Which of the Different Product Mix Pricing Strategies Discussed in the Text Applies Best to Payless's New Strategy? Discuss in Detail.

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The strategy for setting a product's price changes when the product is the part of a product mix. Mostly,firms look for a set of prices that maximizes the profits on the total product mix where pricing is difficult because the various products have related demand and costs and face different degrees of competition. There are five different product mix pricing strategies that can be used for a firm. These are such as the product line pricing, optional-product pricing,captive-product pricing, by-product pricing and lastly, product bundle pricing. (Kotler,et al.,2009)

In this case, Payless's used two different type of product mix pricing strategies to match their criteria. Firstly is the product line pricing strategy.Companies usually develop product lines rather than single products. A product line pricing strategy is a strategy in which the management sets the price steps between various products in a product line based on cost differences between the products,customer evaluation of different features and competitiors prices.(Kotler,et al.,2009). During the olden days, payless provides only limited range of the footwear to the customers which leads to losses in the year of 2005. As stated in the case, "you can no longer produce the same boring shoes year after year and hope that price alone will get customers to your door.",said a industry insider. This shows that payless had lost its edge in the market.In order to overcome this situation, payless had hired a new CEO, Matt Rubel on the June of Year 2009. Matt Rubel knew he had to redesign a new range of footwear that consumers would swoon over but at the price they could afford. With this new range of footwear, Payless had to change its image from the dusty dungeon of cheap footwear into the fun,hip merchant of fashion.Finally, Payless managed to regain its marker leadership which retains and attracts new customers again. Reflecting to this new strategy,Matt Rubel said, "We have the ability to make shoes at the...
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