Marketing in Context: Wine Group 15: Matthias Suttner, Johanna Stenmark, Swati Mahajan, Sam Sin & Saunders Shen Oct/Nov 12 Jean Pernet Champagne 08 Fall Table of Contents Introduction3 Current Situation of Champagne in the United Kingdom4 Company Anlaysis4 Current Situation of Jean Pernet4 Strength5 Weakness5 Competitor Analysis5 Target Segmentation6 Product6 Champagne6 Jean Pernet Limited Edition7 Champagne Booster7 Price7 Jean Pernet Champagne8 Jean Pernet Champagne Limited Edition9 Champagne Booster9
Distribution10 Evaluation of learning experience12 Appendix13 Organisation schedule for The Comite Interprofessionnel du Vin de Champagne13 Figure 1. 013 Figure 1. 214 Figure 1. 316 Structure 1. Executive summary of the marketing plan 2. Introduction 2. 1. 1 Introduction of Champagne 2. 1. 2 Current situation 2. 1. 2 Challenges 3. Company analysis 3. 1. 1 Current situation of the company 3. 1. 2 Strength 3. 1. 3 Weakness 3. 1. 4 Focus 4. 1 Competitor Analysis 4. 1. 1 Position of the competitor 4. 1. 2 Strength 5.
Segmentation of Market (customer analysis) 5. 1. 1 Summarize 5. 1. 2 segment 1 5. 1. 3 segment 2 5. 1. 4 Reason of choosing this specific group (decision process) 6. Marketing Plan 6. 1 Product 6. 1. 1 Aim of the product 6. 1. 2 Product description 6. 2 Pricing 6. 2. 1 Costs 6. 2. 2 Value based pricing 6. 3 Distribution 6. 3. 1 Place to be distributed and the rationale behind 6. 4 Promotion 6. 4. 1 Advertising (using sign) 6. 4. 2 Public relation 7. Drawback/Evaluation 8. Conclusion 9. Feedback of the project Introduction
Throughout history, Champagne has been seen as a symbol of pleasure and luxuriance. The royalties and the nobles were the first to spread the word of this sparkling quality wine. Internationally, English were the first to welcome the beverage and today, the United Kingdom still is the biggest market for Champagne export. The development of transportation systems, especially the railway, helped spreading the product and by the end of the 19th century, Champagne had gained an international reputation of being something very special.
The reason for this very characteristic wine is said to be a combination of the terroir, climate and the extensive experience in the process of making it. The region of Champagne is defined by the law of 22nd of July 1927. It is situated around 150 kilometres east of Paris, France. In the region of Champagne there are four major areas: Mountain of Reims, Marne Valley, Cote des Blancs and Cote des Bar. The whole area is about 34000 hectares of vineyards and has more than 15000 winegrowers. About 5000 of these produce their own Champagne.
An organisation called The Comite Interprofessionnel du Vin de Champagne (CIVC) has been established and is administrating the common interests of the Champagne industry in order to preserve it well. It was founded in 1941 and is therefore one of the first trade bodies ever created (for organisation see figure 1. 0). The protection of the name Champagne means that it can only be used for sparkling wine that is produced in the region of Champagne in France. Sparkling wine from other areas in France for example, is called Cremant (Vignerons et Maisons). Current
Situation of Champagne in the United Kingdom Champagne, the ultimate expression of luxury and prestige, has always been the epitome of sparkling wine. In 2006, champagne itself accounted for 34% of all sparkling wine sales in the UK (Euromonitor, 2012). Before the economic crisis in 2007, the UK market was averaging volume sales of champagne approximately ? 1 billion annually (Thring, 2012). Post crisis, market sentiments are expecting the sales of champagne to fall to ? 700 million in 2012 as UK consumers opt for cheaper alternatives of champagne – “Other sparkling wine”. Other sparkling wine”, which includes alternatives such as Cava and Proscecco, are becoming increasingly popular in the UK market as some of them outperform the coveted champagne at half the cost. While the volume of sales of both champagne and “other sparkling wines” were deeply affected by the economic crisis, “other sparkling wines” have shown a more resilient demand; latest figures in 2011 has reported sales of “other sparkling wines” increasing to 74% of sparkling wine exports, while champagne sales have fallen from 34% in 2006 to 26% in 2011.
Company Analysis Current Situation of Jean Pernet Champagne Jean Pernet is a small family vineyard situated in Mesnil Sur Oger, which is in the heart of the Champagne region. Its vineyards span across more than 40 hectares, serving mostly the French market, wine merchants and private clients. Jean Pernet produces 5 Champagne Cuvee under the label “Champagne Jean Pernet”, and an additional 4 under its sub brand “Champagne Camille Jacquet”. Each labels is approximated to carry 100,000 bottles each.
The awards credited to Jean Pernet Champagne, which includes the Grand Prix d’excellence and the Grand Hachette award, are testaments of the high quality and potential that their champagne carry. We define Jean Pernet as a small producer because of the techniques being used and the number of bottles they produce each year. Strength Jean Pernet are Brut Champagne wines. Brut Champagne wines are very dry. They are perfect for most occasions and are to be found in all the four families of Champagne wines (Body, Heart, Spirit and Soul).
This is why they are the most popular today in the Champagne market. This winery definitely has a decent collection of the variants and vintages they produce. They are very well recognized in the world of wines as the company has won several awards and medals. They have been increasing their production area over the last years, so they do possess the capability to expand in the others nations of the world which bring very good revenue generation opportunities to the table. Also the company has a very evolved channel of distribution in France as well as other nations. Weakness
Jean Pernet, even after winning awards and medals, is not that much recognized in the market as it should be. So the company is definitely not promoted well. Also, the company has a very minimal presence online which is very bad in today’s era when most of its competitors have a good presence on the web. Also, it can be considered that the company is small and not very well equipped. Moreover, there is no mention of plans for new products, investments as being done by other companies. The other companies are bringing in new varieties of the drink to sustain the market trends.
Since there is no mention of any such plans for this company, we can assume that there is none. Competitor Analysis A number of trends spotted in the UK market lately include a decline in alcohol consumption and a shift from Champagne consumption towards other sparkling wine (See figure 1. 3). The decline in alcohol consumption could be explained due to the fact that consumers realise what alcohol can do to your health and therefore, they choose not to consume it. An increasing part of the population that doesn’t drink alcohol for religious reasons could also be a reason for the decline in alcohol consumption.
When it comes to the shift from Champagne to other sparkling wine this could be explained by the fact that Champagne is loosing its status as a luxury product. When a customer buys a bottle of Champagne she buys a bottle of good quality wine. She also pays for the fact that the wine is exclusive, it is from the region of Champagne and that is something that differentiates it from other sparkling wine. This is something the customer experiences as added value to the product. However, this value does not count as much when the product becomes available to a bigger number of customers.
It looses its exclusiveness. When it comes to sparkling wine that is not from Champagne the Spanish Cava and the Italian Prosecco have long been two popular varieties. Today, in the UK, there is also a growing interest in sparkling wine from the United Kingdom Target Segmentation Market segmentation is the process of dividing a market into segments or groups that have identifiable differences between them. For the wine industry, we will be using 4 bases of marketing segments divide the UK population. The 4 classic marketing segments are geography, demography, psychograph and behavioural.
Demographics wise, UK has ranked all the households in a country by disposable income, and classified them into 10 deciles. Consumer reports have reported that the middle-income deciles, deciles 4,5 and 6, averaged around 29. 6% of their income on alcoholic beverages and tobacco (Euromonitor International, 2011). This target segment has an annual income ranging from ? 20,000 to ? 30,000. Our marketing plan would be targeted at this group of consumers as they record the highest expenditures on alcoholic beverages.
Further insights have showed that the majority of the population within that income bracket is aged from 25 to 30 years old (Euromonitor International, 2011). Other characteristics of this group of consumers include being Internet proficient, diversity conscious, positive and practical, belief in fun and responsibility and are environmentally and socially aware (Thach & Olsen, 2006). This target group of consumers grew up being connected to the Internet. A recent study has found that this group of consumers spends an average of 16. 7 hours a week on the Internet – using it for shopping, chat rooms, etc. Moriarty, 2004). The Internet is a primary source of information for this group of consumers; hence it is important that our marketing plan will include integrated media approach to reach out to this segment of consumers. In a survey conducted among this target group of consumers, 19% of respondents have suggested to make wine more appealing to them, that wineries should market to the young generation (Thach & Olsen, 2006). This result tells us that there are currently insufficient marketing strategies targeted at this particular group of consumers.
Other results reflected in the survey indicated that this group of consumers felt that current wine marketing strategies were too focused on the older market segment; 3 of the top suggestions provided to increase wine consumption were to broaden the market focus, advertise more, and provide a reasonable price for good quality. Product For the UK market we will offer three different products. They include a selection of the Champagne that the Jean Pernet winery produces today, a limited edition Champagne that comes out once a year and also a completely new product. Champagne
When it comes to the Champagne that already exists we will restructure the product pipeline as follows. We are not going to export anything from the second label, Champagne Camille Jacquet and from the first label, Champagne Jean Pernet, we will export two out of five existing varieties. The ones that will be available for export are the Tradition and the Brut Rose. They will carry the names they do today. The reason for this restructuring is that it is too complicated and not profitable enough to export the nine different types of Champagne that is produced and sold in France.
Since there’s a declining demand for Champagne in the UK market we will only have two Champagnes available in order to meet customer demand. We want to offer the Tradition because it is a good quality Champagne that is not too expensive and therefore will fit well into the market. The Brut Rose we will launch as an alternative to the Tradition in order not to fall behind our competitors on the UK market when it comes to Rose Champagnes. Jean Pernet Limited Edition The Champagne Limited Edition is traditional Champagne with an added flavour.
Flavours will include for example: orange, cinnamon and ginger. When the limited edition comes out in mid November each year there is always a new flavour. The bottle will only be sold for a limited period of time, from about mid November till just after New Year’s. Since the product is only available at this time customers have to be quick in order to be able to get a bottle and this is something that we see will create an interest for the brand Jean Pernet, an interest that hopefully will stay all year around.
Our identified target segment has an interest for new and trendy products and that is why they are going to buy our limited edition Champagne. Our goal is to get the consumers to see it as a bit of a sport to get this collective item and therefore get them to keep buying it each year. Since the product will be available to consumers before Christmas and because it is something even more special than a bottle of Champagne, it makes a great gift. Champagne Booster The new product we will launch is going to be a mixed drink called Champagne Booster.
This product is best described as a 50/50 mixture of Champagne and different types of fruit juices. The product will be sold in a glass bottle in the size of a Chopine (25cl) or a Bouteille (75cl). However, the shape of the bottle is going to be the same as for a traditional bottle of Champagne and the bottle will also carry the special cork. This packaging is meant to remind consumers that the mixed drink does contain actual Champagne. The packaging of the smaller product is meant to fill in a gap on the market. When you open a bottle of Champagne you have to consume it all at once, before the bubbles go away.
If a consumer just wishes to have one glass of Champagne, our smaller bottle is an option. The size of the bottle is also suitable for consumption in clubs. It will not be competing with other Champagnes in a club but more with for example other mixed drinks such as cheaper cocktails and also with beer. The size of the product and the fact that its content is inside a bottle makes it easy to consume the Champagne Booster on the dance floor without risk of spilling the drink. Our target segment for this product is outgoing young adults since this group fits well into the description of who would attend a club.
It is also the biggest age group for consumption of both Champagne and sparkling wine in the UK and the forecast says the demand is about to increase. Price We are offering three different product lines to enter the UK market. * Jean Pernet Champagne (Tradition and Brut Rose) * Jean Pernet Champagne Limited Edition once a year * Champagne Booster For each of the product lines we are setting specific price strategies as we are focusing on different target groups. Jean Pernet Champagne This first category contains the Traditional champagne and the Brut Rose.
Both are within the same price range. Our objective with these products is to offer high quality champagne for people willing to pay a relatively high price and who are acknowledging the “champagne brand”. We are not aiming for very high volumes but want to achieve a similar margin to the one we are receiving in France. The following table shows arguments for high respectively low elasticity of demand: Low price sensitivity| High price sensitivity| Hard to compare quality | Hardly distinctive| Not bought regularly| Awareness of substitutes | High quality and prestige| |
It is rather hard for the customers to distinguish between different champagne brands and prices of competitors are set in a similar range. In addition to this, most customers do not buy champagne regularly and for that reason, they do not have a very clear price expectation for this product. Champagne is furthermore a product of high quality and a symbol for luxury and prestige what reduces price sensitivity. What increases elasticity of demand is the poor differentiation from other champagnes and that people are aware that there are much cheaper alternatives such as sparkling wines from other regions.
The production costs are the minimum price we could set for our product. We are assuming a total cost of ? 7. Competitors’ prices for champagne range from ? 20 to ? 100 whereas other sparkling wines are offered much cheaper starting at ? 5 to ? 15 still providing good quality. However, as we are focusing on a target group that wants to buy “champagne” we are setting the price of Jean Pernet Champagne within the first price range mentioned. For finally setting a price we will take into account the factors influencing the price mentioned above, the value we provide for the customer as well our brand image.
We are offering a high quality champagne what we can prove with several awards we have won throughout the past years. However, the brand name Jean Pernet is not known yet in the UK, so we cannot compare ourselves with names like Moet & Chandon and we have to set our price closer to the lower border. On the other hand we know that our quality is definitely above the average and we are selling our wines at a supermarket price of at least ? 29 in France. Summarizing all these aspects those ? 29 the price we are aiming for in the UK as well for this product line.
Jean Pernet Champagne Limited Edition The aim of the Jean Pernet Champagne Limited Edition offered for a short time once a year is mainly to increase brand awareness. Of course it also helps to increase our revenue and profit at the same time. Some points related to the elasticity of demand mentioned for the Jean Pernet Champagne count similarly for the limited edition as can be seen in the table below. Low price sensitivity| High price sensitivity| Hard to compare quality | High awareness of substitutes| High quality and prestige| | Exclusive (limited) product| | Offered for particular occasions| |
However, the Limited Edition is something special which attracts buyers and might bind them for several years to the product line. Further, it is only available for a short period of time and it is designed for occasions like Christmas or New Year’s Eve. For these events people allow themselves to spend more money to have an exceptional experience and are less sensitive to higher prices. The production costs for the special edition will be slightly higher than for the common champagne because flavors have to be added and the design of the bottle and the label have to be adapted each year.
Therefore, we assume total costs of ? 8. Competitors for this product line are the same as for the Jean Pernet Champagne. However, due to our clear distinction from other common champagnes through the added flavor we are able to set a higher price. Adding up all those arguments we decide to offer the Jean Pernet Champagn Limited Edition at a supermarket price of ? 39. Champagne Booster The third product line we want to offer, the Champagne Booster, will be the most important one for us in the UK. We are aiming to maximize our market share in this category.
Therefore, we are going to use a penetration strategy. This product is very different from the two other categories. It is meant to be an everyday party drink or appetizer, still with a claim for good quality but at a much more affordable price. It will be cheap enough to buy it for every occasion, to offer it at parties or to have it instead of a beer or cocktail in night clubs. There are several substitutes but the product is more distinctive than pure champagne. Low price sensitivity| High price sensitivity| High quality | Moderate awareness of substitutes|
Rather low price product | | Because we are using 50% of champagne in our drink the total cost for a 75cl bottle consist of ? 3. 5 for the champagne plus ? 0. 5 for the juice plus ? 1 for branding and marketing, i. e. ?5 as our minimum possible price. Competing products like Bellini are offered at a price of ? 9 to ? 13. We are using champagne instead of “cheap” sparkling wine and are therefore offering a higher quality product. This means, even if we are trying to penetrate the market we do not have to set the price lower than this.
The expression champagne in our brand name signifies the superior quality and will attract customers. At the same price they will rather tend to buy the Champagne Booster offering additional value. In this case competition and our aim to achieve a high market penetration as fast as possible are the main aspects influencing our pricing decision. Therefore, we will offer the Champagne Booster at a supermarket price of ? 10 for the 75cl bottle and ? 4 for the 25cl bottle. Distribution As mentioned, we are intending to export three different products to the UK market.
Each product will be distributed through different channels to avoid any brand dilution or confusion. For the Champagne Booster, we have two sizes – the 25cl and the 75cl bottles. The Champagne Booster is positioned to compete against pre-mixed bottle drinks and beers, offering consumers an alternative to the traditional favourites. As such, the Champagne Booster will be distributed to places where consumers frequently purchase bottled drinks and beers. These places include various supermarkets and hypermarkets, as well as selected clubs and party venues.
Reports have shown that in the UK markets, there has been a strong shift in demand to alcohol consumed at home and that consumers are increasingly purchasing their alcohol in supermarkets and hypermarkets (Euromonitor International, 2012). As such, the Champagne Booster will be distributed to these locations for the convenience of the consumers. Internet retailing has also become increasingly popular among UK consumers (Euromonitor International, 2012); as such, the Champagne Booster would also be available online for convenient purchases.
The Champagne Booster will avoid being distributed at pubs, as consumers do not frequent pubs as often. With the impact of the recession and increased price competition by retailers, coupled with the ban on smoking in pubs, consumers have opted to mostly consuming alcohol at home (Euromonitor International, 2012). Similar to the Champagne Booster, both the Jean Pernet Champagne and Jean Pernet Champagne Limited Edition will also be available via Internet retailing, supermarkets and hypermarkets. As mentioned, UK consumers frequently purchase their alcohol from these places identified.
Additionally, the Jean Pernet Traditional Champagne will also be available at specialty wine shops and restaurants. In conjunction with the festive season, the Jean Pernet Limited Edition will only be available during the year-end period. The Jean Pernet Limited Edition is positioned as an affordable luxurious novelty gift for the holidays; as such, the champagne will be sold at places where UK consumers frequent for Christmas shopping. Apart from specialty wine shops, the Jean Pernet Limited Edition will also be made available at mid-range to high-end departmental stores identified such as Harrods and Harvey Nichols.
Such places resonate with the luxury and prestige associated with the Champagne brand, and would be ideal for selling this novelty gift. Promotion As we have developed three different products for the UK market we will have a number of different strategies for promoting these products. Jean Pernet Champagne As mentioned in the distribution section of this paper most UK consumers but their alcohol from supermarkets and hypermarkets and since we will have the Jean Pernet Champagne available in these places we will advertise them like other supermarket products.
This promotion will include posters outside supermarkets and flyers sent home. For the promotion online we will have a website set up in both English and French. Jean Pernet Limited Edition The Jean Pernet Limited Edition will be promoted in the same way as the Jean Pernet Champagne but since it is only available a limited time a year it will only be seen amongst other Christmas products. For the Jean Pernet Limited Edition sold in Harrods and Harvey Nichols we will arrange bottles under a massive Christmas tree in order to build the connection with Christmas.
On a long-term basis we will develop more seasonal details such as a Christmas cover to put on the bottle. The idea of the Jean Pernet Limited Edition as a gift creates the need for a nice package. Champagne Booster Just as the other two products the Champagne Booster will be promoted in supermarkets and hypermarkets. The impact of social media is huge and to better reach our identified target group of trendy young adults we will also use the Internet for promotion. There we will spread movies of trendy young adults partying with our Champagne Booster together with friends.
This is to appeal to the need for our customers to feel like they’re a part of a trendy community. In order to create hype around our product we will make arrangements to sponsor some clubs so that consumers gain knowledge of this new product. In the long-term, the clubs will have to decide to sell the Champagne Booster in case their customers develop a taste for the product. The Champagne Booster part of the website is going to have a funky design in order to appeal to our young adult consumers. Conclusion Jean Pernet has been producing and selling Champagne in France successfully for many years.
To further expand their business activities it is essential to enter new markets. As we found out in our research the UK is the most important export market for Champagne. However, it is decreasing for this particular sort of sparkling wine whereas the whole sparkling wine market is growing. Therefore we decided to enter the market but not by selling mainly classical Champagne but by developing new, and to this market more attractive products. We are going to offer three different product types to reach different target groups: * Jean Pernet Champagne for the common Champagne buyers at a medium price. Jean Pernet Champagne Limited Edition produced in a low volume and only offered during a particular time of the year, designed for special occasions and used to increase brand awareness * Champagne Booster as an high quality everyday party drink or appetizer at a rather cheap price and main product to earn money in the UK market With this strategy we will achieve a high market share and brand awareness within a short time allowing us to breakeven in the UK market within a few years and pushing our winery to new dimensions of success in the future.
Evaluation of learning experience To work in a group with five people of different nationalities and level of English has been challenging but in the end we managed to get it to work. An issue has been to find time to complete the work since classes have been scheduled at the same time as we’ve had quite a bit of work to do out of class apart from this project. When we first found out about this project we all agreed to complete it before the holidays since all of us are here on exchange and already had made plans to go away for the holidays.
To leave the work till after the holidays would be very hard since we’re all going to be attending different classes and therefore have classes scheduled at different times. When starting this project we had to do some reading on the Champagne area, which we found very interesting. It truly is a fascinating industry with a great cultural heritage. Some of the research was hard to do due to the fact that none of us speak French and sometimes information on websites was only provided in French. To find information on the UK market was possible with the help of some databases we could access through our universities in our home countries.
The difficult part was to sort out information relevant to our project. We have gained a general knowledge on how to form a marketing plan but to fully create one takes a long time. What we have come up with is a brief plan on how the Jean Pernet winery could enter the UK market but if we had more time we feel that we could have gone into more depth. Despite this, we appreciated the project since it gave us the opportunity to discuss different aspects of a product, what it is and what is important when launching it. Appendix Organisation schedule for The Comite Interprofessionnel du Vin de Champagne Figure 1. 0 Figure 1. 2 Figure 1. 3