Pricing Strategy There are a number of pricing strategy decision to be made including, but notlimited to,
Athletic Brewing Company: Crafting the U.S. Non-Alcoholic BeerCategory
What is the right price level relative to competition & substitutes (e.g., muchhigher, higher, the same, lower, much lower)?
Why? Should beverage items be lined priced, individual priced or there be several pricepoint groups? Why? Desired pricing in physical channels (e.g., stores) versus on-line. Should they bethe same or different? Why? Don’t worry about food service as you can assume that channel takes a”standard” premium to the retail channel prices. Should they continue with the on-line subscription pricing options? Why or whynot? You can assume that distributors and retailers take a combined gross marginof 35% of the consumer selling price. You can also assume that shipping and handling costs 20% of the current on-line consumer selling price ($13.99 for a 6 pack). If you decide as part of your product strategy to offer multipacks, how shouldthey be priced compared to single cans? Why? It would be wise to look at what competitive pricing of singles versusmultipacks in your store visits to ensure that your recommendation makessense. A criteria table is NOT required for your pricing decisions. Simply determine yourrecommendation and provide a short (2 – 4 bullet point) rationale for that decision. Remember that there may be other pricing strategy recommendations that youneed to make in addition to the ones identified above.Marketing Distribution Channel Strategy – 10 marks Based on all the previous decisions that have been made, where should AthleticBrewing sell their product? Which retail channels are high priority, medium priority, low priority or not used atall? In addition to the physical retail and food service channels mentioned previously,you must, obviously, also consider physical taprooms, on-line channels includingthird-party on-line sites (e.g., Amazon) and whether or not they should continueto operate their existing on-line sales channel. While it is not required or necessary to make a formal channel power & conflictanalysis, your recommendations must consider channel power & conflict issues (i.e.,they should be included as close-ended criteria in your criteria table)
Crafting an effective pricing and distribution strategy is crucial for the success of any business, and the non-alcoholic beer category is no exception. In the case of Athletic Brewing Company, a prominent player in this category, several pricing and distribution decisions need to be made to optimize market positioning, profitability, and customer satisfaction.
Relative Price Level: The right price level relative to competition and substitutes should be on par with or slightly higher than competitors. This ensures perceived quality and value for customers. Pricing significantly lower could imply lower quality, while pricing much higher might deter cost-conscious consumers.
Pricing Points: A tiered pricing approach with multiple price point groups is recommended. This approach caters to different consumer segments, offering budget-friendly options and premium choices. This strategy capitalizes on the diverse preferences and purchasing power of the customer base.
Physical Channels vs. Online Pricing: Pricing for physical channels and online platforms should be relatively consistent. A minor price variation might be acceptable due to factors like shipping costs, but maintaining a comparable pricing structure fosters consistency and avoids customer confusion.
Online Subscription Pricing: Continuing with online subscription pricing is advisable. This strategy not only enhances customer loyalty by offering convenience and consistent supply but also secures a recurring revenue stream for the company.
Multipack Pricing: Multipacks should offer a slightly discounted price per can compared to single cans. This approach incentivizes customers to buy in bulk and provides an attractive deal, increasing the average order value and sales volume.
Retail Channels Priority: High-priority retail channels should include health and specialty stores, where health-conscious and niche consumers frequent. Medium-priority channels might encompass grocery chains, targeting a wider audience. Low-priority channels could be convenience stores, while not using certain channels like gas station retail can help maintain brand image.
Online Channels: Athletic Brewing Company should continue to operate its existing online sales channel, leveraging its established customer base. Additionally, partnering with third-party online sites like Amazon can increase reach and tap into their massive customer base.
Physical Taprooms: Establishing physical taprooms can create a direct-to-consumer experience, enhancing brand engagement and customer loyalty. These taprooms can serve as flagship locations where consumers can enjoy the products and engage with the brand’s story.
Channel Power & Conflict: Channel power and conflict analysis must consider the balance of power between Athletic Brewing Company and its distribution partners. Managing channel conflicts through clear communication, mutually beneficial partnerships, and well-defined roles can ensure smooth distribution and preserve brand integrity.
In conclusion, pricing and distribution strategies are integral components of Athletic Brewing Company’s success in the non-alcoholic beer category. By carefully considering the relative price level, adopting a tiered pricing structure, maintaining consistent pricing across channels, continuing online subscription options, and offering discounted multipacks, the company can optimize revenue and customer satisfaction. Strategic distribution, including prioritizing retail channels, embracing online platforms, establishing physical taprooms, and managing channel power and conflict, will further strengthen the brand’s market position and reach. Balancing these strategies will not only drive profitability but also enhance the brand’s reputation and customer loyalty in a competitive market.
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