preserve the Luxury or Extend the Brand?

PRESERVE THE

LUXURY OR EXTEND

THE BRAND

Chateau de Vallois

INTRODUCTION

• Name : Chateau de Vallois • Location: Bordeaux region of France • Category: Wine producer • Products : Grand Vin Du, Puiné. • Classified as a Premier grand cru classéin 1855

CHARACTERS

• Gaspard de Sauveterre: owner • Francois: son • Claire de Valhubert: granddaughter (MBA

graduate) • Jean-Paul Oudineaux: Agriculture engineer,

expert

BACKGROUND

• de Vallois had been steadily profitable since the 1980s.

• Claire planned to join family business. • She wanted de Vallois to enter the

"affordable luxury“ market, selling directly to customers.

• François, her uncle didn’t believe in that proposal.

BRANDS

Grand Vin du Château de Vallois 150,000 bottles each year €100 to €450 up front for a bottle .

Puiné 200,000 bottles each year.

The remaining grapes were sold to other estates on condition that their origin would not be revealed.

Success of Vallois

• The estate had fallen into a slow decline under its lastowner.

• Gaspardand Jean-Paul had restored it to its former glory.

• In a ranking of Bordeaux wine estates that recognizestheir long-term track record in quality and reputation,

PROBLEMS

CLAIRE ‘S DESIRE

François’ Argument

ANALYSIS

Existing Distribution Process

• 70%of still-maturing wine had already been sold to specialist merchants called négociants.

• The négociants bought the wine a year before bottling and then sold it to distributors and importers.

• Customers could not purchase a bottle of wine directly from the château.

New Distribution Process

• There is risk of merchants shifting.

• They have to develop new distribution channel.

• set up own website to allow them to order directly

• Customers can directly purchase.

ALTERNATIVES

COST BENEFIT ANALYSIS

COST • Investment(distribution

channel, marketing, resource expansion)

• Risk of goodwill • Geographical barriers • Process modification • Less profit Margin • Different type of Business • Danger of pursuing the

wrong marketing activities

BENEFIT • More Customers • More usage of brand • Product diversification • Geographical

diversification • More sales • Professional board of

directors because larger business

EXAMPLE IN INDIA

• BOSE- an iconic sound and music device manufacturer.

• Less advertising. • Popularity due to the

quality and loyalty to customers.

• Serves both expensive and affordable market price.

RECOMENDATIONS

REASON BEHIND RECOMENDATION

• In order to retain its competitive advantage, a company needs to realize its full potential, and this includes reaching out to new markets.

• A case of Microsoft : MS was an indomitable entity ten years ago, but has now lost its appeal to Apples, Google, and Facebook of today’s world

CREATED BY HARSHVEER SINGH, JSS NOIDA , during an internship by Prof. Sameer Mathur,

IIM Lucknow. www.IIMInternship.com