chapter 2 - Bentham Science

Research Topics in Agricultural and Applied Economics, Vol. 2, 2011, 73-84 73
Anthony N. Rezitis (Ed)
All rights reserved - © 2011 Bentham Science Publishers Ltd.
CHAPTER 6
Territory Image and Notoriety as Sources of Equity in the Wine Market
Domingo Calvo Dopico *
Economic Analysis Department and Business Administration, University of A Coruña, A Coruña ZIP code: 15071, Spain
Abstract: The world wine market is mature, together with an increasingly global, open and very competitive
environment. Companies have to face the challenge of achieving differentiated quality based on the creation of
equity. One of the mechanisms to build this differentiation is the creation of strong brands. The objective of this
paper is to find out which sources of brand equity could endow the product with a higher differentiation. To
respond to this objective, we carried out a study with five Spanish collective brands: Rioja, Valdeorras, Ribeiro,
Rias Baixas, and Ribera de Duero. A panel of 296 consumers assessed the dimensions of brand equity for each of
them. Results reveal that the most important source of equity, from the consumer’s point of view, in explaining
the formation of brand equity, is territory image. Territory image is a differentiating factor used by consumers to
identify and recognise a specific brand among the many alternatives, as well as shaping an excellent source to
equity in the consumer’s mind. Another important source of equity is notoriety. Individual or collective efforts in
investments to create notoriety and territory image would be very important in creating a strong brand. This is an
excellent way to build authentic brand equity. Regarding wineries, the procurement of authenticity will be critical
in commanding price premiums and obtaining an advantage against potential competitors.
Key Words: Consumer behaviour, brand equity, wine market.
INTRODUCTION
The world wine market is mature, with a very slight increase, together with an increasingly global, open and very
competitive environment. This level of competition has risen with the appearance of new competitors with growing
wine production such as Argentina, Chile, Australia, South Africa and the United States. Elsewhere, we are faced
with a very disperse market, with thousands of individual brands (over 10,000 domestic brands in the Spanish
market) that are battling to defend a position in this huge international market. Faced with this scenario, companies
have to look for solutions based on a better offer in terms of equity. Spanish companies need to face the challenge of
achieving differentiated quality and aim to improve their competitive position (Vrontis and Paliwoda, 2008). One
mechanism to build this differentiation is the creation of strong brands (Spawton, 1998) which are necessary in very
mature and competitive markets such as the one in question.
However, as we have just mentioned, there are numerous individual brands, and many of these belong to small
producers or vineyards. These producers lack the economic and financial resources necessary to create a commercial
brand. One of the brand strategies that can be used in the sector is the creation of collective brands (e.g. designation
of origin, geographical indication, quality mark, etc.). A collective brand is the result of a combined effort of
different producers in order to create a differentiated quality. The objective of this paper is to find out which sources
of brand equity could endow the product with a greater differentiation. Previous literature (Aaker, 1996; Keller
1999, 2003; Keller and Sood 2003) has proposed various sources of brand equity such as are awareness, quality,
image, loyalty and other assets.
However, we need to know and to research the nature and meaning that each of these dimensions has for the market,
as well as to discover the weighting of each of these in brand equity, viz., the contribution each one makes to the
final brand equity. To respond to this objective, we have divided this work into five sections. First of all, we will
provide a detailed explanation of the theoretical framework and main foundations of brand equity. Next, based on
these foundations, we will develop the model for the case of the wine sector. We will then explain the methodology,
followed by the analysis of results from which we will draw the main conclusions. Lastly, we will explain the key
limitations of the study and future lines of research.
*Address correspondence to Domingo Calvo Dopico: Economic Analysis Department and Business Administration, University of A Coruña,
A Coruña ZIP code: 15071, Spain; Tel: + 34 981 16 70 50; Fax: +34 981 16 70 70; Email address: domingo@udc.es