Business School

Module Code Number: BSB10186-3

Module Title: International Marketing

Teaching Block: 2, 2008/2009

Assessment Type: Assignment

Assessment Title: Wedgwood

Weighting: 100%

Moderated by: Internal Scrutiny Panel External

Date of issue: February 2009

Submission Date, Time, Place & Arrangements:

Submission Date: 10th April 2009

Assignments must be submitted by the due date. The only circumstance in which assignments can be submitted late is if an extenuating circumstances form is submitted at the same time. In these circumstances work may be submitted up to 2 weeks late only. If the extenuating circumstances are upheld, the assignment will be graded, otherwise a ‘0’ will be awarded.

Maximum word length: 2500 words
State the number of words used at the end of the assignment. You may include diagrams, figures, appendices etc. without word penalty. A sliding scale of penalties for excess length will be imposed. The penalties will be as follows:
Up to 10% excess words no penalty
11-20% excess words 10% penalty
21-30% excess words 20% penalty
31% plus excess words the work will be capped at a pass i.e. 50% or grade point 7

NB. None of the above penalties will be used to change a student mark which is above the pass mark, to one that is below the pass mark. Therefore the maximum penalty for exceeding the word limit will be a reduction to a pass grade.

Assignment

Wedgwood
Waterford Wedgwood is a UK based PLC with worldwide sales around £750 million.  It has 9,000 employees, of whom 4,000 are UK based, and is organised into 4 main 英國dissertation網divisions, each of which has a portfolio of brands within it.  The Wedgwood division includes the Wedgwood brand itself, Johnson Bros, Coalport and Mason’s.  With 4,000 employees (of whom 3,200 are UK based) this division accounts for approximately 20% of total Wedgwood PLC sales. 

Sadly, in January 2009, the impact of the global credit crunch on ‘nice to have’ rather than ‘need to have’ luxury branded tableware, together with the long term decline factors discussed below, forced Waterford Wedgwood into administration. Nevertheless, business continues and there is a hope and expectation that a buyer will be found who can restore the fortunes of these iconic brands.
 
Over two thirds of Wedgwood branded products are in china tableware, produced in England, whilst the remainder are split between home décor products, children’s ware, jewellery and miscellaneous items. These are generally outsourced and branded Wedgwood. Tableware in general is made from bone china, porcelain, earthenware or stoneware. Bone china is translucent and extremely strong and represents the finest and most expensive in UK tableware. Porcelain dominates luxury tableware markets in Europe, is semi-translucent and not quite as tough. Wedgwood is world renowned for its bone china dinner services although, amongst many consumers, it is often at least as strongly associated with the unique Jasper unglazed ware, invented in 1774, and plates and bowls for children decorated with Peter #p#分頁標題#e#http://www.400190.com/Thesis_Writing/Marketing/Rabbit characters, the license for which Wedgwood has held since 1949. The product split varies somewhat between international markets so that, for example, tableware accounts for around 60% of sales in the UK and Japan but around 90% in the rest of Europe and the USA. 

Wedgwood is striving to succeed at a most complex set of roles. It is a UK based manufacturer, a retailer and a tourist destination. It also brands products sourced elsewhere and markets internationally in a culture bound industry. Finally, through its collectors’ clubs, it is in direct marketing as well as selling through a variety of owned and independent wholesalers and retailers. 700 million homes use the brand worldwide and 360 retail shops stock it.  There are15 million consumer purchases each year, 1 million visitors to the website and ½ million to the Visitor Centre in Barlaston near Stoke-on-Trent. The company which was founded by Josiah Wedgwood in 1759 is a British cultural icon. In 2006 Wedgwood was the number 1 fine china brand in the UK and has consolidated its position as No. 2 in the US market.  Wedgwood also maintains its No. 1 position in Japan, Ireland and Australia. 
 
The UK pottery industry in general has suffered from decades of increasing import penetration, principally as a result of low price products from the Far East, coupled with declining domestic demand. The latest casualty is Royal Doulton, a household name and Wedgwood’s main UK competitor, absorbed by Wedgwood in 2005. The subsequent rationalisation has reduced the cost base for Wedgwood and Doulton and will provide greater global reach for Doulton, Minton and some of its other brands. Some manufacturers (including Doulton) have tried to respond to the price pressure by shifting some production to low cost locations. In 2003, production of the earthenware Johnson Bros brand was transferred from Stoke-on-Trent to China where costs were thought to be 70% cheaper.  Responding to fears that Wedgwood tableware might follow suit, the CEO at the time said that “We would take the view that the fine bone china of Wedgwood is quintessentially English, and it should be made in England for it to maintain its cache.  Nevertheless, we relocated 35%-40% of our Waterford Crystal production outside a few years ago, and it has continued to sell successfully.”
 
Declining UK demand for bone china dinner services and tea sets stems from social change, particularly the reduction in the number of marriages (impacting on the important bridal/wedding list market), the shift from formal to casual dining and the increase in eating out. These trends have resulted in a fall in the number of tableware pieces needed and a substitution of  more informal earthenware for the more formal bone china. On top of this, today’s consumers buy traditional pottery less frequently and seem less involved in, and excited by, the product category.#p#分頁標題#e#
 
The market situation has forced the UK industry to focus its attention on 3 key areas. Firstly, it has long been recognised that sales are concentrated in too few countries.  This is also true of Wedgwood where 35% of divisional sales are in the UK, 11% in the rest of Europe, 27% in Japan, and 18% in the USA. An associated英國dissertation網issue is the choice of market entry mode strategy. Hitherto, Wedgwood had generally established wholly owned sales companies in overseas markets because their size justified a local marketing presence and in order to control the way the brand was positioned. In Japan, for example, Wedgwood had recently reduced the number of office staff from 170 to 100 but increased sales staff from 100 to 140.

Secondly, research had shown that, in terms of several dimensions, the Wedgwood brand was perceived differently in different countries and different regions.  For example, Wedgwood was seen as more traditional in the USA than in Europe and more luxurious in Japan than in Europe. There were other differences. Wedgwood was seen in Japan and the US as expensive but value for money, classic/timeless, British, stylish, luxurious, and elegant. However, whilst perceived as exclusive in the US, it was perceived to be too available to be exclusive in Japan, where it was also seen as not being sufficiently adventurous and contemporary to have the cachet of some lifestyle brands. In the US, Wedgwood was perceived to be too formal and not sufficiently contemporary for audiences such as Generation X whereas it was very desirable to other segments such as empty nesters. In Japan, Wedgwood was considered a safe choice for all segments which would reflect well on giver and receiver.
 
Thirdly, the industry is still trying to define target consumers.  In the UK, much of the tableware industry used a combination of product usage/type and price (point) with which to segment.  Thus, according to Mintel approximately ? of sales value is contributed by casual dining and ? by formal dining ware.  (Casual dining is defined as having an average price point of around £10 for a plate.) 
 
Some manufacturers were thinking in terms of fashionable, traditional or brand conscious consumers; others were considering social class, life stage, lifestyle and various combinations of these; yet others were segmenting some markets on the basis of occasion. In many cases, formal consumer market research used profile, lifestage and lifestyle segmentation whereas management tended to make decisions based on internal qualitative perceptions of typical customers.

In Japan new general consumer segments were seen to be arising out of changed economic and social circumstances.  Working single women, aged 25-34, who still live with their parents, now number about 10 million.  On average, they are estimated to spend about £2,500 a year on fashion goods.  Viewed negatively by many, they are referred to ‘parasite singles’.  Another growing segment is formed by couples with double incomes and no children.  The silver (older age groups) market is also increasing in size.#p#分頁標題#e#

Fourthly, Wedgwood (in particular) is continuing to adapt and refine what its brand stands for and how this should relate to the company’s mission and vision.  One aspect of this relates to the brand’s rich English heritage but with the desire to be seen as contemporary rather than old fashioned. There was a general feeling within much of the company that Wedgwood should seek to become a luxury lifestyle brand, following in the mould of  Burberry, Gucci, Prada and Tiffany. This would allow it to expand beyond its product focus and craftsmanship base into a much wider range of lifestyle categories. An important role in implementing this strategy would be played by Wedgwood iconography. For example, a tiny Jasper ware motif already appears in the centre of Wedgwood cufflinks. However, there were some fears that extending the brand too far would cause a loss of credibility and a shift towards more accessibility but less premium status.
 
Changing the public perception of Wedgwood from purveyor of wedding china to ‘lifestyle’ brand has involved a number of initiatives. Alliances with high profile designers has tried to restore Wedgwood’s reputation for being a leader of fashion as in the days of Josiah Wedgwood. One collaborator is Vera Wang who says “The wonderful thing about china is that it is such a personal decision. It has to do with your lifestyle, your taste, your personal sense of style. With how you like to entertain and what you like to eat. It’s one of the foundations of starting a home.”

Jasper Conran has designed a range of pure white china, complemented by a number of shimmering pieces in Wedgwood Jasper ware to present a strong 英國dissertation網英國dissertation網contemporary look in tune with modern living. The elegantly sculptured pieces in the collection may look like works of art but are ideal for use throughout the day. The range has all the simplicity and elegance of Jasper Conran’s catwalk collections.

A second initiative is explained by Tony O’Reilly (the son of Sir Anthony O’Reilly, the Heinz magnate and chairman of Waterford Wedgwood). ‘Since the 18th century Wedgwood has been at the forefront of innovation and design, but today it is primarily seen as a plate manufacturer. We have become a sleeping giant and need to reacquaint ourselves with our customers.  This means providing them with a total retail experience.  We already do this in Japan, where our stores are at the cutting edge of retail design, but in this country our flagship store was an abomination. The Regent Street flagship store used to display every piece of every range regardless of their often clashing styles.  The result was a chaos in which Peter Rabbit bowls collided with the latest Jasper Conran tableware, while brides-to-be tried to pick out their wedding china.  The new store will be a destination and an experience’#p#分頁標題#e#

In the important luxury brand market of Japan, there has also been dramatic social and economic change. The extended Japanese recession has seen a significant decline in the ceramic tableware market. Despite being awash with cash, Japanese consumers have saved rather than spent on the luxuries they prize – including Western luxury brands. The end of guaranteed lifetime employment, worries over pensions and the loss of confidence in Government and financial institutions have all contributed. Demographic changes such as fewer children and the most rapidly ageing population of all the industrialised countries have occurred. Socially, Japan is no longer such a homogeneous nation.  Far more emphasis is today put on individuality and “customisation” than before, with value-for-money playing an increasingly important role in consumers’ decisions.  This has been reflected in changes in marketing channels with, for example, supermarkets playing a much larger role (although more at the expense of small shops rather than the position of the world class department stores).

In the middle 1990’s Wedgwood was forced to significantly reduce prices as Japanese consumers, accustomed to travelling the world, saw price levels which were much lower in other countries. They responded by buying through the parallel market either in the form of personal imports or through unofficial traders. The main causes of the price differentials were the markups added by lengthy vertical channels combined with the depreciation of the yen. The price reductions harmed profit margins and also affected brand perceptions.

Other cultural changes which impacted directly on Wedgwood included a decline in the traditional Japanese customs of formal and corporate gift giving. In personal gifting, a china cup and saucer is still the gift and many households have impressive collections. However, younger gift givers are beginning to depart from this and buy with the recipient’s specific needs in mind. Tea remains a central part of Japanese life with Japanese tea ceremonies celebrating special family occasions. English tea and scones are often served in English bone china on other social occasions.

 “We have a number of approaches in terms of how we present Wedgwood as a superb lifestyle brand,” says Hanspeter Kappeler, President of Waterford Wedgwood Japan.  “The ultimate validation of our status as a luxury brand here is demonstrating that it is a luxury for department stores to have us present.  For fine imported brands in this country, department stores are the place to be.”
 
Based on his previous experience of developing both the Chanel and Dior cosmetic brands into “number one” leadership positions in Japan, where the largest 15 department stores each draw more than 30 million customers annually, Kappeler’s first strategic move was to reduce the number of department stores in which Wedgwood was present from 230 to 100. “I believe it is very important to balance any quick gains in short-term sales from wider distribution against the exclusivity of Wedgwood’s brand value.  We must not underestimate Wedgwood’s inherent brand value,” argued Kappeler.#p#分頁標題#e#
 
Not only did reducing the number of stores support Wedgwood’s brand exclusivity, but it enabled Wedgwood to increase space within the best stores.  “Wedgwood Japan continued to flourish in terms of sales and profits; our department store alliances benefited from our strong and exclusive brand presence within their stores; and our loyal customers responded very positively to the marvellous shopping and brand experience we were able to offer.”

To showcase Wedgwood’s casual products distinctly from its more formal luxury lines, “My Life” boutiques were established in a number of department stores in a separate area from the main Wedgwood shops.  These featured Wedgwood earthenware and many non-ceramic products. Wedgwood Fine Living mini-boutiques display the growing range of Wedgwood linens for table, bed and bath and are found on yet another floor in department stores Traditionally, Japanese department stores have food halls in their basement areas, and this is where many Wedgwood Fine Taste corners are to be found featuring Wedgwood’s line of teas and English food products, which have grown increasingly popular. Wedgwood has also launched five Wedgwood tea rooms in department stores, featuring both Wedgwood products and light English-style meals that reflect the company’s roots. Barlaston Green Salad, for example, is a popular offering.

Tasks: Please note you may choose EITHER Task 1 OR Task 2

Recommend and justify a ‘whole channel’ market entry mode strategy for Wedgwood into Mexico OR Russia (100% of marks)

Recommend whether Wedgwood should cease UK production of its brand and reduce costs by manufacturing in, or outsourcing to, a lower cost country. Your recommendation must be based on the likely impact on Wedgwood’s brand image in general and in some key international markets.
(100% of marks)

Assessment criteria for Task 1

In order to achieve a pass, you must:
Apply an appropriate and explicit model to inform your decision
Take a detailed account of the relevant factors relating to the business environment of Mexico OR Russia
Use some academic text AND journal article references to underpin and justify your arguments

In order to achieve a merit, you must fulfil the above, plus:
1.Reference more widely
2.Demonstrate maturity AND depth of thought in evaluating the application of theory to Wedgwood’s specific situation
3. Discuss and evaluate some alternative approaches to market entry mode selection

In order to achieve a distinction, you must fulfil the above, plus one or more of the following:
1. Use an extensive source of recent journal articles
2 Critique theory and models as appropriate and propose an adapted market entry mode selection model incorporating new insights

Assessment criteria for Task 2

In order to achieve a pass, you must:#p#分頁標題#e#
Apply an appropriate and explicit model to inform your decision
Take a detailed account of the overall nature and essence of the Wedgwood brand
Use some academic text AND journal article references to underpin and justify your arguments

In order to achieve a merit, you must fulfil the above, plus:
1.Reference more widely
2.Demonstrate maturity AND depth of thought in evaluating the application of country of origin and branding theory to Wedgwood’s specific situation
3. Discuss and evaluate some alternative approaches to country of origin and branding theory

In order to achieve a distinction, you must fulfil the above, plus one or more of the following:
1. Use an extensive source of recent journal articles
2 Critique theory and models as appropriate and propose an adapted model for informing the country of manufacture decision

Appendices

Constraints On Your Use Of Appendices:

Appendices do not count towards your word limit
However, up to (and no more than) 8 sides of A4 may be submitted as appendices
You may use appendices to submit supporting short articles/documents that you have found which are important to support any analysis and/or plans you put forward
Each article you use should be accompanied by a short commentary (within the Appendices, but cross-referenced to the main analysis/plan), explaining its relevance to your work
Please do not submit numerous pages of unsorted/downloaded web pages, nor extensive consumer/research reports. Where you wish to draw upon material sourced from long articles, it is up to you to:
Select and summarise the appropriate sections & information;
Where applicable, to provide the relevant content in the concise form of tables, graphs, charts or lists
Ensure that all material used is properly referenced at all times (see full guidelines below).

All Information Must Be Properly And Fully Referenced:

This requirement applies if you use any sources of evidence, including:
Company promotional material
Commercially-produced reports (Mintel, Keynote, GMID,or special commissions)
Academic research reports
Newspaper articles or editorial
Magazine articles
Academic journal articles from the marketing/business subject or other areas
Web pages
Books
Interviews
Any reference data (e.g. Government data)

You should make use of the library and the Internet for accessing suitable sources of data, and the University has databases such as:
Emerald
Ebscohost
FAME
BRAD
Lexus Nexus

ADDITIONAL INFORMATION TO TAKE CAREFUL NOTE OF:

Plagiarism

Contrary to popular student belief getting caught and being punished for committing plagiarism is not a rare occurrence. The Marketing Team typically uncovers and reports for disciplinary action between 6 and 12 students each year.

We strongly recommend that you read the full document at the above address. Summarised below are some of the key points. You will have committed plagiarism and may be caught, reported and punished (as described below) if you:#p#分頁標題#e#
Copy extensively from the work of others (from sources such as books, magazines, journals, web-sites for example) and submit the work as your own. NB It is acceptable to refer to the work of others as long as you do not use too much, and reference your sources properly .
Copy another student’s work and submit it for assessment under your own name.
Allow another student to copy your work and they then submit it for assessment under their name.
英國dissertation網The last item is of particular importance; few students seem to understand what it means. You should be aware that if, for example, you allow another student to borrow your work and they subsequently copy some of that work and present it as their own, you and they will both be punished even though they copied your work.

What happens if you get caught?
Examination Boards may punish offending students in a number of ways. Typically, punishments range from reducing grades, making students re-sit modules, through to failing students on a module or an entire award.

The University regards this form of cheating as a serious offence.
Please consider yourself warned!