Channel and Pricing Strategies
University of Phoenix
Kudler Fine Foods had determined that expanding their markets will allow foreign market growth and increased profits. Kudler Fine Foods has decied to launch a fine and organic wine assortment in the country China. China’s culture and markets align with Kathy Kudler’s vision for Kudler Fine Foods. China is the seventh largest country in the world for wine consumption. This revealed the need for this type of expansion within China’s markets. This paper will highlight international market justification, channel and pricing strategies for expansion success, a market evaluation as well as innovation and technology factors that influenced Kudler Fine Foods decision to expand its market into China. International Market Justification
When wine first entered China market the consumers of foreign wines had a "noble" image. Today the "status identification" is no longer a trending issue Chinese consumer behavior is becoming more reasonable and personal. One reason for growth and productivity in China is the improvement of people's lifestyles. The Chinese income is increasing, and they are becoming more fashionable. In China, drinking fine wine was only for special occasion ceremonies and considered a symbol for high class socialites. As grape wine was becoming more common among the Chinese; they were drinking more wine and better types of wine. Consumers with high incomes and also those who have higher education were more likely to consume wine products. The male consumers are higher than the female consumers by 19%. The age group 25 to 44 is higher consumers of wine than other group (Rubin, 2010).
In today's market, wines are facing obstacles like brand unfamiliarity and price competitiveness. According to the Chief Executive of Vinexpo, Robert Beynat, "China is the seventh largest consumer of wine in the world and soon to be the sixth largest in the coming years. The sales and the consumptions of wines continue to grow sales in China jumped 42 percent between 2001 and 2006, from 1.5 billion liters in 2001 to 2.18 billion liters in 2006 (Conley, 2007). According to Eric Pope, manager of International Winery Programs at the Wine Institute in San Francisco "Wine consumption is growing globally, China is very attractive as the largest single wine market in the world based on its population." In the recent years China newfound wealth has been feeding the demand for luxuries. The Chinese, who once use to mix wine and soda together, are developing a taste for wine is acquiring special taste for fine wines. In addition to the increase wealth in China, magazines are promoting the health benefits of drinking wine; this is causing an increase in women who drink wine. Channel Strategy
The best channel system for Kudler Fine Foods chosen products should be able to achieve ideal market exposure for China. However, our premium organic wine selections require much less market exposure than others because our products cater more toward China’s elite, wealthy younger generations, urban professionals, and health-conscious social drinkers who prefer less grain-based spirits. Choosing an ideal market exposure for our product to satisfy the target customers’ needs remains our topmost priority. For our premium wine selections in China, the selective distribution will be the best choice. Selective distribution covers the broad area of market exposure between intensive and exclusive distribution by gaining some of the advantages of exclusive distribution and still achieving fairly widespread market coverage (Perreault & Cannon, 2008). A selective policy might be used to avoid selling to wholesalers or retailers that allocate very modest orders, compile too much returns or demands excessive service, have unsatisfactory credit rating, or have poor performance (Perreault & Cannon). Selective distribution can generate bigger profits for all our channel...
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