Cost
Market price
Production and outsourcing
To correctly price our product, a quality cost strategy must be put in place. With the current boom of the premium spirits market, the hardest part will be gaining the attention of our customers. This part will be developed in the communication section. While deciding on how to price our product, we must keep in mind the perceived value of the product to the consumer.
As explained before, our brand of tequila will belong to the premium market but in order to correctly identify our pricing, we must benchmark. To recall our definition of a premium spirit, its price must be between 50% and 100% higher than that of a standard product.
Below, we listed standard tequila brands available in three Belgian supermarkets (Delhaize, GB Carrefour and Colruyt) and took the mean to establish our price range.
The difficult part of producing tequila is that is has to be made in certain regions of Mexico like Jalisco. Moreover, the knowledge and the permits necessary to grow blue agave and distil the plant to produce tequila are difficult to quickly obtain. Therefore, outsourcing is the perfect solution to reduce our costs and maximize our margins. In addition to benefiting from the agricultures and distillers’ expertise, we will avoid the initial costs of building the distillery, buying farms and paying local supervisors.
Following this analysis, we decided to price our product between €35 and €40. The lack of sufficient data regarding premium tequilas for sale in Belgian supermarkets makes the price difficult to compare. Yet, when comparing our price bracket with that of spirits retail websites our prices correspond as shown below.
These prices correspond with what our surveyed showed us as customers were willing to pay almost €15 more for a better designed bottle. The packaging (and what it includes) is one of our unique qualities compared to other premium tequilas so we can conclude that our design will lead consumers to be attracted by our bottle. This confirms the idea that the product is a reflection of the quality of the product.
Besides the price that we have set, one of our objectives is to make our targeted segment loyal. Even though setting a lower price than our competitors seems the easiest way to do achieve this, the solution is not viable so we decided to include a goodie with our bottle. In addition to the product, a special glass will be sold so that customers can directly make the most of the experience associated with our tequila.
