Ceja Vineyards Marketing To the Hispanic Wine Consumer Harvard Case Solution & Analysis

Ceja Vineyards Marketing To the Hispanic Wine Consumer Case Study Solution

Table-3: Financial Performance Analysis

From the above table, it could be seen that the company is growing with improvement in its financial performance as each of the ratios related to 2005 and 2006 is growing except net profit margin. The major cause of decreasing net profit margin is the increase in the operating expenses that the firm must control to be profitable and sustain its profits in future. Moreover, despite of declining net profit margin, the overall return on equity is increasing that is because the reduction in the equity in 2006. Overall, it could be said that the firm is efficiently performing in finance terms. (Brigham, 2016)

VRIO Analysis

VRIO Analysis for the company could be seen in the Table 4 below;(Grant, 2014)

Table-4: VRIO Analysis

Key Success Factors

Key success factors for the company could be listed in the Table 5 below;

Table-5: Key success Factors

Alternatives

The Ceja Vineyard is considering expanding options to whether target Hispanic consumers residing in the US or to target the Hispanic consumers outside the US as both the markets have high potential. There are certain challenges the company is prone to while taking any of these two decisions such as the smaller Boutique distributors are not available in every US state to operate, Direct selling to the consumers rather than by selling to the distributors will increase the labor-intensive as well as the management of the growth of wine club, which are critical for the success of the company. Some of the options are given below for the company:

Option-1: Direct Selling to the Consumers

The direct selling to the consumers is the first alternative available to the Ceja Vineyard as this will strengthen the relationships with consumers but eliminating intermediaries will end up in the hire labor cost as larger labor intensive will then be required for the business to operate. However the profit margin will be higher. Selling directly to the consumers will also increase the wine club members which in return increases revenue as around 35% of sales is because of them.

• Pros

• High profit margin.
• Strong relationship with consumers.
• Also increases the wine club members.
• Greater power.
  • Cons
• Increases labor intensive.
• Increased in cost
• May impacts the relationship with intermediaries.

Option-2: selling through Boutique Distributors

Selling through boutique distributors will be beneficial in a way that they end up selling the product in the renowned restaurants which will increase the brand image of the product. But there is a major drawback that in most of the US the boutiques distributors are not available and those which are available are high-end and therefore expensive. Further, to deal with such well known distributors will be difficult for Ceja as the terms and conditions will be suggested by the boutique distributors.

• Pros
• Increase in the brand image.
• Huge return. (because of sale in renowned restaurants)
• May sale in premium prices.
• Cons
• Not easily available in many states.
• Difficult to deal with well-known distributors.
• Less bargaining power.

Option-3 Wine Clubs

The wine clubs and the tasting and sampling events are unique features of Ceja which if grow rapidly, would provide a huge benefit in terms of the increase in the company’s sales. Although it is on a smaller scale now, but if it increases then the consumers will be much satisfied as it would also be increasing the attractiveness of the consumers towards their brand.

• Pros
• Increase in sales.
• Customer satisfactions.
• Customer attractiveness.
• Cons
• Risk form competitors.

Recommendations

From the above analysis the Ceja Vineyard is suggested to target Hispanic customers in the US as it will provide Ceja with a competitive advantage. But there are some major amendments which should be considered before targeting this market, such as that the product should prices at a low price and this could be possible by implementing the option-1 that is selling the products directly to the consumers. The strategy will also provide a higher profit margin to the company and will be beneficial in maintaining its relationship with its consumers.

Implementation

Risk and Mitigation

There are certain challenges attached with expansion of the firm towards the US Hispanic market. Various challenges are provided in the table 6 below along with the attached risks as well as their mitigation.

Table-6: Challenges

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