I. Introduction
This paper explores regional consumer-based brand equity (CBBE) in the specific context of U.S. wine businesses in North Carolina, an emerging wine market. The concept of brand is studied at the regional (state) level rather than at the individual firm level, because the focus in on economic development of the statewide wine industry. The state industry in 2017 has close to 200 wineries, a major increase from 10 wineries in 2000. With this expansion, North Carolina is increasingly concerned about developing its wine brand image and is striving to understand those factors that influence the regional reputation of its wine industry. State-sponsored strategies have been instituted with an eye to “buy local” movements, such as “Got to be NC,” and are applied to wine marketing as well as to other agricultural goods. Interfirm cooperative efforts are increasing to enhance the visibility of NC wines through product quality management and pursuit of wine awards (Canziani, Byrd, Bhadury, Troy, and Banks, Reference Canziani, Byrd, Bhadury, Troy and Banks2014).
The current study follows extant logic—that is, that fostering awareness and brand equity of regional wine is useful for increasing the level of sales for large and small wine firms in a geographic area (Bruwer and House, Reference Bruwer and House2003; Bruwer and Johnson, Reference Bruwer and Johnson2010; Lockshin, Jarvis, d'Hauteville, and Perrouty, Reference Lockshin, Jarvis, d'Hauteville and Perrouty2006; Schamel, Reference Schamel2009; Yasin, Norr, and Mohammad, Reference Yasin, Noor and Mohammad2007). Additional consumer indicators, such as subjective wine knowledge, product and experience motives, and future intentions toward regional wine purchases and winery visits are included in the study to gain a fuller picture of the role of regional CBBE.
II. Defining Regional Brand Equity in the Wine Sector
The concept of regional brand equity used in this paper derives from two sources. First, brand equity is treated as a consumer-based perceptual measure that focuses upon consumers’ personal opinions and evaluative judgments of the brand (Keller, Reference Keller1993). Measures of CBBE integrate facets of perceived quality (PQ) and perceived value for cost (PVC), among other items (Aaker, Reference Aaker1992). Aaker (Reference Aaker1992) and Keller and Lehmann (Reference Keller and Lehmann2006) suggest that CBBE signifies value to the consumer and to the firm (and, by extension, to the regional industry).
Second, investigation into regional brand equity benefits from an understanding of place branding, because a wine product's association with a geographical region at best complements and may even supersede the importance of individual firm reputations. Aranda, Gómez, and Molina (Reference Aranda, Gómez and Molina2015) argue that a domain of origin influences the actual quality of the products produced there and operates as signals of quality to consumers. Bruwer and Johnson (Reference Bruwer and Johnson2010) find that, in the case of California wines, consumers use regional information on wine labels to increase their confidence in the quality of a wine. Schamel and Anderson (Reference Schamel and Anderson2003) note that price premia are associated with selected regional reputations in Australia and New Zealand. Yet, there is very limited understanding of how a regional brand operates to influence wine purchase decisions in a younger, developing wine market, such as North Carolina.
The adoption of a place-branding perspective achieves two important goals for an emerging wine region, such as North Carolina: i) preparing the wine region to compete in an interplace market with high barriers to entry due to the historical dominance of existing regional players and ii) providing the impetus for within-region wine businesses and allied partners to cooperate in the strengthening of positive regional brand equity (Hankinson, Reference Hankinson, Kavaratzis, Warnaby and Ashworth2015).
A. The Influence of Regional Wine Knowledge
Given the foregoing rationale for studying regional CBBE, the next step is to consider which types of consumers may be motivated to incorporate recognition of regional brand images in their decision making. Wine knowledge has been studied in relation to the consumer's search for and use of regional brand information. Bruwer and Buller (Reference MacDonald, Saliba and Bruwer2013) report that consumers with higher levels of objective knowledge do not use country-of-origin cues more than consumers with low objective knowledge do, but other research has demonstrated that such variables as self-reported subjective knowledge can influence consumer responses to brands (Canziani, Hwang, and Byrd, Reference Canziani, Hwang and Byrd2016; Graeff, Reference Graeff1997). A three-item measure of subjective regional wine knowledge serves as a primary antecedent of regional CBBE in the model along with regional affiliation—that is, being a “local,” in-state resident versus an out-of-state consumer.
B. Product and Experience Motives in Wine Consumption
A typical North Carolina winery produces 5,000 cases or less annually. For the small entrepreneur seeking efficient distribution tactics, attracting visitors to the tasting room is a feasible strategy due to the advancement of wine tourism as a field. Wine tourism grants wineries a key opportunity to lower the cost of distribution through direct sales and to enhance perceived value by providing products and experiences during the visit (Fernandes and Cruz, Reference Fernandes and Cruz2016). Service experiences are found to be significantly related to behavioral intention toward wine purchases in tasting rooms (O'Neill, Palmer, and Charters, Reference O'Neill, Palmer and Charters2002). In the present study, product motives refer to consumers’ being motivated to visit wineries to buy or consume regional wines. Experience motives relate to the pursuit of a specific set of four ancillary services provided by wineries in support of product purchases: i) learning about wine, ii) touring a winery, iii) speaking with the winemaker, and iv) visiting wine trails within the region.
CBBE has been used to project future brand purchase behavior, and this effect is applicable across a variety of product classes (Netemeyer, Krishnan, Pullig, Wang, Yagci, and Dean, Reference Netemeyer, Krishnan, Pullig, Wang, Yagci and Dean2004). If regional brand equity is a driver of NC wine purchase behavior, it may do so by inspiring product and experience-related winery visits and, thus, related purchases. Therefore, in our model, regional CBBE is anticipated to influence consumer product and experience motives (Lockshin et al., Reference Lockshin, Jarvis, d'Hauteville and Perrouty2006) and, indirectly, consumer behavioral intentions related to NC winery visitations and wine purchases. The base model is depicted in Figure 1.
Model of Consumer Intentions toward Regionally Branded Wine
III. Methods
Visitor data are collected via intercept method by trained researchers at 23 NC wineries, using a self-administered questionnaire that includes demographics and perceptions of motives and intentions toward NC wines. The sampling frame of 117 NC wineries listed with the NC Department of Commerce in 2012 is refined and stratified to balance across winery location, size, grape variety, American Viticulture Area (AVA), and types of on-site tourist services. A sample of 832 visitors represents an 81 percent response rate of visitors approached at the wineries. The dataset is refined to 658 usable surveys for the current analysis. SPSS™ version 23 and SmartPLS™ version 3 are employed in analyzing the model presented.
IV. Findings
A majority of visitors are from North Carolina, with self-reported limited subjective knowledge about NC wines and wineries (Table 1). Other demographics are similar to those in extant studies (e.g., older, largely female, having comparatively higher education and income levels).
Demographic Profile of Respondents (n = 658)
Multiple items are used for each of the latent variables in Figure 1, except for “in/out of state.” Table 2 provides these items with their related means and standard deviations; all are collected using 5-point scales from 1 to 5, where 1 represents the negative pole of the response. It is important to recognize that all items are specifically worded to relate to NC wines and wineries to clearly surmise the model's relevance to the NC wine industry. Except for regional wine knowledge, most of the mean ratings are above the midscale point of 3.0.
Item Composition of Model Factors (5-point scales)
Analysis of relations among the variables shows some significant results, as seen in Table 3 and Figure 2. All item loadings are consistent with reliability and validity criteria standards commonly adopted for partial least squares path measurement models. Respondent subjective knowledge about regional wine has a slight influence on perceived regional wine brand equity; the latter, in turn, has a slight influence on winery experience motives and a moderate influence on product search motives. Only product motives have a significant effect on intentions to visit regional wineries and buy regional wines.
R 2 Results for Model
Structural Estimates (Hypotheses Testing)
*Decision is supported if critical t-value is greater than 2.58 (p < 0.01).
V. Conclusion and Future Research
Regional brand equity in this case is seen to influence respondents’ motivations to buy and consume regional wine and, indirectly, their future intentions to visit regional wineries to pursue consumption goals. These findings are consistent with the literature, in that regional brand equity can have significant impacts on important consumer motivations and behaviors affecting wine sales (Duhan, Kiecker, Areni, and Guerrero, Reference Duhan, Kiecker, Areni and Guerrero1999). Moreover, the results confirm the important role of the tangible product—that is, taste and tasting are primary motives and drivers of interest in wine (MacDonald, Saliba, and Bruwer, Reference MacDonald, Saliba and Bruwer2013).
In contrast, the role of experiences in selling wine is not as clear cut. The results show a weaker relationship between regional brand perceptions, experience motives, and intentions to visit or consume NC wine products. A majority of U.S. wineries are small or medium-sized businesses with limited investment capital, yet there is evidence of service or scope creep whereby wineries are increasing service offerings and staged experiences for visitors with the hope of positive returns. Although expanded product mixes correlate well with the ideal of an experience economy and regional brand equity seems positively aligned with wanting winery experiences, we do not find experience-motivated consumers to be intentionally acting on these motivations in ways that would increase revenue.
We also find that the degree of knowledge a consumer reports having about these regional wines is not a major influence on regional brand equity, leaving open the question as to what drives brand equity formation for emerging regional wine markets. At least two concerns are at play in rethinking the role of wine knowledge in understanding regional CBBE. One is the degree to which emerging markets simply lack the depth of information that traditional markets enjoy; for example, there is less availability of expert ratings and blogs about the wine region and very limited inclusion in wine books or in other sources, such as wine seminar materials. The second concern is that knowledge about wine in general or about the traditional wine terroirs may also influence regional brand equity in the wine industry. It is possible that respondents who have greater general knowledge might have different beliefs about emerging wine geographies and that emerging wine sectors might not pass the test for these wine consumers.
Although a majority of respondents are in-state residents, consumer affiliation to the product point of origin (in-state or out-of-state consumer) has a negligible impact on regional CBBE. Consumer propensity for local consumption may be still be an important factor, because the opportunity to sell to local consumers is particularly strong for agricultural products (Tootelian and Segale, Reference Tootelian and Segale2003). Future research efforts might apply a self-reported scale on commitment to buying local to ferret out additional attitudinal information on propensity for local consumption.
In terms of other future research, work on place branding suggests that dominant industry partners can exert exceptional influence on perceptions of place; for example, perceptions of a few wineries in a region may compose the bulk of effects on regional brand equity (Pike, Reference Pike2005). This occurs if consumers form opinions about a wine region that are biased due to overestimating the probability that all regional wines are like the one or two they have sampled from the area. Also, as in the franchise industry, where global franchise brands are affected by local franchisee behaviors (Nyadzayo, Matanda, and Ewing, Reference Nyadzayo, Matanda and Ewing2011), the citizenship behavior of area wine firms is a critical factor in the economic development of a wine region. These critical issues may be explored further to better understand the role of regional brand development in the wine sector.
