Posts Tagged ‘Selling’

 

Selling commodities is difficult because people buy on emotion, or instinct if you will. Want and desire are powerful emotions that can stimulate the release of endorphins. It’s why some people are shop-a-holics. It feels good to buy. But it’s not that easy to get emotionally worked up about borax, chlorine, and salt. As an economic good, a commodity has no real differentiation, so small price differences in competing products can make huge differences in total sales.

Think about how you won’t buy gasoline at one gas station because it’s four cents cheaper around the corner. That’s a commodity. Ever buy a piece of art that way? Of course not because art’s value is in the eye of the beholder, is easily differentiated, and consequently will have wide price ranges. When art is sold, it’s sold on the artist’s reputation or the emotion the piece evokes for someone. Marketers work overtime to take commodity-like goods and then pretend they aren’t commodities by creating and building an emotional appeal around the brand.

 Take the above deodorant commercial. Did you hear mention of the product characteristics as a differentiator? Nowhere does this commercial say Old Spice is made with orange, lemon, clary sage, heliotrope, pimento berry and musk, even though those were the original Old Spice ingredients. The creative team instead focused on delivering an emotional image; something with a human connection that ties back to the product.
 
In this case in a humorous way, they are talking about sex-appeal and are really targeting women who are by far the larger purchasers of family groceries still. The subliminal note is if you get Old Spice for your husband, he will look like this …….. or maybe the message is he will ride a horse? I don’t know but I am wearing Old Spice and on a horse right now. Look at me….

 

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What do Chinese wine consumers really think?

 

Wine Intelligence China Team shares five key challenges they faced in their latest projects in China at a recent MRS event

Distilling 4 years of experience working in China into a 40 minute lecture was never going to be easy. Yet this was the challenge set us by the UK Market Research Society (MRS) a couple of weeks ago, when they invited us to address our fellow market research professionals in a session entitled “In Vino Veritas? The challenges of finding out what the Chinese really think about wine”.

After a healthy debate among the Wine Intelligence China market team, we settled on five key challenges that we have faced in recent projects. Here they are:

1. The real China is a complex cultural mosaic
The extent to which Chinese people are different from each other is tough to grasp from an occidental perspective – at least at first. The complexity of the country in terms of its cuisines, languages, climates, economic layers, culture, and lifestyle becomes apparent with time spent in the country, and away from the Tier 1 cities. Hangzhou is not like Harbin, which is very different from Chengdu. So which is the real China? It’s a bit like flying from Bremen to Barcelona, and having to decide, between those two cities, which represents the real Europe – a decision both impossible and pointless.

 
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Boom go the millenials…

 

John’s Grocery in Iowa City is an upscale wine retailer whose customers include doctors and employees of the nearby University of Iowa Carver College of Medicine. As such, says wine buyer Wally Plahutnik, his customers are knowledgeable and service oriented, regardless of age and demographic. Except for one very intriguing thing.

“I can’t get the older ones to use the camera on their phone to take a picture of the wine label,” he says. “The younger ones, no problem. But the older customers still come in and tell me they had a bottle of wine, but can’t remember the name. And when I ask them why they don’t use the camera, they just sort of look at me.”

In this, Plahutnik is in the middle of one of the biggest changes the wine business has ever seen—the revolution in consumer demographics, of which the role of new technology is just one small part. The Baby Boomers, born between 1948 and 1962 and widely regarded as the best friend that retailers and restaurateurs ever had, are becoming increasingly less important in the marketplace. Their replacement? The Millennials, two generations behind them but already numerically more significant among core wine drinkers, according to the 2012 Wine Market Council report. Though the Boomers make up 38% of wine drinkers, they consume only 32% of the wine. The numbers for Millennials are 29% and 38%.

 More broadly, Boomers will account for less than 20 percent of the U.S. population over the next eight years, and the number of Baby Boomers younger than 60 will fall by more than two-thirds, according to a 2012 study by Jeffries-Alix Partners. Meanwhile, Millennials (born between the early 1980s and the early 2000s) older than 25 will make up almost one-fifth of the country’s population. And that doesn’t take into account the 8 million Millennials who will turn 21 and start buying wine over the next three years.

“The Boomers are famous for consuming more stuff than anyone else in history,” says Dan Graham, a vice president with the Dechert-Hampe marketing consultancy in southern California. “The question is not so much whether the Millennials will be like them, but how to reach them, since they’re so different from the Boomers.”

The key is understanding—or, first, trying to identify—those differences. It’s one thing to market to Millennials with cute wine names or to approach them through social media because they use it, but that doesn’t mean it’s going to work. The Millennials may not be as jaundiced as their older cousins, the Gen Xers (born between born the mid-1960s and the early 1980s) about marketing, but they’re still more wary than the Boomers.

Also important, and often overlooked: Any discussion of the Millennials must take into account three things. First, that since the end of World War II, the U.S. economy experienced unprecedented growth. Will that continue? Many of the projections on Millennial spending assume they’ll have the same economic opportunities that the Boomers did, and that may not be the case given what appear to be major structural changes in the U.S. economy (to say nothing of ongoing wrangling about government spending).

Second, the Millennials are saddled with $1 trillion in college debt, which could limit their spending in a way that didn’t bother the two older demographics. One guess is that the Millennials’ penchant for low-cost social events like Wine Riot and the success of companies like Groupon represent evidence that they want to go out but can’t afford the bars and clubs that the Gen Xers and Boomers could.

Third, says John Gillespie, president of Wine Market Council, there appear to be some differences between younger Millennials, ages 21-28, and those 28 -36. The latter, he says, act more like Boomers—more willing to spend money, for instance. The younger group may change as it ages, too, but no one knows for sure.

Moving forward, every business looking to capture Millennial dollars needs to know what sets them apart from the Boomers—things that take into account not just demographic but economic and cultural differences:

 

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Per bottle or per glass?

Per bottle or per glass?

 

Politicians may keep telling us the economic downturn is over and western economies are on the road to recovery, some market data actually tell us otherwise. A case in point is the latest market research by GuestMetrics in the United States. Based on its proprietary database of POS transactions of over $8 billion dollars in transactions and over 250 million bills from restaurants and bars across the United States over the past two years, it shows that on-trade consumers in the US traded down from bottles to glasses in 2012.

In fact, the shift was significant with the number of bottles ordered in restaurants and bars declining by 13 percent, while the number of wine glasses increased by 4 percent. “Given the large difference between the price, with the average bottle costing over $43 and the average glass costing $9.60, we believe this shift was driven by a consumer base that is still feeling pressure from a sluggish economic recovery, not to mention the unusually high level of uncertainty towards the end of the year with the spectre of the fiscal cliff,” commented Bill Pecoriello, CEO of GuestMetrics LLC.

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Latest ProWein survey covers five Asian markets.

A new survey commissioned by ProWein, the German trade fair company, has revealed that “in-country representation is key to success” for wine producers trying to capture Asian markets.

Research carried out for ProWein by UK-based Wine Intelligence also found that the five markets it surveyed – China, Japan, South Korea, Singapore and Taiwan – “differ substantially.” The study concludes that it would be a mistake for the wine industry to think of Asia as a single cultural bloc.

It does concede, however, that there are some common trends and characteristics. Across Asia, wine is shaking off its image of being a purely luxury product and becoming more attractive to young consumers, who show “a real interest in understanding it better.”

On the question of local representation, Wine Intelligence suggests that having people on the ground is imperative.

“The wine producers who achieve the biggest success will be the ones who not only get to grips with these trends, but actually take the trouble to establish a physical presence in their target markets,” says Richard Halstead, chief operating officer at Wine Intelligence.

He adds: “It’s not possible to conquer China, Japan, South Korea, Singapore and Taiwan from an office outside those countries.”

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The Millennial Generation.

 

How can wine producers get into the hearts – and pockets – of under-35s, the biggest demographic in history?

 

They drink wine more often, experiment with different brands, eat at upscale restaurants, and are attracted by ‘”fun” and “contemporary” wine labels. They’re the consumer group known as The Millennials (or Generation Y), and they’re on every marketer’s hit list.

America’s Wine Market Council is so keen to fathom the drinking habits of this demographic that in its latest report on wine consumption, it divided them into two groups: younger (22 to 25) and older (26 to 34). Its research shows that 65 percent of the older group drink wine every day or several times a week, and consume more glasses at each sitting – up to 2.92 – than other age groups.

How, then, should wine producers respond – bearing in mind that in the United States alone, this target demographic comprises between 75 million and 100 million consumers, depending on how it’s defined. In other words, they are the biggest consumer group in history.

L.A.-based Mutineer magazine, whose mission is “to share the modern fine beverage experience with the millennial generation,” runs Millennial Wine Circus workshops specifically to help producers target this huge group. For president Alan Kropf, there’s no doubting that this market segment is different from others.
“The size of the Millennial demographic distinguishes it, as does the existence of digital media in the mainstream,” he says. “Digital media has not only influenced the way Millennials receive information, it has revolutionized the way the wine industry communicates in general. Millennials are a revolutionary demographic for wine, and we’ve only seen the tip of the iceberg.”

Australian-based global giant Treasury Wine Estates has decided that the future lies in establishing a male/female divide. Two years ago, it launched Sledgehammer wine (slogan: No Sipping. No Swirling.), complete with a website that asserts: “We make wine because we like drinking wine. Not because we want to talk about it. If you want a wine to swirl and sip while you analyze it, best move on and pick one with a foreign name and a picture of a chateau on the label.”

There are two wines in the range: a Sledgehammer Zinfandel (described as “bold and complex”), and a Sledgehammer Cabernet (“so big and rich we had a hard time fitting it in the bottle”). If a consumer needs a primer on how the wines are made (no swirling, mind), the website contains a guide – so “you can drink them like the man you are.”
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