Payless Shoe Case

2.) Psychological pricing and reference pricing both apply well to the strategy that payless employs. Before purchasing, consumers think about which prices are suitable for specific products that are available. When consumers see a high priced product, they would expect to see the product to have certain characteristics that stand out from items that are available at a lower price. Payless catches the buyer’s attention by displaying products as a very high quality product, so the consumer assumes a certain price to themselves. After the consumer assumes a certain price, payless will sell this product for much cheaper than the consumer would expect prompting the buyer to believe it’s being sold for much cheaper.

Payless Shoe Source Case Study – Question 3

The benefit in the new Payless strategy is that it allows payless to upsell their products which in turn give them a higher profit margin for every item they sell. This would help bring in more customers to the store. It could also help bring in customers that don’t necessarily shop at Payless on a regular basis. The new pricing and/or the new designs might attract the new potential customers. The risk in their new strategy is keeping the customers interested in the store. The fashion industry is a field that’s constantly changing and in order to keep up with the industry, Payless has to constantly keep updating their designs to keep customers interested and attracted to the store and designs produced. Failure to do so might make them seem outdated and potentially lose customers and sales.
Payless offers designers substantial sale volumes. They get orders in bulk that they probably would not get with other suppliers in the market. Although this might seem like a benefit to the designers, there are risks involved as well. The designers will need to find a healthy medium that incorporates both the average, everyday consumers as well as the high-end boutiques.