Revisiting Wine Marketing 101

Leo Burnett“If you don’t get noticed, you don’t have anything. You just have to be noticed, but the art is in getting noticed naturally, without screaming or without tricks.” … Leo Burnett

Chicken Little

Yes indeed, the sky may be falling. The Great Recession, which in the 6 months from September 2008 through March 2009 stripped in excess of $6.6 trillion from USA personal wealth, may be with us for awhile. The access to credit that drove US consumer spending behavior and the economy has largely evaporated. Although consumers have paid down debt at aiDepression Bread Lines coming soon to your neighborhood record pace, banks continue to reduce credit availability, expecting to retract an additional $1.5 trillion by lowering home equity loan access, consumer credit card limits and commercial lines of credit, restricting the ability of the US economy to recover recent spending patterns. Something lost in the swirl of marketing images from luxury Paneri Watchesconsumer brands such as Panerai Watches, Hasselblad, Hermes, Ferrari, Tom Ford, Christian Louboutin, Michael Kors, et alia, is that under the aura of glitz America has been on sale for quite sometime. Just like disco, to many consumers the idea of the luxury brand may be dead, at least for the foreseeable future. Value has coexisted with the concept of brand as long as brand has existed. It’s the yin and yang of the retail continuum. Walmart created explosive growth in the 1990’s with the concept of everyday low prices, and then created significant competition to chain grocers with the introduction of consumables in both Walmart and Sam’s Club stores. Costco has been in the game for awhile, and has become a major factor in wine sales. Target introduced the idea of designer products at value pricing, and now will match Walmart pricing toy for toy this Safeway Cut Case Wine Display w/Sale pricingChristmas. And then there’s Amazon. Amazon is no longer just your bookstore, but now a major online retailer across several categories of consumer goods and electronics. And, as soon as the compliance situation, delayed by the well documented situation at New Vine Logistics, can be sorted Amazon will be a major factor in wine sales. Trader Joe’s introduced the concept of healthful foods at value pricing back in the 1970’s. With the latest US Labor The Economic Elevator's going SouthDepartment statistics pegging the jobless rate at 9.8%, this is a dramatic understatement of the now real number that’s closer to 17% including people no longer actively looking for work and those now underemployed and working non-benefited minimum wage part-time jobs. It’s not surprising to see major retailers and grocers follow a strategy of value pricing. For anyone in this neck of the woods if you’ve been in Safeway recently the major merchandising theme is SAVE, and the yellow sale tags are inescapable. Lucky stores are following their philosophy of everyday low prices. And overriding this is a spirit of the new consumerism. It’s now cool to be frugal and save money.

The New Wine Consumer

San Francisco TrafficAs I worked my way to the Mission Street Garage traffic slowed to a crawl, in part due the rerouting of traffic away from Market Street. I was in the process of doing a NorCal broad market survey of grocery and independent package stores for a privately held family winery client, and it was time to break for lunch. Since my last two stops were in SoMa, I was headed to the food court in the Westfield Center, and to Charles Phan’s ‘Out the Door.’ Even though it was only 12:30 on an early October Friday, the joint was jumping. The food court was packed with shoppers, most holding multiple bags. The noise level sounded, well actually felt, like a low roar, creating a sense of excitement not present in the City’s shopping Out the Door at the Westfield Center, San franciscodistrict for several years. One of my early retail lessons at Disney’s Lake Buena Vista Village, was to look for the bags in shoppers hands as an indicator of a good or bad day, and this looked like a good day. All of this economic activity seemed to be driven by the aggressive mark-downs and clearances in the stores in the Center. Pricing motivated by the need to make room for holiday merchandise, and these pricing strategies seemed to be working. Consumers have been on the sidelines, even during the recent back to school shopping period in August. But sharp advertising and in store media seemed effective at getting shoppers to reopen their wallets. The efficacy of the various campaigns will be reflected in each stores daily flash reports. The tide may be turning, however slowly, as consumer sentiment seems to be Inflection Point Graphdriven by value, with the economic thermostat having obviously been reset. An economy that now seems more driven by consumer needs rather than by wants. And the need for value seems to be paramount as a new inflection point in consumer purchasing behavior has been reached. So, in an age of cash for clunkers, extended unemployment benefits and tight credit what can we do as wine marketers to meet the contemporary challenges of the market. Let’s take a quick revisit to the basics of consumer packaged goods marketing (I’ll try not to be too wonky) by first asking the following questions:

  • Who are the buyers?
  • How much will the buyers pay for my wine?
  • Where and how will the buyers purchase my wine?
  • How do I create buying situations?
  • Is the customer happy after purchasing my wine?

Marketing 101 Revisited

  • Product - the want satisfying offering of your winery (branding, packaging, product features)
  • Price – what you charge for your wines. Price is a measure of value. Price in the marketplace is a rough measure of how your consumers value your wines
  • Promotion – the communication of information between your winery (the seller) and the potential buyer in a defined channel (Place) that tends to influence attitudes and behavior
  • Place – making goods and services available in the right quantities and locations when your customers want them, resulting in the transfer of ownership from producer (your winery) to your customer/client, taking into account strategies and tactics applicable to any middlemen, brokers, marketing agents, wholesalers and retailers

Wine Business Monthly Top #0 US Wine CompaniesToday most wineries are micro marketers. Even wineries in the WBM Top 30 approach the market on a segmented basis. Micro marketing is the ‘performance of activities that seek to accomplish an organization’s (your winery) objectives (selling your wine on a timely basis) by anticipating customer or client needs (marketing research) and directing a flow of need satisfying goods (your wines) from producer (you) to customers/clients’ (via DTC, DTT, broad market).

It is important to understand that we are no longer in a wants period of aspirational or conspicuous consumption, but in period of meeting the specific identifiable needs oAbraham Maslowf your targeted audience. Without entering the maze of Abraham Mazlow’s ‘hierarchy of human needs,’ here are the basic definitions of wants and needs and demands:

  • Wants - desires for specific satisfiers of deeper needs; i.e., the particular choices (including types of products/specific brands) that consumers aspire to buy to satisfy perceived needs.
  • Needs – a state of felt or real depravation of some basic satisfaction (the difference between a consumers actual condition and their desired condition).
  • Demands – wants for specific products that are backed by an ability and willingness to pay for them.

Wine Consumers at Benziger WinerySo, as wine marketers it is important to understand that we don’t create needs. Needs preexist marketers and their brands. A marketers function is to influence wants. A good marketer takes the initiative in stimulating and facilitating commerce. A key part of this function is understanding the market and your consumer. So, how can one identify the best possible markets, and then influence consumer purchasing behavior? Engage your marketing research resources and ask:

  • Who are the people with identified wants?
  • Where are these people?
  • What’s their purchasing power?
  • What’s their buying behavior?

Having asked and answered the above questions, what degree of market exposure do you want, or more importantly can support with your production, allocations and resources, human and capital?

  • Intensive (ubiquitous distribution for large production, enterprise wine companies)
  • Selective (by channel for mid-sized winecos, or for products within an enterprise wineco where price dictates targeted distribution)
  • Exclusive (small- family winecos with limited channel distribution, or luxury brands model)

Having now identified your market and your desired level of targeted distribution, what sort of consumer behavior response do you want to engender – routinized response behavior or adoptive response behavior?

Routinized Response Behavior – the regular selection of a particular way of satisfying a need. This is typical of low involvement purchases, generics or purchases motivated by price or perception of price.

Adoptive Response Behavior – the demand for a specific product that meets, on a regular basis, the hierarchy of needs of a buyer, and the continued ability to purchase your wine(s). This is typical of high involvement purchases, usually of products (wines) within a consumer’s brand set.

Sale tags on all the winesAs a marketer, if you plan to sell your wines in a saturated market based only on price, in essence creating a commodity and not a brand, in what has to be by nature a rapid depletion exit strategy, then the idea of routinized response behavior is the way to go, and pricing and display allowances will be your primary marketing tactics. However, if you want to build a brand even in this challenging market, then engage in marketing tactics that create adoptive response behavior within your identified consumer set.

Wine Consumer Adoption Process

Awareness – comes to know your wine(s) through your brand awareness plan that may include category specific magazine reviews, scores, story placement, newspapers, blogs, forums, and social media.

Interest – the ease of finding information on your web site, forums, blogs and traditional wine press. Events like Twitter Taste Live, open that Bottle Night or Tweet-ups.

Evaluations – providing information and access to your wine. In addition to the traditional wine press new points of information such as Cellar Tracker, AbleGrape, and approximately 800 wine bloggers are a resource that you need to identify and utilize.

Trial – the chance to try before committing. Wine by the Glass, in-store sampling, winery tasting rooms, winemaker dinners.

Decision – to adopt or reject. A whole set of modifiers come into play, such as varietal, pricing, packaging, where and when available to purchase.

Confirmation – the reinforcement that the decision is good. This can be in the form of availability or rarity, appealing to cultural values (sustainable or biodynamic wines), based on acclaim, reviews or a wine blog, or on the affirmation from friends or family.

The Game

Twins beat Tigers in one game playoff 2009Without a thorough grounding in classic CPG marketing fundamentals and a clear understanding of wine brand marketing concerning human motivations in regards to purchasing behaviors, success in today’s highly competitive and product saturated marketplace is not likely for your winery. This somewhat academic take, a departure from my usual ‘how-to’ articles was written to encourage you, your winery’s marketing officer, to think about your current brand plan. Concerning your brand – what is it that you do and why do you do it? Is it working? What would you do differently? What are you doing to differentiate your wines? It’s not a time for indecision in your consumer facing wine business. Faced with declining sales in his collection line Michael Kors quickly introduced a consumer approachable ready to wear line and is thriving in a brutal retail market. Yes, times are tough, and consumer behavior has been reset, but commerce moves on. It is important to be in the game, so sharpen your pencils and fire up your synapses. Preparation and planning = performance.

Note: Copyright © 2009 Think Wine Marketing® All rights reserved.

12 thoughts on “Revisiting Wine Marketing 101

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  2. Great article. You know your wine marketing.

    I like the quote at the beginning and your key term outline.

    But, what’s the answer to the question “how do you get noticed?”

    I agree it’s important to have a good package on a shelf, but what about direct to consumer brands? I like how new personalities in the wine industry are emerging by producing their own media and sharing it online.

    • Dr Dave, thank for the read. The statement by Leo Burnett, when taken into context of his life’s work had to do with mastering the fundamentals of branding and brand marketing. Through my brother-in-law, Charley Wendy, who was a senior VP/Creative Director at Leo Burnett in Chicago, I was lucky to have early exposure to the idea of brand, and how to create awareness for brand, and yes packaging is one of those. Utilizing in creative ways product, pricing, promotions and place are all necessary components to successful branding. For example, ‘channel design decisions’ have impact on brand and the effects tend to be long term. As you’ve stated this system may be direct (DTC, DTT) or indirect (Three-Tier Broad Market). Wine as an arcane category of the greater CPG universe has to deal with 50 unique set of beverage laws; so, unlike most consumable the idea of compliance affects channel system designs and by default awareness. Hopefully after 24 more post in the next 6 months the different aspects of Leo’s statement will be further clarified. While each of my articles takes a micro look at a wine business marketing topic, the planned 52 post will be the whole story …. Cork

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  4. I thought Disco already came back once and died a second time, it is a possiblity that it can return again. Great read btw…I feel smarter every time I am around your words and deeds. The remaining question is – Is value here to stay and what are all those lux wines going to do now…
    I had a Famous Grouse Scotch on Monday eve and was thinking of you and our lost & deceased friend.

  5. Excellent discourse John.
    The current recession is going to transform the wine industry as distributors shed smaller players and retailers play with margins to drive volume dollars, focusing on ‘winning horse brands’ and pasturing poor performers.
    I continue to be amazed at how new brands and SKU’s are pushed out without anyclearly identified consumer demand or need. Is every niche really taken? (One might ask.)
    Social media and the ability to dialog directly with consumers can be a Godsend for small players who can understand how to use it, as long as wineries militantly fight for their right to ship direct. (Beware of what the beer industry is up to.) After all, although it is fulfilling to make wine, it has to be sold through a sustainable business model, a la “Marketing 101″!

  6. John, you went way beyond Marketing 101, but doing business in this environment requires a savvy approach to reaching the consumers. I know that it wasn’t very long ago that a winery just made the wine, opened the door and it flew out…funny…times have changed but the average winery needs to adopt significantly different attitudes about their business. I think it was about a month ago that you wrote an excellent piece on Planning…how many wineries stopped, smelled the coffee, sat down and wrote out a plan (LOL and then implemented it).

    I read a few days ago that some of the wineries in Oregon may not be able to afford the glassware when the 2009 vintage is ready for bottling so I understand that those in panic may not be able to think clearly but what is the alternative? For the last 6 or 7 years I have been watching the public version of BAREIS real estate system at least several times a week, not only residential but also vineyard properties…and in the last few weeks I am seeing a definite increase in the number of winery / vineyard properties for sale and yet I can tell you that many have not gotten the “new realities” based upon the prices that I am seeing.

    I sure as heck hope that you get at least 6000+ hits on each of your posts (at least one hit for each U.S. winery out there) but my gut tells me that its far less (wineries reading) because I see little evidence that they are “getting it”.

    Thanks for such a well thought out informative post!

  7. Great stuff, Cork. Keep it coming.
    It’s true that this is not the time to be spending lavishly, even if you have the bread. However, any prediction of the death of luxury may be premature. I wouldn’t bet against the American consumer or the U.S. economy. We’re aspirational,in that we always seek to improve our lives, and we don’t give up on that. We’ll be back – perhaps more quickly than expected. It’s just a great time to buy low and stock up. This will soon be viewed as another period of great opportunity.

    Keep stimulating our synapses with your thoughtful prose.

  8. Pingback: Reflections of a Wine Business Blogger « Think Wine Marketing

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