Company Case Notes Payless Shoe Source - Assignment Example

Payless Shoes Payless Shoes is a popular American footwear company that offers wide range of shoes and accessories to s at affordable prices. Since the coming of giant retailers like Wal-Mart and Target that also offers shoes at low price, Payless Shoes adopted product mix pricing strategy to make optimum profit out of their product mix. The objective was to capture price conscious customers who also prefer branded shoes. To sustain their position in the market and to deal with the increasing competition, Payless sell their fashionable shoes at prices lower than their competitors.

It was in 1995 that Payless Shoes made drastic changes in its marketing mix and pricing strategy. With fierce competition from Wal-Mart, Payless focused on collaborating with well known marketing developers and designers to target the young women. As the company launched branded shoes, it shifted from its previous EDLP (everyday low pricing) strategy to offer shoes at prices as high as $60, thus selling at higher prices than Wal-Mart and other low price stores (Grewal, 425). 2. Psychological pricing is the strategy of taking advantage of customers’ emotional responses to products with different prices.

It is a strategy adopted by most retailers who fix their product prices at odd amounts like $1.99. It gives the customers illusion that the price is closer to $1 whereas in reality it is as good as equal to $2 (Agarwal, 410). Since Payless has to sustain their market share within growing competition from giant retailers like Wal-Mart therefore it has increased their price by collaborating with branded shoes Aerosport, Airwalk, American Eagle, Dexter Comfort, and so on (“Payless: All Brands”).

In order to refrain from shocking the customers with sudden increase of prices, the common tactics could have been the above mentioned psychological pricing strategy. However, Payless did not pay attention to this and did not implement any such strategies. 3. Payless shoes targets the young women to sell stylish and fashionable shoes at affordable prices. The goal is to establish its own set of brands among customers who will be willing to pay a little more provided the shoes fulfills their desire to stay trendy.

The company has collaborated with designers like Laura Poretzky and Lela Rose to provide fashionable shoes specially designed for the young women. Payless has also hired the developer of Cole Haan footwear to bring about a change in every aspect of marketing mix. By applying this strategy, Payless is able to produce trendy shoes at low cost. Even though the offered price is little higher, it does not runs the risk of losing customers since young people agree to pay more for fashionable accessories. 4. In the 2008 global economic recession in which the United States was badly hit, Payless also felt the brunt.

However, unlike many retail stores that faced disaster resulting in closures, Payless was in a more advantageous position. Its strategy of offering fashionable shoes at affordable prices to young women has helped the company survive in one of the worst global recessions. Payless operates on global basis as the company has recently opened stores Middle Eastern countries like Saudi Arabia, Kuwait and UAE. After suffering a setback in the global recession, Payless hopes to restore its previous position with its expansion plans.

To bear the cost of expansion, Payless will have to focus on increasing price of its products keeping in mind the spending capacity of its target customers. References Agarwal, R.D. Organization and Management, Tata McGraw-Hill Education, 1982 Grewal, D. Marketing, Tata McGraw-Hill Education, 2010 “Payless: All Brands” paylessshoes, 2014, October 28, 2014 from: http://www.paylessshoes.com.au/brands/