Ch. 2 - Strategic Planning for Competitive Advantage

       
        Because Dom Perignon is a luxury brand item, its strategic marketing can differ greatly from more traditional approaches to marketing. Dom Perignon does not rely on a cost competitive advantage in order to sell its product unlike many of its sparkling wine competitors. Instead, the company relies on their prestigious image and uses a product differentiation competitive advantage in order to sell their highly priced champagne to consumers. A good example is in the 1950's, much of Europe was drinking an inexpensive champagne called Krug. When Moet Chandon, Dom Perignons mother company, discovered they could produce a comparable wine and price it three times higher than their competitor, they took that opportunity to release Dom Perignon onto the market. In order to expedite their "symbolic acceptance" they sent cases of Dom Perignon to the Queen of England and even had the fine champagne appear in the first James Bond movie as his signature drink. This strategy worked, skyrocketing Dom Perignons sales and even causing their initial competitor, Krug, to raise the price of their champagne from $19- $100 over the course of only ten years. High price, high prestige, and high quality are all factors that have resulted from an extensive and historic market plan.
        Dom Perignon is not aiming to lower its prices anytime soon. Instead the company uses an experience curve in order to create the exact opposite effect, that is to demand more money for their product. Technology and wine production have increased and improved greatly since Dom Perignons inception over two centuries ago. Therefore, with these technological advances and increased knowledge, Dom Perignon is not only able to produce far greater quantities of champagne than it once did, but it is also able to truly perfect its craft, thereby making it more desirable by consumers. Beyond having a highly sought after and prestigious product, Dom Perignon also boasts a niche competitive advantage by simply having the name "champagne" affixed to its label. A sparkling wine cannot be called "champagne" unless it is produced in the small wine region of Champagne, France. Therefore, any wine produced in this region already has a competitive advantage over other retailers who are trying to sell luxury sparkling wines. A consumer looking to purchase a high end sparkling wine is far more likely to pay $200 for a bottle of authentic champagne than they are to pay the same price for a bottle of Cava or Prosecco. That one word alone can make all the difference when it comes to purchasing sparkling wine. Additionally, Dom Perignon is a vintage wine, meaning that they will only produce bottles in years where the grapes are perfect. If it is a weak year, no wine will be produced by the company. The word vintage also refers to the fact that each bottle boasts grapes from the same harvest and, of course, the same year. Vintage wines are very rare and can also be very costly to produce. However, the rarity of these wines make them more valuable, with some vintages collecting $1000 or more per bottle. These are only some of the many competitive advantages that have put Dom Perignon a head above the rest for so many years.