Concentrating on a narrow market range with higher price and of course with a solid product is a high stake game only the brave can take on. But that is where traditional and long lasting wine companies must move on in the wake of upstart firms flooding their non-premium product into the European market. And this business manoeuvre is called focused differentiation.
For the focused differentiation business manoeuvre to work a company must not only have a history behind it but an untarnished reputation as a provider of quality product or services. The big question is why then a company must think of focused differentiation in the first place. The answer lies in the fact that the barriers of entry into most products are negligent or in most cases non-existent. This allows many second rated firms to enter into market and challenge the established companies in their own domain.
A good example is the European wine industry. For a long time wine was produced and mostly sold in the European market because drinking wine is undoubtedly a European custom. Of late, wineries from Australia, New Zealand and many of the Latin American countries have got into the fray and like wolves on the gate prey on the sophisticated in Europe with their non-premium products.
To be sure, European wine companies can fight back as they have the essentials with them. One is their target market is segmented to such extent that vintage wine is readily sought after by consumers within. Secondly wine connoisseurs typically consider only the vintage produced from Bordeaux, Champagne, Burgundy and many other European vineries as premium ones.
What these companies must do is to identify newer target markets segmented on the basis of taste, culture and income bracket. Having done that, companies must improve the target market by building up close relationship with consumers in that segment. Much hope must be placed on the dynamics of this target segment and companies must use their capacity and capability to sell their time tested brands and leave the rest to the rest.
Risks are manageable too. Despite their higher cost pf production, vintage brands built on solid ground in terms of acceptance by consumers command higher prices. This leads inexorably to the fact that the standards of wine set in European markets must never be diluted. For this to happen authorities must be persuaded to bring in suitable rules and regulations regarding entry of non-premium wine being sold as premium ones.
Cheers!
Muthu
Ashraff Rajulu
Business Strategist
Mobile: + 94 777 265677
E-mail: cosmicgems@gmail.com
Blog: Business Strategist
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