Chapter 8: An Introduction to Marketing Wine Flashcards
What is Marketing?
‘the management process which is responsible for identifying, anticipating and satisfying consumer requirements profitably’.
Identifying the target consumer and understanding their needs and wants is fundamental to successful marketing.
However, it is often not simply the wine that the consumer wants but also the experience the wine will bring: for example, confirmation of social status, ownership of something perceived as valuable or return on investment capital.
The marketing should therefore emphasise how the product can give the consumer the experience they are looking for.
What is the aim of marketing?
Create profits, whether this is through volume of sales (attracting new consumers, encouraging existing consumers to buy more) and/or value of sales (convincing consumers that it is worth spending more money on this product, compared to its lower-priced competitors).
Marketing campaigns cost money and resources; a successful campaign is one that achieves an adequate level of profit within a specified timetable
Overview of the Marketing Process
Creating and implementing the marketing strategy consists of five key stages:
- Identifying the product/brand to be marketed.
- Identifying the target market.
- Setting the objectives of the marketing strategy.
- Devising the marketing strategy (the ‘marketing mix’).
- Implementing and monitoring the marketing strategy.
This is not necessarily a linear process: for example, stages 2, 3 and 4 are closely interlinked. However, for the purposes of this guide, each of these stages will be taken in the above order.
How does SWOT divide factors
SWOT identifies factors that are relevant to achieving an objective, and divides the factors in two ways:
- Is the factor helpful or unhelpful to the achievement of the chosen objective?
- Is the factor internal to the organisation (such as resource or capability that would provide competitive advantage) or is the factor external, in the wider business environment (such as a political, economic, sociological, technological, environmental or legal factor or trend)?
SWOT Diagram
Swot: Importance of Specified Objective
In the absence of a specified objective, there is no reference point for evaluating whether a factor is helpful or unhelpful.
An organisational resource or external trend that is helpful for achieving one objective may be entirely irrelevant for another, or even an unhelpful distraction.
SWOT: Helps organization in a few ways
- For a given objective, to what extent do the various factors favour the organisation’s success in achieving that objective? (This is sometimes referred to as ‘strategic fit’.)
- Where there are mismatches between the factors and likelihood of success, what changes could the organisation make in order to achieve a better strategic fit? This is especially helpful in guiding investment in resources (such as vineyards, production equipment, labour) and capabilities (such as expertise to make a specified style of wine, create attractive packaging or lobby governments).
- Where there are threats, how can the resulting risks best be managed? Consider the likelihood and the size of impact of the risk, and the options to avoid it entirely, reduce probability or impact, transfer the risk (e.g. by purchasing insurance) or accept the risk and budget for its possible impact.
SWOT: Helps big picture
The SWOT process can also help the organisation to understand that a particular objective is not easily or realistically achievable, and to consider pursuing a different objective.
A beneficial side effect of working through the analytical processes is that the insights gained can inspire ideas for alternative, more achievable business objectives. These can then be fed into subsequent SWOT processes and evaluated.
Note that SWOT analysis is value neutral. It does not show whether the objective is ethical or not, it merely provides guidance on achievability.
SWOT: Setting the Objective
The objective to be evaluated is selected prior to the SWOT analysis. The exact origin of the analysed objective does not matter, because the SWOT analysis will sort the realistic from the unrealistic and show the way forward.
The origin of the analysed objective could be:
- Someone’s educated (or uneducated) intuition that a particular business opportunity exists.
- An individual’s personal business dream or aspiration.
- Something generated by other business tools, such as ones that determine unmet gaps in markets.
SWOT: Value Curve Analysis (example of Something generated by other business tools, such as ones that determine unmet gaps in markets.)
The analyst selects various factors that differentiate products within a particular market (such as price, packaging, prestige, convenience, history, environmental impact.
Rather than evaluating each factor separately, consumer research is used to identify common clusters of consumer demand. The result of the research and analysis may discover that there are clusters of consumer demand that are under-supplied, or even completely ignored by the industry.
An organisation can take into account the size of the opportunity and consider whether or not to develop products for that gap.
SWOT: Value Curve Analysis real example
Many people in the wine industry assume that the demand for premium-priced red wines is best met by wines that are dry and complex in flavour. An entrepreneur might conjecture that there is an under-supplied market for premium-priced red wines that are off-dry with simple fruit flavours.
Value-curve research and analysis might confirm this or not. If an opportunity is confirmed, then the next step for an organisation seeking success with such a product is to set a specific objective (e.g. ‘build a million-case brand for a premium-priced off-dry simple fruity wine’), and analyse its strategic fit through a SWOT analysis, and use the conclusions of the SWOT analysis to show the best way to achieve success.
Having set the objective, the next step is to establish what belongs in each of the SWOT boxes.
SWOT: Strengths & Weaknesses overview
In order to achieve an objective, what tools and resources are needed? What capabilities are relevant?
Compared to other organisations that might pursue the same objective, how does this organisation compare and do its internal resources and capabilities provide it with a competitive advantage? Can it achieve the objective better? Faster? More affordably?
SWOT: Strength & Weaknesses (Resources)
A resource is a ‘thing’ that the organisation has access to, that it can exploit as a tool. In the context of wine production, some resources that could be considered include:
- An established reputation in wealthy, growing markets.
- Reliable and affordable supply chain relationships.
- Vineyards in locations that favour a particular style of wine.
- Wine production facilities that are optimised for a particular style of wine.
- Access to reliable, affordable support industries (logistics, bottling and labelling, training of production staff, research and lab analysis).
- A strong financial position to enable investment.
- Internal expertise and experience, and the ability to make best use of these.
SWOT: Strength & Weaknesses (Capability)
A capability is something the organisation is able to do. Some capabilities include ability to:
- build strong new brands or grow existing ones (considering all the Ps of marketing);
- scale production volumes up or down in response to changing demand, or change products to follow rapid changes in demand;
- experiment to innovatively develop and launch new products;
- lobby political organisations to achieve favourable political outcomes (such as subsidies, favourable regulations, governmental promotion).
SWOT: Opportunities & Threats (Factor Requirements)
When considering the external business environment, a good SWOT analysis depends on the factors that are considered being:
- real and accurately described;
- everything that is most important to consider;
- relevant to the objective under discussion.
For any factor, also consider what the trends are that might affect the helpfulness or hostility of the external business environment in the future, as well as the present.
