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Zara is the flagship chain store of Inditex Group owned by Spanish tycoon Amancio Ortega. The first Zara store opened in 1975 at A Coruna, Spain. Its first store featured low-priced lookalike products of popular, higher-end clothing fashions. The store proved to be a success, and Ortega started opening more Zara stores in Spain. During the 1980s, Ortega started changing the design, manufacturing and distribution process to reduce lead times and react to new trends in a quicker way, in what he called "instant fashions" or “fast fashion”. The company based its improvements in the use of information technologies and using groups of designers instead of individuals. In 1988, the company started its international expansion through Porto, Portugal. In 1989 they entered the United States and in 1990 France. This international expansion was increased in the 1990s, with Mexico (1992), Greece (1993), Belgium and Sweden (1994), etc. until the current presence in over 70 countries. Zara stores are company-owned, except where local legislation forbids foreigner-owned businesses. In those cases, Zara franchises the stores.
As completely as possible, sketch the supply chain for Zara from raw materials to consumer purchase. Design cuts fabric sewing ironing selling wrapping transportation
Zara is a vertically integrated retailer. Unlike similar apparel retailers, Zara controls most of the steps on the supply-chain: It designs, produces, and distributes itself. Firstly, Zara designs the apparels itself, and sends the design draft to cut fabric in-house. After that, they will be sent to the local co-operatives for sewing. When items return to Zara’s facilities, they are ironed by an assembly line of workers. After complete ironing, they are wrapped in plastic and transported on conveyor belts to a group of giant warehouses. Finally, they would be sold at the stores.
Discuss the concepts of horizontal and vertical conflict as they relate to Zara.
A Corporate VMS is a vertical marketing system that combines successive stages of production and distribution under single ownership for which channel leadership is established through common ownership. distribution. Statistically. production. Thus.Horizontal conflicts referred to the conflict between competitors of the same marketing channel. This will make the smaller competitors be at an extreme disadvantage. Vertical integration. distribution. This in turn. a distinctive feature of Zara’s business model. Zara should maintain a good relationship with its distributors in order to expand its business and increases the profit. Question 3 Which type of vertical marketing system does Zara employ?. and store shelf placement in as little as two weeks. a retail distributor may refuse to carry a manufacturer's product because of low sales. the founder of Zara’s clothing chain designed a system in which he could control every aspect of the supply chain. Britain’s Top Shop. Hence. For example. Amancio Ortega. Zara makes 40 percent of its own fabrics and produces more than half of its own clothes rather than relying on the slow-moving suppliers. and logistics functions by itself instead of relying to outside partners. List all the benefits that Zara receives by having adopted this system. the company manages all design. Not only that the company has the control over the entire distribution chain. Zara competes with other retailers like Sweden’s Hennes & Mauritz(H&M). Fast at Zara means that it can take a product from concept through design. manufacturing. from design. further decreasing the manufacturer's total sales. Zara’s team consisted of more than 300 designers who deals with the design process. It means that Zara has the advantage to be a fast-fashion leader. The Corporate Vertical Marketing System provides the company with the effective channel leadership. resulting in oversaturation of the target population area and extreme competition. colors. The store managers and sales staff updated the headquarters every day about the moving stock and provided inputs regarding the new lines. Vertical conflicts means that the conflict occurring between two or more different hierarchical members of a Channel of Distribution. Zara makes use of Corporate Vertical Marketing System (VMS). they even outsource their own raw materials. and retailing and which has turned it into the world’s fastest-growing fashion retailer. makes Zara to emerge as a unified system which the whole team can work together responsively. much quicker than any of its fast fashion competitors. They are operating in the same marketing area that is local co-operatives that is only available in hundreds. Spain’s Mango and other big retailers to send the designs to the local co-operatives for sewing. styles and fabrics that customers are demanding. Zara successfully integrate design. For instance. Thus. has allowed the company to react swiftly with the latest trend in the fashion industry. In the case study. avoiding conflicts emerge from different channels. and production to distribution and retailing. if a customer is asking for a rounded neck on a vest . warehousing.
Particular to its highly capital intensive investments. However. The disadvantages that would likely to occur is that Zara rely heavily on the high capital intensive investment. Changeover of production techniques to create different apparel lines requires highly automated equipment specialized by garment type. The high tech information system is an essential that links the shop to designers and . It was paid off to be fast in fashion industry as fashions were keep on changing in fast pace. If a design does not sell well within a week.rather than a v neck. No design stays on the shop floor for more than four weeks which entice customers to check out the store stock more often which lead to frequent patronage. This would keep the inventory low and low cost of maintenance. Zara is able to sell more items at full price. Zara has successfully opened up 1 495 stores worldwide. such an item can be in stores in seven to ten days. Regular customers know that new products are introduced every two weeks and most likely would not be available tomorrow. This process would take traditional retailers months to meet customers demand. Rapid turnover creates a climate of scarcity and exclusivity in Zara’s retail stores. It was also difficult for them to expand to far location as Zara’s warehouses are centralized in La Coruna in Spain. Their “fast-fashion” distribution system has more advantages than not. Corporate VMS has also resulted in quick inventory turnover. And the company will only bear a small amount of loss if any item is not selling. further orders are cancelled and a new design is pursued. they are able to lead the fast fashion industry. An average high-street store in Spain expects customers to visit three times a year. The high tech information system that is claimed to be an advent-guard could cost them high price in order to survive in the industry. To keep up with this high technology plant Zara has to financially back the strategy within the organization. As to date. Due to that. but most of them are located in European countries. That goes up to 17 times for Zara. Therefore. it is withdrawn from shops. In order for them to keep up with the fast pace in the fashion industry it’s hard for them to cope with the worldwide supplies and the increasing transportation costs. As top notch technology that they are using enable them to produce and display garments in stores as little as two weeks. As Zara frequently updated the clothing line in stores they need to change the techniques and equipment to design the garments accordingly. these advantages are offset by the advantages. Zara’s in-house production purposely creates a rapid product turnover since they only produce items in smaller batches. Zara delivers goods via cargo jet to stores farther away. Question 4 Does Zara experience disadvantages from its “fast fashion” distribution system? Are these disadvantages offset by the advantages? Zara do experience several disadvantages regarding to its “fast fashion” distribution system practice. Zara could also experience increasing cost in order to keep up with the latest trend in the fashion industry.
Even if they have to incur higher costs in producing different apparel lines they would try to reach up maximum revenues. This can have more products in the market for the customers. Since that Zara introduces new item for almost every week they have the advantages upon maximum sales and revenues. dealers. labels. highly automated warehouse designed to receive goods from various plants and suppliers. And it was proven as last year the revenues increased over 15 percent which recorded $14. As customers are driven to check out new items in stores as they would not want to miss out the latest fad. the satisfaction of customers can obtain. and allocates clothing items to every one of Zara’s stores. cutting down in advertising costs seems too paid off as they receives indirect promotion by either the press or the people and focus on the vertically integrated system that they pursued. Zara is largely seen as a company that emphasis on delivering customer value.5 billion. the company can choose among five main transportation models: truck. They can concentrate more on the stores chain expansion rather than facilities expansion. pipeline and air. take orders. A centralized warehouse brings out the best for Zara as it is easier for the company to have the control over the distribution networks activities. Zara use intermodal transportation like truck and cargo jet. Inventory Management Balance the costs of carrying larger inventories against resulting sales and profits. like H&M and Gap they only produces 2000 to 4000 items respectively. packs. along with an alternative mode for digital products-the internet. and customers. Transportation In shipping goods to its warehouse. fill the efficiently. Compare to the other rivals. Question 5: Warehousing A large. In a typical year. As Zara’s stores are expand rapidly. If the distribution is efficiency. Zara is capable to launch for about 11 000 new items. We can add value by increase the availability of warehouse and swift and advance the automotive are used. Many companies have greatly reduced their inventories and related costs through just-in-time logistics . to be accessible for the customers to reach out their products. and deliver goods to customers as quickly as possible. Zara warehouses are a vision of modern automation as swift and efficient as any automotive or consumer electronics plant. In that sense Zara’s store is growing in number and for every 3 days a new Zara store would be opened up for business. This in turn gives them advantage to lead the market in the industry and emerge as fast fashion retailers. Due to that.finally to the distribution system. This will make the customers feel more satisfy. The computerized system sorts. customized machines patterned after the equipment used by overnight parcel service’s process up to 80000 items an hour. rail. water. Example. Zara utilize the most valuable concept that is crucial for every retailer’s store. It delivers within a 24-hour drive to every one of Zara’s 1495 stores.
It’s Zara’s high-tech information system that has taken vertical integration in the company to an unprecedented level. the computerized exchange of data between organizations. producers and retailers carry only small inventories of parts or merchandise. New stocks arrive exactly when needed. information flows such as customer transactions. Information can be shared and managed through traditional or Internet-based electronic data interchange (EDI). Just-in-time systems require accurate forecasting along with fast.systems. shipment and inventory levels. Logistic Information Management Channel partners often link up to share information and to make better joint logistics decisions. From a logistic perspective. For example. Zara’s stores receive new merchandise 2 to 3 times a week. It responds to fashion trends much quicker than any of its fast-fashion competitors. and even customers data are closely linked to channel performance. often only enough for a few days of operation. Zara’s information system is absolutely Avanti-guard. It’s what links the shop to their designers and distribution system. and flexible delivery so that new supplies will be available when needed. billing. frequent. . With such systems. rather than being stored in inventory until being used.
Marketing intermediaries is the firm that help the company to promote. The company might target any or all of five types of customers market like customer market. Other than that there are many reason of the success of the Prius starters. The aim of the entire value delivery system is to serve target customers and create strong relationship with them. government market.90 in second generation. Whereas the first Prius averaged an astounding 5. it can be easy to create customer value and relationship. when they do work together it can be more opportunities and get more idea to increase the company. In the Prius case. marketing services agencies. This is because. These include wholesalers and retailers who buy and resell merchandise. techies who were attracted by the car advanced technology. customer. reseller market. physical distribution firm. In department such as top management. Resellers are distribution channel firm that help the company find customers or make sales to them. The personal selling carried out by local dealers who in advance . cramped. operation. This is because the company is more to designing marketing plan. Customer also fills satisfaction in the company at work hard. so when Toyota Prius create new technology it can be Customer more attracted that car. Toyota targeting strategy has been spot-on from the beginning. research and development (R&D). It was a small. when work with harmony in each other company department. and financial intermediaries. Three years later. They must work closely with other company in department. Customers are the most important factors in the company’s microenvironment. focused first on early adopters. slow compact car with a dull design. sell and distribute its goods to final buyers.6liter per 100 kilometers and than its successor did even better at 4.PRIUS QUESTION 1 What microenvironmental factors affected both the first generation and second generation models of the Toyota Prius ? How well has Toyota dealt with these factors? The effect sale of the Toyota Prius in microenvironmental are company. business market. The company is very important in the sale of Toyota Prius. marketing intermediaries and publics. purchasing. The Prius first sold in the United Stated in the 2001 model year. and accounting department. Such buyers not only bought the car but found ways modify it by hacking into the Prius’s computer system. This all related in internal environment. First focus adopters and customer. Example. there are finance. the second generation Prius benefits from a modest power increase. the company target customer market and international market. They include resellers. Toyota motor company successfully introduce the first and second generation Prius which combined petrol engine with electric motor. So. and international market. Customer also like the improvement.
technological. Some eco-friendly companies such as Timberland. Success of selling the car should lead to an increase in supply. and Hyperion Solution also joined in the incentive game. age. Toyota has sought tax deductions to help with the “sticker shock. and is the essences of basic economics. economic. Demographic environment is the study of human population in terms of size. With the increase in gas prices. location. political. which would result in a lower price. giving employees as much as $5000 toward the purchase of hybrids. and people make up markets. others statistics. Marketers must pay close attention to major trends and consumer spending patterns both across and within their world markets. natural. race. As in United States. The world population is growing at an explosive rate. This is not priced as a luxury car. political and cultural forces that shape opportunities and pose threats to the company. some consumers shifted to smaller cars and demand . Google. occupation. They had no problem getting price premium of up to $5000 over sticker price for Prius. and cultural – that have affected the introduction and sale of the Toyota Prius. How has Toyota dealt with each these factors? Macro environmental factors consist of broader forces such as demographic. Younger generations may be more environmentally concerned and want a Prius. gender. is in line with what Americans are paying for cars. From the Prius case.” The price of the car. Publics are any group that have on actual or potential interest in or impact on an organization ability to achieve its objective. Toyota dealers have done a great job in promotion and selling Toyota Prius. Because it does cost more. The demographic environment is of major interest to marketers because it involves people. Baby boomers are the major market in the United States and they have reached the stage where the kids are grown and gone. Publics also give impact in company. This means that they can pay more for cars (can overcoming the higher price). Publics give more opportunities to increase in profits and facilities in the company to do some project. the Prius offers even greater savings and in the summer.should have trained to be are familiar with the Prius car and know how to overcome objections. QUESTION 2 Outline the major macro environmental factors – demographic. They have always been known for an interest in quality and willing to try the new—both factors that might incline them toward purchase of a Prius. density. natural. but few may be able to afford one. The economic environment consists of factors that affect consumer purchasing power and spending patterns. technological. the single most important demographic trend is the changing age structure of the population. economic. however. To be one of the first to own such a car may be worth the higher initial price.
As the case indicates. Some detail on tax incentives is given in the case. and behaviours. The Prius use gasoline in a small quantity compared to another hybrid car. For technological environment. preferences. technology is the Prius’ primary strength.028. Natural environment involves the natural resources that are needed as inputs by marketers or that are affected by marketing activities.for the Prius grew. The cultural characteristics can affect marketing decision making. and our rebellion against gasoline price increases. Cultural factors are Americans’ love of automobiles.auto buyers a tax break anyway because in emissions regulations. Toyota has played this up in their marketing and aimed the car at the “techie” part of the market. marketing decisions are strongly affected by developments in the political and legal environment.000 Prius in the US alone. QUESTION 3 Evaluate Toyota’s marketing strategy so far.000 Prius cars since . Recognizing that some senators may adopt a tougher stance toward gas emissions and mileage standards. and politics. our claim to care about the environment. Toyota sold 181. It use a tagline “A car that sometimes runs on gas power and sometimes runs on electric power. from a company that always runs on brain power”. the introduction of the car is likely to lead to other technological advances (such as the batteries). perceptions. The cultural environmental is made up of institution and other forces that affect a society’s basic values. they would be favorably inclined toward the car. This environment is composed of laws. and pressure groups that influence and limit various organizations and individuals. Marketers should be aware of several trends in the natural environment. In May 2008. These are given in the first paragraph of the case and these are all factors that will favour introduction of the vehicle. The second general vehicle adds more features such as the six-disc CD player and cruise control—options that the first generation. In political environment. This supports the Japanese cars in their claim to be technologically advanced. our willingness to adopt technology and progress. environmental concerns. a 70% increase over 2006 sales. Although increased gas prices alone cannot account for the increase in demand. Environmental concerns have grown steadily during the past three decades. stripped-down car did not offer. What has Toyota done well? How might it improve its strategy? In 2007. Toyota announced that it has sold a total of 1. government agencies. The US government give hybrid. they certainly didn’t hurt Prius sales. These ads helped to position Toyota as an “environmentally concerned” company and more subtly stressed the technology aspect of the car.
They make a lot of improvement to the cars as time is moving on. They boast such modification as using the dashboard display screen to play video games. The car has been readily accepted in consumers mind and mostly consumers see cars as an environmentally friendly and efficient car. Techies not only bought the car but found ways to modify it by hacking into Prius’s computer systems. Toyota had implements the strategy of targeting the right group at the right time. Toyota are applying more than 95% recoverable and more than 85% recyclable materials. For example. the Prius Gen 3 are now more larger. Toyota could improve their strategy by providing official forums to discuss about Prius computer system and how to install new software that are compatible with the existing operating system. Toyota have done marketing segmentation by which they are divided their target customer into two group which are : i -Techies. so no fuel consumption or emission. The new body is more aerodynamic. They also could provide professional in order to help solving their customer problems via the forum itself. It means Toyota marketing strategy has done very well in attracting customer. These are the people who love technology and willing to experiment. Toyota marketing strategy also is mainly customercentered. more powerful and more fuel-efficient.it was first introduced in Japan in 1997. Toyota marketing strategy is marketing logic by which the business unit hopes to achieve its marketing objective.000 towards the purchase of hybrid car. Some government and province gives tax breaks amounting to thousands of dollars and some eco friendly company gives their employee as much as $5. For example.Pro environmentalists. Some states issued permits for hybrid to drive in HOV (High Occupancy Vehicle). There are also some various external incentives that help the Toyota’s marketing strategy. . And Toyota can do more promotion to educate customers about their cars advantages. Pro-environmental can play part in taking care of environment by drive solely on electric power. Toyota using recyclable plastics which they are recycling as many part of Prius as possible. Some cities provide free parking. Toyota introduced to market a so-called hybrid electric vehicle using both gasoline and electric batteries. Toyota also can build a website which they can interact with their customer in order to understand better about their customer. They are also using recyclable materials and ecological plastics. ii .
QUESTION 4 GM’s marketing director for new ventures. First of all. hybrid car is able to effectively conserve fuel consumption. we are strongly agree with Mr. Stewart? Why or why not? I would agree with Mr. Toyota used the Internet very heavily. This should stimulate good discussion in class about how automotive companies might move away from reliance on gasoline powered engines. they were using more mass market media. but also help to create new business opportunity in the market. This gives students an opportunity to compare the two strategies and debate which one seems more appropriate for the American market. Let’s take Malaysia as an example. Therefore. causes less pollution and releases less carbon dioxide into the atmosphere. . “if you want to get a lot of hybrids on the road you put them in vehicles that people are buying now. The case provides an excellent opportunity to compare Toyota’s marketing of the introductory and follow-up models—very different campaigns. Stewart. The second version of the Prius came out in 2004 and was a sporty. At introduction. This is because some of the car’s owners prefer to install hybrid engine into their existing cars rather than buying a new hybrid car and it is responding to the environmental awareness indirectly. Steward. In this way. PRIUS: LEADING A WAVE OF HYBRIDS SUMMARY This case recounts the introduction of the Toyota Prius and compares it with the strategy that Honda has followed. as hybrid cars carry with them a bundle of advantages.S. Both are quite different from the strategy that GM and other companies are using and plan to use. auto makers’ approach to hybrids. Ken Stewart. the competitive response by various other car makers is highlighted. and eventually boost up the car’s sales. The Prius was originally introduced in 2000 with very targeted marketing aimed at techies (innovators).” This seems to summarize the U. Prime minister had announced the import and excise duty exemptions for hybrid cars as well as incentives provided in the 2011 Budget. Would you agree with Mr. says. we can see that hybrid cars are not only help to protect our environment. more fashionable car aimed at a wider market (early adopters). It is environment friendly compared with conventional cars. Additionally. The exemption will definitely encourage more consumers to own hybrid cars. but by 2004. well thought out and implemented. Many countries are now standing in the line with the global concern of the environment issues.
there are shoes in differences brand like Fioni. color and design.99. Product mix pricing strategies consist of five elements which is product line pricing. Spalding. Companies usually develop product lines rather than single product. Eagle. including Airwalk. The strategy for setting a product’s price often has to be changed when the product is part of a product mix. But the expansion of its brand portfolio to include famous labels will certainly give payless greater pricing flexibility.99 until $26. by-product pricing. Dexter. captive product pricing and optionalproduct pricing. they have many shapes. width.99 until $24.PAYLESS SHOE SOURCE Question 1 Which of the different product mix pricing strategies discussed in the text applies best to Payless’s new strategy? Discuss this in detail. . color. Most products Payless offers are under $50. In this case. Amerian. Payless have relationship with top New-York based designers Laura Poretzky. Payless sets most of the stores product line below $15. Lela Rose. Matt Rubel also has suggested that in many cases. the product mix pricing strategy Payless use is product line pricing. Other than that. for boys’ shoes. For girls. Payless have strategy product line. Customer can buy many types of products with different prices by looking at size. size. and various Disney brands. price increases may be as little as 50 cent per pair of shoes. Stacey Bendet and Patricia Field. and Smartfit from $14. Dexter.99. from one comprised almost entirely of store brands to one dominated by well-known national brands. Product mix means in the same companies have many type product with they are brands it sold. Product line pricing is setting the price steps between various products in the product line based on cost differences between the products. Payless now sells shoes under numerous brand names that it either owns or licenses. The company’s CEO. design. and numerous brands which they can get with difference price from $ 12. Shaquille O’Neal-endorsed Dunkman. customer evaluations of different features and competitor’s prices. Lela Rose. Champion. The four are designing everything from pumps to boots to handbags for Payless. For example. product bundle pricing.
Psychological pricing occurs when sellers consider the psychology of prices and not simply the economics. As the result. This is where Payless’s strategy deviate from psychological pricing concept. psychological pricing is a pricing approach that considers the psychology of prices and not simply the economics. we can see that high price does not play its main role to increase the quality of the shoe they sell. merchant of fashion. but changed the image from dusty dungeon of cheap footwear into the fun. they did not increase the price of their product to gain higher quality product perception. Payless is now looking forward into style and design rather than price. according to reference pricing. In the other hand. They even upgrade their store environment into more comfortable places which then create customer satisfaction.Question 2 How do concepts such as psychological pricing and reference pricing apply to the Payless strategy? In what ways does Payless’s strategy deviate from these concepts? By definition. They then launched new “Fashion Lab and “Hot Zone” store format. “We have the ability to make the shoes at the most affordable prices anywhere in the world. it makes the $12 shoe looks like a $20 shoe. It was a drastic improvement. But the store’s environment itself creates a quality satisfaction towards Payless’s product. Payless focus more towards style and design of their product rather than price. In addition. and we want to marry that with the greatest creativity”. The reference price might be formed by noting current prices. Consumers usually perceive higher-priced products as having higher quality. consumers usually carry prices in their minds and refer to when looking at a given product. The price is used to say something about the product. With the new store environment. remembering past . light. hip. and airy thus create a more satisfying consumer experience. reference pricing is prices that buyers carry in their minds and refer to when they look at a given product. Payless store now have more open. In the other hand. Here. Like what Matt Rubel said in a statement reflecting the company’s new strategy. But what happen in Payless is. Payless even re-designed their logo for the first time in 20 years.
because women in their 40s who shop for their family are nostalgic about that time in their lives. Mardi Larson. The new format not only attracts more customers. Question 3 Discuss the benefits and risks of the new Payless strategy for both Payless and the designers. Compared to competitors. Payless has made decision to redesign their logo and launched a new store format. and airy. Payless is now target the 24 years-old demographic. Payless are now transform and introduce their new image as more trendy and more modern. it makes the $12 shoe looks like $20 shoe. customers are still willing to pay more. they have the ability to produce shoes at the most affordable price. . Prices increases may be as little as 50 cents per pair of shoes. light. ‘Fashion Lab’ and ‘Hot Zone’. but the expansion of its brand portfolio to include famous labels will certainly give Payless greater pricing flexibility. Payless’s manipulate the reference pricing by implement a drastic improvement in their store. According to Head of Public relations. This strategy will change the image of Payless from the dusty dungeon of cheap footwear into the fun. This strategy widens the age range of the customers from teenagers to adult women. hip merchant of fashion Payless now are making the store more open. the price offered by Payless is still affordable by customers. while teenagers are aspire to that age group. All new Payless stores now have one of the two new formats and old stores are being progressively remodeled. Even though the price is slightly increased. However. light. They launched a new “Fashion Lab” and “Hot Zone” store format to create more open. Which of these two stands to lose the most? With the new strategy implemented by Payless. This will result to increase in the number of sales. This strategy can attract more customers and this will result to more satisfying consumer experience built around style and design rather than price. but they even make the customer willing to pay a little bit more than they have in the past. With their new store atmosphere.prices or assessing the buying situation. Sellers can influence or use these consumers’ reference prices when setting price. and airy with a more satisfying consumer experience built around style and design rather than price.
Their old customers will lose their confident to this company and Payless will face bankruptcy if their strategy is failed. they will lose their customer. If they failed to do so. The newest design that is designed by the designers now named under the Payless. They also forged relationships with 4 top New York designers to designing high quality of shoes. By comparing the benefits and risks. Question 4 . If the new strategy that they are implementing is failed. Payless will face big problems . their previous followers are failed to follow their designer’s new design. they are being tied with Payless contract and it is hard for them to find another opportunity to show their talent. Vogue and W. Payless spend a lot of money to launched a new store formats. When the designers design the new shoes. Top designers from Michael Kors and Kenneth Cole are hired as full-time employees to head the new team.in terms of financial problem and their reputations will go down. The designers get tremendous exposure. a large customer base. Payless have to face a risk which is they have to make sure that the new image they bring should can capture their customers attention whether old customers or new customers. They are also doing an ads in magazine and this allow their designers collection been recognized by many people. Payless is producing shoes that are designed by these top designers at a lower price than their competitors. As they becoming the full-time employees at Payless. and the power and budget of a mass retailer. featuring the tagline. They are also redesigned their logo. This efforts cost a lot of money to the company. Payless have to face a few risk if they failed to handle the situations. Payless also hired top designers as full-time employees to head the new team and they also began running full-page ads in magazine such as Elle. “Look Again”. Another risk for the designer is that they will lose their job if Payless cannot survive in this field. In order to ‘democratize fashion’. Payless stand to lose the most.By implementing the new strategy. And this will cause the designers hard to get the new followers. Payless are helping the designers by took the designs to the runway of New York’s fashion week. By setting a low price to a luxury products can cause their customer feel hesitates about the products quality.
Lastly. . Voucher and mystery gift can be given off to the customers who purchased more than a specific amount. they are willing to pay more. the economic downturn causes the costs for producing and distributing products increase. Secondly. This will increase the sales of the products. Besides that. Because of this. All of these attribute to higher cost for the company. Payless also regularly advertise on television. This is not only help to attract more customers. Recent years. In conclusion. competitor and cost inflation. Payless can use consumers’ reference prices to set the price. Payless can also come out with a series of limited edition products which are slightly higher in price in order to gain more profits. To make the stores more open. Therefore.Consider the scale on which Payless operates. Payless need to increase the price to cover the expenses. Thus. on-line and magazines. Payless had spent a lot of money to launch the new “Fashion Lab” and “Hot Zone” store formats in its new stores and old stores are being progressively remodeled. a successful price increase can greatly improve profit. Many consumers use price to judge the quality. How much of a price increase does Payless need to achieve in order to make this venture worthwhile? In my opinion. Payless should plan its pricing strategies properly. light. Payless should adjust the price based upon prices of the similar competitor products. but also help to remain its low pricing policy. Payless can provide discount during season clearance. the price changes for Payless should depend on several factors which are company expenses. It must first consider the price range of their products. and airy. In addition. radio. For example. cost inflation. Payless have to increase their price to protect the profit of the company. it can place its stores in some higher-end malls in the country. They usually perceive higher-priced products as having higher quality. Hence. It also recruits a few top designers from New York as full-time employees. Some of the products can be set at a lower price and sometimes even below cost to act as a loss leader to stimulate other profitable sales. then set its own products at a lower price.
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