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Stuart Cellars: Marketing the Core

Wine is one of the most favorite alcoholic drinks all over the world. There are a lot of different brands which products are very popular and people all over the world consume them. There are a lot of wine clubs all over the world when people consume the wine products of one brand. People used to consume products of high quality and demand from producers more and more perfect wine products. The appreciators of wine products all over the world know the Stuart Cellars Wine trademark and continue to consume it and valuing its high quality.

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Stuart Cellars’ trademark with a product of high quality. Many old honored traditions mixed with the California style of the winery are used by Stuart Cellars to become a popular brand. Vigilant adherence to quality is maintained by winemakers of Stuart Cellars. (Stuart Cellars)

The Stuart Winemakers are sure that the “good wine must be aged in good barrels” (Stuart Cellars Winery), which is one of their demands while producing their wines. The Stuart family tries to do as much as possible to supply us, the consumers, with wines of the highest quality.

The price rate of Stuart’s cellars wine varies greatly: from $15 per bottle to $56 per bottle. The members of the Stuart Cellars Wine Club have an opportunity to buy wines with discounts. The Stuart Cellars Wine Club members can also get wines that are not accessible to other consumers. (Order Wines)

Let us try to calculate break-even volume with such data: Stuart cellars annual fixed costs are $1,000,000. With an average retail price of $28 per bottle and assuming estimated unit variable costs of $11.50. To solve this problem we should use the following table, where TR = P*Q; VC = UVC*Q; TC=FC+VC, and profit = TR – TC:

Q P TR UVC VC FC TC Profit
0 28 0 11.5 0 1,000,000 1,000,000 -1,000,000
60606 28 1,696,968 11.5 696,968 1,000,000 1,696,968 0
100000 28 2,800,000 11.5 1,150,000 1,000,000 2,150,000 650,000

Let us imagine the next situation: you are a Stuart Cellars Wine Club member. You want to order Cabernet Sauvignon that normally retails for $45 per bottle. The following discount structure applies a 20% discount for purchases of 11 bottles or less; 30% discount for purchases of 12 bottles or more. Add 7.75% sales tax for California residents. Our task is to answer the questions: what price before shipping and handling, would you pay if a) you order 10 bottles? b) you order 12 bottles? What are the implications of this discounting structure?

To buy 10 bottles of wine we should make such calculations: 10 bottles will cost $450. Taking into consideration discount and tax we will get: $450 – 20% + 7.75% = $387.9 – we will have to pay for the order. So, one bottle will cost $38.79.

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To buy 12 bottles we will have to pay 450 – 30% + 7.75 = $339.41 – we will have to pay for the order, and one bottle in this case will cost $28.28. To sum up, the profit from buying more bottles is visible: the more you buy, the less you pay.

Stuart Cellars use lots of strategies to gain success and profit in business. The main strategy has just been presented in the example with discounts, which depend on the number of bottles you want to buy. One of the ways to gain profit is to maintain a price policy where a firm charges a relatively low price for a product initially. (Baker, 2002) Stuart Cellars continues this strategy till now, providing low prices for its Wine Club members and flexible discount.

Reference List

Baker, D. (2002) Setting the right price. Chepter 18. South-Western.

Order Wines. Stuart Cellars. Online. Web.

Stuart Cellars Winery. Official site. Web.

Stuart Cellars. Touring and tasting. Wine food travel. Online. Web.

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