international market research moose and goose...
TRANSCRIPT
Niagara college
International Market Research Moose and Goose Whisky
Prepared for: Dawit Eshetu
Prepared By: Sydney Markarian, Bryan Heeney, Pavel Tikhonov, Steve Parr
28.11.2011
Table of ContentExecutive summary......................................................................2
Research Description..................................................................4
Company Description..................................................................6
Country Analysis United States...............................................9
Political Characteristics and Governance........................10
Country Analysis Canada........................................................18
Strategic issues............................................................................28
Recommendation and Action Plan......................................38
Appendix........................................................................................40
References.....................................................................................48
1
Executive summary
The purpose of this report is to evaluate which international markets will be
most successful for exporting Moose and Goose Scotch Whiskey from the United Kingdom
to international markets.
At the beginning of our report we identified 5 possible countries. Those 5 foreign
markets that we considered were Canada, France, United States, Japan and New Zealand.
Using our country matrix we rated countries on a variety or scales. These scales were
economic characteristics, market potential, risk profile, legal/ regulatory characteristics,
cost, quality of infrastructure and environment. After competitionofourmatrixwe
narrowed down to Canada and United States.
Both prospective countries showed potential as foreign markets for our whiskey.
Therefore, as a group we needed to conduct further research on these 2 foreign markets.
We then explored in detail each country’s profile, political characteristics and
governance, physical and commercial Infrastructure. We also identified the United
Kingdom’s trade relations with each country.
As a result of these research findings, the conclusion that we have come to is to
make United States as our primary foreign target market. There is ample opportunity for
our company to gain market share and make a large profit in this country. It is
economically viable and the target market that can be reached and exploited is of the
biggest in the globe.
Once we determined United States as the
most successful potential export market for our product. We then had to explore and
research the strategic issues such of the US market. These issues were market priority,
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market entry strategies, product development and pricing strategies along with market
communication strategies.
Our chosen entry strategy is direct exporting will take advantage of the
knowledge and expertises of the distributors and holesalers which they have
accumulated through time spent in this market. This strategy will allow us to exploit the
market to the greatest extent but it will also allow our company to keep in close contact
with the customers that we are trying to build brand loyalty with.
We then outline or marketing strategy’s as well as communication strategies that
will allow us to succeed in our market. We believe that we have solid plans and basis for
our company to succeed. We think that the expansion to the United States is a smart and
well thought out endeavour as outlined by this research report.
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Research Description
What is the problem/opportunity?
Whiskey producer from United Kingdom is looking to expand internationally. This
research will provide comparative analysis of international markets of Canada, France,
Japan, New Zealand and United states in relation to possibility of expansion. After first brief
comparison which was based on multiple criteria such as costs, market potential, risks,
environment and quality of infrastructure only two countries were selected United States
and Canada for further research. This research will pursue the purpose of identifying most
attractive market to export to for our company.
Why you need to do the research (motivation for conducting research)?
Market research is the collection and analysis of information about consumers,
competitors and the effectiveness of marketing programs. Company will use this market
research to determine the feasibility of a new business venture, possibility of expanding,
identifying preferences and need of customers and develop market entry, market
development and competitive strategies.
In other words, market research allows businesses to make decisions that make
them more responsive to customers' needs and increase profits. It also will allow Moose
and Goose to create successful marketing plan and prepare for difficulties which may arise
during expansion.
State the research objectives
Research will be conducted using secondary sources online and offline. Major sources
for this report will include but not limited to:
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www.cia.gov
www.worldbank.org
www.tradingeconomics.com
www.doingbusiness.org
Data collected will be used in a decision making process in a relation identifying
most preferable country to enter. Once country has been selected this data will be used
for marketing decisions such as market entry and development strategy, minimizing
costs and identifying primary market.
List research questions
1. Where we expanding to?
2. How is economic conditions within chosen market ?
3. Is it a mature market and who is our main competitors?
4. Is our product needed and in demand within chosen market?
5. What are the trade and market entry barriers?
Determine information needs
The information that we will need for our report are the demographics of the target
market, the economics of the target market, the location/density and the accessibility of the
target market. This means that we will need to know the type of people that live in the
target market such as age, gender, population, and culture. For the economics of the target
market we will need to look at the average cost of goods, and the average wage of our
target market. Lastly, for location and accessibility we need to see if it is beneficial to enter
this country based on location, and will we have the resources accessible to market and
produce our Whiskey.
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Company Description
Our company name is Moose and Goose. The distillery is located in the bustling town of
Dufftown in the heart of Banffshire. Other distilleries in the immediate area are its
sister distilleries Balvenie and Kininvie, as well
as Convalmore, Dufftown, Glendullan, Mortlach and Pittyvaich. We have a grand total of 29
which consist of 11 wash stills and 18 spirit stills, both stills are gas and coal fired. Our
distillery was founded in 1886 by Steve Parr in Dufftown, Scotland, in the valley of
the River Fiddich. In Scotland the whiskey industry fell on hard times in the 1960s and 70s,
many small, independent distillers were bought up or went out of business. But we
managed to survive by expanding production of our scotch, and introduced many new and
dynamic advertising campaigns; our goal is to have our product seen as one of the top
whiskey brands. Our goal is compete with the top brands that are sold in today’s market.
One of the main brands that we have to compete with is Glenfiddich which is sold in 180
countries around the world and shares 35% of market share. Our whiskies have done very
well in many international competitions.
Our brands of 12, 15, 18, and 21-year whiskey have all been rated highly at the San
Francisco World Spirits Competition. Our 15-year old whisky has been our best performing
whiskey; we have received three double-gold medals at the 2007-2010 San Francisco
competitions for the whiskey. Our mission is to supply people with a high quality whiskey
that is affordable. Our goals are to gain a vast market share of a competitive market. We
also have to goal gain customers that are younger and establish our brand as a main brand
with the younger generation. We operate in many different countries around the globe. Our
product is universal and does not require adjustments to change the raw product from
culture to culture thus making it easy for us to expand in to multiple countries easily and
cost effectively. The market that we are competing in is very competitive; there are about
100 main well known brands that are sold on the regular market. But there are many more
brands that are less well know and are produced locally and could only be produced for
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private use. Thus we must make a very good impression to break into this market that is
intensely competitive.
We as a company have many strengths that we have identified. We have had past
success with the advertising campaigns in the United Kingdom and always maintaining
a positive image among Scotch drinkers. As seen in this report we have a very strong
research segment at our disposal. Our Brands is positioned as a premium and prestigious
whiskey as proven by awards that we have won. Like every company our company has
weaknesses our first weakness is that being a foreign company importing we will have
slow reaction to the changes in the market. Our current clientele is not growing at a rapid
rate and finally it is hard to attract new customers to a premium grade alcohol. There are
many opportunities that our product can capitalize on. For starters the United States is the
largest liquor market in the world with a13% market share as well as high profit margins.
Overall the young adults’ have a good attitude towards the consumption spirits such as
whiskey. The threats to our product are the possibility of sales in the industry with a
possibility of negative growth. The mature portion of the target market is consuming less
Scotch whisky. There is a shift of consumer preference towards lighter alcohol beverages.
Our company offers pristine quality single malt scotch whiskey aged 12 years, 15 years and
18 years. Each scotch has a distinct taste that will please any commeasure. They key factors
to the success of our company are simple and predicable. We plan to establish our brand as
a top quality whiskey in the United States which will be recognizable by not only
appearance but also by taste. We plan to grab a large portion by offering our high quality
product at a lower price point then the competition. This will rapidly allow us to gain
customers and the taste of our whiskey will inspire customer loyalty.
The marketing strategies for our company are marketing at local stores to attract
clientele to our product. Use commercials and media to attract customers to the stores to
specifically buy our product. We will use social even settings such as charity events and
large parties to sell our product at to gain a large source of clientele. Our last marketing
strategy is to sell our product at a lower price point to gain clientele and spread the word
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through word of mouth about a high quality low priced whiskey. The management
structure that we have chosen to go to go to is a matrix structure. That way we have
managers in all key sections of our company. We have managers is research, production
sales and finance.
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Country Analysis United States
Country Profile
The United States of America is a federal constitutional republic. It has fifty states
and a federal district. The United States of America is also part of North America and
located more centrally and between the Pacific Ocean and the Atlantic Ocean. Its capital is
Washington D.C. is 9.38 million kilometres squared and has a population of more than 312
million people. It is ranked the third largest country by land area and population. In 1776
the Declaration of Independence was founded and in 1789 the constitution became the
basis for the US federal government. The first political parties were founded in the 1790’s.
From 1861-1865 it was the American Civil War which ended in redefining the nation and
ended slavery in the reconstruction era. In 1917 the US declared war on Germany. The Wall
Street crash that happened in 1929 changed everything and began the great depression.
1941 was the attack on Pearl Harbour and which began World War II. In 1985 the Cold War
began and ended in 1991 when the Soviet Union dissolved. The most recent part of history
were the attacks on September 11th in 2001 and the first African American president in
2008.
According to population, the United States has a better market potential because
they have a higher population. Population can play a major role in market potential
because as the population increases so will our target market.
Income per capita, or GDP per capita, is the most frequently used statistic for
comparing economic well-being across countries. United States is market-oriented
economies where private individuals and business firms make most of the decisions. The
federal and state governments buy needed goods and services predominantly in the private
marketplace. Though it is well known that historically U.S. has had the stronger economy
then Canada. The GDP at purchasing power parity (PPP) of U.S. was estimated at USD $
$14.66 trillion in 2010, ranked 2nd in the world, GDP per capita is $ 47,200 and it currently
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holds 11th place worldwide, Real GDP growth for U.S. though out last 10 yeast is down from
4% in 2000 to -2.9% in 20091. Write now both of the countries are trying to recover from
the effects of 2007-2010 global financial crises.
International Business/Trade
The United States total imports have shown a similar pattern as in the Canadian
economy. From 2005 – 2008 the total imports had risen from 1,476 to 2,112 (billion).
There was also a drop in their imports in 2009 to $1,575 and then to $1,903 in 2010. The
exports in the United States have grown from 2005 – 2008 from $795 to $1,291 (billion).
The total exports dropped in 2009 to $1,069 but had risen in 2010 to $1,270.
United States is a crucial part of a multitude of bilateral treaties. They have been a
member of the world Trade Organization sin January 1st, 1995; which is coincidently the
same date as Canada. They are also a member of the North American Free Trade
Agreement which also includes Canada. The relationship between United kingdom and the
United States represents the "most important bilateral partnership" in current British
foreign policy while United States foreign policy affirms its relationship with the United
Kingdom as one of its most important enduring bilateral relationships, as evidenced in
aligned political affairs, mutual cooperation in the areas of trade, commerce, finance,
technology, academics, as well as the arts and sciences; the sharing of government and
military intelligence, and joint combat operations and peacekeeping missions carried out
between the United States armed forces and the British Armed Forces. Britain has always
been the biggest foreign investor in the USA and vice versa.
Political Characteristics and Governance
Political Condition
The United States government type is a Constitutional based federal republic, with a
strong democratic tradition. The constitution of the United States was constructed on Sep,
17th 1787 and was effective on Mar, 4th 1789. The cabinet of the United States is
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appointed by the president with the senate approval. The senate consists of 100 seats
where two members are elected from every state by popular vote to serve a six year term.
The political parties in the United States consist of the Democratic party, Republican party,
Green party and the Libertarian party. After the last election the seats were as follows
within the House of Representatives; Democratic party (192) and the Republican party
(243). Within the Senate the seats were; Democratic party (51), Republican party (47) and
independent (2). Barak Obama is the current President of the United States. In the failed
states index of 2010 (as stated before) the United States ranked 159th. This shows that
they also have a moderately stable government.
Government’s International Trade and Investment Policy
The United States ranked 4th in the ease of doing business in a country. This shows
that the United States has a high openness rate within the country. The United States has
had a history of being expropriated by mainly two countries; Cube and Chile. The United
States government has also had a focus on foreign direct investment as well as
international trade. Also, as well as Canada the United States is also a signatory to the
WIPO and the WTO as well as many other international organizations.
Regulatory Barriers
The United States and Britain have a shared history, common language/legal
system, culture and ancestral lines. Today the relationship between the two countries,
through British Foreign Policy is known as the most important bilateral partnership. The
United States foreign policy upholds its relationship with the United Kingdom as one if it’s
most important enduring bilateral relationships as well. To import one litre of whiskey
there is a $2.05 import duty. The packaging and labelling between Canada and the United
states varies in imperial for the United States and Metric for Canada. When importing to
the United States you need to have a Spanish translation on the bottle. The United States
drinking age is more strict than that of Canada, which is at the age of 21.
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Physical and Commercial infrastructure
Physical
The Internet availability in U.S is high 77.3% of the population, according to ITU.
The Mobile and fixed-line telephone subscribers in United States were reported at
425,154,848 in 2008, according to the World Bank2. Freight transportation is carried by a
variety of networks. The largest percentage of US freight is carried by trucks (60%),
followed by pipelines (18%), rail (10%), ship (8%), and air (0.01%)3. According to the U.S.
Department of Transportation: "Transportation's vital importance to the U.S. economy is
underscored by the fact that more than $1 out of every $10 produced in the U.S. gross
domestic product is related to transportation activity. There are 327 official ports of entry
in the United States, several major seaports in the United States include but not limited to
New York to the east, Houston and New Orleans on the gulf coast, Los Angeles to the west.
According to the CIA World Factbook, there were 15,079 airports in the fifty U.S. States, as
of 2008 only, 376 of them have regularly scheduled airline service. In terms of cargo,
twelve of the world's thirty busiest airports were in the U.S., including the world's busiest,
Memphis International Airport. Although United States is one of the largest counties in a
world it has a great system of interstate highways, total: 6,506,204 km (number 1) paved:
4,374,784 km (includes 75,238 km of expressways) unpaved: 2,131,420 km (2008) and
well developed railroad system total: 224,792 km ranked number one in the world (CIA
world fact book).
The approximate distance between Bristol, UK and New York, U.S. is 3361.43 miles
through the North Atlantic Ocean. Warehousing is available all though out the country for
relatively low price due to significant competition in this area. Cost measures the fees
levied on a 20-foot container in U.S. dollars according to World book4. All the fees
associated with completing the procedures to export or import the goods are included.
These include costs for documents, administrative fees for customs clearance and technical
control, customs broker fees, terminal handling charges and inland transport. The cost
measure does not include tariffs or trade taxes is $1,315 per container.
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Commercial
According to Doing Business 2012 data for the United States, U.S. is ranked #4 to do
business in. Inflation rate is 1.3% up from a 2009 deflation of -0.3% ranked 47 th in the
world. Tariff levels are standard for WTO. According to Doing business “trading across
borders” report5, it takes on an average of 5 documents (Bill of Lading, Cargo release order,
Commercial invoice, Customs import declaration, Packing list), 5days and average of
$1,315 per container to import it to United States. So Tariff levels are low, documentation
needed to import is not complicated, waiting time is minimal and the costs of importing
containers are low. Moreover there is no repatriation or other foreign investment
restrictions. Importers seeking to import beverage alcohol into the U.S. for commercial
reasons must apply for an Importer’s Basic Permit on TTB Form 5100.24. Also note that
importers must maintain and staff a business office in the United States in order to obtain
an Importer’s Basic Permit6.
Despite meltdown of 2008-2010 in a banking sector it remains strong and stable,
according to the FDIC, there were 8,430 FDIC-insured commercial banks in the United
States as of August 22, 2008. It is extremely easy to obtain a credit in United States ranked
number 4 in a world according to Doing business report for 2012 7. The U.S. dollar is
considered the standard unit of currency in commodity markets across the globe (namely
gold and oil). At the present time, the U.S. dollar remains the world's foremost reserve
currency, primarily held in 0 denominations8.
United Kingdoms experience in the target market: United States
The top items being exported from the United Kingdom to the United States is
passenger cars and medicinal preparations. The most traded items from United States to
the United Kingdom are precious metals, fuel and oil. The United Kingdom exported
US$53.4 billion worth of product into the United States in 2006, which is up 4.7% from
2005 and up 31.2% in the last 4 years. The product that’s the British imported from the
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United States rose 17.6% to $45.4 billion in 2006, up 36.7% since 2002. The America’s
trade deficit towards Britain was $8 billion in 2006, up 6.7% from 20029.
There are many British corporations that do business in the United States, but for
the purpose of this report I will only list five companies that have an effect on the lives of
most Americans on a daily basis. The lists of companies are Barclays Capital Bank, The BBC,
British Airways, HSBC Bank and Virgin Atlantic Airlines. There is diplomatic trade
representation in the United States by way of the European Union and the agreements that
are sent between the E.U and the United States.
Product/Service fit
Both United States and the United Kingdom share very similar cultural attitudes
towards drinking. Americans much like Canadians, have many of the same attitudes, values
and culture. So America will have many of the same descriptions and information for the
product and service fit disruptions. The first criterion that I will elaborate on is culture.
According to statistics from the World Health Organization people in America drink 8.3
litres or alcohol per capita per year, compared to in the United Kingdom which drinks
11.75 litres per capita10. Both America and Great Britain’s cultures embrace drinking and
night life aspects of the culture. The highest percentage of people drinking in both counties
is people who are in an age bracket of people attending post-secondary education
institutions. This creates a binge drinking culture where people do not drink casually but
they will drink an abundance of alcohol on certain days of the week, weekends being the
most popular time. This is much different than many other countries, but it benefits liquor
sales because of the amounts being consumed. The second value is religion, unlike many
other countries United States and Canada are very different. In both countries there is not
predominate religion that is against drinking. There are however some religions in the
country that do not promote drinking, but overall the amount of people that will indulge in
alcoholic beverages. Also as people become more Americanised of those that have
immigrated to both countries start to lose their religion, which may be against drinking;
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and begin to adapt to the culture around them. The final criterion is attitude. The general
attitude towards alcohol in America is very similar to that of Canada; it is seen as the North
American attitude towards drinking. Americans see drinking as a part of their culture, it is
not a hindrance or a detriment to society but an integral part of it. Americans like
Canadians are proud of the amount they drink although it may not be to the same
standards the top drinking countries in the world it is a point of national pride.
To match our product to local preferences technically the product will not have to
change. The distribution of alcohol in the United States is by all sold publicly owned stores.
So this makes it easier to distribute our alcohol because we do not have to go through
government establishments. The quality of our whiskey is held to the same standards as
that of American liquors such as whiskeys and bourbons of the United States. Our whiskey
will meet the quality that people are accustomed to and also exceed many expectations.
The whiskey that is produced in the United Kingdom is of a different type of whiskey that is
not made in America, allowing us access to a niche in the market that must be filled.
Though some of the American whiskeys are supposed to be comparable in taste and quality
to the whiskeys of the United Kingdom they are simply too different to compare. American
whiskeys are either blended whiskey that creates scotch; as well they have bourbons and
other strong malt liquor products. But what we are brewing is a single malt scotch whiskey.
So although they do share a similar name we are not infringing on any patens on
technologies used. The bottles that are used to hold our whiskey are made of glass and are
similar to any alcoholic containers that are already found all across Canada. Thus our
bottles can be recycled and disposed of in the same manner that is already being used for
domestic bottles.
For the topic of modifications, we believe that our raw product does not need any
modifications to be exported and sold to Americans. However in American they use the
Imperial system of measurement which is a different measurement label than will be on
our original label. So we will have to adjust our label to tailor to Americans specifically. Just
like exporting to Canada there is the benefit that we are also exporting to a country that
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also speaks English this allows us the use the same name and description for our products
labels in part. But for certain areas in American the label must also be adjusted to include
an equal amount of Spanish and English on the bottle. This will be need for distributing to
places in the southern states. For most of the States there will be just English on the bottle.
But for the southern states there will be a need to have a smaller portion of the bottle taken
up by Spanish, but still the predominate language on the bottle will be English. For the topic
of life cycle of the product our opinion is the same to what was previously stated in the
Canadian section. When it pertains to the life cycle of our product I believe that we still
have room to expand our market and can only gain in sales. Scotch whiskey has been
around for many years like most alcohols, and as much a part of the American culture as
the British. There is also a mystic about a specific portion of the culture that particularly
enjoys scotch; it is seen as a drink of people that are in the wealthy portion of the
population. Due to that factor many people will start to drink scotch to try and fit into that
segment of the population.
Target Market Characteristics
Our segmentation strategy for the United States is to look at the Behavioural,
Demographic, Psychographic, and Geographic Segmentations. For behavioural, we will look
at customer’s needs, and target them accordingly to keep customers as regulars. In order to
figure out if Whiskey can be marketed to a mass market or a specific clientele, we need to
look at age, gender, income, socioeconomic status, culture, religion and nationality which
all fall under demographic segmentation. Looking at someone’s interest, opinions, and
values is part of psychographic segmentation. Geographical segmentation can be used for
the United States because it is so big, and we need to take each state into consideration for
location and region. These are all important aspect to consider because they will help us to
narrow down our target market.
Our target customers for the United States will be mostly males between the ages of
30 and 60. We choose this target market because not many young adults in their twenty’s
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drink a lot of hard liquor especially because the drinking age is 21. Also it is usually males
with a higher income that drink whiskey. Currently 66.8% of the United States population
is between 15-64 years of age with 104,411,352 being male and 104.808,064 being female,
with the rest being 20.1% between 0-14 and 13.1% being 65% and older.
The American culture is extremely diverse. 82.1% of the population speaks English
the rest being Spanish, and other languages. They have many different religions such as
protestant, Roman Catholic, Mormon, Jewish etc. They have the largest and most powerful
economy in the world. They have a per capita GDP of $47,200. Currently the United States
are is in a poor economic state with a public debt of 62.3% of GDP from 2010. They have a
passion for football with an atmosphere that is perfect for having a few drinks.
Similar products are currently being sold in the United States with bourbon
whiskey, Rye, and wheat whiskey and Tennessee whiskey. All of these types of Whiskey are
made in The US. Our projection for whiskey is that it will continue to have a growing
market in the United Sates due to the large population. Our whiskey will be distributed to
all major liquor stores around the United States including all the duty frees, airport, grocery
store, and CVS. We will ship our whiskey over by both boat and plane and will market our
product during the holiday season and have commercials on during major sports events
along with billboards and other forms of advertisements.
For our projected market size we want to target all the males we can within the higher
income bracket. By doing this it will potentially make our market smaller with the poor
economy the United States is facing at this present time. By modifying our product in order
to differentiate it from others we will have our own special way in making our whisky and
by having it taste different from the other ones, we will be able to attract our target market
and in the future be able to expand on it. To make our product more appealing we need to
consider packaging and make it look different from the other whiskey product, at a
reasonable cost for our company and the American economy. In entering the United States
of America we need to consider the exchange rate and make our price both acceptable to
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the American market as well as our own market in order to make a profit and sales we are
striving for.
Competition and competitive barriers
The spirit industries in Canada and America are almost identical. Both countries sell
similar products in similar fashion. The target markets for both countries are also the same.
The target market that we are reaching in Canada and America is a purely competitive
market. The market is dominated by many small companies. These companies or bands
may stem from a larger corporation that owns many smaller brands, but the product is
identified with the name on the bottle and not the company that owns the rights to the
product. There are both domestic and imported products that we will be directly
competing with. But our product does differ in taste from all the other products; so even
although we are competing as a type of alcohol our distinct taste and flavour will set us
apart. The main brands that we are in direct competition with are Ballantine's, Chivas
Regal,Grant's, Bell's, Johnnie Walker and The Famous Grouse. These are all blended scotch
whiskeys. The main competitors for single malt whiskeys are: Dalwhinnie, Talisker,
Balvenie, Glenlivet and Bowmore. We plan to differentiate ourselves from the competition
by offering a higher quality whiskey that will be sold at a cheaper price. Our plan is to
undercut our closes competition by 5% to gain market share quickly and set ourselves
apart and solidify our large portion of the market. We also plan to offer promotions and
coupons along with free tasting sessions and a abundance of locations for people to gain an
appreciation for the superior quality and taste of our product. Once people realize that our
product is of better quality and is sold at a cheaper price it will be easy to quickly grow our
share or the market and easily maintain our share.
Country Analysis Canada
Country Profile
Canada is a North American country. It has ten provinces and three territories and is
in the Northern part of the continent. Canada extends from the Atlantic Ocean to the Pacific
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Ocean and spans over 9.9 million square kilometres. It is the second largest country by
total area as of April 1st 2011 it had a population of 34,349,200. Canada is a constitutional
monarchy, governed by its own house of commons. The Governor General is officially the
representative of Queen Elizabeth II but acts only on the advice of the Prime Minister. The
first inhabitants were Native Indian People, and in 1497 began the history of the white man
in the country. In 1608 Quebec was founded and in 1670 the English Hudsons Bay
company. In 1713 conflict began between the French and English causing Canada to loose
New Foundland, Hudsons Bay, and Nova Scotia to England. In 1849 the right to Canada to
self-government was recognized. In 1867 the Dominion of Canada was created through
confederation of Upper and Lower Canada Nova Scotia and New Brunswick. By 1885
Canada was all linked together by the Canadian Pacific Railway. Pierre Elliot Trudeau
became Prime Minister in 1968 and maintained Canada’s defensive alliances with the
United States but began moving toward a more independent policy in world affairs. To cut
the last legal ties between Canada and Britain, Queen Elizabeth II signed the Constitution
Act in Ottawa which was accepted by every Province but Quebec. In 1988 Canada formed a
Free Trade Act with the United States. By 1999, the North West Territories were divided to
create a new territory in the east to govern the Inuit people.
Canada resembles the US in its market-oriented economic system, pattern of
production, and affluent living standards.. Canada enjoys a substantial trade surplus with
the US, which absorbs about three-fourths of Canadian exports each year. Canada is the
US's largest foreign supplier of energy, including oil, gas, uranium, and electric power.
Canadian GDP at purchasing power parity (PPP) was estimated at USD $ $1.33 trillion
(2010 est.)15th world wide, GDP per capita is $39,400 and it is currently 22nd worldwide.
Canada real GDP is down from 5.2% back in 2000 to -2.5% in 2009 growth11.
International Business/Trade
The volume of exports in Canada for 2010 is $392.7 billion, which in relation to the
rest of the world ranks 12th . While the United States volume of exports for 2010 was
$1,289 trillion. The United States was ranked 4th overall for total exports in the world.
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The total Canadian exports for 2005 – 2010 have been steadily increasing. It wasn’t
until 2009 that it dropped but began to rise again by the year 2010. From 2005 until 2008
the amount of exports had risen from $450,210 to $488,754.1 (millions), with a sharp drop
in 2009 to $369,343. The total exports in Canada are $404,834.2. The imports in Canada
have been following the same pattern of growth. From 2005 – 2008 the amount of imports
has grown from $387,837.8 to $443,772.2. In 2009 the amount of imports had decreased
to $374,080.9, but then rose to $413,832.8. In 2009 and 2010 there were more imports
than exports bringing the balance to a negative number for these two years.
Canada is a part of many free trade treaties. The biggest free trade agreement that
Canada is a part of is the World Trade Organization. They have been a member since
January 1st, 1995. Other notable trade treaties that Canada is a part of are the North
American Free Trade Agreement and the Canada-European Free Trade Association Free
Trade Agreement. Canada is also in the process of negotiating bilateral FTAs with the
European Union. The Canadian and British have strong bilateral relations between the
governments of each country Kingdom. The capital cities of London and Ottawa enjoy
cooperative and intimate contact; the two countries are related through history, through
language, through the Commonwealth of Nations, and their sharing of the same Head of
State and monarch. Despite this shared history, the UK is no longer Canada's largest trading
partner, and the two nations are now in separate trade blocs, the EU and NAFTA.
Political Characteristics and Governance
Political Condition
The Canadian government has three different types. These are a parliamentary
democracy, a federation and a constitutional monarchy. The constitution is made up of
written and unwritten acts, customs, judicial decisions, and traditions. The major parties in
which the Canadian people can vote for are; The Conservative party, New Democratic
party, Liberal party, Bloc Quebecois, and the Green party. Each of these parties has a
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different amount of seats in the Supreme Court depending on how many votes they have
received. After the last election on May 2, 2011 the conservative party came out on top.
The total seats are as follow; The Conservative party (166), New Democratic party (103),
Liberal party (34), Bloc Quebecois (4), and the Green party (1). Every province in Canada
is under a common law system except for the province of Quebec where civil law based on
French civil code triumphs. The bicameral parliament of Canada consists of a senate (105
seats which are appointed by the governor general on advice from prime minister to serve
until 75 years of age) and the House of Commons (308 seats where people voted from
popular vote to serve a four-year term. Stephen Harper is the current Prime Minister of
Canada. Canada is ranked 166th on the failed states index of 2010. The failed states index
is based on different social, political, and economic indicators. This shows that they have a
moderately stable government.
Government’s International Trade and Investment Policy
Canada ranked 13th in the ease of doing business in a country. This shows that
Canada has a relatively high rate of openness within the country. Expropriation is not a
danger in Canada because of the expropriation act which was created in 1985. The
Canadian government has had a focus on foreign direct investment as well as international
trade. Canada is a signatory to WIPO as well as WTO as is also involved in many other
international organizations.
Regulatory Barriers
There are bilateral relations between the government of Canada and the United
Kingdom, which is also known as Canada-United Kingdom relations. London and Ottawa
have a cooperative contact because the two countries are related through history, through
language, the commonwealth of nations and their sharing of the same head of state and the
monarch. The packaging and labelling would be in the metric measurement for Canada
with French translation on the bottle. To import one bottle of whiskey into Canada there is
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a $3.68 import duty. The legal drinking age in Canada is 19 years old. Some examples of
non-tariff barriers would be anti-dumping, where you can’t sell the alcohol under a certain
price. Also there is a countervailing duty that is in place to reduce the subsidization a
country might put on a product.
Physical and Commercial infrastructure
Physical
The Mobile and fixed-line telephone subscribers (per 100 people) in Canada was
reported at 121.11 in 2008, according to the World Bankm internet coverage though out
the country as approximately 75.1%12. Canadian transportation system includes more than
1,400,000 kilometres (870,000 mi) of roads, 10 major international airports such as
Toronto Pearson International Airport, Vancouver International Airport, Montréal-Pierre
Elliott Trudeau International Airport Montreal, Calgary International Airport, Edmonton
International Airport Etc., 300 smaller airports, 72,093 km (44,797 mi) of functioning
railway track, and more than 300 commercial ports largest ones are: Vancouver British
Columbia, Montreal Quebec, Halifax Nova Scotia, St. John's Newfoundland and Labrador,
Fraser River British Columbia and harbours that provide access to the Pacific, Atlantic and
Arctic oceans as well as the Great Lakes and the Saint Lawrence Seaway.
The approximate distance between Bristol, UK and Halifax, Canada is 2785.9 miles
through the North Atlantic Ocean. As well as in U.S. warehousing is available all though out
the country, majority of population is concentrated with in 200 mills from American
border. Approximately cost measures the fees levied on a 20-foot container in U.S. dollars
according to World book is $166013.
Commercial
According to “Doing Business” report of 2012 Canada rated as #13 country in a
world to do business in down from #12 a year ago 2011. Inflation rate 1.8% (2010 est.) up
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from 0.3% (2009 est.) ranked number #56 in a world14 it takes on average of 11 days for
the import procedure in Canada, Import documents include but not limited to: Bill of
lading, Certificate of Origin, Commercial invoice, Customs import declaration15. Overall
import procedure is very similar to the one in us, slightly more complicated and time
consuming.
In order to import into Canada you need to obtain International Import Certificate
and to pass The Goods and Services authorisation.
Canadian banking system considered being one of the best, secured and most
efficient worldwide, according to the Department of Finance, Canada’s banks, have over
8,000 branches. Obtaining a cred is slightly harder than in U.S, Canada ranked #24 in the
world. Currency is Canadian dollar as of last couple years traded equally with U.S. dollar,
sometimes used for international trade but not as common as U.S. dollar, overall currency
is strong and sometimes even more secure then U.S. dollar
United Kingdoms experience in the target market: Canada
The United Kingdom and Canada are major trading partners. According to
Parliament Canada the UK is Canada’s second largest export destination in the world, and
its sixth largest source of imports. In 2009 Canada totalled $9.4 billion in imports form the
United Kingdom with beverages, sprits, and vinegar being within the top ten.
In 2009 the top three major Canadian exports to the UK were Prec. Metals,
jewellery, coins were $6.9 billion being the highest followed by aircrafts and parts at $1.0
billion, then Inorganic chemicals at $0.9 billion. The top three major Canadian imports form
the UK were energy and related at $2.6 billion, followed by machinery and equipment
being $1.8, then pharmaceuticals being $0.9.
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Canada and the United Kingdom have a very integrated culture. This means that
because they are so similar, there are many successful companies and organizations in the
UK that are from Canada. These include, Aberdeen Canadian club, British Association for
Canadian Studies, Canada House Cine-Club, the Canada Post and the Canada-UK Chamber of
Commerce along with many more. Some of the titles listed above are non-profit
organizations made for the Canadians living over in the UK and others are for people to
learn more about the Canadian market. Another helpful company that is over in the UK is
the Canada-UK Chamber of Commerce. They work to improve and strengthen trade
between Canada and the United Kingdom.
There are many diplomatic and trade representations from Canada in the UK. The
most well-known diplomats are the Canadian Embassy’s. These help Canadians that are
travelling in the UK if they have any questions or problems. For the trade representations
they have the Canada-UK Chamber of Commerce. As mentioned above they work with all
the trade and improving it between the two countries.
Product/Service fit
Canada and the United Kingdom share very similar cultural attitudes towards drinking.
I will compare each country for each of the three criteria. The first criterion is culture.
British and Canadian cultures both embrace the drinking and night life aspects of their
culture. According to statistics from the World Health Organization people in Canada drink
7.80 litres or alcohol per capita per year, compared to in the United Kingdom which drinks
11.75 litres per capita17. Both cultures have a binge drinking culture where people do not
drink only casually but they will drink an abundance of alcohol on certain days of the week,
weekends being the most popular time. This is much different than many other countries,
but it benefits liquor sales because of the amounts being consumed. The second value is
religion; unlike many other countries in the world Canada is very different. There is not
predominate religion that is against drinking. There are however some religions in the
country that do not promote drinking, but overall the amount of people that will indulge in
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alcoholic beverages is much greater than the latter. Also as people become more
Americanised who have immigrated to North America and start to lose their religion and
back ground, which may be against drinking; and begin to adapt to the culture around
them. The final criterion is attitude. The general attitude towards alcohol in Canada is that
drinking is not a bad thing but a part of the culture. Canadians are proud of the amount
they drink although it may not be to the same standards the top drinking countries in the
world it is a point of national pride.
To match our product to local preferences technically the product will not have to
change but where the product is being distributed will have to change. In some provinces
such as Ontario and Québec liquor is distributed by the Provincial government through
privately owned stores. Where as in other Provinces liquor can be sold anywhere in stores
run by the public. The quality of our whiskey is held to the same standards as that of
Canadian whiskey. Our whiskey will meet the quality that people are accustomed to and
also exceed many expectations. The whiskey that is produced in the United Kingdom is of a
different type of whiskey that is not made in Canada, giving us a niche in the market that
must be filled. Though some Canadian whiskeys are thought to be comparable to United
Kingdom whiskeys they are simple to different. Canadian whiskeys are either rye whiskeys
or blended scotch whiskeys, where what we are brewing is single malt scotch whiskey. So
although they do share a similar name we are not infringing on any patens on technologies
used. The bottles that are used to hold our whiskey are made of glass and are similar to any
alcoholic containers that are already found all across Canada. Thus our bottles can be
recycled and disposed of in the same manner that is already being used for domestic
bottles.
For the topic of modifications, I believe that our product is in no need of any
modification to be exported and sold to Canadians. In Canada they use the metric system of
measurement which is the same as will be on our original label. There is also the benefit
that we are also exporting to a country that also speaks English this allows us the use the
same name and description for our products labels in part. But for the case of Canada the
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label must also be adjusted to include an equal amount of French and English on the bottle.
For distribution anywhere outside of Québec, the predominate language on the bottle can
be English with the French language taking up smaller portions of the bottles label. But for
distribution in Québec the main language on the bottle must be French with the secondary
language being English. When it pertains to the life cycle of our product I believe that we
still have room to expand our market and can only gain in sales. Scotch whiskey has been
around for many years like most alcohols, and as much a part of the Canadian culture as the
British. There is also a mystic about a specific portion of the culture that particularly enjoys
scotch; it is seen as a drink of people that are in the wealthy portion of the population. Due
to that factor many people will start to drink scotch to try and fit into that segment of the
Target Market Characteristics
Our segmentation strategy for Canada is to look at the Behavioural, Demographic,
and Psychographic, Segmentations. For behavioural, we will look at customer’s needs, and
target them accordingly to keep customers as regulars. In order to figure out if Whiskey can
be marketed to a mass market or a specific clientele, we need to look at age, gender,
income, socioeconomic status, culture, religion and nationality which all fall under
demographic segmentation. Looking at someone’s interest, opinions, and values is part of
psychographic segmentation. These are all important aspect to consider because they will
help us to narrow down our target market.
Our target customers for Canada will be mostly males between the ages of 30 and
60. We choose this target market because not many young adults in their twenty’s drink a
lot of hard liquor. Also it is usually males that have whisky and they usually have a higher
income and can afford the hard expensive liquor. 71 per cent of spirits sold in Canada in
2007 were Canadian spirits, with whisky, scotch and bourbon being the most popular
choices.1
1
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The Canadian culture is very diverse. Their interest differ according to region. For
example people living on the East Coast are more interested in their natural resources
which are fishing and their main source of income. For the most part all Canadians share an
interest in hockey, which is a competitive atmosphere which can lead to having a few social
drinks. Currently Canada’s economy is low. There are not many jobs available and taxes
and living expense continue to increase. The table #1 shows the expenditures per
household in Canada in 2009.
Similar products are being sold in Canada with the similar target market. During
1996 to 2005, the Canadian distilled spirits industry grew slowly. At the end of 2005 the
Canadian market stood as $935.5 million with a 78.6% increase from 1996. In 2005 sales of
sprits totalled at 141.5 million litres, with whisky products accounting for 30% of all sprits
sales. The value grew in all regions of Canada with the exception of Newfoundland and
Labrador. The table #2 shows the per capita consumption of alcoholic beverages in liters in
2007
Our projection for whiskey is that it will continue to have a growing market in
Canada. Our whiskey will be distributed to all major LCBO’s and liquor stores around
Canada including all the duty frees and airport stores. Will ship our whiskey over by both
boat and plane and will market during the holiday season and have commercials on during
major sports events.
For our projected market size we want to target all the males we can with a higher
income, however by doing this it will potentially make our market smaller with the poor
economy Canada is facing at this present time. We as a company can modify our product in
order to differentiate it from others by having our own special way in making our whisky
and having it taste different from the other ones. To make our product more appealing we
need to consider packaging and make it look different from the other whiskey product, at a
reasonable cost for our company. In entering Canada we need to consider the exchange
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rate and make our price both acceptable to the Canadian market as well as our market in
order to make a profit after shipping, packaging, and making our whisky.
Competition and competitive barriers.
The spirit industries in Canada and America are almost identical. Both countries sell
similar products in similar fashion. The target markets for both countries are also the same.
The target market that we are reaching in Canada and America is a purely competitive
market. The market is dominated by many small companies. These companies or bands
may stem from a larger corporation that owns many smaller brands, but the product is
identified with the name on the bottle and not the company that owns the rights to the
product. There are both domestic and imported products that we will be directly
competing with. But our product does differ in taste from all the other products; so even
although we are competing as a type of alcohol our distinct taste and flavour will set us
apart. The main brands that we are in direct competition with are Ballantine's, Chivas
Regal,Grant's, Bell's, Johnnie Walker and The Famous Grouse. These are all blended scotch
whiskeys. The main competitors for single malt whiskeys are: Dalwhinnie, Talisker,
Balvenie, Glenlivet and Bowmore. We plan to differentiate ourselves from the competition
by offering a higher quality whiskey that will be sold at a cheaper price. Our plan is to
undercut our closes competition by 5% to gain market share quickly and set ourselves
apart and solidify our large portion of the market. We also plan to offer promotions and
coupons along with free tasting sessions and a abundance of locations for people to gain an
appreciation for the superior quality and taste of our product. Once people realize that our
product is of better quality and is sold at a cheaper price it will be easy to quickly grow our
share or the market and easily maintain our share.
Strategic issues
Country/Market Priorities
After an analysis between Canada and the United States, the country on which we
would like to pursue is the US. The United States has been set as the main priority because
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their population is much higher which can be exploited to gain further customer base. The
United States population in comparison to Canada is approximately 9 times the amount.
The United States also ranked 4th in the world on the ease of doing business within a
country, which shows they are a great target market that will be open and willing to do
business.
In relation to the world the United States is 33 rd in the total amount of alcohol
consumption. American`s consume 8.6 litres of alcohol per capita (people over the age of
15). With a population of more than 300 million this would be a substantial market to
expand into to gain more profitability and market share. The US is also the number one
country in the world in terms of importing different products into their country.
The American people have a very high level of living and also have a sizeable
amount of income being generated per household. Due to the fact that alcohol (whisky) is
at the same amount of demand all year round this would be a very beneficial market to
expand into. This shows that the United States would be our best option in terms of
exporting into a country and is why we have made the United States our number one
priority.
Entry Strategies
Entering mature market, with little product differentiation is never going to be easy.
In this case it was even more challenging due to high level of competition. We will begin by
conducting a SWOT analysis of our business to get a clear understanding of its strengths
and weaknesses, its capabilities and cost base. Next step is to look into the US market its
structure and competitors. Survivability and overall success of any business venture is
highly dependent on a clear understanding of consumer preferences. The main objective of
our business venture is to gain significant market presents (market share), as well as
building brand recognition and brand loyalty. Considering all of the above we will chose
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one of the following strategies: direct exporting, indirect exporting, joint venture, strategic
alliance or wholly owned subsidiary.
After careful overview of our current situation we have decided that most suitable strategy
would be direct exporting. The idea behind direct exporting is that you deliver your
product straight to the customer in our case that would be large retail net such as Wal-
Mart, Costco, etc. The advantages of this method include but not limited to:
Your potential profits are greater because you are eliminating intermediaries.
You have a greater degree of control over all aspects of the transaction.
You know who your customers are.
Your customers know who you are.
By narrowing our focus to large retail wholesaler and retailers we would be able to target,
communicate and build relationships much more effectively and with smaller budgetary
implications. As well as covering maximum of the potential market, due to wide
accessibility of those retail stores though out the country. Also we are very concerned with
a needs and preferences of our individual customers (final consumer) that is why each
bottle will be supplied with a references to the company website as well as a QR code, so
each and every customer could go online and ether fill in a small questioner in relation to
overall experience and satisfaction, or just leave a comment in a special tab on a website.
According to our previous research United States and Britain have a shared history,
common language/legal system, culture and ancestral lines. Today the relationship
between the two countries, through British Foreign Policy is known as the most important
bilateral partnership. The United States foreign policy upholds its relationship with the
United Kingdom as one if it’s most important enduring bilateral relationships as well. To
import one litre of whiskey there is a $2.05 import duty. The packaging and labelling
between UK and the United states varies in imperial for the United States. When importing
to the United States you need to have a Spanish translation on the bottle. The United States
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drinking age is 21 and according to appendix 1 there are 225,478 people with in legal
drinking age group in US.
We are planning to ship our goods by see. And the most comfortable location for us
will be Bristol in UK and New York in United States. The approximate distance between
Bristol, UK and New York, U.S. is 3361.43 miles through the North Atlantic Ocean. As soon
as we unload our cargo it will be taken by one or more of the retailers for final sale. Cost
measures the fees levied on a 20-foot container in U.S. dollars according to World book 4.
All the fees associated with completing the procedures to export or import the goods are
included. These include costs for documents, administrative fees for customs clearance and
technical control, customs broker fees, terminal handling charges and inland transport. The
cost measure does not include tariffs or trade taxes is $1,315 per container.
Our product will be shipped in a 0.75 ml and 1.14 ml it is a standard packaging for
this type of product and that will allow us to minimize the shipping cost and avoid any
possible issues with a retail consumers in relation to unfamiliar packaging and labelling.
Property rights will be held by us up until the point of unloading goods in a cargo
port and then they will be transferred to the byer.
Due to level of risk associated with new product on a mature market Direct
importing is favourable. Under such circumstances, small volume supplies can be provided
to retailers to test the market. This will help forecast future sale volumes. We will have 2
types of whiskey. First one I original price range will be sat at $20+ per bottle and
competition will be represented by Bushmills Original, Feckin, Finian's, Jameson, Kilbeggan
etc. Second one is Whisky that has been aged in oak barrels price range $40+per bottle and
competition will be represented by Black Bush, Clontarf Single Malt, Jameson 1780, Jack
Daniels etc.
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We think that support from retail chains will help us to avoid numerous problems
that are related to exporting into a foreign market. It will also ensure that all procedures
are followed and will create the most efficient mode of exporting. On the other hand this
way of distribution will lead to partial loss of control in terms of branding, distribution and
presentation on a market. That is why we will hire local company to supervise our
operations with in US compensation will be based on a number of contracts and quantity
sold. That will allow us to oversee distribution and marketing of our product.
Product development Strategies
The market and non-market customers are very similar in the case of distribution
and selling of scotch Whiskey. The consumers that are likely to buy our product are also the
consumers that are likely to purchase our product at bars. So we will identity where people
go to drink our product in a social setting and insure that they have the option to purchase
our whiskey. There are two types of customers that we are trying to reach with our
product; those who are heavy drinkers and light drinkers. Heavy drinkers are those
individuals who drink on a daily basis; meanwhile light drinkers are individuals who do not
drink daily basis. This may be because of a variety of reasons like work, school. In order to
ensure that we garner to all market types we are packaging our whiskey in different sizes
and at different price points to guarantee every customer will be able to afford it and enjoy
it.
In terms of changes to our product we do not believe that our raw whiskey product
is in need of any changes to be exported and sold to Americans. However in American they
use the Imperial system of measurement which is a different measurement label than will
be on our original label. So we will have to adjust our label to tailor to Americans
specifically. As well for certain areas in American the label must also be adjusted to include
an equal amount of Spanish and English on the bottle. This will be for the southern states;
there will be a need to have a smaller portion of the bottle taken up by Spanish that
describes the product, but still the predominate language on the bottle will be English.
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There will be no specific handling and transportations requirements for our product. It will
follow the same shipping and handling route as other spirits that are sold in the United
States. The quality of our whiskey is held to the same standards as that of American liquors
such as whiskeys and bourbons of the United States. Our whiskey will meet the quality that
people are accustomed to and also exceed many expectations.
We will be importing our product to a distributor. For most products in the alcoholic
beverage industry the products are sent to a main distribution warehouse then sent out
from that location to local stores. The services that we expect from our distributor is to ship
our product on time and at the demand of the local store out carefully and quickly. Also it is
expected that the distributor has an accurate inventory management system to let our
company know well in advance that more product will be needed due to our high volume of
expected sales. The cost of our getting our product to the United States has a great deal to
do with how low we can sell our product for thus in the bigger picture effects the
profitability of our product. We do not want to incur high cost on transportation of our
product to our chosen country; because we plan to sell our product at a lower cost to the
customer. If we have high shipping cost we will not be able to sell our product at a low
price point which is our plan to gain market share quickly. In the grand scheme of our entry
into the market if we struggle in gaining market share our profitability will be drastically
lowered. The management control of our product is key to our industry. If we do not keep
an accurate inventory count and run out of product on the shelf we cannot make any sales.
If our product is consistently sold out we will not be able to build brand loyalty from our
customers if our product is not available for purchase.
The import strategy that we believe is most suitable we have chosen to use for our
current situation would be direct exporting. The advantages of this method include but not
limited to giving us the possibility for potential profits are greater because you are
eliminating intermediaries. Allows us to have a greater degree of control over all aspects
and transactions that are involved in our distribution of our product. Allows our company
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to have greater contact and knowledge about who our customers are and likewise for our
customers to identify with our company and product.
The market conditions for our product are very favourable for us to capitalize on.
The biggest factor that benefits our company and the product that we are selling is the
amount of people that are available to purchase our product. United States has a very large
population of people in relatively close proximity in urban areas. In the age brackets of 15–
64 years which includes our main target group included 67% or the total population. This
break up is 102,665,043 males and 103,129,321 female. This is also a secondary but very
important group that our product will be sold to which is older gentleman. This is the
perceived ideal scotch drinker. The demographics for that age group of 65 years and over
includes 12.8% of the population. The breakup of the number is 16,901,232 males and
22,571,696 females. (CIA World FactBook)
Pricing Strategies
The cost of our shipments will be a big factor when it comes to making a mark in the
alcohol industry in America. Our transportation needs to be quick and convenient in order
to have our products on the shelves at all times. The fastest way we would be able to ship
our products from the United Kingdom to the United States would be by plane. Oversea
transportation would be another good way to transport our goods and will be used for the
majority of our shipments due to the fragility of our products. If there is a sudden mass
demand for our product air transport would be much faster and that is exactly what would
be used to help penetrate the American market. It is very hard to build customer loyalty if
your products are sold out the majority of the time the customer wants to purchase.
Another cost that we are going to inquire would be the fact that our labelling will have to be
changed to better suit the United States as their two predominant languages are English
and Spanish as opposed to English and French. This will not be a significant cost, but it is a
necessary factor when it comes to expanding into another country.
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Due to the fact that this will be a new whiskey product in the United States, many of
the already Americanised whiskey companies have a customer base that they can already
work with. Our product will be sold at a slightly lower cost than our direct competitors
because our company needs to gain a competitive advantage relatively quickly within the
market. This would also be beneficial because younger drinkers are more likely to buy a
less expensive type of liquor that will bring them the same effects. In the United States a
750 ml bottle of whiskey can sell for a price from $27 per bottle up to $500 per bottle.
When it is going to cost approximately $6 per bottle to produce a good quality whisky there
is a good opportunity to make a high level of profit. The costs in advertisements will be
very high for the first year or two within the United States. This could bring a struggle for
our company for the first couple years in terms of making a solid profit, but once our
product is in the United States and people are starting to hear about the quality and
relatively cheaper cost of the whiskey our sales will then boost much higher than
previously before. Flexible pricing would be the best suited for this because we could sell it
at a cheaper price, but if our sales are doing very well we could make the price a little
higher, bringing the company more profits. This would also allow for more cash flow to
advertise our product on higher levels of publicity like the Super-Bowl and different
baseball games as these are the United States top two watched sporting events.
The INCO terms in which we are going to use will be CIF (Cost and Freight). These
terms mean that the delivery of goods to the named destination will be at the seller’s
expense. The buyer is responsible for cargo insurance and other costs and risks. The term
cost and freight is used for oversee transportation only, but in practice cost and freight is
commonly used for air transportation as well. We will be using an advanced payment
option and also a point of purchase option. The advanced payment will be used for the
products that are being shipped at a constant rate, while the point of purchase method may
be used for the products that will be needed after the current products have all been sold
out.
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Marketing Communication strategies:
The promotion will be altered a little bit to adapt it to the Unites States target
market. We will use a prototype ad to gear our whiskey towards the United States market
by adding things that would easily grab the attention of our American target market. These
can include tying it into sports and American pride as very American citizen loves there
country. In this case, our positioning strategy will be head-to-head positioning. This means
we will compete with similar product attributes in the same target market as our
competitors. We will translate this into our promotion strategy by being aware of our
competitors and competing one on one with what they are doing and strive to be a head of
them in the end.
The focus of our product introduction ad is to introduce our whiskey into the
American market, and let them know where it can be found such as what stores and States.
The competitive ad should focus around persuading our target market to choose our
Whiskey rather than our competitors. We could do this be comparing our strengths
compared to competitors. Lastly, the focus for our brand awareness will be to get our
product out to everyone and make it appeal to all Americans makes sure they are aware of
where it can be purchased and why it is better than our competitors. The key message in
our promotion is that we are a high quality Whiskey which has been part of the United
Kingdom market for 125 years. We will make our promotion appealing to the target market
by addressing there wants and needs. We will look into the wants of our target market and
possibly through in perks that would bring in a younger crowd as a posed to our target
market in there 50’s and 60’s. Although there is a big gap in our target market, we feel if we
get the younger crowed they will stick with our brand as they get older increasing our
productivity and income. That being said we should avoid making whiskey look like an
older mans drink
In order to market our Whiskey we need to figure out the media techniques that will
be beneficial to our company. The media were planning to use on marketing our whiskey
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are television ads such as commercials during different sports games, radio commercials,
internet, and possibly billboard ads. The factors we need to consider in selecting our media
are price, the target audience, nature of our message, and the type of product. Television is
one of the best ways for us to market our product because it communicates with sight,
sound, and motion as well as reaching an extremely large audience. However it cost the
most, and has a greater potential for wasted coverage-having people outside the market for
the product see the advertisement. The radio is another good way to market our product.
Studies shows that it reaches 92% of the population aged 12 and over in an average work
week. It doesn’t cost much, and can target specific local markets quickly. The disadvantages
to radio are that there are no visual elements, and there isn’t much time to convey message.
The internet grew over 80% in just one year and now exceeds over $1 billion in total ad
spending. The internet is a great way for us to advertise because it uses video, audio, and
animation to grab our target markets attention. They can also link to advertisers and stores
where our whiskey is being sold. The downfall to internet advertising is that the animation
and interactivity requires both time and money that we may not have. Lastly billboards
could potentially be a successful marketing tool because they are low-cost and a flexible
marketing alternative, with high visibility. However with billboards the message needs to
be short and simple, and many people feel they are a traffic hazard. Our strategy to market
through television will be extremely expensive. We plan to market mostly during sports
games which is “prime time” to market products such as alcohol and other sports related
things. February will be the best time for us to market our whiskey Americans through
Super bowl commercials. This however is the most expensive time to have a commercial air
with cost up to around $100,000 per second. This will be the area we will inquire the most
cost and come that time we will have to decide as a company if it will be a smart strategic
thing to do.
37
Recommendation and Action Plan
For our recommendations and action plan I think we should start out by stating the
basis of our entry plan. The country that we have selected to import our whiskey into is
The United States of America. They way that we are importing our product in to the United
States is a Direct Exporting method. We will be distributing our product to whole sale
distributors as well as smaller distributors we can reach the largest portion of people
possible while keeping our costs to minimum.
Our product will be bottled, labelled and prepared for shipping before it leaves our
distillery. This allows us to maintain the high quality standards that our company is built
on. Bottling our own product also allows us to make the minor changes that need to be
made for specific countries easily and effectively. For distribution of our product we will
use a main distributor company that will take our product from that central location to the
local stores where our whiskey will be sold. After distribution of our product to the
wholesalers and distributors the shelf maintenance and inventory control will be managed
by the employees and management of the specific store.
Due to the fact that this will be a new whiskey product in the United States, many of
the already Americanised whiskey companies have a customer base that they can already
work with. Our product will be sold at a slightly lower cost than our direct competitors
because our company needs to gain a competitive advantage relatively quickly within the
market. This would also be beneficial because younger drinkers are more likely to buy a
less expensive type of liquor that will bring them the same effects. In the United States a
750 ml bottle of whiskey can sell for a price from $27 per bottle up to $500 per bottle.
When it is going to cost approximately $10 per bottle to produce a good quality whisky
there is a good opportunity to make a high level of profit.
The future success of the business venture will depend on consumer preferences and
acceptability of the product. In the current global market, consumers are spoiled with the
38
variety of choices and they are certainly open to new products as well. For this reason, we
need to create a positive over all image of the product as well as explain how it will fit in
their daily life and why it should be consumed by all age groups.
So now our primary target is to capture as large of the market share as possible and at
the same time build up brand recognition, brand loyalty, brand personality and brand
awareness. Over the next few years, we need to build a great mix of strengths and
resources to manage our target growth in both the good times and more challenging times.
This range of capabilities will enable us to be agile in response to local market conditions,
and supports our scale and diversity, which in turn provides the company with resilience
and growth opportunities. Our true competition is constant change in consumer’s
preferences, needs and wants. In order to survive and support our company’s growth we
will need to be able to clearly identify our target market. We need to as a company realize
consumer’s preferences as well as long term need and wants, when it comes to our product
line. We need to be able to identify our target goal for market share. And finally we need to
be able to build up a brand recognition, brand loyalty, brand personality as well as brand
awareness.
39
AppendixCountry Attractive Matrix
40
Appendix 1. Resident Population by Sex and Age
Age2010
Total Male Female Total 308,746 151,781 156,964Under 5 years 20,201 10,319 9,8825 to 9 years 20,349 10,390 9,95910 to 14 years 20,677 10,580 10,09715 to 19 years 22,040 11,304 10,73720 to 24 years 21,586 11,014 10,57225 to 29 years 21,102 10,636 10,46630 to 34 years 19,962 9,997 9,96635 to 39 years 20,180 10,042 10,13840 to 44 years 20,891 10,394 10,49745 to 49 years 22,709 11,209 11,50050 to 54 years 22,298 10,933 11,36555 to 59 years 19,665 9,524 10,14160 to 64 years 16,818 8,078 8,74065 to 74 years 21,713 10,097 11,61775 to 84 years 13,061 5,477 7,58485 years and over 5,493 1,790 3,7045 to 13 years 36,860 18,834 18,02614 to 17 years 17,120 8,792 8,328
18 to 24 years 30,672 15,662 15,01018 years and over 234,564 113,836 120,72855 years and over 76,751 34,964 41,78765 years and over 40,268 17,363 22,90575 years and over 18,555 7,266 11,288Median age (years) 37.2 35.8 38.5
41
Table #1
The average household expenses Expenditures per household, Canada 1
2009
Average
expenditure
Percent of
Households
reporting
Average
expenditure
per
household
reporting
Percentage
of total
expenditure
Median
expenditure
per
household
reporting
dollars Percent dollars percent dollars
Total
expenditure
71,117 100.0 71,120 100.0 58,324
Food 7,262 100.07 7,260 10.2 6,350
42
Shelter 14,095 99.8 14,120 19.8 11,211
Principal
accommodat
ion
13,120 99.7 13,160 18.4 10,250
Rented living
quarters
3,146 37.0 8,500 4.4 7,800
Owned living
quarters
7,770 66.0 11,770 10.9 9,250
Water, fuel
and
electricity for
principal
accommodat
ion
2,204 85.8 2,570 3.1 2,424
43
Other
accommodat
ion
975 50.9 1,920 1.4 800
Household
operation
3,428 100.0 3,430 4.8 2,625
Transportat
ion
9,753 98.1 9,940 13.7 6,152
Health care 2,004 97.2 2,060 2.8 1,377
Personal
Care
1,200 99.7 1,200 1.7 899
Recreation 3,843 97.4 3,950 5.4 2,395
Education 1,238 33.1 3,740 1.7 1,300
Tobacco
products
1,506 82.6 1,820 2.1 1,000
44
and
alcoholic
beverages
Tobacco
products and
smokers’
supplies
601 32.2 1,870 0.8 1,300
Alcoholic
beverages
905 77.9 1,160 1.3 600
Miscellaneou
s
expenditures
1,180 91.5 1,290 1.7 520
Total
current
consumptio
n
50,734 100.0 50,730 71.3 43,873
Personal
taxes
14,399 93.4 15,420 20.2 8,500
Table #2
Per Capita Consumption* of Alcoholic Beverages in Litres** (2007)
45
Region Total Alcohol (l) Beer (l) Wine (l) Spirits (l) Coolers (l)
Canada 115.75 92.04 14.77 5.90 3.04
Ontario 112.64 89.66 14.09 5.78 3.11
Quebec 123.25 98.29 20.62 3.11 1.23
Alberta 130.7 104.00 11.35 9.58 5.77
B.C. 107.58 81.50 15.37 7.23 3.48
Manitoba 105.55 86.39 9.08 7.20 2.88
Saskatchewan 102.58 83.24 7.92 8.03 3.39
Yukon 184.04 151.64 16.61 10.95 4.84
N.W.T./Nunavut 96.32 76.11 6.54 9.15 4.52
Newfoundland 117.76 100.02 5.99 8.48 3.27
Nova Scotia 107.36 86.67 10.10 7.04 3.55
New Brunswick 104.15 86.44 7.79 4.85 5.07
46
P.E.I. 106.86 85.98 9.29 7.43 4.16
Source: Brewers' Association of Canada *Based on legal drinking age population (19+; 18+
in Que., Man., Alta.). **Litres are litres of alcoholic beverages consumed, not pure alcohol as
in other studies.
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47
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48
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49