International Marketing (Arsi)

Executive Summary

China’s demand for Western wine has rapidly increased. This has created a market opportunity for high end, quality wine companies from Australia to export their products to China. The product that will be focused on is Glandore Wine from the Hunter Valley. The report will focus on exporting this product into the Chinese market.

There should be a strong focus on building brand reputation and maintaining long-term business relationships. There are multiple entry types into foreign markets yet Chinese regulations limit the mode of entry. The recommended mode of entry for Glandore wines is a Joint Venture. The decision between product standardisation and customisation is an important aspect of strategic decision-making. It is recommended that Glandore does not customise their core product of wine, however it is recommended that other product attributes are customised to appeal to the Chinese market. When promoting Glandore wine in the Chinese market there should be use of advertising, public relations, sales promotion and personal selling.

Table of Contents

Executive Summary ……………………………..…. 2

1. Introduction ………………………………………………... 4

2.

2.1 Market Entry………………………………………………4

2.2 Recommendations ………………………………………5

3.

3.1 Product Standardisation and Customisation ……..…..7

3.2 Recommendations…………………………………….….7

4. Promotion in China

4.1 Push Strategies……………………………………….…. 8

4.2 Pull Strategies………………………………………….… 9

5. Conclusion…………………………………………………….10

6. Reference List…………………………………………………11

1. Introduction

Middle-class affluence in China is beginning to fuel changes in consumption, which creates market opportunities for higher end products. Exporting wine to China that is of higher quality is rapidly increasing. Some wine companies have increased their presence in the market by supplying a service of cellar doors in China, creating a positive, high-end brand image. According to Fletcher & Brown (2008) China had the second highest market potential globally. There is increasing competition but a lot of this is counterfeit products that are not highly valued by consumers.

The product that will be focused on is Glandore Wine from the Hunter Valley. The report will focus on exporting this product into the Chinese market.

The higher end wine market in China tends to be focused in coastal, main and second-tier cities. When exporting wine to China there are duties and taxes, labelling regulations and other country-specific export requirements to consider.

Wine has shown the strongest growth of all alcholic beverages over the last ten years in China (Webley, 2010). Per capita consumption is still only 0.5 litres per annum, but the size of the market is immense and growing at 7% per annum. The import tariff rate for wine less than 2 litres is now down to 14%.

There are multiple entry types available to entry China. There are also standardization and customisation considerations to be made. The marketing of the wine is also a crucial factor that must be focused upon to ensure success in the Chinese market.

2.1 Market Entry

The company needs to establish effective relationships with a balance of Guanxi (business relationships in China) and wine culture.

There are multiple types of entry into international markets, which are constantly changing, depending on the nature and type of the company, product and market. According to Fletcher & Crawford (2010) the level of involvement in an international market is determined by the Government. The choice of entry mode is influenced by the exporter’s interntaional experience, culture, industry, location, and resource commitment factors (Wei, Liu & Liu, 2005).

Entry modes include Indirect and Direct exporting. Indirect modes of entry refer to the manufacturing of good or services in the home country and transferring the responsibility of exporting to another agency (Albaum, Strandskov & Duerr, 1998). It involves use of agencies in the domestic or foreign market, export merchants, and piggy-backers. A turnkey project involves a contractor organising a foreign project and then handing over ownership at the completion of the contract (Fletcher & Crawford, 2010).

Direct exporting relates to the firm itself contacting buyers overseas and either selling direct to end users or arranges agents and distrubutors in the foreign market to sell their products (Fletcher & Crawford, 2010). Entry modes include Joint Ventures, Wholly Owned Subsidiaries, Licensing, Franchising, and relationship entry of strategic alliances. A licensing agreement is where a licensor grants the rights to an intangible asset to another entity for a specified time period, in return for royalty fees. This allows avoidance of entry barriers. Franchising is similar to licensing, with the addition of insisting that the franchisee abides by rules in carrying out business in a certain manner. This allows the company to avoid high costs and risks, and has the benefit of local expertise and market knowledge.

Wholly Owed Subsidiaries (WOS) are expensive and require high commitment and involvement in the market. According to Fletcher & Crawford (2010) a WOS is 100% owned by another company, called the parent company. They have the benefit of maintaining a high level of control over core competencies. WOS entry can be carried out through an acquisition or Greenfield project. Acquisitions are quick and have lower risk, yet Greenfield projects allow the firm to establish the subsidiary

exactly to their preferences and needs. According to Wei et al (2005) the more experience China has in attracting Foreign Direct Investment, the more likely China will be to allow and encourage the entry of WOSs. Joint Ventures are of greater use when there is high cultural difference between the domestic and international nation (Wei et al, 2005). The propensity to enter through Joint Venture increases when small capital commitment is desired and there is large cultural distance between nations.

2.2 Recommendations for Market Entry

Joint Ventures (JV) are of greater use when there is high cultural difference between the domestic and international nation (Wei et al, 2005). The propensity to enter through Joint Venture increases when small capital commitment is desired and there is large cultural distance between nations.

The use of JVs can reduce the effect of import issues such as permits, tariffs and customs. Azari Vineyards & Winery stated that carriers were unwilling

to accept shipments due to these documentation difficulties (Gurney & Atkin, 2013).

Factors that need to be assessed when deciding upon an entry mode include the size and financial resources of the firm, their existing foreign market involvement and knowledge, competition, and tariff and non-tariff barriers. The product is crucial in the decision as it may have a competitive advantage and need patents and other forms of protection. Timing affects the entry mode as the company needs to assess if it wants to be first mover or a follower (Fletcher & Crawford, 2010). According to Wine Australia (2013) exports of cheap wine decreased by 3% while exports of higher end achieved a double-digit growth percentage suggesting any high-end importer that now enters is a follower.

Agencies such as ‘Export Australian Wine to China’ supply access to importers and connect them to Australian wine exporters. They provide professional export services and assist with bottling, standard approval, shipping, customs, registering and sales. They have expertise in the Chinese market and provide information and assistance for Australian exporters. The entry timing is currently correct for companies who wish to

export quality wine to China as there is market demand and opportunity. To avoid the issue of counterfeiting it is important to have a high presence in the market and give consumers the opportunity to sample the wine. To initially enter the market, Glandore wines would be recommended to use agencies established in the market with expertise in the wine category and use this cooperative association to their benefit. Piggybacking may also be recommended, as this use of an experienced exporter in the foreign market may be highly beneficial to the success of exporting the wine to China.

The Chinese government has local policies restricting entry levels into the market, which often dictates the mode of entry that is allowed. For this company the mode of entry that is recommended is a Joint Venture with a wine distributor. A JV with a Chinese business partner makes entry more feasible due to strict regulations and the political environment. A Joint Venture is the establishment of a firm that is jointly owned by two or more otherwise independent firms (Fletcher & Crawford, 2010). This has benefits of distribution networks, low costs, skills access, tax relief, and neighbouring markets (Albaum et al, 1998). This allows for higher presence in the market, ability to exert more control and not simply sending wine to China without any involvement from the company in terms of marketing. JVs enhance confidence and trust due to increase in host country experience (Wei et al, 2005). This entry mode is recommended because the firm can benefit from a local partner's knowledge of the foreign country's competitive conditions, culture, language, political systems and business systems. Location of the partner is crucial, therefore a business partner with high access to the target market is recommended. Thus a wine distributor located in capital or main cities near to the cost is recommended, such as Shanghai.

The disadvantages are manageable and thus the JV entry mode is still recommended. The firm risks giving control of its technology to it’s partner and they may not have control over all business aspects and decisions. Shared ownership can lead to conflicts and battles for control if goals and objectives differ or change over time (Fletcher & Crawford, 2005).

Glandore Wines have a low level of experience with the Chinese culture and a JV can lower this perceived risk in the transition economy and culture of China (Trąpczyński & Wrona, 2012). Australia has a vast cultural

distance with regard to China. Trąpczyński & Wrona (2012) suggest the higher the cultural proximity to transition economies, the lower the level of perceived risk. A JV can narrow the cultural gap between Glandores and Chinese consumers. The JV allows the company to have direct participation in the local markets and gain understanding.

3.1 Product Standardisation and Customisation

When marketing internationally, the decision of customisation or standradisation is influenced by government regulations, cultural preferences, competitors, linguistics, the nature of the product, and so on. Standardisation relates to marketing one common version of the product to all markets on a worldwide basis (Fletcher & Crawford, 2010). Levitt (1983) supports standradisation, arguing that firms should treat the world as a global market.

Product customisation refers to making appropriate changes in a product to match requirements of consumers in a specific market (Fletcher & Crawford, 2010. It is essentially tailoring products to consumer needs and preferences. Consumer products require higher levels of adaptation than industry products and services.

Reasons for customisation include variations in taste and consumption patterns, and for products to suit the purchasing power and disposable income level of the foreign market. Also, Government regulations, legal requirements and industry standards affect the decision. Albaum et al, (1998) suggest higher cultural similarity requires less adaptation. Products may need to be adapted to ensure efficiency in regard to transport, storage, sales distribution, and access to support systems.

The approach to branding may need to be customised if the brand name or logo will not be well received in the international market due to cultural differences. Translating brands can be difficult between English and Mandarin. Packaging and labeling languages often require customisation.

3.2 Recommendations for Standardisation and Customisation

Customisation is not always based on national boundaries, but rather geographical, sociodemographic and political boundaries within countries.

This is known as niche marketing (Fletcher & Crawford, 2010). According to Wei et al (2005) foreign investors should view Chinese regions as separate markets. Total standardisation or adaptation of the marketing mix is unlikely to happen in any one company (Jun Hou, 2001). Consequently, neither complete standardization. The strategy often depends on the level of power the company has in the foreign market. There is high level of competition in the Chinese wine market and Glandore wines need to offer a competitive advantage through a balance of customisation and standardisation. It is recommended that the core product of Glandore wines is not adapted because the target niche in China is similar to the domestic country. In the Asian region it is thought that the more differentiated the products the more likely the occurrance of high market potential due to cultural differences and consumer taste preference (Trąpczyński & Wrona, 2012). This has been successful for companies producing cheap wine suit the target market, such as Yellow Tail wines. The market that has preference for quality, authentic wine suggests Glandore should not adapt their core product and rather only adapt on the basis of packaging and language, and possibly branding. Differentiated products are not always demanded when the focus is on high-income segments of the market (Trąpczyński & Wrona, 2012). This justifies the recommendation of not customizing the wine to suit the Chinese market.

The accompanying service of cellar doors should be kept standardised to maintain the high-end consumption culture that is desired by the foreign targeted market. It is recommended that packaging, symbolism and labeling are adapted to maximise appeal. This ensures that there will be no negative connotations with the brand or use of certain colours that are not received positively. In Asia the quality of a product is judged by how elaborate the packaging is, therefore this aspect should be adapted.

Wine may be affected when transported or stored for a long period of time in humid weather. The bottles and crates need to be modified to withstand transport and climatic conditions. This ensures that the product arrives at the optimum standard and quality is maintained by each link in the distribution chain (Atkin & Gurney, 2013). To ensure authenticity and reduce counterfiteing the bottles should be adapted to show their quality and authenticity (Gurney & Atkin, 2013). Correct labeling in Chinese must be affixed to bottles.

4. Promotion in China

Chinese consumers are still relatively new to wine, and generating sales requires education and promotion. Success can be simply attributed to brand recognition and distribution channels.

4.1 Push Strategies

Push strategies are aimed at distributors, and create demand for products or services through sales promotion and personal selling (Fletcher & Crawford, 2010). The use of personal selling and sales promotion are recommended for Glandore. Personal selling relates to managing relationships and a selling strategy focusing upon relationship building. In regard to China the focus needs to be on long-term relationships and an understanding of the cultural and business norms. Trade missions are recommended as Williams & Brothers (2000) showed that they are effective in attracting FDI. Outward trade missions would be effective and involve visiting overseas markets. Trade missions give access to distributors and potential business partners, and are sponsored by either the Australian Government or Chamber of Commerce. Sales promotions are used in international marketing as a networking tool, to gain access to distribution chanels and to increase brand and product awareness when introducing a product to a new market (Fletcher & Crawford, 2010). The China 2nd Tier Cities Road Show, organised by the Austrade, was designed to link Australian wineries with importers, distributors, traders and corporate buyers, as well as hotel and restaurant owners. And in 2012 Austrade collaborated with Wine Australia to host an Australian Wine School seminar for importers and consumers. Albaum et al, (1998) suggest the use of appealing package design and maintaining a reputation for reliability, value and style in the Chinese market. Catalogue and/or brochure marketing is also recommended as this give the Chinese distributors the chance to learn about Glandore’s offerings.

4.2 Pull Strategies

Pull strategies are directly targeted toward overseas consumers and end users (Fletcher & Crawford, 2010). They involve the use of advertising, public relations, promotions, offers and discounts, and building demand.

Publicity and Public Relations (PR) is recommended to promote Glandore wine in China. News releases in the foreign Chinese market are highly beneficial through press conferences or announcements that use industry expert endorsement to gain credibility. PR activities are recommended as they are effective to demonstrate the authenticity of the product to the Chinese market. These can be done through the web, magazines and newspapers to build brand image. Sponsorship of events and sport is questionable as it can raise issues of corporate social irresponsibility and bring negative connotations to the brand. Associations with high-end sport is recommended as wine has positive lifestyle connotations in China. It is seen as a sign of civilisation, a global product and good for health. Associating wine tastings and the brand with golf is one promotional way of doing this.

In regard to advertising, the use of multimedia is effective in China. Website advertising is recommended, because the internet is a main source of information and there are high levels of technology and digital media usage. The Chinese seek information from specialised websites therefore it is crucial to have a strong web presence. Broadcasting stories of the winery history and using pictures are effective in point-of-sale displays. Interactive marketing should also be used to enhance brand image and awareness. The country of origin should be promoted as this contributes to the authenticity of the wine, and builds brand and product knowledge. The Chinese market evaluates products on their prestige and origin. Interactive marketing is recommended in the Chinese wine market through use of text messages, the internet, and DVDs (Fletcher & Crawford, 2010). A great deal of the market relies upon what they see on TV ads and online, to determine if the wine from a quality brand. Therefore it is recommended that the company uses broadcasting media and the internet to pull in consumers. Use of communication media to make the Chinese society more aware of Western tastes. The marketing efforts should be directed toward developing a want in the market.

In China, word-of-mouth promotion is important and having the product visible in restaurants and bars is crucial to success and creating brand awareness. A strategy should be adopted that promote to a key market (one city at a time) or key channel (popular bars in a certain city) with industry leaders pushing the product. It is crucial to build a prestigious, high

quality brand in the Chinese wine market. This can be accomplished through wine tasting, advertising, promotion, PR and the use of cellar doors. The company must invest in marketing and educate consumers and make them aware of the brand and product. Showcasing and advertising the wine and brand, creates consumer demand and can convince distributors to stock and showcase the products.

5. Conclusion

It is recommended that the wine company enters a JV to maintain control and reach potential, without entering a high unmanageable level of risk. The factors that affect standardisation and customisation are political, economic, cultural, physical condition, technology, product life cycle, competitive factor, organisational factor, the nature of the product, and the target and positioning strategy. Glandore wine should not be customised; the company should adopt a strategy of standardization. However other factors in the marketing mix should be customised.

The use of advertising and promotion must be politically and culturally acceptable, of relevant content and media vehicle, and must be targeted at the market segment. When promoting Glandore wine in the Chinese market there should be use of advertising, public relations, sales promotion and personal selling. China is a good market because the high Australian dollar is not as problematic as it is in the European and American markets. When entering the Chinese market, Gladore’s needs to be aware that it takes time to build relationships and trust with Chinese partners.

The increase in China’s demand for Western wine has brought many new competitors to the market. Glandore’s needs to create a wine culture in China and reinforce a message of excellence and reputation. They need to maintain their boutique integrity to avoid undesirable brand image. Glandore’s can create brand image through physical presence, wine education and maintaining authenticity.

1.0. – Executive Summary

After conducting an analysis of the French business environment, findings suggest that tastecard would achieve a good level of success in entering the French market. It has been established that France and the UK have many similarities in terms of dining out, culture and the economy. The fact that France is well known for their love of food, and that being only a partial aspect of what France has to offer, tastecard will be able to enter this new market with minimal difficulty. With the rising global demand in ‘daily deals’ and the on-going expansion of restaurant chains in France, the tastecard scheme would be positively affected. In light of this, pricing strategies, promotions and adaptations will also assist tastecard in entering the foreign market place.

In contrast, both La Four Chette and Groupon (France) have proved to be large competitors in this line of business and pose as the greatest threat in hindering tastecard’s international move. Consequently, although tastecard will achieve a reasonable amount of market share when expanding into France, it is not certain that they can establish themselves as market leaders. A future recommendation for tastecard is to continue growing into new foreign markets, establishing and developing their global brand name.

* 2.0. – Company Background and Target Market

Starting out as tastelondon in 2006, tastecard quickly established themselves as the capitals leading diners club. In July 2010, after their rapid growth, tastelondon was re-branded and newly named tastecard. Tastecard is the UK & Ireland’s Largest Diners’ Club with over 5500+ participating restaurants, offering over 500,000 members’ huge savings every time they dine out, allowing members to enjoy taste discounts nationwide (Tastecard, 2012).

Tastecard works by giving each member a personalised membership card which is shown at participating restaurants in order to receive a discount. All restaurants involved offer members one of two deals; either:

* 50% off the total food bill

* 2 for 1 meal offer

All members that own a tastecard will receive the privilege of saving, on average, £25-£30 each time the card is used.

Restaurants involved with the tastecard scheme range from high-end fine dining establishments by Marco Pierre White, Conran and Mark Baumann, to popular favourites such as PizzaExpress, La Tasca and Bella Italia etc..

The tastecard scheme consists of both a Website (Appendix 1.0) and a Mobile Phone App (Appendix 2.0). Both of these channels give consumers full access to details on participating restaurants, their locations, reviews, contact details and offer availability.

The target market for the tastecard is aimed at families, couples and students. Couples will take kindly to the 2 for 1 offer at participating restaurants; whereas families and students who maybe strapped for cash will benefit from the 50% off the total food bill at participating restaurants.

* 3.0. – Business Environment (PESTEL Analysis)

* 3.1. – Political Factors

In 2010, the French government decided to slash the value-added tax from 19.6% to 5.5% over all restaurants in France, allowing one of France’s most important industries a greatly needed boost. This change will see a seven-year lobbying campaign by the French government, with restaurant trade groups agreeing to create 40,000 new jobs over two years (Liu, 2009). The drop in VAT will allow French citizens and tourists to dine out at more affordable prices. In recent times, with consumer’s purchasing power in decline, dining out has become more of a luxurious leisure pursuit, not a necessity. According to Liu (2009), French eateries have been struggling to stay afloat since the start of recession back in 2008. The number of people going out to restaurants in France has dropped by 20% during this period. This VAT reduction is an attempt to stave off additional restaurant closings in France and revitalize the restaurant sector.

* 3.2. – Economic Factors

According to the Central Intelligence Agency (2012) ‘France is transitioning from an economy that has featured extensive government ownership and intervention to one that relies more on market mechanisms, but is in the

midst of a euro-zone crisis.’ France is the fifth largest economy in the world in relation to GDP (Gross Domestic Product), in which it has a GDP of 1.350 billion Euros or 22.50 Euros per inhabitant (Dismal Scientist, 2012). During 2009, the French economy showed better resilience to the 2.5% downturn that took place and began to recuperate in 2010, seeing an increase of 1.4%. In addition to this, the government have forecast a growth of 2.0% in 2011 and 2.25% in 2012 (UK Trade & Investment, 2011). Figure 1.0 shows the economic stability of France in comparison to the Global Average. It suggests the GDP of France is level to the average, therefore implying France is economically stable. However, it also implies that its growth rate, is lower than average, therefore suggesting the economy may lack sustainability. The restaurant industry in France is a very important part of the economy.

Figure 1.0 - Strength of Socio Economic

and Technological Factors in France.

(Senior Watch, 2003)

* 3.3. – Social Factors

With a population of approximately 65 million, similar to the UK, France offers a variety of opportunities for international business. UK Trade & Investment (2011) believes ‘France is home to world leading companies in many innovative industries and is the third largest recipient of foreign direct investment, offering new opportunities for UK companies in procurement and sub-supply.’ In addition to this, it was stated that ‘almost anything that sells well in the UK can be sold in France, provided that the quality and price are right’. In the region of 75 million foreign tourists per year, France has been labelled the most visited country in the world. Additionally; it remains as having the third highest income in the world from tourism (Eucommerz, 2012). As mentioned previously, the restaurant sector is essential to France’s economy, in light of this, Novelli (2009) (cited in Liu, 2009) stated, ‘for 42% of tourists, the reputation of French gastronomy is what motivates their visits...During the summer, tourists make up anywhere from 20% - 30% of restaurants’ clientele’.

* 3.4. – Technological Factors

France has an excellent technological and scientific environment; being the world’s 4th industrial power and one of the world leaders in space technology, computer engineering, nuclear energy and environmental protection. In France, the government fund technological and industrial growth in which helps to increase the standard of living of people. Overall, France approximately sends 2.2% of its GDP for the development of its technology and industrial growth (Scribd, 2012). Once a technology is developed, it is soon accessible everywhere in the world. Technology is a universal indicator that crosses national and cultural boundaries. In other words, this current communication revolution has become a major driving force behind global marketing. ‘In regional markets such as Europe, the increasing overlap of advertising across national boundaries and the mobility of consumers have created opportunities for marketers to pursue pan-European product positioning’ (Geetha, 2009).

* 4.0. – Market Demand Analysis

* 4.1. – ‘Daily Deals’ and Discount Demand

Due to the current economic climate, more individuals are looking to purchase products, services, meals and experiences etc, through the use of deals and discounts. The demand for these ‘daily deals’ and discounts worldwide is constantly growing. Customers are thriving at the chance of money off a product or service and are therefore utilizing this new craze. ‘The 2-for-1 offers and discount vouchers that currently characterise the fast casual sector of the restaurant industry will continue to drive trade throughout the recession and even after it has ended’ (Lewis, 2009).

These implemented offers are beneficial to the restaurant sector in many ways. They attract new customers, who have never visited a particular restaurant before, that find themselves using certain restaurants due to the ‘deals’ being provided. It is an effective way to put a restaurant business on the map. ‘Daily deals’ and discounts, as well as both; the French economy making a combination of improvements in the last two years that impacted the full-service restaurant industry, and the implementation of the VAT reduction, has made eating out in full-service restaurants, particularly in chained outlets, more affordable to French consumers (Euromonitor International, 2010). According to Buy-O-Metric (2012), ‘The pressure on

household budgets will increase throughout 2012, with rising unemployment and the fact that pay rises almost certainly won’t keep up with the rising cost of living. Daily deals will benefit from an overall increase in the usage of money saving websites.’

* 4.2. – Growth of Chained Foodservice Operators

Across France, a large number of existing foodservice chains are continuing to open new outlets. As a result the chained consumer foodservice industry saw current value sales grow at a CAGR of 7% between 2005 and 2010, while the independent outlets saw sales decline at a CAGR of 1% (Euromonitor International, 2010). None the less, independent outlets still dominates the market, accounting for 73% of total current value sales and 94% of total outlet numbers (Figure 2.0).

Outlets | Independent | Chained | Total |

| | | |

Cafés/Bars  | 44,703.0 | 453.0 | 45,156.0 |

100% Home Delivery/Takeaway  | 874.0 | 1,001.0 | 1,875.0 |

Full-Service Restaurants  | 84,736.0 | 2,136.0 | 86,872.0 |

Fast Food  | 9,773.0 | 3,925.0 | 13,698.0 |

Street Stalls/Kiosks  | 3,729.0 | 700.0 | 4,429.0 |

Pizza Consumer Foodservice  | 12,155.0 | 1,103.0 | 13,258.0 |

Self-Service Cafeterias  | 42.0 | 810.0 | 852.0 |

Consumer Foodservice  | 143,857.0 | 9,025.0 | 152,882.0 |

Figure 2.0 – Consumer Foodservice by

Independent Vs Chained Outlets.

(Euromonitor International, 2010)

The success of chained outlets not only allows them to expand rapidly across the country but to invest in marketing activities that attract customers into their outlets and stimulate in-store demand. Moreover, those chains with high brand recognition can use franchising agreements in order to achieve expansion at a reasonably low cost (Figure 3.0).

Additionally, France has 26 of the 8 three star Michelin Restaurants in the world. (Why Go France, 2010). In other words, the Michelin Guide Rouge has approximately 50% of the market share (FPSi, 2011). France also produces the GaultMillau, a massive restaurant guide throughout France. If negotiations are played correctly, all of the above outlet types are great foundations to making tastecard very successful in the French market.

| Global Brand Owner | outlets |

| | |

McDonald's  | Various franchisees | 948.0 |

La Brioche Dorée  | Le Duff Restauration SA | 456.0 |

Paul  | Holder, Groupe | 384.0 |

Campanile  | Société du Louvre SA | 312.0 |

Quick  | Various franchisees | 258.0 |

McDonald's  | McDonald's France SA | 241.0 |

Subway  | Various franchisees | 234.0 |

Speed Rabbit Pizza  | Various franchisees | 226.0 |

Buffalo Grill  | Buffalo Grill SA | 224.0 |

Quick  | Quick Restaurants SA | 198.0 |

Casino Cafétéria  | Casino Guichard-Perrachon SA | 188.0 |

Relais H / Relay  | Relay France SNC | 188.0 |

Domino's Pizza  | Domino's Pizza Australia New Zealand Ltd | 180.0 |

Courtepaille  | Serare SAS | 173.0 |

Flunch  | Agapes Restauration SA | 165.0 |

La Croissanterie  | La Croissanterie SA | 150.0 |

La Boîte à Pizza  | Various franchisees | 142.0 |

Coeur de Blé  | Casino Guichard-Perrachon SA | 124.0 |

McCafé  | McDonald's Frnace SA | 118.0 |

Le Kiosque à Pizzas  | Various franchisees | 115.0 |

Buffalo Grill  | Various franchisees | 103.0 |

Pizza Hut  | Various franchisees | 102.0 |

Class'Croûte  | Various franchisees | 100.0 |

Pizza del Arte  | Various franchisees | 95.0 |

Mezzo di Pasta  | Various franchisees | 94.0 |

Restaumarché  | Various franchisees | 90.0 |

Hippopotamus  | Flo SA, Groupe | 87.0 |

Point Chaud  | Various franchisees | 85.0 |

Francesca  | Various franchisees | 76.0 |

Bonne Journée  | Selecta France SA | 73.0 |

Others  | Others | 3,096.0 |

Total  | Total | 9,025.0 |

Figure 3.0 – Leading Chained Consumer Foodservice Brands by Number of Units. (Euromonitor International, 2010)

* 4.3. – Mobile Technology Advancements

Information and Communication Technology (ICT) is constantly developing in the daily lives of French customers. According to French Telecoms Regulator ARCEP (Cited in Euromonitor International, 2010) mobile penetration in France stood at 99.7% in December 2010. A survey conducted by ComScore (Cited in Euromonitor International, 2010), showed that smartphones have proven very popular, with the number of users in France rising from 4.84 million in January 2009 to 7.14 million in January 2010. In relation to these technological advancements, tastecard is able to greatly benefit from the implementation of applications made for these smartphones, i.e. iphone, android or blackberry apps (Appendix 2.0). The UK tastecard app has a number of exceptional features. The app allows existing tastecard members to find restaurants nearby that accept the tastecard, enabling their members to discover new eateries while out and about, maximising the ways they can use the card. Reviews, directions, contact information, website details and offer availability to all tastecard participating restaurants is also available from this app.

* 5.0. – Current Supply Side (Market Gap)

* 5.1. – La Four Chette - (lafourchette,com)

La Four Chette is a website based diners club which provides a discount of 50% when reserving a restaurant booking. La Four Chette has approximately 6,000 participating restaurants throughout France; with 6 million users reserving bookings at these restaurants. La Four Chette provides an application on the smartphones, allowing users to access information regarding the La Lour Chette restaurants and discount terms and conditions. La Four Chette is a similar service to the tastecard, having the same principles being applied to members, however a substantial competitive advantage it holds over tastecard, is the fact it does not cost the consumer any money to make a reservation, yet the discount will still be available.

Although La Four Chette is one of the main competitors in the French market, there are a variety of websites such as, Top Table and SmartSave that also provide deals and discounts to certain restaurants. These websites however, are on much smaller scale and do not provide a specific ‘membership’ base like La Four Chette and tastecard.

* 5.2. – Groupon – France - (Groupon.fr)

Groupon was successfully launched in 2008, solely featuring daily deals, via their website, on the best stuff to do, see, eat and buy. After a rapid growth and substantial customer outreach, Groupon has now expanded into 45 countries all within approximately 4 years. ‘A key growth strategy for the largest daily deal providers will be a continued expansion in their areas of coverage, and increasing the number of deals available across the categories. Groupon remain, by far, the largest provider in the UK with twice the geographic coverage of any other player. Where they have trail blazed, others will follow.’ (Buy-O-Metric, 2012)

Groupon (France), launched in February 2010, offers the same deals and discounts that Groupon (UK) offer. For example, discounts on a variety of products and services, e.g. best establishments for lunch, spas, experiences, sporting trips etc. Groupon (France) has a widespread database and covers several major cities in France (Groupon-France, 2012).

Although Groupon offer deals on a larger scale of different products and services, the deals provided in relation to eating out are similar to that of tastecard. Tastecard’s main factor is a diner’s club membership base with deals for only participating restaurants. As a result, a competitive advantage is over Groupon (France) is displayed. However, the main reason to why Groupon (France) is a competitor in tastecard’s market share is because how well established Groupon is as a global business.

* 6.0. – Market Entry Strategy

* 6.1. – Entry Strategy

Following an analysis of the business environment, market trends and potential competitors, a strategy can now be devised to ensure maximised potential for tastecard expanding in to France. A consideration in to the following will need to be made:

* How the company will enter the market

* The competitive strategy

* The pricing strategy

* How the product will be adapted to suit the French market

When entering a foreign market it is necessary to obtain as much control over the business as possible. Therefore, it is essential for tastecard to adapt a Market Entry Strategy that maximises their strengths as a business. Tastecard has the opportunity to expand in to France through the use of already participating restaurants in the UK. For example, Pizza Express is one of the top participating Restaurants of the tastecard in the UK. The benefit that this brings to the tastecard in France is the fact that Pizza Marzano, a sister company of Pizza Express, is an established chain throughout France. As an Market Entry starting point, tastecard can liaise with Pizza Marzano to become a participating restaurant of tastecard in France. Additionally, tastecard can begin communicating with the well recognised restaurant guides that France provide, for example the Michelin Restaurants and the GaultMillau. This will provide a wide variety of restaurants, both high-end and popular mid-range, for consumers to choose from.

* 6.2. – The Value Chain Framework

In order for the tastecard to achieve a competitive advantage, the value chain framework will be assessed (Figure 4.0). The value chain analysis illustrates the activities that are carried out in a business and relates them to an analysis of the competitive strength of the business (Tutor2u, 2010).

Figure 4.0 - The Value Chain Framework.

(Rayport and Sviokla, 2008)

The Value Chain provides the ability to develop a value network in which a company can assess the following:

* Where it’s expertise lie

* Where can the most value be added to the product

* Where can activities be done the cheapest

* Where can the company sell at the highest profit

* Where are the gaps in the market

In order to better understand these activities that lead to competitive advantage, a generic value chain can be started and then the relevant firm-specific activities can be identified. Adding value to their product, tastecard gives the opportunity for consumers to rate and review their restaurant experience. Therefore, this gives a good indication of perceived quality to future consumers using these participating restaurants.

* 7.0. – Product Adaptation

When planning to take a product to the foreign market, it is important to consider whether the product will meet the needs of the chosen foreign market. In order to meet these needs, the product may have to be adapted. Foreign markets are likely to be characterised by a different standard of living that may be found in the country where the product was first sold. This suggests there may be a ‘need to lower the price, or an opportunity to raise it. Adapting a product to use different materials and meet different standards of quality is one way that product adaptation addresses the needs of new markets’ (Trade & Investment, 2010). Although adaptation may be pricey, it is a crucial cost in maximising the success of that product.

A product that has not been adapted to fit with foreign trade may not translate well to foreign audiences. Language barriers are a good example of influences affecting the success of a product penetrating foreign markets. The language difference is a key factor on the adaptation of tastecard. The tastecard website will need developing to suit the French market, in which a French website will need to be implemented, i.e. www.tastecard.fr, as well as a French mobile app.

The current tastecard website homepage (Appendix 1.0) is packed with features promoting how tastecard works. However, when setting up in France, it has been recommended that the website should have, ‘a complete aesthetic and navigational make-over for your new market.’ In addition to this, ‘Web development in France starts from tailoring the website to the audience, and just as you will be reconsidering your marketing and advertising strategies to accommodate a new market, your website should naturally follow suit’ (Start Up Overseas, 2010).

Additionally, it is essential for tastecard to establish the effectiveness of brand identity. Translation for the brand name will be a necessary adaptation due to the fact that the French dislike the use of the ‘Franglaise’ language approach. Therefore Figure 5.0, shows the French translation of the tastecard Brand that will be implemented.

Figure 5.0 - French translation

of the tastecard brand name.

The French tastecard diners club will include a variety of restaurants across France. These restaurants will be adapted into the new French website and mobile app, showing similar details to those already established with restaurants in the UK tastecard brand. For example, when searching for a particular participating restaurant, the map of France will be shown, pin pointing all of the locations of restaurants involved with the scheme.

In addition to the above adaptations, the logo of the French tastecard will need to be altered. As shown in Figure 6.0 below, the current UK tastecard logo includes the outline of the River Thames. This clearly represents the UK tastecard brand as the River Thames is a main landmark in the city of London. People can easily identify the UK Tastecard logo as being part of the UK market due to this featured design.

Figure 6.0 - River Thames Outline on tastecard and map of London.

(Google Maps, 2012)

To adapt the tastecard design in to France, so that the card can be identified as a product within the French market, a famous landmark of France can be used. For example, the River Seine is a well-known River running through the France’s capital city, Paris. Figure 7.0 below, shows the outline of the River Seine which can be easily adopted to fit in with the French tastecard design.

Figure 7.0 - River Siene outline in France.

(Cruising Holidays, 2012)

* 8.0. – Pricing Strategy

When entering a new market, an effective pricing strategy is a key influential factor in making a business a success within the marketplace. As an established leading diners club, tastecard generate their income through their annual memberships. Tastecard currently charge £79.95 for a 12 month member subscription. When expanding to the French market, a penetration strategy will be implemented (Figure 8.0).

QUALITY

Low High

Low

PRICE

High

Figure 8.0 - Pricing Strategy Matrix.

(Marketing Teacher, 2012)

The objective of using this strategy, which includes the setting of exceptionally low price points for products, is to help a business rapidly gain market share (Sylvestre, 2010). Tastecard will use this strategy when entering the French market in attempt to gain a high percentage of market share. Additionally, this pricing strategy can be effective in France due to the fact that France and the UK share similar business factors. ‘When it comes down to straight business and the strategies involved, France is just like the rest of the world, especially when it comes to pricing’ (Martin, 2008).

As Figure 9.0 demonstrates, the current exchange rate is 1 GBP = 1.1772 EUR. In relation to tastecard UK’s annual membership fee of £79.95, the equivalent price that tastecard France could adopt would be €94.12.

Figure 9.0 - Current Exchange Rate

(UKForex, 2012)

However, in order to gain more market share and implement the penetration pricing strategy, €69.99 would be an appropriate starting price

for an annual tastecard membership in France. The figure €69.99 has been proposed as it is an approximate 25% discount from the current UK membership fee. By having a 25% discount for a limited time to begin with, implements not only a firm, low price point to gain market share, but provides a great marketing opportunity to attract consumers towards this promotional offer.

* 9.0. – Distribution Options

As tastecard is a relatively internet based company, communication and delivery of the product/service between tastecard and both participating restaurants and consumers is direct. As a result, further distribution channels, such as importers and exporters, are removed from the process. However, tastecard do need to send members their personal membership card. As tastecard has a well established set up in the UK, a postal delivery system will be implemented to begin with. The Membership fee will be able to cover the cost of this one time delivery.

Figure 10.0 – The Distribution Cycle for tastecard.

As shown above, Figure 10.0 demonstrates the distribution cycle for tastecard:

1. The consumer visits the tastecard website or mobile app and purchases their tastecard membership.

2. Tastecard sends the member their tastecard membership card.

3. The consumer visits any participating restaurant

4. The consumer is then able to return to the tastecard website and provide their review on the particular restaurant.

5. The cycle continues.

* 10.0. – Promotion and Communications

As the tastecard scheme exists significantly on the web, online promotion and communication is a key factor to success. Tastecard currently uses the Internet for the majority of its advertisement, other areas include partnerships with big brand businesses and of course the participating

restaurants of the tastecard scheme. Using a variety of different web promotion tools, tastecard has established a strong sense of brand awareness in the UK.

* 10.1. – Social Media Websites

Social Media sites are on the up rise on a global scale, they are a key part in tastecard’s online promotion and communication with consumers. Popular social media sites such as Facebook and Twitter (Appendices 3.0 and 4.0) allow effective free marketing tools and facilitate tastecard to communicate directly with their consumers via these sites.

* 10.2. – Pay Per Click Advertising

A certain level of tastecard’s online marketing is targeted. By using a Pay Per Click (PPC) online marketing service through Google (Appendix 5.0), Pay Per Click advertising promotes a service in which the company only pays for the advertisement, when the consumer has clicked on the link, guaranteeing ad success. These advertisements surface on both search engine results pages (SERP) and other websites through display advertisements. These are ads displayed when the consumer searches specific keywords and key-phrases. As a result, this enables tastecard to direct a great proportion of its advertisements to customers searching for a service, or who have done so in the past.

* 10.3. – Partnerships with established brands

Tastecard have partnered up with major brand names in a bid to raise their profile. For example, as seen in Appendix 6.0, Carphone Warehouse and Best Buy partnered up with tastecard to offer a free 12-month membership when consumers purchased an airtime contract or repay handset priced £45 and above. By tastecard communicating through the use of these well established branded businesses, tastecard is creating a significant amount of brand awareness that is a key tactic in gaining a competitive advantage and market share.