Wine pricing strategy
Businesses use various strategies in calculating the price of a product or services. These various methods of establishing the price of a commodity are referred to as pricing strategies. A commodity or service’s price can be set with an objective of maximizing profit related with each unit or the price of the commodity can be sold at market price (Smith, 2012). A business can lower or even increase the price of a commodity; this is done in relation to customers’ behavior and needs (Mills, 2002). The aim of the company is to make profit, calculating the factual price is an important trait for the success of the business. The aim of this chapter is to find a suitable pricing strategy that can be used by J.P. Chenet Company …show more content…
Various considerations will be made in coming up with the exact price with which the wine will be sold. The first factor that will be considered is the cost breakdown of the wine production. The next step will be to establish the cost that will be involved in distribution and promotion of the product. I will then analyze how quantity and price of the brand relate in Netherland. In addition, environmental factors will be considered. This will include competitors producing brands that are close to Semillon white wine and the legal requirements in Netherland. After considering the above factors, the last step will be to set the price and also defining the discounts that will be given. The best method that will be used is cost-plus pricing (Schindler,2012). The company will offer quantity discount to traders who will buy the product in bulky to enable them sell the product at fair prices while gaining profit.
In Netherland, VAT on wines is 21%. This will be taken into account when setting the price for Semillon white wine. Considering the above factors, price for Semillon white wine sub-label brand will be calculated as …show more content…
The company needs also to pay VAT tax, which is 21%. According to the article” Pricing strategy for wine in today's marketplace” wineries usually get a profit margin of 15%.
In the Netherlands the Excise duty is 88.36 Euros (Belastingdienst 2014), per 1 hectoliter, this means that if our bottle has 750ml we would have to add 0.6627 euros to the final price. The excise duty depends on the level of alcohol in the wine; in this case 14% is the amount of alcohol. Considering or costs as stipulated in the table, the price of the product will be 5.93 Euros per 1 bottle of Semillon wine.
In conclusion, the final retail sale of Semillon white wine per bottle will be 6.97.
Direct and Indirect Competitors
In order to be able to compete against other brands, external factors like direct and indirect competitors have been analyzed. The information is gathered from many retailers around the Netherlands. Direct competitors are the ones who sell Semillon in the Netherlands. Furthermore, the indirect competitors are the competitors which sell a similar wine but different grape. The tables below will give a better picture on the prices and how we can position ourselves in the market. The brands where chosen from the main retailers, which are: Albert Heijn, Mitra, and
Businesses use various strategies in calculating the price of a product or services. These various methods of establishing the price of a commodity are referred to as pricing strategies. A commodity or service’s price can be set with an objective of maximizing profit related with each unit or the price of the commodity can be sold at market price (Smith, 2012). A business can lower or even increase the price of a commodity; this is done in relation to customers’ behavior and needs (Mills, 2002). The aim of the company is to make profit, calculating the factual price is an important trait for the success of the business. The aim of this chapter is to find a suitable pricing strategy that can be used by J.P. Chenet Company …show more content…
Various considerations will be made in coming up with the exact price with which the wine will be sold. The first factor that will be considered is the cost breakdown of the wine production. The next step will be to establish the cost that will be involved in distribution and promotion of the product. I will then analyze how quantity and price of the brand relate in Netherland. In addition, environmental factors will be considered. This will include competitors producing brands that are close to Semillon white wine and the legal requirements in Netherland. After considering the above factors, the last step will be to set the price and also defining the discounts that will be given. The best method that will be used is cost-plus pricing (Schindler,2012). The company will offer quantity discount to traders who will buy the product in bulky to enable them sell the product at fair prices while gaining profit.
In Netherland, VAT on wines is 21%. This will be taken into account when setting the price for Semillon white wine. Considering the above factors, price for Semillon white wine sub-label brand will be calculated as …show more content…
The company needs also to pay VAT tax, which is 21%. According to the article” Pricing strategy for wine in today's marketplace” wineries usually get a profit margin of 15%.
In the Netherlands the Excise duty is 88.36 Euros (Belastingdienst 2014), per 1 hectoliter, this means that if our bottle has 750ml we would have to add 0.6627 euros to the final price. The excise duty depends on the level of alcohol in the wine; in this case 14% is the amount of alcohol. Considering or costs as stipulated in the table, the price of the product will be 5.93 Euros per 1 bottle of Semillon wine.
In conclusion, the final retail sale of Semillon white wine per bottle will be 6.97.
Direct and Indirect Competitors
In order to be able to compete against other brands, external factors like direct and indirect competitors have been analyzed. The information is gathered from many retailers around the Netherlands. Direct competitors are the ones who sell Semillon in the Netherlands. Furthermore, the indirect competitors are the competitors which sell a similar wine but different grape. The tables below will give a better picture on the prices and how we can position ourselves in the market. The brands where chosen from the main retailers, which are: Albert Heijn, Mitra, and