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The focus of this report aims to discuss how market segmentation and the interdisciplinary nature of consumer’s behaviour research applies to China and how it differs to Australia. These two aspects are two driving forces that assist organisations expanding domestically or globally however the implementation of these aspects is what differentiates a success or a failure of a firm. This has allowed for a marketing opportunity to arise in which Australia can export wine to China.
Background/ Market Opportunity of Wine
One of Australia’s main exports to China is wine as it characterises the fourth largest wine exporting nation (Australian wine and Branding Corporation 2009, paras 1). China provides a marketable and competitive opportunity for Australian wine corporations as it is a growing economy with an emerging market for wine. The emergence of wine is evident by research by Australian government on the “Australian Wine and Brandy Corporation” that red wine is favoured with 94% of consumers. Some of the main initiators of the development include increase in disposable incomes and the promotion of health benefits of wine (Australian Wine and Branding Corporation 2009, paras 2-3 ) This implies that Australian wine corporations need to incorporate aspects of market segmentation and interdisciplinary nature of consumer behaviour research in order to identify the requirements and expectations of selling in China which distinctively varies in comparison to Australian business practices.
Market Segmentation is the first important step in a three phase marketing strategy. It is the process of dividing a market into subgroups based on common needs or characteristics in order to target with a distinct marketing strategy (Schiffman, Bendall, O’Cass, Paladino, Ward, & Kanuk 2008, p.30). The strategy of market segmentation continues to be commonly adopted by all companies around the globe in all geographic locations especially in the Asia Pacific Region where Australia and China are some powerful forces. This is conveyed through the six segmentation bases of geographic, behavioural/psychographic, sociocultural, user related and benefit segmentation (Schiffman et all, 2008,pp. 30-40) 1. Geographic Segmentation:
In geographic segmentation the market is divided by location as people living in some areas have different needs and wants to people living in other areas. According to Schmitt (1996, p.192) the Chinese consumer market is a geographically fragmented market. This geographic variable is conveyed through the emphasis of firms in the large cities of Beijing and Shanghai avoiding targeting suburbanite areas were consumers value $384 million (Schmitt, 1996, p.2). This is due to insufficiencies in infrastructure and distribution strategies which exemplifies a failure of accessibility which is one of the main forces of market segmentation. In comparison geographic segmentation is not implemented as strong in Australia due to the market having minimum differences between various states, cities and regional centres. Geographic segmentation in China provides an opportunity for Australian exporters from the wine industry to target a western style of wine that is becoming more favourable. This is shown in how exports of wine have increased from 32 to 48 million in 2008 (Data Monitor, 2009, p.1) 2. Demographic Segmentation:
Demographic segmentation focuses on characteristics such as age, sex, marital status, income, occupation and education (Schiffman et al, 1998, pp. 32-33). Demographics help to locate a target market. China is one of the growing economies of the world with its working age population of (15-25) set to peak at 997.71 million people in 2015 according to (Business Monitor International, p.26). In contrast