I keep finding cruise brochures folded into the weekend newspapers that arrive here at Wine Economist world headquarters. Ads of various sorts for wine clubs associated with those same papers show up frequently, too. That got me thinking, which is usually a mistake. What do ocean or river cruises and those wine clubs have in common? Intrigued? Read on.
They come in the mail and stuffed in weekend papers — brochures for ocean and river cruises and barge-and-bike tours. It is hard to resist the temptation to thumb through them and imagine visiting all these far-away places. You’ve done it, haven’t you?
Thousands and thousands of full-color printed brochures — this seems like a pretty expensive way to solicit customers. There must be something about having those pages and pictures in your hands that is especially important. Or maybe it is that the demographic that still reads a physical weekend paper and can afford to pay for it is a juicy target.
Experience Deficit Disorder
Several things about the tours strike me as important and relevant to wine. The first is that tours are “experience goods” — you cannot really know if you will like river touring, for example, until you actually try it. And then, if your experience is a good one, the odds of a second trip go way up (and the cost of customer acquisition way down).
The most important thing in marketing an experience good is to get people to try it the first time. The cruise industry seems to be good at this, so perhaps there is something to be learned by studying their strategies.
Wine is obviously also an experience good. Hard to know if you will enjoy a wine (or how much) before you pay the bill and open the bottle. If you like it, you are likely to come back for more. No wonder winemakers go to so much effort and expense to hold tastings of their wines.
The Olive Garden restaurant chain has a very successful wine program that is built around their practice of offering free tastes (as allowed by local law). One taste makes a customer more often than not.
Those colorful cruise brochures and television videos (think PBS’s “Masterpiece Theater” sponsorship) try do the same — they give potential customers a “taste” of what cruise life is like. But for the most part neither wine now cruise ships can entirely overcome the obvious experience deficit disorder. So they need a strategy around it to give buyers confidence to take the plunge.
A Little of What You Fancy
Since cruise lines and independent “professionally curated” wine clubs of the sort that are often associated with newspapers and airline mileage programs cannot give all their potential customers actual samples of their products, they both seem to sell the glamour and exotic nature of the experience and hedge their bets in an interesting way.
Cruise tours seldom spend more than a few hours in any single port of call. If you love today’s stop, you can always come return on your own, but if you find you hate Venice (is this even possible?), don’t worry. You’ll be back on the boat and headed for another destination before you know it.
Some of the wine clubs that advertise in the weekend papers seem to work in the same way. Don’t worry about getting a case of even a six-pack of a particular wine you don’t like. Each case has at least six and sometimes twelve different wines. Don’t like this wine — don’t worry, because it is gone just like that. But you can order more of anything you fall in love with.
The fact that the details of the experience — the particular wines, the particular travel route — are made by experts, not the buyer, seems important, too. You buy the package and leave the rest to the experts. The modest commitment comes with relatively modest effort and emotional investment.
The low commitment strategy doesn’t appeal to everyone (see my personal note below) among either tourists or wine buyers, but its persistence in both spaces suggests that there is a market for it. Especially when there is a big discount involved.
Nice wine and ocean and river cruises are luxuries from an economic point of view. No one has to buy them and there are always cheaper alternatives. The trick to getting the weekend newspaper-reading public to try them seems to be to make them simultaneously very luxurious and a tremendous bargain.
Thus the cruise lines advertise stratospheric rack rates for their services, which are then deeply discounted. The “full brochure fare” for the cheapest stateroom on a 10-day Mediterranean cruise in the flyer that arrived a few weeks ago is $9,999 (including economy airfare from certain gateway US airports). Wow, that’s a lot of money. Must be quite a cruise.
But wait, if you act now this wonderful experience can be yours for just $2,999 (airfare included) or $1,999 if you book your own flight. Lifestyles of the rich and famous at a fraction of the list price. Who can resist?
For the record the full brochure price of the most expensive cabin for this 10-day cruise is … wait for it … $33,998! But your price is just $14,999 or $13,999 if you pay your own airfare. Needless to say, this top-of-the-line listing makes the $2,999 of that bottom-tier inside stateroom seem an even better deal than before. Or maybe you would like to upgrade to the $4,599 veranda stateroom?
Wine club ads (and most supermarkets) adopt a similar strategies. Wine club ads seem to stress both the high retail value of the wines and the low low price that you will pay. Sometimes the introductory offer prices are so low that they must be intended solely to entice buyers into the first “experience” purchase, counting on repeat order for profits.
Foot in the Door?
I don’t see anything wrong with how cruise lines and wine clubs market their services. If this low-commitment affordable luxury strategy is successful in introducing people to wine and travel — and if they enjoy themselves — then that’s a plus.
Remember this. Most consumers don’t drink wine (here in the U.S. about 40% of adults don’t consume any alcohol at all). And most of those who do drink wine do it only a couple of times each month. There is much work to be done to introduce these consumers to the pleasures of wine and if thinking about wine as if it were a luxury river cruise can help, I am all for it.
The point of this that sometimes those of us in the wine space think that wine is so special that we fail to see how it relates to other products and experiences. It’s a good idea to pay attention to how other experience goods present themselves to consumers and to note how those consumers react.
For the record, Sue and I don’t seem to fit the wine club/cruise ship profile. We signed up for one of those wine clubs years ago and never ordered again. The wines were fine, we just wanted to make the choices ourselves. We’ve taken just one cruise: a Holland America Inside Passage cruise to Alaska. We had a great time and met many nice people, but were never were tempted to repeat. Chacun a son gôut, I guess.
At least we had good experiences, unlike the diner in this vintage television commercial.
Mike I love reading your blogs. We have similar interests wine and economics so for me I get twice the enjoyment. I’ve enjoyed the books too!
We cruise with Crystal Cruiselines, and there has always been a special wine dinner offered. We always sign up for those, and they have truly been world-class.
Thanks, Lowell. I have noticed that some cruise lines feature “winemaker cruises,” which sound like fun. No “wine economist” cruises yet, alas!
As a marketer I was really drawn to the “experience” notion. Very intuitive and logical way of thinking about attracting people. It’s one of the reasons wineries in Napa fight so hard to get visitor permits – it drives the direct-to-consumer business when people can taste the product.
Agreed. Many in Napa give a great deal of attention to the total experience, not just the wine tasting opportunity. Thanks!
As a former student, it is always a pleasure reading your posts. Taking a European river cruise this September. Plan on trying many wines while cruising, all inclusive cruise, wine included.
Thanks, Peter. Great to hear from you. Where are you going on your cruise?
Being an attorney representing cruise lines and also food and beverage suppliers your post caught my attention. You might be interested to look into the “wine programs” that are developed for the cruise operators, often by independent wine consultants. They take over the design of the wine program, negotiate with the wineries, prepare the on-board promotions, and train the wine staff. One line, I think NCL, has a Robert Mondavi branded fine wine room on one of their newer ships. The cruise line offers dinner wine packages, six bottles of wine, one for each night, typically of very nice, but not top drawer wines on which they get a great mark-up even though the price to the passenger is not all that bad. Of course they also have the fine wine wine-list. Cunard seems to be notorious for very expensively-priced fine wines that reportedly aren’t all the fine, You can probably review the wine programs on line at the cruise line websites.
Thanks for this comment, Glenn. The winemakers I know see cruise line sales as a very attractive opportunity. Lettie Teague did a column about cruise line wine in the WSJ a few weeks ago. Thanks again.
“Most consumers don’t drink wine (here in the U.S. about 40% of adults don’t consume any alcohol at all). And most of those who do drink wine do it only a couple of times each month. There is much work to be done to introduce these consumers to the pleasures of wine . . .”
Consumer goods marketers would be derelict in their fiduciary responsibility to their employers and clients if they emphasize converting non-users into first-time users, and infrequent users into more frequent users.
That’s a fool’s [gold] errand.
The profits come through “base retention” (keeping your existing customers satisfied) and “share gains” (poaching users from your competitors).
Excerpt from The Wall Street Journal “Marketplace” Section
(November 26, 2008, Page B6):
“Marketers Reach Out to Loyal Customers”
By Emily Steel
“It’s an adage of . . . business: Persuading a satisfied customer to return is cheaper than attracting a new one. Now, in the struggle to do more with less, that concept is becoming even more important.
“Acquiring a new customer costs about FIVE TO SEVEN TIMES as much as maintaining a profitable relationship with an existing customer, says Marc Fleishhacker, managing director at WPP’s Ogilvy Consulting . . .”
A telling statistic from the wine industry:
Excerpt from WineBusiness.com
(May 12, 2010, 2012):
“The Market for Fine Wine in the United States”
[Fine Wine 2010 Conference in Ribera del Duero (Spain)]
By Graham Holter
Associate Director – Publishing
Wine Intelligence market research firm (United Kingdom)
“According to the data presented by [David] Francke [managing director of California’s Folio Fine Wine Partners], US wine drinking is compressed into a small segment of the population.
“SIXTEEN PERCENT OF CORE WINE DRINKERS consume wine once a week or more frequently, which ACCOUNTS FOR AROUND 96 PERCENT OF CONSUMPTION. Thirty-five million adults drink virtually all of the wine sold in America, Francke said.”
Those 16% core wine drinkers are your target audience.
Not the 84% of infrequent drinkers. (Those who have a glass of wine at the family meal for Thanksgiving or Passover or Christmas, or a celebratory glass of sparkling wine on New Year’s Eve.)
And definitely not the “40% of [U.S.] adults don’t consume any alcohol at all.” There is a compelling reasons why they aren’t wine drinkers (e.g., religious belief, health reasons, household income limitation). Those are consumption impediments your marketing cannot resolve.