1. (a) Discuss the extent to which you think MontGras can control its own market position, as opposed to being dominated by the country-of-origin effect, and be perceived as a “Chilean Wine”? (8 points) MontGras aim was to produce higher-quality wines, they can use this strategy as a competitive advantage to market and export the wine and extend its market also. While the other Chilean wine producers focused on selling cheap wine and using the “Chilean Wine” campaign to market the wine in the United States, United Kingdom , Germany and Japan. MontGras used the breakaway positioning to produce higher-quality wines that commanded premium prices. This could help MontGras to control its market as compared to the other Chilean wine producers whose focus concentrated on producing same quality wine at a low price to sell internationally.
Therefore MontGras, has a niche market compared to its competitors who are concentrating on the low priced wine by MontGras . Wine consumers select the type of wine using the country of origin, and since Chile did not have an attractive image as a country this made it hard to market the “Chilean wine”. MontGras need to use the price strategy to market the wine other than using the country of origin as a positioning strategy. Because if they use the “Chilean wine” campaign then they will have competition from the many markets players in Chile who focused on export.
(b) What implications does this have for marketing strategy? (7 points) MontGras will have a well-established niche market from the consumers that look for a premium quality wine and therefore they will face less competition from the other low priced Chilean wines. The price strategy will create a brand image in the consumer’s mind since high price is a guarantee of a quality wine. Chilean wine industry had many players in 2006 and by participating at the “Chilean wine campaign” MontGras would not attract customers due to the competition from the Chilean well established brands. MontGras need to position its market more strategically by using price and quality than following the campaign which would be a waste of time and less sales.
2. Evaluate the US and UK options separately. For each country, which option would you recommend and why? (15 points) UK was the major export destination for the MontGras wine at the same time MontGras had grown to be one of the top 10 Chilean wine exporters to the UK. This means the UK distributors had created a ready market for MontGras wine and Middleton needed to keep this relationship. MontGras marketing strategy was to sell higher quality wines at a premium price. Therefore, Middleton should establish the premise channel to be branded DeGras meaning they continue to supply wine to the restaurant’s and keep the customers. At the same time they can take advantage of Tesbury offer and keep the off premise channel name MontGras to sell the wine to the regular store customers.
MontGras in the end will keep both restaurant and supermarket customers and in the long run the distributors will keep distributing DeGras to the restaurants. With the change of wine names the restaurant consumers will not worry about the price differences. US market was not as responsive as the UK Market to the MontGras wine. MontGras was having a difficult time getting a distributor for the US market and they were forced to terminate two of the contracts. The consultant came up with two strategies for MontGras to implement, either to use the World Wine Importers or Cabo imports to distribute the wine in the US. The World Wine Importers was a fast growing wine distributor that had selling 200 different wine brands. This distributor could fail MontGras like it happened in 1999, when the sales forces did not even know the wine brand.
The marketing strategy offered by MontGras was promising low sales and prices which could have affected MontGras in the long run and also change its brand which was selling wine at a premium price. Comparing the revenue of the two distributors Cabo Imports revenue was $120 million and World Wide Importers revenue was $200 million which shows that the Cabo imports was performing very well since it was distributing just 50 different wine brands. Thus for the US market I would suggest Middleton to choose Cabo investment since they wanted to maintain MontGras premium price and quality wine. MontGras need to position themselves in the US market and by establishing the champion brand it would attract more customer. By having the MontGras employee to oversee the US market would be a good thing because the employee will track the performance of the distributor in the US.