This is the first post in a series focused on the essential partner of fine wine stores – the premium winery.
The Way a Premium Wine Brand Boosts Profits through Marketing
In a nutshell this blog series provides information on marketing wine through “niche marketing”. Follow the professional marketing process outlined in this overview section to boost prices, margins and/or volume.
I’m assuming that you have already created, or are in the process of creating, a high quality wine. Long term success in premium brand management is based on this foundation. Some brands may get away with hype for a while but they will eventually be found out.
High quality wine is the price of admission of building a premium wine brand. After you’ve created great wine, professional brand management will help turn your hard work into business success.
Note to winery readers: if you are determined to sell mainly through supermarkets, discount your wine, and focus on volume rather than value this series is not for you…
The way great products become great brands
This is a central issue for small wine businesses. Despite people making fantastic wine they’ve only completed half the job. They then need to let people know about the wine in appealing ways.
For some of these customers the sensory characteristics of smell and taste is enough. They have a trained knowledgeable nose and mouth for wine and enjoy all the subtlety there is to drinking good product.
But there aren’t many connoisseurs. Indeed estimates range from about 2-5% and possibly as small as 0.1% depending on your definition of a wine expert.
What’s much more likely is you have a great product that is equal to 500 other great (say Pinot Noir) wines in the international market place. That customers will have an aspiration to be a connoisseur but haven’t put in the time, money and hard yards to develop their taste into one that can distinguish between your wine and your competitor from down the road or across the world.
High Quality is a Requirement
Offering high quality wine means customers may consider you along with your competitors. By itself it’s not enough. They’re not like you, they don’t have your subtlety of taste and smell. In their opinion there are a large group of premium wine brands that are very similar in taste and smell so once satisfied with the product they are looking for non sensory reasons to purchase.
What’s Important to your Customer?
Not only is great product not enough but a great brand is not enough if it doesn’t appeal to a particular customer in a way that’s important to them. Ways that are important are covered in my Wine Research page – if you read only one more page then read this one: it’s all about the customer. This is the realm of niche marketing or what professional marketers call it “segmentation”. It’s my own version of segmentation based on various studies both proprietary (my own work experience) and published (academic and corporate).
The one you choose to focus on will be probably the most important choice you make in the process outlined in this winery marketing category as it becomes the focus of all your brand activities.
How are you Different from your Competitors?
We’ll also look at your competitors within various niches to ensure you have a point of difference from the rest.
A common issue is new entrants entering the wine business and wanting to replicate the success of others by copying their methods. By all means do this with vineyards and wineries but if you do this with marketing you are not going to stand out.
You will need to find a point of difference from your competitors that is compelling to your consumers.
What’s your Story?
We’ll look for any interesting personal stories and consider your own company’s business goals, production cost and product quality. This is to see if you can tell a story that provides your company with a unique and compelling brand and still fit in with your shareholder goals.
Finding your Niche?
The analysis of Customers, Competitors and the Company will start to suggest what is the best niche market to target. In this website we combine something that’s important to customers with how you’re different from the rest to create a simple statement about how your brand benefits customers and is different from competitors.
The jargon marketers use is positioning the brand in a target segment. I like the word “position” as it also helps explain the difference between a brand and a product.
Creating your Brand
A brand is a set of images and experiences in a person’s mind. A product is the wine itself. The product you have direct control over. The brand you only have influence over as it’s in the customer’s mind.
It’s an important distinction because wine growers and makers make a series of very rational decisions in producing their wine and perhaps feel that customers are similarly rational. However customers are emotional beings who make split second decisions based on how they perceive your brand.
Four key truths about why people buy wine help to explain why brands are so important:
1. Wine drinkers never understand a premium wine as well as the company that sells it. Their relationship is not through months of hard and loving graft but rather fleeting and superficial.
2. Wine drinkers perceive premium wine brands in their own terms. Given they have imperfect knowledge of the wine they have to select something relevant to them – perhaps by label design rather than taste.
3. Wine drinkers’ perception will focus on benefits that are often intangible – this can seem irrational to wine growers. This is because consumers focus on what a wine can do for them rather than what it actually is. The benefits to them are intangible but are still real in their minds.
4. Wine drinkers’ perceptions are not at the conscious level. When we ask people why they purchased a wine we may get a rational answer but not the whole story. Feelings about wine are not always easily articulated because they are complex and emotional.
Source: altered for wine but based off “The Handbook Of Brand Management”, by David Arnold, 1993, page tbc
Understanding Customers in ways that help you Boost Profit
Good brand management and marketing results in higher profit by allowing higher prices, margins and/or volume. Many wine growers struggle to make a reasonable margin because:
- they can’t push through higher prices
- they sell though low margin distribution channels (e.g. supermarkets) or
- they can’t sell enough cases because they don’t have sufficient demand.
This website will help great wine growers and makers become financially successful through professional wine marketing and brand management.
Whatever your background – viticulturist, wine maker, customer services or general manager – this website aims to provide insight into wine marketing without the jargon and with making profit in mind.
Let’s look at the marketing process of making your great product an equally great brand.
It has 8 steps.
Once you have completed all of the steps you will know clearly and in detail
- Your target market, competitors and company goals
- Your points of differentiation from your competitors
- What your brand means to your customers
- Your marketing strategies
- An action plan with dates, responsibility and budget
To see a summary of each step scroll down this page. To go into detail click on the step link.
The steps are:
Step 1. Understand your customers
Step 2. Analyse your competitors
Step 3. Look at your company goals, personalities and stories
Step 4. Choose your niche
Step 5. Create or Define your brand
Step 6. Review the marketing mix or 5 Ps
Step 7. Create your marketing plan
Step 8. Review
The steps are visually outlined in the diagram below.
Step 1. Understand your Customers
A great product is a start but not enough. It needs to appeal to particular customers in ways that are important to them. This is the realm of “niche” or “target” marketing. In short you have different groups of people and these different groups of people (or segments) want different things from wine. Some want that moment of savouring a great wine by themselves at home, others want to make an impression at an important dinner party, some want to show that they don’t follow the conventions of the world in a trendy cafe, others just want to have unpretentious fun with close friends at a BBQ.
Those with previous exposure to marketing will see the hints of demographic or psychological descriptions of these groups of people or “psychographics”. However here’s the secret – the alcohol beverage industry relies on various occasions or situations in which people drink wine, as well as demographic and psychographic descriptions. So the same person can buy different wines depending on what sort of occasion it is – for example fun with friends, impressing a business client, or proving how fashionable you are to associates.
I’m not saying that choosing a niche based on region, age, gender, varietal, price point or country is wrong – it’s just not a small enough niche for you to be a leader in, it doesn’t provide insight into why consumers will purchase your brand and therefore you’ll get lost in a sea of brands.
Based on variety of international research I’ve outlined these different groups of customers in the diagram below. The use of names helps you to imagine the sort of person. It uses occupation to illustrate a group of similar consumers rather than precisely define them. The occasions are around the outside.
Wine Market Model
One thing is for certain a customer will have an image of your brand the moment they are first exposed to it. It may be at a friend’s house over dinner, on a wine list at a fine dining establishment, or at the supermarket. The initial impression will be based on the product’s bottle/label (and hopefully the wine), its price, the place it’s sold, the people who are drinking it and any perception via advertising, DM, the web etc. Based on this set of images and experiences they will position your brand in their minds as a wine for a sort of person which might be themselves. Or if it makes no strong impression, just a bland brand appealing to no one particularly that will hopefully taste and smell great.
Wine growers and wine makers put so much effort into the wine and, bless their socks, getting out there and telling distributors and consumers about the product, that they tend not to have the time or don’t feel comfortable doing brand management. This usually means that the brand is for everyone or picks up a default regional or country wine image rather than for a niche – illustrated in the diagram below…
Step 2. Analyze your competitors
So we know what sort of customer groups are out there. If you (hopefully with help from senior managers and distributors) do some extensive and truthful analysis of your brand you can have a reasonable guess which group of people your wine appeals to. Often this analysis will suggest that your brand appeals to no particular group terribly well but given a strong product its seen as marginally more a wine for the “Knowledgeable Professor” (a particular niche described elsewhere).
That is it tastes and smells great, perhaps the bottle/label is sufficiently premium, has had some good reviews, maybe the odd medal, and it’s in a few top restaurants. However there are other brands that are doing this, including showing all the other cues that a Knowledgeable Professor is looking for, much much better.
This is what the market model below simply illustrates. Your brand may be sending strong product signals but is being overwhelmed by stronger brands that are better known and/or have a more comprehensive brand management program.
The top brands would be more appealing to some customers/occasions more than others. That’s not to say they would not appeal to the other groups/occasions but rather they would appeal more to one than the other, so on average end up in that part of the model.
Lost in a Sea of Wine Brands
Step 3. Take a close look at your company goals, personalities and stories
So you know what occasions and customers groups are out there using a market model. You’ve analyzed where your brand and your competitors’ brands are positioned in the market, and know whether any of you appeal to one group of customers more than another.
Now you need to look inwards and see what stories you can tell that will appeal to one of these segments more than the other. Who are you (and team) most comfortable with? Is your key personality (owner, wine maker, and/or sales/marketing manager) going to be consistent with this image in the consumer and trade eyes?
Additionally what are your financial goals? If you’ve got a high cost base, a desire to produce the best wine and “damn the cost”, or have high levels of debt your price will need to be high. Some of these groups of customers will be able to afford this, others won’t.
Step 4. Choosing your niche
Considering Company, Competitors and Consumers
Choosing your niche will depend on whether there is a gap in the market, the strength of competitors in that niche, and your own strengths and company objectives.
In the diagram below, analysis suggests a gap is in the Inspiring Businessman (illustrative only). The company feels at home in this segment and has some compelling and unique stories to tell.
In the rest of the brand management process everything you do will make your brand more appealing to this group of people than any other. Start with how the customer should see your brand in their mind (brand definition), then consider ways to change that through some key drivers (the 5Ps) and then create an action plan that will use various marketing activities to move the brand.
Step 5. Define your brand
This is a key moment in your brand management process. You’ve decided on your customer group and occasion and are now looking at how the brand benefits the customers in a compelling and unique way. A way that will motivate your customers and distinguish your brand from your competitors’.
You will take a key customer insight and describe your brand in a simple statement that summarizes your brand – the brand essence. It’s your “elevator speech” or quick succinct description of your brand.
You’ll then need to describe in some simple words or phrases what makes up your brand and which are compelling to the selected customer group. What it stands for. Include at least one word or phrase that makes it different from competitors – your point of difference.
Then describe how the brand benefits the customer – which could be called a unique selling proposition, a brand proposition, or a brand promise.
You’ll then flesh this out with the various visual identifiers (e.g. label), key product attributes, (including region), the personality of the brand, and the key customer group and drinking occasion. Your brand will actually roughly mirror your chosen consumer’s personality.
Your Brand reflects your Target Consumer
Step 6. Review the marketing mix or “5Ps”
A customer’s image of a brand is prompted by some key drivers, a description of which have been moulded into words that start with “P”. They are a good check of your branding activity and are in general order of importance Product, Price, Place, People, and Promotion.
They are sometimes referred to as the marketing mix and are great prompters in writing a comprehensive brand plan.
Briefly they are the following:
- Product. Tasting notes, the bottle, the label, the closure, and cases.
- Price. The most simplest indicator of quality to a consumer – if not always the most accurate!
- Place. The “right” restaurants, bars; wine stores, liquor chains, supermarkets; distributor(s) strategy; direct sales
- People. What sort of people are you hoping will be seen drinking your wine.
- Promotion. Advertising; wine, food, and music events; DM, internet
5Ps Position the Brand
Step 7. Create your brand plan
In a Brand Plan we outline some core issues and how we’re going to address them. This is usually a list of actions under each issue with responsibility, budget and due date. It should be a set of programmed tasks that put all your thinking into an action plan that will shift the image of your brand in the consumer’s mind. Indeed a calendar for the first 12-18 months of activity is a good and common discipline in marketing teams.
Step 8. Review annually
In general once you’ve decided on a plan it’s best to stick it out for three years as it takes a while to change consumers’ minds.
Every year review the tasks from the previous year’s marketing plan and alter it according to your growing knowledge about the segment. Then create a new action plan for the coming year.
Every three years you might consider whether you are getting the results you want or whether the competition in that niche is too strong or the segment is not acting on your brand activity.
If you’ve followed the above steps you should be making progress in your customers’ minds and in your company’s price and volume. A key truth of brand management is consistency over a long period of time builds the brand into a strong profitable position.