Amanda Castray and Heather Francis

8/11/2019 Amanda Castray and Heather Francis

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EXPLORING THE ROLE OF RELATIONSHIP MARKETING IN WINE TOURISM

Amanda Castray and Heather Francis

University of Tasmania

Track: Market Orientation and Relationship Marketing

Abstract

Academic researchers have devoted considerable attention over the last two decades todeveloping a comprehensive theory of relationship marketing. Previous research hasaddressed several aspects of a relationship marketing orientation, such as the benefits of consumer loyalty, repeat purchase and positive word-of-mouth, to provide justification for itsusefulness in both theory and practice for contemporary firms. However, these aspects of

relationship marketing have attracted little research attention in the context of the winetourism industry. Furthermore, previous empirical research in wine tourism has largely had ashort-term focus, centered on shaping the marketing mix in an effort to attract consumers to awinery cellar door with little consideration to the elements of the wine tourism experience thatmay facilitate long-term relationships with consumers post-visit. This conceptual paper highlights the relevance of relationship marketing to wine tourism and proposes a researchagenda by which gaps in extant literature may be empirically addressed.

The growing importance of relationship marketing

Traditional marketing theory has been grounded in a transactional framework, where there isa simple exchange of goods or services between a seller and a buyer in a context whereongoing interaction is given little, if any, consideration (Callaghan and Shaw 2001). Suchtheory focused on single transactional exchanges between the firm and the consumer oftenresulting in anonymous, price-based, automated purchasing (Day 2000). However, there is agrowing consensus, by academics and practitioners alike, which questions the continuingrelevance of this transactional approach to marketing given, among other things, theincreasingly competitive marketplace and the growing power of consumers (Berry 2002;Gronroos 2000; Payne 1997).

Current marketing research and theory highlights the importance of forming strong, ongoing

relationships with customers for organisational success (Beverland 1999). The new paradigmof relationship marketing is defined by Gronroos (1994:9) as marketing to establish,maintain and enhance relationships with customersat a profit so that the objectives of the

parties are met. This is achieved by mutual exchange and fulfilment of promises. Inconsidering the scope of relationship marketing, it is often viewed as a whole of firm strategywhich includes the development and management of relationships with a variety of markets(Veloustou, Saren and Tzokas 2002). It is apparent that in current theory and practice,customer markets are now placed at the core of relationship marketing (Christopher, Payneand Ballantyne 1991). Indeed, a relationship marketing strategy is designed to enhance theconsumers chances of satisfaction, loyalty and repeat business through the development of interpersonal ties with the firm (Claycomb and Martin 2002). In this sense, Fournier, Dobscha

and Mick (1998:44) argue that relationship marketing is the epitome of customer orientation.

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Sheth and Parvatiyar (1995) attribute the emergence of relationship marketing as a reaction tothe loss of direct interaction between firms and their customers caused by mass productionand the apparent separation of production and consumption activities formerly closely alignedin the pre-industrial era. Furthermore, it is acknowledged that the transactional approach to

marketing has restricted our understanding of the role of the end user to acceptance or rejection of the offer made and precluded firms from considering the reasons underlying their decision or the formation of their preferences (Wikstrom 1996). As such, there has been a

paradigm shift in marketing, re-focusing on the mutually satisfying, potentially ongoing, buyer-seller relationship as the fundamental approach to marketing strategy (Berry, 2002;Gummesson 2002; Hennig-Thurau, Gwinner and Gremler 2002; Palmer, 2002).

There are many reasons provided in the literature for the emergence of the relationship focus,with the key drivers having foundation in competitive advantage, the growth of services in theeconomy, technological advancement and consumer empowerment (Faus and Quintano 2000;Gronroos 1994; Gummesson 1997; Morgan and Hunt, 1994; Sheth 2002). In combination,these drivers provide a compelling force demanding that marketing theorists and practitionersunderstand and engage in relationships of mutual benefit with a longer term focus.

Relevance of relationship marketing to the wine tourism industry

Recent decades have witnessed a dramatic increase in growth and competitive intensity of thetourism industry, which has, in turn, stimulated recognition of the importance of marketing insetting objectives and associated strategy. Indeed, recent findings published by the AustralianBureau of Statistics (ABS) have observed that tourism provides a strong contribution to our nations economy, with $31.8 billion generated from international and domestic tourism in

Australia, accounting for 4.7% of GDP in 2001 (ABS 2003).

Many regional areas are aiming to build upon the production of regional foods and wines tomarket new travel and destinational experiences in an attempt to lure domestic andinternational tourists (Carlsen, Getz and Dowling 1999). This practical engagement has beencoupled with strong growth in the degree and sophistication of conceptual and empiricalresearch into the field of tourism generally and, more specifically, a recent focus on winetourism (Getz 1999; Hall, Johnson, Cambourne, Macionis, Mitchell and Sharples 2000).

Of particular interest is the parallel growth in, and the complementary nature of, the wineindustry and wine tourism and the effort which has been expended in determining the mosteffective manner by which one may promote the key elements of a winery experience to

potential visitors (Getz, Dowling, Carlsen and Anderson 1999; Macionis 1998). For thetourism industry, wine is an important component of the attractiveness of a destination andcan be a major motivating factor for visitors (Hall et al. 2000). For the wine industry, tourismis a very important way to build relationships with customers who can experience first handthe workings of a vineyard and gain wine education (Jago, Issaverdis and Graham 2000). It isrecognised that substantial benefits are to be derived from increasing cooperation between thewine and tourism industries, at both regional and national levels (Carlsen and Dowling 1999).

Wine tourism or visitation to vineyards, wineries, wine festivals and wine shows for the purpose of recreation (Johnson 1998 cited in Hall et al. 2000) is an essential element in thegrowth and success of many small wineries (Cambourne and Macionis 2000). Wine tourism islargely transient and experiential in nature, with wineries making popular daytrip destinations

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involving visitors making a brief stay at a winery to taste the wine, tour the facility and/or eatat the winery restaurant (Getz 1999). Furthermore, historically, wine tourism has been viewedin practice from a transactional exchange perspective.

Despite this interimistic nature, for small wineries, particularly in emerging wine regions,

wine tourism is often an economic necessity to complement fundamental productionactivities, providing cash flow and assisting to achieve a better sales mix at a higher yield,while at the same time providing opportunities to brand both product and winery successfully(Cambourne and Macionis 2000). Dodd and Bigotte (1997) note that many smaller wineriesin the United States rely primarily on tourism for their survival, reflecting the fact that incomefrom tourists can be a major source of revenue and, further, that this interaction may provideexcellent public relations opportunities which may in turn support the development of moreenduring relationships.

In their study of Margaret River wineries, King and Morris (1997) found that tourism is animportant part of winery operations, reporting the average cellar door sales accounted for approximately 34 per cent of their total sales revenue. In addition to sales revenue, winerytourism offers benefits such as opportunities for market intelligence, the education of customers and the chance to encourage brand loyalty toward a winery to facilitate future

purchase beyond the tourism experience (Dodd and Bigotte 1997; Getz 1999). Significantly,Mitchell and Orwig (2002) suggest that such consumer experience tourism forms animportant part of a firms integrated marketing communications effort, cultivating greater

personal involvement and bonding with a brand and subsequent brand loyalty and positiveword-of-mouth promotion. The benefits associated with ongoing relationships with customersat the cellar door are explicitly noted as being likely to add exponentially to profitability (Sin,Tse, Yau, Lee and Chow 2002). This growing need of many wineries to become activelyinvolved in tourism, combined with the growth in both the wine and tourism sectors in theAustralian economy, has placed greater emphasis on marketing strategies and associateddevelopment of a successful wine tourism industry (Macionis 1999).

Although recognised as an important area in wine marketing, it is apparent that researchershave given little attention to the benefits of retaining consumers beyond the initial visit. In

practice, wine tourism marketing appears to have a short-term, largely transactional focus,with operational goals based on visitor numbers and sales with a limited commitment tounderstanding or meeting customer expectations in the long-term. This is consistent with theconcentration of many researchers and practitioners on how to shape the marketing mix toacquire consumers rather than on how to retain them (Berry 1995). Indeed Dodd (1999)

argues that it is mistakenly believed by many winery operators that the supply of newcustomers is endless. Hall et al. (2000) argue that there is a limited research base fromwhich an understanding of wine tourism and its relationship to broader sales and profitabilityissues may be developed. Illustrating this point, in their study of wine tourism, Ali-Knight andCharters (1999: 8) suggest that research into the needs of wine tourists may enable wineries tosee beyond increasing short-term sales towards ideas of brand awareness, relationshipmarketing and cementing opportunities for repeat sales.

Highlighting the significance of this observation, in Longos (1999 cited in Hall et al. 2000)research of wine tourists in New Zealand, 88 per cent of visitors who had previously visitedthe winery expressed the opinion that they would definitely or were highly likely to make

future purchases of that wine. This indicates the possibility of a continuing post-visitrelationship between the winery and these consumers and an opportunity to develop brand



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loyalty. Interestingly, however, no work has been done to date to confirm, or otherwise, thefindings of Longo's research in New Zealand or any other wine producing country (Hall et al.2000).

As identified, both in theory and practice, little attention has been given to considering the

possible benefits of a relationship marketing orientation in the wine tourism context. The gapin the research is highlighted by Ali-Knight and Charters (1999:8), who suggest that thenotion that cellar door sales lead to higher wine sales when the visitors return home hasconsiderable scope for investigation. Furthermore, Jago et al. (2000) argue that moreresearch is required to assess whether cellar door visitation leads to increased purchase of wines once the visitor returns home. Specifically, there is a need to identify the elements of the wine tourism experience that facilitate post-visit consumer behaviours such as repeat

purchase of the wine, positive word-of-mouth and brand loyalty, in order to assist marketersto better shape the marketing mix at the cellar door (Charters and Ali-Knight 2002; Dodd andGustafson 1997; ONeill and Charters 2000). These aspects of relationship marketing theoryare equally as relevant to the wine tourism industry where it is argued that developing long-term relationships with visitors is an important part of the activities in a winery (Dodd1999:139).

However, it should be noted that the transient nature and experiential basis of wine tourismmay prevent the formation of close, collaborative exchanges, often described as the ultimateaim of relationship marketing. Rather, marketing mix variables may be better developedwithin the framework of value-adding exchanges through tailored communications with anemphasis on retention and maximising lifetime value. Indeed, Hall, Binney and OMahony(2003) argue that the tangible nature of wine combined with the intangible aspects of theexperience adds greater complexity to the marketing of wine tourism. Hence, there is greater relevance of a value-added marketing focus in the context of wine tourism, one that moves

beyond the traditional transactional approach to marketing strategy. Given this, empiricalresearch is required to determine what opportunities currently exist to provide such value-adding exchanges in the wine tourism experience.

Formation of a research agenda: Identify elements of the wine tourism experiencefacilitating relationships

It is proposed that research is required to determine the elements of the wine tourismexperience that impact post-visit consumer motivations and behaviours towards buildingrelationships. These elements are diverse and may include the existence and standard of suchthings as wine quality, complementary and supplementary products, service quality, temporaldimensions (pre and post visit), spatial dimensions (setting, atmosphere, facilities,cleanliness), a mailing list, value-added services such as tours and meeting the winemaker,accommodation availability and communications (including website). Clearly, this summaryof product, service and experiential elements is not exhaustive and yet its complexityhighlights the need to fully understand the influence of these factors, individually andcollectively, upon the formation of customer relationships.

Thus it is contended that research is required to inform the theory of relationship marketing inthe context of wine tourism in practice by seeking to:

Understand the marketing strategies wine tourism operators believe will assist them to build relationships, during the visiting experience and post-visit;



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Identify the characteristics (demographic and psychographic) of wine tourists, particularly those that can be identified as having repeat purchased or spread positiveword-of-mouth;

Identify the elements of this wine tourism experience that most effectively contributeto customer satisfaction (through an assessment of the perceptions of both the wine tourismoperator and the wine tourist); and

Determine which of these elements are important in influencing the relational behaviour of wine tourists (repeat purchase, positive word-of-mouth communication andgenerate positive feelings of loyalty to the brand and winery).

Through pursuit of this research, consideration can then be given to what factors should beconsidered by wine tourism operators with respect to their product and service offering toassist in encouraging repeat purchase and building consumer loyalty and developingrelationships.

Wine tourism provides a valuable opportunity to study the tourist experience within a wider temporal and spatial context (Mitchell, Hall and McIntosh 2000). In this way, pre and postvisit factors and experience both at home and in the winery should be considered whendeveloping the marketing mix. Zaheer, Albert and Zaheer (1999) suggest the importance of considering time-scales and temporal intervals in research given that observations of avisitors experience during their visit may be different to the emotions remembered about thetrip once the visit is over. This has particular relevance to the carriage of future researchwhere the elements important to formation of long-term relationships between visitors andwineries can only be tested by considering behaviours and attitudes of consumers post-visit.As such, it is postulated that contrary to the majority of extant research in this area, empiricalinvestigation must focus upon exploration of consumers perceptions of the wine tourismexperience post-visit rather than in situ.

Relationship marketing in wine tourism: A summary of implications and furtherresearch opportunities

Much of the conceptual literature and empirical studies in the growing field of relationshipmarketing have focused on discovery and explanation of the constructs which constitutecustomer relationships. The research proposed aims to move beyond analysis of thesubcomponents of the constructs to an exploratory focus, identifying those elements of aconsumer experience that facilitate the establishment of a relationship with a firm in the wine

tourism context. Further, it is observed that the relative importance of these elements torelationship marketing requires exploration in order to provide valuable contributions andinsight into the applicability of relationship marketing strategies in wine tourism, both intheory and practice, and to assist in informing a wider research agenda.

Specifically, there are extensive opportunities for further, complementary research to augmentthe program proposed. In particular, research is required to analyse the economic and other

benefits of increased customer loyalty for wine tourism operators and to determine the potential value of relationship marketing for an entire wine region. As an extension of this, itis observed that explanatory research should be undertaken to determine the effect of arelationship marketing orientation on the overall performance of a winery. Furthermore, it has

been acknowledged that limited research has been undertaken in ascertaining whether suchrelationships and loyalty can contribute to a firms long-term profitability in the wine tourism



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context. Dodd (2000) highlights this opportunity for research work stating that thedevelopment of loyal customers has been closely linked to profitabilityalthough no

published studies have been reported concerning this link in winery tourism, it is expected toexist (2000:139).

The findings from the preliminary research agenda outlined in this paper aim to underline theimportance of this area of theory and, importantly, to provide the foundation upon which toundertake further causal research. The brief overview of the theoretical concepts underlyingrelationship marketing and its practical relevance in the context of wine tourism, illustrate theconsiderable value which may be gained from this program of investigation, a contribution inwhich the authors are actively engaged.

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