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Lungarotti Presentation

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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 …

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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  • 1. LUNGAROTTI c atività, te rio tradizio re rrito , ne Rossella Carpino Paige Hannah Zach McCarthy April 10th, 2008
  • 2. 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
  • 3. 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
  • 4. 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
  • 5. SWOT Analysis: Weaknesses • 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 German April 10, 2008
  • 6. SWOT Analysis: Opportunities • 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 • Brandy April 10, 2008
  • 7. SWOT Analysis: Threats • 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
  • 8. Cultural Profiles: Trompenaars’ Cultural Dimensions • Universalist/Particularism • Individualist/Communitarian • Neutral/Emotional • Diffuse/Specific • Achievement/Ascription • Internal/External Control • Sequential/Synchronic April 10, 2008
  • 9. Marketing Strategies Current Markets Emerging Markets • European Union • China – Italy • India – Germany • Japan – UK • Russia • United States Focus Strategy April 10, 2008
  • 10. 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
  • 11. Existing Market: Italy Characteristics Doing Business • Particular • Relationships are very important – Relationships before schedule • Communitarian • Superiors are respected • Affective • Time is approximated • Diffuse – Being late with good reason is OK • Ascription • Show emotions very openly • Internal • Very little personal space • Synchronic • Use of proper etiquette • Work and Personal lives not separated April 10, 2008
  • 12. 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
  • 13. 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
  • 14. 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 – Chengdu – Beijing – Ningbo – Guangzhou – Dalian • Heavy direct marketing is essential • Asia Distribution Solutions: main importer of western beverages April 10, 2008
  • 15. Emerging Market: Chengdu, China • 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
  • 16. Emerging Market: China Characteristics Doing Business • Particular • Appointments are important • Communitarian • Long decision making process • Neutral • Group is most important, but • Diffuse rank is highly valued • External – Senior Executives lead • Ascription • Punctuality • Synchronic • No use of large hand movements or personal contact April 10, 2008
  • 17. Emerging Market: China Price Product • Expensive – Communicate • High Quality Wines Luxury – White wines towards women – Room for 60% price increase • Wine Therapy in large distribution areas • Brandy Line • Selling to top 10% • Marginal Costs – Only using variable costs and profit – Use marginal costs to expand • Fixed Costs constant (70%) April 10, 2008
  • 18. Emerging Market: China Place Promotion • Business & First Class of Airplanes • Push image of Lungarotti wines – Singapore Airlines – Lungarotti is the wine to drink – DragonAir – Associate with Status – Cathay Pacific Airline – Health Benefits, Wine Therapy • Luxury Hotels – Awards, DOC • Upscale Social Scenes • Heavy Marketing • The “Big Six” Cities – No Agents – Hong Kong: VinExpo – “Impression on brand has – Chengdu: Important trade center become the main reason for • Two Biggest Importers: Montrose consumers’ purchasing actions.” Food & Wine, ASC Fine Wines • VinExpo in Hong Kong (May) • Lungarotti Distribution in major • 2008 Olympics cities • White wines for Women April 10, 2008
  • 19. 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 wines April 10, 2008
  • 20. Emerging Market: India Characteristics Doing Business • Particular • Hierarchy plays a key role • Communitarian • Use appropriate titles • Neutral • Must build relationships • Specific/Diffuse • Appointments are important • Ascription (made in advance) • Internal/External • Punctuality • Synchronic • Slow process for business transactions April 10, 2008
  • 21. Emerging Market: India Price Product • Expensive – Selling to top • Currently like sweet wines, 2% but tastes are developing • Marginal Costs • Sparkling and rose wines – Only using variable costs and target the affluent profit – Use marginal costs to expand • Luxury Good • Fixed Costs are Constant (70%) April 10, 2008
  • 22. Emerging Market: India Place Promotion • 80% of wine sales accounted for by major cities • Lungarotti is a luxury wine – Mumbai – Awards, DOC – Bangalore • Heavy Marketing – Delhi • – No agents Business & First Class on Airplanes • Show women drinking wine – Jet Airways (sign of sophistication) – Cathay Pacific Airlines • 5-Star Hotels, upscale restaurants, • Wine Magazines pubs and bars – Sommelier India recently – Accounts for 63% of volume sales featured Lungarotti • Lungarotti Distribution Centers – Wine storage in India is a problem April 10, 2008
  • 23. Emerging Market: Japan • 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
  • 24. Emerging Market: Japan Characteristics Doing Business • Universal • Teamwork is important • Communitarian – Always deal with team, not individuals • Neutral • Hierarchy is respected • Specific • Formalities, procedures • Ascription • Don’t show feelings • Internal – Silence is a virtue • Synchronic • Value relationships and harmony April 10, 2008
  • 25. Emerging Market: Japan Price Product • Expensive – Selling to top • High Quality Wines tier – Red Wines • Marginal Costs – Accompany Italian Meals – Only using variable costs and – Enjoy sweet wines profit • High status product – Use marginal costs to expand • Brandy Line • Fixed Costs are Constant (70%) April 10, 2008
  • 26. Emerging Market: Japan Place Promotion • Japanese Italian Restaurants • Push the image of Lungarotti • Business & First Class of Airplanes – Lungarotti is the wine to have – ANA All Nippon Airways – Associate with status • Luxury Hotels – Awards, DOC • Upscale Social Scenes • Heavy Marketing • Major Cities – No agents – Tokyo – Yokohama • Males in mid-30s – Osaka – Need convincing – Nagoya • Young Japanese Women – Kyoto • Joint ventures with upscale • Supermarkets, Wine Stores Italian restaurants and hotels April 10, 2008
  • 27. 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 stores April 10, 2008
  • 28. Emerging Market: Russia Characteristics Doing Business • Particular • Openly show feelings • Individual/Communitarian • Work and personal lives • Affective separated • Specific • Punctuality – Indicates how serious one is • Ascription • • Formality observed External • • Simple, straightforward Sequential/Synchronic presentation • Rude to reject invitations April 10, 2008
  • 29. Emerging Market: Russia Price Product • Selling to upper class • Want seemingly expensive – Young, extremely wealthy luxury Wines males • Semi-dry red wines • Marginal Costs – Only using variable costs and profit – Use marginal costs to expand • Fixed Costs are Constant (70%) April 10, 2008
  • 30. Emerging Market: Russia Place Promotion • Major Cities • Very fine Italian wine – Moscow – St. Petersburg • Push Awards & DOC – Tomsk Certification • Business & First class of airplanes • Heavy Marketing – Aeroflot – S7 – No agents • Specialized wine stores, Kiosks, Supermarkets • Upscale Hotels, Restaurants • Lungarotti Distribution Center in major cities April 10, 2008
  • 31. 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
  • 32. LUNGAROTTI c atività, te rio tradizio re rrito , ne April 10, 2008