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3. Overwhelmed by Wine Industry Competitors?

Just How Strong are your Wine Industry Competitors?

wine shopThe majority of wine industry competitors are probably doing what everyone else does – they are trying to copy success.

They’ve looked at what others are doing and may have also chosen a less sophisticated form of analyzing niches – e.g. women, Napa Valley, cool climate Pinot Noir.

Indeed they will probably be doing no marketing at all (Wine Business Monthly 2006, of the 9300 wineries in the US fewer than 10 percent have clear marketing strategies).

Before we look any further at competitors let’s set the scene.

Four key truths about why people buy wine*

      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’ perceptions will focus on benefits which 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.

Customers 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 cheap and nasty supermarket.

This 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 promotion via advertising, DM, the web etc (the “5Ps” are covered later).

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.

Below is the market model but this time with some illustrative brands put in.

Wine Brands in the Wine Market Model

Remember each “slice” represents a consumer group in a particular occasion. Occasions are on the outside, consumers are in the inside.

Brand A represented by the dot in Creative Individualists segment strongly appeals to this group of people. It may be purchased by other groups but it is most associated with this segment. Brand D, on the other hand, has no particularly strong association with any customer group and is floating in the centre.

We would say Brand A is strongly positioned in the Creative Individualists segment. Brand B is also positioned in this segment but not as strongly as Brand A.

##### Sidenote #####
In a multinational alcohol beverage company’s market research surveys, the positioning of each brand is worked out through some serious math formula (called multi variate analysis). This formula calculates how closely the surveyed consumers associate Brand A with key words that are important to that consumer group and positions the brand in the market model accordingly. What you do here is a rough proxy for this expensive research.
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Brand positioning is a key concept in brand management and marketing

Go through the series of prompts below, each of which says something about your brand. For example a colorful label might appeal to one segment whereas a simple label will appeal to another. A low price will not appeal to some (in a certain occasion) but will be seen by others as a welcome bargain.

These prompts are:

  • Label
  • Bottle
  • Opening
  • Case
  • Price
  • Medals/Ratings
  • Point of sale
  • Website
  • Advertising
  • Trade Promotions
  • PR, media clippings
  • Wine store promotions
  • Fine Dining (“A class”) Restaurant listings
  • Premium Bar (“A class”) listings
  • Specialist fine wine stores
  • Other retail
  • Wine and Food Festivals
  • Cellar Door experience
  • Market research
  • Marketing Plans
  • Business Plans, Annual reports
  • Customer emails, letters

From this analysis, map your wine brand on the Wine Market Model – is it strongly Knowledgeable Professor for example, or is it not really appealing to any one of these customer groups and occasions?

My experience is that wine brands do not give a consistent message and try to appeal to too many groups, thereby getting lost in a sea of brands. The outcome of 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 have a more consistent message and comprehensive brand management programme.

Even worse, your brand may be sending very few signals at all and be lost in a sea of brands desperately trying to compete on smell and taste characteristics.

Lost in a Sea of Brands

Competing Wine Brands in the Wine Market Model
Is your brand the grey one in the middle of the wine market model?

The example above is only illustrative of an international market. The successful brands would be more appealing to some customers/occasions more than others.

A group of wine industry competitors in a particular price bracket are known as the customer’s consideration set

In most industries a brand manager attempts to build awareness of a brand, then ensure that it is attractive enough to be considered one of a number brands customers will consider buying (consideration set), and finally attempting to become the most preferred brand. The process is known as Awareness -> Consideration -> Preference.

In the wine industry customers tend to have a price bracket in mind for purchasing wine. They will have a number of varietals and regions they will consider but do not have a strong preference that is seen in other industries. So the aim is to be included in the consideration set. If a customer buys wine every week then a realistic aim is to be chosen perhaps every fourth week rather than expecting to be purchased every week.

Make an educated guess of who your competitors are. Put yourself in (for example) your (e.g. Californian) customer’s shoes. They may consider a Napa Valley Pinot Noir, a Burgundy and perhaps an Australasian Pinot Noir.

I spent many years in Central Otago New Zealand but I don’t kid myself that that average Californian wine consumer knows where Central Otago is. They will know New Zealand however (thanks to the America’s Cup and Lord of the Rings!). So if you’re a Central Otago wine maker you shouldn’t assume your neighbors are necessarily in this consideration set though your compatriots might be.

Arguably you should include other varietals, but let’s keep this simple. They should be in a similar price bracket in your major market(s). For Pinot Noir brand owners I suggest this price is retail USD30-60+ per bottle (remember this blog series is for premium wines not mainstream ones).

They should be the market leaders in this segment – the ones customers would recognize and like the most on a wine list or wine store shelf. They are the consumer’s consideration set.

Then use the prompts below to decide what group of consumers your competitors brand most appeals to:

  • Label
  • Bottle
  • Opening
  • Case
  • Price
  • Medals/Ratings
  • Point of sale
  • Website
  • Advertising
  • Trade Promotions
  • PR, media clippings
  • Wine store promotions
  • Supermarket
  • Fine Dining (“A class”) Restaurant listings
  • Premium Bar (“A class”) listings
  • Specialist wine stores
  • Wine and Food Festivals
  • Cellar Door experience
  • Market research
  • Marketing Plans
  • Business Plans, Annual reports
  • Customer emails, letters

This is a proxy for customer research. Customers have imperfect knowledge and fleetingly focus on benefits relevant to them before making a decision. The time and effort you’ve spent looking at all of your wine industry competitors’ brands’ cues is probably a heck of a lot longer than customers ever will spend in making their decisions.

From this analysis map your wine industry competitors on the Wine Market Model. No need to use my Wine Market Model “mash-up” if you don’t want to, check out Constellation Wines Project Genome research instead.

Occasions and Segments in Wine Market Model

*Source: altered for wine but based off “The Handbook Of Brand Management”, Arnold D., 1993

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<<< Return from Wine Industry Competitors to Wine Marketing Success
Photos courtesy of: wine shop

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  1. […] 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. […]

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