Marketing Chateau Margaux

California State University East Bay

CASE ANALYSIS: 3

Marketing Chateau Margaux

GROUP MEMBERS

Darius Branner

Supreet Narula

Abhitej Nibber

Nicholas Razes

Zhou Yong

CLASS DETAILS

MKTG 6215 Marketing Management

Fall 2015

Instructor: Dr. Lan Wu

Question 1: Should Chateau Margaux extend the product line? Why or Why not? (Provide at least two reasons for your decision)

Chateau Margaux should not extend the product line. The next production step would be to create a third wine however the article suggests multiple reason for not doing so. The first reason is the lower priced third wine market has much competition with New World producers (primarily consisting of California, Australia, South Africa and New Zealand. These new world producers have “bigger vineyards and marketing budgets, lower cost, modern production techniques, and increasingly good quality” (pg. 4). In addition to the aforementioned positive attributes, the New World producers also have less regulations on what type of grapes they can grow which allows them more flexibility in processes and quality variations to be able to adequately participate in the very different market than the one Chateau Margaux is currently producing in. Chateau Margaux isn’t equipped to compete in a market that can be categorized as a race to the bottom because while trying to capture lower price points quality is often one of the things sacrificed and that goes directly against Chateau Margaux’s philosophy. General manager Paul Pontallier made it clear by saying, “Our philosophy is to rather earn less than risk quality.”

Producing a third wine could also tarnish the image of the brand. Chateau Margaux has had a long history of being amongst the top wine producers in the world. Historically the Bordeaux wines were the best in the world and with the classification of 1855 they were ranked the best of the best by being classified as a first growth Bordeaux wine. In addition to Chateau Margaux’s long list of accomplishments it has often been called, “the most seductive and elegant of all Bordeaux wines” (pg. 2). Leading wine critic Robert Parker classified it as “a brilliant consistent wine of stunning grace, richness and complexity” (pg. 2). Producing a third wine with grapes bought from another