Wine marketing - Essay Example

?Wine Marketing Table of Contents Table of Contents 2 Introduction 3 Online Wine Retail Business 3 Products and Services Offered 4 Market Analysis 4 Market Segmentation 4 Positioning 6 SWOT Analysis 6 Marketing Mix 8 Competitive Analysis 10 Market Trend of E-Commerce 13 Web Strategies for Increasing Sale 14 Recommendation and Conclusion 16 Reference 17 Introduction Customers can buy wines from various locations. There are lots of choices ranging from individual wine shops, retailers, supermarkets and also through the modern trend in business i.e. through online wine retail shops. With days the buying pattern of customers are changing from retail store to supermarkets and now towards online stores. This report mainly focuses on the online trend of wine retail marketing which are growing with the emergent of new technologies and sophisticated techniques over the internet network. With more technological development day by day online e-commerce system can generate a great prospect for online wine retail business ventures. Online Wine Retail Business Online wine retail business is growing fast with technological inventions. There are various advantages for starting a retail business online. Due to the cost cut as there is no physical space for the shop or floor staffs or other rents in the business process the online retailer will be able to offer products at a very low cost than the competitors who are retailing from shops physically in different shops and supermarkets. In online retailing the customer have the choice sit back comfortably at home and place their order for wines without any hassle of travelling. With this growing demand from the customers the online wine retailing business venture can be very effective way for any company to grab the market share. Through online retailing the company can have a wider reach to the customers worldwide and can increase their sale but on the other hand there are certain drawbacks also for online wine retailing like customers are not able to get a tangible product in their hand which is not preferred by many customers and since there are no direct contact with the customer face to face it’s not possible for the company to convince them to generate the lead (Aerator for Wine, 2011). Products and Services Offered Online wine store can quickly transform the visitors of the website into customers if they find the products and services interesting enough and relevant to their needs. Online wine retailer will have to offer wines of different brands for every need of the customers. Different wines ranging from red wines, sparkling, valentine, white wine, champagne and various others should be available online with their detailed information. The company should update information of the website regularly so as to understand the stock available for the products and will also give the customer an image about the popularity of the website. The company can offer discount count coupons on different occasions for their loyal customers and can also start the service of membership card to avail various benefits from the company. The company should also send e-mail notification to the customers to make them aware about their offers and products. Market Analysis Market Segmentation Market segmentation is the strategy by which the company divides the market and target a specific group of customers for a particular product. Porter’s Generic model is a very useful tool for analyzing the market and selects the possible route for entering into the market. Figure 1: Porter's Generic Model (Source: Kreitner, 2008, p. 184) Cost Leadership Cost leadership strategy is used to penetrate the market in a competitive environment by keeping the price low from others. Price sensitive customers are often attracted by this type of strategy. Differentiation Strategy Differentiating the product from the competitors’ product is another strategy used by companies. Distinctive features of the specific product are highlighted to the customers. Focus Strategy This is the niche marketing technique used by companies to target a specific segment of customers. This products offered by this strategy is not targeted for the whole market. It mainly concentrates on a particular group (Sengupta & Bhattacharya, 2006, p. 120). Here the company should adopt both cost leadership and focus strategy. Online Wine retailer should concentrate mainly on the customers who are aware of e-commerce services and spend most of their time on internet. The company should also provide with the best price for different products amongst the competitors to enter the market with its new services. Positioning Product positioning is the strategy of giving an impression in the mind of the customer. With this technique the company place a product in the market showing the advantages or the benefits of the services or products from the competitors’ product (Stevens & Loudon, 2005, p. 166). It is the perception of the people about the product. Proper positioning of product can be accomplished with the help of the marketing mix tools like promotional activities and various other forms of advertisements and marketing. Positioning is mainly done based on several aspects like Benefit of the product, User application positioning, based on competitor and Price or Quality advantage positioning. For the online wine retail store the price and quality based position is most suitable for a start-up business. Cost leadership approach with quality service can be very effective for the new retailer to expand its business online. SWOT Analysis Strength Online retailing helps to expand business to a global level for any company. Online wine store will help customer from any part of the world to order products of their choice thus producing a better reach for the company at very little time and low cost. The company will be able to target the niche segment of their choice with better analysis of the market. There is very little entry barrier for the company as the initial cost for online retail setup is much less than that of a physical shop. A better public relation is maintained in online retailing as the customers are communicated from time to time with the different product promotion and offers through E-mail after the initial interaction (United States. Dept of Agriculture Risk Management Agency, 2008, p.2). Weakness Since the physical size of the company cannot be estimated by online presence the customer expectation can be very high for the types of services provided by the company. Often the services are compared to the leaders in the same type of business which can lead to dissatisfaction for the customers. Another aspect is, the SEO cannot always work effectively which might lead to a fall in traffic to the website resulting to drop of sale of product. Opportunities With the advancement of technology the customer interaction can be more attractive in E-commerce system. There is no shop timing for placing orders which is a huge advantage for any online wine retail shop. Transaction can be carried out 24X7. The growing trend of internet usage will bring more potential for the company in near future (Rahman & Raisinghani, 2000, p. 202). Threats Due to the low entry barrier there can be more and more competitors with in a very short span of time. This will result to price drop from the company to survive in the competitive environment which in turn will reduce the profit margin for its product. Technological advancement can develop new system of transaction which can act as a possible threat for online wine retailers. Misuse of data over the internet can be another issue which the company should treat carefully (Botha, 2004, p. 43). Marketing Mix Every company analyze the different marketing mix before entering into the market. The market scenario is analyzed and then the strategies are formulated according to that get an extra edge amongst its competitors. The marketing mix tools which are used are referred as the 7P’s of marketing i.e. Product, Price, Place, Promotion, Physical Evidence, People and Process. Product Product is the tangible material which the company offers to their customer. It is designed to meet customers’ needs and demand (Hawkins, 2010, p.18). For the online wine retailer the product offered by the company is wine of different brands which will be sold online. Wines of different quality should be available online so that customers can choose according to their taste and demands. Finest quality wines made from good quality grapes are often preferred by many so it should be available in the stock to attract premium customers and also there should be products which will attract customers who are price sensitive in the market. Price Price is referred to the consumers cost for the transfer of goods from the company to the customer. In retail business the price comprises of the cost of product along with some additional cost like tax, service charge and also the added profit which the retailer keeps for selling the product to the consumer. Price is a sensitive issue which the company needs to evaluate very carefully. It is one of the major reasons for driving sales of the product. It should be very competitive with the market otherwise it will not be able to attract customers. But on the other hand the company should also keep in mind to maintain the price in accordance to the market otherwise wrong pricing policy often give wrong impression on the mind of the customer. For online wine stores adopting a differentiated pricing strategy with focus on value based pricing should be adopted as it would help in attracting value for pricing based customers as well as the premium customers (Gupta, 2007, p.379). Place Place is not a very vital element of the marketing mix in case of online retailing. It can be carried out from anywhere in the world as there is no direct contact of the customers with the company. But certain facilities like a store house, easy transportation can be useful for transfer of goods which are ordered online by the customers. Promotion One of the major catalysts for increasing sales of the company is the promotion tool of the marketing mix. Promotional activities if carried out with right technique can increase sales in a significant manner (Gitman & McDaniel, 2008, p. 296). For a new online store promotion is a very important tool to look after. Proper placing of advertisement to the specific target customers can drive more traffic to the website which will lead to more business for the company. Various promotional schemes like discount coupons and free sample gifts can be provided by the company to capture the market share. In case of online stores social networking websites like Facebook and Twitter can be used to reach out to a large target audience. Physical Evidence Physical evidence is the material which the customer can see and feel before they buy the product. In case of online wine retail store it is a service provided by the company. Thus no physical products can be shown to the customers so the company need to feature their various services to the customers to convince them. People People referred to the employees of the company. Though in service industry people are one of the most important marketing mix tool to interact with the consumer but in case of online service people hardly come in direct contact with the customers. Process It is the most important aspect of the marketing mix for online services. The whole process from viewing products over internet to its delivery to the customer should be managed in an efficient manner by the company. At any point the customer should not be disappointed by the service of the company. Competitive Analysis In order to analyze a market segment and understand the competitive environment of the online retail wine shop, company should take help of the Porter’s Five Force model. Figure 2: Porter's Five Force Model (Source: Hill & Jones, 2007, p. 45) The five forces which must be analyzed before any new business venture are- Entry Barrier In online retailing of Wine there are not many entry barriers as the cost of entry is very low in these business techniques. This is the main reason for the massive growth in online retailing and e-commerce services. Thus it is a favourable factor for the online wine retailer to enter the market in this growing market segment. Bargaining power of Supplier Suppliers bargaining power depends on the number of suppliers present in the market for the products offered by the company (Haag, n.d., p. 73). In wine industry there are many suppliers for the products from different companies which results to the low bargaining power of the suppliers for the retailers of online wine shop. Competitive Rivalry The competition in online retailing is huge with the advancement in e-commerce technology. There are many players in the market offering various types of drinks for the customer. Competitive rivalry is mainly concerned with the direct competitors in the market who are supplying wines to their customers (Lucas, 2009, p. 29). Various renowned online wine retailers like appellationamerica.com, bountyhunterwine.com, avalonwine.com, klwines.com, brownderby.com, wine-club-central.com, 2020wines.com, winecommune.com and many players can acts as the direct competitor for the new online business venture (Glassofwine, 2010). Bargaining power of Buyer With more availability of the same type of product in the market the bargaining power of the buyer also increases (Ahlstrom & Bruton, 2009, p. 132). Many Wine stores are available over the internet due to the rapid growth in the internet technology and due to the low cost of entrance. Thus with ample options in the hand of the customers the bargaining power of the consumers are very high. With more and more online retailers of wine over the internet this can be a serious problem for the retailers as they will have to decrease their profit margin in order to survive in this competitive market. Threats from Substitutes Physical presence of the shop is sometimes preferred by the customers who will act as the threat for the online retail wine shop. Online retailers are not able to meet the customers which can be difficult task for the company as customers prefer to see the product physically before buying them. In order to cope with this problem the service from the company should be very good so that customers can trust them for the process of electronic commerce. Market Trend of E-Commerce E-Commerce activities of the customers are increasing amongst the customer at a very fast pace. With the advancement of technologies people are more aware of the different facilities available over the internet. Due to the modern trend in social networking, people spend much more time browsing websites of different genre. According to the US report published in 2010, E-commerce spending rose to a huge percentage in last year as compared to the previous 3years report. Figure 3: Retail E-Commerce growth rate (Source: Comscore, 2011) Online sale in retail industry reached around $ 34 billion in the year 2010 and is expected to grow even more in coming years thus creating a huge prospect for the online wine retailer (Comscore, 2011). Web Strategies for Increasing Sale There are various platforms with the help of which a company can increase its sales volume in today’s world. The various forms of media like Company website, E-commerce, Search Engine Optimizer, various Social Networking websites, Pay per click advertisements, E-mail marketing etc can act as a stimulus for the business. In online marketing these tools are the only gateway for the interaction with the customers thus they are needed to be very well evaluated before entering into the new business venture of online retailing. Website The best way to communicate with the customers in this fast moving technologically advanced world is the usage of websites. Website for a company acts as a very important tool for the company spread their words. For small companies or for a new business venture company website is a popular way to reach to their target customers at a very low cost than any other ways of communication (Moore, 2008, p. 464). For the new online retailing of wine, website of the company is the first essential tool for the marketing of its product. It will give the idea to the customers what the company offers for them. It helps to maintain existing clients like the suppliers and it will also help to maintain a good relation with the consumers with the help of customer care in a very cost effective way. E-Commerce E-Commerce is the tool for the retailers in the business who want to carry out their operation online. With E-Commerce websites the company can attract new customers and also cut their operational costs by selling their product from the online shop. Cost of building, costs of salesperson are all cut down with this technique. A single website from the company can serve all the purposes for the target market (Bajaj, Nag & Bajaj, 2005, p. 14).For the new online wine shop an E-Commerce website is necessary for the company to sell their product to the customers. The whole transaction process like selecting product, buying of product and payment for the wine can be carried out at a single place by the company with the help of this electronic medium. Search Engine Optimization This is a popular technique used online in order to reach people fast and in an easier way. Search Engine Optimizer helps to show the website on top the list so that it drives more traffic to the website which will in turn give more popularity to the website and might drive more sales to the company (Grappone & Couzin, 2011). For a new business it is very important to reach to the customer as much as possible. When customers searching for online retailers for wine, if the company website link is ranked top in the list there will be more visit to the website and people will be aware of the services provided by the company. This process will generate more transaction possibility for the company. E-mail Marketing E-mail marketing is another way of communicating with the customers. Company maintaining the database of the customers can send e-mail to their clients for special offers of the company from time to time. This is a form of direct marketing which is targeted towards a specific segment in the market that is aware of the company and their products. For a new online business venture like online wine retailer also, E-mail marketing can be useful to get people know about their services (Mullen, Daniels & Gilmour, 2008, p. 7). Social Networking The modern trend in today’s business process is marketing through social networking websites. Various websites like Facebook, My space, Orkut are in huge demand amongst the web browsers. Advertisements in these social networking websites can be very effective for the online retailer to make people aware of the products and services they provide. People finding them interesting will visit the company website and can be a possible prospect for the company. A large target market can be reached by the company with this promotional technique (Fox, 2009, p. 102). Recommendation and Conclusion Online wine retail store can have a very good prospect for a new business expansion process. The consumer’s behaviour towards buying process of wine is changing drastically with the use of modern technologies like e-commerce services from different company. But due to the low cost in entering into the business there is a huge competition between the online retailers dealing with wine. To penetrate the market in an effective manner the company should have a very good quality services to their customers. The pricing policies of the products need to be evaluated from time to time to compete with the market. The logistic system for the business should be very well maintained to avoid any kind of customer dissatisfaction in the transfer of goods. The transaction system should be much secured so that the customer can trust on the system. Reference 1. Aerator for Wine, (2011). Why Buy From an Online Wine Retailer?. 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