You are #1 in your Core Markets - Now, How Do You Grow?
By Denise A. Harrison

Over the last twenty years your company has served the mass market with its products. You have the number one market share position - time to relax and enjoy? No, you find that the mass market has not only grown, but now it is fragmenting as consumers are becoming more sophisticated. Niches are carving up pieces of the formerly lucrative mass market and consumers are becoming more educated, picky and even downright snobby. What should your company do?

E. J. Gallo faced exactly this dilemma as it was developing its strategic plan for the 21st century. While the forecast for the mass market was still good, the growth in the wine market was going to come from various wine niches as the wine drinking population became more savvy and had more disposable income to spend on wine. Gallo's mass market image was fine for the mass market, but the image did not play well in the new image-conscious niches that were chipping away at mass market growth. The tried and true strategy of the past would not work for the future.

Knowing that they could not leverage their brand, they sought ways to leverage their knowledge of the wine industry. As the Wall Street Journal reports on February 8, 2006, Gallo decided to create a stand-alone brand: Ecco Domani, a wine made and bottled in Italy. This wine would capitalize on the popularity of white wine, but instead of Chardonnay it would be a Pinot Grigio. To further capitalize on the wine's Italian origin, the marketing team decided to use the Italian fashion industry to develop a trendy image for the brand. The team set up the Ecco Domani Fashion Foundation awarding grants to emerging designers. Publicity came fast and furious - the major networks covered the awards, Ecco Domani was on the short list of invitees to fashion's promotional events and given access to fashion and media's current luminaries. Pairing wine with fashion enabled Gallo to create a successful new brand - who knew that mass marketer Gallo really owned the label?

What next?
When a strategy works - repeat! Gallo continues to create stand-alone brands to capitalize on the trendy and often fickle wine market. Did you know the following were really Gallo brands?

  1. Red Bicycle: Wines from France
  2. Black Swan: Wine from Australia

Lessons learned:

  1. If you are a dominant mass market player watch out for market fragmentation as consumers' tastes and preferences mature. Keep your team looking for emerging trends so you do not open the door to niche competitors.
  2. If your image is mass market, consider a stand-alone brand when you approach a niche market.
  3. This niche market will often require different marketing techniques than the ones that have been successful in the mass market - consider a variety of creative approaches.

As markets grow, they often fragment into specialized niches. Use strategic planning as a way to identify and capitalize on these emerging trends.

Denise Harrison is a Consultant with Center for Simplified Strategic Planning, Inc. She can be reached via e-mail at harrison@cssp.com.

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