Pelet et Lecat - WILL DIGITAL CONSUMPTION BASED UPON SOCIAL NETWORK SYSTEMS AND MOBILES HELP TO CLOSE PRODUCERS OF WINE TO Y GENERATION?

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Pelet et Lecat - WILL DIGITAL CONSUMPTION BASED UPON SOCIAL NETWORK SYSTEMS AND MOBILES HELP TO CLOSE PRODUCERS OF WINE TO Y GENERATION?

  1. 1. Will Digital Consumption based upon Social NetworkSystems and Mobiles help to close Producers of Wine to Y- Generation? Jean-Eric PELETIDRAC International School of Management, Associate researcher, LEMNA, IAE-IEMN – Nantes University, France 16, rue Laurence Savart, - F-75020 Paris - jepelet@yahoo.com - 0630536976 jepelet@yahoo.com Benoit LECAT Professor-Marketing Department Burgundy school of Business 29, rue Sambin F-21000 Dijon benoit.lecat@escdijon.eu
  2. 2. Will Digital Consumption based upon Social Network Systems and Mobileshelp to close Producers of Wine to Y-Generation?AbstractThe ability to reach distinctive customer segments is a fundamental challenge facedby the world wine industry. This paper describes the consumer behaviour of the Y-Gen regarding their level of Internet sophistication and orientation, brand loyalty,Internet satisfaction regarding wine and Internet access through mobile. Resultsshow that m-commerce using Social Networks Systems may prove greatly efficient inthe foreseeable future for wine growers, in combination with the Global PositioningSystem (GPS). Results show that wine sellers may wish to incorporate this media intheir strategy to sell more in the direction of Y-Gen consumers.Key wordsY-Gen, GPS, SNS, Wine, Wine-growers, m-commerce, e-commerce, brand loyalty,cohortsLa Consommation Numérique basée sur les Systèmes de Réseaux Sociauxinstallés sur Mobiles peut-elle rapprocher les Producteurs de Vin de laGénération Y ?RésuméLa capacité datteinte des segments de clientèle distincts représente un défifondamental auquel est confrontée lindustrie mondiale du vin. Cet article décrit lecomportement des consommateurs de la génération-Y en ce qui concerne le niveaude sophistication et dorientation sur Internet, la fidélité à la marque, la satisfactionsur Internet au sujet du vin et de laccès à Internet par les smartphones. Les résultatsmontrent que le m-commerce utilisant les Systèmes de Réseaux Sociaux (SNS) peutsavérer grandement efficace dans un avenir proche pour les producteurs de vin, encombinaison avec le System de Positionnement Mondial (GPS). Les résultatsmontrent que les vendeurs de vin peuvent penser à intégrer ce média dans leurstratégie pour vendre plus en direction des consommateurs de la génération-Y.Mots clésGénération Y, GPS, SNS, vin, viticulteurs, m-commerce, e-commerce, fidélité à lamarque, cohortes
  3. 3. IntroductionThe Internet has disrupted several industries over the past few years. It has changedthe way we do business and how consumers behave and interact with each other.The wine industry is not excluded from this phenomenon. One could argue thatsmartphones could contribute to enhance the distribution process thanks to a properuse of Social Network Systems (SNS) such as Facebook with a switched on GlobalPosition Systems (GPS). The “groupage” phenomenon which already exists amongwine producers could find another supply chain management process thanks to aparticular use of such tools that are both SNS and GPS. This is the issue this articleraises. Our research question is: “Would Social Network Systems reveal to be aviable way of distributing bottles of wine, both for wine producers and Gen-Yconsumers, using Global Position System?”Gen-Y is defined as those born post 1980 (Chowdhury and Coulter 2006; Lescohier2006). Gen-Y, the largest generation since the Baby Boomers (Neuborne 1999),spans in age from fourteen to thirty one (Norum, 2008). For the purposes of thisstudy, the age range of Gen-Y has been narrowed to ages eighteen to thirty-onebecause increased financial independence is gained at the age of 18 according toDjamasbi et al. (2008) and because drinking alcohol is prohibited before the age of18.Cell phone adoption is widespread especially in young population, with 75% ofteenagers and 93% of adults aged 18-29 having a cell phone, with 55% of the lattergroup accessing the internet wirelessly from their cell phone (Lenhart et al., 2011).The evolution of mobile communications has triggered an increase in the use ofmobile devices, such as mobile phones, to conduct mobile commerce on the mobileWeb (Venkatesh et al. 2003, Ngai and Gunasekaran 2007). Creating a well-conceived and executed digital marketing strategy requires clarity of concept andgoals that few companies are willing to invest in order to support their digitalbusiness.
  4. 4. One of the major economic problem which hinder the development of the e-commerce of wine lies on distribution costs (at least for cheap wines). Based onconveyors services, this estimated cost is around one euro per bottle in France(Hachette Vins, 2012). The retail store includes support functions for the provision ofphysical goods such as the relationship a consumer developed with the stores staff,it seems difficult to compete economically with home delivery of all goods. Thissituation could change with the coming of SNS in the e(m)-commerce of goods,combined with GPS systems, to make real friends consolidators, in the sense that thewinemakers agree. These consolidators already exist and they are named“groupers”. These latest could arise with the arrival of SNS and GPS onsmartphones.Groupers and winemakers forge close ties with their different partners to worktogether over the long term. They become relays each with their clients to do themonitoring of wine, favorize logistical conditions or events and tastings. Theircustomers can be professionals or individuals, importers, wine shops, wine bars,wholesalers, grocery store etc... thanks to such a system, the cost of transportationbecomes lower than the price of a bottle purchased from the wine grower. It is evencloser to the price of a bottle purchased from the producer: one delivery instead ofseveral delivery directly from each grower.It has been showed that 90% of shoppers prefer to communicate while shoppingaccording to Schummer (2001). This underscores the notion that people trust people.Thanks to their ease of use, SNS can help shoppers provide positive ratings andrecommendations about the goods of a vendor on its public SNS’s page, an actionwhich would be rewarded of course.Exploratory study about Gen-Y perception of SNS and m-commerceA survey-based method using quick interviews (appendix 1) has been conducted. Weinterviewed 21 students in Switzerland Respondents were selected to achieve abalance in terms of age, gender and socio-professional background, in order toobtain a homogeneous sample. Questions embedded for the exploratory phase were
  5. 5. structured and opened. Every interview, the duration of which ranged from 20 to 25minutes, was re-transcribed offering a verbatim of around 80 pages correspondingapproximately to 6 hours of recording. After around ten minutes of conversation, weasked respondents two final questions to summarize the interview. Interviews weregenerally referring to the aspect of the interface and to trust concerns butnevertheless, one student said this, regarding the difficulties to buy wine online, inparallel to the interview conducted with her: “Personnally I have stopped buying wineon the internet (from California) and sometime the internet offers were great, but thelogistics are too cumbersome, such as the winery does not want to ship when theweather gets too hot or too cold (too cold when we lived in New England and now toohot in Florida…), so you have to wait, sometime several months… and if you do notwant to wait, you have to pay such a high premium for air shipment that it defeats thepurpose…. In addition there are state laws that prohibit the selling of wine on theinternet, (which is not the case in Europe). All that to say that it is not as easy as itsounds…. From both the consumer and the seller’s perspective and the problems arenot generational only...” Regarding the interview, here is a summary of the answerswe obtained (table 2). Given the exploratory nature of our research, the indicatedpercentages are not intended to be statistically representative but they rather serve tosummarize the information collected in numbers. Table 1: Results of the qualitative analysis Citation Modalities / Common frequency Principal themes Constructs Evoked themes use among the 21 respondentsUse of Social Iphone 11/21 52%Networks Systems Mobile Possession Blackberry 4/21 19%on Mobile Sony Ericsson, Samsung, Nokia, HTC 6/21 29% Facebook 18/21 86% Youtube 6/21 29% - SNS Registration on LinkedIn 6/21 29% Twitter 4/21 19% Contact their community (Facebook…) - - SNS on Mobile 10/21 48% SMS Sending of short messages 9/21 43% WWW Surf the Internet (look for information) 10/21 48% - Use of mobile GPS Global Positioning System (GPS) “ON” 9/21 43% Discourage users from re-visiting a Negative Slowliness 5/21 24% particular website
  6. 6. Human Ease-of-use Design concerns Mobile HMI 6/21 29% Interaction - Ergonomics If it is practical 6/21 29% - Aspect Security 5/21 24% Use of mobile for Shop on m-commerce websites (music, m-commerce Shopping 2/21 10% shopping train tickets, …) Received an invitation for a commercial GPS GPS and SNS 3/21 14% proposal Peer recom- - Proposal from as SMS Sms offers something 6/21 29% mandation Popularity of It has been heard from friends It is popular 7/21 33% SNS Privacy Respect privacy Many other people trust it and have it 5/21 24% Security of It is safe Recommended by friends for that 4/21 19% paymentFollowing this exploratory study, a confirmatory one followed.Confirmatory studyThe confirmatory study was implemented by asking French and internationalconsumers coming from more than 10 countries how they did perceive SNS and m-commerce embodying the later. The sample is composed of n=190 validquestionnaires of international Y-Gen consumers born after 1980. It was selected toachieve a balance in terms of age and socio-professional background. Among the190 respondents, 68% of them connect to the Internet using their mobile and 38%spend between 10 and 19 hours a week on the Internet whereas 41% spend morethan 20 hours a week. Nearly all of them (95%) access the Internet every day. Only43% do purchase on the Internet at least once a month. They mainly use Internet tostay in touch with friends and relatives (95%) but also in order to look for informationon a product (69%). They also access discussions (29%) and 21% access chatrooms.In terms of SNS, they nearly all use Facebook (93.2%). Regarding wine, only 5 ofthem were influenced by friend’s recommendations. Regarding the wine consumptionand habits, 7.4% of our respondents are members of a group dedicated to wine. A lotof them dont buy wine (32.6%) and 36.8% buy wine several times a year. Withregards to wine buyers only, they mainly buy it in supermarkets (56.3%) andhypermarkets (19.5%) but also in wine shop (19.5%).
  7. 7. For 72.6% of them, the delivery on time to develop their trust when they are buyingwine through their mobile phone is important. The fact that the wine is delivered ingood condition is an important figure with 76% of respondents expecting it. Thefollowing factors shown in table 2 are considered as important when the Y-consumers are buying wine through the Internet. Table 2: Internet satisfaction regarding wine purchase Factors Score out of 5 Quickness 3.07 Reducing cost 3.06 Efficiency 2.78 Internet is a complementary channel to wine shop 2.2 Preference for using technology to purchase 1.85Results show that cost and quickness are still the most important criteria to considerwhen thinking about selling over a mobile, exactly as it the case about e-commercealready. They also refer to the perception of time, which is an important concernaccording to the results of the exploratory analysis. On the other hand, they do notnecessarily perceive Internet as a complementary channel to wine shop and are notobviously convinced that new technologies have their preference for purchasingwine. In other words, if e-commerce and m-commerce want to increase their marketshare, they must invest in services like quick delivery, reduced transport cost andefficiency of the service. Otherwise, they will not be able to differentiate vis-à-vis thespecialty stores or supermarkets. In this context, the development of groups ofpurchasers that could meet each other on the SNS (via GPS) would be a concept tofollow and help: indeed, those groups who will be able to generate big orders wouldsave time and spend less thanks to the economies of scale coming from thereduction of transport cost and the large volume orderingThe following channel characteristics are also considered as important when the Y-consumers are looking for information or want to buy wine online:
  8. 8. Table 3: Internet access through mobile regarding wineChannel characteristics Score out of 5The usefulness of the information 3.26The richness of the information 3.23The presence of a lot of information 3.22The convenience of the website / Digital Social Network 2.79The usability of the website / Digital Social Network 2.77The presence of search feature 2.54The size of the picture that illustrates the bottle 2.49The presence of a celebrity 1.54Once again, results reveal the importance of useful commercial information to showon the screen. This information which is researched by consumers must be importantin terms of quantity, but interesting too in terms of quality, as well as scarce becauseof the constraints of the screen size.The following table shows the level of agreement of Y-consumers related to thestatements on Internet access through mobile for wine. Table 4: Statements on Internet access through mobile for wine Statements Score out of 5I am overall satisfied with my ability to use a mobile phone 3.74I am sure it was the right thing to go to learn to use a mobile phone 3.64I am happy that I decided to use a mobile phone 3.54My experience at using a mobile phone was good 3.46My trial of a mobile phone worked out as well as I thought it would 3.21If I like a wine brand bought through a mobile phone, I rarely switch from it 2.27just to try something differentEven though certain wines are available in a different number of brands, I 2.24always tend to buy the same wine brand through a mobile phoneI generally buy the same brands of wine that I have always bought 2.18through a mobile phoneOnce I get used to a wine brand bought through a mobile phone I hate to 2.15switchIt is likely that I buy wine through a mobile phone in the near future 1.75I intend to buy wine through a mobile phone in the near future 1.69
  9. 9. I plan to buy wine through a mobile phone in the near future 1.67I will certainly buy wine on a mobile phone in the near future 1.65Results reinforce the relative youthness of m-commerce since Y-Gen students stilldiscover the possibilities offered in terms of m-commerce when using theirsmartphones. It demonstrates that m-commerce and e-commerce are very importantfor them if they can save time. Furthermore, even if the scores are not so high interms of brand loyalty, it is quite interesting to see that consumers develop some. Asrecommendations, m-commerce and e-commerce suppliers should focus more onservices in order to gain market share on this target where time saving seem to bequite important. Further studies will be needed to expand the generalizationaccording what wine will be more enjoyable to shop over such a little device.Conclusion, limits and managerial implicationsThis article answers positively to the question we posed. It seems effective thatSocial Network Systems (SMS) reveal to be a viable way of distributing bottles ofwine, both for wine producers and Gen-Y consumers, using Global Position System(GPS).It also appears useful to use different channels to generate interest from the use ofSNS and GPS, without hurting customer’s trust towards the brand, by protecting datarelated to his privacy. Based on the assumption that when the user is online, vendorscan know where the customer is, what he does, when he visits the website etc.,which is not possible with traditional channels (Television, Radio, Newspapers…), oronly for catch-TV, when connected on the Internet. One can imagine that it will nowbe possible thanks to mobiles. A company can get data and use these as long as it iscareful with wording. It has to make sure that it can fully use the collected data byasking things in a transparent manner, stating the real intended use of the discloseddata. Customers will then choose themselves, but will not feel tackled by thecompany. This will help companies to be honest and transparent about what they dowith customer’s data and how they use them. Companies will then stay in line withlaws and make sure customers realize how much information they really give away.As an example, Blackberry doesn’t ask for authorization when using information,whereas Iphone always asks. Therefore, offering better services to their potentialconsumers would help those companies to gain market share. The use of these datamight contribute to do so.
  10. 10. The infancy of m-commerce implies a relative difficulty to gather data about m-consumption. Active users on m-commerce browse and purchase a few items on themobile web and many brands still don’t have the proper interface of their website to fitwith mobile screens. As a result, it is not easy to find users with similar interests onthe mobile web based on product preferences, directly linked to their browsing andpurchasing history. This is a limit of our work.Further quantitative analyses must be developed based on the data collected amongthe sample of 190 respondents in order to better understand the relationship betweenY-Gen behavior regarding new technologies habits like SNS on m-commerce andwine purchase and consumption. We are actually achieving them.BibliographyChowdhury, T.G. and Coulter R.A. (2006) - “Getting a ‘Sense’ of FinancialSecurity for Generation Y”, in American Marketing Association ConferenceProceedings, Chicago, Vol. 17, p. 191.De Magistris, T. Groot, E. Gracia, A., Albisu, L.-M. (2011) - "Do Millennialgenerations wine preferences of the “New World” differ from the “Old World”?: Apilot study", International Journal of Wine Business Research, Vol. 23 Iss: 2,pp.145 - 160Djamasbi, S., Tullis,T., Siegel, M., Ng, F., Capozzo, D., and Groezinger, R.(2008) - Generation Y & web design: usability testing through eye tracking. In:Proceedings of the Fourteenth Americas Conference on Information Systems.Toronto, Canada.Fountain J., Lamb C., (2011) - "Generation Y as young wine consumers in NewZealand: how do they differ from Generation X?", International Journal of WineBusiness Research, Vol. 23 Iss: 2, pp.107 - 124Hachette-Vin (2012) - retrieved from the Internet the 3rd of June 2012 athttp://www.hachette-vins.com/forum/Lenhart A., Purcell K., Smith A. and Zickuhr K. (2011) - Social Media and YoungAdults, Pew Internet & American Life Project (2011) - Pew Research Center,retrieved from the Internet on February 2011 athttp://www.pewinternet.org/Reports/2010/Social-Media-and-Young-Adults.aspx
  11. 11. Lescohier, J. (2006) - “Generation Y… Why Not?” Rental Product News, Vol. 28,pp. 40-44.Maamar Z. (2003) - Commerce, E-Commerce, and m-commerce: What ComesNext? Communications of the ACM, December 2003/Vol. 46, No. 12ve, pp.251-256Mueller, S. Remaud, H. and Chabin, Y. (2011) "How strong and generalisable isthe Generation Y effect? A cross-cultural study for wine", International Journal ofWine Business Research, Vol. 23 Iss: 2, pp.125 - 144Neuborne, E. and Kerwin, K. (1999) - "Generation Y", Business Week, p. 46-50Ngai, E. W. T., and Gunasekaran, A.(2007) - A review for mobile commerceresearch and applications. Decision Support Systems, 43, 1, 3–15.Norum, P.S., (2003) - ‘Examination of generational differences in householdapparel expenditures’, Family and Consumer Sciences Research Journal, Vol.32, No. 1, pp. 52-75.Raines, C. (2002) - Managing millenials. Generations At Work. Retrieved onOctober 29, 2004, from http://www.generationsatwork.comSchummer, T. (2001) - GAMA-Mall: shopping in communities. In Proceedings ofthe Second International Workshop on Electronic Commerce (WELCOM’2001),Heidelberg, Germany.Venkatesh, V., Ramesh, V. and Massey, A. P.(2003) - Understanding usability inmobile commerce. Communications of the ACM, 46, 12, 53–56

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