You can’t just ask customers what they want and then try to give that to them. By the time you get it built, they will want something else. — Steve Jobs

What we really need is a mindset shift that will make us relevant to today’s customers. A mindset shift from “telling and selling” to building relationships. — Jim Stengel

There definitely is an overlap between the marketing strategy and the corporate strategy, and sometimes the marketing strategy may actually be the central pillar in the overall corporate strategy! In this article we will review a case (written by Marion Andrivet in thebrandingjournal.com) to see how the marketing mix was used (along with the Blue Ocean strategy), to carve out a significant slice of the wine market pie by an entrepreneur.

So how do you break into a market that has been established for thousands of years and dominated by the French, the Spaniards, the Germans, the Americans and a host of other top producers in many other countries? How do you compete against established wines like the champagnes and chardonnays of the world? How do you scale the onerous barriers of climate, geography, process technique and other stringent criteria which determine the taste quality of superior wines? And finally, how does a young Australian company break into the well established American wine market?

Well, below you will see what Yellow Tail did — mainly by using the tool of marketing. Their strategy will be summarised using the 4Ps of Marketing (Product, Place, Price, Promotion) known as the Marketing Mix

Product

According to Andrivet, Yellow Tail’s research indicated that about 85 per cent of the American population either did not like, or did not drink wine. They targeted this market by designing a wine that did not contain tannin or acid.

For those who need a Wine 101 initiation — tannin is the “backbone” of red wine and is derived from the skin, seed and a part of the stem of grapes that is essential to, and makes red wine — well, red! Acid is the tannin counterpart for white wine, which is typically fermented from grapes without the skin.

Here, Andrivet describes the innovative product, “Yellow Tail developed a wine that is soft and sweet in taste and as approachable as beer and ready-to-drink cocktails. It resulted in an easy-drinking wine that did not require years of experience to develop an appreciation for it…. Finally, the product can be consumed immediately; there is no need to keep it in expensive wine fridges or underground cellars to age the wines. This also simplifies the consumption process! Besides tasting different, being easy to choose and to consume, Yellow Tail developed other qualities that would make it more appealing to non-wine drinkers:”

Promotion

Continuing with their innovative approach, Yellow Tail did not go the usual marketing route taken by the typical wine company.

Typically, large wine companies develop their brands over several years on the back of expensive, and extensive marketing campaigns. Yellow Tail took the route of using retail shop employees to promote the wine, and it was not an intimidating task, since it was such a simple product.

The company also organised several wine-tasting events for customers to discover and sample the product.

A major part of their promotion effort was the company’s innovative approach to packaging.

Andrivet explains it well: “.. the idea was to design a simple and unintimidating packaging with an unpretentious text and vibrant colours. Consumers can read the name of the grape variety, which is important to American consumers, on a simple label featuring an orange Kangaroo on a black background. The brand was also the first to use the same bottle packaging for both red and white wines, which allowed the company to simplify both the manufacturing and purchasing processes. These clearlydisplayed wines stood out from the extensive choice of intimidating wines, with similarly designed bottles full of complicated terminology.”

Place

As I had indicated, the strategy targeted the American market, where 85 per cent of the population were not wine drinkers. The size of this market is more than 270 million – given the 2014 American population of about 319 million.

This is a classic example of the Blue Ocean Strategy in action, where the strategists seek to avoid the clutter of a particular market, and instead seek to create a new market that has so far been ignored by the competition.

Initially, the company had estimated that they would have sold 250,000 bottles of their product for the first year, but actual sales totalled 1 million!

As a matter of fact, according to Andrivet, Yellow Tail’s success has been phenomenal: “in the space of two years, Yellow Tail became the fastest growing wine brand in the US and in 2003 it became the number one red wine in a 750ml bottle sold in the US. Yellow Tail went on to be named Australia’s most powerful family-owned wine brand in the 2012 Power 100 report by British consultancy firm, Intangible Business.”

Price

Yellow Tail priced their product at just above the pricing for budget wines, and ranges from about US$7 to US$15.

Pricing is a critical element in the marketing mix. According to Martin’s article on cleverism.com, while the other elements of the marketing mix generate expenditures, price is the only one that pulls in revenue. The marketer and the strategist therefore need to carefully think about the price placed on a product as it affects several variables — a key one being that it should reflect as near as possible the value that the customer places on your product.

In summary, “Yellow Tail managed to become a leader in the wine market by creating new business opportunities; it didn’t steal the market, it created a new one. The success of the brand is explained by a good use of marketing tools and product innovation.”

Dr Kenroy Wedderburn is an MBA part-time lecturer. Send your e-mails to drkwedderburn@gmail.com.