International Wine Economics Topic 3. Consumer behaviour insights and wine Sylvie Rivot, FMA, University of Mulhouse 1

Consumer behaviour and marketing Main issues Ability to effectively differentiate a wine product (brand) from those of the competitors Hence the need for knowledge about consumer behaviour Wine becomes more acceptable. Hence: - comprehension of consumption patterns, consumer values - Convert this understanding into successful marketing strategies. 2

1. Context: demand and choice Wine markets is characterized by ‘dichotomy of demand trends’: -Old world wine countries are characterized by decline in consumption; -New world wine countries and non-producing countries (Scandinavia, Denmark e.g.) are characterized by increase in consumption. Different wine segments appear Consumer research. Adapt production to tastes. Consumer behaviour: multi-dimensional issues Demographics, socioeconomic background, attitude, personality, cultural origin… 3

2. Consumer interfaces with wine Exemple. UK market Off-licence: 82% On-licence: 18% In the off-licence channels, supermarkets&multiple grocers like Tesco: about 80% in volume. 4

2. Consumer interfaces with wine 5

3. A framework for understanding wine consumer behaviour Need for a simplified and structured approach to understand consumer behaviour. There are several options for segmenting a wine market. 6

3. A framework for understanding wine consumer behaviour 7

4. Consumer behaviour constructs and market segmentation approaches Utility of market segmentation: -Need analysis of a specific consumer segment; -Marketing campaigns to be focused on the consumer needs. Market segmentation identifies groups of consumers that are close in one way or in another. Wine consumer behaviour segmentation: -Consumer characteristics; -Product benefits. 8

4. Consumer behaviour constructs and market segmentation approaches Classic approach for segmenting markets: Combination of demographics, geographical characteristics, situational factors, purchase and consumption behaviour. “Classical approaches” can be classified into 4 main market segmentation variables: Geographical Demographic Psychographic (lifestyle) Behavioural. 9

5. Wine consumer behaviour and market segmentation 1. Socio-demographic and geographic factors (gender, age, education, occupation, income, home language, ethnic group, residential area) Identify a certain lifestyle segment, e.g. low-alcohol ‘concept’ wines. If combined with geographic factors (state-of-origin, urban, rural, inner-city and outer-city etc): geo-demographic segmentation Demographics provide a lot of personal detail but not about motivation. Start of generational view of the wine market. target younger segment requires demystifying wine. formation of wine habits and tastes. 10

5. Wine consumer behaviour and market segmentation 2. Sensory preferences and demographics Differences in tastes between male and female. Women have more subtility in wine tasting, stronger preference for white wine, sparkling wine. USA: 56% of wine consumers are female; 77% of US women buy wine for their household. 11

5. Wine consumer behaviour and market segmentation 3. Cross-national behaviour Home consumtion/festivals for example: strong differences between countries 4. Occasion-related consumption Special occasions: celebrations, dinner with friends or family, etc. Social (out-of-home: at the pub, with friends, etc.) Social (at home relaxing) Casual (private home consumption) 12

5. Wine consumer behaviour and market segmentation 5. Volume-based segmentation 13

5. Wine consumer behaviour and market segmentation 6. Risk perception and risk reduction strategies (RRS) Which degree of involvement purchase decision? High involvement: high degree of perceived risk. Kind of risk: financial, functional, psychological (self-image), social or physical safety (health). RRS employed by consumers: Information gathering (family, friends, salespeople, internet, labels, tastings) Brand loyalty Store image, brand image Price Reassurance (returns-policy, tastings, free samples) 14

5. Wine consumer behaviour and market segmentation 7. Life-style based (psychographical) segmentation Lifestyle measurement widely used. Attitude map/value map: few dimensions Wine related lifestyle first introduced in Australia: -ritual oriented conspicuous wine enthusiasts; -purposeful conspicuous premium wine drinkers; -enjoyment seeking social wine drinkers; -fashion/image oriented wine drinkers; -basic wine drinkers. 15

5. Wine consumer behaviour and market segmentation 8. Wine choice cues Cognitive cues Assurance cues In-store promotion-based cues 16