Introduction to consumer behaviour and the decision making process Wine Intelligence teaching programmes - 2006 Wine Intelligence 2006
What is Consumer Behaviour? Consumer behaviour is defined, in its broadest context, as being about human responses in a commercial world (East, 1997) Consumer behaviour must examine both purchase and consumption of goods and account for decisions that both precede and determine these acts (Engel,1986) First emerged as a separate and distinct area of study during the 1960s Wine Intelligence 2004 2
Wine Intelligence 2006
Wine Intelligence 2006
Why is it important in the context of wine? Must identify what is important to the consumer - gauging the importance of attributes. (Hall et. al., 2001) With a strong understanding of a consumer s behaviour in a specific product category, companies can create the right products, with the right attributes and target to the right consumers (Hall and Lockshin, 1999) Wine Intelligence 2004 5
Intrinsic & extrinsic cues Intrinsic attributes - those that are inherent within the wine itself such as taste, type, alcohol content Extrinsic attributes - those that are not part of the physical product such as brand, price and label/package suggest that intrinsic cues and can be modified without changing the essence of the product. Wine Intelligence 2004 6
Types of consumption A range of consumption practices have been identified which attempt to understand the relationship that consumers have with the consumption of products including: product involvement consumption as experience utilitarian versus hedonistic consumption consumption as integration the relationship with the self and the social network consumption as classification the role of product symbolism Wine Intelligence 2004 7
Product involvement High involvement and low involvement consumer use different cues or attributes when selecting products low involvement: tend to use extrinsic cues high involvement: use a broader range of cues that are often more complex and often intrinsic Wine Intelligence 2004 8
Wine Intelligence 2006
Consumption as experience Hedonistic vs. utilitarian i Hedonic consumption designates those facets of consumer behaviour that relate to the multisensory and emotive aspects of one s experience with products (Hirschman, 1980) Hedonic consumption acts are based not on what consumers know to be real but rather on what they desire reality to be (Singer, 1966) Wine Intelligence 2004 10
Wine Intelligence 2006
Consumption as integration Consuming both in relation to one s self and within relation to society The personality perspective emphasises the importance of the consumer s self within the decision making process where consumers view products as reflecting themselves (Pachauri, 2002) Products act as social symbols and are therefore significant to ones social class (Pachauri, 2002) Wine Intelligence 2004 12
Consumption as classification Making a purchase forces the consumer to make an assessment of the symbolism of the product to be purchased, not just of its utilitarian i function Modern goods are recognised as essentially psychological things which are symbolic of personal attributes and goals and social patterns and strivings (Levy, 1959) Wine Intelligence 2004 13
Consumption as classification When making a purchase, the symbol of the object becomes joined to and reinforces the way the consumer thinks about himself. An image that is consistent with the way he wants to be (Levy, 1959) Wine Intelligence 2004 14
Product involvement High involvement and low involvement consumer use different cues or attributes when selecting products low involvement: tend to use extrinsic cues high involvement: use a broader range of cues that are often more complex and often intrinsic Wine Intelligence 2004 15
Consumption as experience Wine Intelligence 2006
Consumer behaviour and the decision making process in the wine category Wine Intelligence 2006
What differentiates the wine category? Complexity Complexity in the decision- making process for wine purchasing Different segments of wine buyers probably use different purchasing strategies (Charters et. al., 2000). Range More choice for each need than any other FMCG category Occasions Determines how the choice will be made Can affect the set of attributes used and their priority Attributes A product can be described as a combination of levels of a set of attributes and that these levels determine a consumers overall judgment of the product (Jarvis and Rungie, 2002) Wine Intelligence 2004 18
The wine consumer behaviour model of the future Decision-making hierarchy consumption occasion colour generic wine type style suitability price point value recommendation origin brand product information reliability endorsement varietal / blend details winemaker - heritage alcohol level character Wine Intelligence 2004 19
Why is the wine category unique? Category complexity: the range of SKUs Social complexity: wine is held in high regard by many people Situational complexity: Appropriateness p of wine and food matches and wines for occasions Product complexity: the variability of style, vintage and variety, etc. Wine Intelligence 2004 20
How do consumers feel when choosing wine? Scared, confused and afraid! Why? Because buying wine is a risk for most purchasers due to the complex nature of the category (Batt and Dean, 2000; Thomas and Pickering, i 2002; Spawton,1997; Mitchell and Greatorex, 1989) Wine Intelligence 2004 21
As a result, consumers use risk reduction strategies t Choosing untried brand, familiar (and liked) varietal: I like Merlot, so I ll like this a well known brand or region: I remember seeing this advertised a wine based upon reassurances such as retailer guarantee: I can always bring it back if I don t like it low price or attractive ti promotion: At this price, I can t go wrong formal endorsement from a 3rd party source - shop/restaurant staff, wine writers, awards or medals: They said it s good, so it must be region or country from which the consumer has previously purchased and enjoyed a wine: I m really into Chilean wine, so I ll like this Remaining loyal to a brand Using information found on the back label Batt and Dean, 2000; Chaney, 2002; Charters et al, 2000; Hall et al, 2001; Mitchell and Greatorex, 1989; Olsen and Thach 2001; Spawton1997; Thomas and Pickering, 2002; Halstead 2000, 2001 Wine Intelligence 2004 22
Introduction to brand Wine Intelligence 2006
So, what is a brand? A brand is a name, term, sign, symbol or design, or a combination of these, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors (Kotler 2001) Wine Intelligence 2004 24
Or should we develop the definition of brand.. Brand is a deceptively simple concept. Everyone can immediately come up with an example of a typical brand, but very few people are able to propose a satisfying definition (Jean- Noel Kapferer, 2001) Wine Intelligence 2004 25
Brand Definition further clarification The brand, however, is much more than a name or trademark (Brand.New, 2000) The brand image results from the dialogue that takes place between brand owner and consumer (Barwise, Dunham, Ritson, 2000) Wine Intelligence 2004 26
A brand sits with the consumer At its simplest, a brand is a recognisable and trustworthy badge of origin, and also a promise of performance. A brand is simply a collection of perceptions in the mind of the consumer (Feldwick, 1991) Wine Intelligence 2004 27
Brand definition some useable guidance Lockshin and Rasmussen (2000) developed d four broad categories for defining a brand: Brand is a statement of the marketing mix Brand is a differentiation device Brand is a layer of associations Brand is a shortcut for consumers Wine Intelligence 2004 28
What should a brand promise? authenticity replicability reliability confidence security Wine Intelligence 2004 29
Brand in the context of the wine category A wine brand is a product cue given in wine packaging or information such as origin, grape variety, region, price etc., for which h consumers search during their decision making process (Halstead, 2002) Wine Intelligence 2004 30
Product cues as a proxy for brand Main influences of the wine purchase decision are: perceived risk and product cues such as brand, label, price, product experience & knowledge and product use situation (Spawton, 1991) Information given in wine packaging (e.g. origin, grape or region) act as brands (Cawley, 1992) Wine Intelligence 2004 31
Product cues as a proxy for brand Price Used as in indicator for quality and to reduce risk (Mitchell & Greatorex, 1989) Familiarity & Trial Most important t criteria i for purchasing wine (Jenster & Jenster, 1993); (Rink, 1998) More important than promotion Extrinsic indicators (e.g. price, origin) Feature more strongly than personal experience (Lockshin & Rhodus, 1993) Wine Intelligence 2004 32
The wine brand paradigm Branding eases purchase = generates volume But heavy wine purchasers, often more knowledgeable and affluent consumers, tend to express less willingness to purchase wines which are perceived to be heavily branded. (Mintel, 2001) Wine Intelligence 2004 33
The Wine Intelligence Brand Building Process Wine Intelligence 2006
Brand Identity what is it? Customers must recognise that you stand for something Howard Schultz, Starbucks Brand Identity provides direction, purpose and meaning for a brand It answers the questions: What are its core values? What does it stand for? How should it be perceived? What personality traits should it project? What are the important t relationships in its life? Wine Intelligence 2004 35
What is brand identity? Brand identity is a unique set of brand associations representing what the brand stands for and what it is promising to customers Underlying the brand identity should be a value proposition which has Rational benefits (good quality, good value) Emotional benefits (makes me feel good about myself) Good identities have core elements which endure across markets and time Eg Coca-cola: The Real Thing Good identities also have extended elements that do change over time and by market Eg Nike = Tiger Woods = golf, but also the Brazilian football team (particularly in a World Cup year) Wine Intelligence 2004 36
Brand position A brand position is the part of the brand identity and value proposition that is actively communicated to the target audience and that demonstrates an advantage over competitive brands Good positioning i communicates Emotional benefits ( you deserve a special treat ) Rational benefits ( and a good value one at that ) How you can turn desire into action ( here are three reasons why you need this product today, available at X ) Wine Intelligence 2004 37
The product attribute fixation trap Most common trap with branding, where strategic t and tactical management of the brand is focused solely l on product attributes t based on the assumption that this is the only relevant base for consumers. The most common issues with this are: Failure to differentiate from competitors at all Any non-trademarked attribute can be copied anyway It assumes a rational customer (!) It limits brand extension strategies And reduces strategic flexibility Wine Intelligence 2004 38
Four Brand Identity Perspectives A company should consider its brand as: 1. A product (Coca-cola) 2. An organisation ( GE is light ) 3. A person (Accenture s Go on, be a Tiger ) 4. A symbol (The Nike swoosh ) Not every brand identity needs to employ all these perspectives for some brands, only one may be appropriate but all should be considered Wine Intelligence 2004 39
Brand building blocks (1): where is your company s high ground? Your company s core competencies What is the organisation good at generically? Examples: cost control, scale vs competitors, account management, quality control, ability to develop products fast What is the organisation not good at generically? Examples here are structural problems that can t easily be fixed, eg risk-averse shareholders, currency issues etc Wine Intelligence 2004 40
Brand building blocks (2): where do your products compete well? Your products core competencies In what areas do your products generally do better than the competition? Egs: Better value, more exciting, lowest cost, reliable In what areas are you never going g to compete well? Egs: highest quality, most prestigious, lowest cost Wine Intelligence 2004 41
Brand building blocks (3): what are the key market trends? What are the macro trends? Long-term Category-wide Multi-national? What are the micro trends? Short term Source-country or sub-category specific Local Wine Intelligence 2004 42
Brand building blocks (4): what is the legacy brand positioning? What are your current brand attributes t (if any)? What are the current brand attributes of your nearest competitors? Who are your current customers (if they can be identified)? Who are the customers of your nearest competitors? Wine Intelligence 2004 43
Constructing a new brand entity With these building blocks.... Block 1: Corporate Block 2: Product Block 3: Key Block 4: Legacy competencies competencies market trends brand positioning We need to decide: Who is our new target audience? What do they look like? How do they like to be communicated with? What emotional and rational needs do they have? What is our new brand identity? What are its core values/extended values? What is its personality What does it look like 3-4 words that sum it up And answer the question: why will this audience care about this brand? Wine Intelligence 2004 44