D2C12 Devising Marketing Strategy

Question 1

What is the marketing mix?

Answer 1

Elements of the marketing strategy, a combination of factors that must work together for the strategy to work
5Ps: product, price, people, place, promotions (6th P is packaging)

Question 2

What is the product in the context of marketing mix?

Answer 2

The product being marketed, including all packaging and branding and any value-added features, e.g., gift wrapping in a wine shop and a winery’s wine club

Question 3

What should marketing communicate with regard to the product?

Answer 3

> Characteristics that will appeal to target consumers and how it will satisfy their needs and wants
Presentation appeal to consumer
Experience delivered

Question 4

What does saturated market mean?

Answer 4

> There are already enough products to satisfy consumers’ needs and there are few gaps in the market
Strong competition between relatively similar products

Question 5

What should companies try to explain with regard to the product in a saturated market?

Answer 5

> How their product is different to that of competitor, e.g., better quality, better value for money, organic, Fairtrade etc

Question 6

What is price in the context of marketing mix?

Answer 6

> The amount which a consumer pays for a product
Includes price of the product on the shelf, and any additional costs such as delivery and discounts
Also includes cost in time and effort which the consumer is willing to go to in order to buy the product

Question 7

List some pricing strategies

Answer 7

> Penetration strategy: Low price for new product - undercut competition and rapidly reach a wider section of the market, expecting consumer to permanently to switch to new brand. May be difficult to raise price later

> High price: linked to more pleasure. Consumer with low wine knowledge buying for someone with more knowledge are likely to buy more expensive bottle

> Certain price points have psychological importance: 9. Producer may reduce price slightly so retailers can hit desired price point

Question 8

What does people mean in the context of marketing mix?

Answer 8

> Attitudes and behaviours of target consumers;
Relationship between company, staff, partners, customers, and includes aspects such a s employee attitudes and skill, and customer service

Question 9

Key features of people

Answer 9

> Ensure to have sufficiently knowledgeable and trained staff to sell
Any companies, such as distributors and PR, share producer’s image and vision
Present consistent message at all stages of supply chain

Question 10

What is place in the context of marketing mix?

Answer 10

Where the product is sold (e.g. bar?, supermarket?, specialist?)

Question 11

List elements to consider regarding place in the marketing mix

Answer 11

> Where target market shop, supermarkets? Specialist wine shops?
Identify most effective distribution channels: bulk? Specialist intermediaries?
Consumer tastes change between countries: produce wines with different aroma/flavor, sweetness and alcohol
Legislation, taxation and duty or restriction on distribution make some markets less attractive
Market maturity

Question 12

Briefly compare mature and emerging markets

Answer 12

> Mature and established markets show the greatest amount of saturation and least growth; reliable trade structures and routes to market; established wine culture
Emerging and new emerging markets hold potential for most growth; carry most risk; often do not have the structures in place for an easy route-to-market

Question 13

List major types of market, describe and give examples according to Wine Intelligence’s market maturity

Answer 13

Mature market: markets where wine appears to have reached its potential with stable or declining volumes. E.g., Germany, France, Switzerland, UK
Established market: markets with strong historical growth which is tailing off. E.g., Australia, Netherlands, Ireland, Japan
Growth markets: markets where wine is a mainstream product and experiencing growth. E.g., USA, Canada, Italy, Poland
Emerging markets: markets where wine is experiencing growth and shows potential from a relatively low base. E.g., China, Russia, Brazil
New emerging markets: Markets where wine is still a relatively new and unknown beverage, but showing some potential. E.g., Malaysia, Philippines, Vietnam, Thailand

Question 14

What is promotion in the context of marketing mix?

Answer 14

All methods used to promote a particular product

Question 15

Two categories of promotional activities

Answer 15

Those take place at point of sale

Those happen elsewhere

Question 16

List promotions at POS

Answer 16

>Price promotion
>Free merchandise
>Limited edition packaging/presentation
>Competitions
>Consumer tastings
>Staff training and incentives

Question 17

The aim of price promotions

Answer 17

> Increase sales of existing products, gain volume sales for new products or attract new customers
Shift old stock or discontinued lines

Question 18

What are bin ends?

Answer 18

Old stock or discontinued lines

Question 19

List major types of price promotions

Answer 19

> Effectively reduce the price of a product, usually for a limited period
Multi-buy or volume discount
Link saves
Discount on delivery cost

Question 20

Examples of price reduction

Answer 20

Specified amount or percentage discount on all or selected items
Seasonal sales
Discounts on certain days
Discounts for certain groups of people

Question 21

Give examples of multi-buy or volume discount

Answer 21

BOGOF
Buy one get one half price
Buy three for the price of two
Save a specified amount when spending over a certain amount, buying a certain number of bottles or more
Buy two glasses and get the rest of the bottle free

Question 22

How to fudge the success of price promotion

Answer 22

If price reduction has worked, although sales will drop once it has increased again, they will still be higher than they were before the promotional period

Question 23

Risk of price reduction

Answer 23

> Promotion does not build consumer loyalty to the product or even the retailer, when price returns to normal
Consumers view promotion simply as ways of buying products cheaply and switch to the next similar product to be on promotion
Damage image of product in the mind of consumer (direct reduction, not multi-buy)
Multi-buy and volume discounts encourage excessive alcohol consumption

Question 24

What are “link saves”?

Answer 24

When consumers can buy one product at a reduced price alongside another product from a different category

Question 25

Adv and disadvantages of price promotion for producers

Answer 25

> Highly beneficial: increase sales, brand awareness
Dis: big retailers expect producers to meet the cost of promotions including loss in sales revenue, meaning that they may only be financially viable for large producers

Question 26

Adv and disadvantages of free merchandise to producers

Answer 26

> Adv: generate sales without the need to reduce price of product
Dis: available to everyone, rarely seen as anything valuable by consumers, unlikely to create many additional sales

Question 27

Adv and disadvantages of limited edition packaging/presentation

Answer 27

> Contribute to brand image: exclusive, elaborately designed presentation cases for particular wines; packaging linked to sponsorship of major events promote brand image if regular
Dis: most seen by consumers as little more than a bit of fun; may be introduced to the brand in this way and buy again, but does not tend to increase sales in the longer term

Question 28

Advantages of competitions to producers

Answer 28

> Encourage to buy a product because it is a more attractive, higher-value proposition as it gives the chance to win something exclusive; collect consumers’ contact details, which are used for further promotion

Question 29

Adv and disadvantages of consumer tastings

Answer 29

> Adv: studies show that offering tastings increases sales; consumers, especially low-involvement, nervous about buying when they do not know if they will like it. Many will buy now and future, those who don’t may buy something else
Dis: cost of bottles which could have been sold, sometimes provided by retailer, sometimes by distributor and producers

Question 30

Benefit and disadvantages of using staff as promotional tool

Answer 30

> Education help promotes the product with more confidence and enthusiasm, allow them to tell story of wine
Incentives may not be illegal in certain markets (China)
Not suitable for large retail outlets

Question 31

In what kind of market is using staff as promotional tool

Answer 31

> Where there is personal contact between sales staff and consumer, such as specialist wine shops, bars, restaurants
Not appropriate for larger retail outlets such as supermarkets

Question 32

List promotions away from point of sale

Answer 32

> Advertising
> Sponsorship
> Website
> Social media
> Smartphone apps
> Wine tourism
> Events and festivals
> Reviews and awards
> Public relations

Question 33

Major benefits and disadvantages of advertising

Answer 33

> Benefit: well-designed advertising campaign can be very powerful tool for promoting a product to a potentially large and varied group of consumers. Can remain in minds for long time after withdrawn
Dis: can be very expensive, esp on TV, cinemas or national press; need advertising agency which can be very costly
Many countries have laws restricting advertising of alcoholic beverages

Question 34

Major channels of advertising campaign. Compare

Answer 34

> TV or cinema: most powerful, reach largest number of people; very expensive, only for large companies
Radio: slightly less effective than TV; less expensive; lack of images
Press: striking image to promote brand; can give more detailed story. Important to put in right place to reach the target consumer. “Advertorials”
Online: easy, in the form of company website, advert on another website or YouTube; lower cost
Billboards: most people do not stare for long - striking effect is important; railway stations and bus stops can contain a more detailed message as people spend longer here

Question 35

Forms of sponsorship

Answer 35

> Display company logo on billboards or participants’ clothing
Exclusive rights to be served in bars and hospitality venues at event
TV program sponsorship

Question 36

Advantages of websites as promotion

Answer 36

> Give great deal of information, enhanced through use of photographs and videos
Website can tell story, give details, offer paring suggestions, incorporate online shops, provide details of upcoming events
Provide different levels of information to satisfy different types of consumer: basic details for most; link to technical specification for high-involvement consumers

Question 37

Key features of websites

Answer 37

> Attractive and easy to navigate - building can be costly
Ensure as many as possible find website - search engine optimisation
Access by people below drinking age - filter, depend on visitor honesty

Question 38

Benefit of social media promotion

Answer 38

Having a dialogue with consumers rather than simply advertising to them

Question 39

How should companies utilize social media for promotion

Answer 39

> Non-promotional activity equally important - even if not related to wine, such as what is going on in the vineyard
Use the most appropriate social media channels to communicate with target market
Allow to leave reviews: peer review increasingly important on wine purchase decisions, esp among millennials; negative publicity and reviews need to be sealed with in a positive way

Question 40

How can smart apps be used for promotion

Answer 40

> User find, read about and comment on individual wines -free publicity
Shops can allow stock info to be shared through apps so that consumers can find who stocks the wine they want to buy

Question 41

Benefits and issues of wine tourism

Answer 41

> Benefit: particularly beneficial for new producers and those in up-and-combing regions, provides opportunity to engage with public; increase sales through tasting
Issues: infrastructure can be expensive; get in the way of day-to-day operations; staff requirement

Question 42

Forms of wine tourism

Answer 42

> Simple cellar door
Winery tour, visitor center
shops selling local produce, art and wine-related paraphernalia as well as wine
Cafe, casual dining and fine dining
Experience packages: participate in harvest or become winemaker
Hire space for events
Bring together other tourist business: wine trails, specialist tourist attractions (Napa Valley Wine Train)

Question 43

Reasons for high-involvement and low-involvement consumers to become wine toursists

Answer 43

> High-involvement: keen to widen wine knowledge

> Low-involvement: winery is in the region they are visiting

Question 44

Adv and disadvantages of using events and festivals as promotion

Answer 44

> Adv: take place in urban areas, chance to taste a variety of wine without having to travel to vineyards; attract mostly high-involvement consumers but can engage with new customers because of other attractions
Issues: cost - pay to exhibit, additional staff, use up stock that could have been sold, prepare stand; competition - need something distinctive; management - consumers drink too much (vouchers);

Question 45

Compare advertising and PR

Answer 45

> Advertising seeks to draw attention to and promote a specific product or a range of products
PR gives business the most favorable image possible in the mind of consumers

Question 46

List forms of PR activities

Answer 46

> Representatives of company attending public events or appearing on TV or radio news programs to comment on issues relevant to the business
> Press releases
> Newsletters
> Social media
> Brand ambassador

Question 47

Who could be brand ambassadors

Answer 47

> Full time employees of company, chosen for excellent brand knowledge and social and presentations skills
Celebrities who the company believes share value and image of their products; feature in campaigns / videos on brand website
Key opinion leaders hired to create social media content about the company’s brands shared with their huge number of followers; can be very powerful where word of mouth and peer recommendation is highly valued

Question 48

What are KOLs

Answer 48

> Person, community or organization that creates high quality content on social media and has a large group of loyal follower, ranging from thousands to millions