Thursday, December 6, 2007
Wine marketers: Don’t kill the brand that lays the golden egg
In the recent past wine brand owners has put a great deal of emphasis on sales volume improvements. Marketing campaigns were specifically designed to increase short term sales volumes. This over emphasis on sales volume increases has caused some wine marketers to lose their focus on strategic branding aspects. These marketers must be cautious not to kill the goose (brand) that lays the golden egg. South African wine producers in some chases diluted their brand value by focusing on short term sales improvements. These sales improvement strategies usually include price reductions and even brand sacrifice. Prof. Frikkie Herbst of the USB (University of Stellenbosch Business School) indicated that the total cost (price) is only one of the five main factors influencing the consumer’s choice of bottled wine. These “other” factors are firstly push and pull consumer’s choice factors. Pull factors include psychological motives like celebrations or value perceptions while pull factors are factors like grower’s reputation and wine variety. Other factors that influence the consumer’s decision are place of purchase and shopping time frame factors. This implies that wine marketers can focus on different aspects to improve sales without damaging their brand. Although sales growth and market expansions are deemed to be important aspects of wine marketing, the sustainability of the business depends mainly on the brand. Some authors suggest that brands are the atomic core of the consumer-driven economy and companies are dependent on the success of their brands to be able to establish a sustainable business future. David Higgens, president of Brown-Forman Beverages Worldwide Wine Group, indicated that “in general people in the wine business don’t understand the need to build brands”. He further states that this will become more and more of a problem in mid-sized wineries (www.seriousaboutwine.co.za/?p=443). Studies conducted in Australia by the Fosters Wine group found that consumers look at “brand” and label design more than any other feature when selecting wine. The study found that “brand” is consistently the strongest influence across all consumer segments, when browsing for wine. This implies that medium to long term brand strategies must be formulated to maintain a sustainable business. South African wine exporters and brand owners has the advantage of organizations like WOZA to promote Brand South Africa. These organizations build a holistic industry brand and opens international markets for local wine brands. It must be stated that wine brand owners must still focus on building their own brand and/or their region’s brand. Although the dynamics of local and international wine branding may differ, the basics still stay the same. Su Birch, CEO of WOSA, recently indicated that South African producers were heartened that the rate of value growth in the UK wine market was outpacing volume growth. ACNielsen data reflected a 7,2% rise in value, compared with a 2,1% increase in volumes for the year to June. Birch added that the higher value growth suggests that margins will be under less pressure than in the past, offering sustainable trading opportunities (www.biz-community.com -10 Sep 2007). In the local market, wine producers must realise the importance of value growth. Perceived value growth by the market can be managed by effective brand and communication strategies. In effective sustainable business management it is impeccable, and non negotiable, to maintain the quality of the product (wine). In some cases brand building involves the influencing of consumer perceptions about the different aspects of the product. This implies that brand building and consumer communication goes hand in hand. Marketers must thus find new ways and angles to communicate their brand messages to the consumer. Examples of new brand message communication platform include, but are not limited to the following: Coopetition: This can simply be defined as collaboration among competitors. Many examples exits of cooptetion in the international and local wine markets. The consortium of Alluvia, Tokara, Sagila, Knorhoek and Yonderhill serves as a classical coopetition example. Extended service offerings. Wine producers are expanding their brand by introducing new aspects of the brand. These new aspects serves as new communication platforms and brand awareness are taken to a far wider audience. Examples of this include function venues, theatres and conference facilities on wine estates. Spier, Lourensfort. Paul Cluver and Stellenrust are a few examples of brands that have found new angles to expand their brand audiences. Wine Tourism: Dr. Bouwer from UCT Graduate School of Business indicated that cellar door marketing is a very important brand image tool, especially for the smaller producers. This gives producers the opportunity to sell and communicate much more than just the physical product. This enables wine producers to develop broader communication platforms and thus improving their brand image. E-marketing: Marketers have not realised the wide array of brand building opportunities of e-marketing. Stormhoek has recently achieved tremendous brand building success with effective blog marketing campaigns. Facebook and other interactive web based platforms will create new opportunities for the expansion of brand communication platforms. Although the improvement of short term sales are a very important consideration, wine marketers and wine brand owners must also focus on developing their brand. By nurturing and developing their brands, wine marketers can create a sustainable business future and the “goose” will keep on laying golden eggs.