Beer Is Good!Pricing Strategies and Tactics - 3390-01

November 14, 2013Group3

Kirk TeegardinJose Guerrero

STORE BACKGROUND

We will be discussing the distribution and selling of beers in the H-E-B. The store sells many items, but it also sells lots of other alcohol. In 1905, Florence Butt opened the C.C. Butt Grocery Store in Kerrville. She invested sixty dollars into the business to get started. H-E-B was created from Howard Edward Butt, Florence's son. H-E-B first began selling food and products. H-E-B was not a family owned business.

H-E-B has been successful ever since they first opened. Now they are located throughout Texas and parts of Mexico. And if you have not noticed, their beer aisle consists of many types of beers at different prices. They have a variety of beers to select from, and it is constantly changing. We will be discussing some of the beers that are being sold at our H-E-B stores right now.

As of now, H-E-B employs over fifty-six thousand people and has an annual revenue of more than twelve billion dollars. H-E-B has more than three hundred fifty stores in Texas and is headquartered in San Antonio. Howard Edward Butt died in 1991 at age 91, and since then his family carried on the business. There is so much money that is being made by the stores and its products that it continues to be a success. As the years go by, it continues to expand.

H-E-B has a wide variety of food items and products that it sells. The products they sell also depend on the location of the store, since H-E-B shifts their products based on the local demographics. The location of each store is important because that is where H-E-B makes its revenue.

H-E-B has had many public relations project for the community like helping to establish the University of Corpus Christi. This was a big thing for the community. H-E-B funded the school and the students appreciated it, there is even a plaque of the H-E-B family in the campus to show appreciation. “The founder’s daughter, Eleanor Butt Crook, seventy-four, is a former school teacher like grandmother Florence and mother Mary. She is a public education advocate, a world hunger activist and a director of the LBJ Museum in San Marcos”(Muchety). The H-E-B owners are a Baptist family with Baptist values, trying to input their values and beliefs into their business. Many of Baptists believe in not using alcohol; for this reason, it was not until 1976 until H-E-B began selling alcoholic beverages, such as beer.

In 2004, H-E-B first introduced the new H-E-B plus store. As this store was introduced, many things were included within the store. The store provided customers with expanded product lines and service offerings including extensive music, video, and DVD selections. There is now a big selection of these products where before these items were not offered. Also, the H-E-B plus stores have created larger baby aisles and have dedicated space for grills and barbeque supplies. With this said, there were a lot more sales in the meat, and accessories for a barbeque since H-E-B dedicated a section for grills. Other features H-E-B introduced with this store was an expanded card and party product section; lawn and garden equipment; electronic and household items. Now the

H-E-B plus stores are expanding throughout Texas and are quickly becoming more popular with more sales, topping the previous yearly sales. It is expected that as time goes on, more H-E-B stores will be created.

PRODUCT CATEGORY

Beer is a unique product category. It serves as both a beverage but it also has some entertainment value to consumers. This product has many different brands throughout the world making this product a worldwide product. A good beer that can stand out from others can make a lasting impression on consumers, demanding more of the product.

Beer is an alcoholic beverage that is consumed around the world. This product can be found to date back to over four thousand years. The first inventor of beer is unknown although it is believed that beer was created before bread was. Different cultures began to make their own beers: Africans used millet, maize and cassava, the Chinese used wheat, the Japanese used rice, and the Egyptians used barely. For a long time different countries brewed their own kinds of beer until about one thousand years ago when a main ingredient was added to creating a beer, hops. This is still one of the main ingredients in brew making.

Once again, the beer making industry hit a plateau after the hops discovery. It was not until many more centuries passed and commercial refrigeration methods were created until the beer production had another significant increase. On January 24, 1935, Krueger Cream Ale became the first canned beer that would eventually lead to the current beer industry we have (About.com).

Today, beer is sold in cans, bottles, and kegs. Cans and bottles are the main source of acquiring beer for consumers. Customers can purchase beer at many different retailers, such as H-E-B, and Wal-Mart, and liquor stores. Most products have one or two sources of where you can acquire the product, but beer has places created specifically for beer consumption; such as bars and nightclubs. At these places, consumers are usually in a group consuming an alcoholic beverage. Another place where beer can be purchased is at a convenience store. Consumers tend to pick a convenience store when they are on the run and want to quickly get a beer.

The target consumers of beer outlets are anyone of the legal drinking age, whereas some countries do not have legal age regulations on beer. Many different brands create their beer to appear attractive to certain age segments. An example of this can be with the low quality product Keystone. Many consumers prefer a different brand but this one is very cheap compared to the others. We believe that the Keystone beer is targeted towards college students since many of them are unwilling to pay a higher price for beer.

BRANDS

Budlight: 6 pack $5.97 12 pack $9.97 24 pack $19.97

Bud Light is the most popular selling beer, and has the largest section located in the middle of the aisle. There is more Bud Light beer in the aisle than any other beer on display. “Even more intriguing is the fact that Bud Light, the number one selling beer in the country sold close to two hundred seventy million cases, which is a whopping sixty million cases over the combined amount of sales done by the number second and third most popular brands, Coors Light (101,760,300 cases) and Budweiser (101,651,900 cases)” (foodbeast).

The company has made an investment of $5,327,145,000, in 2011, and $5,452,052,000, in 2012, into the success of the company. That is a large sum of money for the beer which remains very popular in America, and even in our own backyard. With these types of sales, no wonder the Budweiser company is ranked one of the highest and most popular in sales in the country. Their logo is almost everywhere, and they can also afford to spend a fortune in advertisement which also benefits them as well. As they continue to expand their sales, they will continue to provide to satisfy the customer.

Budweiser: 6 pack $5.77 24 pack $19.97

Budweiser is a well know beer, and is very popular. This beer and its name has been around for the longest time. Budweiser lager (made by Anheuser-Busch) was first created in 1876 by Adolphus Busch and has been made ever since, with a gap between 1920 and 1933 for prohibition. At the time, Adolphus Busch partnered with his father in law in which they had created Busch Brewery in St. Louis, Missouri. In 1879, Busch became inspired to create Budweiser. It is one of the most recognized beers in the United States. Budweiser also sells Bud Light, which is a lighter tasting type of beer. Budweiser also has Bud Light Lime, Budweiser American Ale, and Budweiser Select.

As the company continues to expand, so does the different type of beers being made. “Budweiser, which was once the top-selling beer in the country for years, have fallen by 7 million barrels. Sales of Michelob are down more than seventy percent. Based on data provided by Beer Marketer’s INSIGHTS, 24/7 Wall St. reviewed the nine largest beer brands with a five-year decline in sales of thirty percent or more. After three years of declining sales, shipments of domestically sold beer are up by more than one percent in the United States this year. Sales of light beer and specialty beer, such as Budweiser Light Platinum, ShockTop, and Blue Moon, have been the driving force in the resurgence of U.S. breweries”(NBC news). Budweiser had its glory days in the 1950's when Anheuser-Busch helped strengthen its national brand by sponsoring shows featuring Jackie Gleason, Milton Berle, and Frank Sinatra. At this time, this was used as a form of advertising for the beer itself. It also promoted its beer by sponsoring sporting events and branding stadiums. By the 1980s, Budweiser was synonymous with American culture.

Heineken: 6 pack $8.28 Small Keg $20.99

Heineken was first brewed in 1873, this is a very unique type of beer with a distinctive taste and got its start in a very old brewery called the De Hoolberg in

Amsterdam. Purchased by Gerard Adriaan Heineken, the rest is history and today Heineken & Co. is still a family business. This unique type of beer sells to those who like the taste and is stationed on the far right of the aisle in H-E-B. It even sells by the keg. It is the only beer on the aisle of H-E-B that sells by the keg, in which it comes with a pump. The packaging of the keg is highly favorable by consumers. Heineken sells their beer in most parts of the world. Heineken has a profit of four hundred eight-three million euros for the third quarter compared to five hundred sixty-eight million year-on-year.

Heineken is the third largest brewer in the world. This beer is favored by many Americans and in other countries as well. “Sales of beer in the Americas, excluding the effects of Heineken’s purchase of Fomento Economico Mexicano SAB in April 2010, fell two and half percent, Heineken said. Sales in the United States., the world’s second-largest beer market, slid as sales of the Heineken brand declined” (Bloomberg). Since then Heineken has expanded its market by purchasing Dos Equis which has greatly helped their overall sales with the successful "most interesting man in the world" marketing campaign.

Miller Lite: 6 pack $5.77

Miller Lite is one of the competitive beers of Bud Light. Miller Lite beer sells 86,678,030 cases of beer each year. Miller Lite is the fourth top selling beer in H-E-B and it’s reaching higher sales as the years go by. Miller Lite has a total sales of $1,716,281,000 which makes a great expansion on the company alone. Miller Lite is a 4.2% abv pale lager brand sold by Miller Coors of Chicago. “The Gablinger's formula was created by a young brewing chemist named Dr. Joe Owades. Gablinger's was such a marketing disaster that Rheingold actually gave the formula to Chicago brewers Peter Hand Brewing. They brewed up the light beer and linked it to their flagship brand, calling it Meister Brau Lite.”(Bloomberg)

PREMIUM PRICED BEERS AT H-E-B

Dos Equis: 6 pack $8.28

Wilhelm Haase, who was a born in Germany, had created Dos Equis, in 1897. He did this after he had migrated to Mexico. He wanted to create something different, something that could bring culture together. With this in mind, he wanted a combination of his homeland and his current home with the new tasting beer Dos Equis. This is a wonderful beer with a tasting traditional twist to the flavor. It was originally named Siglo XX, but later he changed the name to what we know it as today. Dos Equis XX Amber had been available in the United States since 1973, when it was first imported from Mexico. This beer is one of the most popular beers in Mexico and has quickly gained popularity in America as well. This beer is loved by many consumers. Heineken won the brew-off for Mexico's Femsa, brewer of Dos Equis, Tecate, and Sol. The Dutch beer company that houses Heineken was looking to pay $7.6 billion for Femsa, which is the facility that makes Dos Equis. This way they can have more sells of their own beer, and use the facility to make their own brew of beer. Heineken eventually purchased Dos

Equis for $7.6 billion for Femsa in an all-stock deal. Heineken had been looking to buy out the company for a while. This way they can have more sells of their own beer, and use the other facility to make their own brew of beer. Dos Equis has been successful in selling their beer and their sales have actually increased by seventeen percent

Michelob Ultra: 6 pack $6.88

Michelob is a pale type of beer which was invented by Adolphus Bush in 1896. This beer is targeted at young adults who are looking to stay fit. It was named after Michelob, a Bohemian brew master from Saaz. This region was very famous for its Saaz hops in which all people knew about in the region. In 1961, Anheuser-Busch produced a pasteurized version of Michelob which allowed legal shipment of the beer across state lines. Now the beer sales in different places. This unique type of beer is favored by many people. Bottled beer began to be shipped soon after, and the brand was introduced in cans in 1966. This amazing beer has won popularity with people and is now being sold almost everywhere. Many people are amazed at the amount of calories that the beer holds compared to other beers, which is one of the distinct differences this beer has from others.

Bohemia: 6 pack $8.49

Bohemia is a beer that was first brewed in the Bavarian and Bohemian regions of Germany. This beer is a light beer that has a refreshing taste to it. The brewers had wanted to try something different, so they experimented with malted hops and wheat in the process of making the beer. Generations of European brewing knowledge eventually yielded a beer first brewed in the Bavarian and Bohemian regions of Germany and the Czech Republic. Although beer, loosely defined as an alcoholic drink made through fermentation of natural sugars. In 1842, Burgess Brewery in Bohemia recruited a Bavarian brewer named Josef Groll to produce a new type of lager beer. He had combined the regular Bohemian flavor and the malts and noble hops to produce the first modern Pilsener lager. This was a fast selling beer that quickly spread to other regions of the world as it gained in popularity. The city of Bohemia is now a public gathering, where tourists from all over the world come and admire the small town and its historical attributes.

There are also dark beers like Dos XX Amber, this type of beers is usually bought by those who like dark beers, and it’s one of the most popular imported dark beers sold. H-E-B also sells medium beers, which are Modelo, and Dos XX. Many people like this type of beer because its not to dark or to light. It’s just the right type of taste for the consumer. There is also pale beer like Corona, and Sole. Corona is actually one of the more popular beer sold, and people like to drink it with a side of lemon. They also have imported beer that is also cheat. These types of beers are called a step down, the ingredients are cheaper, and the cost of purchase is also cheap, such as Tecate and Modelo Light.

As you can see there are many types of beers sold in H-E-B, this gives the people a variety in taking the beer that suits them the best. People often want to drink to socialize, party, or even for a barbeque in which having some friends over for food and drinks is common. It also depend on the occasion and people you may be hanging out with. Some might even influence you to go out, only to later regret how much money you spent on beers.

TARGET CONSUMERS

There are many different brands of beers available at H-E-B. The store targets a wide variety of consumers to their store. The lower quality beers offered at H-E-B target college students and other price sensitive consumers. Bud Light has the largest shelf space available at H-E-B, with Budweiser coming in second. These two beers, owned by the same company, are placed side by side, below a display board of the Houston Texans and Dallas Cowboys football games.

This display board is H-E-B's attempt to target sport fanatics. When a consumer is shopping at H-E-B, they will be able to see what times the games are played. Since H-E-B is only located in Texas, the store assumes that many of the shoppers are fans of at least one of the teams. Many consumers associate beer with sporting events, making this an ideal strategic tactic.

Another segment that H-E-B is targeting is the consumers that drink higher priced beers. These beers cost more but are rather hard to find in several other stores. Such examples of these premium priced beers are Guinness, Michelob Ultra, and Samuel Adams Boston Lager. H-E-B is consistently changing out their inventory, allowing for consumers to try out new beers.

At other H-E-B locations, such as Austin, they offer beer, wine and cheese tasting days. This sampling used gets consumers to try H-E-B's products. Since H-E-B offers many beers that are rare, consumers many believe that they can only find this particular beer at H-E-B. If the customers experience with the newly found beer is positive, then H-E-B will have possibly have gained a new loyal customer.

Several consumers of beer prefer to drink imported beer such as Heineken or Dos Equis. The store attracts this segment group by offering consumers a huge selection of imported beers. H-E-B is constantly adding new imported beers allowing for consumers to try new ones. There are several beers that we had not heard of when conducting our research.

COMPETITION OF BEER

Since beer is a beverage, also serving as an entertainment product, it can have many competitors. Everyone must drink some kind of water to survive. Some consumers find this form of water in other drinks such as soda, energy drinks, tea, and coffee. These are several of the competitors that beer brands compete against.

Primarily, a competitor of the beer product is alcohol. Over time, both beer and alcohol provide consumers of the drink with intoxication. For beer, this time seems to take longer for most consumers and so beer is consumed at sporting events. Consumers that are attempting to reach this intoxication level quicker usually drink alcohol as opposed to beer. Another reason people drink beer is because they enjoy the taste. Some consumers say it takes awhile to like the taste of beer. Several other people, that drink other drinks, say that beer taste terrible.

Beer does not serve as a primary source for a consumer to get hydrated, but instead to enjoy himself/herself. Due to this, beer is also a product of entertainment for consumers. This can lead to many other competitors for beer itself, such as television, and playing sports; for this study we kept the competition limited to products that are similar to beer and to the competitors of H-E-B.

COMPETITORS OF H-E-B

H-E-B is a major retailer of groceries for consumers. Our product category, beer, is one of the many products sold at H-E-B. This alcoholic beverage is sold at numerous locations such as: local convenient stores, retail stores like Wal-Mart, liquor stores, bars, restaurants, and nightclubs. Each of these different locations impact the sales of beer sold at H-E-B. The company must compete with all of these entities in pricing strategies and other consumer pulling techniques.

Another competitor of H-E-B is local convenient stores. Consumers sometimes desire nothing more than a single beer. When this occurs, they are more inclined to purchase a beer at a convenient store. The consumers are willing to pay more for this product since they do not have to travel to a grocery store, such as H-E-B or Wal-Mart. When shopping at convenient stores, consumers usually purchase a single can of beer as opposed to pack of beer, although larger packs are available. Consumers prefer to purchase a large pack of beer at stores similar to H-E-B and Wal-Mart.

Wal-Mart is one of H-E-B's primary competitors for selling beer. The two stores hope to serve almost the exact same set of consumers. The only difference is that Wal-Mart also features far more electronics than does H-E-B. A difference, in favor of H-E-B, is the variety of beer they sell. This gives them a competitive advantage against Wal-Mart in selling beer. The numerous amounts of locations Wal-Mart has made the overall selling of beer more frequent at Wal-Mart.

Liquor stores that sell alcohol are another direct competitor of H-E-B's beer. While this is a less common place consumers purchase beer, they still have the option to. When a person goes to a liquor store they tend to buy alcohol. Beer and alcohol eventually put consumers in the same state of intoxication. As previously stated, beer tends to take much longer for this state of impaired focus to occur, although it varies between each consumer. Consumers that purchase the beer substitute, alcohol, purchase

the product because the want to get intoxicated faster. Also, several liquor stores sell beer to consumers.

Several consumers are sometimes looking for a single beer or two when they go out with a friend. The most common place to do this is at a bar. When consumers are at a bar, they usually pay more for each beer purchased. This is because of the location and social environment that they are in changes their perception on how much they are willing to pay per beer. Several bar's are located at restaurants such as Chili and Applebee's.

These two restaurants are bar and grills and sell alcoholic beverages to consumers. Other restaurants like Texas Roadhouse or Logan's also sell beer. Just like bar's, these prices, per beer, are more than the price of beers at a retail store or convenient store. Consumers sometimes prefer to drink beer with a specific meal like steak or pizza. Due to this, food can serve as a catalyst for some consumers to purchase beer.

Nightclubs are highly associated with alcoholic beverages; therefore, this is another competitor for H-E-B. Many people go to these clubs to socialize with other people, but in their hand lies an alcoholic beverage. Many people drink beer at these nightclubs and pay an increased price, like bars and restaurants. Depending on the type of nightclub determines the price range of each beer. Some nightclubs charge eight dollars per beer as opposed to H-E-B charging far less per beer.

POSTIONING OF H-E-B

H-E-B is known as a family oriented store, this is where the necessities are met by people who go to shop and buy product. This store is welcoming, alluring people with their sales. H-E-B is always having sales and offering coupons. This is one way they try to bring in customers. People are willing to buy at H-E-B because there is a wide variety of food items and other products ranging from health related supplements all the way to perfumes. These three steps can help you enjoy the benefits of a healthier life. No matter your age, if you've decided it's time to lace up your walking shoes and add a little more greens, fruits and whole grains to your diet, H-E-B's got simple and affordable ways to help. There is a lot of healthy food that is available in the store; all is well when the employees are welcoming and very nice.

So many items that welcome the family in and have them come in for more. There are things that will spark people interests as they go in and shop, H-E-B always leaves a good impression on people. This is why they continue to grow and have a good relationship with its customers. At H-E-B there are many ways that a customer can get back to the main corporation if the employees are not being fair. What the customer can do is call the number on the receipt to complain or go to management. The store is always willing to attend to the customer in every way possible.

Also during holidays, the store also has decorations throughout the store to make their business more appealing to customers. As previously mentioned, this is a fun,

loving, customer, attracting store which implies good things on the people. H-E-B also holds yearly festivals for people to attend. This is a way of showing their appreciation. This festival is family oriented and held at different places. They have fun events and food for the whole family.

Our friendly H-E-B also has flowers and romantic cards that. There is wide variety of flowers all counting singles and some that come in a flower pot. This is a good place to go and even get something like a balloon with the bundle. There are many things for many occasions that H-E-B sells for the family. As mentioned earlier, there are many coupons that are given out through H-E-B as a sign of appreciation. The coupons are handed out in magazines at the entrance of the store and by some employees. Some are even mailed to customers as a sign of appreciation.

The friendly environment is one of these things that people tend to admire. With the numerous events that H-E-B does throughout the year the positioning of the firm is clear. They have positioned themselves to be family oriented. The beer section at the store does not take away from the overall feeling that the H-E-B store gives to consumers.

PRICING STRATEGIES

Pricing strategies when selling a product are important to consider. Many consumers are unaware of pricing strategies such as odd number pricing. Many of H-E-B’s beers are priced with odd numbers at the end, except for some of the premium priced beers. Odd number pricing makes consumers perceive that they are getting a product that is a good deal.

Consumers are more willing to purchase a beer when they see it priced at $5.97 as opposed to $6.00. One reason is because people read from left to right so they notice the five making them perceive that they have to pay five dollars instead of six dollars. Another tactic H-E-B uses in their pricing scheme is that the first number is in a larger font. This makes consumers notice the number faster as well, not paying as much attention the last few digits.

At the time of this study, a six pack of Bud Light cost $5.97. Other beers, such as Budweiser and Miller Lite, both cost $5.77 for a six pack. The difference between the Bud Light and the other two beers is twenty cents. Consumers will perceive Bud Light as higher quality since it is slightly higher priced. Bud Light also offers consumers a variety of packs of beers. A twelve pack of Bud Light is offered costing $9.97. Bud Light also offers a twenty-four pack at the price of $19.97.

Many other beers are offered at H-E-B, with price ranges suitable for many consumers. The premium priced beers range between the six to nine dollar ranges. These high priced beers can help influence consumers to purchase other beers. The anchor effect can occur, because consumers may compare a six pack of Bud Light to a

six pack of Bohemia. When they see the price of the Bohemia beer, $8.49, the consumer will feel like they are getting a better deal with the Bud Light six pack.

The other purpose of the premium priced beers is to satisfy the desire consumers have for a fine, rich beer. This is accomplished by the many high quality beers H-E-B offers to consumers. Bohemia, as mentioned, is priced at $8.49, Dos Equis is offered to consumers at $8.28, Michelob Ultra is available at $6.88, and many other brands are priced alike. All of these high priced beers are only available in a six pack of beers.

Another strategy H-E-B uses is the way they have strategically placed the beer at the end of an aisle. At the end of the beer aisles consumers can find even more beer available. The beer available at the aisle was Redd’s beer. This beer at the end of the aisle also serves as an indicator for H-E-B customers to locate where the beer is sold in H-E-B.

These strategies H-E-B uses are a combination of pricing strategies and strategic placement. The premium priced beers and odd number pricing strategies are effectively used at H-E-B. The effort the company has partaken, has led to many consumers to consider H-E-B as a source to obtain beer.

METHODOLOGY

The methodology for conducting this research began with us visiting H-E-B, evaluating the beers offered at the store, discussing the pricing strategies, and researching other information about the competitors H-E-B has in selling beer. Once this information was gathered, several interviews were conducted where ten consumers of beer were asked questions.

INTERVEIW PLAN

For our research we targeted consumers of beer. We were interested in seeing how and why these consumers are willing to pay more for beer depending on the location of where they are consuming it. When conducting our study we concluded that using a qualitative method of research would best suite our needs.

Before conducting our research we had several hypotheses about the purchase of beer. When determining what these hypothesis where we deemed it best to focus on H-E-B began noticed by consumers, and how location effects the willingness to pay more for a beer.

Hypothesis one was that many consumers would recognize H-E-B in their top three places to purchase beer. We hypothesized this because of the many different varieties of beer H-E-B offers.

Hypothesis two was that when beer is offered, the quality of it does not matter to consumers. We hypothesized this since price is an important factor for consumers when determining the quality of a product.

Hypothesis three was that the location of purchasing and consuming the beer effects the overall price consumers are willing to pay. We hypothesized this because many consumers purchase beer at many different locations.

A total of ten beer consumers participated in the interview process. Each of them was asked the following questions:

1) What is your favorite beer?2) What is your least favorite beer?3) What is the cheapest price your willing to pay for a beer?4) If the beer is free does the quality of it matter? (such as being of low quality)5) What is the most expensive price you are willing to pay for a beer?6) Why would you pay this amount for a beer?7) Write the top three stores you purchase beer at, starting with the most common

place first? (example: 1. H-E-B, 2. Convenient Store, 3. Bar)8) Does the location of where you are consuming the beer affect the price you are

willing to pay for the beer? How so?9) Have you ever been to a club?10) Did you consume beer at the club? 11) How much did the beer cost at the club? 12) Have you ever been to a bar?13) Did you consume beer at the bar? 14) What was the price of the beer at the bar?15) Are their certain reasons or occasion where you drink more beer then usual? 16) Are you willing to pay more for beer, based on the occasion? How much?17) What is your age?18) What is your gender?19) What is your ethnicity?

On the following page is the data that we found useful from the interviews conducted:

OBSERVATIONS

After conducting our research on H-E-B and its pricing, we have been able to find valuable information. All of our three hypothesis were proven through the data we collected from the interviews.

Hypothesis one was proven with the question where customers rated the top three places where they purchase beer. All of our interviewees stated H-E-B in the question. Other popular choices for this question were Wal-Mart and convenience stores. These two are major competitors with H-E-B selling beer.

Hypothesis two was confirmed; indicating that if beer is free the quality of it does not matter. It is important to note however that two participants believed that even if the beer was free that the quality does matter. These two participants also stated that the lowest price for beer they would be willing to pay is either one to two dollars. Many other participants stated that the cheapest price they would pay for beer is zero dollars.

Hypothesis three was verified as well; the location where the beer is purchased and consumed affects the overall price a consumer is willing to pay for the beer. This is important because this can impact the sales of H-E-B. Consumers are most willing to pay more at places such as: nightclubs, bars, and restaurants. What makes these locations different from H-E-B is that they include socializing with people. As previously mentioned, other H-E-B's, such as one located in Austin, offer a beer, wine, and cheese taste testing event. This event can help H-E-B offer a type of socialization with customers. Doing this at the H-E-B in Edinburg where we conducted our research, may make it possible for H-E-B to compete even more with nightclubs, bars, and restaurants.

When conducting our interviews we noticed that Michelob Ultra seemed to stand out as being the dominate beer. This was the favorite beer from forty percent of participants. One interviewee stated that he does not understand why so many people prefer Michelob Ultra. He listed this as his least favorite beer.

Another important aspect that we noticed is that many consumers are willing to pay more than seven dollars for a single beer. This means that premium price beers are highly desired by customers. From one of our interviews the person said he would only be willing to pay three dollars for a beer, yet later in the interview, he said he paid four dollars for a beer at a bar. The prices of beer highly fluctuate based on the type of the beer and its location of consumption.

While at H-E-B, we also noticed several techniques the store used in order to attract customers to purchase beer. As previously mentioned, Bud Light has the largest display of beer at H-E-B. This beer is also right in the middle of the beer aisle. With the beer strategically being located in the middle of the beer aisle, consumers will have to walk past other beers before arriving to the Bud Light section. This can possibly lead to consumers trying a new beer that H-E-B has to offer since they have to walk by many other beers.

Budweiser sits right next to Bud Light, with the second largest beer section. The price of a six pack of Budweiser cost $5.77. Unlike Bud Light, consumers can only purchase Budweiser beer as either a six pack or twenty-four pack. This entices consumers to purchase the twenty-four pack since there is not a twelve pack of beer available.

Aforementioned, H-E-B has a huge football game banner placed above the beer section. This sign can act as a catalyst, reminding consumers that football is coming up soon. The consumer will be more inclined to purchase beer. This sign can impact all of the beers that H-E-B sells. Below this sign, on the top shelf of the beer aisle, are a large amount of coolers priced at $6.97. These coolers H-E-B offers helps entice consumers to purchase more beer for other events such as going to the beach with friends or family.

CONCLUSION

H-E-B offers many price points that can appeal to may consumers. The wide range that H-E-B offers gives consumers a reason to return to purchase beer at this retailing store. While a consumer is in the family oriented business, they can also purchase many other goods in a comfortable environment. We believe that the overall pricing strategies and tactics used at the store are successful with their constant innovation in attracting customers.

REFERENCES

"Bloomberg." Bloomberg.com. Bloomberg, n.d. Web. 1 Nov. 2013.

<http://www.bloomberg.com/>.

"H-E-B Home." H-E-B Home. N.p., n.d. Web. 9 Nov. 2013.

<http://www.heb.com/>.

"The History of Beer." About.com Inventors. N.p., n.d. Web. 9 Oct. 2013.

<http://inventors.about.com/od/bstartinventions/a/beer.htm>.

"Index." Index. N.p., n.d. Web. 12 Nov. 2013.

<http://www.muckey.com/>.

"Kevin's Real Beer Blog." Kevins Real Beer Blog. N.p., n.d. Web. 29 Oct. 2013.

<http://realbeer.wordpress.com/>.

"Man Arrested for Impersonating a Cop to Score Dunkin’ Donuts Discount." Foodbeast.

N.p., n.d. Web. 14 Nov. 2013. <http://www.foodbeast.com/>.

"Nbcnew.com." Nbcnew.com. N.p., n.d. Web. 12 Nov. 2013.

<http://www.nbcnew.com/>.

"Since 1977, The Premier Travel Resource for Meaningful Work, Living and Study

Abroad." TransitionsAbroad.com. N.p., n.d. Web. 6 Nov. 2013.

<http://www.transitionsabroad.com/>.