IB Business Management SL 4.2.3 Niche and mass markets Question Bank

Secco Vineyards (SV)


Secco Vineyards (SV) is a family-owned business producing wine in Sonoma, California. In 1947, SV opened using cost-plus (mark-up) pricing. For SV's customers, the wines were medium priced and available in local grocery stores.
In 1977, Joe Secco, grandson of the founder, created a new strategy. He re-branded SV's wine for a niche premium market.
- SV began to sell directly to customers at its winery instead of in local grocery stores.
- SV stopped using cost-plus (mark-up) pricing and began to sells its wines at much higher prices than before.
- Regular wine tastings and promotional events were held at its winery. At these events, wine experts would promote SV's wines by creating an elegant experience based on a luxurious culture of wine consumption: stylish wine glasses, classical music and food that complements the wine.
However, SV has recently faced intense competition and sales have fallen. Local wine producers and overseas competitors have entered the market with similar market positioning. In order to maintain its brand image, S V has not changed its pricing strategies.
SV conducted secondary market research about other possible markets in the US for its premium wines. The research suggested that other possible markets for high-quality wines, such as those of S V, exist. As a result, S V is considering two options to increase sales in addition to its current distribution channel:
- Option 1: open a business-to-consumer (B2C) e-commerce store
- Option 2: sell SV wines to wholesalers serving the whole of the US market for premium wines.

Describe one characteristic of a niche market.