Segmentation and Target Audience
Chateau Margaux is French wine brand which is known to be among the world's finest. The market segmentation for the Chateau Margaux is placed at high price and high quality. In the wine industry, the quality of the wine is determined by its price. A higher price means higher quality and vice versa. Chateau Margaux is an expensive wine with good quality and it is a luxury good. The target audiences for this wine are mainly connoisseurs and wealthy people who want luxury goods. For many years, connoisseurs have been the main target audience of the Chateau Margaux but in recent years wealthy people now buy 40% with connoisseurs buying the order 60%. Most of the wealthy people who buy this wine are mainly in China. The target audiences of the Chateau Margaux are people who want to show an image of wealth or class. The price range for Chateau Margaux are anywhere between $150-1300. The price of the wine limits it target audiences to people who can afford luxury goods. French wine accounts for 18% of the European market share.
Porters Five Forces
Porter's five forces are buyer power, supplier power, new entrants, threat of substitutes, and degree of rivalry. The five forces measure the external environment of Chateau Margaux. In France, the main buyers of wine are supermarkets and hype markets, these markets distribute nearly half of the markets value. There is a wide of range of products that are offered by wine producers to differentiate themselves and also to suit consumer demands. The buyer power in the wine market increases because there are varieties of wine which makes switching cost inexpensive. The buyer power in the wine market is moderate. Suppliers provide the raw materials for making wine mainly grapes, bottles, fermentation equipments and others. Many companies follow the traditional process of harvesting grapes from the vineyards they own, going through the fermentation process and bottling. Companies that own their vineyards produce more premium wine and this weakens supplier power. Other companies depend on suppliers for raw materials such as grapes increases supplier power. The supplier power in the wine market is moderate. Threats of new entrants in the French wine market have to go through regulations set by the government. The government regulation for new entrants is strict which raises the cost of market entry. The wine market is controlled by large companies that make premium wine at expensive prices, which allows small scale companies to enter the market. Entry in the wine market will require the company to have a reliable distribution channel. The threat of new entrants is low. The wine industry has substitutes such as beer and other alcoholic beverages. In the consumer’s point of view, the switching costs are not expensive and the availability of substitutes is simply personal preferences, taste and pricing. Also there are different wine brands that can be used to substitute each other. The threat of substitutes is strong in the wine market. There is strong rivalry in the wine industry because there many brands in the market. This gives consumers many brands to choose from and makes switching costs low. Many brands differentiate themselves with premium wine, label designs and marketing campaigns. These factors makes rivalry very strong in the wine market.
Value Chain Analysis
This explains how the wine is made and how it gets to the consumer. This analysis is made up of inbound logistics, operations, outbound logistics, marketing and sales, and services. Inbound logistics explains the use of raw materials received from suppliers, storage and all other inputs needed to start the making of the wine. This is not a problem for Chateau Margaux because they produce their raw materials. Operations explain the process of wine making, the transformation of inputs into outputs. This is where raw material is transformed into finished goods. Outbound logistics is when the finished goods are stored and readied for distribution to wholesalers or directly to retailers. This one of the most significant stages for Chateau Margaux because they have to make sure they meet the demand of buyers by distributing their products to the right distributors. Marketing and sales is also a significant factor to Chateau Margaux. Marketing exposes the product to its target audience. Effective marketing through many channels such as media, public displays and tasting leads to high sales. Chateau Margaux does not deliver any specific service to the user besides the content in the bottle. The value chain analysis is important because it goes through the stages of making the product till the product gets to the consumer.
This is analysis considers political, economic, social, technological, legal and environmental. The political factors consider whether Chateau Margaux have been affected by any political decisions such as taxes, fiscal policies and trade tariffs. These make it difficult for companies to operate efficiently. Economic factor is significant to Chateau Margaux because well performing economies means the people can afford their products. Social factors deal with the trends of population and cultural trends. Chateau Margaux follows this factor because its main customers are from Asia, and it is important to follow the social activities and cultural activities they celebrate with wine. Technological factor deals with the innovation and equipments used by Chateau Margaux to increase their production, operation and distribution of their product. There have not been any law suits or any legal actions taken against Chateau Margaux in recent years. The environmental factor explains both the internal and external environment of Chateau Margaux. This includes tourism, agriculture and how the company gives back to the community.
This stands for strengths, weaknesses, opportunities and threat. The SWOT analysis measures the company's performance by measuring the company in four different categories to provide an idea of how the company is positioned in its market.
Strengths of Chateau Margaux
It has a strong brand name
It has identified it target audience
It is good quality
It preserves a philosophical tradition of wine making
Good reputation of French wine
They don't deal directly with their consumers
They rely on merchants and retailers to deliver their products
Poor marketing techniques
Potential customers are located in Asia
There are fewer tariffs on wine in Asian countries
Marketing opportunities in the Americas
Availability of Substitutes
World economy is not performing well
Climate changes and drought affects grape farming
Chateau Margaux faces fierce competition both locally and internationally. Many countries now produce quality wine that gives competition to French, Italian, Portuguese and other wine producing European countries. Some of the competitors of Chateau Margaux include Chateau Latour (France), Colgin brand (California), Chateau Palmer (France), Chardonnay (California), Domaines Baron de Rothschild(Chile), Dominus Estate and others. Generally, there are a great number of competitions in the wine industry. Chateau Margaux has a fierce competition with another French wine Chateau Latour. The competition between Chateau Margaux is not as intense as the one with the other local French wine. There is serious competition in the wine industry is because there are many brands seeking to capture market share. The competitors of Chateau Margaux are also luxurious brands, high price and high quality. Chateau Margaux is the second most expensive wine right behind Chateau Latour. The price of Chateau Margaux also makes it vulnerable to substitutes but on the other hand, many customers know that a high quality wine is expensive.
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