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How to discount for business growth

'Auldstone's discounting works because it caters to our target market.'
Michael Auldstone, Auldstone Cellars

Top tips

  • Know your customers and what will be an incentive to buy
  • Be careful not to devalue your high-end items
  • Encourage return customers by offering loyalty cards

Auldstone Cellars is a boutique winery in Taminick that markets many different wines. Owners Michael and Nancy Reid have learned what their top discounting methods are through customer research and analysing sales.

Have a discount label

Their wine blend, Kelly's Red, is a separate label from their premium varieties and is made from the excess grapes of the harvest. Kelly's Red sells for $6 per bottle compared to $25 per bottle for their premium reds.

The Kelly label enables better economies of scale, a workforce all year round, better utilisation of vineyards and ensures overheads are covered.

Friends of Auldstone Club discounting

Their loyalty club rewards good high-end customers for their patronage by offering 15 to 20 per cent discounts. The larger the order, the greater the discount. Since discounting, 200 members of the loyalty club spend $300 per year on average.

Wholesale discounts

Auldstone's sell direct to retail outlets offering discounts of 10 per cent based on sales of two or more dozen. It does impact on cash flow with payment terms of 90 days common. Small specialised retail outlets are preferred to volume supermarkets.

Know your market

Auldstone's discounting works because it caters to their target market. For Auldstone Cellars:

  • Discounting is best used when it rewards customers for loyalty
  • Discount labels help move excess wine that would be deemed as lower quality without adversely affecting the price of their premium wines
  • Discounting to move volume using 'end of year' sales techniques does not work for a boutique winery.

The result

Auldstone's discounting works because it caters to their target market. Research helped them discover club members are not price sensitive. Visitors are there for the boutique food/wine experience. Each year Auldstones aims to have a wine with a 'wow' factor. Exclusivity at a good price heightens member interest and helps sell the other wines. Conversely, 'end of year' discounting has not been successful as club members are not price sensitive.