Download The Analysis of Liquor Group Purchase Marketing

EASTERN ACADEMIC FORUM
The Analysis of Liquor Group Purchase Marketing
DIAO Shangdong, LIU Yunzhong, KE Youmeng
School of Economics and Management, China University of Geosciences, P.R. China, 430074
Abstract: Group Purchase as a new e-commerce model has become the main mode of product
marketing methods, with the backgrounds of internationalization of resources and with globalization of
the economy and development of knowledge economy, in particular, with the virtual network
environment being constructed and becoming perfect. At the same time, Group Purchase has a unique
advantage that it not only ensures service and quality but also to provide consumers with the lowest
price. These advantages make it possess huge development potential and opportunities. This paper
attempts to introduce a specific case: Liquor Group Purchase Marketing. I study the consumer's point of
view and exploring the impact of consumer participation in the Group Buy marketing model factors in
order to provide a theoretical reference and evidence for Group Purchase marketing practices.
Keywords: Group Purchase, Liquor Group Purchase, Mode of Group Purchase
1 Introduction
Group Purchase essentially refers to that many consumers form a team and they negotiations with the
business so that they all can obtain the product at the lowest price. Group Purchase is an e-commerce
mode which including three forms. They are building a group by consumers their own or by business as
well as professional site. Although Group Purchase is not a mainstream now, it has great potential and
opportunity to become the mainstream. The purpose of Group Purchase is that the consumers want to
improve bargaining power with merchants so that they can obtain the product at the lowest price, at the
same time, they can reduce the circulation of the middle. At present, Group Purchase has a great concern
by consumers and manufacturers.
2 The Present Condition and Development of Group Purchase in China
According to domestic authority website statistic, until October 2011, the number of Group Purchase
reached 5723 in China. In September of 2011, the total sales were 2.051 billion Yuan, increased by
9.86% month-on-month, which exceeded 267 million dollar compared to the same period in the United
States (equivalent to 1.698 billion Yuan, increased by 12% month-on-month). The "save money"
purpose of Group Purchase is that no mater what size the goods can be consumed or purchased. At the
same time, Group Purchase also extends to various areas, such as Personal consumption, healthy
physical examination, insurance, tourism, education training and all kinds of beauty, fitness, relaxation
and so on. With the generation of the electronic network and the richness of marketing activities,
especially in the new economic era, the attention on costs and benefits pays of market and sales channel,
consumer and product manufacturers begin to try a group mode in the circulation of commodity trading.
For example, the value of Groupon company had soared to $1.35 billion in less than 2 years.
The Chinese electronic commerce development is in its early age, successful Group Purchase, on one
hand can help businesses and consumers, on the other hand can develop huge market through the Group
Purchase activities. At present, China Group Purchase market is: firstly, the competition is fierce and
balance. Its development tends gradually smooth development and rational growth. The number of
Group Purchase net is on growth in between 15% and 30%, and at the same time, the resources of
Group Purchase are preference for the competitive enterprise to form barriers. Secondly, the scale is
becoming concentrate. Because of the service and brand recognition by the consumer, the Group
Purchase activities are monopolizingd by a few big famous brands. Thirdly, it is towards Making
Network Social and the future development direction of "O2O". "O2O" that this online combining
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off-line mode of electronic business affairs, technology applicants in the field of SoLoMo (Social, Local,
Mobile), which will improve the influence of Group Purchase in the public and enrich the consumer
market and service.
By the marketing of this new marketing mode (Group Purchase) enterprises expand their commodity
circulation channels and help themselves to expand their product marketing ability and increase the
market share. Due to Group Purchase activity can reduce the intermediate of sales process from a
variety of ways so that it reduces the cost of product marketing. Group Purchase activities will
maximize the advantages and benefits of manufacturers and consumers. Consumers get low product
prices for the reason that product procurement cost and time have been saved. Group Purchase change
the situation that goods and services was limited by region or natural condition and it solve the problems
caused by the poor information. The social significance of Group Purchase is not only reflects the value
of the interests of the goods and services but also a conservation and a effective allocation of resources.
It can get the maximum benefits for the majority of the masses.
The features of Group Purchase are as follows: low price and the product quality and service are ensured.
By Group Purchase activity business builds a platform. This platform can not only meet the consumer's
wishes and preferences but also give businesses an opportunity to bring a plenty of clients. The design,
initiated, operation, control and implementation of the activities are the link of the Group Purchase. It
has the volume trading and low prices and enjoys the convenience bringing by Internet network so that
consumers can break through time and space constraints. In a word, a mode of success is inseparable
from a success of the product transactions and a direct transfer of interest.
Due to Group Purchase is developing now, there are some problems in it: This activity is intense
competitive and has a harsh operating environment; fraud be exposed from time to time; product quality
sometimes can not be guaranteed; important information of customers disclosure and the amount of
product issues which consumer complaints are increasing. Due to credit risk, regulatory risk, transaction
risk, settlement risk, deception risk and moral risk exist in Group Purchase activities, consumer
participate in Group Purchase for the low price need to choose a platform cautiously. Meanwhile,
authorities and institutions should to take advantage of the management tools and regulations to manage
Group Purchase activities and make standardization for Group Purchase activities. Chinese Ministry of
Commerce should to strengthen supervision and management on Group Purchase activities and work
out the integrity of the qualification as well as the classification standards. Protect the interests of
consumers by means of strengthening the Group Purchase activities regulations.
The development of Group Purchase needs the integration of product distribution channels, so that we
can build a joint system which includes the channel, manufacturer and distributor. We need a wide range
of joint and communication, especially Professional Group Purchase organizations. Only make full use
of the supplier, customer resources and the advantages of existing platform brand to improve the
platform and operating web environment, can businesses and operators enhance their market
competitiveness. In addition, businesses and operators can take follow measures to achieve a good
Group Purchase activity: using electronic technology and network systems as well as service quality to
meet the various needs of customers. At the same time they should take local conditions into
consideration and make sure that their promotion or display goods meet consumers' habits.
3 Liquor Marketing and the Strategies of Group Purchases
The liquor is a typical representative of Chinese wine goods. The liquor is a typical product of the spirit,
the essence of it is a process to satisfy peoples' spiritual world. Meanwhile, liquor marketing has some
characteristics of the time. China's liquor industry is limited by many factors. Such as the gradual
increase in production costs; domestic inflation and monetary policy changes; financing difficulties;
international trade protectionism; the changes of exchange rate restricting the export of Chinese wine
industry.
There are many kinds of liquors in China. Production and the share of the sales are different from one to
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another. But only a few species has been dominated in China liquor market. We can see the annual
liquor sales top ten in the country and different regions in 2010 in Table 1.
rank
1
2
3
4
5
6
7
8
9
10
Table 1 Annual liquor sales top ten in the country and different regions in 2010
China
North China
Northeast
East China
South China
Southwest
Wuliangye
Hongxing
Maotai
Wuliangye
Wuliangye
Wuliangye
15.08%
30.48%
13.09%
19.36%
19.76%
16.76%
hongxing
wuliangye
jianzhuang
maotai
maotai
maotai
maotai
maotai
jinliufu
jiannanchun
jinliufu
jiannanchun
jiannanchun
jingjiu
wuliangye
gujingong
jiannanchun
luzhoulaojiao
jinliufu
jiannanchun
luzhoulaojiao
luzhoulaojiao hongxing
shixiantaibai
jingjiu
jinliufu
gujingong
xielangtai
wanjiu
xijiu
luzhoulaojiao shuijinfang
hongxing
wuliangchun baofeng
liuyanghe
gujingong
gujingong
langjiu
shuijinfang
yangliuwan
jiangkouchun
shuijinfang
niulanshan
ningchenglaojiao jinliufu
quanxing
guizhouchun
langjiu
luzhoulaojiao yushu
gaolu
luzhoulaojiao yaxijiao
Source: From the Chinese liquor market research data.
Northwest
Wuliangye
15.59%
maotai
yilite
xiagong
jiannanchun
gujingong
yingchuan
xifeng
langjiu
ningxiayan
Above tells us that from 2006 market share of Chinese liquor concentrated to the famous wine. In
different regions, different liquor brand has different recognition level.
Reviewing of the rise and fall of Chinese liquor market from 1991 to present, we found that it is a test
for the liquor brand.
The famous wine companies take advantage of the profits and taxes to enhance their core
competitiveness and make use of integration advantages to develop high-end goods. By means of
history and cultural influence as well as technological innovation and brand building, Wuliangye,
Maotai, Jiannanchun, Luzhou, Xinghuacun and Gujing and other famous liquor business ranked among
the six strong in interest and taxes during the years 2003 to 2005.
In 1991-2006, China's wine industry broke through the restriction of repeatedly tax policy and
experienced the impact of advertising standard king. At the same time, it resisted the interference of
hype and experienced extrusion by other interbank capital. In the process of liquor marketing, we carry
out promotional activities by determining the marketing positioning and unique selling proposition;
formulating marketing strategies and the planning of specific advertising; selecting the appropriate
media.
The rapid expansion and increasingly competitive of Chinese liquor industry promote the brand building
of the liquor industry. The marketing operation is more interested in strategy; marketing strategy has
almost become the core of all strategy. Facing the new situation, liquor marketing needs some new
marketing ideas and strategies. Selecting good dealers and marketing channels is very important, Group
Purchases marketing is a win-win mode for liquor companies and businesses nowadays. According to
Porter's theory of competition: low-cost; centralized strategy, we know that liquor Group Purchases
marketing is the foundation for the sustainable development.
Liquor Marketing Channel broke through the former circulation pattern and changed to composite
channel mode in close connection with the needs and consumer habits of liquor customers. For
low-grade liquor goods, businesses mainly rely on Group Purchases to expand the market capacity; as
for high-grade liquor goods they focused on the channels to cultivate loyal customers. Marketing
structure is the pyramid which ensure that liquor goods easy to buy and easy to sell. To take direct
control of the terminal so that effectively pulling the surrounding market or to choose intensive
controlled wholesale customers and select different types of wholesale customers to build a unimpeded
channel.
Liquor Group Purchases marketing need to respect the laws of the market and get innovation in the
follow aspects: strategic, tactical and product for this new marketing mode. The liquor companies
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should to enhance their brand influence and culture customers who loyal to their brand. Due to Group
Purchases deeply communicate with consumers can businesses spread thought and culture of liquor
consumption and build a new channel to improve competition.
Group Purchases marketing has become a core competitive. In the environment of the fierce competition,
manufacturers and businesses compared with each other on their comprehensive strengths. Liquor
Group Purchases activity not only has a strong leading role but also can create strong spending power.
For this reason, liquor Group Purchases to become normalized is needed.
Liquor Group Purchases has the following characteristics: the scale rapidly expanded; the way of it from
the one-way to two-way; professional organizers and operators emerged; Group Purchases become open
and transparent; competition become more and more fierce; the efficiency of input-output ratio is no
longer high; The costs associated with marketing activities is growing; taking more accurate and unique
techniques is needed. In terms of manufacturers and distributors, to take advantage of the Group
Purchases marketing platform and to improve operational capabilities are required. They should
removed and avoid the limitations of the traditional marketing mode, make use of the characteristics that
the coverage of Group Purchases is large, especially virtual network space is much more superior to
improve the operational efficiency. This is a trend of the further evolution of the Group Purchases.
The marketing strategy and strategic initiatives of liquor Group Purchases are as follows:
(a) To create a marketing alliance with mutual trust and communication;
(b) To enhance their marketing skills by together training;
(c) To create a scientific Group Purchases by means of the terminal;
(d) To enhance the marketing value with the force of brand. In liquor consumption, the consumption of
government affairs is dominant. Make use of the leading role and strong purchase power of Group
Purchase channels to create the core purchase power of liquor.
Successful and effective marketing is a marketing which can change the customer from a passive
consumer to proactive one. The purpose of Group Purchases marketing is to guide customers to take the
initiative to purchase. As for marketing campaign platform, it is best to choose a specific place to
operate. Manufacturers and distributors must provide and create such a place. In this place, they can
guide consumers to participate in Group Purchases activity positively but not passively.
4 Successful Examples
The channel of Group Purchases is shared and open. In the liquor industry's marketing, strong brands
and new entrants can be involved in and succeed. The solution to the problem has nothing to do with
strategic, more of a thinking level and tactical level things. The following successful Group Purchases
marketing case can give us some inspiration.
4.1 I: Honghualang
In the conventional sales channels, Honghualang does not give a large investment, but to use the Group
Purchases marketing channels as the core of marketing activities and deal directly with consumers
through marketing campaign platform. The goal of Honghualang is to find and affect such a crowd who
possesses consumption of high-end liquor capacity and demand or has social resources to dominate the
power and willingness to buy its high-end liquor. It established a unique way which finding the target
consumer group through restaurants, hotel, wine retailers and supermarket. We call this mode as the
"Three-Channel Interaction".
Once the target consumer was found, it influence and guide they and implement the follow-up projects
(end liquor to them free). In such a way it can cultivate the loyalty of the consumers. In addition, it holds
meetings to attract people to taste and appreciate its liquor and organized sponsored activities to boost
its brand reputation.
The enlightenment of this case is: successful marketing should have a strategy and tactics. Enterprises
should both attach importance to the strategic level, price positioning and brand positioning, but also
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concern the operation of the Group Purchases tactical so that they have ability to focus resources on
Group Purchases channels.
4.2 II: 18th Liquor-making Workshop
Goods of 18th Liquor-making Workshop targeted mainly at the mid-end and high-end. The production
and sales of its liquor continues to grow rapidly in recent years. Related product sales data and the
product structure continued to improve which can be found in following performance: the kind of liquor
goods is more than previous kind, the price of those liquor is higher. All of these factors enhanced the
product structure of 18th Liquor-making Workshop and 18th Liquor-making Workshop took the
majority of consumer groups. In 2008 18th Liquor-making Workshop begin to launch Group Purchases
activity. The company attaches great importance to these marketing activities. Every month, the
achievements of Group Purchases would be first notification at the regular meeting in which employees
discuss and practice it and explore a specific mode to operation Group Purchases activity. 18th
Liquor-making Workshop designed a new mode--cooperating with the wine shops to attract fixed
customers of these shops to be their own customer. By cooperate with these shops to transfer our
interests become these shops' interests. The workshop make a concession in a certain sense, while wine
shops provide their advantages at sales and the terminal so that they all can create a rigid demand and
stable prices together.
The reason why 18th Liquor-making Workshop success is that it attach importance to the role of Group
Purchases channels. Each regular meeting, it innovated and planed Group Purchases activities to get
close to the target consumers in a flexible and effective way, as well as make tactics innovation and
develop and research all kinds of consumers. By these efforts it establishes a stable market demands.
4.3 III: Jiuliangye
Due to the restrictions of its scale, Jiuliangye can not make a large-scale national promotion. It improve
its brand by implementing the strategy that putting advertising in CCTV and sponsoring a variety of
popular program, such as "Lecture room", "People", "Discovery" and so on.
At the same time, it expanded its market to ensure market share, but not limited to cultivate a particular
region, For example, it target at the top 100 counties and ensure that each county with annual sales of 2
million. Jiuliangye has a good social relationship with the dealer. It provides huge profits for the dealer
to stimulate the dealers' enthusiasm. These dealers are professional and have much network resources.
At the same time, pay attention to build the franchised store to establish a well-know brand.
The reason why Jiuliangye succeed is that it catches consumers' heart because Chinese always think
“price to determine the value of the wine”. And the CCTV advertising establishes a high degree in
people's awareness. In addition, high price ensure a high profits.
4.4 Analysis
These three cases are of three types of liquor business. Their success is to take appropriate business
marketing strategy. Cases tell us that a successful Group Purchase has no fixed pattern. Their success
can be attributed to the following reasons:
4.4.1 Building a consumer-oriented service system
Demands are critical factors in Group Purchase activities. Therefore, the liquor marketing strategy
should not only attach importance to providing goods, but also attach importance to providing services.
Chinese liquor marketing competition will become a competition on consumer-oriented service. The
service will become a crucial element in the competition of liquor industry.
Liquor companies need to establish service awareness. The establishment of service awareness needs to
do some effort in a long-term. Some of service standards should be built. At the same time, making the
sense of service be reflected in the daily behavior to services for consumers is important.
Companies establish a set of standardized service system to serve for customers and establish an
operable and controllable database to manage customers’ data. By means of visiting customers regularly,
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to communicate with customers and organizing taste activities, companies culture consumers’ loyalty.
After the scale is big enough, increasing profits need rely on management and clear strategic positioning.
Understanding their own strategic and promoting the brand-building, enterprises build a core
competitive. As for asymmetric information, Liquor marketing can grasp the core consumers to achieve
success. The "word of mouth marketing" inspired the marketing of the liquor industry. The rise of so
many liquor brands through the Group Purchase channels tell us that Group Purchase channels can
replace the hotel channels to become the leading channels.
4.4.2 Paying attention to customers' psychological needs
We should put our insight into consumer psychological needs to achieve effective cooperation of the
marketing activities and trading. Make use of "the top radiation" Psychology of Liquor consumption.
Use the core consumer level which is the highest level of "preference" as psychological-oriented. Grasp
the consumers' sense of "respect", "luxury", "health" and break down psychological characteristics, clear
the inner psychological needs of the customers, then, in accordance with different types of psychological
characteristics: high quality, soft and taste, alcohol moderate, we should meet different customers'
demands. Facing consumers' changes in consumer behavior and motives of specific groups of liquor
consumption, we need to find the target consumers, Group Purchase marketing campaign organizers will
take a variety of means to attract people so that the target consumer to complete the transaction.
Building "consumer-centric" system of Group Purchase, organizing a Group Purchase marketing
campaign from a consumer perspective, caring about the consumer's interests and meeting the
consumer's needs for face, health and quality, these are what we should try our best to achieve.
4.4.3 Innovation in the Group Purchase mode
According to the current liquor Group Purchase marketing activities, we can predict the future direction
of the marketing activities. Making resources integration and searching good potential resources of
Group Purchase, companies provide a quality brand to the target consumers. Looking for famous hotels
as Group Purchase channel, liquor businesses should cooperate with hotels deeply and provide
specifically wine to hotels as well as breakdown the liquor marketing channels. In addition, cooperating
with every unit in Group Purchase activities, make use of its advantages and resources (such as capital)
to form other profitability but not only the profit of liquor sales.
In the activities of marketing, we should pay much attention to the emotional and benefice and keep the
"band and resource" mode to build the "dual-core" drive. And at the same time, we should remain the
large customers; develop personalized marketing techniques, strategies and culture loyal partnership.
Keep the eyes on the customers' needs to create more values for consumers. Analyzing the needs of
large customers, we should research and development the appropriate goods and services to meet
specific customer needs to maximize the benefits for customers and at the same time we should develop
appropriate marketing strategies. Changing "sell" to be "serve", businesses make use of brand to
improve goods and services. Liquor Group Purchase marketing activities requires them to improve the
organizational system, sort out the administrative details, search the talent personnel and keep
innovating.
5 Conclusion
Group Purchase marketing mode has a relatively long history, but the development of it is slow. With the
emergence of electronic networks and enrich of marketing activities we started to pay attention to
questions such as: market and distribution channels, the value of consumers and product manufacturers
as well as cost and effectiveness and so on. Nowadays, Group Purchase gradually developed to be a
major marketing method. Among the problems of liquor marketing, high-end liquor marketing is critical.
In recent decades successful case of liquor marketing have a common feature. It is to enhance the
competitiveness of its brand of high-end goods and enhance their brands position in this industry. It is
the trend of product structure of the liquor business that high-end goods become dominant.
Liquor Group Purchase marketing activities required the manufacturers to adjust the product structure
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and demanded the organizers improving the ability of their organizations gradually. Liquor Group
Purchase marketing activities with a strong vitality has a wide channel. Obviously, the competition
among businesses is a competition for resources and brand. As the upgrading of consumption and the
consumers' awareness enhanced, it required enterprises to improve the system of organization, sort out
the administrative details, attract talented personnel as well as maintain innovation.
At the same time, businesses should grab the heart of large customers by developing personalized
marketing techniques and strategies so that to establish a loyal partnership. By means of cultivating
satisfaction and loyalty of customers and with the reputation of the product and a good relationship
between business and government, enterprises implement their expansion. In addition, they can achieve
a win-win on both sides by integrating the resources strengths of both agents and manufacturers.
The mode of liquor Group Purchase marketing makes use of the high-quality channels to service the
target consumer directly. It reflects a value-added of personalized services in liquor sales. At the same
time, to build a system to manage consumers' demands by more convenient and personalized solutions.
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