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Using the tasting room experience to create loyal customers
Linda I. Nowak and Sandra K. Newton
Sonoma State University, Rohnert Park, California, USA
Abstract
Purpose – The purpose of this research is to determine if positive affect, in combination with product quality, fair pricing, and customer-focused operations leads to higher levels of customer satisfaction and repurchase intentions. Design/methodology/approach – A total of 89 undergraduate and graduate business students, ages 23 to 59, each visited a winery they had never visited before. Afterward they filled out a questionnaire evaluating the winery on product quality, fair pricing, feelings of commitment towards the winery, positive emotions felt, preference for wine, overall customer satisfaction, and repurchase intentions. Data were analyzed using multiple regression. Repurchase behavior was the dependent variable. Findings – Product quality, positive emotions felt, preference for wine, customer commitment, and fair pricing were all significant predictors of repurchase intentions. Research limitations/implications – The findings are based on a small sample of 89 business students. Future research could replicate this study with larger samples of both marginal and core wine drinkers. Practical implications – The results of this research empirically support the anecdotal evidence that through positive tasting room experiences, wineries can cultivate relationships with customers that build commitment and loyalty. The quality of the wine is not everything. Customers have many choices. The total experience at the winery, one in which the customer feels a sense of belonging and camaraderie and in which the experience is fun or exciting, contributes to repurchase intentions. Originality/value – This is the first time that customer emotions have been measured after a tasting room visit and then tested for their relationship with repurchase intentions. Keywords Customer loyalty, Experience, Customer satisfaction Paper type Research paper

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Introduction How does a winery successfully compete in the highly competitive global wine industry? Two important keys are understanding and responding to the wishes and needs of the purchaser, whether it is the end consumer, the retailer, or the distributor. This research focuses on the tasting room experience with the end consumer; on building loyal wine drinkers that will continue to purchase the winery’s brand after the tasting room experience is over. By getting to know the end consumer, wineries can learn how to meet the customers’ expectations for the type of tasting room experience that will lead to positive word of mouth, wine club memberships, and repeat purchases. Previous research has shown that perceived wine quality along with consumer perceptions of fair pricing relative to quality are two critical success factors for building brand equity (Nowak and Washburn, 2002). But what else can the winery do to differentiate itself from the competition? How does it create loyal customers? One way is to build strong emotional connections with the consumer. Most wineries understand intuitively that it is important to connect emotionally with consumers, but many do not know how to put the principle into practice. Instead, they neglect the opportunity to make emotional connections and focus their attention

International Journal of Wine Marketing Vol. 18 No. 3, 2006 pp. 157-165 # Emerald Group Publishing Limited 0954-7541 DOI 10.1108/09547540610704738

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on marketing their wines using traditional tactics such as attractive label designs, Wine Spectator scores, and appellations of origin. While all of this is going on, the wine industry continues to become increasingly competitive, with fine wines available from all over the world at reasonable prices, forcing bankruptcies, and buy-outs. If any business is successful at forming a positive emotional bond with the consumer, it has a competitive advantage. Some marketers refer to this as ‘‘share of heart’’. Day (1989) describes how important it is to appeal to the consumer on a personal and emotional level. She talks about creating products and then ad campaigns that will ‘‘win the hearts’’ of the customer. Share of heart leads to market share. But other factors contribute to market share also. For example, new buyers can be attracted to a wine simply through special promotions (e.g. price discounts, coupons), but marketers warn that often these special promotions do not create brand loyalty (Schultz and Robinson, 1986). Deal-prone consumers can comprise a significant portion of a firm’s market share, but how long will they be there? Building share of heart is a good defense against aggressive promotional efforts (e.g. price deductions) by other wineries. Emotion marketing is neither quick nor easy to employ, but the results can be measured in loyal customers who spend more and stick with the brand longer (Robinette et al., 2002). Loyal customers make a difference in the bottom line. Forming an emotional bond with a customer involves showing them that the winery truly cares about their customers as people. Product quality and fair pricing still form the foundation for a successful brand, but the emotional components of a brand can be effective in differentiating a wine from its competitors. Emotion marketing is not just a heart-tugging advertising campaign that is eventually forgotten. It is a total company effort by employees, events, and communications (e.g. events, phone calls, e-mails, and newsletters) to give the customer a tremendous sense of belonging and camaraderie. The tasting room experience is a perfect place to start building this relationship. Consumers are emotional beings and they strive to meet their higher–level needs in every aspect of their lives (Robinette et al., 2002). We see consumers trying to meet their emotional needs through their consumption choices, through where they dine out, what they wear, what they drive, and of course, their alcoholic beverage choices. Oliver et al. (1997) found that positive emotion (positive affect) had a direct and significant effect on customer satisfaction which then leads to purchase intention. Research has shown that other factors also contribute to repurchase or future purchase intentions. A strong emotional marketing campaign cannot make up for poor quality, lousy service, or too high of a price (Robinette et al., 2002). Excellent customer service becomes a key factor in pleasing customers and gaining a share of their heart. Customer contact employees should be empowered to act quickly to solve customer problems, answer questions, and make the customer feel appreciated. Charters and O’Neill (2001) found that dealing with customers in a speedy, sensitive, and sympathetic manner is more important than the facilities, the decor, or the wine offered for tasting. Customer satisfaction has a significant and positive effect on the profitability of a firm (Yeung et al., 2002). Satisfied customers return to the winery, bring their friends, and spend more on both wine and wine accessories than typical first time visitors (Dodd, 1999). Positive affect and its relationship with customer satisfaction and purchase behavior have not been researched in the wine industry. The purpose of this study is to determine if positive affect, in combination with product quality, fair pricing, and customer focused operations lead to higher levels of customer satisfaction and repurchase intentions.

Customer satisfaction Researchers and practitioners have been proposing that merely satisfying customers is not enough to significantly increase behavioral outcomes such as customer retention, word of mouth, and profitability (Keiningham et al., 1999). In fact, Yeung et al. (2002) analyzed customer satisfaction data and financial performance data from approximately 100 firms over a five-year period and found that there is a direct linear relationship between customer satisfaction and profitability. In other words, with increased satisfaction came increased profits. Anderson et al. (1994) found that ‘‘high’’ levels of customer satisfaction are correlated with superior economic returns. Some researchers and practitioners call extremely satisfied customers ‘‘delighted’’ customers (Keiningham et al., 1999). It has been proposed that customers have a range of satisfaction, referred to as the ‘‘tolerance zone’’ and within this range of satisfaction differences between firms does not produce much change in customer behavior, and therefore profitability. However, it is believed that moving satisfaction scores beyond the upper threshold of this zone of tolerance creates exceptional results. For managers, this level of customer satisfaction is commonly referred to as ‘‘customer delight’’ (Keiningham et al., 1999). Schlossberg (1990) also proposed that merely satisfying customers is not enough, that you really need to delight them in order to build loyalty and loyalty-driven profits. Whittaker (1991) proposed the same concept when he said ‘‘although the elimination of defects is critical to continuing customer satisfaction, increased productivity, and decreased costs, it is customer delight that is the key to survival in today’s markets’’. Jones and Sasser (1995) found that Xerox Corporation’s ‘‘totally satisfied’’ customers were six times more likely to repurchase the company’s products over the following 18 months than customers who rated themselves as merely ‘‘satisfied’’. Roche Diagnostics Systems, a division of F. Hoffman-La Roche Ltd. health care, had rarely met its profit objectives for nearly 20 years (Keiningham et al., 1999). Roche conducted focus groups with its customers to determine their weaknesses in the areas of product quality and customer service. It then adopted a strategy focused on moving customers’ reported levels of satisfaction beyond ‘‘satisfied’’ to the ‘‘very satisfied’’ level by making improvements in those areas. Roche found that by improving the quality of customer interactions with their business (e.g. toll-free telephone support and ordering assistance) that the number of ‘‘very satisfied’’ customers increased, as did sales and profits (Keiningham et al., 1999). The preceding discussion regarding the development of ‘‘very satisfied’’ customers and the relationship with increased profits and sales leads to the development of the first hypothesis relating to the wine industry. H1. The higher the level of customer satisfaction with a wine brand, the higher the reported repurchase intentions by the consumer.

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Positive affect Richins (1997) determined that there were over 17 consumption-related emotion sets. They are anger, discontent, worry, sadness, fear, shame, envy, loneliness, romantic love, love, peacefulness, contentment, optimism, joy, excitement, surprise, guilt, and pride. He developed the consumption emotion set (CES), which identifies emotions that are relevant to consumers. Delight is considered to be a descriptor of the ‘‘joy’’ cluster. Therefore, the two consumption-related emotion sets that may be appropriate for a study relating to wine consumption are ‘‘joy’’, which is comprised of the descriptors of

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happy, pleased, and joyful and ‘‘excitement’’ which is described as excited, thrilled, and enthusiastic. These descriptors could easily be included in survey questions. Other feelings that may lead to positive emotions and which may be associated with ‘‘share of heart’’ are ‘‘sense of belonging’’, ‘‘sense of being appreciated as a customer’’, ‘‘sense of being like family’’. The customer interface during the tasting room experience is an area in which a winery can differentiate itself from the competition. Successful firms ‘‘realize that every interaction with the customer can make or break the relationship’’ (Brown, 2003). Customer contact employees need to understand that often they are the key to delighting the customer and creating lasting, positive memories. Tasting room staff can never have a ‘‘bad day’’ or appear snooty. Not enough staff to handle a surge of customers in the tasting room can be the kiss of death, leaving the customer with a feeling of ‘‘just being one of the crowd’’ and not ‘‘appreciated’’ by the winery. Commitment is defined as a consumer’s belief that an ongoing relationship is worth investing time, energy, and money (Sharma and Patterson, 2000). A wine consumer feels a sense of commitment or loyalty to a winery if he or she feels a strong sense of belonging; feels like part of the family. Helping a visitor feel special during the tasting room visit may help the consumer develop a special attachment to that particular winery. Hirschmann and Holbrook (1982) proposed that extremely positive, consumption-related emotions are likely to lead to very high levels of commitment and repurchase intentions. Therefore: H2a. H2b. The higher the level of positive emotion associated with a winery, the higher the level of commitment to the brand, and The higher the level of positive emotion associated with a winery, the higher the level of repurchase intentions.

Oliver et al. (1997) found that positive emotion (positive affect) had a direct and significant effect on customer satisfaction which then leads to purchase intention. Therefore, the following hypothesis is developed for wine consumers: H2c. The higher the level of positive emotion associated with a wine brand, the higher the level of customer satisfaction.

Product quality Nowak and Washburn (2002) found that among wine consumers, product quality is the strongest predictor of brand equity. Anderson et al. (1994) found that quality was a significant predictor of customer satisfaction and that this relationship, over the longterm, was an important predictor of superior economic returns through repeat sales. Novice and expert wine consumers will assess quality using a variety of cues: their senses, price, brand name, awards, ratings, growing region, the winery’s reputation, and recommendations from other wine drinkers. For some novice wine drinkers, a sweet wine such as a white zinfandel might be considered a wine of good quality because it is enjoyable to drink, has a pretty label, and is a brand name they recognize. A novice wine drinker may not be able to appreciate the taste of a $100 bottle of awardwinning zinfandel, but the price would certainly hint at its quality and act as a substitute for a sophisticated palate. In fact, Lockshin and Rhodus (1993) found that there was a positive relationship between price and perceived quality by consumers. Consumers were either unable or unwilling to trust their own palates. However, they found that as a consumer’s knowledge of wine increases, the reliance on external cues

to determine quality tends to decrease. Regardless of how a wine consumer assesses quality we propose: H3. The higher the level of perceived wine quality, the higher the level of repurchase intention.

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Pricing Perceptions of fair pricing have been found to be highly significant predictors of brand equity and repurchase intention in the wine industry (Nowak and Washburn, 2002). There are three general types of pricing strategies: skim, penetration, and neutral (Holden and Nagle, 1998). Wineries use all three of these strategies. Skim pricing is the strategy of pricing a wine higher than its competitors. Some wineries make a conscious decision to deliberately price above the market average in order to indicate superior quality or even luxury. The wineries that are able to successfully use this strategy do so because of the wine’s reputation for extremely high quality, prestige in ownership, or collectability. When a winery decides to use penetration pricing, it is a decision to price the wine lower than the competition and low relative to the wine’s value, in other words many wine consumers would consider it a ‘‘good deal’’. Neutral pricing by a winery would be an attempt to eliminate price as a decision factor for wine consumers by pricing neither high or low relative to the competition. This is the strategy that most wineries are currently using; therefore: H4. The higher the perception of fair pricing (neither too high or too low for the quality), the higher the level of repurchase intention.

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Methodology Participants were asked to visit a winery they had never visited before and then fill out the questionnaire evaluating the winery on product quality, fair pricing, feelings of commitment towards the winery, positive emotions felt, overall customer satisfaction, repurchase intentions, and the degree to which they preferred wine over other beverages. The participants were asked to visit the wineries on a week-end in order to control for volume of traffic as a determinant of customer satisfaction. The participants were also asked their ages, their gender, and approximately how many wineries they had visited in their lifetime. Individuals participating in this study were 89 MBA students from a public university in California. Their ages ranged from 23 to 59 and the sample included 39 men and 50 women. The number of times they had visited wineries in their lifetimes ranged from 0 to 50, and the mean number of visits was 13.6. All had easy access to local wineries. This was a class assignment. Students chose to visit either wineries or restaurants. Out of 120 students, 31 chose to visit restaurants, usually because they did not drink wine. According to Day (1989), ‘‘measuring share of heart requires measuring the consumer’s product commitment, the nature and strength of the emotional bonds to the brand’’. Commitment to the winery was measured with three items, adapted from research conducted by Meyer and Allen (1991) and Bansal et al. (2005). Using a sevenpoint Likert-type scale, the scale was anchored with strongly disagree on one end and strongly agree on the other. The Cronbach Alpha score for this construct was 0.923. The strength of the emotional bond was measured using two of Richins (1997) consumption-related emotion sets, joy and excitement. The components of joy and excitement are happy, pleased, joyful, excited, thrilled, enthusiastic, and delighted. The participants were asked to indicate, using a seven-point semantic differential scale,

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how often they felt these emotions during their visit to the winery (never . . . always). The Cronbach Alpha score for emotions was 0.948. Three items were used to measure perceptions of fair pricing, adapted from research conducted by Nowak and Washburn (2002). The Cronbach Alpha was 0.928. Preference for the product category and product quality were measured with three items each and were developed by the researcher for this study. Preference for the product category was measured with the following statements: ‘‘In general, I like drinking wine’’, ‘‘Wine is usually my beverage of choice’’, and ‘‘Wine is not my beverage of choice’’. The Cronbach Alpha score was 0.933. Product quality was measured with the following items: ‘‘Overall, I consider the quality of the wine to be excellent’’, ‘‘I believe that the general quality of the wine is low’’, and ‘‘The quality of the wine is generally (very poor . . . excellent)’’. The Cronbach Alpha was 0.898. All used a seven-point scale. The four customer satisfaction items were based on a scale developed by Oliver and Swan (1989), using a seven-point semantic differential scale. The Cronbach Alpha score was 0.935. Repurchase intentions was measured with four items. The questions were based on scales developed and used by Oliver et al. (1997). The Cronbach Alpha was 0.959. Results H1 through H4 were tested using simple regression. H1 proposed that the higher the level of customer satisfaction with a wine brand, the higher the reported repurchase intentions by the consumer. Participants were asked how they felt about the winery, both the wine and its tasting room. Results suggested that there was a significant relationship between the level of customer satisfaction and repurchase intentions. The simple regression indicated an adjusted R square of 0.498, an F score of 88.28, at a significance level of 0.000. H2a and H2b proposed that the higher the level of positive emotion associated with a winery, the higher the level of commitment to the brand, and the higher the level of repurchase intentions. Level of positive emotion felt during the visit to the winery was a significant predictor of both commitment and repurchase intentions. In testing positive emotions as a predictor of level of commitment, simple regression results indicated an adjusted R square of 0.268, an F score of 33.15, and a significance level of 0.000. For repurchase intentions, the adjusted R square was 0.493, the F was 86.44, and the significance was 0.000. H2c proposed that the higher the level of positive emotion associated with a wine brand, the higher the level of customer satisfaction. This hypothesis was supported with an adjusted R square of 0.534, an F of 101.81 at a significance of 0.000. H3 proposed that the higher the level of perceived wine quality, the higher the level of repurchase intention. H3 was supported with simple regression analysis, with an adjusted R square of 0.593, an F score of 129.26 at a significance level of 0.000. H4 was also supported. The higher the perception of fair pricing (neither too high or too low for the quality), the higher the level of repurchase intention. The adjusted R square was 0.222, the F was 26.12, and the significance was, once again, 0.000. The variables that had been independently tested as predictors of repurchase intentions were then entered into a multiple regression model in order to test for the overall strength of the predictability of these factors in consumer repurchase intentions. The dependent variable was repurchase intentions and the independent variables were customer satisfaction, product quality, positive emotions, fair pricing, commitment, and preference for the product category. A correlation matrix using all

six of the independent variables was created and customer satisfaction was found to be correlated with other variables (see Table I). The initial multiple regression model found customer satisfaction not significant at 0.821; therefore, a second model was run without customer satisfaction. The results of that model are in Table II. The model predicted approximately 78 per cent of the variance in repurchase intentions. The F score for the model was 62.230 at a significance level of 0.000. Discussion The results of this research empirically support the anecdotal evidence that through positive tasting room experiences, wineries can cultivate relationships with customers that build commitment and loyalty. Building deeper relationships with the customer lead to long term, profitable relationships through continued patronage. Carefully orchestrating a tasting room experience that creates a positive experience for the customer is a critical component of future repurchase intentions. Previous research into what drives consumer behaviors supported the premises tested in this study. According to Anderson et al. (1994), ‘‘loyal and satisfied customers are a revenuegenerating asset to the firm that is not without cost to acquire, retain, and develop’’. Robinette et al. (2002), emphasize that lifelong loyalty can be created by emphasizing the emotional component of human interactions, such as the importance of friends and family. These authors also stressed that everyone who interfaces with the customer must show that they truly care about them as people. The goal is to help the customer feel a sense of belonging and camaraderie. This requires careful training and monitoring of the tasting room staff.
Fair pricing Fair Pricing Customer commitment Product quality Customer satisfaction Preference for wine Positive emotions 1 0.306* 0.473* 0.417* 0.032 0.303* Customer commitment Product quality Customer satisfaction Preference for wine Positive emotions

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1 0.434* 0.578* À0.044 0.525*

1 0.618* 0.221** 0.494*

1 0.099 0.734*

1 À0.038

1

Notes: *Pearson correlation is significant at the 0.01 level (two-tailed); **Pearson correlation is significant at the 0.05 level (two-tailed)

Table I.
Correlation Matrix

Beta Product quality Positive Emotions Preference for wine Customer commitment Fair pricing 0.574 0.437 0.147 0.198 0.147

t-score 6.296 5.862 3.060 3.062 1.825

Significance 0.000 0.000 0.003 0.003 0.072

Table II.
Multiple regression predictors of repurchase behavior in wine consumers

Notes: F ¼ 62.230; adjusted R square ¼ 0.777; significance ¼ 0.000

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Kumar et al. (2001), in their article on the antecedents of customer delight, recommend that organizations try to find a very meaningful way to delight customers ‘‘through an on-going activity which physically and/or mentally engages the customer with the firm or its products and services’’. In other words, the first visit to the winery is just the beginning of the relationship. Special invitations and seasonal events should keep the customer returning. Wineries can also personalize the relationship by sending birthday greetings with gift coupons to its wine club members in order to get them to return to the winery and to convey the message that the winery really cares. Another way to build a sense of belonging in wine club members is to get them involved in an activity that makes them feel good about their relationship with the winery perhaps by asking them to help serve their wine during a fund-raising event. Participants can be given free wine for their efforts. Goodwin and Ball (1999) describe how to build customer loyalty by a ‘‘deep commitment to the execution of a customer intimacy strategy’’. This means really understanding the customers and their needs and fixing any problems that may ‘‘push the customers toward the competition’’. These authors encourage organizations to become ‘‘customer-centric’’ in all of their internal and external operations. In conclusion, this study focused on the tasting room experience and how not only product quality and fair pricing build loyalty. Wine consumers have a vast array of choices and there are many quality wines being produced worldwide. Creating an experience in the tasting room that is fun or exciting builds customer loyalty and future sales. Through careful research into the needs and wants of the wine consumer, wineries can focus their efforts on improving customer satisfaction in all areas of the customer’s experience.
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