YOUR SHOUT – JEREMY ROCKETT: Money isn’t everything

“The bogof still has to tick enough boxes for the consumer to buy into it, even if it is a great deal” Jeremy Rocket (Gonzalez Byass UK)

Price is one cornerstone of the marketing mix; it is often the least understood. This regularly leads to the mistaken belief that consumers are predominantly led by price and nowhere more so than in the wine industry, where a recent article in the drinks business quoted, “price is at the top of the decision-making tree”.

Believing this is the route to a low margin commodity business. Surely the business of brands and of marketing is about differentiation, adding value, creating demand, justifying a reasonable price. While I accept that discounting is hugely important, we must put price, by which I mean the actual on-shelf offer, in its proper place on the “decision tree” – that is, at the bottom.

If you decide to buy a frozen pizza for dinner you have subconsciously chosen a budget (ie a price range but not the shelf price) of about £2 to £3, but you haven’t begun to look at price yet. You may have made that decision at home; the decision tree often starts well before you get to the store. Your next decisions might be: shall I have thin or deep crust? What toppings do I want? Shall I have my favourites or try something new? At the shelf you may see your favourite pizza with 50p off, so your decision is made, but the offer, ie the price you pay, was the last point on the decision tree. If you don’t like pepperoni, no offer on earth would tempt you to buy a pepperoni pizza; that decision to not buy pepperoni was made long before you got to the store, before you saw any prices.

With wine, like pizzas, the decision tree has actual price/offer at the bottom; the process might look like the diagram below.

The first decision is the occasion you’re buying for; this could be a weekly top up of plonk, your “Friday night” wine, or because the boss is coming to dinner. Each of these occasions might justify a different quality of wine, so the occasion leads to the budget or price range. But this has nothing to do with the final price paid, it just sets the parameters.

The next decisions are about colour – am I a red, white or rosé drinker? Then flavour – do I like Italian, do I always go for Pinot Grigio or Rioja? These are repertoire driven decisions and, while consumers will try something new, many of the right boxes have to be ticked before they will experiment. Consumers are looking for reassurance and won’t stray too far from their core, trusted repertoire unless many of the variables are familiar to them.

All these decisions may have taken place before reaching the store, and many of them are so subconscious that we don’t even know we’re making them. When we get to the store, with our budget of, say, £6 to £7, (our “Friday night” wine), we look for those things that are within our repertoire, say a Chilean Chardonnay, and we may look for wines we recognise. This is where brands come in.

Finally, when we are satisfied with all the variables, we look for labels we like, recommendation or award barkers, and the price offer or deal. The reason many people think that price is the key driver is because they are unaware of the subconscious and lightning-quick nature of the decision-making process that happens first.

A challenge we often hear is, what about the people who walk into the store and go straight for the Bogof display? Well, like pepperoni pizza, no Bogof is going to make a Shiraz hater buy Shiraz, or a committed red wine drinker buy white. Even the label may put consumers off at this point. So even here, these repertoire based decisions come above price on the decision tree. The Bogof still has to tick enough boxes for the consumer to buy into it, even if it is a great deal. Obviously there are consumers who just buy the cheapest wine they can find – these are not the business of brands.

What shouldn’t  be underestimated is the value of display, in a wall of 600 or more wines, you need something to make your wine stand out. A shelf barker with a recommendation, an award, or a tasting note is one way to do this.

Those retailers, who won’t consider any type of display or shelf barker unless there’s a discount may be losing full-price, full-margin sales. Waitrose has had much success with “Buyer’s Choice” which has no discount, simply a display. Consumers see this as a recommendation from a respected retailer, as well as making the wine stand out from the crowd.

Discounting is certainly a very important part of the marketing mix in wine, especially in making our products stand out in a crowded category. But we need to fully understand the decision-making process that consumers go through before they purchase. Price is only the most important factor on value brands, and there can only be one of those in each sector. The job of marketers is to add value to our brands, not to constantly look for ways to make them cheaper.

© db October 22007