Final answer:
The wine production company uses a dual-network distribution strategy to cater to its diverse customer base. Low-cost, assembly line wines are distributed widely through wholesale and retail channels, while the more expensive, on-request handmade wines are sold directly to consumers or through more specialized channels, exemplifying a differentiated products strategy.
Step-by-step explanation:
The distribution network for a wine production company selling to retail, wholesale, and tourist customers is crucial in achieving effective market coverage and customer satisfaction. For mass-produced, assembly line wines priced at $1 per item, efficiency and economy of scale are essential. These wines are likely distributed through traditional wholesale and retail channels to reach a broad customer base. Conversely, the handmade wines, crafted on request and with a higher price tag, are probably sold directly to consumers, possibly in a monopolistic competition market where product differentiation based on style, flavor, and exclusivity is key. This approach ensures that premium customers receive a personalized product that reflects their taste and willingness to pay more for a bespoke item.
Choosing this type of distribution network allows the company to cater to different market segments effectively. The low-cost, mass-produced wines can be widely distributed at a lower cost to various retailers, including supermarkets and wine shops, which would appeal to customers looking for affordable options. In contrast, the on-request handmade wines with higher price points could be targeted at specialty stores, premium outlets, or sold directly at the vineyard to tourists, reflecting a differentiated products strategy. This dual-network strategy leverages the law of supply and demand, meeting diverse customer needs while optimizing the supply chain for both product types.