This report is a market analysis of Australian wine market with major emphasis on one of the renowned brands in the country, Penfolds. It looks into the strategic objectives of the firm in the market and the manner in which it has built its competencies to gain a hold in the market. The report studies the Australian wine market in general covering the potential and the market opportunities. The changing customer preferences have also been captured along with the manner in which Penfold has responded to those demands. Penfolds has also faced some recent challenges in the market because of the increasing competition in the market. The report looks into that and also the recommendations to solve the problems faced by the company.
Strategic Objectives and fit
Penfolds aim at the wine market not only in terms of domestic market but also the export market. The main reason behind it is the attractiveness of the export market and the success which the company has seen over the years doing business with customers across UK, US and Europe. Much of it due to the changing preference of the customers towards Australian wines and treating them at par with the one of the premium wines (Snow, 2009). This change in strategy has been developed to maintain a two pronged strategy in order to capture both the domestic and international opportunities.
The brand aims to target majority of the customer profiles by introducing specific wines for them through its research and development. Penfolds manufactures wine is an entirely different manner than the rest of the competitors thereby giving it a different taste altogether which is liked by the customers (Evan, 2007). The brand plans to promote it aggressively in the market as it gives the company a differential advantage over others. Penfolds over the course of years plans to expand its product portfolio in both the premium and the affordable segment. Through this it wants to reach out to more set of customers in the market. With this the brand also plans to take out these brands to those markets which are still at nascent stage in terms of wine market. This would help Penfolds make an entry into such markets with affordable wines so as to open the market initially and then later on introduce its full range as the market grows (Margot, 2007).
Industry Overview and Competitor Analysis
The competition in the market is severe in the Australian market as lot of opportunities are present in the market and also there is a sustainable demand for wines in the country. The competition is not only in satisfying the internal demand in the market but also the export market which holds a big portion of the business done in Australia (Robinson, 2006). Also there is considerable competition in every market segment from normal to premium wine category. In Australia there are more than 2000 companies which deal in wine production and marketing and employ more than 40,000 people in direct and indirect labour.
Some of the biggest names in wine market in Australia are Southcorp, Beringer Blass, BRL Hardy and Orlando Wyndham. Although there are more than 2000 players in the market yet these four players control over 75% of the Australian market (Jade, 2010). The other players are majority small scale in number which serve only on a regional scale and do not operate in the export market too. The top players in the market have been in the market for long with an established presence and brand name in the market. Each of the above mentioned competitive companies have multiple brands in their portfolio to cater to wide range of customers not only in the domestic market but also in the export market of UK, USA and European Union.
In the past few years the companies have increased their presence in the market by expanding the range of wines available to the customers. This have increased the competition as big brands which used to deal in luxury and premium wines have started to offer wines even in the affordable categories thereby challenging the already present players (Conrady, 2008). The market has shifted from being a net importer to an exporter of quality wines across the world. Much is attributed to the sharing of competencies among themselves which enabled the brands to innovate more quickly in order to respond to changing customer demands from all across the world. It is because of this that Australian wineries produce only 2% of the world wine output but they 2.5% of the world market by volume and 4% by value. This shows the emerging strength of the Australian wineries within and around the world (Hartley, 2002).
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