D2: Marketing (7)

Question 1

What is marketing

Answer 1

Definition given by Chartered Institute of Marketing (CIM), which states that marketing is the management process which is responsible for identifying, anticipating and satisfying consumers requirements profitably

• • identifying the target consumer and understanding their needs and wants is fundamental to succesful marketing
• it is not simply the wine the consumer wants, but also the experience the wine will bring
• for example: social status, ownership of something perceived as valuable or return on investment capital

So the marketing should therefore emphasise (benadrukken) how the product can give the consumer the experience they are looking for

Question 2

What is the ultimate aim of marketing?

Answer 2

1) create profits, either through volume of sales (attracting new consumers, encouraging excisting consumers to buy more
2) or value of sales (convincing consumers that it is worth spending more money on this product, compared to its low priced competitors

3) marketing campaign cost money and resources
* a succesful campaign is one which achieves an adequate level of profit wihtin a specified timetable

Question 3

Everyone in the entire company need a clear marketing strategy and everyone need to know what is expected of them. some key stages:

Answer 3

1) Identifying the product/brand to be marketed
2) analyse the current market
3) identifying the target market
4) setting the objectives of the marketing strategy
5) devising (bedenken) the marketing strategy (marketing mix)

6) implementing and monitoring the marketing strategy

** this is not necessarily a linear process: for ex stages 3,4,5 are closely interlinked. however for the purpose of this guide, each of these stages will be taken in the above order

Question 4

Identifying the product/brand to be marketed:

Answer 4

1) understand the product characteristics
2) the product may be brand new, launched to fill up a gap in the market

3) also the product have a life cycle:
* establishing in the market the sales and product will grow quickly,
* more people buy the product, sales will eventually stabilise as there are fewer people who have not yet bought it or if competition increased
* finally sales will begin to decline

Question 5

Product life cycle:

Answer 5

1) Introduction: the strategy should focus on getting the product into the market and gaining recognition and reputation, initially, distribution may be limited to a few carefully-selected channels to begin

2) growth: The product should be increasingly widely distributed and aimed at a broader target market
* to encourage strong growth

3) Maturity or stabilisation: The strategy should highlight the differences between the product and

4) Decline: Faced with the prospect of declined sales, a company may take steps to extend the lifecycle
By improving the product, updating the packaging, reducing the price to make it more competitive or seeking new markets

Question 6

Branding:

Answer 6

1) branding seek to move the product away from being a commodity to the extent that the consumers will want to buy that product even more than the min possible price

eg: if 2 Marlborough SB standing on a shelf, one of mid price and the other is cloudy bay and sells at premium price
- - the consumer may choose the more expensive wine because they specifically want to buy what cloudy bay represent and not just any sample of a marlborough SB

Question 7

What is brand ?

Answer 7

The set of physical attributes of a product or service, together with the beliefs and expectations surrounding it
* a unique combination which the name or logo of the product or service should evoke in the mind of the audience

Question 8

To be succesful a brand must create a positive image in the consumers mind and this can be achieved in a number of ways:

Answer 8

1) Substance: Succesful brands consistently deliver the same level of quality and style
eg: champagne houses produce a non- vintage which is consistent of good quality year after year

2) consumer trust: As a result of consistency, consumers come to trust a brand always give them what they want
- many low involvement consumers will therefore regularly buy their favourite brand of wine in preference to a cheaper, unbranded alternative which tey dont know

3) consumer engagement: the consumer should have a relationship with the brand and will ask for it by name
* they will feel that the brand’s marketing strategy is aimed directly at them
* * for the closeness of this relationship, succesful brands are aware that even the smallest change to their marketing strategy such as minor label redesign risk alienating loyal customers
- - so they will consider any such changes very carefully before implementing them

4) succseful brands have a story this creates an emotional attachment between the consumer and the brand
5) Price premium: many succesful brands command higher prices than similar generic products. many consumers view higher prices as a guarantee of quality
6) longevity: Many leading brands have been in existense for a long time yet some of the big players are also newcommers (old ones: Gallo 1930 Hardys 1850 Robert Mondavi 1960)

7) Brand name: easy to remember, easy to pronounce in all the relevant languages
Also some names in one language means something else in another:
- Mist (Maide in Saint Tropez), means also excrement (uitwerpselen in Germany)

Question 9

Story of wine

Answer 9

1) many consumers (especially millennials) ie those between legal drinking age and their mid 30s are attracted to products with strong stories

2) compared to some procucts it is easy to tell the story of wine for ex:
* what is the producers history ? have they been producing wine for generations ? did the producer have an interesting previous career
* where did the grpes grow ? single vineyard,… what other vegetation or animal life is there? stony soil, rocky,…
* how is the wine made ? organic, biodynamic, natural, sustainable
* is there a story behind the name of wine ? label design or bottle design

3) this type of information creates a sence of authenticity it links a wine to a particular place and a particular producer in a way that bulk production wines do not

4) however it is a more succesful story than just this, the story also covers matters such as price, where the wine is sold and how it is sold (ie marketing mix)
* it also includes what other people say about the product, making consumers part of the story

Question 10

In some instances it may be beneficial to have different brand names in different markets.

Answer 10

This is not merely a translation, but a different name ususally that is designed to better appeal to and resonate with the target market:

eg:
1) Penfolds (chinese tekens Ben Fu)
2) Lafite (La Fei
3) Casillero del Diablo Hon Mo Gui

Question 11

Many succesfull wine brands have names that contain references to geographical features (eg cloudy bay, blossom hill, banrock station, Felton Road)

Answer 11

It may be that, because wine is a product very closely linked to agriculture and the land
* such names gives the wine a sense of place (even if many are made up)

• • the name of a company founder can also be a successful brand name as it links the product to its heritage and gives a sense of longevity
• • champagne (Krug
• • port (Taylor’s Port

Question 12

Some wine brands have not only a brand name but also a logo

Answer 12

okido

Question 13

For a successful brand protecting such assets through trademark registration is vital.

Answer 13

eg in chine trademark rights are given to the first person/company to file an application rather than being based on usage

Due to this a number of well knowed wine brands have needed to enter expensive legal battles to gain the right to own their brand name in the chinese market
* like Treasure Wine Estate’s battle to cancel the prior registration of the trademark Ben Fu (used for their penfold brand used by a person not using the trademark for any commercial means

Question 14

Measuring the strength of a brand or its value to a company is not as easy as the measurement of a tangible asset (tastbaar goed). The value of the brand to its owner tends to be termed brand equity, and typically includes components such as:

Answer 14

1) Brand awareness: the extend to which consumers are familiar with the brand
2) brand image: how consumers perceive (waarnemen) the brand
3) often amongst other measures

• • its an abstract object with many people simply talking about positive and negative brand equity
• • also many companies employ special consultants to calculate the financial value of their brand equity to include as an asset on their balance sheet

Question 15

Many terms are used to describe different aspects of branding or types of brands a few of the most relevant of the wine industry are:

Answer 15

1) Brand positioning
2) Private Label
3) Ladder Brand
4) Soft Brand
5) Luxury Brand

Question 16

1) Brand Positioning:

Answer 16

where a brand sits within a market and the cues indicate that position. it is often linked to retail prices

• various ways of categorizing brand position within a market have been suggested, one common method being:
  1) Value
  2) Standard
  3) Premium and
  4) Super Premium

The use of these terms and the price ranges to which they apply, can vary considerably even within the same market.

Question 17

A brand position is usually set at launch, having been intended to hit a particular price point.

Answer 17

1) if competition increases, a brand may have to lower its position to remain competitive

2) its rare but nevertheless possible over time and with a lot of work to raise brand’s position
eg: Symington Family Estates effort to raise the market position of their cockburn’s Port brand by modernising production, updating the brand image and introducing new higher end products

3) Some large wine companies, such as Concha y Toro and Hardys, have a variety of brands positioned in different parts of the market in attempt to attract as wide a range of consumers as possible

Question 18

2) Private Label:

Answer 18

1) Some supermarkets, deep discounters and larger chains of bars and restaurants have created a range of wines under their own brand name
* Sainsbury’s Taste the difference in the UK
* exclusive brand name Kirklan Signature by Costco in the USA

2) these wines may be produced by well know producers that have their own brands, but their name will not appear prominently on the private label, if at all
3) private label products are only available from the retailer or restaurant that created the brand

Question 19

3) Ladder Brands: These are intended to give consumers easy-to-understand ‘rungs’ to help them trade up to a higher-priced and better-quality expression of the brand the whole range benefits from the identify of the most prestigious expression of the brand.

Answer 19

Ladder brands tend to have three rungs:
1) Accessible: The least expensive with the greatest distribution and the one that consumers will buy most often

2) Stretch: Affordable, but only for special occasions

3) Aspiration: The most prestigious expression of the brand. most of the brand’s consumers will never buy it as it costs far more than they are willing or able to spend on wine
* however it shoult cast it super- premium identity over the entire ladder

Question 20

Ladder branding works very well for luxury products such as champagne:

Answer 20

1) accessible (toegankelijk): Pol Roger: Non Vintage
2) Stretch: Pol Roger Vintage
3) Aspiration: Pol Roger Cuvée Sir Winston Surchil

Question 21

As for still wines, ladders may work for some ‘soft brands’ bought by high involvement consuers, for example in Burgundy:

Answer 21

1) Accessible: Bourgogne Rouge
2) Stretch: Gevrey Chambertin
3) Aspiration: Le Chambertin Grand Cru

Question 22

however ladder brands tend to work less with wines bought by low-involvement consumers:

Answer 22

1) consumers who buy the accessible wine will be aware that the aspiration wine exists
* result: There is no identity given by the aspiration wine to the rest of the ladder

2) in the worst situation the image is of the entire ladder is based on the accessible wine and consumers could be reluctant to trade up even to the stretch rung as they believe it to be overpriced

Question 23

Soft Brand is a term sometimes used to describe any cue (aanwijzing) used by a consumer when choosing to buy one product in preference to another

Answer 23

In the wine industry this can b:

1) a country or region
2) Geographical indicator: Pouilly Fumé
3) Grape variety: merlot, zinfandel
4) even a style of wine: oaky chardonnay

Question 24

The meaning of soft brands is controversial (betwist)

Answer 24

1) some marketing professionals are happy to accept the excistance of soft brands and use the term
* others do not consider this to be brands at all

2) certainly a soft brand does not does not conform easily to the definition of brands as given by the american Marketing Association

*** Yet a soft brand does share many, but not all, the characteristics, identified as features (kenmerken) of leading brands

Question 25

Whatever it may be called, this is a very important element of wine marketing:

Answer 25

Many wine producing countries and regions promote themselves succesfully in this way
*and the significance of geographical indicators in creating a regional identity of brand is increasingly acknowledged

• whilst sauvignon blanc is produced around the world
  only wine from a small specifically designated area in the Loire valley of france can be labelled as Pouilly Fumé

*** most producers are too small to become a well knowed brand, but they can benefit from the AOC’s reputation to market their wines

Question 26

Even outside the EU, Geographical Indicators are being created largely for marketing purposes

Answer 26

witness the ever-growing number of AVAs being created in california

Question 27

Luxury brand:

Answer 27

1) as with ‘fine wine’ there is no agreed definition of what makes a luxury brand

2) these tend to be a super premium priced wine which only a very few consumers can afford
* champagne prestige cuvées
* Bordeaux premier cru classé and the most expensive alifornian wines

Question 28

Luxury brands promote the idea that they are scarce even if:

Answer 28

1) as in the case of many champagnes, this is not always the case
2) The percieved scarcity is one reason why luxury brands can usually charge a large premium

3) The marketing may also promote other assets of the product such as the quality of the fruit, vintage, rich heritage

• • every aspect of marketing strategy for the product is likely to promote the idea of luxury
• eg sponsorship of luxury and exclusive events
• positioning in the most upmarket retailers and on the winelist of fine dining restaurants

Question 29

according to the drink business using Euromonitor date in 2016 the worlds 10 best selling wine brands were:

Answer 29

1) Barefoot USA 202,5 milion
2) Concha Y Toro Chile 146,7m
3) Gallo Usa 135m
4) Changyu China 135m
5) Yellow Tail Australia 103,5m
6) Sutter Home USA 94,5m
7) Robert Mondavi USA 90m
8) Hardys Australia 91m
9) Beringer USA 67,5m
10) Great Wall China 63m

*** Most of these brands are concentrated at the less expensive end of the market

Question 30

in 2015 these were the 10 best selling champagne brands:

Answer 30

1) Moet en Chandon 22,5m
2) Veuve Clicquot 14,25 m
3) Nicolas Feuillatte 8,1m
4) GH Mumm 5,7m
5) Laurant perrier 5,4m
6) Taittinger 4,1m
7) Pommery 3,3m
8) Piper Heidsieck 3,2m
9) Lanson 3,1 m
10) Canard Duchene 3,1m