Free Custom «New Product Pricing Strategy» Essay Paper

Free Custom «New Product Pricing Strategy» Essay Paper

The e-store is to sell four product lines: Super Girl, Party Chic, Trendy Casual, Simply Casual and Humble Styler.

The fashion industry trends that are being referred to here are: (1) the fashion retailer’s expansion to online selling to cover a much broader market of consumers and target using behavioral marketing techniques specific social trends prevalent amongst the consumers and furthering refinement of segmentation and positioning; (2) the extensive use of online advertising incorporating the clever use of social networking and social marketing; (3) fashion retailer’s use of viral advertising to get their message across to a broad range of audience in the form of videos and acquire trial through the most cheapest tool of promotion; (4) owing to the economic meltdown, the frequent use of sales offers that condemn the retailers to sell most of their product lines in cheap prices; and finally (5) the use of celebrity endorsements and use of in-house designers as part of the effective supply chain and creation of unique brand identities and most importantly (Berman 210).

Explain how you are segmenting the market. Why did you choose this method of customer segmentation? Please be specific.

The present service idea incorporates the combination of two basis of segmentation for the females the brand is to target at: demographic and psychographic models (Kotler and Keller 370).

Demographic segmentation entails the use of income, gender, age, physical location and family size to differentiate different customer groups. In the present case, the females belonging to the age group of 18 to 30, living in UK are to be used.

On the other hand, there is a very wide range of population that accounts for this segment and to further refine the segmentation the service brand uses the model of psychographic variables (Hines 130). These include the personality and behavioral characteristics and the likes and dislikes to differentiate the potential from the customers who are not likely to ever purchase the service offering of NEXT’s Chit Chat Chic Club. The specific personality types most suited for the service offering are consumers who are social, out-going and are fashion followers and innovators.

Who is the target market?

The target market based on the segmentation identified using two key variables, the following profile of potential customers is drawn, as shown in Table 4 below.

Table 4: Most Attractive Customer Segment to Target
Age 18-30
Occupation Student or Young professional
Income to Spare on Shopping Up to £60 per month
Social Position Fashion Innovator, Fashion Follower

What are your products’ benefits to the target market?

A key trend in the fashion retail is using social networking websites to link fashion follow-up with the latest trends offered by the fashion retailers to not only attract online shoppers but also those who are highly influenced by social groups and peers with regard to shopping (Newman and Patel 780). This is what the idea of NEXT’s C4 is based on. The cultural aspect of fashion purchase behavior underpinned in the concept of the plan of NEXT C4 is towards the need for social belongingness amongst the female gender where the website triggers their need to relate with other females and get influenced with others’ style.

At what price will your product be introduced? Why?

Each product line corresponds to a different price range. Price ranges are set different to allow consumers to identify the most affordable product line for them. Product lines are priced up to £60 pounds, the distribution is shown below.

Super Girl – £60

Party Chic – £45

Trendy Casual -£35

Simply Casual – £20

Humble Styler – £10

What pricing strategy are you using? Why?

Value based pricing and price skimming are two pricing models to be used for NEXT’s C4. Value based pricing will be based upon the added services the website offers in the form of a social environment together with that initially higher prices will be introduced (which will be affordable nonetheless) followed by discounts and cheaper offers six months after when bottom line profitability is attained. Discounts are to be offered quarterly once the initial stock is sold generating breakeven and a preliminary profit.

What objectives will be accomplished by using this strategy? Be specific.

The pricing strategy would allow the brand to position itself as an affordable fashion retail location in the online market and attract consumers. Discounts are offered in the products priced above £40. This strategy is used to remove risk of hampering the price based market positioning of the company if all products are offered for sale using promotional pricing. This will restrain the company to charge higher later on as customers are looking for cheaper deals (Smith 240). The shop is to position itself in the middle market and low priced market so that customers perceive it to be offering value deals and not expect further discounts and that sales discounts are offered mainly because of seasonal trends such as holidays.

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