Innovative marketing isn't about creating ways to bring a horse
to water, but finding ways to make the horse thirsty. Perhaps
this was the thinking when Trader Joe's began exclusive
distribution of the Charles Shaw brand of wine at an unheard of
price of $1.99.

Great marketing ideas seem obvious after they become successful.
Such is the case with this niche grocery store and what Global
Marketing, Inc. terms the "$2-Buck-Chuck" marketing phenomena.

Started by Joe Coulombe Trader Joe's has evolved into its
present form over a number of years. Trader Joe's actually began
in 1958 as a chain of convenience stores called "Pronto Markets"
in the Los Angeles area. In 1967 Joe Coulombe, wanted to expand
the stores' offerings and enhance their image. He doubled the
floor space and offered hard-to-find, boutique domestic and
imported wines and gourmet food items at outstanding prices. He
decked out the stores with cedar plank walls and nautical décor
and garbed the Captain (the store manager), the First Mate (the
assistant manager) and the CrewMembers in colorful Hawaiian
shirts. "Trader Joe's" was born.

Today, 200 stores strong in 17 states, Trader Joe's has expanded
to Arizona, Connecticut, Delaware, Illinois, Indiana, Maryland,
Massachusetts, Michigan, Nevada, New Jersey, New York, Ohio,
Oregon, Pennsylvania, Virginia and Washington. With annual sales
of roughly $2.2 billion, this privately held firm is considered
one of America's fastest growing companies.

Dan Bane is the current Chairman and CEO of Trader Joe's. When
Dan assumed this position in 2000 he was already a long-term
employee of Trader Joe's. As president of Trader Joe's west he
managed about 120 stores and supervised various operational,
real estate and marketing elements for the business.

When Dan became CEO he already knew he had one pressing problem.
Trader Joes had grown into a significant leader in a smaller
market of niche product offerings. To take Trader Joes to the
next level of growth he would have to find ways to expand his
customer base.

Expanding his served markets would not be easy. Dan needed to
find a marketing strategy that allowed his firm to retain their
present customer base, while addressing and capturing portions
of the larger, albeit, more competitive market opportunity now
served by the biggies - Ralph's, Vons, Albertsons, etc.

Dan felt confident that Trader Joes proven business model would
lay the foundation of this strategy, but what would be the
catalyst that drives entry into this expanded market?

Success comes in a variety of ways. Sometimes it emanates from
clever, well thought-out ideas, meticulously executed in the
market with just the right amount of luck. And then there is the
coming together of forces, almost coincidentally, that meter out
phenomenal success - such is the case when Trader Joes and Fred
Franzia of Bronco Winery came together in late 2002.

It turns out that as Dan Bane was looking for a growth strategy
for his Trader Joes, Fred Franzia was looking for a new customer
base where he could sell a high volume of ‘budget' wine.

So who is Fred Franzia? And what part does he play in this tale?

Fred is part owner and president of Bronco winery. Started in
1973 by brothers Fred and John Franzia and cousin Joe Franzia,
Bronco has grown to be one of the highest volume wineries in
California. It has a wine storage capacity of 62 million gallons
and can crush up to 60,000 tons per day.

Fred's winemaking lineage is legendary. Fred's father was a wine
maker and, he is the nephew of Ernest and Julio Gallo.

Right after the 2001 grape season, Fred realized that his
industry was fastly moving into an over supply condition of
grapes. Soon it would become less expensive to let the grapes
rot on the vine then to harvest them, and Fred felt this was
unacceptable. Always considered a maverick within the wine
community, Fred decided to think outside the traditional
winemakers' box. Fred's marketing approach is simple and
straightforward. He states, "Our strategy is to fish where the
fish are. I think more people want value in their wine purchase
and realize it doesn't have to cost them $10-25 dollars."

Hence his Charles Shaw brand of budget wine was born and the
stage was set

Fred Franzia met with Dan Bane in early 2002 and the Charles
Shaw saga began. Dan recognized that the budget wine from Fred
Franzia's Bronco winery would bring customers into his store and
while there, they would be introduced to his offering. He was
confident in the quality and pricing of his products and felt
this would prompt many to conveniently buy items they would
normally purchase at their regular grocery store. This was the
catalyst Dan was looking for.

The other force in this success equation is Fred and he clearly
understands how to make money. Fred knew that Bonco was in a
unique position to take advantage of present market conditions
because his winery is one of just two California wineries with a
distributor's license. The other is Kendall-Jackson. That means
Bronco can dramatically cut the middleman costs. Direct delivery
to retailers is not something most wineries can do. Bronco
delivers a case of Charles Shaw to Trader Joes for a meager $19.
Trader Joes decided to sell this same case for $24 or $1.99 a
bottle.

With virtually little promotion, the Charles Shaw brand has
become the most successful wine brand ever. Mostly by
word-of-mouth it has gained almost mystic status.

People need logic or a believable reason when a major price
shift takes place on anything they purchase. Justifying the new
price and the value of the product must be rationalized.

Almost immediately, rumors began to surface about the $1.99
bottle of Charles Shaw wine. A few well-publicized stories like
the tale that this $1.99 bottle of wine beat out a $68 bottle of
Chardonnay wine in a blind tasting, although totally
unsubstantiated, has given it front-stage billing. Another
common rumor for the low price suggests that Charles Shaw was a
premium wine dumped by American Airlines because of a ban on
corkscrews on airlines precipitated by the actions of 9/11.
Other rumors included that "Two-Buck Chuck" was a financial
bailout of a premium wine from United Airlines trying to avoid
bankruptcy. None of these are true (some say Fred Franzia
floated these rumors, but he denies it), nor is Charles Shaw a
fire sale Napa wine from a nasty divorce of Charles Shaw and his
wife.

Charles Shaw continues to fly off-the-shelves resulting in
handsome dividends to both Bronco winery and Trader Joes. With
its Charles Shaw loss-leader marketing approach, Trader Joes has
driven many new customers into their stores resulting in double
digit growth for the firm, with no sign of slowing. And Bronco
winery, with its maverick CEO Fred Franzia, cannot keep up with
the demand. Bronco has already delivered more than 60,000,000
bottles (about $100M in Bronco annual revenue) of the now famous
two-buck-chuck.

Innovative, risk-oriented, marketing always trumps linear
thinking in any market. How are you infusing innovation into
your marketing ideas?

About the author:
Frank Williams is a marketer and astute businessman. Frank has
many post graduate courses in management, leadership, marketing
and technology to his credit. He has given many speeches,
written numerous articles and introduced new technology. He has
significant knowledge in marketing strategies and sales
development programs and is the founder and CEO of Global
Marketing, Inc. - a leader in business, marketing and sales
consulting

Author : Frank Williams
Site : www.goarticles.com

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