12. Devising the Marketing Strategy

Question 1

What are the ‘5 Ps’?

Answer 1

PRODUCT

PRICE

PEOPLE

PLACE

PROMOTION

Question 2

The 5 Ps:

Define PRODUCT

Answer 2

The item being marketed, including all packaging and branding and any value-added features; for example, gift wrapping in a wine shop and a winery’s wine club.

Question 3

The 5 Ps:

Define PRICE (2)

Answer 3

This is the amount which a consumer pays for a product, including any additional costs such as delivery as well as discounts.

It also includes the cost (in time or effort) which the consumer is willing to go to in order to buy the product.

Question 4

The 5 P’s:

Define PEOPLE (2):

Answer 4

Sometimes this means the attitudes and behaviours of the target consumer;

and others it refers to the relationship between the company, its staff, its partners, and its customers, and includes aspects such as employee attitudes and skills, and customer service.

Question 5

The 5 P’s:

Define PLACE:

Answer 5

This relates to where the product is sold. A company needs to identify where its target market shops, such as supermarkets, deep discounters, specialist wine shops or online, and focus on those outlets.

Question 6

The 5 P’s:

Define PROMOTION:

Answer 6

This covers all the methods used to advertise a particular product.

Question 7

What is meant by a ‘saturated’ market?

How should marketing be strategized in such a case?

Answer 7

If a market already has enough products to satisfy consumers’ needs and there are few gaps for new products.

This means products have to set themselves aside from others in the market by highlighting their uniqueness when compared to competitors: this could be their percieved quality, value or production ethos (organic, vegetarian, vegan etc.).

Question 8

What is penetration strategy in relation to new wines (3)?

Answer 8

A wine may be introduced to the market at a lower price than it will be sold at in the future, or it may be put on promotion.

This is to try and persuade price conscious customers to try a new wine, with the hope that they will permanently switch to this brand (thereby rejecting their preferred brand/s).

The low price undercuts competitors and makes the new wine seem more appealing.

Question 9

What are the 5 different Market Types, as posited by Wine Intelligence?

Answer 9

1. Mature Market
2. Established Market
3. Growth Market
4. Emerging Market
5. New Emerging Market

Question 10

Define Mature Market:

4 eg’s?

Answer 10

Markets where wine appears to have reached its potential with stable or declining volumes.

Germany, France, Switzerland, UK

Question 11

Define Established Market:

4 eg’s?

Answer 11

Markets with strong historical growth which is tailing off.

Ireland, S. Africa, Italy, HK.

Question 12

Define Growth Market:

4 eg’s?

Answer 12

Markets where wine is a mainstream product and/or experiencing growth.

USA, Canada, Brazil, Poland.

Question 13

Define Emerging Market:

4 eg’s?

Answer 13

Markets where wine is experiencing growth and shows potential from a relatively low base.

China, Russia, Turkey, Taiwan.

Question 14

Define New Emerging Market:

4 eg’s?

Answer 14

Markets where wine is still a relatively new and unknown beverage, but showing some potential.

India, Malaysia, Thailand, Philippines.

Question 15

What is a ‘bin end’?

Answer 15

Wines that are old/have been in stock a long time, or that have been discontinued.

Question 16

What are examples of multi-buy/volume discounts (5)?

Answer 16

Buy One Get One Free (BOGOF)

Buy One Get One Half Price

Buy 3 for 2

Receive % dicount when spending over certain amount or on certain # of bottles or more.

Buy 2 lrg glasses of wine, get the rest of the bottle free (hospitality-specific).

Question 17

6 eg.s of Marketing Promotions at POS:

Answer 17

Price Promotions

Free Merch

Ltd. Edition Packaging / Design

Contests/Competitions

Consumer Tastings

Staff Training / Incentives

Question 18

PROS (3) and CONS (4) of PRICE PROMOTIONS at POS:

Answer 18

PRO: If the price promotion is successful, sales of the wine will be higher than before the promotion has ended.

Increase brand awareness.

“Link saves” can encourage customers to try other types of product alongside the wine, thereby increasing overall sales.

CONS: Consumers associate the wine with promotions so will only buy it when on sale. The image of the wine is damaged by the reductions, and consumers aren’t willing to pay full price.

Brand loyalty is not created and consumers return to their favourite wines once the promotion ends.

Have been seen to encourage increased alcohol consumption.

Producers can be expected to cover the cost of price promotions, so may lose revenue.

Question 19

What are ‘Link Saves’?

eg?

Purpose?

Answer 19

A promotion whereby the consumer who buys a product saves on the purchase of another product in a different category.

eg. buy wine at full price, get food 1/2-off.

Helps the consumer save money w/out devaluing the product image.

Question 20

PRO and CONS (2) of FREE MERCH at POS:

Answer 20

PRO: Sales can increase, particularly around holidays, as these products make good gifts.

CON: Merchandise may not be viewed as exclusive/special because it is available to everyone. Therefore sales don’t increase.

Additional costs of producing merch.

Question 21

PROS (2) and CON of LTD. EDITION PACKAGING/PRESENTATION at POS:

Answer 21

PROS: Collectors and investors may see wines packaged in exclusive packaging as collectable/desirable.

The packaging is distinctive, and can help raise brand awareness.

CONS: Sales don’t tend to increase in the long-term, particularly as the wine is not typically presented in this way.

Question 22

PROS (2) and CON of COMPETITIONS at POS:

Answer 22

PROS: Wines can appear more attractive given the possibility of winning something. This can increase sales.

Customer details can be collected to be used for other marketing purposes

CON: An expensive way of encouraging sales, and few people will benefit from the prize.

Question 23

PROS (3) and CON of CONSUMER TASTINGS at POS:

Answer 23

PROS: Encourages low-involvement customers to buy wines they may have previously avoided because they wouldn’t know what it tastes like.

Encourages brand engagement.

Even if the wine at the tasting isn’t purchased, it encourages potential customers to come into the retail outlets where they may buy other wines.

CONS: Bottles will have to be opened and given away for free, when they could have otherwise been sold.

Question 24

PROS (2) and CONS (2) of STAFF TRAINING / INCENTIVES at POS:

Answer 24

PROS: Educating staff helps them effectively sell the product, thereby making it more appealing to consumers.

Staff can be encouraged to create more sales by personal incentives, making them more invested in their work.

CONS: In some regions incentivising staff by awarding prizes is considered bribery, and therefore illegal.

It may be costly initially to train all staff to a high level.

Question 25

9 Marketing Methods AWAY from POS?

3 S’s

2 W’s

PEAR

Answer 25

Advertising

Sponsorship

Websites

Social Media

Smartphone Apps

Wine Tourism

Events/Festivals

Reviews/Awards

Public Relations (PR)

Question 26

PROS (3) and CONS (3) of ADVERTISING:

Answer 26

PROS: Can reach a potentially large and more varied group of consumers.

Effective campaigns can remain in the minds of consumers for a long time.

Certain avenues of advertising, such as print media, can be more effective than TV/Cinema/Radio promotion, as wine often has a ‘story to tell’. Print media is usually a cheaper alternative to visual/audio outlets. Good for high-involvement consumers.

CONS: Can be very expensive to purchase airtime/ad space, especially via media such as TV, cinemas, national press.

Contracting the services of an outside ad agency can be very expensive.

Certain countries completely ban advertising alcoholic beverages (eg. The UAE), while others severely limit it (eg. France’s Loi Evin). Companies must comply with different laws in different markets, creating additional administrative workload.

Question 27

PROS (3) and CONS (3) of SPONSORSHIP:

Answer 27

PROS: Exposes the brand/logo to a very large audience, eg. low-involvement Sports fans watching events such as the Tour de France, sponsored by Chilean wine brand Cono Sur.

Can give the brand exclusive rights to being served at hospitality venues at certain events, essentially granting them a captive audience.

Can be cheaper than producing actual advertisements.

CONS: Obviously, these opportunities must be paid for and still cost substantial sums of money.

Subject to same legal restrictions and bureaucracy as regular advertising.

Viewed by some to be inappropriate to associate alcohol consumption with sporting events, which theoretically promote health and well-being.

Question 28

PROS (4) and CONS (4) of WEBSITES:

Answer 28

PROS: Opportunity to reach large numbers of people throughout the world.

Many different types of information can be offered to consumers, including photos and videos, details regarding winemaking, food and wine pairings, information on upcoming events.

Can provide different levels of information to different levels of interest, eg. Detailed tech sheets for High-Involvement vs Basic information for Low-Involvement.

Can incorporate online shop w/out overheads of physical store.

CONS: Website design must satisfy internet consumers who can be easily frustrated by sites that are not attractive, easy to use/navigate, fast or well-constructed.

In order to make their site stand out, a company will need to pay either an outside web design company or hire dedicated design-focused staff members. Additionally, round-the-clock support will be required in order to cope with any technical issues or website crashing.

Attracting consumers to the site can be difficult, as most consumers rarely scroll past the first handful of results provided by a search engine such as Google.

There are ethical implications as well; though most websites advertising/selling alcohol require a visitor to verify that they are of legal drinking age, this relies on the assumption that visitors are being honest.

Question 29

PROS (4) and CONS (4) of SOCIAL MEDIA:

Answer 29

PROS: Allows companies to engage in dialogue with consumers, rather than simply talking at them.

Especially effective with reaching younger consumers (‘Millenials’).

Can potentially provide invaluable free promotion.

Allows ‘ordinary’ customers to leave ‘peer’ reviews, which can have significant effect on consumers’ purchasing decisions, especially with consumers who often trust fellow social media users more than established critics.

CONS: Care must be taken to include information other than pure promotion/advertising, as this can be seen to alienate followers = costly/time-consuming

Important to choose the correct, most effective social media channel for promotion; studies show preference for more visual channels such as Youtube and Instagram vs. Facebook and Twitter.

Companies may need to employ dedicated staff to monitor and maintain their social media presence, which can add to costs.

Giving web users the ability to add their own reviews or content adds the risk of some uploading inappropriate materials, which must be taken down immediately to avoid negative publicity.

Question 30

PROS (3) and CONS (2) of SMARTPHONE APPS:

Answer 30

PROS: Allows users to find, read about, purchase or comment on/review individual wines.

Large potential audience, as many consumers spend more time on their phones than a computer.

Certain apps can be designed/marketed towards consumers with different levels of involvement, eg. apps to track cellar contents for high-involvement consumers.

CONS: Costs, usually in the form of commission, associated with having products sold through the app.

Typically only used by high-involvement consumers.

Question 31

PROS (4) and CONS (3) of WINE TOURISM:

Answer 31

PROS: Provides opportunity to engage directly with consumers; especially important for nascent producers and emerging wine regions.

Consumers who visit wineries are more likely to purchase these wines and subsequently recommend them to friends/family (‘word of mouth’ marketing).

Opportunities to increase revenue by other means than simply selling wine, such as event hosting, space rental, full experience packages (spa treatments, etc…) dining and more.

Appeals to both high-involvement (eg. in-depth tours in vineyards, winemaking facilities) and low-involvement (eg. day trip to a Cava producer in Sant Sadurni d’Anoia in Catalunya) tourists. Tastings/tours can be pitched at different levels.

CONS: Of course, development of wine tourism incurs many costs, including developing infrastructure, hiring staff, maintaining facilities, additional licensure.

Takes time away from day-to-day operations in the vineyard/winery.

Only readily available to larger producers/companies that have the funds/staff/infrastructure to offer such amenities; not easily accomplished by small wineries.

Question 32

PROS (3) and CONS (4) of EVENTS / FESTIVALS:

Answer 32

PROS: Opportunity to gain exposure to broader audience (both high/low involvement consumers).

Gives consumers the ability to try a wide array of a producer/region’s wines without them needing to actually visit the winery itself.

Chance to engage one-on-one with consumers, forming relationships.

CONS: Costs associated with attending events (renting booth, providing staff/brand ambassadors).

Additional design expenses will be needed to make booth stand out from competition.

Usage of wine for samples that otherwise could have been sold.

Events such as these must be managed properly in order to dissuade disorderly conduct that can result from excessive and reckless consumption of alcohol.

Question 33

PROS (2) and CONS (2) of REVIEWS / AWARDS:

Answer 33

PROS: Positive reviews from renowned critics/publications can significantly boost sales.

Awards/reviews can be used in promotional materials used by not only the winery/company, but also distributors, importers and retailers.

CONS: Cost of entrance fees for wine competitions, eg. Decanter World Wine Awards or International Wine Challenge.

Cost of sending samples to critics, tasting panels, competitions etc…

Question 34

PROS (3) and CONS (2) of PUBLIC RELATIONS (PR):

Answer 34

PROS: Creates favorable image/association in the minds of consumers.

Usage of ‘Brand Ambassadors’, especially celebrities (eg. Roger Federer for Moët et Chandon), can appeal to consumers who may not be avid wine-drinkers, but are fans of the celebrity.

Hiring social media ‘influencers’ or Key Opinion Leaders can allow a brand to reach a huge audience via that entity’s followers.

CONS: Costs associated with hiring a PR Agency, paying a celebrity, influencer or Key Opinion Leader.

Risk of celebrity scandal tarnishing the image of the brand with which they are associated, which can require costly PR “damage control”, eg. Lance Armstrong’s doping scandal and its associations with Nike and Budweiser.

Question 35

What does the marketing strategy need to accomplish in terms of

PRODUCT (3)?

Answer 35

• communicate characteristics of product and how it will satisfy needs/wants.
• presentation (bottle/label design) should appeal to target consumer.
• describe the experience that the product will deliver to the consumer.

Question 36

What does the marketing strategy need to accomplish in terms of

PRICE (3)?

Answer 36

• purposefully under-pricing product at first, raise price later (‘penetration’ strategy).
• price high if wine is meant to be a ‘luxury’, special occasion, or ‘gift’ product.
• lower slightly to appeal to psychological associations, e.g. $9.99 instead of $10 (closer association to ‘9’ than ‘10’).

Question 37

What does the marketing strategy need to accomplish in terms of

PEOPLE (4)?

Answer 37

• choose correct medium for advertising, eg. social media, print, etc…depending on the target market.
• adjust attitudes, behaviors to create positive customer experiences, whether directly with consumers, or distributors with retailers, etc…
• sufficiently knowledgable staff to effectively sell products, whether at cellar door or to distributors/retailers.
• maintain consistent branding through all parts of the supply chain; eg. hold complimentary masterclasses for distributors, retailer staff etc…

Question 38

What does the marketing strategy need to accomplish in terms of

High-Involvement vs Low-Involvement Wine Drinkers (3)?

Answer 38

• understand that different consumer types will buy wine at different outlets

HIGH INVOLVEMENT: shop at specialist retailers, premium supermarkets. drink/dine out at specialist wine bars, fine dining restaurants; these outlets are ideal for wines from lesser-known regions, grapes, even if low quantity (they sell less vol.)

LOW INVOLVEMENT: lower $ point, simple flavor profile, shop a supermarkets, drink/eat at non-destination restaurants.

Question 39

What does the marketing strategy need to accomplish in terms of

PLACE (3)?

Answer 39

• choosing effective distribution channels; smaller production, premium wines through specialist intermediaries, big brands through larger intermediaries.
• choosing the right country; tastes vary, may be necessary to produce wines with different flavor/aroma profiles, levels of sweetness/alcohol.
• be aware of legislation, taxation, restrictions of target country.

Question 40

What does the marketing strategy need to accomplish in terms of

PROMOTION (2)?

Answer 40

• tailor promotions according to different psychographical and behavioral segments; a single type of promotion will not be enough to appeal to an entire segment.
• awareness of legal constraints from country to country, eg. in terms of alcohol advertising, price promotions.