Château Margaux: Launching the Third Wine Harvard Case Solution & Analysis

Arguments for now “Going against” her Father’s Vision

Andre Mentzelopoulos bought the Chateau Margaux in 1977. Previously the idea of the third wine rejected in order to maintain the tradition and high quality and it was expected that the quality left after the two wines doesn’t meet the required quality and goals of the company. But increase in uneven demand of the wine and the removal of legislation barrier regarding wine production increases the number of suppliers and decrease in prices. As compared to the other wine producers, the prices of the first two wines increases continuously and reaches more than 1000 dollar per bottle for fist quality premium wines and more than 200 dollar per bottle for second wine.

The trend of the wine purchasing at high markup bars and restaurant was just 20% of the consumption and remaining 80% from the grocery and retail stores that sold wine directly to the users. Uneven demand and decrease in consumption of premium priced wines results in the decrease in demand of the first and second wine of the company.

In addition to decrease in demands of these wines, the volume of the third wine which is the by product of the first two wines is 20% greater than the total production of the wines. The taste of the third wine is also pleasant and it is expected that the wine consumer will show a great response towards the third wine, these all factors encourage the Mentzelopoulos to go against her father’s vision and planned to launch third wine properly.

Target Market for the New Wine

According to the research and analysis the core and loyal customers of the company becomes unable in getting the wine like the consumer of the wine from traditional market like Japan, US, UK and France. It is expected that the users of the wine from these markets have knowledge about the unique quality of the company regarding the production of wine and used to purchase its wine due to uniqueness and high quality.

 From last few years due to increase in number of wine producers the company is unable to reach that market, therefore it is expected that targeting the traditional market through the third wine will helps the company in getting back its local customers and due its pleasant taste and low price it would also help the company to fight with the public image which considers Chateau Margaux a premium and luxury wine brand.

Plan of Action

The Chateau Margaux is facing the problem of increase in uncontrollable price of its wines and due to increase in price as compared to the other producers of the wine, the demand of its first and second wine is reducing because the consumer of the premium wines are low in percentage as compared to the consumers of basic priced wine.

Therefore the first recommended course of action is to control the prices and getting back the users of its wine who are willing to use its wine but shift to the others due to very high price. The company has significant number of wine users in traditional market markets like Japan, US, UK and France but due to the larger number of wine producers and poor marketing strategy the traditional users are unable to access the Chateau Margaux wine. These traditional users are considered as the loyal customers of the company and they also know about the uniqueness and high quality of the wine that company produced therefore selling wine direct to these loyal users by establishing own distribution channels in these markets should make possible in order to fight with the current problems.

In addition to this in order to create awareness in the new world and users of wine about the brand the company should take part in public relations, fairs and events of that companies which could also help the company in fighting with the current problems.

Suggested Strategic Moves

Chateau Margaux is currently facing the problem of the increase in prices of its wines and the company is dealing in the market with only two wines. Due to its poor marketing strategies its wine is become inaccessible to traditional wine market therefore the company should improve its marketing strategy rather than being focused on the high quality............................

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