It’s personal : exploring the relationship between package design, consumer expectations and brand personality

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IT

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S PERSONAL

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EXPLORING THE RELATIONSHIP BETWEEN PACKAGE DESIGN

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CONSUMER EXPECTATIONS AND BRAND PERSONALITY

M.I. (Marieke) Snijders – Student number: 10662006

MSc. in Business Administration – Marketing Track Amsterdam Business School – University of Amsterdam Supervised by Drs. Ing. A.C.J. (Antoon) Meulemans

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Statement of Originality

This document is written by Student Marieke Snijders who declares to take full responsibility for the contents of this document.

I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it.

The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents

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Abstract

This study is all about exploring the relationships within and between the areas of package design, consumer expectations and brand personality. The package element that is chosen as the stimulus for this study is the label. The main questions are what the influence of labels on consumer expectations in terms of price and point of sale expectations is. Whether the one can predict the other and if a fit in the label and store could explain these relationships.

Brand personality frameworks of d’Astous and Lévesque (2003), for analysing store personality, and Boudreaux and Palmer (2007) for analysing label personality, play a pivotal role in this study. Brand personality serves two main purposes in this study: analysing labels without examining specific visual details and as a means to compare stores and labels on the same level.

The setting of this study is the Dutch wine market; hence the stimuli are wine labels and Dutch stores in which wine can be bought. Via an online survey 167 participants were recruited. They made brand personality judgements of fourteen labels and of four stores and rated their price and point of sale expectations based on these labels. The quantitative results of this study were subsequently statistically analysed using predominantly linear regression and correlation analyses.

This study confirms that price expectations are formed on the basis of package design and adds to the literature that point of sale expectations are also formed based on labels, as well as that price expectations can predict point of sale expectations. Results also turn out that the brand personality of a product can predict both store and personality expectations. However, this study was not able to confirm that a fit between store and label personality can explain store expectations.

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List of figures and tables

Figures

1. Brand personality scale p. 12

2. Conceptual model p. 15

3. Benefits spectrum for wine p. 18

4. The basic wine supply chain p. 22

5. The role of festivals, wine shows and wine clubs p. 23

6. Complexity of the wine supply chain p. 24

7. Media, legal and cultural overlays p. 25

8. Detailed conceptual model p. 29

Tables

1. Main wine exporters between 2001 – 2011 p. 20

2. Main wine importers between 2001 – 2011 p. 21

3. Chosen labels and store division after pre-test p. 34

4. Sample – wine consumption frequency p. 46

5. Sample – wine purchase frequency p. 46

6. Sample – wine expertise p. 47

7. Sample – wine interest p. 47

8. Sample – wine preference p. 47

9. Sample – wine country preference p. 47

10. Point of sale expectations per label p. 48

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“Begin at the beginning,” the King said, very gravely,

“and go on till you come to the end: then stop.”

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1. Introduction

Imagine doing your groceries in your local supermarket for a nice Italian meal with your loved ones. You’ve got your mind set on pasta with tomato sauce, basil and Parmesan cheese accompanied by a bottle of wine. Choosing your tomatoes, basil and Parmesan was not too confusing, however, once glancing over the pasta shelves you are overwhelmed by choice. In less than thirty seconds you pick one and move on to the wine. You choose an Italian wine that catches your eye as a finishing touch to your Italian supper. Wait, but why did the wine in question catch your eye? And why did you choose the pasta you chose? It can’t really have anything to do with what is inside the package can it? You only looked at all the pasta and wine shelves for less than thirty seconds. So it must be the package that sends some kind of ‘Pick me! Pick me!’ message to your brain. Could it have anything to do with what supermarket you are in and what you expected to see there? This study aims to find answers to all these questions.

My own ‘Wait, but why?’ moment was at home while drinking wine with a friend. It suddenly became a very intriguing issue as to why the specific wine bottle on our table managed to find its way into our home. Did it have anything to do with the shop where we bought it? Except for, of course, that it was on offer there. These issues didn’t seem to let me go and for that reason decided to learn more about them and conduct my graduate research in this area in order to find some answers.

This study is all about exploring the relationships within and between the areas of package design, consumer expectations and brand personality. Research (Higgins & Canty, 2013) had lent support to the fact that opinions and expectations about packages can be formed based on labels alone. That is a reason why labels alone, instead of the complexity of a whole package, are chosen as the subject matter of this study. However, caution is taken and it is looked into whether this proposition can be confirmed.

The issue that is addressed during this study is searching for the influence of labels on consumer expectations; consumer expectations are divided in price and point of sale expectations. It is also studied how these two expectations interact. The rationale behind this is that when knowing what price and point of sale one expects after looking at a package, design can be adjusted according to the desired response and a positioning strategy can be put in place.

Brand personality came around the corner as a way to analyse labels without going into specific visual details, which is an area wherein a lot of research has already been conducted. Additionally, brand personality provided the opportunity to compare and relate labels to stores on a common ground.

As a starting point for comparing stores and labels on personality characteristics two brand personality frameworks are consulted. Boudreaux and Palmer (2007), who have created a brand personality scale to assess the personality of products based on label design, and d’Astous and Lévesque (2003), who created a scale for measuring the brand personality of stores.

Using Boudreaux and Palmer’s (2007) framework it is investigated whether these individual (label) brand personalities could predict store and point of sale expectations. If results can conclude that this is the case, implications could be, as Keller, Apéria & Georgson (2012) already suggest to be the case for private brands in particular, that

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designing packages to create a certain personality can induce the desired price expectation, be a fit for a specific store and can even strengthen store image.

To dig deeper in the issue whether this ‘fit’ between stores and packages could explain store expectations the relationship between the two is examined.

Wine is the product category of choice in this study. Wine is a product category that is cut out for package design related studies because wine is, among other reasons, a product where the perception of what is inside a package is strongly influenced by the package itself (Mueller & Szolnoki, 2010). What also plays its part is that the wine market and its original craftsmen; the winemakers, are a longstanding passion of the researcher, which results in a motivation boost in taking this subject on.

As is supported by Hall and Mitchell (2008), within the supply chain wine makers are losing their power to parties with more capital, such as large supermarkets. In this tough market proper branding knowledge could be vital for all parties to survive. Based on the results of this study and the contextual background of the product category, there are some managerial implications that provide a step forward in aiding weaker parties to keep afloat in their battle against the super(-market) powers.

All these issues are investigated with a quantitative study using an online survey in which 167 Dutch participants over the age of 18 took part. Respondents made brand personality judgements of 14 labels and four stores that represent the scope of the Dutch wine market; discount supermarket Lidl, supermarket Albert Heijn, liquor store Gall & Gall, and the boutique wine store. Moreover, price and point of sale expectations per label are indicated. The results are statically analysed using predominantly linear regression and correlation analyses.

In the section following this introduction a foundation of the theories and thoughts surrounding the addressed issues is established. At the end of this section all the questions and the existing literature come together in a conceptual model that ends with support for the chosen product category; wine. Hereafter the ins and outs of wine and the wine market are portrayed. After this light is shed on how this study is methodologically and statistically conducted. The outcomes of statistical analysis are reported in the results section. To translate statistical results into meaningful messages and conclusions, a discussion section that also covers limitations and ideas for future research, is written. In order to properly honour the work of the consulted academics and other sources there is a list of references starting on page seventy-four that is followed by the appendices.

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2. A foundation in theories and thoughts

To lay a firm foundation of the theories and thought-patterns, the following section covers the work of a variety of academics.

Established authors in the field of marketing such as Kevin Lane Keller and Jennifer Aaker write about the foundations of branding and about brand personality in particular.

The theory of the personality of inanimate objects is something this study strongly leans on. Specifically, the studies by d’Astous and Lévesque (2003) about store brand personality and Boudreaux and Palmer (2007) about product brand personality, based on labels as stimuli, play an important role in this research.

Furthermore, the ins and outs of package design and, from a more psychological point of view, Gestalt theory are discussed. The way in which consumer expectations are formed, with product packaging as stimulus, is also elaborated on.

Overall, a varied mix of ideas and concepts that are at the heart of the current academic work are considered.

2.1 Package design

A package is in indirect contact with the product and is a container that holds, preserves, protects and identifies the product. However, a package is also pivotal in the commercialisation and positioning of the product (Vidales Giovannetti, 1995; Ampuero & Vila, 2006). Package design attributes can be either functional or visual (Bloch 1995; Keller,et al., 2012).

At the point of sale the visual design of a package communicates, positions and tells a story about a product in the consumers’ mind, even without processing the information on the package. As many purchases during a store visit are unplanned, it can be those packages that attract the consumers’ attention that are the thin line between a successful and an unsuccessful product (Keller et al, 2012).

In this study the focus is on holistic label design. Meaning that the aim is to show what effect types of labels (and not stand-alone elements thereof) have on consumers. There are several reasons why this study focuses on the label as a whole.

Firstly, many previous studies have considered the effect of different elements of labels, when it comes to research on labels, as a whole there still remains a significant research gap to be filled.

Secondly, focusing on separate elements makes it difficult to implement theories in practice. The goal of this study is to make a significant step in the direction of providing a more practical use.

Thirdly, reaching out to Gestalt theory makes it clear why the whole, holistic, design of a label is meaningful, and not just the sum of its parts. As Soff (2013) pointed out, the basis of Gestalt theory is that the whole is not the same as the sum of parts; instead the whole is different than the sum of parts. The direct translation of gestalt theory is ‘structured whole theory’, as Gestalten in German translates to ‘structured wholes’ in English (Wagemans, Elder, Kubovy, Palmer, Peterson, Singh & Von der Heydt, 2012). This view is applied to the way labels are approached in this paper. The

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perception the whole label generates is of interest, and not what response a sole colour or shape on that particular label produces.

2.2 Consumer expectations: store and price

Consumer interest and loyalty in shops are often created by product brands (Keller et al, 2012). Brands help in creating an image and establish a position to the extent that ‘you are what you sell’ (Keller et al, 2012). Moreover, the appeal of brands can permit higher prices and growths in sales volume, in turn increasing profits (Keller et al, 2012). These branded products can come from either a source external to the shop, public brands, or internal sources, private brands (Keller et al., 2012).

Private brands can further create consumer loyalty and generate higher profits for stores (Keller et al., 2012). Private brands are also often established to strengthen and communicate the store brand. Stores carefully design the packages of their private label brands to communicate their either basic- and premium quality product lines (Keller et al., 2012). Indicating that there is in fact a best fit in product design and product price for those stores. From here the question arises if there is also a best fit for public brands in those stores.

In a 2012 study Hurley, Ouzts, Fisher and Gomes explore the effect of private label and public label packaging on consumer purchase patterns. Their results illustrate that both purchase decision and time spent observing packaging indicates that participants preferred public branded packaging over private label competitors.

A 2012 study by Orth, Campana and Malkewitz further strengthens the idea that packages have the ability to project brand image and can be altered to convey the product quality. Their study indicates that based on packages consumers form an expectation of the product’s price.

In order to test whether there might be a best fit of public label brands in stores, the current study researches store expectations based on packaging, also referred to as point of sale expectations. Furthermore, as price expectations are actually formed on the basis of packages, this study looks into price expectations.

2.3 Brand personality

On the website of the American Marketing Association (AMA) a brand and branding is described as: “A brand is a customer experience represented by a collection of images and ideas; often it refers to a symbol such as a name, logo, slogan, and design scheme. Brand recognition and other reactions are created by the accumulation of experiences with the specific product or service, both directly relating to its use, and through the influence of advertising, design and media commentary (AMA, 2015)”.

“Fundamentally, branding is about endowing products and services with the power of brand equity” (Keller et al., 2012, p. 42). Brand equity is the value of a brand from a consumer perspective (AMA, 2015). Keep in mind that it is not about the value of a product or service itself. “Fundamentally, the brand equity concept stresses the importance of the role of the brand in marketing strategies” (Keller et al., 2012, p. 42).

“Brand elements are trademark able devices that serve to identify and differentiate the brand. The main brand elements are names, website addresses, logos, symbols, characters, spokespeople, slogans, jingles, packages and signage” (Keller et al.,

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2012, p. 153). “Such elements can be chosen to build as much brand equity as possible. That is, according to the customer-based brand equity model, brand elements can be chosen to enhance brand awareness; facilitate the formation of strong, favourable and unique brand associations or elicit positive brand judgements and feelings” (Keller et al., 2012, p. 153).

The notion of brand personality finds it roots in the Big Five dimensions of human personality. In Aaker’s 1997 article, brand personality is formally defined as “the set of human characteristics associated with a brand”. The symbolic use of brands is said to be possible because consumer often instil brands with human personality traits (Aaker, 1997), which finds its origins in the idea of animism described by Gilmore in 1919 in the book ‘Animism; or thought currents of primitive peoples’. Taking a trip down a more philosophical path “animism encompasses philosophical, religious, and/or spiritual beliefs that souls or spirits exist not only in humans, but also in all other animals, plants, rocks, natural phenomena such as mountains or rivers, or other entities of the natural environment (Harvey, 2006, p.9)”. This natural tendency is intensified as advertisers instil brands with “personality traits such as anthropomorphization, personification, and the creation of user imagery (Aaker, 1997, p. 347)”.

However, “it is not yet known exactly how the various antecedents of brand personality interact, but perception of brand personality is likely to be a largely unconscious process roughly analogous to the perception of human personality, by which people draw conclusions based on minimal or incomplete evidence” Boudreaux & Palmer, 2007, p. 171).

In Aaker’s research “a total of 631 subjects rated a subset of 37 brands on 114 personality traits (Aaker, 1997, p.353)”. The outcome of the study generated a framework of five brand personality dimensions, as represented by the 42-item Brand Personality Scale below, that is reliable, valid and generalizable (Aaker, 1997).

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Building further on the idea of brand personality several authors have applied and modified the dimensions to specific items such as stores (d’Astous & Lévesque, 2003), performing arts venues (Ouellet, et al., 2008) and wine labels (Boudreaux & Palmer, 2007).

2.3.1 Store personality

In 1958 Pierre Martineau introduced the idea that stores have personalities, he presented this personality as “the way in which the store is defined in the shopper’s mind, partly by its functional qualities and partly by an aura of psychological attributes” (Martineau, 1958, p.47). A study by Marcus (1972) adds that store image is the mental representation that entails all the dimensions associated with a store, such as value for money and product selection. Following this thought, “store personality is defined as the mental representation of a store on dimensions that typically capture an individual’s personality (d’Astous & Lévesque, 2003, p. 457)”.

D’Astous and Lévesque transform Aaker’s brand personality framework to make it more suitable to measure the personality of stores. The authors remark that the personality traits identified by Aaker were uniformly positive. In an earlier study one of the authors has recognised that the case of stores is somewhat different, as there are ambient, design, and social components of a shopping environment that can be perceived as negative and irritating (d’Astous, 2000).

Therefore, a negative dimension, unpleasantness, is incorporated in their scale. The final five broad dimensions integrated in the store personality scale are: sophistication, solidity, genuineness, enthusiasm and unpleasantness.

In suggestions for future research the authors encourage to extend the application of the created measurement tool. The current study attempts to do so by using their scale to measure store personality, as well as comparing store personality outcomes to label personality outcomes.

2.3.2 Label personality

Antecedents of brand personality are both direct associations that are displayed by human representatives of a brand and indirect associations derived from non-human features (Boudreaux & Palmer, 2007). From the indirect associations of a brand, packaging is stronger in conveying brand meaning than advertising. Package design also contributes to in what way consumers interpret brands (Underwood, 2003).

Despite the large number of studies on brand personality, such as Aaker (1997), until 2007 little strategic guidance in developing and managing brand personality of products was realised.

In their 2007 study “A charming little Cabernet” Boudreaux and Palmer modify Aaker’s brand personality framework to determine brand personality based on labels, also referred to as label personality. The subject of their research is wine, however, the authors assert that their scale may well work for other, preferably symbolic, products too. The five broad dimensions incorporated in their measurement tool are: successful, cheerful, excitement, sophistication and ruggedness. While using the measurements of that framework they study the effect of label design on purchase intent and brand personality.

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The outcome of their study with regard to purchase intent was that “brand personality explained nearly half of the variance in purchase intent, with the facets successful, charming, spirited and up-to-date being most strongly correlated with purchase intent (Boudreaux & Palmer, 2007, p. 170)”. In what way exactly the various antecedents of brand personality interact is still largely unknown, however, the “perception of brand personality is likely to be a largely unconscious process roughly analogous to the perception of human personality, by which people draw conclusions based on minimal or incomplete evidence (Boudreaux & Palmer, 2007, p.171)”. Moreover, their study confirms that designing packaging in order to establish brand personality provides tangible benefits.

In a 2013 study Higgins and Canty use Boudreaux and Palmer’s framework to test both whether a label is enough to communicate brand personality to consumers and whether there is an impact of consumer’s own personality on their label interpretation. They conclude that the personality of respondents does alter how they interpret labels. They also conclude that the label is in fact enough to transmit brand personality dimensions.

As a ready-made framework exists to measure brand personality, based on labels, and Higgins and Canty (2013) conclude that the label is enough to transmit brand personality, this study chooses to also use label design as its starting point in research.

The current study further broadens the research on this subject, while making use of Boudreaux and Palmer’s framework, in the direction of the effect of labels and label personality on price expectation and point of sale expectation, making use of d’Astous and Lévesque’s store personality framework.

2.4 Conceptual model

Previous literature as summarised in the previous pages lays the groundwork for the relationships that are investigated in this study.

Background

The visual design of a package communicates the brand at the point of sale. Research indicates that package design not only communicates the brand, but can also communicate quality and price of a product. Higgins and Canty (2013) point out that the label alone is enough to communicate these values. The label is the starting point of this study.

Research about private labels, products manufactured by stores, shows that stores put major effort in creating packages that are perfect for their venue and support the stores’ brand values. Another research, however, demonstrates that there is a general preference for public label products, independent brands, as opposed to private labels. This gap between what consumers want and how stores want to communicate their brand invites to look for a solution; is there a way to let store management pick and choose products in packages that communicate their brand values? And the other way round; is there a way for brands to know what stores to best sell their products to? This is where brand personality comes in.

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identity of a brand: the 1997 brand personality scale. Later this scale was modified to use it to assess the personality of specific subjects, such as performing arts venues, stores and symbolic products.

If there is a measurement tool for the brand personality of stores and there are measurement tools for the personality of various products, could a match between the two be the answer for stores looking for public label package design that communicates their brand values? To investigate this, d’Astous and Lévesque’s (2003) store personality scale and Boudreaux and Palmer’s (2007) product personality scale, based on label design, are used.

Relationships

With this background in mind, the current study explores a multitude of issue:

• How well can price and point of sale expectations be made based on a label alone? And how do these two expectations interact?

• How well do Boudreaux and Palmer’s (2007 label brand personality scale and d’Astous and Lévesque’s (2003) store brand personality scale work in the setting of this study?

• Can the brand personality of a product based on its label predict both price and point of sale expectations?

• And lastly, based on the used scales, could a fit between store and product personality explain store expectations?

The conceptual model in figure 2 entails all the relationships above and helps visualise the issues that are addressed. The un-dotted lines represent relationships that are directly asked to respondents, while the dotted lines represent questions that are not directly asked to respondents. More about how research is carried out in this study can be found in the methodology section.

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In the following section a product category is chosen to place the conceptual model and its connections in a testable setting. From this setting the three main elements: label, store and price, are adjusted to fit within that context. For instance, if the product would be a cigar, the labels would be cigar package labels; the stores could be a supermarket, newspaper and magazine shop, tobacco shop and a specialised cigar shop; and prices would range from the cheapest cigars to the most expensive cigars.

2.5 Product category

Following other researchers who study label design (Boudreaux & Palmer, 2007; Schoormans & Robben, 1997; Orth & Malkewitz, 2008; Mueller & Szolnoki 2010; Orth, et al., 2010), this study is about the product category wine. Wine is a product category in which its exterior strongly influences the perception of its interior (Mueller & Szolnoki, 2010). The setting in which this research takes place is the Dutch wine market.

The Dutch market is the chosen setting in which this research is conducted, for the reasons that this study is written at the University of Amsterdam and the researcher has good access to respondents living in the Netherlands.

Orth and Malkewitz (2008) identify four major concerns in the selection of a product category suitable for research. The first is to make sure that the results are generalizable. Therefore, a branded product with package design elements that can be found in a variety of consumer goods is required. Second, to avoid brand familiarity biases the brand name should be unfamiliar to the respondents (Underwood & Klein, 2002). Third, the impact of package design on consumer impressions and purchase decisions need to be measurable. The last point is that for a meaningful assembly of actual stimuli a large variance in package design needs to be available in the selected category.

Based on these criteria and following Orth and Malkewitz (2008) this study selects stimuli from the wine category. “Wine bottles contain a wide variety of design elements commonly found in other consumer goods, there is an opportunity to use brands largely unfamiliar to research participants, there is at least anecdotal evidence that wine package design influences consumer impressions, and the large variance in wine packages and brand personalities allows for a meaningful assembly of actual stimuli designs (Orth & Malkwitz, 2008, p. 67).”

Chaney (2000) confirms this choice in stating that wine bottle labels are especially relevant in the decision making process in the wine market. This study uses front labels as stimuli, as research has pointed out that both the visual and non-visual information on front labels are deemed more important than the cues that are generally depicted on back labels (Thomas & Pickering, 2003).

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3. Contextual background

This chapter discusses the complex market for wine. For this study it is valuable to be acquainted with the ins and outs of this specific market in order to better place the remainder of this thesis in its context. First the unique and often confusing properties of the wine product are discussed. Thereafter a general overview the wine market and its trends are provided, including a discussion of the multifaceted supply chain. To finalise an overview of the Dutch market is discussed.

3.1 The product

Wine is an intricate and even a mysterious product (Hall & Mitchell, 2008). Hall and Mitchell (2008) define wine in all its aspects. Wine is “a provider of sustenance and a luxury item; associated with healthy living, while in excess it can lead to death; a symbol of status and a ‘peasant’ drink; of immense religious and cultural significance and can be associated with hedonistic and debauched behaviour; a fashion item, experience and commodity all in one (Hall & Mitchel, 2008, p. 2)”. According to Nelson (1974) there are two types of goods, one type being search goods, where the quality can be determined by inspection before purchase, and the other type being experience goods, where the quality can be determined only after purchase. Wine is an experience good as there is no certain way to determine the quality of wine prior to tasting. Since wine is an experience good there is always a certain risk consumers carry when making their decision in which wine to choose. This characteristic in particular makes it very difficult and confusing for consumers to make a choice when purchasing their wine.

Spawton (1991) identifies that the majority of wine consumers are very risk-sensitive and are led by expectation and risk reduction strategies when purchasing wine. The main expectation factors by which these consumers are led are the self-esteem of the consumer, occasion and celebration enhancement, and the wine should be complementary to meals. There are three key components of risk, which are closely related to the expectations by which consumers are led. “The main facets of risk are:

• Psychological, being potentially damaging to the buyer’s own self-esteem by making the wrong wine choice;

• Functional, i.e. the inability to determine that the wine is faulty, or it is the wrong choice of wine for the occasion or to accompany a particular dish or meal;

• Economic, i.e. the perceived value of the product relative to the price being paid? (Spawton, 1991, p. 16).”

These risks may be reduced by a multitude of risk-reduction strategies also identified by Spawton (1991). A selection of these strategies are choosing known brands, following recommendations of friends, critics and retail assistants, wine knowledge, pricing, and packaging and labelling.

A final aspect that makes choosing wine today even more complicated than it was a few years ago is that every year more wines enter the market. Wine is not only made in a handful of countries anymore; currently almost every country in the world produces wine. The constantly growing market for wine and wine’s naturally confusing properties make choosing a bottle for the modern consumer a very difficult task indeed.

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3.1.1 Tangible and intangible wine benefits

Spawton (1991) developed a spectrum of the various benefits of wine in which the tangible and intangible cues, that direct consumers to their choice, are presented.

Figure 3: Benefits spectrum for wine (Spawton, 1991, p. 20).

The core benefit, represented in the middle of the spectrum, is the final decision-making benefit for choosing wine. “To communicate these benefits to the consumer they are made tangible by relating the wine’s properties to the knowledge and experience of the buyer (Spawton, 1991, p. 19).” A tangibility process is put in place in order to appeal to the consumers’ senses of touch, sight and smell. “The devices used in this process are:

1. Quality of the packaging and the materials used.

2. The bottle shape, which will help identify the style of the wine (for example, the champagne bottle shape is universal).

3. The label and the information presented on the label, e.g.: o Grape variety

o Vintage o Region o Appellation o Vineyard or brand

o Wine maker’s notes (Spawton, 1991, p. 19).”

Intangible factors serve as differentiators from competitors and as positioning devices in the market. “Intangible factors include:

• Price (does the price reflect the perceived value and quality of the product?). • Outlets where the products are sold (fine wines should not be found at discount

stores).

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• The personality of the winemaker.

• The respectability of the agent or distributor.

• The communications mix used by the wine company. (Spawton, 1991, p. 19)”. 3.2 Market dynamics worldwide

3.2.1 Globalisation: boosting exports

Over the past two decades, a rapid process of globalisation has affected the world wine market (Pomarci, Boccia, & Catapano, 2012). “The volume of export as a percentage of world wine production experienced an increase from 15% to 32% between 1989 and 2009, despite a much slower increase in world consumption. Recently, the international trade has been boosted by the increasing demand in countries which up to a recent past were marginally involved in wine import, mainly located in Asia; production is increasing in some importing countries, such as China India and Brazil, and in some countries with a large potential, such as Ukraine” (Pomarci et al., 2012, p. 23). This can be partly explained by that globalisation as such involves a search for lowest-cost sources of production so that goods are produced economically in various parts in the world and distributed to markets worldwide (Banks & Overton, 2010).

3.2.2 Globalisation: leading to increased demand for branded higher-status products

Globalisation does not always lead to homogenisation and agglomeration (Murray, 2005). “As individual wealth has been growing in the wake of an expanding global economy, consumer preferences particularly amongst the wealthy or middle classes seek not low-cost high volume products in all cases but instead more differentiated and higher-status products (Banks & Overton, 2010, p. 58).” Products that this group of consumers are in search of are often marked by brands that place emphasis on quality insurance, place of origin, and either artisanal or high-tech methods of production (Banks & Overton, 2010). 3.2.3 Anti-globalisation as a counter trend

A third aspect that fits within the trend over a movement toward product differentiation is the phenomenon of the resistance to globalisation. In some cases agglomeration and homogenisation is resisted by the protection of the intellectual property of methods of production and product and place names (Moran, 1993).

Taking these issues together, the setting of the world wine market is characterised by great changes in the geography of production, trade and consumption (Pomarci et al., 2012).

3.2.4 World production, export, import and consumption Production

A study by the Wine Institute has pointed out that between the period of 2008 until 2011 France has been the largest wine exporter of the world, accounting for almost 19% of the world production. Italy, Spain, the United States and Argentina respectively also belong in the top five of wine producing countries. The largest increase in wine production during these years was seen in the Czech Republic with a colossal 49.77%,

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followed closely by Brazil, which had a growth of 43.75% (Wine Institute, 2011a). For information on more countries please consult appendix 1.

Export

Vlahović, Puškarić, & Tomašević (2013) have studied the ten-year period between 2001 and 2011. The average wine export in the world was 8.4 million tons per year during that period. The authors identified a trend of the exports increasing at an average rate of 5% per year. From 2001 to 2011 exports increased by 74% and reached a total of 11.4 million tons (Vlahović et al., 2013). These numbers indicate a very dynamic international wine trade.

“In monetary terms, the average exports totalled 22.9 billion U.S. dollars, making wine one of the products with the largest portion in the world agriculture trade” (Vlahović et al., 2013, p. 350). Compared to the first analysed year, in the last year, exports increased by 17 billion U.S. dollars. Per litre of wine the average export price was 2 U.S. dollars and 70 cents in 2011 (Vlahović et al., 2013).

In 2011, the European Union provided approximately three-quarters of the world export of wine and numbers are increasing. The average export price was 4 U.S. dollars and 96 cents per litre, which is a considerably higher number than the world average (Vlahović et al., 2013).

Analysed by country in 2011, the largest wine exporter in the world was Italy, whose average export was 1.79 million tons, which accounts for more than 21% of the world export (Vlahović et al., 2013). On average, approximately 40% of the total domestic production of wine is exported (Vlahović et al., 2013).

The table below shows the five main exporters of wine in the world between 2001 and 2011.

Table 1: The main exporters of wine in the world between 2001 and 2011 (in 000 tons) (Vlahović et al., 2013, p. 352).

Import

Between 2001 and 2011 the average wine import in the world was 7.9 million tons, with an increasing average rate of 4.8% per year (Vlahović et al., 2013).

The largest importer in the world is the European Union, accounting for over 70% of world imports between the years 2009 and 2011 (Vlahović et al., 2013). Most of the import is from the countries Australia (25%), followed by Chile (21.8%) and South Africa (21.3%); the import from these countries account for more than two-thirds (69%)

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Analysed by country, the largest wine importer is Germany, with an average import of 1,35 billion litres (Vlahović et al., 2013), which accounts for approximately 17% of the total world imports.

In the table below the top five wine importers of the world identified between the years 2001 and 2011.

Table 2: The main importers of wine in the world between 2001 and 2011 (in 000 tons) (Vlahović et al., 2013, p. 355)

Consumption

In terms of wine consumption between 2008 and 2011 the worldwide consumption has increased from 13,601,577,000 litres in 2008 to 14,367,197,000 litres in 2011 (Wine Institute, 2011b), accounting for an increase in consumption of 5.6% over the period and thus a compound annual growth rate (CAGR)1_{of 1.4% per year. The countries United}

States, with 13.47% of world consumption, and France, with 12.29% of world consumption, rank first in consuming wine (Wine Institute, 2011b). The largest increase in consumption was in Kyrgyzstan, where wine consumption between 2008 and 2011 increased by an unbelievable 1,750% albeit from a very low base of 0.01 litres versus e.g. 45 litres in France.

3.2.5 Consumer specific trends: shift towards low-end premium wines

“Consumption patterns have changed tremendously in recent decades. Sales of commercial premium bottled wine (which retail for $5 to $8) are growing at dramatic rates compared with super premium wines (those costing more than $8), while sales of previously popular jug wines (less than $5) have plummeted (Anderson, 2003, p. 48).”

The shift towards low-end premium wines and away from non premium wines make both Wittwer and Rotfield (2005) and Anderson (2003) express their expectation that even though Old World wine countries like France and Italy are currently dominant in major wine markets, their export shares will decline in favour of New World producers. To clarify, Old World wine countries are essentially all wine producing countries inside Europe, while New World wine countries are essentially all wine producing countries outside of Europe. The general taste of New World wines can be described as being more fruity and clean than the more complex Old World wine taste. Another major reason for the shift in consumer preference may consequently be that

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New World wines are simply easier to drink due to their sweeter tastes resulting from generally hotter climates than those in Europe. New World wines are also marketed differently; typically as single grape variety wines e.g. Merlot, Cabernet Sauvignon etc. versus the practice of blending grape varieties in the Old World, adding to their complexity.

3.3 The wine supply chain

It is a challenging endeavour to describe all the possibilities that wineries have to bring their wine to the consumers. However, that is exactly what this section attempts to do; providing a clear, but concise overview of the ins and outs of the wine supply chain.

“The supply chain for wine is very complex. In fact a single-supply chain that is exactly the same from country to country, and arguably even from winery to winery, does not exist and there are an almost unlimited number of routes that a wine can take from winery to consumer (Hall & Mitchell, 2008, p. 15).” Moreover, whilst the world is becoming more and more global, the supply chain constantly shifts in nature. To demonstrate the complexity of the wine supply chain Hall and Mitchell (2008) have developed three models that gradually build a picture of the potential number of alternatives for wineries to get wine to their consumers. The first model (figure 4) shows how the supply chain, for the sake of simplicity, can be “divided intro three broad areas: the wine industry, which is responsible for producing wine and developing brand values; a range of intermediaries, with varying roles and levels of power, depending on the market in which they operate and; a range of different retailers (Hall & Mitchell, 2008, p. 15)”.

Figure 4: The basic wine supply chain (Hall & Mitchell, 2008, p. 16).

A winery can choose to use intermediaries and/or retailers, although they can also attempt to use methods of direct sales such as cellar door sales including a tasting room or sell their wine via the internet. However, the choices that the winery has may be

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restricted due to regulations, for instance in the United States wineries are obliged by law to sell via intermediaries and retailers (Hall & Mitchell, 2008).

Besides the basic elements shown in figure 4, there are also a number of players that also interfere with the wine supply chain; including wine and food festivals, wine shows and wine clubs (see figure 5).

Figure 5: The role of festivals, wine shows and wine clubs (Hall & Mitchell, 2008, p. 17).

Even though wine shows and festivals have existed for many years, it is a relatively recent trend that they have become essential for wine sales and that they have become a vital marketing tool (Hall & Mitchell, 2008). Wine clubs are a whole different case “as they may be run by intermediaries, wine retailers, independent wine societies, wine and food media, unrelated organisations with large direct mailing databases, such as credit card companies, or the winery themselves (Hall & Mitchell, 2008, p. 19)”.

Figure 4 and 5, however, do not nearly reveal the true complexity of the wine supply chain. “In reality there are multiple pathways between and within each of the three basic components of the industry, intermediaries and retailers (Hall & Mitchell, 2008, p. 17).” It is near impossible to highlight all the variations in the wine supply chain, but the following figure is certainly a step closer to reality.

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Figure 6: Complexity of the wine supply chain (Hall & Mitchel, 2008, p. 18).

Together with the various possible pathways, figure 6 also demonstrates how the boundaries between the different elements of the wine supply chain are blurred. This is, at least partly, a result from the internationalisation and corporatisation of the wine industry (Hall & Mitchell, 2008). One of the major changes in wine distribution of the last years is that “companies that have not traditionally been involved in wine production and distribution have also recently begun to assert more control over all elements of the supply chain (Hall & Mitchell, 2008, p. 19)”. First and foremost supermarkets have gained an enormous amount of power in the wine supply chain. Recently supermarkets have made contracts with wine producers to create their own private label brands. Also, “the distinction between supermarkets and other wine retailers is becoming increasingly blurred (Hall & Mitchell, 2008, p. 19)”. As a result, there is an increasing degree of both vertical, supermarkets owning other retailers, and horizontal, supermarkets controlling production and/or branding, integration within the wine supply chain (Hall & Mitchell, 2008). To make it even more complicated the internet has also changed the way in which the supply chain works. However, this actor is not named explicitly in the model because, in 2008, it was more often used in all levels of the supply chain as a tool, instead of it being a distribution network itself (Hall & Mitchel, 2008). Though, when placing such a model in 2015 the role of the internet would certainly be much stronger.

Figure 6 definitely illustrates the complexity of the wine supply chain, but even this model does not tell the whole story. There are also a series of country specific overlays that alter the way in which the supply chain works in the areas throughout the world that are shown in the model below (Hall & Mitchell, 2008).

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Figure 7: Media, legal and cultural overlays (Hall & Mitchell, 2008, p. 20).

“Each market operates in a different cultural system which influences everything from: the relative importance of different types of intermediaries (e.g. ‘negotiants’ being more important in parts of France than in other parts of the world); to the role and status of wine producers in society (e.g. peasant or farmer in some Old World wine regions versus entrepreneur or business operator in many New World wine regions); to attitudes towards different types of retailers (e.g. the relatively high significance of supermarkets in the UK and New Zealand) (Hall & Mitchell, 2008, p. 19).” Each national system revolves around cultural influences and institutional and legal frameworks that control the way in which wine is distributed and sold (Hall & Mitchell, 2008). As well as cultural influences there are also influences from the local and global media that to a great extent determine which wines are consumed, where they are consumed and when they are consumed. 3. 4 The Dutch wine market

3.4.1 Market specific trends

The total wine import in the Netherlands in the year 2012 was 400.000.000 litre. Most of the wine that the Netherlands imports comes from France accounting for almost 28% of total imports. In the year 2013, for the first time in twenty years, wine sales decreased dramatically (KNVW, 2013). The main reasons behind the drop in sales are the increase in alcohol taxes, and as a result, the new trend that Dutch consumers buy their wines abroad more often than before. In the year 2012 the percentage of the total wine purchases of the Dutch that is bought abroad was 25% (KVNW, 2013). From the wines that are bought across the border 40% is bought in Germany and 31% in France. The Dutch consumers buy, on average, 8 bottles of wine from abroad at a time (KVNW, 2013).

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3.4.2 Consumer specific trends

Historically drinking wine is not a particularly Dutch habit and beer was the more frequently consumed alcoholic beverage. However, since the year 2007 wine consumption surpassed beer consumption (Trendbox, 2010; appendix 2). Between the years 2008 and 2011 wine consumption in the Netherlands has increased with 28.4%. This resulted in that in 2011 the Netherlands became the 17th_{largest wine consuming}

country in the world (Wine Institute, 2011b).

The type of wine that the Dutch used to drink was predominantly red. However, since 2001 a trend has emerged; Dutch wine consumers choose rose wine more often at the expense of both red and white wine (Trendbox, 2010; appendix 3). Nevertheless, wine consumption still has a clear winner; 55% of the Dutch consumers still prefer red wine to white (29%), rose (13%), and sparkling wine (4%). (Trendbox, 2009; appendix 4) 3.4.3 Distribution specific trends

In the Netherlands the percentage of consumers who purchase their wine at supermarkets is still growing. From 1995 to 2009 the percentage of consumers that buy their wines at supermarkets has grown from approximately 60% to 80% (Trendbox, 2010; appendix 5). Wine merchants are losing relative market share, while other sales channels, such as the internet, are gaining.

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4. Methodology

4.1 Survey and procedure

The consumer survey that was developed consisted of sixty-two closed choice questions. There were consumer related questions covering consumer demographics, consumption frequency, purchase frequency, degree of wine knowledge, wine preferences and wine interest. Label related questions were about brand personality, price expectations and store expectations. With regard to sales-point store preference, purchase frequency and brand personality questions were asked. The full questionnaire can be found in appendix 6.

Participants were presented with a 5-point Likert scale ranging from strongly disagree to strongly agree to evaluate brand personality characteristics of both stores, using d’Astous and Lévesque’s (2003) framework, and labels, using Boudreaux and Palmer’s (2007) framework. This type of measurement was used to obtain quantitative data for brand personality, which is considered to be more subjective than objective of nature.

Qualtrics research software was used to realise an online distributable questionnaire. To qualify the respondents had to be of legal drinking age in the Netherlands (18 years or older) and either currently living, or having lived, in the Netherlands. The population is all people who are 18 years or older in the Netherlands. The size of the population is approximately 13 million: calculated by the approximate people count in 2014 in the Netherlands of 16,83 million minus approximately 3,83 million under 18’s (CBS, 2014). When using a margin of error of 5%, a confidence interval level of 90% and a response distribution of 50%, the advised sample size would be 271 respondents.

Respondents were recruited by self-selection. Persons in the researchers’ academic, professional and personal connections had been sent an email with a link to the survey. In order to gain access to respondents who were interested in wine and potentially knowledgeable about wine, the mailing list of an anonymous wine club was sent an email with the request to participate. The compensation for the participants’ time was a chance to win a gift voucher of 25 Euro at a Dutch liquor store.

4.2 Materials

The two main stimuli in this research were labels and stores. Both these stimuli were placed in the context of the Dutch wine market.

4.2.1 Labels

In choosing the labels used for this study a trade-off was made between choosing either labels that could be compared with their actual price and store or choosing a very diverse range of labels from various known and unknown backgrounds. As it is fundamental that in choosing labels brand familiarity is avoided and a large variance in label design is presented to participants the last latter type of label acquisition was preferred (Orth & Malkewitz, 2008). The manner in which labels were acquired and what they look like is further clarified in the pre-test section.

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4.2.2 Stores

The way in which stores were chosen is a variation on a study by Szolnoki and Hoffman (2013). They characterise customers by consumer channel and differentiate between six types of customers: (1) discount-customers, (2) food-retail-customers, (3) supermarket-customers, (4) cellar-door-supermarket-customers, (5) wine-shop-supermarket-customers, and (6) multichannel-customers.

To fit their division to this study supermarkets were divided into two categories: discount-supermarket and supermarket. To adjust to the wine market liquor stores were added to the list. Within the category liquor stores in the Dutch wine market two main types exists; a specialised wine store and a more general liquor store. Together this made up four categories: (1) discount-supermarket, (2) supermarket, (3) liquor store, and (4) boutique wine store.

Throughout this study store and point of sale are used interchangeably. To exemplify the categories to the respondents, four well-known stores in the Dutch market were chosen:

• Discount-supermarket: Lidl • Supermarket: Albert Heijn • Liquor store: Gall & Gall

• Boutique wine store: boutique (high-quality) wine shop

Lidl is a low-priced supermarket, Albert Heijn is a medium to high prices supermarket, Gall & Gall is a specialised liquor store, and the boutique wine store is a specialised wine retailer. From Lidl to the boutique store it ranges from not specialised to highly-specialised, from low-priced to high-priced, from low class to high class, and from very basic to premium.

4.2.3 Price

Five price ranges for wines that are present in the Dutch wine market were chosen. These prices range from low (€2 - €4.99) to premium (€20 and over). These price ranges were chosen based on observation in Dutch stores. It is expected that these price ranges can be perceived as being the distinction between low-class and high-class.

4.3 Methods and measurements

In order to be ready to study the conceptual model a couple of steps had been taken in advance. First a pre-test (section 4.4) with the purpose of choosing labels for the actual research was conducted. Then data was prepared for testing, after which factor analyses and reliability analyses were conducted for all the stores and labels (section 5.1).

Hereafter the dataset was ready for analysing the conceptual model. However, first the respondent sample (section 5.2) was examined. The first two steps within the conceptual model, consumer expectations of point of sale and price, make use of percentage calculations out of the data and interpretation of these percentages (step 1 section 5.3.1 and step 2 section 5.3.2).

The specialised brand personality measurement scales from Boudreaux and Palmer (2007) and d’Astous and Lévesque (2003) were assessed and means and standard deviations were used to interpret personality profiles (step 4 section 5.3.4 and step 5

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section 5.3.5). The factors in Boudreaux and Palmer’s (2007) label personality scale are successful, cheerful, excitement, sophistication and ruggedness, whereas the factors in d’Astous and Lévesque’s (2003) store personality are sophistication, solidity, genuineness, enthusiasm and unpleasantness.

Regression analysis was used to test the predictor of three relationships. Namely, the relationships between price expectations and point of sale expectations (step 3 section 5.3.3), between label personality and point of sale expectations (step 6 section 5.3.6), and between label personality and price expectations (step 7 section 5.3.7).

The final statistical calculations were made using correlation analysis with which the relationships between brand personality and store personality was assessed (step 8 section 5.3.8).

To gain an overview of what steps were undertaken during this study a graphical representation of the used methods was created. The numbers in the model represent the result sections within chapter 5.3 ‘Researching the conceptual model’. The earlier presented conceptual model was the basis for designing the rather detailed model below.

Figure 8: Detailed conceptual model

4.3.1 Data preparation

The gathered data needed some level of preparation before running the analyses. Firstly all unfinished surveys were filtered out of the data set. And secondly, the missing data were filtered out from the data set.

4.3.2 Factor analysis and reliability analysis

In science there is often a need for measuring things that cannot actually be measured directly (Field, 2013), as is the case with the data in this study that represent brand personality. In brand personality several components are tested that represent a single

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variable, for instance, according to d’Astous and Lévesque (2003) the components welcoming, enthusiastic, lively and dynamic represent the factor enthusiasm.

A factor analysis is a technique that is used to identify these clusters of variables (Field, 2013). The brand personality scales that are used in this study are from the d’Astous and Lévesque (2003) and Boudreaux and Palmer (2007). To identify whether the elements in these brand personality scales are allocated to the same factors in the current study as in the other two studies, factor analysis was conducted.

The model of this study is a linear model. A mathematical representation of the components that the factor analysis uncovers is: Yi=b1X1i+ b2X2i+…+ bnXni

The b’s in the equation represent the loading. The equation represents: Component=b1 Variable1i+ b2 Variable2i+…+ bn Variableni

In the analysis of the results the rotated component matrix is used for interpretation and in the factor analyses the extraction was always based on eigenvalues greater than 1, unless stated otherwise. In these rotated component matrices, rotation below .3 was not displayed.

Because the composition of factors of label personality differed a lot between Boudreaux and Palmer’s 2007 study and this study, the factors were named after the element with the highest loading within that factor.

As the store personality factors in the outcomes were very similar to the factors in d’Astous and Lévesque’s 2003 paper not the highest loading of the elements resulted in the factor name, but the factor names in the initial paper; sophistication, solidity, genuineness, enthusiasm, and unpleasantness.

The Kaiser-Meyer-Olkin measure of sampling adequacy test (KMO) was conducted for each of the stores and labels. “The KMO statistic caries values between 0 and 1. A value of 0 indicates that the sum of partial correlation is large relative to the sum of correlations, indicating diffusion in the pattern of correlations (hence, factor analysis is likely to be inappropriate). A value close to 1 indicates that patterns of correlations are relatively compact and so factor analysis should yield distinct and reliable factors. Kaiser (1974) recommends accepting values greater than .5 as barely acceptable (values below this should lead to either collect more data or rethink which variables to include) (Field, 2013, p. 684)”. Hutcheson and Sofriniou (1999) provide some guidelines for interpretation:

• “Marvellous: values in the .90s • Meritorious: value in the .80s • Middling: values in the .70s • Mediocre: values in the .60s

• Unacceptable: values in the .50s (Field, 2013, p.685)” Reliability analysis

“Reliability means that a measure should consistently reflect the construct that it is measuring (Field, 2013, p. 706).” The most common measure of scale reliability is Cronbach’s Alpha. Some confusion exists about what the value of the Cronbach’s Alpha should be in order to be considered reliable. Kline (1999) states that values above .8

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generally indicate a reliable scale. However, when measuring psychological constructs values below .7 can suffice, and in the early stages of research values below .5 can be considered reliable enough (Nunally, 1978). These are just some examples of a lengthy discussion between scientists. Applying these estimations to the current study, it was chosen to also accept values between .6 and .7 as brand personality is a psychological construct and it is an exploratory research.

4.3.3 Percentages

There were three sections for which calculating percentages out of the data was enough for interpretation. These sections are 5.2 in which the respondent sample is evaluated, 5.3.1 in which consumer expectations of the point of sale per label are calculated, and 5.3.2 in which consumer expectations of price ranges per label are measured.

4.3.4 Brand personality measurement scales, means and standard deviations Two brand personality scales were used in this study: one to measure the brand personality of stores and one to measure the brand personality of products based on labels.

D’Astous and Lévesque’s (2003) brand personality elements measuring store personality fall under five factors: sophistication (chic, elegant, high class, stylish), solidity (hardy, reputable, solid, thriving), genuineness (honest, reliable, sincere, true), enthusiasm (dynamic, enthusiastic, lively, welcoming) and unpleasantness (annoying, irritating, loud, superficial).

Boudreaux and Palmer’s (2007) brand personality elements measuring label personality fall under five factors: successful (successful), cheerful (cheerful), excitement (daring, spirited, imaginative, up-to-date), sophistication (upper class, charming), and ruggedness (outdoorsy, tough).

To be more certain the Dutch respondents would understand the meaning of the words they had to evaluate a (primary) schoolteacher was asked her opinion on this. She indicated that the words hardy and reputable might be difficult to understand for the general public. Therefore, in the questionnaire, synonyms were added behind these characteristics to create a better understanding of the concepts. In the survey it looked like this: hardy/tough, and reputable/prestigious.

As briefly mentioned before, four stores and fourteen labels were chosen within the context of the wine market. Stores and labels can, for instance, be defined as inexpensive or expensive.

Brand personality can give a different perspective, to these defining factors. Brand personality can highlight how people feel about stores and labels; it invites people to consciously pinpoint how they unconsciously feel. Many decisions are made on the basis of this ‘gut-feeling’.

On the basis of d’Astous and Lévesque’s (2003) measurement tool for store personality and Boudreaux and Palmer’s (2007) measurement tool for label personality, the personality characteristics of these stores and labels were uncovered.