D2: Devising the marketing strategy (9)

Question 1

The marketing mix:

Answer 1

a combination of factors that must work together for the strategy to work

** if any element is weak, this will weaken the entire marketing effort

Question 2

One common way of identifying those factors is the 5p’s:

Answer 2

1) Product
2) Price
3) People
4) Place
5) Promotion

• some use 4P and leave people
• • some use 7 ps and use Physical evidence and Process
• • related mainly to the delivery of services rather than products

Question 3

1) Product: This is the product which is being marketed, including all packaging and branding and any value-added features, for ex gift wrapping in a wine shop and a winery’s wine club

Answer 3

Marketing should communicate the characteristics of the product that will appeal to target consumers and how it will satisfy their needs and wants

Question 4

The presentation should be designed to appeal the target consumer

Answer 4

Different types of consumers are often attracted to different features on the labels

** the marketing should also describe the experience that the product will deliver to the consumer as this is seen as an increasingly iportant part of marketing

Question 5

The wine market is often described as saturated (verzadigd)

Answer 5

There are already enough products to satisfy consumers needs and there are few gaps in the market

** there is also competition between relatively similar products
– in such a market companies need to explain clearly how their product is different to that of a competitor
(higher q, better value for money, organic, vegan,…)

Question 6

2) Price:

Answer 6

This is the amount which a consumer pays for a product

* it includes any additional costs such as discounts and delvery

Question 7

The ideal pricing strategy:

Answer 7

Strike a balance between the producer’s desire to make a reasonable profit and the price that sufficient numbers of consumers are willing to pay for it
** this can be affected by a number of factors through supply and demand and costs through the supply chain

Question 8

Some pricing strategy:

Answer 8

1) enterig the market with a relatively low price to undercut the competition and rapidly reach a wider section of the market
* the expectation is that the consumer will quickly switch to the lower priced product
* * this is known as a penetration strategy
* ** subsequent attempts to raise the price may not be successful

Question 9

Some tests are done:

Answer 9

consumers are strongly influenced by price:

1) many people get more pleasure from a wine they think its expensive than from the same wine they think its cheap

Question 10

Also the consumer is more willing to pay for a bottle of $9,95 than 10$

Answer 10

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Question 11

3) People:

Answer 11

the attitudes and behaviours of the target consumer so the other aspects of the marketing mix can be tailored:
eg
Consumer is not very active on social media, there is little to be gained by running an intensive social media campaign

Question 12

Some use ‘people’ for the relation between the company, its staff, its partners and its consumers

Answer 12

and includes aspects such as employee attitudes and skills and customers service

Question 13

A producer needs to ensure that they have sufficiently knowledgeable and trained staff to sell their product

Answer 13

Either to final consumers at cellar doors or consumer event

Question 14

4) place:

Answer 14

EG: high involvement consumer:

• buys wine in independent specialist retailers
• more likely to shop at the premium supermarket chains but are being increasingly attracted to the deep discounters
• tend to drink at specialist wine bars and finedining establishments
• as these consumers are keen to expand their knowledge and experiment, so placing wines from lesser known regions or grape varieties (if the quality is usitable)

eg: Low involvement consumer:
* looking for wines with a simple aroma/flavour profile
- but which meet a certain q standard
* tend to buy wine at supermarkets
* drink and eat in non destination restaurants
* products likely to appeal to the low involvement consumer should therefore be placed in such outlets

Question 15

Also consumer tastes vary from country to country and in order to satisfy these

Answer 15

it may be necessary to produce wines with different aroma/flavour profiles, level of sweetness and alcohol to fit in the markets you want

Question 16

Issues such as legislation, taxation and duty or restrictions on distribution, such as monopoly markets and the us three tier system:

Answer 16

may make some markets less attractive than others

* also a producer may decide that they cannot sell their wine profitable in so-called price sensitive markets

Question 17

Producer may also focus on more or less mature markets:

Answer 17

eg
1) Mature market: Markets where wine papears to have reached its potential with stable or declining volumes

2) Established markete: Markets with strong historical growth which is tailing off (afzakken)
3) Growth markets: markets where wine is a mainstream roduct and or experiencing growth
4) Emerging markets: Markets where wine is experiencing growth and shows potential from a relatively low base
5) new emerging markets: Markets where wine is still a relatively new and unknown beverage, but showing some potential

** markets can move up and down in this system
eg italy once was a mature market, but now experience an increase in sales again and is therefore now classified as growth market

Question 18

In very general terms:

Answer 18

A mature and established market show the greatest amount of saturation and the least growth, but have the advantage not only of reliable trade structures and routes to market, but also an established wine culture

** bu contrast emerging and new emerging (opkomende) markets may hold potential for most growth but also carry the most risk and often do not have the structures or place for an easy route-to-market

Question 19

promotion at the point of sale:

Answer 19

Many retailers regularly offer price promotions of one sort or another (although these promotions are rarely used by deep discounters)
the typical aim is:

• increase sales of existing products
• gain volumes for new products or attract new customers
• sometimes they can be used to help shift old stock or discountinued (stopgezette) lines (often called bin ends)

Question 20

Price promotion: those who effectively reduce the price of a product usually for a limited period:

Answer 20

• a specific amount or percentage discount on all or selected items
• Seasonal sales
• discounts on certain days (often used by the hospitality trade to encourage business on quiter weekdays
• discounts for certain groups of people (eg students, members of the armed force

Question 21

Price promotion: multi buy or volume discount:

Answer 21

• buy one get one for free BOGOF
• Buy one, get one half price
• Buy three for the price of two
• save a specified amount or percentage when spending over a certain amout or buying a certain number of bottles or more
• (in the hospitality sector): buy, for example, two large glasses (25cl of wine and get the rest of the bottle for free

Question 22

Succes of a promotion cannot be judged until the promotional period has ended and the price returned to normal:

Answer 22

although sales will drop once it is increased again
- they will still be higher than they were before the promotional period

however there is a risk that the promotion will not builld consumer loyalty to the product or even the retailer when the price return to normal

Question 23

Also reducing the price can be a risk as it can damage the image of the product in the mind of the consumer:

Answer 23

who may come to the view the reduced price as the correct price for that particular product

Question 24

Multi buys and volume discounts are less likely to affect the consumers image of the product

Answer 24

as the reduction in price of the individual products may not be immediately apparent

• • Although these promotions can be controversial as they are seen to encourage excessive alc consumption
• • for that reason they have been banned in some places (sweden, scotland)

Question 25

There are two further types of price promotion which carry less rsk of devaluing the product image

Answer 25

1) link saves: offer consumer who buy one product a reduced price on another product from a different category
eg: wine will complement with certain food, full price on wine but reduction on food

2) also discount on delivery costs or free for order from a certain amount of bottles or price

Question 26

Promotions can be highly benefical for producers as they can increase the sales and brand awareness

Answer 26

however many big retailers expect producers to meet the cost of any promotion, including any loss in sales revenue (omzet)
* result that they may only be viable for larger producers

Question 27

Free merchandise:

Answer 27

eg before holliday to present the product as a gift:

• a bottle of wine in presentation pack with 2 glasses
• also corkscrewers, ice buckets
• also other items not related to wine like umbrellas

Question 28

Limited edition packaging and presentation:

Answer 28

1) some producers of super premum wines offer exclusive, elaborately designed presentation which are prized by wine investos and so contributes to the luxury brand image

2) others create these linked to major events like football world cup or wolympic games
* such as Champagne Lanson limited ed tie in with its sponsorship of the Wimbledon tennis Championships every year
- it can be fun for consumers
- but also a way to introduce new consumers of the brand

Question 29

Competitions:

Answer 29

eg New Zealand wine producer could offer anyone in a particular export market who buys a bottle of their wine the chance to enter a draw to wine a two week holiday to new zealand

• this can be more attractive to the consumer as they can win something exclusive
• • also opportunity to collect consumers contact detaills which they can use for further promotions, subject to data laws in the relevant jurisdiction

Question 30

Tastings:

Answer 30

There can be a cost to the retailer of openng bottles which they could otherwise have sold.
– however some distributors and producers are willing to offer some free bottles for the purpose of tastings

tastings can increase sales:
eg low involvement consumers are nervous about spending money o wine they do not know if they will like the taste
** if they like the wine they taste, they are willing to buy the wine andalso in the future
** even if the customers do not like the wine, they may well buy someting else whilst they are in the shop

Many distribution companies offer to host in store tastings to promote tjeir wines and will send a representative to talk about the wine.
* sometime they arrange the winemaker to come over and talk

Many restaurant also now host wine tasting dinners where the wines are matched with different courses of food

Question 31

Staff training and incentives (stimulanse)

Answer 31

Educating staff about how a wine is made and allowing them to taste it helps them to promote the product with more confidence and enthusiasm and will enable them to tell the story of the wine

** also staff may be offered an incentive (stimulans) to sell more of a particular product
eg selling more of a particular brand of champagne during the promotional period with an expense-paid viit to the region

** in some markets such as China this is forbidden

Question 32

Price promotion: away from the point of sale:

Answer 32

1) advertising
2) sponsorships
3) Websites
4) events and festivals
5) reviews and awards
6) public relations

Question 33

1) advertising:

Answer 33

can be a very powerfull tool for promoting a product to a potentially large and varied group of consumers
** a succesfully campaign can remain in consumers minds for long time after it has been withdrawn sometimes even for years

Question 34

advertising campaigns can be expensive, most advertising campaigns are conducted through a combination of channels:

Answer 34

1) tv or cinema: most powerful and can reach the largest number of people, very expensive (especially in prime time) sometime product placement in a tv programme or a film can sometimes be used instead of advertising
2) radio: slightly less effective than tv or cinema, good for companies with less budget, but the lack of image can make them less memorable

3) Press advertising: striking full page image with little or no text can be very effective at attracting readers and giving a much more detailed story than tv or radio slot and often at lower costs
* large brands will advertise in the general non specialised press to reach as many people as possible
* most wine companies will use specialist wine or food publications
* also some companies pay respected wine writers to write articles specifically about them and their wines in such publications

4) the internet: very easy way to advertise products ocheaply to a large, global audiance

5) billboards: must have a striking and memorisable image as people are unlikely to be able to look at them for very long
* however posters at railstations or busstops can be more detailed as the people are waiting on their bus or train

Question 35

If there is translation needed, be aware of the language and eventually nothing offended could be said in that language

Answer 35

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Question 36

Some countries have restricted the advertising of alc beverages:

Answer 36

These range from total prohibition (UAE and Quatar) through very stricted control such as the Loi Evin in france

Question 37

2) sponsorships:

Answer 37

• Cono Sur CHL (tour de france)
• Mouton Cadet (Golf’s Ryder Club)
• Champagne Carbn (formule one podium celebrations)

In some cases the deal simply involves display of a business logo on billboards or participants clothing
** other deals give the sponsor exclusive rights to be served in the bars and hospitality venues at the event

Question 38

Some companies also sponsor tv programs:

Answer 38

this is cheaper than a television advert and the logo or short film of the company shows up at the beginning and or end of the program

Question 39

3) Websites:

Answer 39

1) a website can give consumers a great dal of information about a business enhaced through the use of photographs and videos
* for wine: can give the consumer the story of the wine, offer foor and wine pairing, incorporae an online shope

it can provide different levels of information to satisfy different types of consumer: eg
* there may be basic details about the wine but also for high involvement consumers there can be perhaps a link to more technical specifications

Question 40

A website must be attractve and easy to navigate.

Answer 40

Websites have become an essential part of brand image and must be consistent with the overall marketing strategy

• there are cheap options for build your own website (but these looks similar)
• but many wnts a more personalized so uses consultants and IT experts
• • this can be expensive however in some cases the company may be able to recoup some of these costs by selling advertising space on the site

Question 41

companies want to ensure that as many people as possible find their website

Answer 41

can be difficult given the vast number of websites now in operation
* studies have shown that people searching online rarely go beyond the first page of the google search page

** For this reason companies use a variety of ‘search engine optimisation’ techniques to ensure the website features as high as possible in search results.

Question 42

4) Tourism

Answer 42

Tourism can increase sales, but:

1) developing the infrastructure can be very expensive
2) tourist can also get in the way of day to day operations in the vineyard and winery

3) small wineries may simply not have the staff to deal with large numbers of tourists
* * therefore some wineries only run occasional events and organised tours whilst others do not encourage visitors at all

Question 43

Many wineregions have developped successful wine tourism strategies bringing together not just producers but also other tourist businesses:

Answer 43

• tour companies, * Restaurants, *hotels
  they have created wine trails which link up a number of producers and which visitors can follow
  eg elsace, these includes cycle routes

** Napa Valley Wine Train which includes a gourmet dining experience with napa valley wines aboard vintage rolling stock and includes the option of winery visits

Question 44

5) events and festivals:

Answer 44

An increasing number of wine regions are organising festivals which bring together producers from that region.
* they often take place in Urban areas and provide an ideal opportunity to taste a variety of producer’s wines without having to travel out to vineyard and wineries, which tend to be in Rural areas

** these events usually attract high involvement consumers, but because they festivals include live music and food and other entertainment they can attract a broader range of people

Question 45

The benefit of making sales and winning new customers have to be offset against the cost of attending these events

Answer 45

Producers usually have to pay to exhibit and may have to pay additional staff to run the stand.
In addiiton there is a cost of preparing the stand:
– these will vary depending on the type of event ranging from a single table to a more expensive branded pop up bar with a seating area and props (rekwisieten)

Question 46

The stand also need soething to stand out to attract visitors

Answer 46

1) there are a lot of other stands and producers competing for the visitors attention, unlike at their cellar door

2) all producers will offer tastings so every producer need to think about giving someting distinctive
* such as food pairing
* formal tasting with a specific range of wines
- - perhaps run by the winemaker

Question 47

Even at winefestivals tasting must be carefully managed:

Answer 47

1) it is not unknown for consumers who have paid to enter a fair to consider they have the right to drink (rather than taste) as much as possible
- - often with regretable results

2) to combat this problem, the staff can handle over vouchers

Question 48

Some producers also exhibit at events where wine is not the main focus such as food fairs, travel shows and music festivals.

Answer 48

These events attract an even wider range of visitors, many of them not regular wine drinkers

• • again this is the opportunity to engage with new consumers who might not otherwise try their wine
• • their less likely to generate sales or find new customers
• • for this reason the producer will usually charge for people to try their wine or simple sell wine by the glass

Question 49

6) reviews and awards:

Answer 49

Some people send their wine to known critics, let them try some samples and hopefully get a review
** Robert Parker buys his own wine to taste and make a review

Question 50

Wine competitions:

Answer 50

1) Decanter World Wine Awards
2) International wine Challenge
* producer can use this in their promotional material
* and it is also possible to purchase stickers
* it is known that critic scores and awards can influence the purchase decision (lower involvement and less knowledgeable

Many producers therefore consider the cost of entering the competition

Question 51

7) Public Relations:

Answer 51

1) companies regard good pr as essential to successful promotional activity

Question 52

Difference between advertising and PR:

Answer 52

1) advertising seeks to draw the attention to and promote a specific product or range of products whereas the aim of PR is to give the business the most favourable image possible in the mind of consumers

Question 53

PR activities:

Answer 53

1) Representatives of the company attending public events or appearing on TV or radio news programmes to comment on issues relevant to the business

2) press releases
3) Newsletters
4) Social Media

Question 54

A strong social/ corporate responsibility policy can help create a positive image in the eyes of many consumers

Answer 54

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Question 55

One Particular form of PR used by many larger companies is the brand ambassador:

Answer 55

1) whilst they are often full-time employees of the company, chosen for their excellent brand knowledge and their social and presentation skills

2) some companies uses celebrity as ambassador: he will feature in advertisings or campaign videos
eg: Roger Federer is a brand ambassador for Moet and Chandon

3) In China in particular key opinion leader KOL: a person, community or organisation that creates high quality content on social media and has a large group of loyal followers
* these may be hired by wine companies to create social media content about the company’s brands that is shared by the key opinion leader

– this option can be very powerful in markets where ‘word-of-mouth and peer recommendation is highly valued

Question 56

Implementing and monitoring the marketing strategy:

Answer 56

1) once the strategy has been drawn up, it can be put into practice
2) however marketing is a dynamic process and the strategy need to be kept up under constant review to check that it is working as intended

3) if necessary, the company should consider making changes to the strategy or even the objectives
4) ultimately the decision may have to be taken to abandon the marketing process and withdrawn a product from sale if it is considered that the objectives will never be met

Question 57

There are many ways of measure the success of a marketing strategy:

Answer 57

1) looking at the sales figures
2) profits
3) nuber of hits on the website
4) marketing research: to understand how consumers are reacting to the strategy
* ask consumers directly for feedback
5) also eye tracking: to analyse how consumers look at websites store layouts and adverts
* which estimates (schatten) the probability that specific communications will be transmitted throughout an individual’s social netwok