Pricing Strategy Payless Shoesource: Paying Less for Fashion

1637 WordsDec 21, 20127 Pages
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…show more content…
Firms are look for a prices that maximizes the profits on the total product mix. There are five product mix pricing strategies for the firms ---- Product line pricing, optional-product pricing, captive-product pricing, by-product pricing and product bundle pricing. In this case, Payless used product line pricing strategy. Company usually develop the product lines rather than the 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 competitors prices. At the beginning, Payless had only limited lines of shoes which focusing on only low-priced shoes and then began to lose their customers. However, Matt Rubel, the CEO in Payless who come with extensive experience with high-end brands like Cole and J.Crew, raised up a brand new pricing strategy which adding more fashion and designing collectives into its brand porfolio, including Stride Rite chain and all its associated brands like Keds, Sperry Top-Sider and Saucony. That makes a hit. He changed the image of Payless, dusty dungeon of cheap footwear into the fun, and fashionable footwear. Therefore, Payless provides a competitive advantage that appeals to more customers again. Q2) How do concepts such as psychological pricing and reference pricing apply

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