Tag Archives: retail

Is this a good deal?

Everyone loves a deal. Just showing a sign with “50% off!” can get shoppers racing to the store to rack up credit card points. But is that perceived ‘deal’ really a deal? Or is it a ploy? And, do shoppers always make the right choices when comparing pricing options? Oftentimes, shoppers do not make the lowest-cost choice, but instead fall prey to their own mathematical errors.

Answer this: Which is a better deal for a $6, 6-ounce product:

  • Option (a): 33% off the regular price, or
  • Option (b) 33% more product for the regular price?

At a quick glance, it appears the two deals are equivalent. But are they? No.

  • Option (a) $6 – 33% discount ($1.98) = $4.02, divided by 6 ounces = $0.67/ounce.
  • Option (b) 6 ounces plus 33% more volume (1.98 ounce) = 7.98 ounces, divided by $6 = $1.33/ounce.

In order for the two options to be truly equivalent, the price discount of 33% must be countered by a quantity increase of 50%.

This is a common scene for product discounts in stores. Generally, consumers prefer product bonuses instead of price discounts, even though these do not offer the same benefit.

Go ahead and try to make these calculations in your head! Then, carefully examine the promotions offered by retailers before making your final decision.

Which promotion would you use?

Group Activities and Discussion Questions:

  1. This activity is a good time to set students loose in stores on a field trip.
  2. Divide students into teams. Have each team walk through a local store to determine how prices are advertised and shown in stores. They can compare the shelf price with prices found in sales flyers (usually at store entrances).
  3. As they wander the store, have students find examples of products that are offering a discount, or offering an extra portion in the package. (They can use smart phones to take photos of the examples.)
  4. What pricing strategies are being use?
  5. Do they always make the lower-cost choice?
  6. Debrief the exercise.

Source:  McGinty, J. (3 August 2018). 50% off: Why that deal isn’t as good as you think. Wall Street Journal.

 

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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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IKEA Opens its First Store in India

IKEA has opened its first store in India. The store, located in Hyderabad, cost roughly $100 million to build and is an estimated 400,000 square feet. The company plans to have up to 25 stores in India by 2025.

India has a large and complex retail base. The country’s 1.3 billion people account for about $30 billion per year for furniture and household items. However, unlike the U.S., 95% of the goods are sold through small shops that offer specialty products or single-category stores. IKEA’s broad product mix and store operations had to be significantly revised for India. While the store layout is similar to other IKEAs, the displays are different, featuring hundreds of products priced at 100 rupees or less ($1.45 U.S.).

To research how India’s people live and shop, employees visited about 1,000 homes in different areas of India to understand consumers’ needs. Some differences: most Indians do not use knives to eat, women are shorter than Europeans, and children often sleep in the same room as their parents until they are school-age. In addition, India’s government requires foreign-owned, single-brand retailers to use local suppliers for 30% of the value of the goods sold in India.

IKEA, the Sweden-based multinational, now owns and operates 415 stores in 49 countries around the globe. With revenue in excess of $42 billion (U.S.), and an estimated 12,000 products, the company uses more than 1% of the world’s commercial-product wood.

It’s not always easy to change, but entering a new market requires research and revision.

Group Activities and Discussion Questions:

  1. Ask students about their experiences at IKEA. What works, doesn’t work?
  2. View the IKEA India website: https://www.ikea.com/in/en/
  3. A video of IKEA India store is available at: https://economictimes.indiatimes.com/industry/services/retail/ikea-says-namaste-to-indian-customers-as-it-throws-open-its-first-store-in-hyderabad/videoshow/65340339.cms
  4. Discuss how to build and use a SWOT analysis grid: strengths, weaknesses, opportunities, and threats.
  5. Divide students into teams. Have each team develop a SWOT for IKEA in India.
  6. What are the issues and risks?

Source:  Goel, V. (7 August 2018). Ikea opens first India store, tweaking products but not the vibe. New York Times.

 

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