Chateau Margaux was serving the market with their premium first wine Grand Vin and Second wine Pavillon Rouge de Chateau Margaux. Owing to the premium taste and quality of these wines, Chateau Margaux become quite popular among connoisseurs. In the production of Chateau Margaux’s first and second wine, the company used special precautions and only choose high quality material for the its production. In this process, a huge quantity of total production was separated which was considered left over by the company. This leftover sometimes comprises around 35% of total production.

Background Analysis

Chateau Margaux was serving the market with their premium first wine Grand Vin and Second wine Pavillon Rouge de Chateau Margaux. Owing to the premium taste and quality of these wines, Chateau Margaux become quite popular among connoisseurs. In the production of Chateau Margaux’s first and second wine, the company used special precautions and only choose high quality material for the its production. In this process, a huge quantity of total production was separated which was considered left over by the company. This leftover sometimes comprises around 35% of total production. However, Chateau Margaux was working each year on improving the quality of their first and second wines which was possible through improving overall procedure. In this process, the quality of ‘leftover’ was reached to a level which made the management to think about utilizing it differently. Previously, Chateau Margaux didn’t care much about the leftover and it was sold in bulk to local merchants. Nevertheless, the vintage of 2009 tasted so good that Chateau Margaux decided to sell their left over from first wine Grand Vin and Second wine Pavillon Rouge de Chateau Margaux as third wine. For this purpose, the management didn’t sell the leftover to the merchants and kept it for future. In the following years 2010 and 2011, Chateau Margaux also sampled the left over and sampled it for third wine. Though, Corrinne Mentzelopoulos, owner of Chateau Margaux wasn’t sure how to market it. The demand for quality wines was historically present in old world countries such as France, Italy and Spain. Notwithstanding, the demand is shifting to other countries such as US, Australia and China. Surprisingly, China has surpassed many countries in wine consumption and their policies are aligned with it. Traditionally, Chateau Margaux used negociants to sell their wine. Selling through negociants had its own pros and cons. The good thing about these negociants was they paid the wine makers like Chateau Margaux and others even before the wine is delivered. It enabled Chateau Margaux and others to start the production for next year. Nonetheless, the prices were controlled by the negociants and the Chateaux owners had very little influence on it. Critics also played an important role in the whole. Process. Renowned critics such as Robert Parker Wine advocate and others sampled thousands of wines and rated them according to the quality. This rating was considered all along the market in setting prices and marketing the premium wines. Various options were considered for marketing third wine. The consumer has been divided into six categories based on various categories, named as enthusiasts, image seekers, savvy shoppers, traditionalists, overwhelmed and satisfied sippers. One of the easiest ways was to sell them to negociants as they would easily buy it in the half price of Chateau Margaux’s second wine. Yet, it was not a wiser decision as it would totally land in China and the traditional markets of Chateau Margaux like UK, US, Japan and France would be ignored who have been previously priced out due to extremely high prices of first and second wine.

Key issues discussion:

We have to consider various market aspects before the launch of third wine from Chateau Margaux. Some of them are mentioned below:

The role of negociants:

Historically the role of negociants was considered very crucial but in current times we have multiple options to avoid them if they are not agreed to deal fairly. Through the development in technology, we can connect with any importer, supplier, state dealer or other super market and restaurant owners and negotiate impartially on our terms. No doubt, negociant do provide a sense of relaxations to the producers as they don’t have to worry about the marketing side of the Margaux. However, in order to expand globally and have a sustainable marketing approach, businesses must develop their own independent marketing strategy which is not significantly relied on other forces.

Protecting the authenticity:

As Chateau Margaux is going to launch the third wine, another important aspect is to keep the brand authenticity and brand image aligned with previous products. Chateau Margaux is known for its exclusive quality and perfection. The management has to keep this authenticity alive and set the pricing strategy accordingly. Moreover, Chateau Margaux’s management must also avoid excessive penetration strategies to maintain the exclusivity of the brand to an optimum level.

Bringing the loyal customers back:

Through various market factors mentioned earlier, the old and loyal customers of Chateau Margaux have been priced out and cannot afford the first and second wine of the company. Third wine must be a game changer to bring back those loyal customers as the quality of this product is not less than any second wine of previous years. In this regard, the management at Chateau Margaux must target the loyal customers in old world countries and keep the pricing strategy aligned with the purchase power.

Marketing the third wine:

Previously Chateau Margaux was not involved in any sort of marketing but the market dynamics has been changed. In the past, 100% of the Chateau Margaux’s products were purchased by connoisseurs. However, this percentage is divided to 60% connoisseurs and 40% luxury buyers. Chateau Margaux has to develop a marketing strategy that encompasses all segments. Although Chateau Margaux has started attending and promoting marketing events, it’s not enough. The company must put attention on new marketing channels such as using media technology, hiring celebrities as brand ambassadors and signing agreements with famous restaurants in each major city of the world. Yet, Chateau Margaux’s management must also focus on increasing production as if the demand increases and they aren’t able to do cater it, their loyal and old customers from old world markets would be again ‘priced out’.

Communication:

The most important thing that would be considered in the communication strategy is to maintain the authenticity of the brand. As we know communication is connecting with your audience in a meaningful way. “Promotion” is usually conceived as a way of placing evidence of your product or service. However, in effective communication we build a link of trust and loyalty. The communication strategy for Chateau Margaux is mentioned below:

Personal selling:

As Chateau Margaux is planning to bring on board restaurants in major cities, personal selling would provide a good value to the third wine. Sommeliers in these hotels would be provided special information and manuals to inform them about the values of Chateau Margaux and how it’s brand image should be perceived. These Sommeliers could be provided with special incentives for promoting Chateau Margaux’s third wine.

Public relation:

Chateau Margaux is already engaging itself in various events and galas arranged in order to promote the products in international markets. These practices can be evolved to press conferences involving various wine critics, newspaper advertorials, social media campaigns and community involvement as it creates a buzz in the public.

Sponsorships:

Chateau Margaux can sponsor events in new markets where they are willing to make presence. For instance, in China, there are multiple sports events and social festivals which can be sponsored by Chateau Margaux. We will go with Margaux du Chateau Margaux as suggested by management as it resonates with the overall brand image of Chateau Margaux.

Branding:

Before starting promoting and advertising our product, we have to define our values. As the evidence shows, Chateau Margaux has never compromised on the quality of its products and always to strived to improve it day by day. Moreover, the management at Chateau Margaux value their old loyal customers and want them back rather than focusing on generating excessive profits by comprising the quality.

Identify audience:

Chateau Margaux will focus on brining the loyal customers back through setting reasonable prices and also attracting new wine lovers such as people in China and other countries to develop an inclusive pool of connoisseurs and luxury buyers.

Analyze competitors:

Latour has provided us a benchmark for setting prices and tone for third wine. We will also keep the prices of our bottles between $100 to $150. Latour’s third wines parker score was 90 and they produced 6000-9000 cases. This information will help Chateau Margaux to manage its third wine in an effective way.

Marketing messages and assets:

As Chateau Margaux’s production capacity is limited, they can’t go for excessive marketing and penetration strategies. We will use social media effectively to reach our target audience in specific locations. Moreover, social media influencers in wine can also be contacted for PR purposes.

Evaluation and feedback:

We will regularly take feedback from our valued customers and revisit our campaign if changes are required.

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