B. The Price of Good Quality Shoes
Price is the most crucial element in marketing because it will affect a company’s
profits. The surface elements of merchandises such as shoes appearance and
salespeople’s service are production costs in marketing. Price is also a very flexible
point that differs on the basis of products characteristic and sale route.
Price could change quality rapidly. Beside, quality could also arouse buyers’
desires. The better the quality of the merchandise is, the higher the price. The basic
price making includes an appropriate profit and cost-plus pricing (prime cost) such as
“Cost-Push Inflation1.” But this price is not charged in department stores. Brands will
decide the prices of shoes according to the customers’ liking to revaluate on cost-push
inflation. The project has mentioned in previous section, “Fashion Culture and
Appearance,” that people will take the first glance on the outlook. But mostly, they
will purchase shoes of high quality through deliberation. After all, few people would
love to pay a lot on some of good looking but uncomfortable shoes after all. So
“Quality” is the most important point to meet shoppers’ needs.
Some consumers choose to buy shoes in department stores because their brands
and products are famous and their quality is guaranteed. It can be analyzed from two
parts of price on a good quality. First, the higher price the better quality. To produce
1
WIKIPEDIA : http://en.wikipedia.org/wiki/Cost-push_inflation
top grade merchandise is to make a higher price for brands to retrieve the cost-plus
pricing. Commodities have a higher value because of great workmanship and
durability. Furthermore, brands need to pay department stores rents, commission and
so on. However, the principle “the higher price the better quality” has a weakness.
Some unknown shops usually imitate those high price products and claim a lower
price for the same quality. When there is economic recession, clients will shop
punctiliously. As a result, the sales of higher price brands will get influenced easily.
Second, if there is a lower price for better quality, it is an excellent deal to purchasers.
But it’s not a suitable strategy to brands in department stores because brands need to
pay department stores big set expenses. If brands cut down selling price, they will
take risks that they may not gain profits by selling high volume with low benefit
margin. So now many female shoes category killers2 undercut counters’ business to
offer varied shoes brands with lower price, than department stores do.
Price is changeable since brands have to reset cost-push inflation with the trend
of the times. The most common tactic is “Promotional Pricing,” which includes
“Special Incident Pricing” and “Psychological discount.” Special Incident Pricing
means department stores will readjust the prices of all products in some magnificent
festival and special duration. Psychological Discount is a smart pricing. On the
2
About.com : http://retail.about.com/od/glossary/g/category_killer.htm
surface, consumers will see the products price is decreased a lot, but actually sellers
drive up the list price to make buyers believe it is worthy to purchase for the large
discount.