumers will start requesting the product from local vendors.
The promotional strategy used will be create awareness. This strategy will help with a pull policy and create a need at the consumer level. This strategy is best used when bringing a new product to a new market.
A5a. Mass and social channels.
The two mass media channels we would use are mass transit advertisement and ads in Imbibe Magazine, an industry magazine. The two social media channels we would use are Instagram and
Facebook.
A5ai. Justification of media channels.
In Tokyo the subway is used by 7.5 million riders each day (Business Status, n.d.). This will introduce the maximum number of consumers to the new products. Using this method will create the pull policy driven by creating awareness. This is the most effective way to reach consumers for the price. The other is through an industry magazine called Imbibe Magazine. This magazine is read by bar and restaurant owners. This will give the retailers an opportunity to learn about the product before having consumers asking for it.
Instagram in Japan currently has 29 million monthly users (Neely, 2020). Using Instagram will give the consumer the opportunity to follow the winery and the product lines. Also depending on what is being posted Instagram will be able to target ads based on location or what users are talking about. The ads will be in the users steam and they will see them even if they do not interact with the ad. Facebook in Japan has 28 million monthly users (Neely, 220). Facebook will also give an advantage for consumers to follow the winery and the products to understand what is happening with the product. These ads can be targeted to people that have interacted with certain types of products.
A5b. Sales promotion activities.
The two first sales promotion activities we will use are frequent user incentives and free samples. The first promotion frequent user incentive will be using our current Wine Society Club. Members of the club will receive notice of specials and upcoming deals. Also members will receive points for all valid purchases and can apply them to merchandise purchases. The second promotion will be to give out mini bottles with every bottle purchased. These mini bottles will give the consumer a free item and make the cost lower but will also give the consumer a way to share with others. This could help to bring the brand name to more consumers.
Sources
Business Status. (n.d.). Retrieved April 14, 2020, from https://www.tokyometro.jp/corporate/enterprise/passenger_rail/transportation/lines/index.html
Gordon, Jack. (n.d.). Risks of a Global Product Launch. Small Business - Chron.com. Retrieved from http://smallbusiness.chron.com/risks-global-product-launch-77154.html
Neely, C. (2020, February 3). Japan's Top Social Media Networks for 2019. Retrieved from https://www.humblebunny.com/japans-top-social-media-networks-for-2019/
Schniederjans, M. J., Cao, Q., & Gu, V. C. (2012). An operations management perspective on adopting customer-relations management (CRM) software. International Journal of Production
Research, 50(14), 3974–3987. doi: 10.1080/00207543.2011.613865
