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From:
Mike Rossander <[log in to unmask]>
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Informed Discussion of Beekeeping Issues and Bee Biology <[log in to unmask]>
Date:
Tue, 24 Jul 2012 11:04:45 -0700
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One option in the short-term is to bottle in the existing beer bottles.  The narrow neck is a bit of an inconvenience but some of the best honey I ever bought was in the Carribean in a recycled whiskey bottle.  You would have to teach the packers how to translate from the bottle's volume measurement to a gram measurement but the conversion is fairly straightforward.  A 355 ml bottle holds about 480g of honey.  Once you can demonstrate that sales are good in the smaller existing bottles, you may have an easier time convincing the manufacturer to make the investment for custom bottles for honey.
 
The economic principle that you are looking for is "pricing diversification" or more precisely "second degree price discrimination".  (The more general economic concept is "vertical product differentiation" on the dimension of size.)  All are based on the economic principle of the demand curve.  For any given price on the demand curve, you can predict how many customers will buy at that price point.  If you lower the price point, you will see an increase in customers who will buy at that price point (assuming a normal demand curve).  With pricing diversification, you can serve both market segments instead of just the one market segment.  
 
See this chart from Wikipedia.  http://en.wikipedia.org/wiki/File:Pricediscrimination.small.png  Total sales are represented by the area under the curve (price times volume) at any given point.  Perfect diversification gets you everything under the curve but perfect diversification is impossible.  A single price point gets you only the one box under the curve - P x Q.  Two price points gives you the original area (P2 x Q2 in the second diagram) plus the incremental area ((P1-P2) x Q2).  The more price points you can offer the customers, the more of that total area under the curve that you will be able to capture.
 
Okay, it's not quite that simple.  There will be some degree of cannibalization of the market as customers who were just at the margin in the single-option scenario switch down to the smaller size but the number is almost always offset by a larger number of customers who were just on the other side of the margin and will now buy.  It is possible to calculate exactly how many but the exercise is very data-intensive - I've seen few examples other than the US gasoline demand curve.  As a general rule, though, diversification to between 3 and 7 options is always an improvement.  (More than 7 options on any one dimension in the market and you start to see customer confusion which rapidly offsets the incremental gains.)
 
One thing to ask your glass manufacturer is whether he/she already sees this phenomenon.  How many different size beer bottles do they make?  Why do beer makers bottle in different sizes?  The answer is to serve different market segments - exactly the same answer as for the honey market.  

Mike Rossander

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