Explaining the rationale of choosing the UK as a market
Yellow Tail is a wine brand and this firm is owned by Casella Family. Yellow Tail has its wine manufacturing plant in Yenda where this family has its own vineyard. Yellow Tail previously supplied wine to the other wineries. In the year 2000, Yellow Tail started its own business of bottled wine selling. Yellow Tail started exporting to different countries and by the end of 2003; Yellow Tail became number one in importing wine to the USA (Yellowtailwine.com, 2018). In this report, the strategy of Yellow Tail to enter the UK market is justified. In the first part of the assessment, market selection and entry strategy will be discussed along with competitive strategy. In the following section, pricing, promotion and distribution strategies are explained of Yellow Tail in entering the UK market.
In the UK, maximum multinational companies are located than anywhere in Europe continent. As stated by Martin et al., (2017), international companies are located in the UK as the companies want to develop new products, access new customers, find new partners and suppliers and do more business in the European countries. In the UK, it takes only 13 days to set-up a company and it only takes 48 hours to get the registration over there. The UK has only 20% corporation tax and 10% additional tax on patents from April 2013 (Besley, 2016). The UK is considered the 8th most competitive country in the world. Current GDP of the UK is $2.936 trillion and GDP rank in the UK is 5th. GDP growth of the UK is 0.4% and the UK has 32 million labour forces. The UK is ranked number 7th in the ease-of-doing-business. After the incident of Brexit, the relationship among the EU countries with the UK gets into trouble. However, the average gross salary of the UK people is £513 weekly (Delmas & Grant, 2017). The disposable income of the UK people was £27,300 in the year 2017.
Yellow Tail will also get the benefit of Australia and The UK free-trade deal as these two countries are urged to strike the free trade deal so that they can counter the USA’s protectionism. High disposable income in the UK will lead to high consumption of the wine and the UK had a wine market of £50 billion (economic activity). Most importantly, the UK had generated almost £10.9 billion in sales of wine in the year 2016 (Nibusinessinfo.co.uk, 2018). More than 554,000 people get the chance to work in the supply chain of the wine industry. Therefore, Wine Tail will have a good market in the UK as almost 60% of the UK adults like to drink wine and it is equivalent to the 31 million (Valeriani & Vaccari, 2017).
Market selection and entry strategy
Yellow Tail started the market selection process by considering three countries, Canada, the UK and China. First, Yellow Tail management set the international marketing objectives. The main objective of Yellow Tail in a foreign market is to achieve the market share of 3% by the end of the second year. Second, Yellow Tail set the parameters of selection the foreign market such as firm’s resources, market situation, the economic condition of the nation, international environment, trade relationship with Australia, nature of competition in the market and the government policy (Eriksson et al., 2015). After doing the preliminary screening, the UK got the highest rating related to the per capita income, infrastructural factors, structure of the economy and trade relationship with Australia. In the wine industry, the UK has the largest market and most of the large Australia based wine market in the UK. The management of Yellow Tail does the feasibility study and the cost-benefit analysis so that they can assess the market well. Test analysis helps the management to understand the specific market and the customers of the region.
Yellow Tail Wine can take ‘indirect exporting’ market entry strategy to enter the UK market. Indirect exporting helps to sell the products through an intermediary who sells the products either to the importing wholesalers or to direct the customers (Ozturk, Joiner & Cavusgil, 2015). Indirect exporting is less risky, the risk of marketing of the products transfer to the market intermediaries. Indirect exporting needs less investment as the company can concentrate on assembling and manufacturing of the products. The intermediaries of indirect exporters help the company about the technical guidance free of cost. Yellow Tail Wine will sell their bottled wine to the intermediaries and these intermediaries will sell the bottled wine to the wholesalers. Therefore, the bottled wine of Yellow Tail will be found in the supermarket stores and the wine stores in the UK.
The price of the average 75cl wine bottle in the UK costs £5.50 and the price of the wine has risen from January to March in the last two years (Nibusinessinfo.co.uk, 2018). Therefore, Yellow Tail Wine can take the competitive strategy of low-cost leadership. Low-cost leadership establishes a competitive advantage for the newly entered organisation as this one provides the opportunity to offer the lowest cost in the industry. According to Madsen & Walker (2015), cost leadership is driven by the company size, scale, efficiency and scope and learning curve. Yellow Tail will sell the wine bottles at a lower price through the wholesalers and Yellow Tail will not keep the large profit percentage at the beginning of the journey in the UK. Low-cost leadership strategy will provide increased market share for Yellow Tail Wine as the company will be able to provide wine at a lower-than-typical market price and lower than the competitors. Competitors in the UK wine market are Morrisons Pinot Grigio, Hardy Stamps, Whispering Angel, Echo Falls and Brancott Estate (Amienyo, Camilleri & Azapagic, 2017). Yellow Tail Wine will capture more capital resources available to fund the growth.
Competitive strategy
Yellow Tail wine will take a lower pricing strategy in the UK; however, it is quite unlike for a wine-seller. Wine is famous for premium pricing; Yellow Tail will take the lower-pricing so that wider customers can afford the wine. Yellow Tail will use the intermediaries to sell the products to the wholesalers. Through the wholesalers; the bottles of wine will be reached supermarket and wine stores. Lower pricing strategy will be used as market penetration in the UK market and the customers will have premium quality wine at a lower price (Pantelous & Passalidou, 2015). Yellow Tail wine will keep the business sustainable through the lower pricing strategy. In the UK, Brexit makes the situation tough and price wars in the wine industry will help Yellow Tail for keeping the price lower.
At first, Yellow Tail Wine will start their promotion through social media marketing among the UK population. Yellow Tail Wine already has its website and they will be marketing through Facebook, Twitter and Instagram. Yellow Tail Wine will post contents on social media pages and will ask the users to visit the website by pasting the link on social media.
Yellow Tail can pay food and wine bloggers so that they can advertise and promote Yellow Tail wine on social media to attract more potential customers.
Yellow Tail Wine will also use the strategy of discount pricing at the beginning of their journey in the UK.
Yellow Tail Wine will also use print media like national newspapers in the UK and magazines to attract the customers in the UK. Yellow Tail can advertise in newspapers by introducing itself as one of the largest wine sellers in Australia.
Yellow Tail Wine will take the indirect exporting strategy to sell wine in the UK market. In the distribution of the bottles of wine to the intermediaries; Yellow Tail Wine will use mainly selective distribution strategy. According to Schmidt et al., (2016), selective distribution operates and lies involving more than one intermediary who can carry the bottles of wine on a basis of company-specific rules. Distribution to the stores and to the supermarkets will be done by the wholesalers. In this case, Yellow Tail will make a partnership with the intermediaries and will ask the wholesalers to use the intensive distribution strategy so that the customers of the wine will encounter the bottles of Yellow Tail virtually everywhere they go; wine shops, hypermarket and supermarket.
Pricing strategy
Yellow Tail is the seventh largest wine-seller in Australia and it is planning to expand the business in the UK. Yellow Tail needs to first take the advice and understand the tax and laws from the Department for International Trade (DIT) to understand the regimes, policy and the procedural. Yellow Tail will sell the wine bottles through indirect exporting and Yellow Tail will take the low-cost leadership strategy so that they can reach maximum numbers of customers. The objective of Yellow Tail is to take a lead in the market share in the UK. In addition, Yellow Tail should take intensive distribution strategy so that the maximum numbers of wine customers should hear the name and recall the brand name during the purchase of wine. Yellow Tail should start the social media marketing and print media marketing so that they can reach wider customers. Yellow Tail should take the distribution strategy so that the customers can be alluded to purchase the wine bottles.
Reference List and Bibliography
Amienyo, D., Camilleri, C., & Azapagic, A. (2017). Environmental impacts of consumption of Australian red wine in the UK. Journal of cleaner production, 72, 110-119.
Belton, P. (2017). Competitive Strategy: Creating and Sustaining Superior Performance. Macat Library.
Besley, T. (2016). Law, regulation, and the business climate: The nature and influence of the World Bank Doing Business project. Journal of Economic Perspectives, 29(3), 99-120.
Delmas, M. A., & Grant, L. E. (2017). Eco-labelling strategies and price-premium: the wine industry puzzle. Business & Society, 53(1), 6-44.
Eriksson, K., Johanson, J., Majkgård, A., & Sharma, D. D. (2015). Experiential knowledge and cost in the internationalization process. In Knowledge, Networks and Power. 4(4), 41-63.
Jiang, Y., Shang, J., Liu, Y., & May, J. (2015). Redesigning the promotion strategy for e-commerce competitiveness through pricing and recommendation. International Journal of Production Economics, 167, 257-270.
Luoma, J., Falk, T., Totzek, D., Tikkanen, H., & Mrozek, A. (2018). Big splash, no waves? Cognitive mechanisms driving incumbent firms’ responses to low?price market entry strategies. Strategic Management Journal, 39(5), 1388-1410.
Madsen, T. L., & Walker, G. (2015). Modern competitive strategy. McGraw Hill.
Martin, R., Pike, A., Tyler, P., & Gardiner, B. (2017). Spatially rebalancing the UK economy: Towards a new policy model?. Regional Studies, 50(2), 342-357.
Morrison, A., & Rabellotti, R. (2017). Gradual catch up and enduring leadership in the global wine industry. Research Policy, 46(2), 417-430.
Ozturk, A., Joiner, E., & Cavusgil, S. T. (2015). Delineating foreign market potential: A tool for international market selection. Thunderbird International Business Review, 57(2), 119-141.
Pantelous, A. A., & Passalidou, E. (2015). Optimal premium pricing strategies for competitive general insurance markets. Applied Mathematics and Computation, 259, 858-874.
Sartor, M. A., & Beamish, P. W. (2018). Host market government corruption and the equity-based foreign entry strategies of multinational enterprises. Journal of International Business Studies, 49(3), 346-370.
Schmidt, M. C., Kolodinsky, J. M., DeSisto, T. P., & Conte, F. C. (2016). Increasing farm income and local food access: A case study of a collaborative aggregation, marketing, and distribution strategy that links farmers to markets. Journal of Agriculture, Food Systems, and Community Development, 1(4), 157-175.
UK wine industry overview. (2018). Retrieved from https://www.nibusinessinfo.co.uk/content/uk-wine-industry-overview
Valeriani, A., &Vaccari, C. (2017). Accidental exposure to politics on social media as online participation equalizer in Germany, Italy, and the United Kingdom. New Media & Society, 18(9), 1857-1874.
Yellow Tail wines – Great Australian wine. (2018). Retrieved from https://www.yellowtailwine.com/our-story/
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
