How important is the dessert wine segment to the industry? to E. & J. Gallo Winery? How do these products fit with Gallo's stated position on the quality of its products? Do brands like Thunderbird and Night Train have any redeeming features as a product, even if they are in demand by a segment of the population?
Dessert wines are very important since it makes up a large portion of the wine industry. Before Gallo upgraded their image, they had more of a brownbag jug wine image through products like Thunderbird and Night Train wines. These products for Gallo Winery do very well for the company. Consumers remain loyal to the brands, especially those that cannot afford other brands. The Gallo Company associates itself only with the premium brands. Even though the brands of Thunderbird and Night Train still exist and perform well, Gallo does not mention them due to their poor image. Even though they have a poor image consumers like their taste for a light and casual carbonated drink that has less alcohol than its competition and its cheaper than the luxury wines.
1. What are the key success factors in the dessert wine segment? Is there strategic fit between Gallo's fortified wines and its other wines?
The key success factors in the dessert wine segment are low pricing and minimum costs allowing the profit margin to be higher. It is easier to market, especially in low income neighborhoods. There is very little or no advertising needed. Gallo chose a low-cost strategy driving the organization’s costs down below the costs of its rivals in the wine market and also with its premium wines The company could always offer its products for a lower price than its rivals because of the company’s vertical integration Gallo had divisions in virtually every step of the wine producing process. But they chose a focused differentiation strategy in the wine cooler market (product: Bartles&Jaymes). “They distanced the product through skillful marketing and sales...
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