Harvard Case - Terlato Wines International: Managing Rutherford Hill Merlot in a Post-Sideways Market
"Terlato Wines International: Managing Rutherford Hill Merlot in a Post-Sideways Market" Harvard business case study is written by Alice M. Tybout, Patrick Bennett, Brie Koenigs. It deals with the challenges in the field of General Management. The case study is 6 page(s) long and it was first published on : Jan 1, 2008
At Fern Fort University, we recommend Terlato Wines International (TWI) adopt a multi-pronged strategy to revitalize the Rutherford Hill Merlot brand in the post-Sideways market. This strategy focuses on repositioning the brand, leveraging digital marketing, enhancing distribution channels, and cultivating a strong brand narrative to appeal to a new generation of wine consumers.
2. Background
This case study focuses on Terlato Wines International (TWI), a leading importer and marketer of fine wines, facing the challenge of reviving the Rutherford Hill Merlot brand in a market significantly impacted by the movie 'Sideways.' The film, which portrayed Merlot negatively, led to a decline in its popularity, impacting Rutherford Hill's sales and brand image.
The case study centers on John Terlato, the CEO of TWI, who must navigate the complexities of a changing market and reposition Rutherford Hill Merlot to appeal to a new generation of wine consumers.
3. Analysis of the Case Study
Strategic Analysis:
SWOT Analysis:
- Strengths: TWI's strong brand reputation, established distribution network, and expertise in marketing premium wines.
- Weaknesses: The negative perception of Merlot, aging brand image, and limited marketing resources compared to larger competitors.
- Opportunities: Growing demand for premium wines, increasing interest in American wines, and the potential to tap into new consumer segments.
- Threats: Competition from other varietals, changing consumer preferences, and potential economic downturns.
Porter's Five Forces:
- Threat of new entrants: Moderate, as entry barriers exist in the premium wine market.
- Bargaining power of buyers: High, as consumers have many choices and can easily switch brands.
- Bargaining power of suppliers: Moderate, as TWI has established relationships with grape growers.
- Threat of substitutes: High, as consumers can choose other varietals or alcoholic beverages.
- Rivalry among existing competitors: High, as the premium wine market is crowded with established brands.
Marketing Analysis:
- Target Market: TWI needs to identify and target new consumer segments, including younger generations, wine enthusiasts seeking value, and those interested in exploring American wines.
- Brand Positioning: Rutherford Hill needs to be repositioned as a premium, high-quality Merlot with a unique story and appeal.
- Marketing Mix: TWI needs to utilize a mix of traditional and digital marketing channels, including social media, influencer marketing, and targeted advertising, to reach the desired target audience.
Financial Analysis:
- Profitability: TWI needs to analyze the profitability of Rutherford Hill Merlot and identify areas for cost optimization and revenue generation.
- Investment: TWI needs to assess the financial resources required for repositioning the brand and developing a new marketing strategy.
- Return on Investment (ROI): TWI needs to measure the effectiveness of its marketing initiatives and ensure a positive ROI.
4. Recommendations
1. Reposition the Brand:
- Focus on Quality and Origin: Emphasize the unique terroir and quality of Rutherford Hill's wines, showcasing the vineyard's history and heritage.
- Develop a Compelling Narrative: Craft a story that connects with modern consumers, highlighting the wine's versatility, food pairing potential, and commitment to sustainability.
- Target Specific Consumer Segments: Focus on younger generations, wine enthusiasts seeking value, and those interested in American wines.
2. Leverage Digital Marketing:
- Social Media Engagement: Create engaging content on platforms like Instagram, Facebook, and TikTok, showcasing the wine's characteristics and lifestyle appeal.
- Influencer Marketing: Partner with relevant wine influencers and bloggers to reach a wider audience and build credibility.
- Targeted Advertising: Utilize digital advertising platforms like Google Ads and Facebook Ads to reach specific consumer segments based on demographics, interests, and behavior.
3. Enhance Distribution Channels:
- Expand Online Presence: Increase online sales through e-commerce platforms and partnerships with online wine retailers.
- Strengthen Retail Relationships: Build stronger relationships with key retailers, including independent wine shops and restaurants, to increase visibility and drive sales.
- Explore New Distribution Channels: Consider alternative channels like wine clubs, subscription services, and direct-to-consumer sales.
4. Cultivate a Strong Brand Narrative:
- Sustainability Initiatives: Highlight Rutherford Hill's commitment to sustainable winemaking practices, appealing to environmentally conscious consumers.
- Community Engagement: Participate in local events and initiatives to build brand awareness and connect with the community.
- Winemaker Storytelling: Feature the winemaker's expertise and passion for crafting high-quality wines, adding a personal touch to the brand narrative.
5. Basis of Recommendations
These recommendations are based on a thorough analysis of the external environment, TWI's internal capabilities, and the changing preferences of wine consumers. They consider:
- Core competencies and consistency with mission: TWI's expertise in marketing premium wines and its commitment to quality align with the proposed strategy.
- External customers and internal clients: The recommendations address the needs of target consumers while considering the internal resources and capabilities of TWI.
- Competitors: The strategy aims to differentiate Rutherford Hill from competitors by focusing on quality, storytelling, and digital marketing.
- Attractiveness ' quantitative measures if applicable: The recommendations are expected to generate a positive return on investment through increased sales and brand awareness.
6. Conclusion
By adopting a multi-pronged strategy that focuses on repositioning the brand, leveraging digital marketing, enhancing distribution channels, and cultivating a strong brand narrative, TWI can successfully revitalize the Rutherford Hill Merlot brand in the post-Sideways market. This strategy will appeal to a new generation of wine consumers, drive sales, and ensure the long-term success of the brand.
7. Discussion
Alternative strategies include:
- Focusing solely on traditional marketing: This approach may not be effective in reaching the desired target audience, as younger generations are less receptive to traditional advertising.
- Ignoring the negative perception of Merlot: This approach risks alienating potential consumers who are still influenced by the 'Sideways' effect.
Key assumptions include:
- Consumer demand for premium wines will continue to grow.
- TWI will be able to successfully implement the proposed marketing initiatives.
- The negative perception of Merlot will gradually fade over time.
8. Next Steps
- Develop a detailed marketing plan: This plan should outline specific marketing objectives, target audiences, strategies, tactics, and budget allocation.
- Implement digital marketing initiatives: Launch social media campaigns, influencer marketing programs, and targeted advertising campaigns.
- Enhance distribution channels: Expand online sales, strengthen retail relationships, and explore new distribution channels.
- Monitor and evaluate progress: Regularly track key performance indicators (KPIs) such as sales, brand awareness, and consumer engagement to measure the effectiveness of the strategy.
By taking these steps, TWI can successfully revive the Rutherford Hill Merlot brand and position it for long-term success in the evolving wine market.
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Case Description
In 2005, a wine snob in the critically acclaimed movie Sideways denounced merlot. Subsequently, sales of merlot, including sales for Terlato's Rutherford Hill merlot, declined significantly. Students are asked to evaluate three strategies-rebranding, cutting price, and launching television advertising-that Terlato is considering to reverse this decline. The case should be used with "Student Supplement: Terlato Wines International: Background Note on the U.S. Wine Market and Terlato Wines International," Case #KEL359.
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