Category Archives: Marketing

Wine Marketing: Science or Magic?

Posted on May 13, 2013 by Becca| 5 Comments

 

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The following is a guest post by Larry Chandler: wine sales and marketing guru!  Please see his bio at the end of this post for more information!

This is blog post #2 billion on wine marketing. Everybody writes about it. A few of them even have something important to say.

So in summary:

1. Know your market
2. Write well
3. Watch the money roll in.

Ok, we’re getting ahead of ourselves. #3 is patently false. #2 means nothing, you either write well or know how to hire well or perhaps neither. So you may need to work on this. But #1 is the most important here, and that’s what we’ll discuss.

Let’s assume you want to sell wine. Let’s assume you actually make wine or work for a winery. Let’s also assume you make good wine. Selling bad wine requires a skill far beyond our abilities here.

Marketing and selling are not the same thing. To paraphrase marketing guru Peter Drucker, “The aim of wine marketing is to make selling wine superfluous.” So where do you start? Marketing involves everything about your brand: what your labels look like, where you might talk about your wine (advertising, social

This photo is available in the holdings of the National Archives and Records Administration, cataloged under the ARC Identifier (National Archives Identifier) 515058. [PUBLIC DOMAIN]

This photo is available in the holdings of the National Archives and Records Administration, cataloged under the ARC Identifier (National Archives Identifier) 515058. [PUBLIC DOMAIN]

media, wine events), how people can taste your wine, where they can buy it, etc. Only then will you be in a position to sell your wine. And if your wine is really good, then people who enjoy it can become your best salespeople (now called “brand ambassadors”).

Who buys your wine now? Do you even know? Do you have a tasting room? If so, you do ask for their email addresses and maybe their phone numbers. No? Why not? They are your customers. They want to buy more at some point. Don’t ignore them. Everyone talks about social media (incessantly). Important, yes. But do not neglect email. It’s still (as of this writing) crucial.

If you don’t have a tasting room, do you do winemaker dinners? Tastings at festivals? Wine store events? Do you ask for emails there?

Do you have a Facebook page? Do you bother to post interesting content? Do you reply to comments placed on your page? Facebook is not simply advertising by the way. Or shouldn’t be. Engagement (responding to people) works.

Do you perform target marketing? Do you choose to market to men, women, young people, existing customers, lovers of a particular variety, big or small spenders?

Do you check out case studies or ask other winemakers how they do it? Will a favorable or unfavorable review of your wine change your plans? Many people today denigrate existing wine publications, such as the Wine Spectator or the Wine Advocate. Don’t. Maybe they are dying breeds, but they sure ain’t dead yet. And a high score can do wonders for your brand. This may change as younger people pay less attention to wine scores.

So is this marketing science? Could be. Is it just wild guessing? Could be. How much time can you spend on reading about marketing, taking seminars, talking to fellow winemakers? You can drown in a sea of data. After all, there are only 48 hours in a day.

The answer to where you go from here, how you market is simple. Start doing it. Learn some of the basics of analytics, who your customers are, and market to them. But don’t spend all your time on it. Create a marketing plan, but don’t wait until it is perfect. Send out an email, but don’t assume you will start moving all your product. Test it, perhaps an A/B test. See if a discount works better than free shipping. Learn from this. Create interesting content, but don’t wait forever for inspiration to hit. (A short wait is fine.) Go with what you know now and spend time with the results and try it again. You may only get one chance to make your 2013 Chardonnay, but you can re-do your marketing efforts.

There is no one answer for every winery. Learn what works for you. Your winery is unique. Even with 8,000 other wineries in the US, your strategy needs to be unique to you. There is no one like you with your same product mix, your same price points, your same customers.

We know of one winery that makes only 2,000 cases of their very well respected wine, and distributes only within California. They noticed they were getting wine club members from all over the country. When they asked those new members how they heard of this brand, all replied that they had this wine in restaurants in California. So the winery knew it had to focus even more on getting on the wine lists of restaurants in California.

You can pay for marketing advice and expertise if you can afford it. If not, you

Photo By NBC Television [Public domain], via Wikimedia Commons

Photo By NBC Television [Public domain], via Wikimedia Commons

can pay attention to the results and try to change your approach if it didn’t work the first time. You can also join the wine forums on Facebook and LinkedIn among other places. Valuable advice is traded there.

In summary:

1. Set up a business plan.
2. Create a marketing strategy
3. Develop tactics to fulfill your strategy
4. Learn from your mistakes
5. Try again

Oh, and don’t forget mobile devices and marketing specifically for that. But that’s a whole ‘nother post.

Wine Marketing is a science. But like making wine, it is part science, part art, and part magic.

Bio: Larry Chandler has been involved in marketing and selling wine for 20 years for both wine retailers and wineries. He also conducts tastings and lectures on wine and food pairings. His wine blog is http://overabarrel.wordpress.com and can be reached at larry@larrychandler.com.

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Women Prefer Wine and Liquor While Men Prefer Beer: Using an Implicit Measures Approach to Determine Consumer Behavior

Posted on October 22, 2012 by Becca| Leave a comment

Often when we see a study examining alcohol preferences and habits in people, we cannot be certain if the results are based on what the participants want to report due to potential guilt or embarrassment, or if the results are actually based on fact.  Survey-type research often runs the risk of experiencing this type of variation, which may not actually reflect what the individual or group of individuals prefers or how they behave in real world situations.

One way to work around the survey method in order to obtain a potentially more accurate presentation of consumer preference and behavior is using what is called “implicit measures”.   What this means is that the strength of an

Photo by jenni from the block: http://farm9.staticflickr.com/8434/7827785878_34859830a8.jpg

association (i.e. how strongly one associates or attaches oneself to a particular stimuli such as a specific type of alcohol) is inferred by the behavior of an individual as opposed to simply asking the individual how they feel about that particular stimuli.  Using implicit measures allows for capturing information that is beyond the conscious control of the individual, theoretically giving a more accurate representation of their preferences and consumption behaviors.

The short communication (i.e. quick study) presented today aimed to evaluate using implicit measures to determine how gender and drinker status (i.e. how much and how often one drinks) relates to selection stimuli (in this case, type of alcohol).  The implicit measures test used in this study is the Implicit Association Test (IAT).  This test uses picture or words to represent a single type of alcohol or picture or words to represent different types of alcohol.  According to the authors, this type of methodology could provide more accurate answers and ensure that the choice made actually reflects the true behavior of the consumer compared to survey methods or other methods that may be inaccurate and inconsistent.

Note: this study is a test of methods.

Methods

300 undergraduates (136 male, 164 female) between the ages of 18 and 25 (mean = 20.47) participated in this study.  They were recruited by email, and were told that they would be participating in a research study about cognitive processes and alcohol.

  • 57% identified themselves as white/Caucasian;
  • 30% Asian;
  • 9% multiracial;
  • 4% as black/African American, American Indian/Alaska Native, Native Hawaiian/other Pacific Islander, unknown, or declined answer.

During the IAT test, classification of preference should be faster when the

Photo by batrax: http://farm1.staticflickr.com/24/92549990_37387f7ca0.jpg

pairing of the target and attribute categories match the individual’s personal associations in their memories.  Two separate IAT tests were used:  alcohol approach (approach or avoid) and alcohol excitement (excite or depress).  A higher IAT score indicates a stronger relationship between alcohol and approach than alcohol and avoid, and between alcohol and excite than alcohol and depress.  In other words, a higher score indicates the individual would consume the alcohol and not avoid drinking it, and that the individual is excited about drinking a particular type of alcohol and not indifferent or “depressed” about drinking another type.

During the test, participants selected four images of alcoholic beverages out of 15.  Each image contained 3 different examples of the alcohol they were representing (i.e. 3 different types of beer or 3 different types of wine, etc).  They were asked to choose the images that corresponded to the type of alcohol they drink most often, and if they were classified as “non-drinkers”, they would select the image that corresponded to the type of alcohol that was offered to them most often.

Quantity of consumption at one time and frequency over the past 30 days were also measured.

Results

  • Women chose more wine and liquor than men.
  • Men chose more beer than women.
  • Those considered heavy episodic drinkers (i.e. binge drinkers) chose more beer than those that were not binge drinkers.
  • Binge drinkers chose less wine than those that were not binge drinkers.
  • Binge drinkers chose more liquor than those that were not binge drinkers.
  • Female non-drinkers were more likely to choose iced malt beverages than female binge drinkers.
  • Those who consumed higher amounts of alcohol had higher IAT scores than other consumers
    • In other words, they associated more closely with “alcohol and approach” than “alcohol and avoid” and more closely with “alcohol and excite” than “alcohol and depress”.
    • Non-drinkers had significantly lower IAT scores than binge drinkers and those consuming alcohol more moderately.

Conclusions

In general, the results of this study are consistent with other studies examining the drinking habits of college students.  Males preferred more beer than females, and females preferred more wine and/or liquor than males.  In regards to the preference of those who consumed a heavy amount of alcohol at one time, those participants preferred more beer and liquor, and not wine.  Finally, females that do not drink alcohol and those that do not drink heavily at one time preferred iced malt beverages more than the other participants.

Results from the IAT test suggest that alcohol associations (i.e. “approach or

Photo by Rennette Stowe: http://farm9.staticflickr.com/8308/7847608288_5b02fcc912.jpg

avoid” or “excite or depress”) are sensitive to differences in the amount of alcohol consumed and not to the particular type of beverage selected.  In other words, IAT test scores were significantly higher for those that consumed heavily during a drinking episode than for those that do not consume heavily at one time or that don’t drink at all.

The authors suggest that due to these results, research examining alcohol preferences among individuals or groups should use the Implicit Association Test, which would help decrease variability associated with survey-type methods that can be complicated by lying or stretching of the truth due to guilt or embarrassment.

One problem with this study is that it only includes undergraduate students; therefore the results may or may not reflect what the entire population as a whole represents.  The study also did not include other types of alcohol such as alcoholic energy drinks, even though these types of beverages are popular among college-aged students.

Ultimately, the authors claimed that the results of this study indicate that implicit measures may be a more appropriate and more accurate methodology for measure actual preferences of alcohol consumers than traditional survey methods.

I would like to have seen this study coupled with a survey method, to compare the results from the survey directly to the results of the implicit measures test.  The authors say that the implicit measures method would provide more accurate results in regards to actual alcohol consumption behavior, however, they do not describe or compare what the participants responses would have been if they were just answering the questions directly on a survey.  If they did do this, it wasn’t made clear in the paper.

What do you all think about using implicit measures methods for determining consumer behavior?  Have you ever filled out a survey asking for alcohol consumption habits?  Did you stretch the truth a little, or were you completely honest?  Please feel free to leave your comments!

Source: Lindgren, K.P., Westgate, E.C., Kilmer, J.R., Kaysen, D., and Teachman, B.A. 2012. Pick your poison: Stimuli selection in alcohol-related implicit measures. Addictive Behaviors 37: 990-993.

 

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Determining Consumer Willingness to Pay for Low-Sulfite Wines: What Drives Likelihood of Purchase?

Posted on September 21, 2012 by Becca| Leave a comment

The presence and/or absence of sulfites in wine is a continual hot topic in the wine industry, and one which is still relatively poorly understood among many consumers.

Sulfites are used in the winemaking process to act as antioxidants as well as antimicrobial agents, which aid in the preservation and aging potential of the finished wine. Amounts of sulfites added to wines are on average 30 to 90 parts per million (ppm).  In addition, sulfites are also naturally present in small amounts in all wines (both red and white).  As a result of technological advances, many wineries are experimenting with lowering or eliminating added sulfites in their wines, since the risk of damage to the wine is significantly reduced with modern technology and practices.

http://opencage.info/pics/files/800_9500.jpg

Sulfites have been shown to have negative health impacts in humans when present in higher doses.  Specifically, several health problems associated with higher levels of sulfites have been reported, including respiratory problems, rashes, stomach pains, headaches, and migraines.  However, though these symptoms have been reported after sulfite consumption, research has not yet determined with complete certainty that sulfites in wine are responsible for these negative effects, or if other components of the wine are triggering the reactions.

As a result of these negative health benefits, consumer perception of sulfites in wine is generally negative, which likely isn’t helped by country-specific labeling rules warning consumers of the presence of sulfites greater than certain levels (i.e. 10ppm or greater of sulfites present in wine in the United States requires a warning label).

Based on this knowledge of sulfites and the assumed negative perception of sulfites in wine by consumers, the authors of the paper presented today aimed to evaluate these negative perception, to determine if consumers would be willing to pay more for low-sulfite wines, and to determine if there are any specific groups of consumers that these types of low-sulfite wines could be specifically marketed to for maximum economic benefit.

Methods

Consumer preference for low-sulfite wines was determined using a survey that was sent out to a local wine shop’s customer email list.  The survey included some preliminary questions that were followed then by a main choice task.  Preliminary questions included demographics (age, income, education level, and sex), typical purchasing behavior, subjective headache experiences, and attitudes toward sulfites.  For completing the survey, participants received a $20 wine voucher to the wine shop that gave out their email addresses.

The main choice task included hypothetical wines split up into 12 different “scenarios” with 3 alternatives per scenario.  Participants were asked to choose which label was their “most preferred” and “least preferred” wine label out of the three possible choices.  Varietal was kept constant throughout an experiment, though in the beginning, participants were randomly assigned to either red or white wine categories.

Quality levels of wine were determined based on their Wine Spectator ratings.

Hypothetical wine labels included an actual “USDA Organic” seal and a “No Sulfites Added” label.  A wine could have either one label, neither label, or both labels.

http://images.cdn.fotopedia.com/flickr-3496808324-hd.jpg

 

To calculate willingness to pay, participants were randomly assigned to three different pricing groups which were $10-15; $20-25; and $30-35.  After participants indicated which wine was their preferred wine, they were asked if they would actually purchase the bottle if it were in the price range to which the participant was assigned.

To not confuse headaches with hangover headaches, participants were asked about their headache experiences only after moderate consumption.

Rather technical mathematical models and statistical analyses were performed on these data, of which I will not get into now for space and time considerations.  Feel free to ask questions if you need some clarification.

Results

  • There were a total of 223 people that responded to the email surveys.
  • 49.78% of survey participants reported owning 10 or more bottles at home, indicating that may be collecting wine for non-immediate use (storing/cellaring).

Headaches

  • 34.08% of participants reported having headaches after consuming a moderate amount of wine.
    • 60% of those that did not purchase any wines in a month and 50% of those that did not store wine at home attributed the headache experience to wine consumption.
    • 63.16% of those experiencing headaches blame sulfites for triggering the pain.
      • 57.89% blamed dehydration
      • 32.89% blamed red wine

Value/Willingness to Pay

  • Consumers placed a value of $0.64 on wine lacking in sulfites.
    • These same consumers placed a value of $1.22 on organic wines.
    • A 4-point increase in the Wine Spectator quality score increased consumer willingness to pay by $2.84.
      • Differences in quality/score have a greater influence on willingness to pay than organic or low/no sulfites added labeling.
      • For consumers placed in the high price category, there were no significant differences in willingness to pay for any wines.
      • Participants reporting headaches were willing to pay $1.23 more for a wine lacking sulfites.
        • Participating not reporting headaches were willing to pay only $0.33 more for a wine lacking in sulfites.
        • Participants reporting headaches were willing to pay more for wines low in sulfites than for organic wines.
          • This indicates an obvious “No Sulfites Added” label is important for these types of consumers.

Likelihood of Purchase

  • For consumers in general, an organic wine designation increased the likelihood of purchase by 1.86%, though this was not statistically significant. 
    • Similarly, wines made without added sulfites increased the likelihood of purchase by 1.72%, again not statistically significant.
    • A 4-point increase in the Wine Spectator score of the wine increased the likelihood of purchase by 5.71%.
    • A $1.50 increase in price decreased the likelihood of purchase by 5.10%.
    • Compared to the lowest price range group ($10-15), those being placed into the mid-range price group ($20-25) decreased their likelihood of purchase by 22%.
    • Compared to the lowest price range group ($10-15), those being placed into the high-range price group ($30-35) decreased their likelihood of purchase by 33%.

General Conclusions

  • In general, price appears to be of greatest importance to consumers compared to score, organic, and low-sulfite designations.
  • Those reporting headaches, results are similar to the general population in that price and quality appear to be of greatest importance.
    • This group does appear to be the best group to market low-sulfite wines to, as they were the group that was willing to pay the most for these types of wines. 
      • Those suffering from headache are 3.41% more likely to purchase low/no-sulfite wine than non-headache suffers (only 0.97% more likely to purchase these wines).

Again, it appears as though price and quality are the drivers for consumers when it comes to likelihood of purchasing wines.  In fact, a 4-point increase in score on a 100-point scale is 3x more important in the likelihood of purchase than a wine advertised as lacking sulfites.  According to the authors, a designation of “low sulfites” may only be useful if the quality is also high, as a wine that is poor in quality will not be purchased even if it is lower in sulfites.

A wine low in sulfites does carry a greater risk of oxidation and spoilage, so producers need to be wary of completely eliminating sulfites from their wine.  If it’s marketed in a way that stresses it’s a wine to drink now and not to cellar, then they may be able to strike a safe balance.

One thing I’d be curious about is whether those survey respondents claiming they have over 10 bottles of wine at home are willing to pay more for sulfite-free wines, or if they are part of a different niche in which this concern does not factor into their purchasing decisions.  Perhaps those people cellaring wines are not concerned about sulfites; thereby an aggressive marketing strategy aimed at stressing a “drink now” approach may be unnecessary.  The results of this study were for the entire population and also the headache suffers subpopulation, and it was not made clear how those storing wine fell into these categories.

There’s a lot to talk about with this study and this type of research in general, but rather than me ramble on and on (too late??), why don’t you tell me what you think about the study?  What else would you have liked to see the authors test?  Where do you think this type of research needs to head in the future?  Please share your comments/questions/discussions!

Source: Appleby, C., Costanigro, M., Thilmany, D., and Menke, S. 2012. Measuring consumer willingness to pay for low-sulfite wine: A conjoint analysis. American Association of Wine Economics Working Papers: Economics 117. Accessed online 09/20/2012.

 

ISSN 2166-9112

I am not a health professional, nor do I pretend to be. Please consult your doctor before altering your alcohol consumption habits. Do not consume alcohol if you are under the age of 21. Do not drink and drive. Enjoy responsibly!

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How Expert Opinions Influence Consumer Wine Purchase Behavior: “Not All Publicity is Good Publicity”

Posted on July 10, 2012 by Becca| 6 Comments

Product quality and consumer awareness of that quality has a huge influence on consumption patterns.  Companies and advertisers have come up with several methods for increasing product awareness to consumers, the methods by which to inform consumers of quality are very important in products that fall under the “experience goods” category.  In a nutshell, experience goods are those products that one typically has to purchase or try before making a decision about quality.  These products include goods such as restaurants, movies, books, and wine.

http://www.winecurmudgeon.com/.a/
6a00e54f84c99f88330162fdfdc50c970d-320wi

In the literature, there have been many studies examining the extent to which product quality information affects consumer behavior.  One method, which has been less frequently studied, is the influence of quality information provided by “experts” to consumers.  One major problem with examining this method for conveying product quality information is that products that are high in quality are likely to receive high ratings and are in fact high in quality (not just saying they are).  Therefore, it becomes difficult to determine how much of the consumer behavior is influenced by expert opinion, since the researchers would need to be able to control for product quality (which is extremely difficult to do).  Another complication with this method is that it is difficult to determine if consumer behavior is influenced completely by expert opinions, or if the review simply alters the consumer to the product, and it doesn’t matter what the overall quality score ended up being.

The goal of the paper briefly presented today (I’m not going to go into all the gory details this time unless requested) was to examine the impact of expert opinion on retail wine purchases using an experimental approach at stores of a national grocery chain in northern California.

Brief Summary of Methods

150 wines that were typically stocked in a national grocery chain were randomly selected.  Wines were only selected if they had a wine score, which somewhat limited the pool of wines to be randomly selected from (14% of all the wines in the store). 

Wine scores were presented on the price tag of wines in the “treatment store” for four weeks during April of 2006.  Half the wines received scores between 82 and 86, and 90% of the wines received scores between 78 and 89.  For all wines sold by the treatment store, weekly sales data were collected.  In addition to the treatment store, the weekly sales data from 38 other “control stores” from Northern California were collected.  Weekly sales data were aggregated to monthly sales, and included the total number of bottles sold per month, average pre-discount price, average post-discount price, and whether a bottle of wine was discounted at all during the month.  Sales data were then merged with wine score data.

To examine the extent to which treatment wines increased wine sales, the researchers used several mathematical models comparing treatment wines with control wines that did not have the wine score labeling treatment.  (I will spare you the mathematical details, but if you have specific questions, I can try to find out the answer for you.)

Results

  • The average number of bottles of “treated” wines sold increased by 1.5 bottles from March to April in the “treated” store.
  • The average number of bottles sold decreased by 1.1 bottles from March to April in the control stores.

o   “Treatment” (providing wine scores to price tags) increased consumer demand of treated wines by 2.6 bottles, or 27%.

  • In the treatment store, average sales of treated wines is driven by an increased demand for high scoring wines, which increased from 9.4 to 11.5 bottles on average.

o   In the control stores, high scoring wine sales decreased from 10.8 to 9.6 bottles on average.

  • In the treatment store, Sales of low scoring wine sales decreased from 9.9 to 8.2 bottles on average.

o   In the control stores, low scoring wine sales decreased from 13.8 to 12.7 bottles on average.

§  Low scoring wines showed a treatment effect of a decrease of 0.7 bottles, whereas high scoring wines showed a treatment effect of an increase of 3.2 bottles.

  • Wines with higher scores have larger increases in demand due to the treatment.
  • The average score that the treatment effect was zero was 80.

o   Wines scoring higher than 81 experienced a positive increase in consumer demand.

o   Wines scoring lower than 81 experienced a decrease in consumer demand.

  •  Demand for wines in the treatment store was less price-sensitive than demand at the control stores.
  • Consumers responded positively to high-quality information signals and negatively to low-quality information signals.

o   This suggests “not all publicity is good publicity”.

o   Consumers exposed to high quality indicators are less influenced by price.

  • At the treatment store, consumer demand for “untreated wines” remained steady.

o   It appears as though average purchases of “unlabeled wines” remained constant, while purchases of “labeled wines” increased.

Conclusions

According to the authors of this study, they were able to successfully analyze the relationship between product quality and expert opinion in a retail grocery chain setting.  By attaching the wine’s score to the price tag of the wine, the results showed that sales increased on average by 25% and that high-scoring wines displayed a higher increase in sales compared to their low-scoring counterparts.  It is important to note that these increases were only found in treated wines, meaning that if there was another high-scoring wine present but it wasn’t advertised as such, sales would not increase for that particular wine.

Some limitations of the study are that the treatment period may not have been long enough to observe the full effect of expert opinion on consumer purchase behavior of wine.  Also, results may not be generalizable to the public as a whole, as only one treatment store was included in this study and the demographics of that particular store may not represent the larger consumer public as a whole.  Specific demographics of the treatment store clientele were not described in the paper, except for the fact that they were wealthier than many in the general public.

Overall, the results of this study suggest that perhaps expert opinion has a strong influence on consumer purchase behavior; in that higher scoring wines are more often purchased than lower scoring or non-reported wines.  Wine shops may wish to take advantage of this information and post wine scores when applicable.   Of course, much more research needs to be done in order to get a stronger sense of the mechanism behind this relationship, in addition to how important it is compared to other consumer purchase behavior influencers, but it is in and of itself interesting and a good addition to this field.

I’d love to hear what you all think about this topic!  Please feel free to leave your comments below!  (Reminder: any unapproved html tags will be promptly deleted.  Links to personal blogs are accepted).

Source: Hilger, J., Rafert, G., Villas-Boas, S. 2011. Expert Opinion and the Demand for Experience Goods: An Experimental Approach in the Retail Wine Market. The Review of Economics and Statistics 93(4): 1289-1296.
I am not a health professional, nor do I pretend to be. Please consult your doctor before altering your alcohol consumption habits. Do not consume alcohol if you are under the age of 21. Do not drink and drive. Enjoy responsibly!

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