Read full document

Question 1

Page 1 of 2
Question 1:

Payless Shoe Source decided to regain its market leadership that had lost in the footwear market, so they look for product mix pricing strategy to maximize the profits on the total product mix. . PayLess Shoe Source general strategy was to expand its footwear business and achieve merchandise authority in the shoe market through the value-priced strategy. As shown in the Company Case “Payless shoe Source” their strategy best suits the product line pricing strategy, in which they set price steps between different related products in a product line based on price differences. This was supported by a perceived quality difference and based on competitors prices where they price less for their fashionable shoes other than well known retailers.

However, the other four product mix pricing situations were somehow different than the change that Payless did on his products and their prices. Their strategy don’t apply to “optional- product pricing” or “captive product pricing”, since there was no a main product that Payless want to sell with it accessories or complementary things. They sell different brands of shoes that can satisfy completely your need in having comfortable beautiful footwear without the need for any other product with it. Moreover, the strategy wasn’t the same as the “By-Product pricing” strategy reveals, in which the manufacturer will seek a market for selling the byproducts to make the main product’s price more competitive. In fact, Payless focus on paying less for fashion to gain competitive advantage and they didn’t show that shoe manufacturing have no value and costly by-products. What is left from the materials in manufacturing sandals for example can be used easily in making a flip-flop.

In addition, the company case and the original website of Payless don’t show that they use the “Product Bundle Pricing” in their stores. They don’t combine several products and offer the bundle at a reduced price. Each brand has its specific...