978-0078029295 Case Ceja_Vineyards Part 1

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This case study was prepared by Armand Gilinsky Jr., professor of business at Sonoma State University; Linda I. Nowak,

professor of marketing at Sonoma State University; Cristina Santini, doctoral researcher at the University of Florence; and

Ceja Vineyards: Marketing to the

Hispanic Wine Consumer?

INSTRUCTOR’S MANUAL

Armand Gilinsky Jr., Sonoma State University

Linda I. Nowak, Sonoma State University

Cristina Santini, University of Florence

Ricardo Villarreal deSilva, University of San Francisco

CASE SYNOPSIS

In September 2007, after celebrating their nineteenth harvest and seventh year as producers and marketers

require incremental future expenses for promotion of wine consumption to U.S. Hispanic consumers, and

The case includes information on the history and business operations of the winery, background data on

the U.S. wine industry, demographics of U.S. wine consumers, and U.S. demographic forecasts through

2025. The case also provides a detailed description of the family’s business philosophy and vision for the

INTENDED COURSES AND LEVELS

We have built sufficient flexibility into this case so that it can be used in either an undergraduate capstone

or a graduate marketing management course. At either level marketing management course, the case

should preferably be introduced to students near the end of the semester, after the introduction and

analysis of consumer behavior, segmenting, targeting, positioning, differentiation, external and internal

market factors, and marketing strategy/planning are covered. The case is highly suitable for a written

assignment and/or for use in student team presentations.

The case has been tested with MBA students in marketing management (as a written take–home final

examination) and with undergraduate business majors in the strategic management capstone (as a written

section.

CASE TOPICS

Competitive, customer, and industry analysis

Consumer behavior

Market segmentation, targeting, positioning, and differentiation

Marketing strategy and planning

Opportunity analysis and screening criteria

Multicultural diversity in marketing

RESEARCH BASIS FOR GATHERING CASE INFORMATION

The four authors worked closely with the owners of Ceja Vineyards to develop the company history and

its current marketing focus, and to understand the company’s vision and long–term goals. Each author

conducted at least one on–site interview with the owners of Ceja Vineyards in March and September 2007

BASIC PEDAGOGY

Instructors in a marketing management or marketing strategy course should review concepts of

competitive, customer, and industry analysis; market segmentation; targeting; positioning; differentiation;

marketing strategy and planning; and opportunity analysis. Good coverage of these issues is provided in

the following marketing management texts:

1. Mullins, J., H. Boyd, O. Walker, and J. C. Larreche. 2008. Marketing management: A strategic

planning approach, Seventh edition. Irwin McGraw–Hill. See Chapters 2–5.

For those instructors considering using this case in advanced or executive level courses and who wish to

provide their students with recent scholarly articles on the topic of multicultural diversity in marketing:

1. Burton, D. 2005. New course development in multicultural marketing. Journal of Marketing

Education 27(2):151–162.

Abstract: The multicultural market has witnessed tremendous growth in many societies, yet multicultural marketing

into the marketing mix. Although teaching specialist multicultural marketing courses may be the prerogative of the

few, all marketing academics can use multicultural examples in their mainstream teaching. Raising students’

2. Bush, V. D., G. M. Rose, F. Gilbert, and T. N. Ingram. 2001. Managing culturally diverse buyer–

seller relationships: The role of intercultural disposition and adaptive selling in developing

intercultural communication competence. Academy of Marketing Science Journal 29(4):391.

Abstract: This article examines how adaptive selling behaviors and intercultural dispositions of marketing

executives contribute to their perceived intercultural communication competence. Results show that in addition to

being adaptive, the intercultural disposition of a marketer is of key importance in developing intercultural

3. Iyer, G. R., and J. M. Shapiro. 1999. Ethnic entrepreneurial and marketing systems: Implications

for the global economy. Journal of International Marketing 7(4):83–110.

Abstract: This article attempts to generate interest in the study of ethnic entrepreneurs within marketing and

tremendous contributions to local and international economies while bridging small business, globalization, and the

nation–state in interesting ways. As ethnic immigrant entrepreneurs, did the Cejas face special challenges?

4. Villarreal, R., and R. Peterson. 2009. The concept and marketing implications of Hispanicness.

Journal of Marketing Theory and Practice 17(4):303–316.

Abstract: Members of a particular ethnic group may possess varying degrees of ethnic identity and cultural values.

For example, some members of an ethnic group may identify strongly with the group but simultaneously not possess

simultaneously have disparate degrees of ethnicity. This article attempts to empirically prove the theory noted at the

One way to get the discussion rolling is to begin by asking students, “What has made Ceja successful thus

LEARNING OBJECTIVES

The case presents the growth and development of a small, family owned winery. By analyzing and

discussing the case, students should be able to:

1. Develop a greater understanding of the wine industry and the challenges facing small wineries in

2. Evaluate a company’s differentiation strategy in light of its resources, customers, competitors,

3. Know what market segmentation is and how to segment product markets into submarkets, with a

recommendations for future implementation. Screening criteria components should be both

quantitative (i.e., sales, profit, ROI) and qualitative (i.e., nature of business preferred, constraints,

QUESTIONS FOR ASSIGNMENT/DISCUSSION

If the case is used for a whole–class discussion, approximate times to devote to each question appear in

1. What has made Ceja Vineyards successful to date? Consider both favorable and unfavorable

factors. (10 minutes)

2. How likely is it that Ceja will be able to maintain its differentiation strategy in the future? (5

3. What is the greatest challenge for Ceja Vineyards in the next five to ten years? (10 minutes)

4. What segmenting dimensions (behavioral, geographic, demographic) will you use to identify and

describe the potential target markets for Ceja Vineyards? Justify your choices. (15 minutes)

6. Develop screening criteria using both qualitative and quantitative factors to evaluate the

Vineyards. (10 minutes)

ANSWERS TO QUESTIONS FOR ASSIGNMENT/DISCUSSION

Superior student responses are denoted by an asterisk. Exhibits are placed at the end of this instructor’s

manual for ease of reproduction or adaptation.

1. What has made Ceja Vineyards successful to date? Consider both favorable and

unfavorable factors.

Instructors should prompt students to consider both favorable and unfavorable factors, i.e., in terms of

Ceja’s current and potential customers; the resources and philosophies of the owners and competitors; and

Favorable Factors

Through 2007, Ceja Vineyards had done a commendable job at positioning itself in the wine market and

receiving the accolade shown in case Exhibit 1. It is considered a boutique winery, since it produces less

than 20,000 cases. Ceja has made lasting connections with larger wineries in Napa and Sonoma, and has

Ceja Vineyards prides itself on being a small, family–oriented grape grower. The current utilization of the

diverse talents of members of the Ceja family has been one of their greatest assets. In order to continue to

preserve the success of this family legacy, Ceja Vineyards must sustainably grow and adapt to external

The Ceja family is one of the first Latino families in the United States of America to make wine in an

industry dominated by white male Americans. This is a case much about developing a strategy that will

maintain the business for many years to come as well as a diversity case. There are not many Latino small

*Ceja Vineyards is a well–built company. The intellectual property that it owns is priceless. Ceja Vineyards

is worth more than just the sum of its parts. Ceja is strong because of its valuable resources, including land,

equipment, employees, and intellectual property.

Ceja Vineyards is thus in a unique position in a wine market typically dominated by large wineries or the

well–known wine families listed in Exhibits 2 and 3 in the case. As a minority owned and operated

winery, it has different opportunities to market its products. While most wineries are going after the

enthusiast wine drinker, Ceja has the opportunity to expand its market segment or to target segments not

sufficiently reached by rival wineries.

The Ceja family represents the epitome of the “American dream.” They are the children of immigrant

The Ceja story has been built into the brand. However: how can they display the family story to show the

true effort that went into such a product? As noted in Appendix 1 in the case, using electronic media

Unfavorable Factors

In comparison to other wineries, it’s likely that limited current production of branded wine may actually

Because Ceja is a small producer and does not have the same type of capital like a large producer has to

execute extravagant plans, Ceja has to focus on one issue at a time. Their main issue, at the moment, is how

to sell the remaining cases of wine they are producing with their private label.

Ceja Vineyards is a family owned and operated winery that prides itself on heritage and community, but the

*Competition in the wine industry is fierce. The growth of a winery heavily depends on being innovative,

thinking differently, and allocating scarce resources. How to allocate these scarce resources is the main

issue that Ceja faces.

Assuming an expanding Hispanic population and wine market segment as noted in the case, it is odd that

Since Ceja’s price point implies a superior product, Ceja faces the substitution effect of discounted or

lower–end wines—often dominating retail and on–premises (restaurant) sales channels in periods of

industry oversupply or softening demand—due to economic downturns and/or declining consumption of

priced in the above $20 per bottle range, and may only allow Ceja’s wine brand a single chance at

success.”

Teaching tip: Instructors should refer to Exhibits 2 and 3 in the case and remind students that numerous

Ceja’s linkage with the country of origin (U.S.), or in this instance, appellation (Carneros), provides

reliability and quality differentiators for its wines. Ceja wines, furthermore, have two strengths that make

them easier to market than other wines: good quality plus a unique brand preposition, i.e., a mix of family

and country of origin.

• • •

Ceja’s financial situation. Students should be able to analyze Exhibits 7 and 8 in the case and calculate

to Ceja’s winery customers under the Viña del Sol entity. Unused debt capacity, positive and growing

working capital, and acceptable liquidity ratios would allow the owners several degrees of freedom in

making future borrowings to build the planned winery as well as choosing among strategic marketing

options. Year on year growth in all categories is healthy, although there is a slight deterioration in

All of these indicators show that Ceja Vineyards is a strong, profitable, and growing company. Ceja

Vineyards is a strong company because of the value of its assets. The land itself has the most tangible

value: 121 acres of prime vineyards located in an exclusive location, with a valuation of $133,000 per acre

on average, may be worth over $16 million alone.

2. How likely is it that Ceja will be able to maintain its differentiation strategy in the future?

One student identified Ceja’s focus/differentiation strategy:

*Ceja Vineyards is engaged in a focus/differentiation strategy, that is, Ceja is pursuing a narrow market

The wine industry is unique in that it offers a homogenous product to most consumers, but heterogeneous

products to a small percentage. Although that sounds like a contradiction, it is a true statement. According

to the consumer psychographic segments shown in Appendix 2, Table 1, only 25 percent of all wine

purchases are made by “enthusiasts,” i.e., consumers who “appreciate information and wine education.”

What that means is that 75 percent of purchases are made by image seekers, savvy shoppers,

traditionalists, satisfied shoppers, or the overwhelmed. This statistic reveals that, to many wine

Several students explained Ceja’s positioning strategy in light of several strong industry and competitive

forces:

Ceja is and will continue to be a unique wine grower and producer. It has many things going for it that set it

The high bargaining power of buyers means that Ceja must pay special attention to the branding of their

wine. Ceja must effectively differentiate itself by overtly celebrating their family story of the “American

*A niche marketing strategy, focusing on its specialty wines and consumers, is pivotal for Ceja Vineyards.

Carneros Pinot Noir and Merlot are niches that need to be marketed to their full potential. Internet

technologies are helping to identify and access these niche consumers. Ceja should embrace this new

technology in order to better serve their customers. Innovative marketing forms, such as Buzz and Viral

marketing, are becoming widely used in the wine industry. These forms of marketing are low cost and

The wine industry has high rivalry and Ceja has to compete with domestic and international wineries for

customers. Though Ceja has competition from imported wines from Chile and Argentina, imports do not

Surely, a major challenge for U.S. winemakers comes from global wine producers. Once again, to an

Teaching tip: Instructors should conclude this part of the discussion by reminding students that, in an

If students maintain that Ceja is unlikely to sustain its current position, ask them, “If this is true, should

Ceja consider targeting and segmenting the Hispanic market?”

Refer students to Appendix 2, Table 1 in the case, “Psychographic Segments,” and ask them to assess the

1. Target “Wine Enthusiasts”

Pro: Essentially continues business as usual; represents 25 percent and the highest end of the market

2. Target “Image Seekers”

Pro: A “cause–related segment;” represents one fifth of all wine consumers; Internet–savvy, primarily Gen

Con: Tends to be a relatively fickle psychographic segment, even among “Afflluentinos”

3. Target “Savvy Shoppers”

Pro: Easily reachable target segment

Con: Price sensitivity may preclude purchasing Ceja wines, currently priced at more than $20 per bottle

4. Target “Traditionalists”

Pro: Value history and tradition, and tend to be repeat purchasers; most likely to appeal to “Affluentinos,” with

possible appeal to “Partially acculturated” (66 percent) U.S. Hispanic wine shoppers

Con: Relative to other wine producers, Ceja still has a limited track record to sell to this segment

5. Target “Satisfied Sippers”

Pro: Tend to purchase only domestic brands

Con: Small segment that tends to purchase from familiar, high volume producers unlike Ceja

6. Target “Overwhelmed”

Pro: Attributes most likely to characterize potential first–time or “Partially acculturated” (66 percent) U.S.

Hispanic wine shoppers

Con: Despite long–term potential in U.S. Hispanic segment, probably not with Ceja’s high–end wines; would

require development of a second–tier or discount brand that could cannibalize sales of current brands.

3. What is the greatest challenge for Ceja Vineyards in the next five to ten years?

Ceja faces the challenge of increasing production and concomitantly creating demand for its wines from

the premium wine consumer (and distribution channels serving those consumers), while at the same time

balancing the solution to those challenges with the needs of the founding family, or as one student put it:

People are naturally drawn to be part of a company that has the intention of being around in the future and

has goals of growth. Ceja is unique because they have consciously put limits on how much growth they