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Preserve the Luxury or Extend the Brand?

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on 4 April 2014

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Transcript of Preserve the Luxury or Extend the Brand?

Option 3 : Joint-venture or Partnership
Preserve the Luxury or Extend the Brand?
Article Summery
Pick a shoe
Pamela Cano, Moon Kyungshin, and Rebecca Seewald
Grand vin du Château de Vallois
Toyota and Lexus
Two brands cater to both the luxury and common markets

Successfully sells to both consumer groups
Jimmy Choo 500 euro
Nine West 50 euro
Tiffany and Co.
Return to Tiffany Collection
Offers some lower priced items
from $100 to over $4,000

Still maintains exclusive high-end luxury collections
So should we Preserve the Luxury or Extend the Brand?
Option 1: Stay True to Tradition
Ignore market opportunity to produce affordable wines

Preserve the luxury of the brand

Avoid potential losses in sales of luxury products

Huge opportunity costs
Purchase California Vineyard
Tap into the "affordable" wine market
Massive resources required
Could potentially devastate sales for luxury wines and the brand's reputation
Option 2 : Expand Internationally
Rest of the grapes sold to other estates, origin not revealed
Joint-venture or partnership with an established vineyard that produces for "affordable wine" market

Knowledge about different markets can be provided

Smaller investment and easier transition

Lack of control over the partnership

Quality of brand may suffer due to differing opinions or reputation of partner
Distribute a mid-range wine both domestically and internationally.

Can either buy grapes or buy land in Bordeaux to produce this line of wine. However, buying land in Bordeaux recommended as it clearly distinguishes the production processes of the various lines, especially for luxury consumers.

Tightly control distribution channel, making the wine available in only select distribution outlets, which will not tarnish the reputation of the brand.

Build your brand and research new markets simultaneously.
Option 4 : Minimal Risk
Questions or Comments?
Thanks for Listening!
Rest of the story...
The Chateau chose to maintain their tradition and brand rather than expand into new markets
Additional Question: To mass produce and sell re branded wine at a more affordable price point or to capitalize on the Vallois reputation by placing it on the label, despite the risk of devaluing the luxury product lines?

price: ㄹ€ 1,000
150,000 bottle produced
profit: € 100 ~ 450
Gaspard de Sauveterre
Owner of Château de Vallois (50%)
Steadily profitable since the 1980’s

Deciding whether to expand or not
Claire de Valhubert
(grand daughter)

"If we can make such great wine here, why not make a wine for younger people somewhere else?"
Introduce a brand wine(€20 - 25)
keep the new wine separate
Own distribution channel
Sell directly to customers(web)
Buy grapes / lands
François de Sauveterre

Loss of reputation
Not enough grapes
Relationship with Négotiates (wife)
Cost of new distribution channel
Jean-Paul Oudireaux

“Vines are like children: They need to be looked after very carefully”

Quality of wine
Working for Gaspard for 30 years
2 is enough
Who will make the wine? I don’t know how

Preserve The Luxury
Extend The Brand?
Don't have to worry about marketing & distribution
Would buy wines even on the bad years to maintain the relationship
Taking nearly half of the profit
Second line
price: € 100
200,000 bottle produced
Young generation are priced out
Loosing next generation to cheaper wine
The result of googling for 30 mins....
Other Examples?
Criteria for Evaluation
Brand Equity
Maintenance of relationships with négociateurs
"Affordable Wine Market" market share
Decisions to be Made
The production place
The branding/labeling
The pricing
The distribution channel
Our Recommendation
Criteria for Evaluation

Brand Equity
Maintenance of relationships with négociateurs
"Affordable Wine Market" market share
Alternative 2: Buy California Vineyard, and produce and mass distribute wine in the US and other markets.
Full transcript