Your string is UTF-8.
I can tell because your fix is to replace the bytes (97, 204, 136) with the bytes (195, 164).
The first byte you're replacing, 97 (0x61) is the UTF-8 character a. The second two bytes, 204 and 136 (0xCC 0x88), are the bytes for the UTF-8 character U+0308, the combining diaeresis: ̈. The two characters combine to form ä.
The bytes you're expecting are 195 and 164 (0xC3 0xA4) which, together, are U+00E4, or Latin small letter "a" with diaeresis.
Both are UTF-8. One prints ä and the other prints ä. This is an example of Unicode equivalence.
In other words:
str1 = "a\xCC\x88"
puts str1 # => ä
p str1.bytes # => [97, 204, 136]
p str1.encoding # => #<Encoding:UTF-8>
str2 = "\xC3\xA4"
puts str2 # => ä
p str2.bytes # => [195, 164]
p str2.encoding # => #<Encoding:UTF-8>
Fortunately, we have Unicode normalization to help deal with this. This is a big topic, but the very, very insufficient TL;DR is that the Unicode consortium has prescribed standard ways to normalize strings like the above, i.e. how to turn str1 into str2.
Unfortunately, it's impossible to say what the best solution for you is, since you didn't provide any details. Your database might have built-in normalization functionality, but I don't know what database you're using so I can't say. Since you did mention Ruby I can point you to the String#unicode_normalize method, which was introduced in Ruby's standard library in Ruby 2.2:
str1 = "a\xCC\x88"
str2 = "\xC3\xA4"
p str1 == str2 # => false
str1_normalized = str1.unicode_normalize
p str1_normalized == str2
# => true
p str1_normalized.bytes == str2.bytes
# => true
If you don't have Ruby 2.2+, well... upgrade. But if you can't upgrade for some reason you can use ActiveSupport::Multibyte::Unicode.normalize, which is especially convenient if you're using Rails, or the Unicode gem.
One more thing
You don't need to do this, since the above is the correct way to do Unicode normalization in Ruby, but a much easier way to do this:
"WinterIDäSchwiiz".bytes.join(",").gsub("97,204,136","195,164").split(",").collect{|s| s.to_i }.pack('C*').force_encoding('utf-8')
...would have been this:
"WinterIDäSchwiiz".gsub("a\xCC\x88", "\xC3\xA4")
Any time you see something like join(",")...split(",") in Ruby it's almost certainly the wrong solution.
