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.

+ any value-added features like gift wrapping

Question 3

The 5 Ps:

Define PRICE (2)

Answer 3

This is the amount which a consumer pays for a product.

• It includes 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 incur in order to buy the product.

Question 4

The 5 P’s:

Define PEOPLE (2):

Answer 4

Attitudes and behaviours of the target consumer

Or

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 customers shop, 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

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

Strategy : 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 ?

Answer 8

Under-price the wine to try and persuade price conscious customers to try a new wine, with the hope that they will permanently switch to this brand after the price is raised.

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, South 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 ?

Answer 16

Multi-buy/volume discounts

• Buy One Get One Free (BOGOF)
• Buy One Get One Half Price
• Buy 3 for the price of 2
• Receive % dicount when spending over certain amount or on certain number of bottles or more.
• Buy 2 large glasses of wine, get the rest of the bottle free (hospitality-specific).

Question 17

What are the 6 Marketing Methods at the POS ?

Answer 17

Marketing Methods at the POS :

• Price Promotions
• Free Merchandise
• Limited Edition Packaging / Design
• Contests / Competitions
• Consumer Tastings
• Staff Training / Incentives

Question 18

PROS and CONS of PRICE PROMOTIONS at POS:

Answer 18

PROS :

• Increase sales (during and after if successful) and brand awareness. Attract new customers.
• Help shift old stock or discontinued lines (bin ends)
• “Link saves” can encourage customers to try other types of product alongside the wine, thereby increasing overall sales.

CONS :

• No brand loyalty : Consumers associate the wine with promotions so will only buy it when on sale and won’t buy it once the promotion ends.
• The image of the wine may be damaged by the reductions.
• 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

PROS and CONS of FREE MERCHANDISE at POS:

Answer 20

PROS :

• Sales can increase, particularly around holidays, as these products make good gifts.
• Increase brand awarness

CONS :

• Doesn’t increase brand loyalty : Merchandise may not be viewed as exclusive/special because it is available to everyone.
• Additional costs of giving away free merchandise.

Question 21

PROs and CONs of LIMITED EDITION PACKAGING/PRESENTATION at POS:

Answer 21

PROs :

• Collectable : Collectors and investors may see wines packaged in exclusive packaging as collectable/desirable.
• Gift : Can be seen as a more original gift than a regular bottle
• Brand awareness : 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 and CONS 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

CONS :

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

Question 23

PROS and CONS 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

Question 24

PROS and CONS of STAFF TRAINING / INCENTIVES at POS:

Answer 24

PROS :

• Staff more efficient at selling : Educating staff helps them effectively sell the product, thereby making it more appealing to consumers.
• Staff encouraged to perform better : 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

What are the 9 Marketing Methods AWAY from POS?

Answer 25

Marketing Methods AWAY from POS :

• Advertising
• Sponsorship
• Websites
• Social Media
• Smartphone Apps
• Wine Tourism
• Events/Festivals
• Reviews/Awards
• Public Relations (PR)

Question 26

PROS and CONS of ADVERTISING:

Answer 26

PROS:

• Great exposure : Can reach a large and 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 air time / ad space, especially via media such as TV, cinemas, national press.
  • To contract the services of an outside ad agency
• Certain countries
  
  • completely ban advertising alcoholic beverages (eg. The UAE),
  • severely limit it (eg. France’s Loi Evin).

Companies must comply with different laws in different markets, creating additional administrative workload.

Question 27

PROS and CONS 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:

• Still quite expensive
• Subject to same legal restrictions and bureaucracy as regular advertising.
• It may seem inappropriate to associate alcohol consumption with sporting events, which theoretically promote health and well-being.

Question 28

PROS and CONS of WEBSITES:

Answer 28

PROS:

• Great exposure : Can reach a large and varied group of consumers throughout the world.
• Online shop can be incorporated
• Lot of space for information :
  
  • Different types of information can be offered to consumers, including photos and videos, details regarding winemaking, food and wine pairings, information on upcoming events.
  • Different levels of information to different levels of interest, eg. detailed tech sheets for High-Involvement vs Basic information for Low-Involvement.
• SEM can be very efficient to reach new customers

CONS:

• The website must be attractive and easy to navigate.
• Cost of creating : Need to hire an outside web design company or hire dedicated design-focused staff members.
• Cost of maintaining : Additionally, round-the-clock support will be required in order to cope with any technical issues or website crashing.
• SEO : 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.
• Laws : 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 and CONS of SOCIAL MEDIA:

Answer 29

PROS:

• Possibility 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:

• Must include information other than pure promotion/advertising, as this can be seen to alienate followers = costly / time-consuming
• Need to employ a Community Manager to monitor and maintain social media presence, which can add to costs.
• Risk of bad reviews / contents from customers

Question 30

PROS and CONS 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 on a computer.
• Certain apps can be designed/marketed towards consumers with different levels of involvement, e.g. 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 and CONS of WINE TOURISM:

Answer 31

PROS:

• Opportunity to engage directly with consumers (Particularly beneficial for new producers)
• Build consumer loyalty : 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 everyone (Tastings / tours can be pitched at different levels)
  
  • High-involvement (eg. in-depth tours in vineyards, winemaking facilities)
  • Low-involvement (eg. day trip to a Cava producer in Sant Sadurni d’Anoia in Catalunya) - sold to tourists.

CONS:

• Incurs many costs : developing infrastructure, hiring staff, maintaining facilities, additional licensure.
• Takes time away from day-to-day operations in the vineyard/winery.
• Not easily accomplished by small wineries (not enough funds/staff/infrastructure to offer such amenities)

Question 32

PROS and CONS 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:

• Can be costly : Producers have to pay to exhibit, hire staff to run the stand, use up stock as tasting samples, prepare the stand, travel cost, accommodation cost (if more than one day)
• Competition with other producers : Additional design expenses will be needed to make booth stand out from competition.
• Necessity to dissuade disorderly conduct that can result from excessive and reckless consumption of alcohol.

Question 33

PROS and CONS 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 and CONS 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?

Answer 35

Marketing strategy in terms of Product :

• 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?

Answer 36

Marketing strategy in terms of Price :

• 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?

Answer 37

Marketing strategy in terms of People :

• 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?

Answer 38

Marketing strategy in terms of High-Involvement vs Low-Involvement Consumers :

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

Question 39

What does the marketing strategy need to accomplish in terms of

PLACE?

Answer 39

Marketing strategy in terms of Place :

• 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?

Answer 40

Marketing strategy in terms of Promotion :

• 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, e.g. in terms of alcohol advertising, price promotions.