Online Business and Wine Marketing - Essay Example

Wine Marketing Executive Summary Over the years, the wine business has been going through a substantial change. This has been occasioned by the increased competition internationally and the transformation toward universal supply sequence. The end users take part in a most important task in terms of choice of purveyors and in products decision making, which is shifting from being operational to being strategic. The enlarged number of wine producers ensuing from surfacing of fresh entrants in the marketplace has led to amplified competition. Customers have turned out to be demanding due to the rise in the number of merchandise alternatives in the market. Starting up a new business is taking a risk; nonetheless if the resolution is well thought there are abundant benefits that come up with endowing in business. This paper analyses the benefits, risks, challenges, requirements and any thing else that Dynasty Wine Company in China has to go through as it undertakes a new business start–up involving the sale of its products over the Internet. Before Dynasty is set to start the new venture there are long and short terms constraints that it should consider to ensure there will be continuity in the business. The future is impulsive and so even the negligible details about something should be interpolated before commencement is done. In the modern world, expertise has been allowed in organizations. It assists in mounting competence and thus buyer satisfaction. The competitiveness of a venture is vested on the quality of its management decisions (Moschis 1994). Quite a number of schemes that target at meeting a certain goal in the business arena have been developed. The move has made it obligatory for a business to integrate it in their plans so as to make certain they benefit totally from the benefits derived from it. In the (wine) industry, the employment of online dealing has become uniformly important. Many companies have diversified their business operation into many countries through the internet. Introduction Online business is the use of the internet to produce and implement business transactions. The internet makes available many opportunities that allow businesses to generate markets and supply to their customers in astonishing ways. It is an innovative area in international trade that entails trading of goods and services internationally through electronic means. It is the exploitation of telecommunication networks to manufacture, publicize or put up for sale goods and services. With the development in know-how, electronic business has been rising radically calling for the consideration of the government and technology industry to make sure that it does not go out of hand. The Internet is a universal structure of computer networks. It is a system of networks in which clients at any computer can, if they have connectivity, get information from any other computer and sometimes talk directly to users at other computers. Information placed on the Internet can be obtained by any person who is acquainted with how to use it. It is good to note that when businesses make a decision to put up for sale their products online, they are attracting some menaces which may result from exposing some of the a business’s vital information. These details can be used by swindlers to duplicate Dynasty’s products or to obliterate the repute of a business. It becomes necessary to generate a high awareness level during the start-up stage so as to attain competitiveness among the well recognized brands within the marketplace. Financial restraints include the costs of study and development and the high intensity of promotion used by competitors may generate a challenge to keep up particularly as Dynasty products are not well known internationally. Online marketing of wine Contemporary online business was introduced in1990 when the World Wide Web was revealed. Nevertheless, profitable trade was forbidden until five years later when security etiquettes were revealed. These etiquettes permitted companies to carry on their businesses through the internet and by early 21st century, many companies in many parts of the world were already offering services and products over the internet. At present, millions of businesses are trading over the internet and this has come about due to the expansion of information technology. Consumers have a diversity of goods and services to select from and purchases and payment transactions have become trouble-free over the Internet (Hitt, et at 2009). The most imperative thing in online business is the utilization of a website. The website is a place where products are publicized and offered for sale in the market. It gives crucial information concerning a product, including but not limited to the design, cost of the product, simple instructions on how to use the product and where the products are manufactured. Every company that is interested in marketing its products online must have a website that is unique and different from other company’s website (OBrien 2003). It must be properly designed and attractive in order to attract potential traders. To do this Dynasty has to hire a knowledgeable person who can plan and maintain it on a regular basis. For the wine company, the website must contain pictures of the products being offered for sale, the ingredients used for their manufacture, and most important, where they are manufactured and the stores where they are distributed from. Wine is a product that is mostly preferred by the younger generation and so the website must be designed specifically targeting the young population. This generates business opportunities for Dynasty both locally and internationally. With the modern technology, there are many programs available on the Internet that can be used in designing websites for different companies. The future looks more promising for the wine company because there is a new program called the Hot Java that makes use of video clips thus enhancing marketing (Andal-Ancion et al 2003). Implication of online business for Dynasty With the development in technology, millions of people are now using the internet for their daily activities. This implies that there are millions of consumers who are expected to get exposed to the products offered by company once they are advertised over the internet. This augments the chances of this company succeeding in the current economic adversities. Recent research shows there are about 10 million people who are using the Internet today, and this is likely to increase to 100 million in the next five years. With the elevated number of prospective customers, the wine company is guaranteed of success in the global world which may not be so if the products were sold locally (Duening, et al 2009). The internet covers an extensive global area thus enabling businesses to send or receive messages from varied geographical areas, and investigate markets and new opportunities. Dynasty can now endeavor into markets that were difficult to get and market its products. The Internet offers a lot of information which Dynasty can rely on to develop its products and learn more in relation to customer service (Chaudhury & Jean-Pierre, 2002) Nonetheless, they are so many businesses operating over the internet and this calls for exceptional products and services. This means that online business is an aggressive business and only those who are well prepared can endure. There are so many large wine companies that are by now advertising their products through the internet and if the new company is to succeed in this new start up, it has to involve itself in intensive research and creativity to make sure that its products have some inimitable facets that draw a large number of consumers. The rate of felony has increased and many people are taking advantage of the internet to con people by offering fake products with the intention of robbing people. Many people have fallen into these traps where they end up losing significant sums of their money without any goods being delivered to them. Other have lost substantial sum of money trying to establish the fraudsters with no achievement. This has condensed the level of trust on online businesses and many customers are terrified of buying products over the Internet. It is the responsibility of every company selling products online to ensure that they earn the customer’s trust and that customers are protected from fraudsters by use of features that cannot be imitated. For instance, before a customer places an order, he needs to be reassured the order found on the website is approved and comes from the specified source. This can be done by use of electronic signatures and dependable third party justification (Conway, et al 2007). Dynasty has to set up software recognized as 3-D secure protocol to protect its customers against fraudsters (Conway, et al 2007). This makes sure that unlawful people are prohibited from obtaining the vital systems. This can be done by the use of a merchant plug-in (MPI) which is attached to the central index for verification of enrollment of a card holder. With MPI, a cardholder browses through mercantile shop to choose goods or services to procure. After deciding on the products that one wants to buy, the mercantile store begins a new payment transaction (Dhillon 2007). The mercantile store then accepts card details through an encrypted SSL and it passes them to the MPI for authentification. If registered, the issuer is positioned by the MPI and he is asked to verify the card holder and the results are sent out to the mercantile store for purchases. If the card is not registered the mercantile has a right to carry on or stop the business deal (Beynon-Davies 2009). If this procedure is followed carefully, then the wine company can operate its business transactions without fear of fraudsters trying to imitate their products. There are many companies whose online businesses have failed because of poor management. SPELT analysis This is a management tool that helps in building informed decision about the sway that Dynasty is going to acquire from the (external) environments as the know-how and other variables change. Its examination is applicable in start-ups and continuing ventures (Campbell, et al 2002). The wine industry in China is highly competitive and this calls for strategies. Socio-cultural Lifestyle drifts and consumer predilection Demographic changes Major actions and manipulations Lifestyle trends and consumer preferences affects the business’s performance. To guarantee customer satisfaction it has to provide extraordinary services. This ensures that Dynasty is able to retain its customers and attract new ones. The demographic composition changes with time and so the business has to keep on revising its strategies to ensure that all customers are satisfied. Major events and influences such as restriction on the sale of alcoholic drinks are also prone to affect the business’s performance in future and the management should take note of them as they occur. Political Government regulation on the sale of alcoholic drinks. Taxation Policies. Restrictions on ownership on the type of business operation (Anon 2009). Government restrictions on the sale of alcoholic substances especially to minors as well as taxation policies are likely to have a negative effect on the performance of the business in the 21st century. This has to be put into consideration before the new start up is put into practice (Peltier 2002). Economical Increased competition as a result of an increase in the number companies offering their products online. Interest rates, exchange rates against the pound. New economic powerhouses. The possibility of competition becoming stiff is very high and thus the business has to search for other strategies to make its products more attractive. This may result from the increase in the number of companies selling their products online at a reduced cost and expansion of new economic powerhouses (Brannan 1995). Interest rates are also expected to shut up due to inflation and this may have adverse effects on Dynasty given that it is starting up the new business. Legal Competition regulation. Technical standards. International pressure groups. Competition regulation, for example, introduction of non-smoking zones as well as the requirement of certain technological standards will result in a raise in the operation costs. There is a likelihood of appearance of international pressure groups which might force the business to reconsider its pricing strategy. Technological proxy expertise and system severance rate. Timing, efficiency and fees of upgrading and scientific developments. Through technical advancement, Dynasty is in a position to boost its efficiency through the implementation of successful systems. Nevertheless, this may result in an increase in its operation costs. The external forces discussed above could help establish the retailer market growth or decline and the implications for Dynasty, which has a swiftly developing business model that acts in response to trends in the economy, technology and the industry in general. An economic recession could see economic factors having a substantial bearing on future strategies through undulation effects on socio-cultural and political factors. SWOT Analysis Strengths 1. Strategic management and valuable administration. 2. Strategic expansion. 3. High technical innovativeness. 4. Strong and close relationship between suppliers and distributors. Weaknesses 1. Prioritising the customer over premeditated relationships. 2. Rigidity. 3. Low profit margins. Opportunities 1. Merging with international vendors. 2. Global trade expansion. 3. Market expansion. 4. Increasing technical developments. 5. Emerging markets. Threats 1. Global rivalry. 2. Intense opposition. 3. Political troubles. 4. Price antagonism. 5. Imitated products. Dynasty need to have a strong and close relationship between its suppliers and distributors. It has to expand its markets in the social and cultural contexts. It also has to use high technology which has been rising over the years so as to succeed in the new venture. An effectual formula has to be employed so as to set up new and eye-catching ideas for the victory of the firm. Sometimes, it may not able to make the expected profit margins due to competition (Grant 2005). However, with the new venture, it has an opportunity of merging with global retailers and to expand its business operations into other countries. This process may not be without challenges as it may be faced by the threat or intense rivalry, price competition and government regulations. Capital Capital is one of the biggest challenges that entrepreneurs face at the set up of a business. This is because savings alone can not be sufficient to start up a business and hence they have to look for external sources. Most of these sources are loans from banks or other financial institutions or contribution from share holders. After the business has been started, the entrepreneur has to repay the loans at a price higher than it was advanced to them. Shareholders also need a return on their investments which comes in the form of dividend (George 2003). It is, therefore, a strategic aim of every business to earn a return on capital in order to repay the external sources, pay employees, give dividend to shareholders and be able to save some money for future growth and expansion. The following chart shows some of the things that need to be put into consideration if Dynasty is to succeed in the new business and for it to be able to earn a return on its investment. Business processes In striking for the correct openings, Dynasty will have to investigate its main market challenger as this is the chief threat it has to come across. The tactics being used by the rival company should be perilously appraised and assessed for essential counter action. In addition, the general plan of the opponent in a bid to control the market is an indispensable toolkit which Dynasty can use to approximate the cutthroat edge of the market. Similarly, the produce being offered to the market at lower price should be inspected to settle on its category and nature (Masterman & Wood 2006). Why, for example, is a company lowering the price of its commodity? Do they have access to inexpensive raw materials or is it that eminence of the artifact has been compromised and can be obtainable at a lower price than normal market value? Finally on opportunities, the promotion department will have to explore Dynasty’s managerial structure (both current and in the past) and give a detailed verdict as well as possible conclusions on the same (Roberts1994). Evaluation and control Strategic management involves devising and applying strategies that permit the organization to reach its objectives. Thus it is imperative that an organization measures its success in the formulation and accomplishment of its strategy and this is called strategy evaluation. The factors that are expected to affect the organization in achieving its goals are its size, management styles, intricacy of the environment, production processes and the nature of its products and services. Strategy evaluation is vital in ensuring that these factors do not hold back the accomplishment of strategic goals and assessment should be followed by incessant improvement. When developing the business, the effects of the business have to be measured in terms of quantitative and qualitative measures. This will guarantee that monitoring of the new undertaking is done effectively. Qualitative factors involve the effectiveness that will be attained by using the business. When information system has been put into practice, it leads to better ways of doing things. Employees will have an eased system of communication with each other and make progressions in Dynasty better. In quantitative terms, this is more on fiscal aspects. The system will lead to a swell in profits in Dynasty. There will be increased revenue due to good organization and increased customer base. All these can be forecasted and documented as objectives of the new business. Conclusion Nowadays, the Internet has become a public means that can be used by virtually everybody for any purpose. It has become a means of communication; trading and some people are using it to conduct illegal businesses. Technology is advancing at a very high rate and only those who are fit can actually survive in the rapidly changing time. Businesses are not left behind as they are using every opportunity that comes their way to ensure that they remain competitive in the highly competitive business world. Many companies have realized the importance of selling their products online and are making use of this opportunity to maximize their returns. The wine industry is not left behind in this innovative development as it is also offering its products to a diverse population through the Internet. Many wine companies have realized they do not have to build stores in every location where they want to market their products, but this can be done by use of the Internet. It has become self-sustaining, and a cooperative flair that many people all over the world can access. However, the online business is not without some challenges that the wine company has to face before it is finally able to offer its products for sale over the Internet. The online strategy is a well thought idea but Dynasty has to fulfill certain requirements before it is allowed to sell its products. First, it has to analyze the external environment associated with this venture in order to assess its viability with the new business set-up. There are legal requirements that Dynasty has to fulfill before being allowed to operate. So Dynasty has to make sure that it has a website that is unique and attractive in order to remain competitive in the business. The probability of competition becoming stiff is high and thus the business has to look for other strategies to make its products more eye-catching. This may be as a result of the increase in the number of pubs in a given area and expansion of new economic powerhouses. Interest rates are also expected to rise and this may result in condensed production. Through technical development, Dynasty is in a position to boost its wine production through the implementation of effectual systems. Nevertheless, this may result in a raise in its operation costs. Reference List Andal-Ancion, et al, 2003, The digital transformation. MIT SLOAN management review. Anon. 2009, SLEPT analysis with example, the Times [Online]. Available at: http://www.thetimes100.co.uk/theory/theory.php?tID=235 [Accessed April 26, 2011] Beynon-Davies, P. 2009, Business Information Systems. Palgrave, Basingstoke Brannan, T., 1995, A practical guide to integrated marketing communications marketing in action series. London, Kogan Page Publishers. Campbell, D. et al, 2002, Business strategy: an introduction. 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