Wine marketing

Wine is a food product consumed for pleasure, but it is often considered a medicine because of its positive health effects. The consumption of wine is influenced by the situational experience, highly depending on where, with whom and under what circumstances it is consumed. Wine is a user experience product because its quality and features are revealed only while tasting and drinking. The objective components like the alcoholic or sugar content (revealed by laboratory testing) are not really important without the consumer’s trust in the winery, the terroir, the label of the bottle or some other features related to its production process.

Wine can be offered in itself, or as a component of a tourism product, and wine marketing may be associated to tourism marketing or place marketing.

Wine marketing includes many layers and levels. Botos (2004) lists 8 levels (Figure 4.16), representing a hierarchical order, with different roles and target groups. This structure makes wine marketing a complex task.

Figure 4.16. Hierarchy of wine marketing levels

Source: Construction by Lőke based on Botos (2004)

For wine as a physical product the usual tools of the 4Ps (Product – Price – Place – Promotion) of commodity marketing are applied. Although these tools are well known from any good marketing textbook, the key concepts are briefly summarised here.

The main component of the 4Ps is PRODUCT, i.e. the utility and the beneficial features of the commodity. Wine as a physical commodity includes tangible and intangible elements. As an abstract product it represents an aristocratic alcoholic drink. As an actual product, its quality, protected origin, product features, packaging, style and brand and similar features represent its core benefits. The concept of the augmented product includes additional services, as delivery and purchase on credit, warranty and price reclaiming, and other post-purchase services, and these enhance its competitiveness in the market.

The quality of wine refers to food health and safety, utility and taste. Objective quality indicators are the sugar content, the alcoholic content, acidity, and the contents of other components, as well as the certified origin. The origin of a product had been an important quality indicator in the ancient and medieval times. Wine makers used it to inform the consumer about the special geographical area and the related unique features of the product, while protecting it from fake products.

The indication of the origin is applied for wines and other products, for which the unique quality is the consequence of the natural and human character of the geographic region. In saturated markets the promise of uniqueness is an important tool to attract the customer. In France from the 700 indications of protected origin 400 refer to wines, and 73% of wine consumption involves wines of protected origin (AOC wines - Appellation d'origine contrôlée) (Gaál – Párdányi, 2006). The stable good quality is a natural requirement for such wines, and the protected origin label has a strong promotion and image value that increases demand, and gives legal protection against fake wines.

Producers create products, but consumers usually buy brands. The purpose of branding is to distinguish the product from the competitors’ products, and group similar wines into product groups. Australia, for example, uses „Wine Australia” as an umbrella brand.

The choice of a brand name may indicate the following product features (Gaál – Párdányi, 2006):

- Place of origin, protected geographical indication,

- A family name introduced to the market as a brand name, - The name of a grape variety,

- A fantasy name (to generate curiosity, or promote sales abroad), o name of mansions, palaces (Malatinszky mansion, Villány), o famous noble titles and family names (earl Dessewffy), o Latin or international names (Vulcanica).

- a name given by the distributor chain, - a brand name of the importer.

Besides quality, protected origin and branding, the presentation, style and packaging are also important tools for product differentiation. For bottled wines these are quite complex, including the shape of the bottle, the label, the cork and special decoration packaging. Although the core function of packaging is the protection of the product, it is also used as a „silent sales agent”, attracting consumer attention, and visually communicating the benefits of the product. The shape, size and colour of the wine bottle influences the image, as well as the label. The labels applied by the wineries in Bordeaux (France) communicate tradition, evoking the classical old French wine making atmosphere. Packaging is often the only way to catch the customer’s eye and provide information, outside speciality wine shops. As wine is often bought as a present, the promotional role of packaging is played by the decoration package.

The second component of the 4Ps is PRICE. Price has several functions in the marketing mix. It generates income, to cover costs and provide finance for future developments. For the consumer it also functions as an indicator of quality, and it is also a competitive tool that considerably influences market share.

Wineries may be either price makers or price takers. The same winery may be a price maker in the domestic market, while a price taker in a foreign market. Table 4.2 summarises the characteristics of premium, quality and cheap wines.

Table 4.2. International wine market segments and their main features

Features

Market segments Premium wines Medium quality

wines Cheap wines

Price high medium low

Competition unique product specific features mass product

Substitutes none other wines other drinks

Protection of origin very strong growing none

Efficiency of input

Excess production rarely occurs occassionally very often

Source: Botos-Szabó, 1995

While premium quality wines of protected origin represent high value and inelastic demand due to their unique features and non-substitutable character, the demand of cheap wines is very price-elastic, and demand is very sensitive to even a small change in price. The medium quality wines are half-way between these regarding price elasticity.

PLACE, the 3^rd component of the 4Ps, refers to the distribution channels by which the customer can purchase the product. For wine the typical distribution channels are consumption at the place of selling (wine tourism), the traditional producer- wholesaler-retailer-consumer distribution channel, the producer- retailer-consumer channel, and the direct producer-consumer channel.

Exhibitions and fairs play a complex role, belonging both to distribution channels and to promotion. Their functions include promotion, product presentation, market building, personal selling, but they can also be utilised for marketing research and information gathering (about competitors and their products, product testing, collection of consumer responses, etc.). Iűn such fairs producers are asked to explain the benefits of their products in detail, and identify the problems related to customers.

International and domestic (national) wine exhibitions, wine competitions, wine fairs, wine festivals, wine celebrations are examples of this. As the visitors to each event are easy to identify, their main interests and motivations are clear for the exhibitors, the

offers may be adjusted to the customer demand. Besides, these events communicate a complex experience. The participation fee is quite high for producers, but the events have strong promotional value, especially, when, as a part of the event, the product is assessed by professional experts.

The 4^th element of the marketing mix is PROMOTION. It consists of the marketing communication mix (advertisements, PR, personal selling, exhibitions and fairs, sales promotion, direct marketing), and all these components are relevant in wine marketing.

Advertising is a one-way form of communication. It includes messages delivered through paid mass-media to reach a targeted audience. Wine advertising is frequent in the gastronomy-related TV programmes, and in gastronomy journals.

Advertisements placed in professional journals and magazines are the most important tools, because their readers are the main target group. Wines can be efficiently advertised in brochures and information boards, event calendars, catalogues, booklets, and short films, or website videos associated with particular wine trails.

The purpose of sales promotion is to attract new customers and generate an immediate wish to buy. Sales promotion tools in wine marketing include free wine tasting, presentation of the products in the shop, a bottle of wine with a wine glass given as a gift, small presents with the company logo on them, information boards, recommended food recipees with the suitable wine. Personal selling is also a tool in the communication mix, with the aim of establishing interaction between seller and buyer, providing information, and facilitating a personalised sales offer.

Public relations is a non-paid and impersonal element of the communication mix, with the aim of delivering positive information about the company and its products, and enhancing the image of the company. It applies messages communicated through mass media. A television or newspaper feature story mentioning a company, for instance, can provide brand exposure, though the company cannot control the actual content of the media coverage. In wine marketing such PR value is attributed to a wine award granted by an independent professional wine organisation, or the title „wine-maker of the year”, or „winery of the year” – as these attract considerable media attention, and thus promote the winery and the brand.

When the core of the product is an intangible service, the traditional components of the marketing mix (the 4Ps) are extended to 7Ps. The additional elements are People (representing the human factor), Physical evidence, and Process (Kotler, 2003). In wine marketing the wine-related catering and hospitality services apply the 7Ps instead of the 4Ps only.