Description: A product that sells for less than the competition and has a wide consumer base may sound like a good thing, but as this paper describes some things sound better than they actually are. In this paper it is discussed the problems that the Chilean Wine Industry is facing with their competition but also with their own strategy. Paper written for my college course International Management.

A product that sells for less than the competition may sound like a dream come true, but like all good things there is a catch. As this case study is proving not good things can be an advantage and the fact of the matter is no matter how much a product is selling its success cannot be guaranteed. That is because so many other factors go into the growth and success of a product that it can’t possibly be measured on simply good sales. No matter how much a product is selling if there are similar products of similar quality selling for me then it is obvious that there is a major problem in that company. Once a product has been sealed in such a specific type of niche, like low price for high quality, for so many years it is bound to catch up and have a negative affect on that said industry. It is not something that can be shaken off easily or quickly for once the consumer has become accustomed to the image a product carries changes to it would most likely cause demand to be withdrawn.

In the case of the Chilean wine industries, it is proving to be a major disadvantage for them no matter how much the wine if selling. The problem lies in image – the image the wine industry has developed as well as the image the entire country. While at first the idea of selling their wine so cheaper may have come across as a good idea, it is in fact that very thing that seems to be dragging them down. This is because while the product is selling cheaply the production and time that goes into making is anything but cheap. Over the years the wine industry in Chile has made more than significant changes within their methods of production.

The thought and care that the industry has been putting into their wine appearance and taste has been effective and efficient in making it popular with the consumer. The popularity with the consumer mainly comes from the superior eminence of the taste the wine conveys. In order to achieve such a high quality product the wine industry in Chile has “…adopted advanced technology and invested in new machinery for optimizing the winemaking process in the field – especially irrigation and planning – and they started using rustproof steel barrels and casks made of French oak” (“The Future of Chilean Wine Exports Turns Sour”). Furthermore the industry producers have also “…perfected their wine cellars and invested in better labels and packing – boxes, bottles and cartons – that were more attractive to consumers” (“The Future of Chilean Wine Exports Turns Sour”). As far as marketing goes, the Chilean wine industry has excelled in presenting their product to the consumer and as such provided themselves with a highly seeked for product.

While the Chilean wine industry has on their hands a high selling product and a high quality product – the problem still remains. The problem lies immensely on the image the industry has applied to themselves. It is when we combine price with image that the heart of the problem comes into a better focus. While Chile’s marketing strategy has always been offering high quality tasting wine for a low price other countries have put more strategy into their perceived quality. When it comes down to it the fact of the matter is that “Chilean wines sell at a lower price than its competitors’ wines but they are intrinsically just as good” (“The Future of Chilean Wine Exports Turns Sour”). Argentine for example can be considered to have the same quality of wine but because they have out emphases on their image they are able to sell their wine at a much high price without hindering their sales. The consumes will pay the high price because the image set is higher – no one brags about buying cheap wine do they? Of course not, it’s all an ideal that an industry makes in the consumers mindset. This perception is a basic one when dealing with any product not just wine.

Although it can appear that way, situation is not hopeless right now however if let be then it will become something impossible of changing. As far as possibilities go then the answer is yes there are certainly possibilities that could in fact change the image of this industry. Now the real question is, is it possible to change their image while maintaining high sales? The answer to that has to be no because of the fact that the consumer has become accustomed to such lower prices when seeking Chilean wine. It would be as if a rock star suddenly decided to start singing ballads – the consumer of his merchandise would be appalled at this change because of the fact that since the beginning they have been offered a certain product. Something as significant as product image cannot be drastically changed, it is more like a change that can offer bits by bits over a seemingly large period of time. And while nothing is set in stone, once an industry has developed a certain image a change to it could cause the industry to basically tank and I’m not sure it is something the industry could afford to gamble with considering their competition. But overall when speaking in terms of global sales I think too much is being expected from the Chilean wine industry. Even despite the fact that they have seen significant growth over the years when faced with opponents like Argentine it is still difficult to compete.

If I were the CEO of a prominent California winery I would definitely be nervous about competition overseas. Countries such like Argentine have a strong reputation for being wine sellers and good ones at that. Consumers have been exposed to such high quality wine from Argentine, Chilean, etc for many years now. So in their retrospect when wanting the best California isn’t necessary where they would think to purchase wine from.

Work Citied

• “The Future of Chilean Wine Exports Turns Sour.” Wharton School.