a conjoint analysis of quality wine

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A Conjoint Analysis of QualityWineMercedes Sanchez a & Jose M. Gil ba Dpto. Gestion de Empresas , Universidad Publi-ca de Navarra, Campus de Arrosadia , s/n. 31.006,Pamplona, Spainb Unidad de Economia Agraria , Servicio deInvestigacion Agroalimentaria (DGA) , Apdo. 72750.080, Zaragoza, SpainPublished online: 11 Oct 2008.

To cite this article: Mercedes Sanchez & Jose M. Gil (1997) A Conjoint Analysis ofQuality Wine, Journal of Food Products Marketing, 4:2, 63-78

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A Conjoint Analysis of Quality Wine: Consumer Preferences

and Market Segmentation Mercedes Sanchez

Jost M. Gil

ABSTRACT. Weighted least squares approach for conjoint analysis is used to examine buyer .preferences towards wines produced in different Spanish regions. Two producer regions are considered, Na- vam and Aragon, and three wine attributes: price, origin and grape vintage year (wine age). In both regions, differences between urban and rural consumers' preferences are tested. Results indicate that the origin of the grapes is the most important attribute for the wine consumer. Rural consumers prefer locally produced wines while Rioja wines are better considered by urban consumers. The price and the age of the wines are secondary attributes in consumer preferences. Finally, some market segments are formed based on individual consumer preferences and some of their sociodemographic characteristics in order to address differentiated marketing strategies to these segments. [Article copies availableJor afiefivm lhe H o r t h Donrment Deliv- ery Service: 14W342-9678. E-mail a d d m : getinfo@havor?h.com]

I . INTRODUCTION

The Spanish wine market is becoming more and more saturated. Global consumption has slightly decreased in the last ten years while beer and non

Mercedes Sanchez is Lecturer, Dpto. Gestion de Empresas, Universidad hibli- ca de Navarra, Campus de Arrosadia, sln. 31.006 Pamplona, Spain. E-Mail: [email protected]

Jose M. Gil is Scientific Researcher, Unidad de Economia Agraria, Servicio de lnvestigacibn Agroalimentaria (DGA), Apdo. 727 50.080 Zaragoza, Spain. E- Mail: [email protected]

Journal of Food Products Marketing, Vol. 4(2) 1997 O 1997 by The Haworth Press, Inc. All rights reserved. 63

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64 JOURNAL OF FOOD PRODUCTS MARKETING

alcoholic beverages have increased their market share. In this saturated market, a full understanding of wine consumer needs, preferences, attitudes and buying behaviour is necessary to identify market segments and to hy to keep present and future business profitability. By understanding the hierarchical structure of the consumer choice orocess for each segment, marketers should be able to position a diffkent product in each market (Johnson et al., 1991).

The very recent European Union regulations on 'designation of origin,' the success of some European food products under geographical origin and the consumer preferences towards food quality products and own region products, have stimulated Spanish wine companies, located in a specific region, to market wines with a region of origin guarantee (Steen- kamp, 1996). The objectives of this strategy were: (1) to increase local wines consumption within the region; and (2) to join efforts in order to promote their wines in foreign markets. As the second objective is long- run in nature, the focus has been placed on the first objective. However, little research has been done in order to show what is the role of locally produced wines in the consumer structure of preferences.

The objective of this paper is to analyse wine consumer preferences and to determine the relative importance of locally produced wines, with a region of origin guarantee, in comparison with other well stabilised Span- ish wines (i.e., Rioja). The analysis has been carried out in two producer regions (Navarra and Aragon) located close to Rioja. Consumers were divided into urban (living in the capital) and rural (in other cases) to test for significant differences in their structure of preferences. Finally, preferences for each consumer were combined with some sociodemographic characteristics (age, sex, family size and income) in order to identify and characterise market segments.

One of the most widely used multivariate techniques for measuring consumers' multiathibute utility fimctions is conjoint analysis (see Ruiz de Maya and Munuera, 1993 for an overview of the different methods to analyse consumer preferences). Two basic hypotheses are assumed in conjoint analysis: (1) a product can be described as a combination of levels of a set of attributes; and (2) these levels determine consumers' overall judgement of the product (Steenkamp, 1987). In this paper, weighted least squares (WLS) is employed in the estimation of the conjoint model as it has a number of desirable properties (Halbrendt et a]., 1991) over standard approaches such as quantitative response models and ordinary least squares (OLS). First, both approaches are based on the assumption of uncorrelated errors for the responses by a single survey respondent. If they are correlated, parameter estimates are biased. Second, the use of OLS

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Mercedes Sanchez and Jose M. GiI 65

assumes errors to be homoscedastic and normally distributed. The viola- tion of these assumptions can cause bias in the parameter estimates and any subsequent hypothesis tests.

The paper is organised as follows. Section 2 deals with a brief description of the survey carried out. Special attention will be devolved to consumer attitudes to wine attributes. A factor analysis is designed in order to detect the main attributes. The basic concepts of the conjoint methodology are summarised in section 3. Section 4 deals with the empirical application of this technique. Particular attention is given to the use of conjoint measurement to identify market segments and to characterise them in order to apply specific marketing strategies. Finally some conclusions are outlined.

2. RESEARCH DESIGN

A survey was conducted from February to March 1995 in two Spanish regions: Navarra and Aragon. Navarra has only one regional label: "Na- varra." It covers an area of 20,000 hectares, with 9,000 viticulturists and 79 wine cellars (Distribucion y Consumo, 1993). Aragon has four regional labels: "Calatayud," "Campo de Bo rja," "Carifiena" and "Somontano." Calatayud is the most recent label. It covers about 18,000 hectares. Campo de Borja covers 10,000 hectares. Cariiiena is the older regional label and covers 21,300 hectares. Finally, Somontano has only 2,000 hectares.

Samples were selected using a stratified random sample of wine buyers on the basis of age and place of residence (~arasur&an, 1991). TWO

hundred eighty-nine respondents in each region where randomly selected. Respondents were the main purchasers of wine in a particular household. They were predominantly male, with a family size between 3 and 5 members and belonging to the middle class group. A high proportion live in the capital.

In order to select the main red wine attributes consumers prefer, fust, the relevant characteristics derived from qualitative research were considered. The qualitative research consists of deep interviews, in each region, of fifty randomly selected wine consumers. Age and place of residence characteristics were taken into account. Results form the survey indicated that the main attributes consumers take into account when choosing a wine were: prestige, quality homogeneity among brands from one region, image, regional label, origin, grape vintage, purchasing frequency, grade, price and taste. Also, it allowed us to identify consumption levels, the relative importance of alternative locations in which consumption takes place and the knowledge of regional wine names with 'designation' of origin.

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Main attributes were reduced using a factor analysis. A five-point scale was used for each characteristic in each region. Consumers evaluated the relative importance of each attribute rating from 1 ('less important') to 5 ('most important'). Results from factor analysis are shown in Table 1. The first factor, 'wine brand homogeneity' explains 27.6 per cent of total variance. The second factor, 'wine origin,' explains around 13 per cent of the variance. The third factor, 'grade' accounts for 12 per cent of the total variance. Finally, the fourth factor, 'price,' explains the 10 per cent of the variance. According to these results, three aspects have been chosen in this paper: regional origin label, grape vintage and price.

In the analysis of the survey data, significant differences were found between interviewing consumers living in the capital (Pamplona and Zara- goza, for Navarra and Aragon, respectively) and in the rural areas. So, it seemed interesting to us to evaluate if there were significant differences in factor loadings in each location. Table 1 also shows that significant differences existed. Concretely, persons who lived in Pamplona or Zaragoza gave more importance to regional label, the grape vintage and the price. Similar analyses were carried out considering age, sex, family size or income but no significant differences were at the 5% level of significance.

Taking into account these results the conjoint analysis technique is applied separately to consumers from Navarra and Aragon distinguishing in both cases the place of residence. That is, if the respondents live in the capital or in another place.

3. METHODOLOGY

Ruiz de Maya and Munuera (1993) classified methods to analyse consumer preferences in: compositional models, decompositional models, models based on the new theory of utility, models based on the new economic theory on consumer behavior and the bayesian approach. Among decompositional models, conjoint analysis has become an increasingly popular approach to estimate the benefits received from the attributes of a product. Conjoint analyses inform the researcher about the structure of consumers' preferences which is obtained from their overall judgement of a set of alternative products defined as a combination of levels of different attributes (Green and Srinivasan, 1978).

Green and Krieger (1993) pointed out the potential utility of conjoint analysis to deal with some marketing problems: to develop new multiattri- bute products with optimal utility levels in relation to other competitive products, to estimate market shares in alternative competitive scenarios, to benefit segmentation, to design promotion strategies, etc. In relation with

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Mercedes Srinchez and Josd M. Gil 67

TABLE 1. Factor Analysis on Wine Attributes in Navarra and Aragbn

Factor 1 (') Factor 2 Factor 3 Factor 4 Brand Regional Grade Price

Homogeneity Label

Prestige 0.821 0.1 85 - 0.027 - 0.001 8 Brand 0.782 0.148 -0.0164 -0.121 Image 0.767 0.152 0.078 0.048

Regional label 0.201 0.767 -0.156 70.1108 Origin 0.0966 0.749 0.054 0.0075 Grapevintage 0.218 0.663 -0.0008 -0.045

Habit purchasing -0.034 -0.219 0.7797 -0.122 Low grade 0.067 0.124 0.6209 0.284

Price -0.0504 -0.0048 0.178 0.8188 Taste quality 0.023 0.393 0.389 -0.5500

Navana. Capital (Pamplona) 0.1067 0.1053 0.0985 0.0816 Arag6n. Capital 0.0805 0.0794 0.0794 0.0616 (Zaragoza) Rest of Navarra -0.058 - 0.057 - 0.054 - 0.0048 Rest of Arag6n -0.048 -0.482 -0.45 -0.373

Percentage of 27.6% 12.6% 11.8% 9.8% variance explained Cumulative 27.6% 40.2% 52% 61.8% percentage variance

(') Factor loadings

wine markets, Johnson et al. (1991) employed conjoint techniques to benefit segmentation in the Australian wine market.

The specific steps in conjoint analysis include conjoint design, adminis- tration of the conjoint experiment, conjoint model specification and estimation, and evaluation results. The conjoint designs include two basic steps (Halbrendt et al., 1991). First, a careful choice of the attributes and attribute levels which characterise alternative products must be done. These attributes reflect main product characteristics consumers take into account when evaluating the product. Attributed levels, on the other hand, should cover the entire range of representative levels. The number of levels must be chosen carefully. It must be large enough to cover all dimensions consumers take into account but not very large in order to allow for differentiation.

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The selection of wine attributes was based on previous wine marketing studies (Albiac et al., 1986; Albisu et a]., 1989; and Elorz, 1994), and on specific questions about the most important attributes which consumers have in mind when purchasing wine. The attribute levels chosen are: 250, 400, and 600 pesetas, for price; current year wine and old wine, for grape vintage year; and local regional label (Navarra, Aragon, depending on where the respondents live), Rioja, and other Spanish regions for origin. Rioja is considered the best red wine brand in the Spanish market.

Once the attributes and attribute levels have been selected, they must be combined forming different hypothetical wines for survey respondents to assign preference ratings (Halbrendt et al., 1991), in this study a full profile approach is used to design the product profiles. Following this approach constructs product profiles by selecting one level from each attribute so that respondents rate a set of "complete" hypothetical products. This approach can generate a large number of product profiles. In order to reduce the number of product profiles, a fractional factorial design (orthogonal arrays method) is used which selects a sample of attribute levels while maintaining the effectiveness of sorting and evaluating the relative importance of a product's multidimensional attributes. This study used Bretton-Clark Conjoint Designer software (1987). The nine hypothetical wine profiles generated are shown in Table 2.

In the survey respondents were asked to rate the nine product profiles on a continuous scale from 1 (least preferred) to 10 (most preferred). Each respondent was shown a randomly mixed set of the nine cards describing the wine profiles and was asked to rank them according to hisher own purchasing intention. In a preliminary analysis at first glance, it could be said that, in both regions, consumers living in the capital preferred more expensive wines. Ln both capitals, Pamplona and Zaragoza, there was a higher preference for Rioja wines.

4. RESULTS

4.1. Model Spec1f22ation

The specification of the conjoint preference model involves two steps. First, the functional form for each attribute must be specified. Next, the functional forms for each attribute are combined into a conjoint preference model for estimation.

The model for this study was designed following Halbrendt et al. (1992), based on Louviere (1988) and on the Information Integration Theory of Anderson (1984). An additive model was used. This model is

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Mercedes Sai~clzez and Jose M. Gil 69

TABLE 2. Hypothetical Wine Profiles

Product Profile Price Regional Label Grape Vintage

1 250 Pts. NAvARRNARAG~N Currenl Year 250Pts. RlOJA Current Year 250 Pts. OTHER REGIONS Current Year 400 PIS. NAVARRNARAG~N OM 400 PI; RlOJA Old

6 400 PI&. OTHER REGIONS Old 7 600 Pts. NAVARRA/ARAG~N Old 8 600Pts. RlOJA Old 9 600 Pts. OTHER REGIONS Old

the simplest and the most frequently used (Steenkamp, 1987). The additive model assumes that the overall evaluations are formed by the sum of the separate part-worths of the attributes. Its formulation is:

Where y denotes the consumer's overall evaluation of the product alternative, v- is the part-worth associated with level j (j = 1,2, . . . . , mi) of attribute! (i = 1,2, . . . . n) and q is a dummy variable representing the presence (= 1) or absence (= 0) of the j fh level of the ith attribute. The assumption of an additive model was made when deciding in using a fractional factorial design to reduce the number of profiles to nine. In doing so, all interactions were confounded with the main effects (Hal- brendt et al., 1992).

Conjoint measurement produces part-worth 'functions' of the attributes (i.e., the set of values vv for the levels of each attribute i) which are directly comparable to each other (Steenkamp, 1987). The utilities of each product profile are scaled from 1 to 10. The rating scales may be regarded as approximately interval in nature. This allows the use of estimation methods such as OLS where the dependent variable is continuous. To test whether there are differences in preferences between markets (capital and other areas), in both regions a dummy variable is introduced which takes the value " 1 " if consumers live in Zaragoza or Pamplona and "0" in other cases. Regional labelling and the age of red wines are categorical so that dummy variables were used. For the price attribute, a linear functional form was chosen because quadratic behaviour was not significant (Mugi- ca, 1989).

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The conjoint preference model incorporating both attributes (grape vintage and origin) and market level @rice) variables, specified with the chosen functional form and the dummy variable indicating the respondent's location of residence, can be expressed as:

Where: Rating. =

04 = GVli = Dc, =

(i= Navarra, Aragon)

Preference rating given to hypothetical wines by survey respondent in region i. Wine price Dummy variable for wine produced within the region (NavarralAragon) Dummy variable for Rioja wine Dummy variable for current year wine Dummy variable for the capital (Zaragoza in Aragon and Parnplona in Navarra) Interaction between market and attribute Error term

Model (2) was estimated by OLS. Results from the Breusch-Pagan test indicated the rejection to the null hypothesis that errors were homoscedastic (28.5 and 5.6 for Navarra and Aragon equations, respectively, while the critical value at the 5% level of significance is 3.84). Thus, model (2) was estimated by WLS.

4.2. Model Estimation and Discussion

Results from the estimated conjoint models are shown in Table 3. The adjusted R-Square of 0.17 and 0.23 for Navarra and Aragon equations, respectively, are somewhat low, due to the cross-sectional nature of the data. In the Navarra equation the place of residence does not play an important role in determining consumer preferences towards wine. How- ever, in Aragon consumers living in Zaragoza behave in a significantly different way from consumers living in other areas. Differences are significant with respect to the mean preference level and with respect to the evaluation of the grape vintage. Table 3 lists also the calculated parameters for the base level attribute and place of residence, as well as for the base level attribute-place of residence interaction variables. The coefficient for

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Mercedes Sanchez and Jose M. Gil 71

the k'th base level of each dummy variable is calculated as the negative sum of the (k-I) level coefficients (Halbrendt et a]., 1991). Using this formula, the calculated coefficient for 0 3 (wine from regions different of NavarralAragon and Rioja) is -4.6534 for Navarra. Also, this equation the coefficient of the dummy variable for residence out of the capital is - 0.7429, the negative value of that for living in the capital.

In both models, almost all parameters for wine attribute variables, with- out taking into consideration the place of residence effects, are significant. The purchase price has a negative coefficient in both models showing that, as expected, buyer utility decreases as price increases. However, this variable is not statistically significant in the Aragon equation. In Navarra, Rioja wine, with a coefficient of 2.45, has the greatest effect on preference rating followed by local wines and finally other regions' wine. However, in Aragon local wines are preferred over Rioja (coefficient of 1.92 and 1.20, respectively). In Navarra, older wine (GV2), with a coefficient of 0.58, has the greatest effect on consumer preferences over the younger wines. In Aragon, the opposite occurs.

Finally, from Table 3 it is also possible to analyse if preference differences about attribute levels exist between urban and rural consumers, allowing for habitat-level interpretation of buyer preferences. As it can be observed, in the two regions, slope changes in wine prices are not significantly different from mean levels for consumers living both in the capital and in other areas. In Aragon, significant differences from mean levels are found with respect to grape vintage year. The negative coefficient for young wines represents that these wines are less important for consumers living in the capital than for those living in other areas.

Since the most important outcome in conjoint analysis is consumers' utility values on a habitat-level bases, parameters from the conjoint model are adjusted to get this information (Halbrendt et al., 1991 provide a detail description of the method). In each region, the intercept coefficient (4.48, in Navarra and 1.90, in Aragon) is added to the habitat coefficients to obtain the intercept for each residence area. For instance, to get the constant for the capital, it is necessary to add - 0.7429, in Navarra, and - 3.659 in Aragon, respectively to the estimated intercept in each model. A similar procedure is used for attribute coefficients. In the case of price, as it has been considered a continuous variable, the corresponding price utility values for each habitat has been multiplied by each level (200,400 and 600, respectively) to get the attribute levels utility. Table 4 summarizes the main results.

For Zaragoza consumers, in Aragon, highest price utility occurs at the lowest level (250 Pts.). However, the highest utility for rural buyers is

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TABLE 3. Estimated Conjoint Parameters for Navarra and Aragon

NAVARRA B a z ~ o d e l Variable Calculated Parameters Variable Parameter Estimate Parameter Estimate

Intercept 4.48"' DV - 0.7429 Pr - 0.0037"' GV2 0.571' 01 2.206"' 0 3 - 4.6534"'

F-Statistic R-Square Adj.R-Square Observations

ARAG6N Variable

Basic Model Parameter Estimate

Variable Calculated Parameters Parameter Estimate

Intercept Pr 0 1 0 2 GVl

F-Statistic 61.648 R-Square 0.2254 Adj. R-Square 0.2218 Observations 1.906

... .. . .and* Indicates the parameterissignificantly different from zem althe0.01,0.05,0.10 level of significance respectively. GV2 = Old wines. DO - Dummy for consumers living in areas other than the capital.

situated at the highest price. In Navarra the behaviour is more homoge- nous as all consumers assign the highest utility to less expensive wines. However, as mentioned above, differences in the utility assigned to each price were not statistically significant.

As far as the origin is concerned, Pamplona consumers preferred Rioja

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TABLE 4. Attribute Level Utility Values for City and Other Home Locations

NAVARRA A R A G ~ N Other Pamplona Other Zaragoza

Base level 3.7371 Prlce 250 Pts. - 1.3429 400 Pts. -2.148 600 Pts. -3.222 Orlgln Local origin 2.5507 Rioja origin 2.5506 Other origins - 5.1 011 Grape vintage year Current year - 0.1437 Old 0.1437

Utility values can be compared within a habitat level, but cannot be compared across habitats because of shifts in base level values between habitats.

wines. Rural consumers, however, placed at the same level Rioja and locally produced wines. In Aragon, local wines are preferred although for Zaragoza consumers almost the same utility is assigned to Rioja and local wines. Finally, all consumers in Navarra and Zaragoza buyers in Aragon prefer an older wine while rural consumers in Aragon located their preferences on younger wines.

To summarise results from conjoint analysis, it is of value to compute attribute importance weights within each habitat market. Since all utility function results are expressed in a common unit, utility ranges can be compared from attribute to attribute to calculate their relative importance in the preference rating (Green and Wind, 1975). The relative importance of attributes is calculated in two steps (Halbrendt et at., 1991). First, for each attribute, the highest and lowest utility values are chosen. The differ- ence between the highest and lowest utility values is the attribute utility range. Next, take the sum of the ranges over all attributes. The relative importance of an attribute (i) is defined as:

The relative importance of each wine, expressed in percentage, is shown in Figure 1. In Navarra the wine origin is the most important attribute in the preference rating. However, the relative importance of

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FIGURE 1. Relative importance of altributes in preference rating for each market

NAVARRA A R A G ~ N

vintage year and price differs depending on the consumer's residence. Price is more important in rural areas, whereas the vintage years play an important role in Pamplona buyers' decision. In Aragon, there exist more differences. In rural markets the origin of the wine and the grape vintage are the most important attributes, while price plays a residual role. In the capital, the origin is the most important factor in wine consumer preferences.

A W h e r possibility of conjoint analysis is the facility of forming different consumer clusters/segments based on their individual utility functions and their specific sociodemographic characteristics (Green and Krieger, 1991). Consumer age, income, family size and habitat haven been selected for segmenting both markets (Navam and Aragon). These sociodemographic variables have been chosen as they provide significant differences. In Navarra three segments have been specified. The first cluster consists of older people living outside the capital. The origin of the wine is the main motivation to buy wine. The second cluster is quite similar to the first one, but, in this case, younger people are predominant. In this case the vintage year plays a more important role in the formation of preferences. Consumers living in Pamplona, young, and with small families consider the price as the most important wine attribute (Table 5).

In Aragon, two different segments have been identified. In this case, family size was not relevant to differentiate between clusters. In both segments, wine origin is the most important attribute. However, in the first cluster, mainly formed by young c o m e r s living in Zaragoza, price is relatively

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Mercedes Sanchez and Jose M. Gil

Attributes

Price Origin Grape vintage

Habitat Other Pamplonal Zaragoza

TABLE 5. Wine Market Segmentation

NAVARRA ARAGON nl n2 n3 n l n2

(37.8%') (41.12%) (21.1%) (63%) (37%)

Age Young (<40) 4.9% 100% 77.8% 89.3% 10.7% Old 95.1% 0% 22.2% 9.1% 90.9%

lnmme High 1.2% 19.3% 4.4% 14.3% 34.8% Other 98.8% 80.7% 95.6% 85.7% 65.2%

Family size Less 2 members 3.7% 0% 66.7% . - - --- - --. - - Other 96.3% 100% 33.3% -. . - -- - -. . -.

(') Segment size

more important than in the second cluster which consists of older and higher income consumers.

4.3. I~nplications for the Regional Wine Industry

The objective of this paper was to determine the perceived image of locally produced wines, with a region of origin guarantee, in comparison with the best-established Spanish wines (i.e., Rioja). Local and regional wine companies are increasingly allocating resources and investing in order to promote their wines, first, in their own regions and, second, in foreign markets through joint marketing and promotion strategies. To achieve these objectives, wine companies are dedicating considerable efforts to improve the quality of the final product. Consumers have reacted positively as, although global wine consumption has decreased in the last years, quality wines' consumption has slightly increased. Differentiation becomes a crucial marketing strategy to guarantee future profitability and market share.

Results from this study indicate that some sort of differentiation is

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needed. The perceived image of local wines for Aragonian consumers is higher than that of Rioja wines while, in Navarra, Rioja wines are better considered. The existence of four regional labels with a region of origin guarantee in Aragon could explain those differences as consumers are very close to, at least, one of the labels. In any case, the promotion invest- ments carried out by local labels have had good results. On the other hand, although the two regions considered in this study are close together, the consumers' knowledge in one region about the existing labels in the other is very reduced. In the survey, for example, only 30% of Aragonian consumers knew the "Navarra" brand. The percentages were even lower when consumers in Navarra were asked for the four Aragonian labels.

A further implication for the regional wine industries is that there exist two main variables which have to be taken into account when developing marketing strategies: place of residence (rural vs. urban) and age. In gener- al terms, rural consumers knew and appreciated more locally produced wines although these areas only concentrate between 35% to 40% of total regional population. In urban areas more promotion is needed. Promotion activities have to be directed towards two main areas: (1) promotion in retailing points, usually accompanied with promotion of other locally produced foods (cheese, honey, . . .); and (2) sponsoring activities related to regional culture and traditions.

With respect to age, young consumers are a potential market for wine companies. The global wine consumption is still quite low, beer and non- alcoholic beverages being the main competitors. Wine consumption be- longs to the tradition which could explain the low consumption in young consumers. However, due to cohort effects, it is necessary to promote wine consumption among them. Promotion directed towards sport activities' sponsorization and related to their regional identity is needed.

Results from this study are difficult to extrapolate to other beverages, as beer or non-alcoholics. There exist big differences as far as the market structure is concerned. The beer industry is dominated by five groups which control more than 90% of market share. Each group has its own private labels which are known by most of the consumers. There is no joint marketing strategies and promotions are designed at a national level. The wine industry, on the other hand, is composed of a big number of small firms which have decided to join efforts and create a regional label to promote their wines. Companies's brands are less important at this stage as the objective is to differentiate the quality of the wine coming from a specific region or county. This study has tried to help them in identifying market segments and defming the appropriate marketing strategy for each group. Further research, however, is needed in order to analyze the atti-

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tudes and values of young people (the most interesting potential market) and define the communication strategy capable of increasing its wine consumption.

5. CONCLUSIONS

This study has used the weighted least squares approach in conjunction with a conjoint designed experiment to estimate and compare segment markets of the wine consumer in two Spanish regions: Navarra and Aragon. In each region, the distinction between rural and urban consumers was considered relevant to explain differences in consumer behaviour. Three attributes have been used in the conjoint design: geographical origin, price and grape vintage year.

The origin of the grapes is the most important attribute for the wine consumer. Wines of local origin are preferred for rural consumers in both markets. Also, Rioja wines are more preferred in Navarra than in Aragon. On the other hand, in Navarra price is relevant to explain consumer preferences, but not in Aragon. In the two markets the price variable has a negative slope indicating that buyer utility decreases as price increases. Finally, in Navarra older wines have a positive impact on preferences. On the other hand, in Aragon rural consumers prefer young wines, while in Zaragoza older wines are preferred.

Results also show that in Navarra consumer ureferences are homone- neous. Although differences exist when comparing the preferences-of consumers living in the capital with consumers living in other areas, they are not statistically significant. In Aragon, however, more differences were found. Differences apply to two aspects: the mean preference level and the attitudes toward the vintage year.

A final objective of this study, was to form consumer groups based on their attitudes towards wine attributes and some of their sociodemographic characteristics: age, income, family size and habitat. In Navarra three different clusters have been formed. One of the segments is formed by young consumers, living in the capital, with small families. Price is the more important attribute for them. In the other two clusters, with similar characteristics between them, the origin of the wine is the most important attribute. In Aragon, older consumers with higher income attach more importance to the origin of the wine than to its price. Marketing strategies have to address these segments. Suppliers and traders can make profitable decisions placing Rioja wines in Navarra while local producers have a chance in Aragon if they meet the consumer's price requirements.

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JOURNAL OF FOOD PRODUCTS MARKETING

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a conjoint analysis of quality wine

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