MyLocalWineStore» Wine Marketing

How many Premium Wine Drinkers are in your Area?

Bruce — Thu, 18 Nov 2010 08:07:26 +0000

In my last post I outlined a financial model for opening a wine store.

In this post I’m going to do some local market research. This will allow me to estimate the most important and sensitive elements of opening this particular wine store. It’s an easy and cheap, but statistically valid, way of doing research.

In the last post we identified these as the most sensitive financial factors:

Store Penetration in Y3 and Y2
Image Seeker Segment Size, Market Share, and Volume purchased
Enthusiast Segment Size and Market Share
Luxury Enthusiast Segment Size
Conversion rate from internet marketing campaigns

See the previous post(s) for a description of these factors.

An easy and cheap way to conduct valid research

… without spending $100,000 with a research company.

I’ll be using a mailbox drop with a letter (no envelope) from me asking people to go online to complete a survey.

Yep, it’s almost that simple.

Except you’re probably not that confident with market research so here’s how to do it.

Create Questions

I want to find out how many bottles they buy, from where, and what their likely price range is.

Let’s say we ask these questions:
1. In the LAST MONTH where and how many bottles of wine have you purchased?
Please enter bottle numbers in an many options as apply below.

Store A

Store B

Store C

Internet Wine Store

Vineyard Direct

Liquor Chain A (outside of town)

Other

2. Would you basically describe your views on wine as:
Please select one option below

There are so many wines on the shelves – it’s confusing since I can’t always tell from the label how the wine is going to taste. I like to drink wine, but I don’t know what kind to buy.

I have some knowledge about wine and am actively seeking to further my wine knowledge. I look to wine writers and other experts for guidance. Buying a wine my friends don’t like is very disappointing.

I enjoy wines from established wineries. I feel like they have perfected the art of winemaking. I like to be offered a wide variety of well-known wine brands.

I shop in a variety of stores each week to find the best deals so I like to be offered a variety of wine specials and discounts. I am a heavy user of coupons and rebates and know what is on sale even before I walk into the store.

I don’t know much about wine, I just know what I like to drink. I usually buy the same brand, preferably a domestic wine. To me, wine is an everyday beverage, so I don’t think much about it.

I love to spend time browsing in the wine section. I’m a confident wine buyer. I like to refer to wine publications and I’m influenced by wine ratings and reviews. I appreciate and understand sophisticated wine information.

3. How much do you spend on a bottle of wine for:

After work, everyday wine

Weekend BBQ with friends

Formal Dinner at your place with some good friends

A special occasion – your loved one has a big birthday

I’ll give them these price point options in columns along the top:
n/a, Less than $4, $5-10 $10-15 $15+

Results

Actually I’ll be asking a few more questions than that and am happy to share them but I wanted to simplify this post .

Once I have enough results I’ll redo my financial model estimates (see in the previous post).

If the survey suggests there are:

a large group of “Image Seekers”
who are buying lots of wine from a Liquor Chain Store,
at high prices

… then I think a premium wine store will work.

If they are:

mainly “Satisfied Sippers”
who are buying little wine
at cheap prices

… then the store is doomed.

No doubt it will be somewhere in between.

I’m not going to cover Internet marketing conversion rates with this survey (the last factor in the list at the top), I have another of way of assessing that which I’ll share in another post.

The Actual Survey Software

Sign up for a free account at Survey Gizmo. They provide a super easy way to create a survey on the internet (not your computer), they publish it via their servers, and provide reports you can use.

I’ve created a video of how easy it is below:

Music: Phil Collins, Papa was a Rolling Stone

You get up to 250 responses when using a free account. Which is about how many I need for a statistically valid sample.

Which reminds me to go through the math part.

The Math – arrgh!

Now I hate math and statistics as much as you. But there are some great tools and methods to keep this simple.

First let’s make sure we get a representative sample of the population.

Use this online calculator from Custom Insight. The best way to explain this is by using an example.

I want to see how many people have wine cellars in the local area. This is an indication that they are a high price/ high volume wine drinker.

If the 50% of the population has a wine cellar then I’m ecstatic. If 5% has a wine cellar then I may be in trouble. In fact I don’t care if 20% or 26% of the population has a wine cellar, only that it is about that figure. I’m after big differences here so I’m willing to tolerate rough figures:

My tolerance for error is high and I’ll choose 6% in the field: How much error are you willing to tolerate?
How many people are in your population?: 25000 as per my previous post.
Confidence refers to how likely the figure is going to be correct. I’m happy with a 90% Confidence level.
Clicking Calculate tells me I need 188 respondents.

So if I did this survey 100 times, then 90 of those times the survey would show results that are within a 6% range (between say 20 and 26% as in the example above). However 10 of those times the figures would be outside of that range. Which is pretty loose but I’m a businessman not an academic, I need the results fast and cheaply.

How many surveys to send out?

I believe that I’ll get a 20% response rate because I’m a local person asking sweetly , not some faceless corporate. To increase response I could offer a prize but I don’t feel I need to, yet. So for the next field in the calculator I’ll put in 20%.

What is your estimated response rate?: 20%

The calculator tells me I need to send the survey to 940 people.

Making sure the sample is not biased

I could just get a student to deliver 940 surveys to the first 940 letter boxes he comes across. The problem is the sample will be biased towards those streets. They may be in a poor part of town, or a rich part. They may be closer to the shop, have lots of vacant houses… all sorts of things could skew the sample.

So here’s what I’ll do.

Let’s say I know there are 7000 households: 7000 households divided by 940 delivered surveys = 7.

So I’ll ask him and his friends to go to every street and post a survey request in every 7th letter box. At no time are they to decide whether the house is worthwhile or not as that will ruin the randomness of the sample.

The Survey Request

I’m just going to print out or photocopy the following:

Hello, my name is [your name], and I’m researching whether I should open a fine wine store in [town].

It would be great if I could, but I just don’t have enough information to make that decision so I thought I’d ask you .

Your answers will be immensely helpful to me in either opening a great wine store that suits you or … helping me avoid making a financial mistake!

I’ll ask a few questions about your preferred wines, your recent purchases and what factors influenced these. It should only take about 5 minutes.

It is an online survey, so please use your internet browser to go here:
[website address from survey gizmo]

Your answers will be anonymous, and are for my own use to create the best store I possibly can.

Please only complete this survey if you are 21 years or older.

Kind regards

[your full name]
[full contact details]
The Online Survey is here: [website address from survey gizmo]

Pilot Survey

Sometimes everything just goes wrong, so its best to have a trial run yourself first.

Print out 100, deliver yourself and see what happens. You may need to adjust the questions or offer an incentive. By finding out with a small group first you check your process.

The Results

You can monitor your surveys day by day as well as run reports and download them.

So that’s how I’m trying to estimate the most important and sensitive elements of opening this particular wine store.

Now, given I’m 20 pounds overweight, can I talk myself into getting on my mountain bike and delivering many of these myself… or I could just stay home and open a bottle of wine while someone else does it. Hmmmn.

What’s your thoughts (not the overweight bit)?

Photos courtesy of: Wine Country of IL, Question mark made of puzzle pieces, Letter Boxes

People drink other People’s Wines: the influence of others’ advice

Bruce — Wed, 14 Jul 2010 23:03:36 +0000

A few days ago I posted an interesting comment by Isabelle from a forum on linkedin (Vintage Wines) I participate in. Yesterday Tony Spawton, a well known wine marketing researcher had this to say.

My comments are italicized and in [square brackets], I also paraphrase by using [ ] , and any bolding is my own.

========= Tony in linkedin: Vintage Wines, start quote =========

I know from my research that Jono [Bruwer] is on the money.

The expectations of the consumer varies with the occasion for which the wine is purchased

The wine consumer is promiscuous in brand, price, region and style so to suggest that the consumer is stuck in one category is a fallacy.

Consumers are most influenced by the advice of others “people drink other peoples’ wines” a phrase I coined in the late 1980′s.

Brand is important as a choice factor and variety is a given. At last the French have woken up to this and now variety to be included in their labelling.

Another phrase of mine is, “the package sells the first bottle the wine maker the second”. The extrinsic attributes need to be distinctive to break though the clutter and jog the consumer memory whether in the retail store or the restaurant.

Consumers generally fall into 3 purchase motivation categories

Monday to Thursday wines – drink and enjoy at home, known brand that is suited to the buyers experience- safe brand- low price and easily dispensed and stored ( a big plus for screw cap).
Lifestyle Wines – shared with peers – high psychological risk – as a poorly selected wine reflects on the purchaser’s lack of wine knowledge. (this purchase is strongly influenced by WOM [word of mouth].
And the treat – the luxury purchase – to celebrate, to honour. The buyer may not personally like this particular wine or can ill afford the price – but the ” loss of face” would be considered very damaging.

The lifestyle wine is a ” social lubricant” – the luxury wine is the ” topic of the conversation” .

====== end of Tony’s comment =======

Anyone who has searched academic journals for wine marketing articles will see Spawton, T. come up often over the last few decades. So this could be regarded as a great summary of why wine consumers buy.

What do you think?

What is most important to wine consumers? Is it selection or price or both?

Bruce — Sun, 11 Jul 2010 21:29:14 +0000

Recently a forum I follow has had a very active discussion about what is most important to wine consumers (linkedin: Vintage Wines).

At first glance I didn’t think so many people would comment but as at 11 July there were 67 comments!

They were split among the usual “suspects”: drinkers, wineries, retailers, other pros… and an interesting comment by a wine researcher.

Her name is Isabelle Lesschaeve. She gave a great summary of wine consumer research, so I asked her permission to paste much of what she said below. My comments are italicized and in [square brackets], I also paraphrase by using [ ] , and any bolding is my own.

========= Isabelle in linkedin: Vintage Wines, start quote =========

We don’t make the purchasing experience easy for consumers

There is an overwhelming number of SKUs to choose from, many labels look the same, the classification by wine origins is not obvious for everyone.

For most consumers, it’s intimidating. It has been established that in average, consumers make a wine selection in 40 seconds, [so wine labels] being visible is important.

Isabelle Lesschaeve

[But I do] admit there is not one consumer, but a diversity of consumers. There are few differences in purchase decisions that can be explained by gender, although females seem to become the primary shoppers.

Researchers like segmenting consumers according to different criteria, Lifestyle is one of them and Bruce gave an example before [this was to do with these posts here and here that I had briefly summarized].

Another criterion that was found critical to explain behaviour differences is the consumer involvement with wine.

High involved consumers are these enthusiasts who like to learn more about wine, read magazines, belong to wine clubs: they will select wine based on origin, appellation, varietals or style.

Low involved consumers are the confused ones (about 2/3 of the population) and yes they use strategies to reduce the risk of making the wrong choice.

Although you all [meaning the previous 50 odd commenters] seem very keen to assist your consumers on the floor, low involved consumers are intimidated and afraid to ask, because they don’t want to look like idiots (nobody likes that). So they use price, awards, cool labels as risk reducing strategies.

What I found fascinating and upsetting at the same time is that the sensory experience consumers have when tasting the wine can be influenced by those extrinsic cues (label, award, price, etc.). As it was mentioned before some consumers drink labels not wine.

Several experiments have demonstrated that wines tasted blind were usually not appreciated the same way as wines tasted with all these cues. And this was found for all types of consumers, including highly involved people and wine professionals.

So what is the most important to consumers?

It depends but I would say a good match between the imagery (brand, labels, story etc.) and the taste of wine.

How do we accomplish that?

Not easy. By recognizing maybe that we – wine professionals – represent only a small % of the wine drinker population.

Most of consumers like fruity and sweet wines and some marketers got it right by making their labels very visible so that in 40sec they can be seen and bought.

How do we take these consumers to the next level?

May I suggest by “involving them”. The professional talk might not be the right strategy or the glamorous image of wine might not be so appealing to these consumers.

The good news: the coming generation of wine drinkers (Gen Y, Millenials) does drink wine and likes to experiment. However, they don’t recognize themselves in the wine culture and wine advertising currently proposed.

One of the challenges that wine professionals will face is to adapt their communication and customer relations differently to make wine accessible and understandable.

[In a latter short post she continued]

Here are few groups thinking outside the box. All are wine lovers and wine enthusiasts, and their approach to “convert” consumers is certainly different to what is taught in many classical wine appreciation classes.

www.billysbestbottles.com
iyellowwineclub.com
www.qwoff.com.au

====== end of Isabelle’s comment =======

And here’s some screen grabs of those groups:

www.billysbestbottles.com

iyellowwineclub.com

www.qwoff.com.au

So my question, dear readers, is how would you think outside the box? What could you do differently in a sea of consumer confusion and a highly competitive wine retail scene?

Wine Marketing: How many women are you getting in your wine store?

Bruce — Mon, 08 Feb 2010 20:45:58 +0000

I’ve just been speaking with a senior wine industry figure and he has pointed out the issues that a traditional wine specialty store has with women.

Many wines stores are full of fantastic wine. They accurately reflect what the wine store owner loves, and can speak passionately about if given half a chance.

However that may not be what much of the local market wants

The market may actually want more Californian Zinfandel, German Riesling, or to explore Chile, New Zealand and South African wines. It may be a hot summer with red wine really struggling to sell (I love Pinot Noir but I can’t drink it in 35C / 95F during the height of summer).

What’s more it may not be what half the market wants: half the wealthy market, half the market within 15 miles, half the market that is – women

Women may want more sauvignon blanc (currently the case in Australia) or they may want French rose champagne. Definitely already cool from the fridge, to drink soon after purchase.

Women may want to have assistance as to what they already are/could be enthusiastic about, rather than the retailer is enthusiastic about. Not paternalistic advice but truly friendly helpful advice.

Perhaps they aren’t so comfortable talking to a man in a dark store surrounded by wines they have no interest in. Funny that

But if the shop also sells specialty cheese as well as wine, has women sales assistants or managers, has lots about food and wine, perhaps even an espresso machine, then you could start to take back that 50% of the market. The female half.

The supermarket now owns women, unless we can get them back that is

So ask some female friends to come in and give you a female’s view on what you could do to attract half your market.

One way to give potential female customers all the information in an environment they’re perfectly comfortable in – their home or office – is the internet. Also ask your female friends to check out your website for any glaring faults.

What else are we doing wrong with this high volume side of the market?

Wine Marketing: Different Wine Consumers (4)

Bruce — Fri, 22 Jan 2010 20:28:49 +0000

I stumbled across this 18-month study commissioned by Constellation Wines US on Wine and Vines .

Ties in nicely with the other studies I’ve seen in the wine and alcohol beverages industry. See my post on Different Wine Consumers (2) in particular.

Key points for a local wine retailer

Traditionalists: Shop at retail locations that make it easy to find favorite brands.
Image Seekers: Use the Internet as key information source (including checking restaurant wine lists before they dine out so they can research scores!).
Enthusiasts: Like to browse the wine section, publications, and are influenced by wine ratings and reviews
Savvy Shoppers: Shop in a variety of stores each week to find best deals, and like specials and discounts
Overwhelmed: Looking for wine information in retail settings that’s easy to understand. Very open to advice, but frustrated when there is no one in the wine section to help. If information is confusing, they won’t buy anything at all.
Satisfied Sippers: Second-largest category of warehouse shoppers, buying 16% of their wine in club stores

And the winners for small wine retailers to focus on are… Enthusiasts and Image Seekers, closely followed by Traditionalists but only if you stock their wine brands.

Here’s some more details:

Overwhelmed (23% of consumers):

* Overwhelmed by sheer volume of choices on store shelves

* Like to drink wine, but don’t know what kind to buy and may select by label

* Looking for wine information in retail settings that’s easy to understand

* Very open to advice, but frustrated when there is no one in the wine section to help

* If information is confusing, they won’t buy anything at all.

Image Seekers (20% of consumers):

* View wine as a status symbol

* Are just discovering wine and have a basic knowledge of it

* Like to be the first to try a new wine, and are open to innovative packaging

* Prefer Merlot as their No. 1 most-purchased variety; despite “Sideways,” Pinot Noir is not high on their list

* Use the Internet as key information source, including checking restaurant wine lists before they dine out so they can research scores

* Millennials and males often fall into this category.

Constelllation Wines US on Wine Consumer Share: the Gnome Project.

Traditionalists (16% of consumers):

* Enjoy wines from established wineries

* Think wine makes an occasion more formal, and prefer entertaining friends and family at home to going out

* Like to be offered a wide variety of well known national brands

* Won’t often try new wine brands

* Shop at retail locations that make it easy to find favorite brands.

Savvy Shoppers (15% of consumers):

* Enjoy shopping for wine and discovering new varietals on their own

* Have a few favorite wines to supplement new discoveries

* Shop in a variety of stores each week to find best deals, and like specials and discounts

* Are heavy coupon users, and know what’s on sale before they walk into a store

* Typically buy a glass of the house wine when dining out, due to the value.

Satisfied Sippers (14% of consumers):

* Don’t know much about wine, just know what they like to drink

* Typically buy the same brand–usually domestic–and consider wine an everyday beverage

* Don’t enjoy the wine-buying experience, so buy 1.5L bottles to have more wine on hand

* Second-largest category of warehouse shoppers, buying 16% of their wine in club stores

* Don’t worry about wine and food pairing

* Don’t dine out often, but likely to order the house wine when they do.

Enthusiasts (12% of consumers):

* Entertain at home with friends, and consider themselves knowledgeable about wine

* Live in cosmopolitan centers, affluent suburban spreads or comfortable country settings

* Like to browse the wine section, publications, and are influenced by wine ratings and reviews

* 47% buy wine in 1.5L size as “everyday wine” to supplement their “weekend wine”

* 98% buy wine that costs more than $6 per bottle, which accounts for 56% of what they buy on a volume basis.