Analysing the wine distribution channels from a marketing point of view through the producers’ decison making process

Abstract

Wine growing and wine making has been known for thousands of years. In some parts of the world where the climate is favourable it is one of the most important sectors of agriculture.The major player of the European wine trade is the European Union in the export and the import as well. In order to be successful in the competition, the sector and the entrepreneurs must use the right means of marketing which are adequate and satisfy the company’s requirements. There is an increasing distance between the producers and the consumers. This trend revaluates the importance of a marketing tool which is not taken as seriously as it should be. This is the distribution. In the domestic and international trade retail is the player that influences the possibilities and the operational conditions of the wine producing companies very much.The other major influencing factor is the changing consumption and shopping behaviour. According to our hypothesis, the image building capability of a certain distribution channel is being evaluated the same way by the buyers and the producers as well and the vineries and the wine producers are not prepared for the renewing challenges of today’s wine market neither from the point of view of the sufficient information, nor the level of education.Their knowledge is only competitive on the field of wine making, but in marketing, gastronomy and sales they are lagging behind their competitors.We made a qualitative research among the wine producers with private deep interviews.The analysis of the interviews was done with content analysis and the help of Excel 2003 software.The first part of the research was carried out between January 2003\ and August 2004. During this time we visited 19 wine regions of the country and made personal deep interviews with the wine producers, owners, decision makers. The next part of the research was made in September 2004 at the Buda InternationalWine and Champagne Festival in the Buda Castle. In the sample we have wine producers from all the 22 wine regions of the country from different size categories. Altogether we had 72 interviews. The best method to fit this kind of research is the personal deep interview. The questions were about the sources of information, keeping contacts, consumers, and customers, choosing the right channel, limits and boundaries, distribution strategy. The marketing information system (MIS) is built on four pillars.These are the inside data system, the marketing observation system, the marketing research, the marketing decision supporting system and the appropriate co-operation of them (KOTLER, 2000).We wanted to analyse the operation of MIS and the critical factors at the Hungarian wine producers.The questions were about the information sources, keeping connections, freedomof sale, the consumers, the competitors and creating image about the customers. Besides these the other important part of the research was to identify the process of selecting the wine distribution channels and the traders. As a result of the research a model is set up that shows the process of selecting the distribution channel from the point of view of the producers. The influencing factors are to be separated in three groups:WPCs side, Distribution side and Consumers’ side.To the unchangeable factors of the consumers’ side belongs the region, the demographic characteristics where the family life-cycle is of key importance. Other important factors are motives that define the consumer’s life style, the attitudes, the personality and the values they represent. The shopping and consumption behaviour belong to the changeable factors, but it is a great challenge for the producers and the distributors and takes time. The distribution side can also be separated into two parts: the basic functions and the added services.The basic functions consist of the distributed quantity, target group, reach ability, product placement and logistics. The added value factors are the image, professional knowledge, services, system of connections, distribution experience and the EDI.These together build the attractiveness of the distribution channel.TheWPC side has very complex characteristics. It can be divided into changeable and unchangeable, company and wine-grower/producer elements.Unchangeable from the company’s point of view are the wine region, soil and the regulations. From personal side personality and cultural characteristics are unchangeable. From the company’s viewpoint size, experience, image, quality, technology, grape types, market conditions, distribution strategy, and company strategy can be changed. From the wine-grower/producer’s point of view psychological and behavioural characteristics can be taken as changeable ones. From the above mentioned company factors strategy is the most important from both the company’s and the producers’ side. It defines or influences the most the future image and the success of the company. It also has an impact on the involvement of the staff that can help to survive for instance the tough periods of the market.All these factors together build the requirements towards the distribution channels by theWPCs. Based on the three pillars’ (WPCs, Consumers, Distributors) requirements and characteristics will be the right distribution channel selected.