Vincor: Project Twist
Report
Feb 13, 2014
Karen Stanley, Olivia Pratile, Alexandra Carlow, Caitlin Tizzard, Lorena Reyes
Table of Contents
Company History
Case Background
Key Issues and Decisions
Market Characteristics
Competitive Landscape
Analyses
SWOT Analysis
PEST Analysis
Porter’s Five Forces
Challenges
Case Synopsis
Alternative Recommendations
Final Recommendation
Epilogue
Company History
Vincor’s history can be traced back to 1874 with the establishment of the Niagara Falls Wine
Company, founded by Thomas Bright and Francis Shirriff. Over the years, a number of Ontariobased wineries were established, eventually amalgamating into three large companies. In 1993,
these companies; Cartier, Inniskillin and T. J. Bright, merged together to form Vincor. As of
2004, Vincor was the world’s eighth largest producer and distributor of wine and wine-related
products.
Case Background
Vincor: Project Twist details the decisions that Vincor’s marketing team had to make in order to
create a new alcoholic beverage to bring to the market. This task was challenging due the fact
that “what’s trendy today may not be trendy two years from now,” as stated by Vincor’s
marketing manager Kelly Kretz.
Key Issues and Decisions
The key issue in this case was coming up with a concept for a new alcoholic beverage product.
Decisions to be made in regard to the product included: product characteristics, positioning,
target market, branding, packaging and distribution strategy, pricing, and promotional strategy.
Vincor was already a well-established player in the wine industry, holding 16% of the
refreshment market in 2004 with their VEX and Growers Cider brands. Creating a successful
new cooler could help Vincor gain an even larger share of the $230 million refreshment industry;
however, reaching success in such a highly competitive market was a significant hurdle to
cross.
Market Characteristics
The refreshment category has been traditionally split by cooler type: spirit, cider or wine, though
the term “cooler” is often used to refer to all three beverages. Over 6.8 million nine-litre cases of
coolers sold in 2004, making the refreshment industry an attractive one. According to Vincor’s
survey, 56% of adult Canadians consumed at least one type of cooler.
Generally, the target market for coolers is university aged adults, who have exploratory tastes
and are open to trying new things. Vincor’s survey indicated that over a third of cooler drinkers
were less than 34 years old, with 57% being female, 43% male. In terms of purchasing
behaviour, 93% of respondents claimed flavour as the most important driver for purchase,
followed by “looking for something familiar” (59%), “looking for something new and different
(44%), and the brand (37%).
A unique characteristic of the refreshment category was its seasonal nature, centered around
the Canadian summer. As a result, just a few weeks’ delay of a spring launch could equate to
significant bottom line sales losses. Companies generally start preparing for new products 10-12
months in advance: conducting research in the spring or summer, pitching the retail trade in the
fall, and finalizing production and distribution in the winter to have the products on shelves by
the start of April.
Unfortunately, the refreshment category is a competitive one. New products have a short
lifespan, rarely lasting beyond three years. There is constant innovation by companies creating
both new flavours and new products: 30% of coolers on the shelf each year are either new
products or line extensions. Additionally, as of 2004, the refreshment category was down 6%
from the previous year.
Competitive Landscape
The refreshment industry was dominated by a few market leaders, with competition also coming
from a large number of new products entering the market. Vincor’s main competitors were
Smirnoff Ice, Bacardi Breezer and Mike’s Hard Lemonade.
Smirnoff Ice is a vodka-based drink, and held 26% of the market share in 2004. It is known as
the market leader, and is seen as edgy, cool, and appealing to both males and females. It also
has the benefit of having a brand name attached to it.
Bacardi Breezer is a fruity, rum-based drink, and held 17% of the market share. It is a more
female-oriented beverage, and associated with a tropical lifestyle.
Mike’s Hard Lemonade was launched in 1996, and is considered to have been the first cooler
on the market. It held 9% of the market share, and has a strong masculine appeal.
Vincor was already a player in the market as well, with their VEX line of products and Growers
Cider. VEX, with 7% market share, was seen as being good value, but was still establishing its
brand identity. Growers held 9% of the market share, and was associated with BC, nature and
fruit. Vincor also had Canada Cooler, the number one wine cooler in Canada with 60% of the
wine cooler market share, but only 2% of total cooler share, as well as TABU, a carbonated lowalcohol beverage with an insignificant market share. Neither product was a significant source of
revenue nor held much growth potential.
SWOT Analysis
Strengths
First and foremost, Vincor had prior experience in the refreshment market. Since they produced
VEX, Growers and Canada Coolers, they were already established in the refreshment industry.
Vincor was also a leading Canadian wine brand which would assist in getting meetings with the
various liquor boards in each province. They had an experienced sales team that knew exactly
what it would take to get the product into the liquor stores across Canada and what types of
promotions had worked in the past.
Weaknesses
Despite their successful refreshment brands, Vincor was seen primarily as a wine company
which meant that getting people behind a new refreshment product could prove to be difficult.
The launch of a new product could be very risky because they were missing the in-house
capabilities for some of the options for labelling, bottling and fermentation. This meant that they
would likely have to outsource and risk losing control of the product. Lastly, there was no brand
name liquor to back the cooler (ex. Bacardi, Smirnoff). People lend more legitimacy to a new
product if it is backed by a product the consumer already knows.
Opportunities
Studies conducted by the firm said that even with relatively high levels of brand loyalty,
consumers were still very interested in trying new products. This was especially true with young
drinkers who didn’t want to drink what their older siblings drank. With this drive to try new
products, there was a huge opportunity to achieve high volume sales through innovation.
The absence of a gin- or tequila-based refresher on the market revealed another opportunity for
Vincor. If Vincor were to go this route, they would be embracing the “Law of the Category”: if
you can’t be the first, create a new category in which you can be first. This goes the same with
the creation of a premium 6-pack. At the time, there were no 6-pack premium refreshments in
the market. Vincor could differentiate itself based on their packaging.
Lastly, there may have been the opportunity to increase distribution through bars and
restaurants. In 2004, bars and restaurants only made up 10% of Vincor’s business. However,
restaurants are where a lot of trial and awareness is made possible. There was a lot of potential
to grow the business through these outlets.
Threats
The refreshment market is highly competitive and dominated by a few huge category leaders. It
is difficult to fight for market share against industry leaders. In addition, the refreshment
category was shrinking 6% annually which made the market very volatile. Regardless of the
shrinking sales, companies came out with many new products annually. Thirty-percent of the
category was made up of either completely new products or line extensions of existing products.
This meant competition was constantly changing and innovating.
Even if the new product was successful, there was the risk that it may compete too closely with
one of Vincor’s other products, such as VEX. If there was not enough differentiation, the sales of
the new product could cannibalize the sales of their already successful product lines.
The Canadian liquor distribution laws make it difficult to completely penetrate the market. Each
province only has one or two major buyers, for example, the LCBO. If Vincor was unsuccessful
in making the sale to these key buyers, they would have no way to get the finished product to
the consumer. Also, getting shut out of a key province such as Ontario could mean failure.
Lastly, the refreshment market is known for its short product life span. Successful products
might have a three year shelf life, and many fail within the first year. This was a huge threat.
Even with a successful launch, Vincor would need to constantly work on the brand and the
product itself to remain relevant in a transient market.
PEST Analysis
Political
As mentioned before, the liquor market is largely government regulated. There are a variety of
different regulations in each province and it is important for the sales reps in each area to have
a complete understanding of the market in their territory. This includes knowledge of any laws
regarding alcohol distribution, as well as any regulations about packaging, language laws, and
advertising.
Economic
In 2005, the market was fairly stable. Inflation was rising steadily and people’s disposable
income levels were increasing. Therefore, the Canadian population would be able to afford nonessential items such as alcoholic refreshments.
Social
The cooler market is a market dominated by females. Often coolers are seen as ‘girly’ which
has pushed males away from drinking them. However, coolers are becoming increasingly
socially acceptable for males. In 2002, males made up 30% of the consumers of refreshers,
whereas women made up the other 70%. However, the research conducted in 2005 showed
that sales to men were up to 43% with women making up the other 57%.
Technological
In 2005, social media was about to take off and websites and blogs were already prevalent.
Vincor would need to take the rise of the internet into account in their 5 year plan. However, it
was not a huge issue at the time.
It was also important for Vincor to take advantage of any innovative technological advancement
in the manufacturing process. If they were going to add new infrastructure to support the
creation of a new type of beverage, they should search for new products that may set them
apart from the competition. This could also mean a more ecologically friendly manufacturing
process.
Porter’s Five Forces
Competition in the Industry
HIGH
There is a very high level of competition in the refresher industry. The category shrank 6% from
2003 to 2004 resulting in companies fighting over market share in a declining market. With huge
players such as Bacardi and Smirnoff in the mix, there was even less market share for the
smaller companies to compete for. There were also many new companies entering the
refreshment market each year which meant there were constantly new products to compete
with. The refresher customer is very exploratory and the cost of switching to a new brand is very
low with little to no risk to the consumer. Since the product is low involvement, it is very easy to
impulsively try a new flavour or brand. And since it is fairly inexpensive (compared to a higher
involvement good such as a car) if the consumer does not like it, it is not a huge hit to their
pocketbooks.
Threat of New Entrants into Industry
MEDIUM
Even with the difficulties posed by Canadian liquor laws, it was still a relatively easy to enter the
market, especially for already established companies. This comes in the form of both new
products and line extensions. However, with the difficult process of getting new products to the
consumer through the provincial liquor distributors, it is difficult for smaller companies to get
their products in stores.
Power of Suppliers
LOW
At the time, much of the fermentation and processing was done in-house which meant that
Vincor’s suppliers had little power over the finished product and pricing. However, with some of
the ideas explored in new product development, Vincor may relinquish some of their power to
outsiders through outsourcing.
Power of Buyers
HIGH
As mentioned before, there are only really one or two major buyers in each province since liquor
distribution is government run. Liquor stores keep very few SKU’s (Stock Keeping Units) on the
shelves since there is limited space in their stores. If products do not perform, they are taken off
the shelves in favour of another better performing product. With little to no alternative to these
provincially run stores, failure to get into one of the provinces outlets would be disastrous and
would likely mean the end of a product.
Threat of Substitute Products
HIGH
In addition to the many different coolers out there, there is the chance that many formulations
could be easily replicated at home. For example, Smirnoff offers a Vodka Cranberry Lime
cooler, which can be easily made at home with the ability to customize the strength of the drink
and serving size. The consumer can also use their favourite brand of vodka and cranberry juice
rather than relying on what the manufacturer uses. There is also little differentiation between
products. Even though companies may categorize each beverage differently, they are all
considered “coolers” by consumers. This means that a vodka-based cooler and a rum-based
cooler may be purchased interchangeably. Vincor must take into account anything that can be
considered a refresher beverage when discussing substitute products.
Challenges
One of the biggest challenges Vincor faced in this case was the high level of competition in the
refreshment market. Up to 80% of new products failed to last beyond the first year. Exhibit 6
mentions the fact that “the refreshment category as a whole is overdeveloped in all regions
except Quebec.” The nature of the university-aged target market was also a factor in the large
amount of innovation in the market, as trends and tastes constantly change and demand for
new products is high.
There were certain limitations of Vincor’s actual in-house production capabilities as well. Current
in-house capabilities were based off of production of the products already under Vincor’s
umbrella, and did not allow for certain packaging options or beverage options that Kertz was
considering.
The nature of coolers in the minds of the consumers was also a challenge. Focus groups
identified a number of drawbacks to drinking coolers, such as their high sugar content, toostrong taste and poor aftertaste, and feelings of fullness and bloating. Overcoming these
perceptions when marketing the new product would be important.
Finally, distribution of the product was a potential barrier. Given the regulation of alcohol sales in
Canada, Vincor had to appeal to each separate buyer in each province to ensure their product
had a place on the shelf. Getting the product onto each liquor boards store shelves was only
part of the battle, as agency stores in smaller towns also had to be convinced to pull products
from the central buyer to ensure complete distribution to consumers. The development of storemandated limited time offers and strong marketing programs would be critical in order to secure
the best placement in stores.
Case Synopsis
In order to create a new beverage that would appeal to consumers and distributors, and surpass
the one year trial period, Vincor had to differentiate the new product from the competition in
flavour and packaging. It was imperative that the flavour introduced something new to the
market while adhering to consumers’ preferred tastes. Similarly, all elements of packaging had
to be creative and attract the attention of consumers while remaining financially on-track.:
Beverage Concept
REAL FRUIT JUICE
Real fruit juice was the preferred flavour by respondents in Vincor’s qualitative research study.
Some of the advantages of introducing a real fruit juice-based cooler were its healthier nature,
lower added sugar content, and lack of carbonation. Survey respondents still showed concern
over other artificial ingredients in the beverage, potential to be filling, how easily be made at
home instead. A real fruit juice cooler did not exist in the market in 2004; however, Yuha had
launched a similar product the year before and failed. There was hope that with better
positioning, promotion and packaging, Vincor’s potential new beverage could succeed.
GIN
Gin-based drinks were also non-existent in the market in 2004. A gin based spirit would attract
those who preferred a less sugary drink. Another advantage of having a gin based drink was
that it could easily blend with any flavour to create a unique and sophisticated product offering.
The disadvantages of gin were that it would alienate vodka and rum drinkers, and didn’t have a
brand name alcohol attached to it.
SPRING WATER
This concept tested well in the survey. On a health note, a spring water-based spirit promised
less dehydration, less sweetness and fewer in calories. A major concern for Vincor was
flavouring if it proved too flavourless for consumers.
TEQUILA
Like gin, tequila would also be a unique offering in the market. A Vincor tequila-based beverage
would include putting a gummy worm in the bottle. This was found to be a disadvantage as
consumers could be turned off by the worm in the bottle. Survey results showed non-tequila
drinkers were concerned about the overpowering taste of tequila.
ENERGY COOLERS
This beverage concept was a contender because Red Bull and vodka turned out to be a popular
choice in the qualitative study conducted. It promised the convenience of having a pre-mixed
drink, as well as a fruit flavour taste. The obvious advantage was increased energy, and many
would find it appealing that energy drinks use guarana berry as a natural source of energy.
Some drawbacks for this concept were the high sugar and caffeine content, as well as the
negative impressions of energy-based alcoholic beverages for health purposes.
Packaging
CARRIER
The carrier design would directly impact the production costs of the new product. The decision
was to be made between a 4-pack versus a 6-pack, and an open versus a closed box carrier.
The combination of these features would either connote the new product as a premium or value
product. See Table 1 for details.
LABEL
As with most products, labels and logos are essential to attract and catch the attention of
consumers, especially when introducing a new product into the market. Vincor wanted to
introduce a premium product with an “edgy” look to generate interest and curiosity for its
product. A paper label was the easiest and least expensive option but also the least upscale.
Ceramic labels are graphics and text etched directly onto the bottle using a laser. Vincor would
be the first cooler to use ceramic labelling, but did not have in-house facilities to do so. Pressure
sensitive labelling would offer maximum flexibility for creative design making it the best option
for creating the desired “edgy” look, but at a high cost and again requiring outsourcing. Vincor’s
last option was no label on the bottles. Having no label would be unique, edgy and inexpensive
to execute. However, there was the concern that no label would create a lack of interest in
consumers to try the new product. See Table 2 for more details.
BOTTLE
The two options for bottles were plastic or glass. As with most packaging options discussed so
far, there are costs to be considered for each, as well as differences in perceived quality. Along
with this, the size and shape of the bottle are also important considerations for design and
creative purposes.
Plastic bottles are usually associated with bottled water products, soft drinks, and sports drinks,
but would be less expensive and more durable. Glass would be the conventional choice for the
cooler category, offering a longer shelf life than plastic bottles. Vincor considered introducing a
square-shaped bottle for the new product as a differentiator, but doing so would require a new
mold. In terms of size, Vincor was considering the standard bottle size (341 millilitres), which
would be comparable to other coolers on the market. See Table 3 for more details.
Pricing and Discounting
A well-planned pricing and discounting strategy could create enough interest in a new product to
maintain the necessary profit margins, and Vincor had four main pricing options. The Grey
Goose Approach would use price to connote “premium”, but could potentially turn off customers
without a well-known brand name attached. Line pricing the new beverage would price the new
product at slightly below the market leader, establishing it as a competitor for the market leader
in terms of price and quality. Pricing below the $9 value strategy had the possibility of
generating higher sales volume but could affect the perceived quality of the product. It would
also create competition for VEX. Finally, discounting in-stores through LTOs (limited time offers)
would ensure good placement in provincial liquor stores, grab the attention of consumers would
and hopefully increase sales through promotion. See Table 4 for more details.
Promotional Strategy
In a period in time when social media was not a major aspect of the marketing mix, Vincor’s new
cooler beverage could be heavily marketed via experiential marketing initiatives that thoroughly
engage consumers to try the new product in different ways. In-street and event sampling is a
great method for consumer trial, while providing key information about the company and product
itself. This would lead to word-of-mouth recommendations, meaning quicker product recognition
among the market. As mentioned above, LTOs would also support these initiatives as
consumers would be put in front of the new product right away and at a discounted price.
Experiential marketing should be supported through traditional forms of marketing such as
commercials and ads that give the brand and product an image and character.
Target Market
Vincor was hoping to bring a new, unique product to the market that would appeal to both men
and women. It would be positioned as a premium beverage with an ‘edge’. The demographic
targeted would change depending on the final product chosen. However, based on previous
quantitative and qualitative research, mainly a younger demographic drinks coolers, and
therefore Vincor: Project Twist’s target market would also likely be younger adults and
university-aged individuals. .
Alternative Recommendations
Recommendation #1
Our first recommendation is a spring water-based cooler. Featuring a premium yet value
conscious product, we opted for a square, plastic bottle priced under the ten-dollar mark and
sold in a four pack. We preferred the spring water based beverage because it received
favorable results from consumers. When asked how likely they were to try a new product, 77
percent of the total survey population stated that they would be either very likely or likely to try
spring water coolers. As one of the most preferred beverage options, spring water also had the
highest incidence of regular drinking at 21%. This is important since the key issue in launching a
new beverage product is having it surpass the first year trial mark. Taking into account the
consumer information presented in the case synopsis we would have to ensure that the
beverage would have an appealing taste.
We chose the bottle, shape, price and packaging based on the aspects that would reach a
broader audience. The plastic bottle presents an athletic, on the go, smart beverage that
appeals to both genders. We opted for a square bottle that revitalizes the premium appeal that
may have been lost with the plastic bottle selection. The four-pack again resonates with a
premium product, but pricing the beverages under ten dollars assists in providing an affordable
option. These choices help develop a product that is significantly different from others on the
market and one that will draw in a broader audience.
Recommendation #2
Our second recommendation is a real fruit juice based cooler. Since Vincor was interested in
launching a premium product our second recommendation will encompass the premium aspects
previewed in the case synopsis. The real fruit juice beverage would feature a round, glass
bottle, sold in a four pack and priced above the ten-dollar mark. Real fruit juice was chosen
because research demonstrated that it was the number one beverage concept of choice, with
85 percent of respondents stating they are very likely or likely to try real fruit juice coolers.
Furthermore, it had the highest anticipated occasional drinking, with 78 percent of respondents
stating they would drink the products again. Similar to spring water, these factors are integral to
a new product launch because recommending the top beverages consumers favored could lead
to a better anticipated sales run within the first year.
With the first recommendation we were looking to generate a product that could appeal to a
broader audience, by mixing the premium with the affordable. With our second recommendation
we look to focus on a strictly premium product that Vincor aspires to launch. The glass bottle
accords to a premium beverage, because it cost more, has a longer shelf life and is more
acceptable within restaurants and bars. Going along with the premium theme, the beverage
would be in a four-pack and be in a higher financial bracket. A real fruit juice cooler presented in
this manner could really hone in on the older generations who have the financial backing to try
new products and continually purchase ones that are more expensive. Although our competitors
feature many of these packaging attributes, there was no other real fruit juice product on the
market and with growing health concerns there is a high probability that such a product would
succeed its first year.
Recommendation #3
Our third recommendation is to focus on current product lines and creating new line extensions.
Under the Vincor umbrella there are three main products that fall within the refreshment
category; VEX, Growers and Canada Cooler. Growers is the #1 cider in Canada, Canada
Cooler is the #1 wine cooler and VEX is the #3 spirit cooler in Canada. These brands carry with
them a well-established and profitable consumer group which is loyal to the brand name. Vincor
should take advantage of the market opportunities they already have by unveiling a new product
under one of these already established names. As demonstrated within the case study,
companies need to be innovative and continually find new beverage ideas for the market. It is
possible for Vincor to be innovative and develop a category to be first in, like spring water based
or real fruit juice based coolers, but it could have more of an impact if a new beverage was
launched under one of their existing brand names. This will be further expanded upon in our
final recommendation.
Final Recommendation
It is our recommendation that Vincor reconsider launching a new premium cooler beverage in
the refreshment market and instead develops innovative ideas under their existing product lines.
In this manner, we urge the company to expand on their well-known products and take
advantage of the market opportunities presented from them. For example, create new flavors,
like a water based vodka beverage but with the VEX name, or create new beverage flavors for
Growers. Having well established names like these could better market the product to
consumers and lead to further recommendations like expansion into other provinces.
We came to this conclusion based on several red flags that were evident throughout the case
study. Firstly, although this could be a very profitable market, it is extremely competitive and
over 80 percent of new product offerings fail within the first year. Secondly, getting distribution
rights within the province is quite complicated. Since only 6% of refreshment sales are from
restaurants and bars, the LCBO is an essential distribution center. If distribution is approved,
then we recommend continually investing in limited time offers to get the flow of traffic moving in
the products first year. Lastly, Vincor was not meeting its numbers this year and the general
appeal in the refreshment category was slowly declining. Launching a new product, with a new
name, would be a very big financial risk. With $40 million on the line, our recommendation to
Kretz and the Vincor executive team is to rethink launching a premium beverage product or to
do so under one of their existing well-established brand names.
Epilogue
In the summer of 2006, Vincor launched their premium spring water based vodka cooler called
Hydra. Hydra was presented in a round, glass bottle and featured creative print media
advertisements. One such ad showcased a ninja in a tank, kicking the water, with the tagline
“water with a kick.” Steve Bolliger was Vincor’s Senior Vice president of marketing and spoke
adamantly about the product. They decided to launch Hydra because water was a big trend at
that time and they felt they had an opportunity to stay current. Bolliger states, “sometimes when
you are number one you tend to look backwards instead of forwards.” Although Hydra showed
strong signs success in the first few months it was clear the product would not succeed beyond
its first year and in 2007 the product was dropped from the market.
Bibliography
Bell , Robert. "Vincor Canada: A Constellation Company." . Vincor International Inc, n.d. Web.
10 Feb 2014. <http://www.winesofcanada.com/vincor_history.html>.
CALJ. (n.d.). About Us. Retrieved from Canadian Association of Liquor Jurisdictions :
http://www.calj.org/AboutUs.aspx
Bourdeau, Annette. “Vincor Steve Bolliger thrives on launches.” Strategy, Web. 01 Oct 2006.
<http://strategyonline.ca/2006/10/01/who-20061001/>
Appendices
Table 1.
Carrier
Type
Pros
Cons
4-pack


Differentiation from vex (6-pack)
Premium aspect

Most competitors are in 4-packs
6-pack


Has to be priced above the $10
mark to achieve desired margins

Faster and inexpensive to produce (Vincor
already has 6-pack production facilities)
First premium product in the market to be in a
6-pack
Open box



Consumer can see product
Easy to pull out beverage
Has an easy to carry handle

Less surface space for creative
packaging
Closed box

Larger surface area for creative packaging,
design and copy

Not as easy to carry
Table 2.
Label
type
Cost
per
label
Pros
Cons
Paper
1¢

Easiest and less expensive option
(already being within existing
Vincor products)


Less upscale
Doesn’t achieve “edgy,” eyecatching, differentiation
packaging
Ceramic
3-4¢


First cooler to produce it
Premium aspect


More expensive
Higher costs (not recyclable)
Pressure
sensitive
6¢


Maximum flexibility for creative
design
Best option for an “edgy” look


Most expensive option
Higher costs (not recyclable)


Unique
Inexpensive

Lack of interest to try product
No label
-
Table 3.
Bottle
Pros
Cons
Plastic




Value product
Less expensive
More durable
Differentiation

Not a long shelf life (4 months)
Glass


Longer shelf life (up to 1 year)
Premium aspect

Conventional choice
Square shape


Differentiation
Brings “edginess”

More expensive (need to purchase new mold)
Size (341 ml)

Easiest size to use

Same as competitors (no differentiation)
Table 4.
Strategy
Grey goose
approach
Pricing
4-pack= $11.95
Perception


Premium pricing
Exceeds $10
psychological
threshold

Difficult to launch product at this
price mark without an existing
brand name


Value add
Compares with
market leader

Same as other products on the
market, people will go with the
name they know
Puts product too close to VEX
Confuses consumers on product
positioning
6-pack= $14.95
Line pricing
approach
Potential product=
$9.45
Pros/cons
Market leader
(Smirnoff Ice)=
$9.65
Pricing below
$9 value
Potential product=
$8.95

Value product


Store
discounts
(LTOs)
Deep discount=
$1.50-$2.00 (per
pack)

Addresses
premium or value
product
Deep discount
 Can lead to unmet profit margins
Smaller discount
 Protects profit margins
Smaller discount=
$0.50-$1.00 (per
pack)