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WINE MARKETING: THE CASE OF MICRO AND SMALL WINE COMPANIES IN THE CZECH REPUBLIC Anastasia Murínová Abstract Purpose: Wine marketing is one of the main reasons of survival and development of micro and small wine companies, that have own rules and advantages which allow to stay in that upcoming craft. Micro and small companies is a major part of wine business in the Czech Republic. The purpose is to understand the specifics of wine marketing perception and find out which marketing tools most affect the success of the wine company within the framework of case study. Design/methodology/approach: A brief comprehensive review of recent scientific literature and articles published predominantly in marketing oriented journals was carried out followed by a qualitative case study. The concerning research part has the form of a case study. There a survey was conducted, namely the face-to-face structured interviews, which belongs to the verbal form of questioning methods commonly employed in qualitative research. Open-ended questions were used in this study that is approach of grounded theory. The qualitative content analysis was carried out for analysing obtained data. Findings: The research determines generalized understanding of wine marketing in the Czech Republic within micro and small wine companies from the theoretical and practical view. The most important and useful marketing tools were detected and confirmed by respondents quotations in the framework of case study. This study shows that respondents basically understand the definition of "wine marketing" in narrow image as a mean of promotion. The main purposes and influence of wine marketing on the business success were discovered within the framework of conducted case study. Research/practical implications: This study focuses on a creation of framework for further research for application wine marketing principals within the context of micro and small companies located in the South Moravian region in the Czech Republic. Results of the study are useful for both theorists and practitioners. Conclusions and that grounding can be as a platform for the development of further in-depth theoretical model of wine marketing. Representatives of the wine business might be interested in conducting a comparative analysis of the activity and the possible use of a well-functioning marketing tools. Originality/value: This paper reflects the perception of selected wine marketing of wine business representatives in the South Moravia region in the Czech Republic. The admitted practical applications of wine marketing tools are equally beneficial. Keywords: wine marketing, marketing tools, micro and small business, family business JEL Codes: M3, L26, L66 641

Introduction The current time can be called as turbulent time. People need a lot of information as soon as possible with help of modern technologies. Speed, dynamics, the latest technology- that all affects not only humans, but also companies. If people want something new, companies are forced to develop new products and technologies. Because nowadays, companies place a great emphasis on the relationship with the customer and the satisfaction of his needs. Furthermore, it is quite important to realize, that today the market is oversaturated by great variety of companies. Therefore, the market competition is high. A lot of micro and small companies terminate its activities, because they are overwhelmed by large companies. Each company should follow not only customer needs but although its competitiveness. It is relevant to find out companies strengths and weaknesses. Based on that, company should focus on elimination of weaknesses. The company can form its image and direction of development based on competitive advantages. This is one of the functions and activities of marketing. One of interesting area is viticulture and wine marketing. Because this is one of the oldest process, which has long reach history around the world. Marketing in wine area is particular and sophisticated. The vast majority of founders-winemakers across the world were small independent producers including in the central Europe, they had experienced a lot of economic, political and social posers (Bruwer, 2010), (Terblanche, 2008). These comprise modification worldwide production and consumption patterns, severe competition, notably from New World producers and rising control (Thomas, Painbéni, & Barton, 2013). Presently winemakers are divided into different groups according to business size, production, wine regions and etc. Based on that, marketing tools are different for various winemakers. Consequently, perception of wine marketing and determination of basic marketing trends of the small wine business are main objectives of this study. Due to the lack of research in this field in the Czech Republic, we have focused on case study that represented several Czech small wine companies in South Moravia region. Czech wine industry is now part of industry which is rapidly developing and gaining momentum. It is particular part to the Czech wine industry given the significance of viticulture and winemaking for the agricultural economy of the Czech Republic, illustrated by 17,600 hectares of vineyards within the country with 18,500 registered grape growers (Rozbroj, 2014). According that context, this paper investigates how it is still probable for a micro and small companies to craft and growth sector in a successful industry through wine marketing (Jones, 2011) (Rozbroj, 2014). 642

1 Marketing in the wine industry 1.1 Theoretical background Existing study on entrepreneurial marketing in the wine industry is limited. Nevertheless, the exploratory research on New Mexico winemakers as entrepreneurial marketers was carried out by Ray Chaudhury et al. (2014). This authors detected introductory maintenance for a few dimensions of entrepreneurial marketing. That detentions are pursuing opportunities, proactiveness and innovation, value creation via customer participation, and collaboration through the sharing of resources (Ray Chaudhury, 2014). Notwithstanding that, validated scale on the Entrepreneurial marketing dimensions has not been existed until in 2013 Fiore at al. extended previous research on entrepreneurial marketing by means of empirical study s presentation on the EM characteristics of North Carolina winemakers (G. D. Shows, 2016). This research is based on the qualitative work of Ray Chaudhury et al. (2014) by verifying through quantitative research the entrepreneurial characteristics of wine merchants, including their acceptance of innovation (idea seeking), and their partisanship to long term customer relationships (customer intensity) (G. D. Shows, 2016). According to conducted research, these two dimensions were detected to be positively related to the winery s satisfaction with performance. Moreover, authors found, that if wineries are more innovative (open to new ideas), so that wineries were associated with a positive percentage sales change (G. D. Shows, 2016). Although more value creation orientated wineries were associated with positively rewarded by consumers resulting in a positive change in sales (G. D. Shows, 2016). Czech wine industry faces extremely competition as on national as on global level. Valid marketing is crucial for solving that issue (Thach, 2006). Wine consumers become more and more spoiled. Because they become more well-informed and penetrating over the years. One of the reason is growing social differentiation: older people from upper middle class or higher socio-economic groups increasingly consume a large proportion of the wine market. (Demoissier, 2011) That consumers prefer to buy limited quantities but orientate on quality so buy more expensive wines. As a result, there is a growing globally trend towards drinking less but better. (Mintel, 2010) Wine market has not passed the increasing significance of product differentiation due to globalization, in spite of wine market is considered as a complex one for consumer decision making (Thomas, Painbéni, & Barton, 2013). In comparison with other mature industries, wine industry differentiation becomes the small winery s major opportunity. (Duquesnois & 643

Gura u, 2010) Nevertheless, differentiation is already implemented in the Czech Republic via regional differentiation. Giving the actual context within the Czech wine industry, the challenge for micro and small wine companies is therefore twofold: to defend current positioning through brand differentiation and the manipulation of product-market development opportunities. 1.2 Wine marketing perception: Case study from the Czech Republic A qualitative exploratory research was conducted in form of case study. The aim was to understand the specifics of wine marketing perception of selected Czech wine companies. The results allow to formulate research questions and hypothesis in the future. There was a set of six questions: 1. What is wine marketing from your point of view? What is its purpose? 2. What kinds of marketing tools do you use? 3. Do you think there is the connection between using of marketing tools and your business success? 4. Which marketing tolls do have a greater influence on success of your company? 5. Are you a family business? 6. Do you use name family business in a way to attract customers? 15 representative persons of wine business were asked to answer on the abovementioned questions. The survey was conducted in September-October 2016. A prerequisite for being chosen was participations in historical folk wine festival Slavnosti vína in South Moravia Region in the Czech Republic as active representative of micro or small wine business. Choosing such representative for an interview was carried out randomly. From that 15 representatives only 7 answered a questions properly. One of representative was an owner of wine business, two of them were family members of wine business owner, and four were well informed agents of representative wine businesses. All of them represent micro and small wine business with no more than 50 employees according to Amadeus database and confirmation of their own (Amadeus database, 2016). Respondents: R1: Business agent of wine shops chain (Respondent A); R2: Family member of family wine business (Respondent B); R3: Agent of wine business (Respondent C); R4: Agent of wine family business (Respondent D); R5: Agent of wine family business (Respondent E); R6: Owner of wine family business (Respondent F); R7: Family member of wine family business (Respondent G). There a survey was conducted, namely the personal face-to-face structured interviews, which belongs to the verbal form of questioning methods commonly employed in qualitative research. Open-ended questions were used in this study that is approach of grounded theory. 644

Recorded interviews were the earliest transcribed, printed and then analyzed. All response have been processed through qualitative content analysis in the following chapter. 2 Results 2.1 What is wine marketing and its purpose according to Czech wine business representatives? A few regularities can be observed in wine marketing perception, based on the statements of respondents. This means propagation of products. (Respondent A) I would say, it contributes to products propagation. (Respondent F) It is demonstration that business makes qualitative wine and sell it for a reasonable price. (Respondent B) It is the toll to inform customers that we exist and where to find us. (Respondent G) Marketing needs to increase customer awareness about that products. (Respondent F) According to that respondents, the product propagation is a main feature of wine marketing. Therefore, they mentioned the tool to stimulate the organization of public opinion, to provide a benevolent fame for business and its products. Respondents C and D reflect on the task of sales increasing in the wine marketing framework: Currently, we perceive wine marketing as a toll for increasing of sales. (Respondent C) Marketing is a set of tools, which can help to develop business, increase sales of wine and its distribution. (Respondent D) Respondent C although mentioned that wine marketing can aim for the dual purpose and gave the reasons: It can have bilateral aim: brand propagation or sales increase. Also there can be intersection between this objectives. I think, it depends on faze of business development. (Respondent C) Demonstration the openness, honesty and company values as an instrument of wine marketing was summarized by participants: It is hard to explain, but I can argue that it is the tool by which I can show people what we do, what we offer to customers, how we make business, how we make wine with the soul. (Respondent E) It is way to express company values and allow people to differ us from big companies, show them that we are the same people who makes their job with love. (Respondent E) In discussion the first question- formulation wine marketing based on the respondents opinion, they mentioned that it is connected with the propagation of product and brand, for example, within increasing of customer awareness. Some of them make accent on making of association their products with good quality. The way they achieve increasing of wine sales is connected with application of marketing tools. The need of 645

company to present itself aboveboard and demonstrate intern motivation and advantages was mentioned by several respondents. 2.2 What kinds of marketing tools are used by representative of Czech wine business? According to all respondents, the self-presentation on different mass different fairs and festivals is the most popular tool to express yourself as a business and increase public awareness about your products. We always try to participate on such mass action as today. (Respondent A) In our company we use marketing tools in the framework of self-presentations at different fairs and festivals such as Vinomania, Svatomartinský košt etc. (Respondent B) Usually as a marketing tool for us is self-presentations on fairs and festivals. (Respondent D) We prefer self-presentations on similar actions as today Slavnosti Vina. (Respondent F) Different mass action as today is also good mean for marketing. (Respondent G) Although respondents A, D, G mentioned self-presentations on wine-degustation in some extern place or in their own wine shop. Our customers can find all needed information about us and our products in our wine shop. (Respondent A) We also understand presentation of our business and products in the wine shop as good marketing tool. (Respondent D) As marketing tool we can give an example as wine degustation, where customer can consume our products, ask questions and know us closer. (Respondent G) When we look closer at the particular marketing tools focused on external presentation, our respondents mentioned the following option of print and outdoor advertising: On occasion we use printed advertising campaign before some competitions. (Respondent C) Sometimes we use also billboards. (Respondent A) We use outside billboards to attract new customers. (Respondent D) To enhance the ability to find and connect with the company, almost all our respondents commented presence on the Internet and using online advertising as an essential tools in today's time. They noticed that it help them to attract new customers and be in touch with regular customers, inform them about promotions, organizations, wine tastings. Many of them named Facebook as one of the most popular resource for information exchange: We are trying to use internet resource as a tool for increasing of customer awareness and communication with our customers. Currently I have been working on improving two-way communications with customers through Facebook. (Respondent A) Facebook page helps us to promote our product brand. (Respondent D) We think that Facebook and our web-page helps us to increase customer awareness and communicate with them. (Respondent F) We think that Facebook and our web-page helps us to increase customer awareness and communicate with them. (Respondent F) Facebook is a good mean for marketing. 646

(Respondent G) One of respondent referred about Facebook in following context: We do not have yet Facebook page, but in the future we plan to create account there. (Respondent B) Broadcast advertising for one of respondents is a mean of pay attention on their product and preparing for some big events for one of the respondent. But that mean needs extra financings, thereby it is not regular tool: If we have extra money we can invest them to radio campaign. (Respondent C) Respondents C and E notice that product design process is using in depth in their company. They pay attention on bottle label creation as a tool that sells the product: We pay great attention to bottle label, because it is orientation for customer. We try propagate our label. For example, my festival neighbor has not attractive, interesting label, thereby he does not have success today. (Respondent C) Respondent E mentioned that only combination of marketing tools can help to achieve results: We use different methods to attract customers, for example, creating good bottle label, participations on various actions, also we use Facebook to facilitate ways to find us. Todays is modern technological times, so we need to use that communication methods that prefer our customers. It is necessary to use many of tools to reach your goal. (Respondent E) The second question was aimed at particular tools of wine marketing which are used in the respondents companies. All respondent identified advertising as a toll of wine marketing. They use online advertising via company web sites, social networks, particular Facebook. Some of them use radio, billboards and printed advertising before major events, where they participate. Mass events, such as fairs, festivals, and degustation were also mentioned as an ideal place for company self-presentation, where customers can become better acquainted. Several respondents noticed that bottle label pay first customer s attention, so that kind of not-verbal presentation is very crucial in product design process. 2.3 Does exist the connection between using of marketing tools and wine business success? Certainly we observe that connection. (Respondent A) Marketing tools using increase our sales. (Respondent B) Of course, thanks to marketing, we created well-known brand on the wine market and enhance sales due to that famous brand. (Respondent C) Yes, we thank marketing allows us to attract new customers and their awareness about us grows. (Respondent D) Undoubtedly! Otherwise, it would be very difficult to let know about us, our company, our history and our products. Our goal is to convey to the end customer our idea of a good wine. We need to create a good vision of our product and the brand. We want to attract 647

the customer, let him taste our wine and pass information about us on friends. Although marketing let us increase our sales, of course. We try to sell the biggest part of our stock during festivals and other events. It works. (Respondent E) Yes, it exists. In this way, more and more people get informed about us. Usually we sell everything what we prepared in similar event as today, so I can claim that it helps us to increase sales. (Respondent F) I would say, yes. (Respondent G) In this third question it was examined whether the companies, where our respondents work observe the connection between using of marketing tools and their business success. All of them responded positively. The most common answer was that marketing contributes to increase company s sales. For several respondents event marketing is a tool, where they can sell impressive part of the products stock. Some respondents mentioned that sales increasing was a result of brand popularization after marketing tools use. The majority of respondents indicated that marketing facilitates company to introduce itself and get in touch with customers. Thereby companies increase customer awareness about them, their brand and products. 2.4 Which marketing tools do have a greater influence on wine company success? For almost all respondents key marketing tool which positively affects the business success is self-presentations where is closer contact with final customers: I think the best way to propagate our wines is participations in different events. I would name wine festivals such as Svatomartinský košt and Slavnosti vína as the most affecting our company prosperity. (Respondent A) The wine festival Slavnosti vína has a greater influence on our success. (Respondent B) Different event help us to introduce us and find new customers, sell them our wines. (Respondent D) For us the most significant marketing tool is self-presentation on such mass events. Because we are small company, we cannot allow to be a part of big chain shops and gas stations. We do not need further several sellers who will raise the final price in several times. Our business will never have such manager, who will be in the big shop and sell our wine for whole republic, we do not capacity for that. We understand the marketing in different way, we need to get to the endless customer, to be in contact with customers, who taste our wine. Our company orientates on such customers, who do not search some exclusive Italian or Moldavian wines. We orientate on people, who want local Moravian wine, who search for winery, which independently produces wine and sell it to final customer. (Respondent E) The biggest results we observe after participations in wine festivals and fairs. (Respondent F) Show impacts on our success. That means, we try to make show everywhere, present ourselves as better as possible. Decorations, national costumes, traditional wine customs help us attract 648

customers and increase our sales. Usually we use that kind of self-advertising on presentations, fairs and festivals. (Respondent G) Respondent F added that such kind of event as open cellars, where customers can look deeper to business history and become better acquainted, also influences on their success. Moreover, we see that open cellars play important role, that marketing event influent on company s success. (Respondent F) Thereby, that respondents claim that the biggest impact of their success is due to selfpresentations on various events. It can be reason that small wine businesses are not able and willing to put their products on the shelves of large retail chains, they aim on final customer. Besides that, such festivals and fairs allow small wine business representative sell a majority of their stock and avoid additional extra investment in propagation. Respondent A notes one more useful tool for their company, where they can present themselves and directly communicate with customer: Propagation of our wines in the wine shops is more productive than advertising on Internet, particularly on Facebook. Respondent C is sure that product design process, especially creating expressive, sapid and memorable bottle label, has the greatest effect on wine business success: First of all, the bottle label, as I mentioned, is the crucial for wine business. We see a customers reaction on our bottle, they like it, the label magnetizes them. Thereby, they want to try our wine and after you can offer them to look at your web-page, follow you on Facebook. So first is the label after we use other tools. Advertising on Internet, especially on Facebook, impact on business success according to respondent D. Thereby, customers have convenient instrument with which they can follow actual information about the company and its plans: Facebook also plays important role for us, our customers find us by name and share different information to their friends. (Respondent D) According to Viana (2016) the use of marketing tools affects sales. Factor number one as a reason people buy wine is based on recommendations and testimonials, revealing the bloggers, digital magazines and social media. 2.5 Do wine business use name family business as a marketing tool? According conducted interviews, from 7 respondents only 5 were representative of wine family business. Their answers are following: Of course, we use name family winery because it is true, and we are proud of it! (Respondent B) Yes, we are family business, so we put this name and on our bottle to show people that we are the same usual people as they are. (Respondent D) We use that name, because today in the Czech Republic people do not keep track of the 649

company size. Because big wine companies orientate on quantity and forget about quality. That situation cannot be in small wine business. Family business name is based on true, because our family make that wine for 60 years from generation to generation. (Respondent E) No, we do not use that. But if customer asks we tell him that whole family participate in winemaking process. (Respondent F) Certainly we use that name everywhere. We write it on our bottle s label, leaflets and web-page. (Respondent G) As it can be seen according to answers, all respondents, who represent family companies, use the name family business to attract customers. The reason is that customers associate family company with a company, which focuses on quality and not on quantity. Companies try to demonstrate that their worker are on the same wavelength as their customers. Conclusion Wine accompanies human since the beginning of his existence. Wine for many cultures is important commodity and its importance did not lose over the centuries. But today on wine market there is an incredible variety of wine which can put the customer in a difficult position. Moreover, wine producing and selling companies have not less ussies. Wine industry is complicated and high competitive. A lot of external uncontrolled factors influence the wine company, especially legislative, political and natural factors, such as unpredictable weather. Nevertheless, micro and small wine companies still alive and developing, they have own rules and advantages, that allow to stay in craft and growth sector in a successful industry. According to literature, one of the reason is the using wine marketing (Jones, 2011) (Rozbroj, 2014). The mission of that research was to create basic foundation for future research in the field of application wine marketing principals within the context of micro and small companies enabled in the South Moravian region of the Czech Republic. By process of acquired research results, it is able to explain practical understanding of this theme. Case study based on open-questions interviews has shown that almost all respondents understand wine marketing as mean of promotion. They associate advertising as the main marketing tool. The purpose of wine marketing, according to respondents, to enhance customer awareness about the company, brand and product. Although one of the aim of wine marketing for respondents is increasing of wine sales. Several respondents mentioned that demonstration of intern motivation and advantages of the company and its products is way of good marketing approach. As a tool of wine marketing all respondents noted self-presentation on different events, they claimed such kinds of participation allows customers become better acquainted. 650

As a not-verbal presentation some represents mentioned bottle label, which pay first customer s attention. Representors said that they use online advertising through company web sites, social networks, particular Facebook. Several use radio, billboards and printed advertising before major events, where they participate. Interesting results occurred during respondents answers analyzing: all respondents maintain that there is a connection between using of marketing tools and their business success. The majority noted increasing of company s sales as a result of marketing contribution. Interesting remark was made by one of respondents, that increasing of their sales was based on growth of brand awareness and only after company was capable to enlarge its sales. Although it was noted that event marketing allows companies to sell meaningful part of the products stock and contributes to introduce itself and get acquainted with customers. Thereby, customer awareness about them, their brand and products is increasing. One of the research goal was to investigate which marketing tools have a greater impact on wine companies success. According to research results, key marketing tool for wine companies is event marketing, particularly self-presentations where contact between the company and customer is maximal. The reason is that small companies cannot afford to be a part of supermarket chain s supply. Small wine companies intend to reach the final customer who deliberately chooses a local producer, associating it with the reliability and quality, thus is showing customer s confidence in that company. Product design process, especially creating expressive, sapid and memorable bottle label has the greatest effect on wine business success according to several respondents. Because the customer has a motley diversity of wine producers on the market and one of the basic elements of customer orientation in that manifold is budding, decoying bottle label. Thereby, it makes sense to pay attention on that kind of notverbal presentation. As one of the most affecting marketing tools on business success, was mention online advertising, especially on Facebook. It is connected with that some respondents founded on affirmation that today the company needs to follow modern ways to communications with customers and use that kinds of which are convenient for customers. Customer satisfaction is basic word of any company today. That is the key for success. Micro and small wine companies are not exceptions to that rule. During the interviews the phrase as satisfied customer was mention oftentimes. They claim if the customer is satisfied, he demonstrates brand loyalty and in the next purchase will reach the same wine brand. On the wine market is high competitiveness, thereby, if customer is not satisfied by purchase, it can be cause of purchase of the different brand. Looking close to research results, it can be perceived that there is a positive future of micro and small wine companies development. First of all, according to this research, 651

customers support local producer basing on internal convictions associating small wine companies with reliability and quality. But the most sapid investigation is confirmation that information by wine companies representative. Micro and small wine companies distinguish themselves from big wine companies by mean of quality orientation and inserting souls into production. Besides that, micro and small wine companies orientate to final customers, they want to be in close contact with them. Acknowledgment This paper was supported by project FP-J-17-4154 Inovace v řízení výkonnosti malých a středních podniků. References Bruwer, J. A. (2010). Place based marketing and regional branding strategy perspectives in the Californian wine industry. Journal of Consumer Marketing(1), 5-16. G. D. Shows, P. A. (2016). Entrepreneurship Marketing in North Carolina s. Atlantic Marketing Association Proceedings, 1-12. Jones, R. A. (2011). Entrepreneurial marketing in small businesses: a conceptual exploration. International Small Business Journal(1), 25-36. Ray Chaudhury, S., Albinsson, P., David Shows, G., & Moench, V. (2014). The winemaker as entrepreneurial marketer: an exploratory study [Online]. International Journal of Wine Business Research, 26(4), 259-278. Rozbroj, D. (2014). Situační a Výhledová Zpráva. Réva Vinná a Víno. Ministerstvo Zamědelství. [Online] Avalable at: http://eagri.cz/public/web/file/433552/svz_vino_2015.pdf. [Accessed 21 October 16]. Terblanche, N. S. C. (2008). The need for a marketing reform: the wines of the Loire region. Journal of International Food and Agribusiness Marketing(4), 113-38. Thomas, L. C., Painbéni, S., & Barton, H. (2013). Entrepreneurial marketing within the French wine industry. International Journal of Entrepreneurial Behaviour & Research(2), 238-260. Viana, N. A., (2016). Digital wine marketing: Social media marketing for the wine industry [Online]. Bio Web of Conferences, 7, 03011. 652

Contact Anastasia Murínová Brno University of Technology Kolejní 2906/4, 612 00 Brno-Královo Pole, Czech Republic petlina@fbm.vutbr.cz 653