Saturday, February 23, 2013

Is Your Wine Trash or Treasure?

You've heard the saying that one man's trash is another mans treasure. How is it possible that two people can view the same object completely different? Its the difference in how each man values the object in question and how the object makes them feel. What about your wine? Is it trash or treasure? It really depends on who is answering the question AND if they are a target consumer for your product. If they are your target - they better not answer trash. Value is a consistently misunderstood concept but it is critical to consider in any successful marketing strategy.


This is the time of year when the end of year news starts to wane  and winery neighbors come out of their cellars to see if they have a shadow then discuss microbial spoilage, stuck fermentations  and quite often these days - their strategy to market their wines and how to do it in the context of a changed economy. Take a look and listen at just such an exchange in the above movie.

How will you best express value in your marketing strategy this year? More tasting room focus? Social media? Wine clubs? Maybe conjure up animal spirits and go completely DtC through the Fifth Column?


Hopefully you're recognizing consumer purchasing patterns have been going through wild gyrations in the past 5 years. That will continue but today, with the mass affluent consumer just starting to show some stubborn life as real estate prices bottom, its the perfect time to think about what will drive the middle class consumers purchasing this year and into next. Forget about Millennials or Boomers. It's what we used to call the Aspiring Affluent that will be the next real growth segment though my bet it that is going to end up comprised mostly of Gen X -  the forgotten generation. Why will the Aspiring Affluent buy your wine and not your good old wine making neighbor's wine in the next few years?
Of course the answer is: It depends on your business model, but that would be a cop out. There is an overall philosophy that you can apply no matter the model.

I consistently drive winery owners to identify their consumers through the use of CRM, and define a strategy to drive value. Now if you are selling out everything on allocation, you might say to yourself: "Self? I don't sell on value. I am all about scarcity." If that's the way you're thinking then you are lucky to be in business because all products are purchased on value. It's your role as a marketer to define what value should mean to your consumer and make sure your buyer knows it.


Many winery owners over the years have told me "I just focus on wine quality and whats in the bottle does the rest." Baloney. It's important to recognize the wine you sell is inert. It is an amalgamation of chemicals. Of course, what you are selling is the flavor profile of the chemicals but more importantly, you are selling the quality of the product which is defined by all the Ps in marketing. Out of that mix you have to evolve a story beyond the special soils, long warm days and cool nights. You are providing an affordable luxury product to your consumer and they are experiencing something when they drink it. They more you can influence consumer experience, the more you can charge for your wine.
I've put this up before as a value equation to consider and it’s particularly important for the DtC model to consider this: All people want value. Value doesn't mean ‘cheap.’ Value can be found in all price categories from luxuries to commodities. For fine wine we came up with this equation for the value model several years ago:

Here's the math: if Perceived Quality were “4” and Price were“2”, Value with just those variables would be “2” (4 divided by 2). If we lower price to “1” Value goes up to “4” (4 divided by 1). Makes sense? Anytime you lower price, you enhance value. But there are other variables here. You can enhance Perceived Quality through marketing and promotion and on top of that, you can enhance the consumer experience. That Experience variable should be where luxury wine retailers spend their time because that’s the soul of the DtC model.


How you do that is very long discussion but before signing off this week, I'd like to ask how are you tracking consumer experience? How do you measure it? How do you know what someone in a restaurant experiences when they drink your wine? How do you know if one of your top influencers or wine buyers had a bad experience?

Feel free to offer your thoughts on the above, and offer ideas how you or your wine making neighbor enhance experience to drive value.

8 comments:

  1. Glad to see you mention both the influences and the restaurant in the CRM equation.

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    1. Thanks NW - There is more to experience than the tasting room and a wine event. Finding the path to measuring and reinforcing positive experiences is key to successful marketing in this era.

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  2. Any voluntary transaction is based on perceived value. What differentiates is the perception. We are a micro (given our Southern Silicon Valley location, and day job wrangling electrons in the Northern Silicon Valley, I could readily say nano) winery, with growing from 150- 1000 cs in two years.

    Our perceptions of our customer's perceptions gets rather meta, but suffice to say, we find that people value obviously the taste of our wines, and but also presentation and packaging far more than I would have thought from an engineering perspective. The ambiance, logo, connection with the tasting room staff count for a lot.

    We try to track it by reviewing internally who bought, what and how much, and why or why not.

    In a restaurant, we don't have that, we have to rely on brand recognition, recommendations from a waiter or Somm, or even whimsey on our brand name.

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  3. Thanks for signing in Sheldon - Wine is really different from most consumer products. Good for you that you are tracking the sales and developing contact with consumers. Understaing how to scale and measure that is your next task. Thanks for weighin in.

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  4. Looking at actionable data has been a focus at BottleJoy for the last two years. We have been developing a new ecosystem for the wine industry that changes the prerequisite that the consumer needs to be able to Speak wine to engage the wine intelligently. We model the attributes for the consumer so that we can reduce the noise of decision at any store/location to the few bottles that will most likely be within their preference Range. Interesting enough, I read all the time how wineries need to study their consumer, utilize CRMs to locate and leverage their influencers, and measure their experiential Value for their wine in order to build new channels. However, when reaching out to wineries to offer such technology they are not interested. The issue is that most wineries are stuck in 1950 and are still marketing and selling their wines the same way. They invest in the relationships that they hope will translate into Long term revenue turn over...But the old Guards are retiring and the younger generations are tuned out…drinking Craft beer in hipster bars using technology to located their favorite taps...For most beer is an easy language to learn as compared to wine.

    BottleJoy changes the language of wine into a symbolic language that young generations can understand quickly. We use the same symbology that they have learned playing video games. If you have ever played Mario Cart..how did you choose your character?
    By setting a values to all attribute and organize the semantics into a concise library of values, we are able to statistically "match" each consumer to the best options. Here is the important part: that may be a brand or varietal that they have never heard of before. The tool we have really engineered is a confidence engine. Confidence is important to decision making as it will mean the difference between sticking to the 2 buck Chuck, or stepping up to another price point to explore. Bottlejoy can only work if the consumer tells the algorithm that the wine was preferred so that it can learn with the consumer. That single action then gives us true actionable data that can be translated into any Value quotient you can imagine and can be applied across a host of demographics.

    Again…When you offer the industry this type of data…crickets.

    So it begs the question, I ask you at what point is the industry ready to embrace alternate strategies to Opinion Peddlers (Critics), and Relationship Channeling to understanding their value proposition for the Consumer.

    I am open to all conversations. We are launching in a few wine stores in San Diego, and in 16 stores in Mexico in April. (It seems that the Baja Wineries are more interested this type of data than CA.)

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    Replies
    1. Thanks for logging in. Long post Scotty. I couldn't tell if you were asking a question, stating a view or selling BottleJoy? (we try and keep commercials to a minimum here.)

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    2. Understood...not selling, just pointing out that the choir is not listening and that the technology you are inferring exists. Sorry if it was a tad long...will keep it to minimum the next time your post strikes a cord as I always read your blog.

      Cheers

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    3. Its the pot calling the kettle black on length of posts. Pithy isn't my strength either. The technology does exist but the adoption is low. Everyone is still scratching around looking for market leadership and I don't yet see it.

      You have a lot to offer in the discussion and would love to hear more of your pithy thoughts. :)

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