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AMB336 Assessment 1
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Tassy Gold - Case Analysis
Word Count: 1540/1650

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Cooper Luskan, n9465812
Tutor: Gilbert Cruz-Carreon

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Section 1)

Tassy Gold is a Tasmanian company that specialises in the production, distribution and retail
of premium woollen skirts. The company’s production has been outsourced to Vietnam, and
as the marketing manager it is my job to recommend the entry into one of two possible
markets: France or Russia. The chosen country will be Russia, due to its luxury market, which
is growing markedly faster than more mature markets such as France (Rakhlenko, 2017). The
market has shown increases in luxury spending “in all categories of upmarket commodities”
(Karnaukh, 2017), and as a result, it has been selected as the point of entry for the brands
international sales efforts, due to its rapid growth and less established industry and
competitors.

Social awareness amongst consumers is on the rise; however they expect businesses to lead
the way (Bonini & Oppenheim, 2008). As such brands that are seen to be socially responsible
(CSR) are able to capitalize on this positive point of difference and generate favourable
stakeholder attitudes, such as purchasing behaviour and brand loyalty (Du, Bhattacharya, &
Sen, 2010). Some of the most relevant ethical issues for the business in this instance are the
production practices used in the outsourced production environment, the methods used to
harvest the wool used for the brands products, and the quality of the product.

Table 1: Tassy Gold Ethical Issues

Labour Practices Sourcing of Wool Product Quality


Being an emerging market, Vietnam has The brand has a positive point of Quality is an integral part of any ethical
the potential for lowered labour costs, difference, as Tasmania is known production (Pace, 2007), and it can be
but with this comes the possibility of worldwide for the quality of its wool argued that it is unethical to sell a
workers being taken advantage of. (Ortovox, n.d.). “We’re not just selling product that is not of sufficient quality
Reports from the International Labor wool - we’re selling the way that it’s for its purpose. Halis, Akowa, and
Rights Forum (2014) show that some produced, the way we look after our Tagraf (2007), state that “it would not
30,000 Vietnamese people are held in sheep and the way we look after the be an overstatement to argue that
forced labour camps, and furthermore, land that wool is produced from” quality is (the) embodiment of ethics”
that work done by these ‘slaves’ has (Griplas, 2016), sums up perfectly the drawing distinct parallels between the
found its way into the supply chains of reputation and expectation of quality two concepts. The concept of a price-
global clothing producers. Research has and ethics that come with the quality interaction adds a third
shown that customers are likely to product Tassy Gold is selling. This dimension to this argument. In a study
positively evaluate CSR efforts if they conditions the consumer to associate by Brucks, Zeithaml, and Naylor (2000),
fall in line with their own morals and ethical treatment with product it was found that when assessing luxury
values (as cited in Green & Peloza, quality, a phenomenon that is already products (such as Tassy Gold’s),
2011). As such it would be reasonable to clearly visible in the beef industry, consumers frequently asked for price
infer that wealthy consumers value where “the most ethically farmed and brand name information to make a
degrees of freedom and consent, and cows produce the tastiest meat” judgement on a products quality. This
would respond positively to proof of (Rivera, 2017). In the context of indicates that in luxury products, a
ethical production practices, even in a Russia, however, World Animal price-quality interaction may very well
restrictive country such as Russia. Protection notes that there is little to exist, and it could be considered
Further research (Vorobyeva, 2015) no legislation regarding animal rights unethical for a brand to inaccurately
indicates that Russian consumers in the country, however the above represent the product they provide by
perceive “actively benefiting from illegal interaction between quality and poorly reflecting its quality in its price.
activity” as unethical, falling in line with ethical treatment of the animals will
my previous statements. still hold true as a value-adding
component of the product amongst
the wealthy target market.

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Section 2)

With an international sales venture, Tassy Gold needs to understand that marketing from
Australia to a higher context collectivist society such as Russia (Engelhard & Nägele, 2003) is
a complex task. Communication is often more nuanced, and the listener is required to “read
between the lines” (Maclachlan, 2010), unlike in Australia where communication tends to be
more straightforward. As stated in section 1, there are vast arrays of issues that need to be
considered in relation to the socio-cultural and consumer behaviour aspects of a venture
such as this; however the most relevant issues (and the ethical implications associated with
them) are as follows:

 Country of Origin Effect


Historically, many studies have confirmed COO as a notable determinant of a
consumers purchase decision, an effect which is largely based on stereotype (Bilkey
& Nes, 1982; Suh, Hur, & Davies, 2016). This effect states that in the absence of
other meaningful stimuli, the customer will use the country of origin to make
decisions on aspects such as quality. However, research by Yim Wong, Polonsky, &
Garma, (2008) has shown that COO has no direct effect on a consumers purchase
intentions for a high involvement product in the Chinese market. This can be
reasonably adapted to the Russian market, as both cultures are high context, place
value on family and groups, and have shown growth recently in the luxury market
(Jourdan, 2018; Karnaukh, 2017; Rakhlenko, 2017) . Furthermore, brand has been
found to have a greater influence than COO on high involvement consumer products
(Ahmed et al., 2004), meaning that if Tassy Gold leverages its quality Tasmanian
wool it can gain the advantages of outsourced production and retain those of a
Tasmanian COO.
The ethical implications of labour will trickle down into the product. Umstot, Bell Jr,
& Mitchell, (1976) have shown that job enrichment and goal setting have a major
impact on job satisfaction and performance respectively, indicating that making your
employees happy (treating them ethically) increases productivity and product
quality.
Sourcing of wool is a relevant ethical issue in this instance. Tassy Gold is using the
reputation of its Tasmanian wool to give their products a perception of high quality,
which is reflected in the price. If the brand doesn’t follow through with this implied
promise of quality, the communications can be seen as untruthful advertising.
Furthermore, as discussed in section 1, the ethical treatment of the sheep in the
company’s supply chain is one of the value-adding components for Tasmanian wool
producers (Griplas, 2016). If this factor were to be eliminated, then it would negate
all benefits associated with the high quality Tasmanian source.

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 Cultural Differences
Russia is a high context culture which varies drastically from the environment we as
a company are accustomed to. Using information taken from Maclachlan (2010), I
will apply Trompenaars’ Dimensions of Culture (Mind Tools, n.d.) to the Russian
consumer.
1) Russians are a particularist culture, believing that some rules can be
bent (Vorobyeva, 2015) and there isn’t a “one size fits all” approach to
all situations. Relationships are important, especially in business.
2) Russians are a communitarianist culture. With roots in agriculture and
farming communities, Russians think about the effect of their actions
upon the group, not the individual.
3) Russians are a diffuse culture. Work and social lives overlap, because
people see relationships as key to doing business.
4) Russians are an affective culture, however being high context, some
things aren’t explicitly stated. Furthers importance of relationships in
business.
5) Russians value ascription, with position and age being key indicators of
status.
6) Russians perceive time as synchronous. They are extremely patient, and
can work on multiple things at once. Commitments can be viewed as
flexible.
7) Finally, Russians believe in outer direction. They believe that their
environment controls them, and their actions are chosen to positively
impact others. They often need re-assurance that they’re doing the right
thing.

Through analysis of the Russian dimensions of culture dissected above, a number of


important factors can be highlighted. These are often looked at from a B2B
perspective, but can be adapted effectively to the B2C marketing of Tassy Gold. The
Russian consumers value relationships highly, and value benefiting “their group.”
This indicates an empathy-response towards the fellow human, indicating that
forced labour situations would not be received well by the community oriented
market (as cited in Green & Peloza, 2011), decreasing sales due to decreased
organisational effectiveness (Jin and Drozdenko, 2010).

Product quality/price is also highly important, as in a high context relationship


oriented society, word of mouth gains even more importance, as “consumers tend
to place more trust in WOM from people they know personally” (as cited in Lam,
Lee, & Mizerski, 2009). If the product’s quality-price interaction isn’t what is
expected, negative WOM will result, greatly damaging the brands image in this
society.

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Section 3)

As a result of the information collated in this report, I will be making a number of


recommendations for Tassy Gold’s entry into the Russian market, via Vietnamese production
methods.

 Recommendation 1 – Targeted Marketing Communications


To accurately target marketing materials to the businesses target market, it is
imperative that we as marketers understand what drives our customer to make
purchase decisions. Based on information from the Trompenaars’ Dimensions of
Culture framework (Maclachlan,2010; Mind Tools, n.d.), it is clear that Russian’s
tend to be group oriented, and highly value relationships. Furthermore, the Russian
community base status off metrics like age and business position, unlike western
countries like Australia, where this is based on performance, presentation, and
actions. Therefore it is recommended that Tassy Gold focus marketing activities
towards affluent members of the Russian society, with the purchasing power and
status to warrant the purchase of luxury items. The brand can also capitalise on the
close-knit family aspect of the Tasmanian wool industry it is a part of, to relate to
the Russian societies group and relationship oriented values. I.e. if the individual
fails the group, the group fails. If Tassy Gold fails to live up to the brand image of the
Tasmanian wool industry, it is failing all Tasmanian wool producers.
 Recommendation 2 – Country Of Origin
Research cited in Section 2 by by Yim Wong, Polonsky, & Garma, (2008) indicated
that high-involvement products like Tassy Gold’s are not impacted negatively by
COO, which in this case is Vietnam. Furthermore, supporting data from Ahmed et al.,
(2004), has shown that a brand’s image has a greater effect on customer
perceptions than the products COO. Tassy Gold can use this to its advantage, as the
brand’s communications are centred on Tasmania – one of the world’s most
premium wool producers – being the source of the wool for its products. This allows
the brand to circumvent any negative associations from a Vietnamese COO, and
retain all positive aspects of the secondary COO – Tasmania, as it has been shown
that “when a foreign country's favorable image is skillfully projected onto a …
product, it can boost the chance of successful market entry” (Ahmed et al., 2004).
 Recommendation 3 – Adopt Stringent Work Standards
As shown in the company’s preliminary research, the Vietnamese production
environment offers markedly lower costs of labour than its Australian counterpart.
This is perfectly fine, as research shows Country of Origin judgements are generally
made primarily based on stereotype (Bilkey & Nes, 1982; Suh, Hur, & Davies, 2016),
and lower costs do not equal lower quality. My research has shown that there is the
potential for unfair labour practices to occur in Vietnam, and to enter even large
company’s supply chains (International Labor Rights Forum, 2014). The solution for
the business is simple. Tassy Gold needs to use the same standards governing labour
practice in Vietnam as it does in Australia. This allows for happy staff, which in turn
leads to increases in productivity and quality, and still provides the company with
greatly decreased production costs (Umstot, Bell Jr, & Mitchell, 1976).

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