In: Business and Management

Submitted By tchick
Words 1177
Pages 5
1. (a) Because the Chilean wine industry, as a whole, has achieved a good reputation as being a “value for money” or a low cost alternative to more traditional, old-world wines (subsequently positioned at the low end of the fine-wine cost range), the country-of-origin effect has made it difficult for smaller, boutique wineries, such as MontGras, from being able to fully control its own market position and produce and sell higher-quality wines at premium prices.
However, although the country-of-origin effect has a large influence on shaping consumers’ general perceptions on wines from Chile, MontGras can use the effect to differentiate and reposition its brand in order to control its own market position. Moreover, as stated in the case, consumption of high-quality wine brands is steadily increasing, while the consumption of more traditional lower quality brands has significantly fallen (6). The perception of Chilean wine being a low-price alternative was developed by the increase in exports of bulk wines with competition based on price. This exports in bulk strategy, which led to the perception or country-of-origin effect does not align with MontGras’ goal to produce and export high quality wines and not compete against the larger Chilean wineries. Therefore, the country-of-origin effect also allows MontGras’ the opportunity to differentiate its brand identity based on exporting higher quality wines at premium prices. The implementation of a differentiation product strategy will instantly allow MontGras the ability to command higher prices for its higher quality wines, thereby controlling its own market position through product and price, distinguishing it from the majority of Chilean wine producers.

(b) Because the mission of MontGras, to produce high quality fine wines, contradicts its country-of-origin effect or consumer perceptions of Chilean wines, the…...

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