Pricing Strategy Payless Shoesource: Paying Less for Fashion

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Case Study 3

Pricing Strategy
Payless Shoesource: Paying less for fashion

Table of Contents

BACKGROUND…………………………………………………... 3

OBJECTIVE……………………………………………………….. 3

PROCEDURES……………………………………………………. 4

SUMMARY OF FINDINGS………………………………………. 4

CASE STUDY QUESTION: 1…………………………………….. 4

CASE STUDY QUESTION: 2 …………………………………….. 5

CASE STUDY QUESTION: 3……………………………………... 6

CASE STUDY QUESTION: 4 …………………………………….. 6

CONCLUSIONS………...........…………………………………….. 7

BIBLIOGRAPHY…………………………………………………... 8

BACKGROUND

When we study on the Payless Shoesource case, we might wonder how this low-price corporation could ever place stores on New York’s Fifth Avenue, these kind of high-end avenues of luxury retailing. However, after reading the whole context in the book and doing the rearch on Payless, the clue seems pretty clear that by using the unique product mix pricing strategies, Payless successfully launched its brand into different segments of customers and went through the great recession when the economic was bad. Transforming from only selling the low-price shoes boringly to the masses in the past twenty years, Payless positioned itself to another path combining with the concept “Collective Brands”, which is implemented by hiring the top-end designers from other luxury brands to work for Payless. In attempt to realize the “democratize fashion”, which is to make truly fashionable products more accessible by applying its cost-effective model to a product portfolio infused with well-known brand labels and some of the hottest hight-end designers in the business, Payless not only get back a lot of old customers since the impact of economic recession, but also aim to attract more new customers as well. As a result, it did. Using the four major components to realize the strategic plan, which including expanding the brand porfolio, the payless design team, designer collections and fun inspiring store formats, Payless does sell the most affordable prices shoes while executing greatest creativity.

OBJECTIVES

The objectives of the case study is to analyze how Payless reaching out a wide range of customers by executing the unique product mix pricing strategy. As pricing decisions are subject to a complex array of company, environmental, and competitive forces, payless does not set a single price but rather a pricing structure. To learn how Payless considers these two sides at the same time is our objectives in this pricing strategy chapter.

PROCEDURES

At the beginning, Payless was targeting itself as low-priced shoe stores for almost fifty years. After recognising that only low price cannot satisfy the customers anymore, Payless swifted its strategy from thrift only to adding high-end design collective brands which price were little higher than the original one, which enables customers enjoyed the affordable price and at the same time got the pleasant shopping satisfaction among more comprehesive and various choices.

SUMMARY OF FINDINGS

From the low-priced shoe store only transformed to combining multiple designed collectives, the case of Payless successfully shows the significant role that pricing strategy is playing in the market place. Expanding the brand porfolio makes a big different in realizing the transformation, which gives Payless greater price flexibility and makes the strategy of “luxury-meets-low-price” feasible in the end. This approach also draw more new customers who are chasing for fashion and trend, not caring too much on the price. As a results,Payless manage to appeal to more categories of customers, including the fashion-concious female who buy 50 percent more shoes than most current consumers.

CASE STUDY QUESTIONS

Q1) Which of the different product mix pricing strategies discussed in the...
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