Brand Management – B Group 5SAKSHI GUPTA PGP30048NORMA MARY GEORGE PGP30212RUCHI SINGH PGP30220KRITIKA GUPTA PGP30030SOUMYA EMANI PGP30230

Prese

rve th

e luxury

Extend the Brand

Case Overview

Case Overview

Current SituationChâteau de Margaux has been profitable for the past 30 years, since the 1980’s, and existed for over 75 years.

Price of Premier Grand CruClassé Grand Vin is $999, averaging 150,000 bottles a year

Second wine Puiné, sold between €100-€450, averages 200,000 bottles per year.

Claire de Valhubert25%

Gaspert de Sou-veterre

50%

Francois de Souveterre

25%

Share

François de Sauveterre (Son) • CEO of Château de

Vallois • In control of day-to-day operations• Traditionalist Perspective

Claire de Valhubert (Grand Daughter)• Stakeholder of Château de Vallois (25%) • Studied from France’s elite grandes écoles • Planned to join Family Business • Radical Perspective

Gaspard de Sauveterre (Grand Father)• Owner of Château de Vallois (50%) • Steadily Profitable since 1980 • Deciding whether to expand or not

Stakeholders

Introduce a branded wine at a price of about 20

Euros to 25 Euros a bottle

Analysis

IncentiveVallois to enter the “affordable

luxury” market

Selling directly to customers

Feared less-expensive

Lower-quality wine makers

Capture and retain the next generation of customers

Less than half potential utilized

• Alienation of Customer base

• Dilution of brand equity

• Added expenditure on Marketing and distribution

• Loss of Goodwill of Negociants

• Current capacity not in line

• Capitalization of brand• Market penetration as

well as development• Increased revenues• Loyalty from younger

generation

Against For

ConclusionChâteau de Vallois should continue to maintain the high-end luxury brand as its core business

But it needs to develop a successful brand for the mass market

A clear separation of the two is necessary to protect the high-end brand

Can be treated as separate businesses, to maintain the premium quality of the Grand Cru Vin

www.youtube.com/watch?v=VCSlxfUeSc4 – Tactics Used by Owners to Extend Brands

An

soff

’s Gro

wth

Matrix

Market Penetration

Strategy

Product Development

Strategy

Market Development

Strategy

Diversification Strategy

Current Products New Products

Current Markets

New Markets

So what is the growth strategy that Claire

proposed?

Line

Extension

Category factors

Product line

Chateau de Vallois has a very short product lineCan increase the long term profits by adding more products

Too long product lines can realize long term profits by reducing the number of products

Brand strength

Chateau de Vallois is a strong brand. Hence, the line extension can be more successful

Consumer Factors

Salience

Consumers associated Chateau de Vallois with the

Highest Quality

Consumers associated Chateau de Vallois with a ‘Classy’ image

Consumers associated Chateau de Vallois with an expensive drink

Favourability

High Brand Equity & Demand

Uniqueness

Terroir (ideal soil and microclimate) that determines

the wine’s character and makes it the best

Competitive Factors

Affordable Luxury is a growing market: Selling directly to customers will give them

higher profit

Competitors will take up the opportunity to capture and retain

the next generation

Luxury extensions in India

Collaborations with

online and store-based

retailers

• Gain access to new customer base

• Develop awareness and equity

• Partners also benefit from higher margin sales

Why extend?

When Does Affordable Fail?

“The company had an excellent foundation, but it had lost its focus in the process of global expansion.”

BURBERRY

“The distinctive check, which dates back to the 1920s, had also become uniform of choice for yobs and football hooligans.”

What Burberry Changed

Revoked licensing

agreements that eroded brand value

Renewed focus on

core category –

luxury outerwear

Revitalize image – Modern British

Burberry

Summary

Luxury: more people have it, less valuable it

becomes

Luxury brands need to

reinvent and reach out to

new customers to

sustain

Need to balance this

with maintaining the existing

brand

IN LUXURY, UBIQUITY WILL

KILL YOU!

Thank you!Questions?