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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.
They are operating in the same marketing area that is local co-operatives that is only available in hundreds. warehousing. a distinctive feature of Zara’s business model. Question 3 Which type of vertical marketing system does Zara employ?. Zara makes use of Corporate Vertical Marketing System (VMS). if a customer is asking for a rounded neck on a vest . has allowed the company to react swiftly with the latest trend in the fashion industry. It means that Zara has the advantage to be a fast-fashion leader. a retail distributor may refuse to carry a manufacturer's product because of low sales. 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. Zara should maintain a good relationship with its distributors in order to expand its business and increases the profit. List all the benefits that Zara receives by having adopted this system. further decreasing the manufacturer's total sales. Hence. Zara competes with other retailers like Sweden’s Hennes & Mauritz(H&M). Amancio Ortega. distribution. Not only that the company has the control over the entire distribution chain. Vertical conflicts means that the conflict occurring between two or more different hierarchical members of a Channel of Distribution. from design. Spain’s Mango and other big retailers to send the designs to the local co-operatives for sewing. The Corporate Vertical Marketing System provides the company with the effective channel leadership. For instance. Zara’s team consisted of more than 300 designers who deals with the design process. the founder of Zara’s clothing chain designed a system in which he could control every aspect of the supply chain. Fast at Zara means that it can take a product from concept through design. For example. Vertical integration. This in turn. colors. styles and fabrics that customers are demanding. much quicker than any of its fast fashion competitors. The store managers and sales staff updated the headquarters every day about the moving stock and provided inputs regarding the new lines. production. Thus. manufacturing. Statistically. and store shelf placement in as little as two weeks. Britain’s Top Shop. they even outsource their own raw materials. and production to distribution and retailing. avoiding conflicts emerge from different channels. the company manages all design. resulting in oversaturation of the target population area and extreme competition. 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. Thus. Zara successfully integrate design. distribution. In the case study. makes Zara to emerge as a unified system which the whole team can work together responsively.Horizontal conflicts referred to the conflict between competitors of the same marketing channel. This will make the smaller competitors be at an extreme disadvantage. and logistics functions by itself instead of relying to outside partners. and retailing and which has turned it into the world’s fastest-growing fashion retailer.
Changeover of production techniques to create different apparel lines requires highly automated equipment specialized by garment type. Their “fast-fashion” distribution system has more advantages than not.rather than a v neck. It was paid off to be fast in fashion industry as fashions were keep on changing in fast pace. Therefore. And the company will only bear a small amount of loss if any item is not selling. 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. The high tech information system is an essential that links the shop to designers and . Particular to its highly capital intensive investments. Regular customers know that new products are introduced every two weeks and most likely would not be available tomorrow. Corporate VMS has also resulted in quick inventory turnover. 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. such an item can be in stores in seven to ten days. This process would take traditional retailers months to meet customers demand. Zara is able to sell more items at full price. Zara’s in-house production purposely creates a rapid product turnover since they only produce items in smaller batches. Zara could also experience increasing cost in order to keep up with the latest trend in the fashion industry. To keep up with this high technology plant Zara has to financially back the strategy within the organization. it is withdrawn from shops. As Zara frequently updated the clothing line in stores they need to change the techniques and equipment to design the garments accordingly. further orders are cancelled and a new design is pursued. 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 has successfully opened up 1 495 stores worldwide. these advantages are offset by the advantages. If a design does not sell well within a week. Rapid turnover creates a climate of scarcity and exclusivity in Zara’s retail stores. That goes up to 17 times for Zara. but most of them are located in European countries. 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 to date. they are able to lead the fast fashion industry. The disadvantages that would likely to occur is that Zara rely heavily on the high capital intensive investment. Zara delivers goods via cargo jet to stores farther away. Due to that. It was also difficult for them to expand to far location as Zara’s warehouses are centralized in La Coruna in Spain. An average high-street store in Spain expects customers to visit three times a year. This would keep the inventory low and low cost of maintenance. However.
customized machines patterned after the equipment used by overnight parcel service’s process up to 80000 items an hour. If the distribution is efficiency. We can add value by increase the availability of warehouse and swift and advance the automotive are used. Compare to the other rivals. The computerized system sorts. dealers. It delivers within a 24-hour drive to every one of Zara’s 1495 stores. 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. They can concentrate more on the stores chain expansion rather than facilities expansion. Even if they have to incur higher costs in producing different apparel lines they would try to reach up maximum revenues. Many companies have greatly reduced their inventories and related costs through just-in-time logistics . As customers are driven to check out new items in stores as they would not want to miss out the latest fad. Zara is largely seen as a company that emphasis on delivering customer value. Zara use intermodal transportation like truck and cargo jet. And it was proven as last year the revenues increased over 15 percent which recorded $14.5 billion.finally to the distribution system. This can have more products in the market for the customers. Zara utilize the most valuable concept that is crucial for every retailer’s store. This in turn gives them advantage to lead the market in the industry and emerge as fast fashion retailers. take orders. and deliver goods to customers as quickly as possible. Since that Zara introduces new item for almost every week they have the advantages upon maximum sales and revenues. Question 5: Warehousing A large. and customers. like H&M and Gap they only produces 2000 to 4000 items respectively. Zara is capable to launch for about 11 000 new items. Example. and allocates clothing items to every one of Zara’s stores. the satisfaction of customers can obtain. pipeline and air. Inventory Management Balance the costs of carrying larger inventories against resulting sales and profits. As Zara’s stores are expand rapidly. rail. labels. In a typical year. highly automated warehouse designed to receive goods from various plants and suppliers. 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. fill the efficiently. packs. Due to that. the company can choose among five main transportation models: truck. 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. Transportation In shipping goods to its warehouse. to be accessible for the customers to reach out their products. Zara warehouses are a vision of modern automation as swift and efficient as any automotive or consumer electronics plant. along with an alternative mode for digital products-the internet. This will make the customers feel more satisfy. water.
Zara’s stores receive new merchandise 2 to 3 times a week. shipment and inventory levels.systems. the computerized exchange of data between organizations. From a logistic perspective. It responds to fashion trends much quicker than any of its fast-fashion competitors. producers and retailers carry only small inventories of parts or merchandise. and even customers data are closely linked to channel performance. and flexible delivery so that new supplies will be available when needed. With such systems. It’s Zara’s high-tech information system that has taken vertical integration in the company to an unprecedented level. frequent. often only enough for a few days of operation. Just-in-time systems require accurate forecasting along with fast. New stocks arrive exactly when needed. For example. information flows such as customer transactions. billing. It’s what links the shop to their designers and distribution system. Zara’s information system is absolutely Avanti-guard. . Information can be shared and managed through traditional or Internet-based electronic data interchange (EDI). Logistic Information Management Channel partners often link up to share information and to make better joint logistics decisions. rather than being stored in inventory until being used.
These include wholesalers and retailers who buy and resell merchandise. and international market. This is because the company is more to designing marketing plan. marketing services agencies. They must work closely with other company in department. Such buyers not only bought the car but found ways modify it by hacking into the Prius’s computer system. techies who were attracted by the car advanced technology. operation. The aim of the entire value delivery system is to serve target customers and create strong relationship with them. Example. government market. The Prius first sold in the United Stated in the 2001 model year. the company target customer market and international market. The company is very important in the sale of Toyota Prius. reseller market. Customer also like the improvement. sell and distribute its goods to final buyers.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. cramped. Marketing intermediaries is the firm that help the company to promote. so when Toyota Prius create new technology it can be Customer more attracted that car.6liter per 100 kilometers and than its successor did even better at 4. This is because. physical distribution firm. purchasing. So. This all related in internal environment. business market. Toyota targeting strategy has been spot-on from the beginning. Three years later. Customer also fills satisfaction in the company at work hard. there are finance. customer. slow compact car with a dull design. and financial intermediaries. Customers are the most important factors in the company’s microenvironment. The personal selling carried out by local dealers who in advance . Toyota motor company successfully introduce the first and second generation Prius which combined petrol engine with electric motor. Whereas the first Prius averaged an astounding 5. In the Prius case. Other than that there are many reason of the success of the Prius starters. It was a small. focused first on early adopters. The company might target any or all of five types of customers market like customer market. when work with harmony in each other company department. They include resellers. First focus adopters and customer. the second generation Prius benefits from a modest power increase. Resellers are distribution channel firm that help the company find customers or make sales to them. when they do work together it can be more opportunities and get more idea to increase the company. In department such as top management.90 in second generation. it can be easy to create customer value and relationship. marketing intermediaries and publics. and accounting department. research and development (R&D).
others statistics. but few may be able to afford one. political. Google. They had no problem getting price premium of up to $5000 over sticker price for Prius. Publics give more opportunities to increase in profits and facilities in the company to do some project. and cultural – that have affected the introduction and sale of the Toyota Prius. the Prius offers even greater savings and in the summer. Marketers must pay close attention to major trends and consumer spending patterns both across and within their world markets. Because it does cost more. and people make up markets. Publics are any group that have on actual or potential interest in or impact on an organization ability to achieve its objective. To be one of the first to own such a car may be worth the higher initial price. economic. The world population is growing at an explosive rate. density. How has Toyota dealt with each these factors? Macro environmental factors consist of broader forces such as demographic. natural. This is not priced as a luxury car. 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. The demographic environment is of major interest to marketers because it involves people. and is the essences of basic economics. Publics also give impact in company. which would result in a lower price. technological. economic. the single most important demographic trend is the changing age structure of the population. technological. Success of selling the car should lead to an increase in supply. some consumers shifted to smaller cars and demand . As in United States. race. however. is in line with what Americans are paying for cars. occupation. Younger generations may be more environmentally concerned and want a Prius. With the increase in gas prices. This means that they can pay more for cars (can overcoming the higher price). political and cultural forces that shape opportunities and pose threats to the company. gender. and Hyperion Solution also joined in the incentive game. Toyota dealers have done a great job in promotion and selling Toyota Prius. Toyota has sought tax deductions to help with the “sticker shock. location. The economic environment consists of factors that affect consumer purchasing power and spending patterns. Baby boomers are the major market in the United States and they have reached the stage where the kids are grown and gone. From the Prius case. age. Some eco-friendly companies such as Timberland.” The price of the car. natural. Demographic environment is the study of human population in terms of size. QUESTION 2 Outline the major macro environmental factors – demographic. giving employees as much as $5000 toward the purchase of hybrids.should have trained to be are familiar with the Prius car and know how to overcome objections.
stripped-down car did not offer. The US government give hybrid. Cultural factors are Americans’ love of automobiles. Toyota sold 181. from a company that always runs on brain power”. Toyota announced that it has sold a total of 1. It use a tagline “A car that sometimes runs on gas power and sometimes runs on electric power. These ads helped to position Toyota as an “environmentally concerned” company and more subtly stressed the technology aspect of the car.028. Toyota has played this up in their marketing and aimed the car at the “techie” part of the market. a 70% increase over 2006 sales.000 Prius cars since . perceptions.auto buyers a tax break anyway because in emissions regulations. and our rebellion against gasoline price increases. This environment is composed of laws. Some detail on tax incentives is given in the case. Natural environment involves the natural resources that are needed as inputs by marketers or that are affected by marketing activities. What has Toyota done well? How might it improve its strategy? In 2007. preferences.for the Prius grew. and politics. Recognizing that some senators may adopt a tougher stance toward gas emissions and mileage standards. government agencies. The second general vehicle adds more features such as the six-disc CD player and cruise control—options that the first generation. Marketers should be aware of several trends in the natural environment. As the case indicates. they would be favorably inclined toward the car. Although increased gas prices alone cannot account for the increase in demand. In political environment. our willingness to adopt technology and progress. QUESTION 3 Evaluate Toyota’s marketing strategy so far. environmental concerns. technology is the Prius’ primary strength. The cultural characteristics can affect marketing decision making. These are given in the first paragraph of the case and these are all factors that will favour introduction of the vehicle.000 Prius in the US alone. they certainly didn’t hurt Prius sales. This supports the Japanese cars in their claim to be technologically advanced. and behaviours. In May 2008. Environmental concerns have grown steadily during the past three decades. For technological environment. and pressure groups that influence and limit various organizations and individuals. marketing decisions are strongly affected by developments in the political and legal environment. the introduction of the car is likely to lead to other technological advances (such as the batteries). The cultural environmental is made up of institution and other forces that affect a society’s basic values. our claim to care about the environment. The Prius use gasoline in a small quantity compared to another hybrid car.
Pro-environmental can play part in taking care of environment by drive solely on electric power. Techies not only bought the car but found ways to modify it by hacking into Prius’s computer systems. more powerful and more fuel-efficient. They also could provide professional in order to help solving their customer problems via the forum itself. Toyota marketing strategy is marketing logic by which the business unit hopes to achieve its marketing objective. Toyota are applying more than 95% recoverable and more than 85% recyclable materials. Some states issued permits for hybrid to drive in HOV (High Occupancy Vehicle). Toyota using recyclable plastics which they are recycling as many part of Prius as possible. They make a lot of improvement to the cars as time is moving on.it was first introduced in Japan in 1997. Toyota had implements the strategy of targeting the right group at the right time. ii . For example. They are also using recyclable materials and ecological plastics. They boast such modification as using the dashboard display screen to play video games.000 towards the purchase of hybrid car.Pro environmentalists. Toyota marketing strategy also is mainly customercentered. It means Toyota marketing strategy has done very well in attracting customer. Toyota introduced to market a so-called hybrid electric vehicle using both gasoline and electric batteries. Some government and province gives tax breaks amounting to thousands of dollars and some eco friendly company gives their employee as much as $5. Toyota also can build a website which they can interact with their customer in order to understand better about their customer. The new body is more aerodynamic. so no fuel consumption or emission. 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. Toyota have done marketing segmentation by which they are divided their target customer into two group which are : i -Techies. The car has been readily accepted in consumers mind and mostly consumers see cars as an environmentally friendly and efficient car. the Prius Gen 3 are now more larger. . These are the people who love technology and willing to experiment. Some cities provide free parking. 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. For example.
we can see that hybrid cars are not only help to protect our environment. more fashionable car aimed at a wider market (early adopters). 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. says. Would you agree with Mr. auto makers’ approach to hybrids. First of all. Many countries are now standing in the line with the global concern of the environment issues. The second version of the Prius came out in 2004 and was a sporty. they were using more mass market media. In this way. Toyota used the Internet very heavily. Prime minister had announced the import and excise duty exemptions for hybrid cars as well as incentives provided in the 2011 Budget. well thought out and implemented. 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. Ken Stewart.” This seems to summarize the U. The case provides an excellent opportunity to compare Toyota’s marketing of the introductory and follow-up models—very different campaigns. The exemption will definitely encourage more consumers to own hybrid cars. Additionally. “if you want to get a lot of hybrids on the road you put them in vehicles that people are buying now. but by 2004. hybrid car is able to effectively conserve fuel consumption. The Prius was originally introduced in 2000 with very targeted marketing aimed at techies (innovators). Therefore. as hybrid cars carry with them a bundle of advantages.S. . Steward. but also help to create new business opportunity in the market.QUESTION 4 GM’s marketing director for new ventures. It is environment friendly compared with conventional cars. causes less pollution and releases less carbon dioxide into the atmosphere. This gives students an opportunity to compare the two strategies and debate which one seems more appropriate for the American market. we are strongly agree with Mr. Stewart. Let’s take Malaysia as an example. Both are quite different from the strategy that GM and other companies are using and plan to use. the competitive response by various other car makers is highlighted. This should stimulate good discussion in class about how automotive companies might move away from reliance on gasoline powered engines. and eventually boost up the car’s sales. Stewart? Why or why not? I would agree with Mr.
Spalding. captive product pricing and optionalproduct pricing. Other than that. product bundle pricing. Product mix means in the same companies have many type product with they are brands it sold. Dexter. Payless now sells shoes under numerous brand names that it either owns or licenses. and Smartfit from $14. width. . color. But the expansion of its brand portfolio to include famous labels will certainly give payless greater pricing flexibility. Champion. Stacey Bendet and Patricia Field. Eagle. Payless sets most of the stores product line below $15. Payless have relationship with top New-York based designers Laura Poretzky.99. Product line pricing is setting the price steps between various products in the product line based on cost differences between the products. For girls.99. Matt Rubel also has suggested that in many cases. for boys’ shoes. Shaquille O’Neal-endorsed Dunkman.99 until $26. price increases may be as little as 50 cent per pair of shoes. they have many shapes. Companies usually develop product lines rather than single product. Lela Rose. Customer can buy many types of products with different prices by looking at size. size. design. by-product pricing. In this case. Payless have strategy product line. and various Disney brands. The four are designing everything from pumps to boots to handbags for Payless. there are shoes in differences brand like Fioni. The strategy for setting a product’s price often has to be changed when the product is part of a product mix.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. Most products Payless offers are under $50. including Airwalk.99 until $24. customer evaluations of different features and competitor’s prices. and numerous brands which they can get with difference price from $ 12. the product mix pricing strategy Payless use is product line pricing. color and design. Dexter. For example. Lela Rose. from one comprised almost entirely of store brands to one dominated by well-known national brands. The company’s CEO. Product mix pricing strategies consist of five elements which is product line pricing. Amerian.
In the other hand. consumers usually carry prices in their minds and refer to when looking at a given product. With the new store environment. it makes the $12 shoe looks like a $20 shoe. The reference price might be formed by noting current prices. Like what Matt Rubel said in a statement reflecting the company’s new strategy. “We have the ability to make the shoes at the most affordable prices anywhere in the world. This is where Payless’s strategy deviate from psychological pricing concept. Payless store now have more open. But what happen in Payless is. hip. In addition. Payless is now looking forward into style and design rather than price.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. remembering past . light. we can see that high price does not play its main role to increase the quality of the shoe they sell. They even upgrade their store environment into more comfortable places which then create customer satisfaction. But the store’s environment itself creates a quality satisfaction towards Payless’s product. psychological pricing is a pricing approach that considers the psychology of prices and not simply the economics. They then launched new “Fashion Lab and “Hot Zone” store format. The price is used to say something about the product. Payless focus more towards style and design of their product rather than price. 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. and we want to marry that with the greatest creativity”. but changed the image from dusty dungeon of cheap footwear into the fun. Here. according to reference pricing. It was a drastic improvement. Consumers usually perceive higher-priced products as having higher quality. Psychological pricing occurs when sellers consider the psychology of prices and not simply the economics. As the result. they did not increase the price of their product to gain higher quality product perception. In the other hand. Payless even re-designed their logo for the first time in 20 years. merchant of fashion.
This strategy widens the age range of the customers from teenagers to adult women. it makes the $12 shoe looks like $20 shoe. This strategy can attract more customers and this will result to more satisfying consumer experience built around style and design rather than price. customers are still willing to pay more. This strategy will change the image of Payless from the dusty dungeon of cheap footwear into the fun. but they even make the customer willing to pay a little bit more than they have in the past. Question 3 Discuss the benefits and risks of the new Payless strategy for both Payless and the designers. Payless’s manipulate the reference pricing by implement a drastic improvement in their store. while teenagers are aspire to that age group. With their new store atmosphere. the price offered by Payless is still affordable by customers. and airy with a more satisfying consumer experience built around style and design rather than price. light. This will result to increase in the number of sales. and airy. Prices increases may be as little as 50 cents per pair of shoes. The new format not only attracts more customers. Payless has made decision to redesign their logo and launched a new store format. Compared to competitors. they have the ability to produce shoes at the most affordable price. They launched a new “Fashion Lab” and “Hot Zone” store format to create more open. Sellers can influence or use these consumers’ reference prices when setting price. However. because women in their 40s who shop for their family are nostalgic about that time in their lives. Payless are now transform and introduce their new image as more trendy and more modern. Even though the price is slightly increased. According to Head of Public relations. Mardi Larson. . Which of these two stands to lose the most? With the new strategy implemented by Payless. ‘Fashion Lab’ and ‘Hot Zone’. but the expansion of its brand portfolio to include famous labels will certainly give Payless greater pricing flexibility. Payless is now target the 24 years-old demographic.prices or assessing the buying situation. hip merchant of fashion Payless now are making the store more open. light. All new Payless stores now have one of the two new formats and old stores are being progressively remodeled.
and the power and budget of a mass retailer. “Look Again”. a large customer base. By setting a low price to a luxury products can cause their customer feel hesitates about the products quality.By implementing the new strategy. In order to ‘democratize fashion’. 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 will lose their customer. This efforts cost a lot of money to the company. Payless is producing shoes that are designed by these top designers at a lower price than their competitors. If the new strategy that they are implementing is failed.in terms of financial problem and their reputations will go down. Payless will face big problems . They are also redesigned their logo. Vogue and W. The newest design that is designed by the designers now named under the Payless. Top designers from Michael Kors and Kenneth Cole are hired as full-time employees to head the new team. their previous followers are failed to follow their designer’s new design. Payless stand to lose the most. Question 4 . featuring the tagline. They also forged relationships with 4 top New York designers to designing high quality of shoes. And this will cause the designers hard to get the new followers. As they becoming the full-time employees at Payless. 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. Payless spend a lot of money to launched a new store formats. When the designers design the new shoes. They are also doing an ads in magazine and this allow their designers collection been recognized by many people. Another risk for the designer is that they will lose their job if Payless cannot survive in this field. Their old customers will lose their confident to this company and Payless will face bankruptcy if their strategy is failed. they are being tied with Payless contract and it is hard for them to find another opportunity to show their talent. By comparing the benefits and risks. Payless are helping the designers by took the designs to the runway of New York’s fashion week. The designers get tremendous exposure. If they failed to do so.
Payless should plan its pricing strategies properly. then set its own products at a lower price. It must first consider the price range of their products. 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. . Hence. a successful price increase can greatly improve profit. In conclusion. This will increase the sales of the products. Voucher and mystery gift can be given off to the customers who purchased more than a specific amount. and airy. light. Payless can use consumers’ reference prices to set the price. the economic downturn causes the costs for producing and distributing products increase. on-line and magazines. Besides that. It also recruits a few top designers from New York as full-time employees. Payless can also come out with a series of limited edition products which are slightly higher in price in order to gain more profits. competitor and cost inflation. Payless can provide discount during season clearance. cost inflation. All of these attribute to higher cost for the company. Recent years. Payless have to increase their price to protect the profit of the company.Consider the scale on which Payless operates. For example. Secondly. In addition. Lastly. it can place its stores in some higher-end malls in the country. radio. To make the stores more open. Thus. Payless should adjust the price based upon prices of the similar competitor products. Many consumers use price to judge the quality. Therefore. but also help to remain its low pricing policy. They usually perceive higher-priced products as having higher quality. 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. the price changes for Payless should depend on several factors which are company expenses. Payless also regularly advertise on television. they are willing to pay more. Payless need to increase the price to cover the expenses. This is not only help to attract more customers. Because of this. How much of a price increase does Payless need to achieve in order to make this venture worthwhile? In my opinion.
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