Tag Archives: fashion

Psychological Pricing – Payless Becomes “Palessi”

Pricing is a complex topic – it is both strategic and tactical and is influenced by a variety of factors such as demand, costs, profits, and competition. But probably the most important part of pricing for marketers is its psychological impact. After all, there is a common phrase that “you get what you pay for.” But, is that always true?

Consider a recent experiment by Payless Shoes conducted in Santa Monica. Payless opened a shoe store named “Palessi” in a former Armani store and stocked the store with Payless’ low priced shoes and boots. The shoes, usually priced at $19.99 to $39.99 were examined by a group of influencers who were invited to a grand opening party and asked their opinion of the “designer” products.

The guests, who had no idea they were looking at low-cost Payless shoes, all praised the look, materials, and style of the shoes. That might not be so surprising, but what was astonishing was the amount that the guests were willing to pay for the shoes and boots. The top offer for shoes was $640 – a 1,800% markup!

What are you willing to pay?

Group Activities and Discussion Questions:

  1. Discuss the six steps for pricing: determining objectives, estimating demand, determining cost/profit relationships, select price level, set list price, and make adjustments.
  2. Discuss the importance of psychology in pricing.
  3. Show the Palessi videos: https://youtu.be/xpqqKRlqZfU and https://youtu.be/7YR2bovjfMU
  4. Payless Web site: https://www.payless.com/
  5. For Payless Shoes, divide students into groups and have each group work on any/all of the six steps.
  6. When setting the price level, assign each team a different model to use (demand-oriented, cost- oriented, etc.).
  7. Debrief the exercise. Compare the various pricing models and discuss advantages/disadvantages of each.

Source: Stanley, T. L. (28 November 2018). Payless opened a fake luxury store, ‘Palessi,’ to see how much people would pay for $20 shoes. Ad Week.

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Crocs Launches High-Heels

Crocs casual shoes surround us. The comfortable, resin-based footwear comes in a wide variety of styles for women, men, and children. There are classic clogs, sandals, wedges, sneakers, boots, and more. But until recently, there were no dress-up Croc shoes for more formal and business events. Hmmm….. Is this a new market opportunity? The answer appears to be a resounding ‘yes’.

Crocs heard the need from its loyal female fans and recently launched a new high-heel Croc shoe. Crocs may have started as the shoe for casual outdoor wear, but were quickly adopted by people who are on their feet (such as restaurant and hospital workers) for long periods of time. Made with a closed cell resin called Croslite, the foot beds warm and soften with body heat, molding to the shape of each foot. The shoes use an orthotic heel, built-in arch support, and tarsal bar, making customers’ vocal fans of the comfortable shoes.

While fashion-forward consumers might not be fans of Crocs, the company has sold more than 300 million pairs of shoes in 90 countries, and reached $1 billion in revenue. The shoes have been featured in fashion run-way shoes, and been seen on the feet of Pres. George W. Bush and First Lady Michelle Obama, among others. The shoes have also been a frequent recipient of satire and “worst” lists.

Crocs – love ‘em or hate ‘em?

Group Activities and Discussion Questions:

  1. Poll students: Who has Crocs? What are the opinions of students about the shoes.
  2. Videos can be found on Croc’s: https://www.youtube.com/user/crocs
  3. Crocs’ website: https://www.crocs.com/
  4. Discuss the importance of clearly defining a target market.
  5. Divide students into teams and have each team develop a profile of a target market for Crocs high-heel shoes. Include demographics, psychographics, behaviors, values, attitudes, etc.
  6. Based on the target market profile, what makes this product unique for these customers?

Source:  Fast Company, USA Today, other news sources

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Garment Recycling Program at H&M Stores

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Is your closet too full? Do you have clothing items you no longer wear or don’t fit? Do you want to do a good deed and help the planet? Look no further than the local H&M clothing store.

As part of a new fashion campaign called “Conscious Collections,” H&M has launched a global garment recycling program. H&M is the second largest clothing retailer in the world, so when it makes a statement, it does so on a global scale. The garment recycling program – available in 269 locations in the United States plus 48 international locations – will give customers vouchers worth 15% off a future purchase whenever they bring a bag of clothes to donate.

H&M has partnered with Global Green USA – the sole beneficiary of the massive recycling program. A partner company – I:Collect – will reprocess all donated garments for new use. H&M also announced the company would partner with the World Wildlife Federation on initiatives to improve the global water supply, particularly where wet processes are used in manufacturing.

Group Activities and Discussion Questions:

  1. Show the Conscious Collections video: http://youtu.be/futi8gcU79w
  2. Bring up the H&M Web site: http://www.hm.com/us/
  3. View Global Green USA’s site: http://www.globalgreen.org/
  4. View I:Collect’s site: http://www.ico-spirit.com/en/homepage/
  5. Discuss recycling programs as part of marketing programs.
  6. How does the recycling program integrate with other H&M marketing tactics?
  7. How can other companies implement similar initiatives?
  8. What is the impact of cause marketing and social issues for companies?

Source:  New York Times, Brandchannel.com, other news sources, 2/21/13

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