Marketing Case Analysis Coursework
The marketing strategy of Chateau Margaux was based on selling the leftover wine. Because the third wine was good, Mentzelopoulos decided to retain it all and sell it as Chateau Margaux wine (Opec & Vogt, 2013). It was important to create the best marketing plan to promote this wine. Nevertheless, the company made significant strategic and tactical mistakes that have to be analyzed.
Nowadays, the wine-making business significantly increased in new regions. This pattern changed in the second half of the 20th century, as wine-making dramatically increased in the New World, which primarily consisted of the US and southern hemisphere countries (Opec & Vogt, 2013, p. 2). Such a trend forced a vast number of winemakers to lower their prices and sometimes even curb the business.
Not to mention, government measures that ranged from subsidizations to help clear excess capacity to impose restrictions on the planting of vines (Opec & Vogt, 2013). That is why an effective marketing strategy can help determine the most appropriate region for winemaking and selling.
Tactical issues and solutions
One of the major tactical problems was location of marketing. The marketing of this wine was primarily based in China. This choice was determined by evaluation of the percentage of consumers in different regions. Thus, in 2005 the mainland China and Hong-Kong accounted for 4% of sales, but by 2012 that number had climbed to 35% (Opec & Vogt, 2013, p. 8). Of course, China has a big percentage of target market. That is why in 2010 the Chateau Margaux appointed a dedicated person, which was referred to as an ambassador and who met with channel members, wine professionals, and journalists to build relationships (Opec & Vogt, 2013).
Nevertheless, it is still vital to develop a marketing strategy that can speak to a larger audience, rather than focus on a particular region.
Another important tactical issue was the bottling of the third wine. Despite the pleasant taste of the third wine, it was important to preserve previous tactics and sell it in bulk. As a result, the third wine would be sold in large quantities and become popular among a larger audience. The main problem is that by bottling the wine and gradually raising the price, it is easy to lose consumers, who are used to purchasing this wine.
The company had already experienced failure when the price for the second wine was significantly increased. As a result, Mentzepolous said, Our core markets were shocked by the recent price escalation and believed they were unduly inflated by luxury consumers (Opec & Vogt, 2013, p. 9). That is why it is important to be careful with the price for the third wine because it can lead to similar consequences.
High prices can discourage consumers in certain regions from purchasing the product as well as make other companies refuse to collaborate. For instance, the second wine began disappearing from retail stores and restaurant wine lists, similar to what had happened to the first wine a few years ago (Opec & Vogt, 2013, p. 9).
Therefore, the company needs to dwell on the lower price if it plans to promote the third wine to the restaurants and stores. Also, it is vital to regaining influence in other regions besides China. As Pontallier mentioned, The wines have become inaccessible to the core customers in traditional markets, like the US, the UK, Japan, and France, who used to buy these wines regularly (Opec & Vogt, 2013, p.9). That is why to maintain these segments, it is important to keep the law price.
Strategic issues and solutions
Branding is one of the most sophisticated processes in business. For example, it is not easy to create a brand name that can really appeal to the target market. That is why the company faced such difficulties when it started to create a brand name for the third wine.
For example, Menzelopoulos asked the team to carefully consider what name to give the new wine, and argued for the name that conveyed simplicity and authenticity (Opec & Vogt, 2013, p. 11). Nevertheless, there were other suggestions for the brand name. Portlier, for instance, advocated for the name that signaled that it was the third wine ((Opec & Vogt, 2013, case 11). In fact, the best strategy is to create an easy and meaningful brand name, because it is always easy to remember.
Wine production is another vital part in the wine-making business. It also determines the quality of the wine. However, in 2011 the company faced serious problems with wine quality. In the short term, as there were fewer third wine bottles from the 2010 and 2011 vintages, the Chateau faced a decision on how many 2009 vintage bottles to release (Opec & Vogt, 2013, p. 11). It was a tremendous goal that demanded an effective marketing and planning.
There were many suggestions towards this goal. For instance, Valance proposed to sell all the 2009 third wine bottles in 2013 and wait to release some of them with the 2010 vintage (Opec & Vogt, 2013, case 11). Nevertheless, it is a risky decision, because the company could lose potential clients, who are ready to purchase wine in 2009. In addition, the demand for the third wine can easily decrease. Consumers' choices are always hard to predict.
Pontellier knew he could be even more selective in making the first and the second wines, which would result in a greater pool, from which to make the third wine (Opec & Vogt, 2013). However, it was also quite unreliable. That is why the company had to develop a plan that can minimize all risks.
However, Chateau Margaux came up with even more radical plan. Because French regulations allowed the classified growth to add hectares from within their appellation and sell the wines under their own name, an industry insider recommended that Chateau Margaux considers buying an estate in the Margaux region (Opec & Vogt, 2013, p. 11). Of course, this decision would increase the production of wine, but it has significant drawbacks. For example, the grape crop always depends on the weather that can increase as well as decrease the amount and quality of the wine.
Production of wine always depends on the weather. For instance, in 2008, the early fall rains delayed ripening, thus the number of grape clusters per vine was reduced, while the cost of wine was higher (Opec & Vogt, 2013). This period inspired wine-makers to shorten the production of wine and increase its quality. This decision was also influenced by consumers choices.
In fact, the more consumers were willing to pay for the first growth wine, the more incentive was to increase the quality by being more selective (Opec & Vogt, 2013). That is why the company has to preserve the previous production strategy and create an effective branding that can introduce the third wine created in 2009 from the new angle.
Another strategic problem was that the wine has been primarily introduced as a luxury product. According to the Latours conception, the company could sell the wine for 500 EUR per bottle in a single phone call with a minimum distribution or marketing cost (Opec & Vogt, 2013, case 13). Thus, by preserving high price on Latour, the company also developed a risky strategy. That is why the third wine should have an affordable price to appeal to new consumers.
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