Presentation given to the CEO of Lungarotti wine company as a final project for a Comparative Global Business Cultures course. The presentation outlines our proposed international business strategy for the company and focuses on marketing.

1. LUNGAROTTI
c atività, te rio tradizio
re rrito , ne
Rossella Carpino
Paige Hannah
Zach McCarthy
April 10th, 2008

2. Presentation Overview
• About Lungarotti
– Company Culture
• SWOT Analysis
• Cultural Profiles
– Trompenaar’s Cultural Dimensions
– Lungarotti’s Markets: Current & Emerging
• Marketing Strategy
– Existing Markets
– Emerging Markets
April 10, 2008

3. Lungarotti
• Power Culture at the top
– Senior Management
• Role Culture
– Underneath Senior Management
• Switch to Task Culture to manage expansion
– Creativity
– Teamwork
– Horizontal structure
April 10, 2008

4. SWOT Analysis:
Strengths
• Good re-use of facilities and resources available
• Aspects of culture used as support for sales
• Lungarotti brand carries a respected name
– Awards
– DOC
• Well-developed, wide-range product line
• Sold in 45 countries worldwide
• Name is beyond wine
– Vineyards, factory, 5-star hotel, museum, olive oil
– Le Tre Vaselle website is translated into English, Spanish, Portuguese,
Russian, Chinese and Japanese
April 10, 2008

5. SWOT Analysis:
Weaknesses
• Lack of communication between agents and home base
• Power culture on top, Role culture on the bottom
• Passive PR
– Agents to do the marketing
– Relying on word of mouth for opportunities abroad
• Global Strategy: Thinking too small
• Webpage not in German
April 10, 2008

6. SWOT Analysis:
Opportunities
• Expansion Wine Therapy
• Potential of internal employees
• Marginal costing to get into new markets
• Creating specific wines for other markets
• Becoming the Italian wine for emerging markets
• Brandy
April 10, 2008

7. SWOT Analysis:
Threats
• Competition from Chile, Australia, New Zealand,
France
• Successor Issues
• Culture can hinder innovation and expansion
• Competition gains advantage in emerging markets
• Domestic wines
April 10, 2008

8. Cultural Profiles:
Trompenaars’ Cultural Dimensions
• Universalist/Particularism
• Individualist/Communitarian
• Neutral/Emotional
• Diffuse/Specific
• Achievement/Ascription
• Internal/External Control
• Sequential/Synchronic
April 10, 2008

9. Marketing Strategies
Current Markets Emerging Markets
• European Union • China
– Italy • India
– Germany • Japan
– UK • Russia
• United States
Focus Strategy
April 10, 2008

10. Marketing Strategy:
Focus Strategy
• Narrow Market
• Tailor marketing mix to these markets
• Looking to gain a competitive advantage
• Good for small companies
April 10, 2008

11. Existing Market:
Italy
Characteristics Doing Business
• Particular • Relationships are very important
– Relationships before schedule
• Communitarian
• Superiors are respected
• Affective • Time is approximated
• Diffuse – Being late with good reason is
OK
• Ascription
• Show emotions very openly
• Internal • Very little personal space
• Synchronic • Use of proper etiquette
• Work and Personal lives not
separated
April 10, 2008

12. Existing Market:
European Union
• Italy, Germany, UK
• Competitive Advantage
• Continue current operations
• Closer contact with agents
• Widespread marketing across EU
• Website translation into German
April 10, 2008

13. Existing Market:
United States of America
• Increase in Price
• Internet Sales
– PayPal Capability
– Distribution Centers
– Distributor Personally Delivers
• Partnerships with Hotels
• Improve motivation and relationships with sales personnel
– Use of Marginal costing
– Build Motivation of sales force
• Marketing Lungarotti over competitor’s wines
– No screw top in USA
– Certified with DOC
– Premium Italian Wine
April 10, 2008

14. Emerging Market:
China
• Target Market: Upper-class wealthy individuals
– More millionaires per capita
– The wealthy are westernized
– Wine is becoming more popular
• Personal Status and brand image are extremely important
• Wealth concentration in few cities:
– Shanghai – Chengdu
– Beijing – Ningbo
– Guangzhou – Dalian
• Heavy direct marketing is essential
• Asia Distribution Solutions: main importer of western beverages
April 10, 2008

15. Emerging Market:
Chengdu, China
• Located in Southwest China
• Huge emerging market
– One of the most important economic transport and pharmaceutical
centers in China
• More tea-houses and bars than Shanghai
• Laid back attitude
– Enjoying life
– Similar to Italians
• France and Australia already showcasing wine
– March 20th: Australian wine showcase
April 10, 2008

16. Emerging Market:
China
Characteristics Doing Business
• Particular • Appointments are important
• Communitarian • Long decision making
process
• Neutral
• Group is most important, but
• Diffuse rank is highly valued
• External – Senior Executives lead
• Ascription • Punctuality
• Synchronic • No use of large hand
movements or personal
contact
April 10, 2008

17. Emerging Market:
China
Price Product
• Expensive – Communicate • High Quality Wines
Luxury – White wines towards women
– Room for 60% price increase • Wine Therapy
in large distribution areas
• Brandy Line
• Selling to top 10%
• Marginal Costs
– Only using variable costs and profit
– Use marginal costs to expand
• Fixed Costs constant (70%)
April 10, 2008

18. Emerging Market:
China
Place Promotion
• Business & First Class of Airplanes • Push image of Lungarotti wines
– Singapore Airlines – Lungarotti is the wine to drink
– DragonAir – Associate with Status
– Cathay Pacific Airline
– Health Benefits, Wine Therapy
• Luxury Hotels – Awards, DOC
• Upscale Social Scenes • Heavy Marketing
• The “Big Six” Cities – No Agents
– Hong Kong: VinExpo – “Impression on brand has
– Chengdu: Important trade center become the main reason for
• Two Biggest Importers: Montrose consumers’ purchasing actions.”
Food & Wine, ASC Fine Wines • VinExpo in Hong Kong (May)
• Lungarotti Distribution in major • 2008 Olympics
cities • White wines for Women
April 10, 2008

19. Emerging Market:
India
• Target Market
– Upper-class individuals: Wine is consumed in top 2%
– Wealth Concentration: Mumbai, Bangalore, Delhi
– Westernized group
– Media is now portraying women who drink wine as sophisticated
• Growing interest in wine, especially among the wealthy
– Developing Tastes
– Wealthy are westernized
– Wine is a sign of sophistication
• Less domestic production as tastes improve
• Typically prefer still wines
April 10, 2008

20. Emerging Market:
India
Characteristics Doing Business
• Particular • Hierarchy plays a key role
• Communitarian • Use appropriate titles
• Neutral • Must build relationships
• Specific/Diffuse • Appointments are important
• Ascription (made in advance)
• Internal/External • Punctuality
• Synchronic • Slow process for business
transactions
April 10, 2008

21. Emerging Market:
India
Price Product
• Expensive – Selling to top • Currently like sweet wines,
2% but tastes are developing
• Marginal Costs • Sparkling and rose wines
– Only using variable costs and target the affluent
profit
– Use marginal costs to expand
• Luxury Good
• Fixed Costs are Constant (70%)
April 10, 2008

22. Emerging Market:
India
Place Promotion
• 80% of wine sales accounted for by
major cities
• Lungarotti is a luxury wine
– Mumbai – Awards, DOC
– Bangalore • Heavy Marketing
– Delhi
• – No agents
Business & First Class on
Airplanes • Show women drinking wine
– Jet Airways (sign of sophistication)
– Cathay Pacific Airlines
• 5-Star Hotels, upscale restaurants, • Wine Magazines
pubs and bars – Sommelier India recently
– Accounts for 63% of volume sales featured Lungarotti
• Lungarotti Distribution Centers
– Wine storage in India is a problem
April 10, 2008

23. Emerging Market:
Japan
• Target Market: Upper-class wealthy individuals
– The wealthy are westernized: education, travel
– Wine is becoming more popular
• Food capital of the world
– Upscale Italian Restaurants
– Hobby is finding new restaurants
• Drinking is very popular; socially accepted
• French wines currently valued
• Wealthy are westernized
– Western Education, Travel
– Willing to Westernize some behaviors
• World Wine Day
– Lungarotti participated per request of Japanese Princess
April 10, 2008

24. Emerging Market:
Japan
Characteristics Doing Business
• Universal • Teamwork is important
• Communitarian – Always deal with team, not
individuals
• Neutral
• Hierarchy is respected
• Specific
• Formalities, procedures
• Ascription
• Don’t show feelings
• Internal
– Silence is a virtue
• Synchronic • Value relationships and
harmony
April 10, 2008

25. Emerging Market:
Japan
Price Product
• Expensive – Selling to top • High Quality Wines
tier – Red Wines
• Marginal Costs – Accompany Italian Meals
– Only using variable costs and – Enjoy sweet wines
profit • High status product
– Use marginal costs to expand
• Brandy Line
• Fixed Costs are Constant (70%)
April 10, 2008

26. Emerging Market:
Japan
Place Promotion
• Japanese Italian Restaurants • Push the image of Lungarotti
• Business & First Class of Airplanes – Lungarotti is the wine to have
– ANA All Nippon Airways – Associate with status
• Luxury Hotels – Awards, DOC
• Upscale Social Scenes
• Heavy Marketing
• Major Cities
– No agents
– Tokyo
– Yokohama • Males in mid-30s
– Osaka – Need convincing
– Nagoya • Young Japanese Women
– Kyoto
• Joint ventures with upscale
• Supermarkets, Wine Stores Italian restaurants and hotels
April 10, 2008

27. Emerging Market:
Russia
• Target Market:
– Young, wealthy individuals
– Highest number of billionaires per capita
• Domestic Wine Production is falling
• 30% Wine consumption increase per year
• Increasingly health conscious
– Drink higher quality wines
• Growth of specialty wine stores
April 10, 2008

28. Emerging Market:
Russia
Characteristics Doing Business
• Particular • Openly show feelings
• Individual/Communitarian • Work and personal lives
• Affective separated
• Specific • Punctuality
– Indicates how serious one is
• Ascription
• • Formality observed
External
• • Simple, straightforward
Sequential/Synchronic
presentation
• Rude to reject invitations
April 10, 2008

29. Emerging Market:
Russia
Price Product
• Selling to upper class • Want seemingly expensive
– Young, extremely wealthy luxury Wines
males • Semi-dry red wines
• Marginal Costs
– Only using variable costs and
profit
– Use marginal costs to expand
• Fixed Costs are Constant (70%)
April 10, 2008

30. Emerging Market:
Russia
Place Promotion
• Major Cities • Very fine Italian wine
– Moscow
– St. Petersburg • Push Awards & DOC
– Tomsk Certification
• Business & First class of airplanes • Heavy Marketing
– Aeroflot
– S7 – No agents
• Specialized wine stores, Kiosks,
Supermarkets
• Upscale Hotels, Restaurants
• Lungarotti Distribution Center in
major cities
April 10, 2008

31. Final Thoughts
• Organizational Cultural Changes
– Role culture to a task culture
• Success in Existing Markets
– Continue current operations
– Small improvements
• Success in the Emerging Markets
– Market as a luxury good
– Get rid of distributors in emerging markets
– Do the marketing yourself
– Pay careful attention to cultural dimensions
April 10, 2008

32. LUNGAROTTI
c atività, te rio tradizio
re rrito , ne
April 10, 2008