E & J Gallo Case Study
Thirumavalavan Murugaiyan
Marketing
Dr.Mango
Dec 2nd 2010

Topics

Summary of Situation:
Problem/Opportunity Identification:
Alternative Actions:
Identify at least three possible courses of action to address problem:
Key Decision Criteria:
Identify specific criteria used to evaluate alternatives:
Analysis of Alternatives:
Recommendations:
Initial Implementation plans for the Delivery alternative :
Monitoring/Control procedures

E & J Gallo Winery
Summary of Situation:
Identification and brief explanation of key information in the case affecting eventual decisions:
The below information’s I believe to great extend affects the eventual decisions of the case. Ernest and Julio Gallo were the founders of E. & J. Gallo Winery. Since its establishment in 1993, E. & J. Gallo Winery had undergone rapid growth from a small-scale firm to an equivalent “Campbell Soup company of the wine industry”. Today, the company stands as a global wine producer. Its well-reputable brand name stems from its well-diversified product line, manufactured under various labels for a number of different price ranges to attract all types of consumers, and global recognition and awards. E. & J. Gallo was the first American company to date to be recognized three times as International Winery of the Year. In 2006, Gallo received the Gold and Best of Class awards at the San Francisco Wine Competition and won individual awards for its cabernet sauvignon and chardonnay.
The possession of major competitive advantages that its competitors did not hold largely contributed to Gallo’s success in the wine industry. Some of these included the entrepreneurial freedom it had as a privately owned firm, the wise stewardship of Ernest and Julio Gallo, low-cost mass production, and strong distribution.
In the early years of E. & J. Gallo Winery’s operations, Gallo saw values in pursuing vertical integration within the wine industry. It viewed this opportunity as a way to expand the company’s operations and seize dominance in market share by participating in every aspect of the value chain. By vertically integrating backward, E. & J. Gallo Winery owned wholesale distributors of Gallo wines in about 10 geographic markets. It also had deep pockets and the resources to expand globally. If it were not for the upper limits in acquisition in the United States, Gallo would have bought out more than 300 independent distributors to handle its wines. As of 2001, the company had more than 75 brands in its product lineup and was exporting wines to countries all over the world. Today, E. & J. Gallo Winery stands to be the largest-selling global brand.

Problem/Opportunity Identification: Based on information given, identify the most important problem/opportunity: The Green Earth café restaurant had several key problems which could have forced business shutdown. It is imperative to look upon these problems and find a suitable marketing solution to succeed. I believe the key problem with the restaurant was lack of strategy and tactics base which are essential to a successful marketing and obviously the space / parking and resource to support huge customer was one of the key problem. Jessie Martin, one of the owners of the business, worked on the strategy and tactics to improve the business. I don’t see specifically a problem with place or the products. The place is located in a bustling, mixed-use neighborhood in downtown Chicago. The neighborhood is a diverse mix of people.

I can understand, parking is a little problem as the business is in downtown and most of the downtowns face the parking issue. Decoration of the restaurant is not the most important problem even if it lacks little fancy. The seating is also not spacious but again I don’t see that to be a problem. From the rest of the case, I do see the owner has put a strategy and tactics to achieve the market success. The key problems could have been based on the strategy and tactics laid out, I believe focusing on the smaller group of targets were not implemented. Jessie , the owner , haven’t extended herself to reach the local economic development councils to collect the primary groups of people and advertise her business. She has to move to focus on smaller targets due to primary issue of not able to serve the community effectively upon large customer base.
This is one of the primary problems of the business.

Alternative Actions:
Identify at least three possible courses of action to address problem:

I identified all the possible actions taken to achieve the marketing success as a tabular column.
I did see more the owner has put possible courses of actions that are needed to accomplish the marketing success. I suggest three more new solutions apart from what I read from the case study.

* Narrow the target to be concentrating on one target type - Kids. * Home delivery system just like pizza hut * Setting remote offices – Example Pizza hut can sell the bakery products .

All the above ideas can be planned and executed to gain more customer base and I believe needs less investments

The below tabular explains the course of actions taken to address the problem. ARKETING STRATEGY WORKSHEET | TARGET GROUP A
Young People less than 30 | TARGET GROUP B
Retirees | TARGET GROUP C
Office Workers | Product
Specifics/Benefits to
Buyer | Non-Traditional / "to go" menu Single Servings featuring non-traditional fare from 6 to 8 PM. | Smaller portions - Earlier in the day and tended to eat inside the café. More traditional foods from 4 to 6 PM | Continental Breakfast foods from 8 am to 10 am; and lightly, healthy lunches from 11am to 2 pm. Large group of portions, with plenty of serving supplies, such as condiment packets and paper products. Menu variations. | Price
Actual Price/Meaning to
Buyer/Value | "To go" menu at a higher margin than other products. | Low prices on a menu heavily reliant on low cost fare such as potatoes, pasta, and bread. Special discounts from 3 PM to 5 PM | Retail price was subordinate to these considerations, and Jessie priced accordingly, which allowed her to offer delivery service free of charge within a certain area. | Place
Where Product is
Delivered/Channel of
Distribution | Objective of channel of distribution is to supply customers on demand. Looked for suppliers who could deliver pre-cut meats and portioned servings for better cost control. Local dessert maker was engaged to provide interesting and varied offerings. | Promotion
How to Reach the Target
Market | Internet/Advertise on several local restaurant information sites. Held themed events on the weekends that appealed to this market - DJ competitions and showcases for new talent. Hired energetic young people to spread the word among their peers , and bought liner ads in the local alternative paper's events calendar | Coupons and flyers at the local senior centers and at several other local gathering spots for seniors. Contributed food to several major senior events, where she also distributed coupons featuring the name and logo. Provided meeting spots from several senior groups during off-peak hours and the local paper listed these events in its senior events calendar | Distribution menus and made personal calls on meeting planners at businesses in the area. For the latest prospects, offered free continental breakfast sampler so that employees could try her fare at no risk. Periodic contact with key event planner and alerted them to new additions to the menu | Competition
Strengths, Weakness | Hosted networking events featuring appetizers and beverages like the competitor Blue N | Offered sample desert platter with small portions of each desert | Prepared food according to customer demand. Flexible menu |

Key Decision Criteria:
Identify specific criteria used to evaluate alternatives: * Narrow the target to be concentrating on one target type - Kids. * Home delivery system just like pizza hut * Setting remote offices – Example Pizza hut can sell the bakery products .

The key decision and specific criteria used to evaluate the above alternatives are
The idea of narrowing down to one type of target gives the owner to serve well and by which in turns bring the various age group along with the kids . Home delivery system needs more resource to deliver the items but earns more customers. The remote office surely is the best solution to sell the bakery items to reach to lot of places and customer with lot more options of pricing . But choosing the above alternatives , the product , the price , the place and the promotion directly gets impacted and see more growth . To set up all the above alternatives , need more resource to transport the bakery items and has it owns challenges. The above decision are suggested by me as the constrain of serving more people , parking lot limitations and has to
Cover three different groups of targets will be resolved.

Decision of identifying three primary targets:
From the surrounding neighborhood, most of her customers would live in a relatively defined area around her location, since driving and parking were inconvenient, the owner decided to focus on the residents and office workers within a four mile radius of her location.
Data from the local economic development council showed that almost 800,000 people were included in this area and that count reveals the difficulty to serve them effectively. The kind of people lived and worked in the area, made the decision of focusing on the three primary targets of Youngster, Retirees and Office workers.

Tailoring the products or services to your target markets: Based on the targets now, the services and products are customized to suite the need of these targets. So the decision of introduction of “to go” menu for the single serving featuring non-traditional fare from 6 to 8 pm are all based on the tactics which are developed based on the key criteria of three targets identified.

Key decision of advertising or using a different promotional tactics to reach the three target markets are mainly due to various challenges in the current technology and method of promotion and its variation of reaching its final destinations. Based on the three targets and due to the constraint of time, money or the right skill set by the owner , the advertise on several local restaurants information sites and conducting events on the weekend , bought liner ads in the local alternative paper’s events calendar decisions were made.

I do see the specific criteria used here to evaluate the alternatives was the understanding of the three targets and there taste. I believe what the owner has done is the right thing to do as narrowing down to the small targets and full filling the needs gains the confidence on the business and thereby her business name becomes the intangible asset to the business.

Analysis of Alternatives:

The alternatives are the * Narrow the target to be concentrating on one target type - Kids. * Home delivery system just like pizza hut * Setting remote offices – Example Pizza hut can sell the bakery products.

Lets analysis the above alternatives using the criteria on the relative merits:

By choosing one type of target, like I said the Kids, She can concentrate on serving many products. She can attract kids with ice creams, sweet products and even can set up play area and
Improve business. Of course kids are not going to come alone. They bring their parents and thereby you can sell all the lunch and other food items for the 30 plus years of youngster.
Most of the other side, even older people tend to like kid’s food and love to come as well.
The office side should have lot of child care and day care to support family working which will bring all the office workers having kids as well.

The second alternative of home delivery makes the business to reach to little more of a radius. Now the reach of the targets are different and the business can grow now bigger. By delivering, the business can cover now 10 miles rather than just 4 miles which means lot many targets and groups and that’s why I was more choosing to one type of target as the miles are more now to be covered.

Setting up the remote office, this is a wonderful idea if the business is able to convince major stores to sell her items. All business needs to do is convince and set up more remote office on a existing business and discuss the % of share etc. Once achieved, now it is even bigger miles and more targets with kids and can grow on the same.

Recommendations:
Initial Implementation plans for the Delivery alternative:

1) Verify and validate whether existing money resource can support the delivery setup or need to take Bank loan 2) Identify how many miles, the residential, office extend in that area to support the 3) Perform data analysis for identifying the targets around the decided range of area. 4) Existing customer feedback about free delivery of bakery and lunch items. 5) Office workers love the free delivery of breakfast, lunch to office. Identify offices who are interested 6) Calculate the budget on how much business can invest on the delivery program 7) Identify whether you can hire two to three youngster who can deliver up to 10 miles radius. 8) Thinks of Free delivery promotion as a introductory offer 9) Identify the mobility for the delivery system. Rental cars or lease rental car etc 10) Calculate the expense including the insurance for the mobility and all other damage control measures 11) Advertise the “Pizza magic” of on time delivery and if not the entire order on the business 12) Account all the tangible and intangible products required to make this all happen.

Monitoring/Control procedures

It is important to have a suitable monitoring and control system to measure performance in achieving the objectives of the marketing plan and to recommend corrective action where necessary. This monitoring and control system should be in the written plan.

* Establishing standards - these would relate to the budgeted sales and costs and the timescales of the implementation of the action plans * Measuring performance – this would compare actual performance against the standards * Proposing measures to correct deviations from the standard – by detailing corrective procedures to be implemented if the variation from the standard exceeds certain limits. These limits should be defined in the written plan.

The marketing plan should be monitored and if major deviations occur you may need to modify objectives, change strategies, or revise schedules and budgets. An update procedure should be included in the written plan. With the best planning in the world, markets are still affected by forces outside your control, but with the proper marketing plan and an understanding of the marketing planning process you can adapt to the changing condition of the competitive world.

To record the progress, use the project planning software or the tactical timeline to address the needs and wants of each of your target markets. Record your progress. Make sure all the sales and expenditure are properly entered on the work book. Weekly review of the business using the software or manual to make sure the business is not suffering. If needed control procedures like cutting down the promotion / services etc can be taken appropriately.

Management monitoring and control procedures will have to be installed to ensure that the right customers are being contacted, at the right frequency and that target performances are being achieved. Decisions on all these points must be translated into the resulting commitment to staffing levels and associated costs.

CHECK LIST * Have you obtained comparative prices from the competitors to monitor * Obtain periodically prices of competitive products or processes * Develop a price performance analysis comparing your product with that of competitors * Keep a set of price for all products based on the steps above * Prepare and monitor the advertising and promotion budget