Question

During a pandemic like today, what should do a wine company or industry in order to survive the crisis ? ( choose 3 from the six basic strategies generic ) and why ? defending in 1 paragraph for each strategy the reason for your choice.

Answer 1

The 6 startegic generic are as follows :

• Broad Cost Leader
• Broad Differentiator
• Niche Cost Leader
• Niche Differentiator
• Cost Leader with Product Lifecycle Focus
• Differentiator with Product Lifecycle Focus

In the pandemic situation like today, the wine market/industry is likely to exhibit the following :

• Immediate buying /stocking by the end user of good quality/brand wines
• Regular users will consume more wine.
• Stock out at retail points due to point (1) as well as no/limited distribution during lockdown
• Logisctics and Supply chain goes for a toss
• Raw material prices likely to increase.
• Experimental and one-time user will avoid as its not an essential for them.

Keeping these points in mind, I would recommend the following :

1. Broad cost leader
   • Product portfolio of the wine company would need to be designed in a way to address the top end as well bottom end of the market, as this will not only help them get better revenues but also maintain the customer loyalty and customer satisfaction.
   • However, the number of products in each category needs to be rationalised,so that set up cost, production cost, logistics etc cost can be managed well.
   • As seen in the USA, wine consumption has peeked during lockdown - we need to make sure that we are present at retail points with our products for premium as well as regular customers.
2. Differentiator with Product Lifecycle Focus
   • This strategy allows us to focus on main stream customers - and avoind the fringe customers. This should allow us to identify the optimal product portfolio to produce and sell, and shut down fringe selling products. We need to be careful when deciding fringe products as to avoind killing cash cows.
   • Given the limited products that we would be producing , it makes sense for us to minimise the new investments and continue with the current technology/resources. This would also avoid any disruptions which may occur owing to significant changes.
   • We also need to make sure that avaiability and accessability are leveraged during these times to generate maximum revenue. Marketing campaigns and communication should be smarter and sharper.
   • A price increase is warranted in these times,as raw materials as well as logictics will be expensive
3. Nich Differntiator
   • We need to make sure that our high end products stand out and we are well positioned to innovate on this segment, as this isnt just a cash cow but also the most important way for us to engage and retain our premium customers.
   • We need to be clear on the what we plan to do post the lockdown is lifted. Our strategy , by definition, cant just be a one-off decision for short term. We need to look at wider horizon.
   • We need to also accept that its a possibility that the life with pandemic becomes the "new normal"
   • Thus investment in tech which makes our production ffacility , technique most safer and secure - will be a huge boost for our sales and reputation.
   • So, investment in tech which serves this purpose is a must.