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Another Bargain From Adelaide Hills

Tiny Single Vineyard Central Barossa Valley

First Was 2008 Now The Ninth

Annals of Marketing
The Deadly and Effective Comparative Marketing of Woolworths
Wednesday, 24th November, 2010  - David Farmer

For a number of years both of the large retailers, Woolworths and Coles have used a method of selling liquor called ‘bundles’. They offer two items, or a bundle, for say $50.00 rather than singly at a higher combined price. Less frequently one of the paired products is either a brand they control as the importer or a brand they own. There are many variants of this simple theme.

When you pair your product with say a well known international brand you begin to mix selling and marketing.

The consumer gets confused and with time associates the lesser known brand with the better brand which might be for example Johnnie Walker. Use of this technique also allows the retailer to bring together two similar products which have a considerable difference in their cost price. Thus two for $50 may bring together spirits that cost $26.00 and $20.00 for a profit of $4.00. The consumer is attracted because they know that at least one of the products is worth far more than half the price which lowers the risk.

With this method the retailer has achieved three things: the customer equates over time the two products as equal and as the retailers product costs less than the established brand this increases the margin. The third benefit is that the retailers product cannot be attacked on price by other retailers. In this way the retailer can manipulate the profit margin and more importantly begin to further control the customer and move them away from brands which they do not control. As you can imagine this makes conventional wholesalers rather nervous.

Of the three liquor categories you can make the greatest use of this method with wine as the selling prices are far more variable than spirits while beer is controlled in Australia by just two companies and it is thus harder to get supply.

The Dan Murphy advertisement shows an advanced use of this method. In sequence Oyster Bay, Taylors and Grandin are used to sell three brands controlled by Woolworths. Coles do similar things. Recently it was mentioned to me that wine suppliers to Woolworths were told they will use their brands to sell and develop their own.

I know this is an effective, indeed deadly marketing technique as I have been using it for 16 years. I do not use the bundle idea but have periodically promoted exclusive retailer brands with a comparable supplier brand. In this way customers see the enormous price discrepancy and readily make the leap that the cheaper wine is of the same quality, and you can reinforce this in the body copy.

The Oyster Bay product in the Dan Murphy advertisement has not been done correctly as it really says two Tangaroa are only worth one Oyster Bay. This is not comparative marketing and is a different proposition entirely. It does though remove customer doubt about the unknown brand as they will rightly say; there is not much risk in this deal.

Big retailers though should be cautious with this method and show far more subtlety than they currently do as it is not in their long term interests to destroy brands.

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