People dont want to buy the cheapest wine but also not the most expensive. Mid grade wines are therefore priced higher. Are these methods used in the real world?
Depends on the value of the product. For example, I found statistics that 74% of people buy wines for the present or for the restaurant or winery. So, if you look at the statistics, only around 20% buy for themselves, so again, it depends on the value. But generally, yes these methods are used in the real World. Mid class people are buying the most and their psychology is to not buy the cheapest, but also they won't buy the most expensive.
It looks like marketing firms have a strong understanding of a consumer's psyche and ultimately purchasing habits. Could you go into greater detail? How do the wine companies gather the consumer information to understand their movement?