Enjoy Tisdale’s California Merlot without having to worry about the cost. Black cherry, mixed berries, and undercurrents of spices this medium bodied wine is still full-flavored. The wine may cost less than $5 a bottle but offers a solid product in their core market segment. You won’t get kudos for your wine sophistication but you can come home with something versatile and drinkable.
Business isn’t always about offering the most expensive product at the highest price. Price sensitive consumers regularly purchase cheaper priced wines with satisfaction. Pricing strategies should consider the consumer segment and the company’s objectives when pricing their products (Duck, 1994). Are you seeking quality or quantity?
Companies will use market segmentation to understand and reach their target market. In the case of wines, this could include multiple bands of prices ranging from the price sensitive shopper to the status oriented shopper. If fewer competitors are in the low price segment it may be the perfect place to introduce a wine product.
One of the primary goals of business is to increase revenue. New business owners regularly assume status, impression, and image are more important than running the business progressively. When it pertains to commerce it is the successful reach into a market segment that will earn the most revenue and not necessarily the overall exclusivity of the product
Consider a high status wine that sells for a $100+ per bottle but is limited to a few thousand sales. Is it better than a business that sells 10’s of thousands of bottles for under $10? Pricing strategy, market research, and cost analysis will help the company determine at what price range their product should be sold. Be careful as a branded image in one segment is difficult to rebrand in another.
Tisdale’s Merlot may not be offered in the finest restaurants and may not fool your friends into thinking you’re a millionaire but it does offer quality within its chosen market. For a few dollars you can throw this in the cart and be satisfied with its taste and consistency. Try it with burgers, pizza, and spicy foods.
Duke, C. (1994). Matching appropriate pricing strategy with markets and objectives. The Journal of Product and Brand Management, 3 (2).