Marketing – Two Case Studies
Case #12
“Fashion isn’t a luxury, it’s a right.”
While he still believed that statement to be true, Paul Jones
CEO of the Payless Shoe division, knows that much has changed – in
the company and in the industry – from those early days in Topeka,
Kansas.
The year he started at Payless, 2012, was among the most
tumultuous the company had seen. Before he arrived, the Collective
Brands Board had fired the former CEO, Matt Rubel and then had
dismantled the ‘house of brands’ that Rubel built. Given the losses
the company had experienced, the decision to split the company in
two, had made strategic sense. The Performance + Lifestyle Group,
housing the Sperry, Keds, Saucony, and Stride Rite brands, were
sold to Wolverine Worldwide. Wolverine was able to pair that
acquisition with its current shoe brands including Hush Puppies,
Patagonia Footwear and Harley-Davidson Footwear. The Payless and
Collective Licensing International groups were taken private by an
acquisition company made up of Blum Capital and Golden Gate
Capital.
And that was how Jones came to find himself in Topeka almost
5 years ago. Interestingly, or ironically from Jones perspective,
many of the same issues that had faced the company a decade ago
seemed to linger. Though it is not really any consolation, Jones
knows that things over at competitor DSW, Inc. aren’t any better.
In fact, having just announced the retirement of their former CEO
Michael MacDonald effective January 1, 2016 Jones is some ways was
glad to still be in his position.
But that was small consolation knowing he was facing a
meeting next week with the Blum/Golden Gate brass to talk strategy
for the next few years. And that’s why he’s called you in … he’s
seeking your help in conducting some industry research and then
brainstorming where the company can (and should) go next.
Specifically, he’s looking for the answers to these questions:
Copy and Paste the below questions in your write-up and place
your answers underneath each question.
Problem Identification – Accurately, clearly, and
completely identifies the relevant case specific problem
Problem Identification: The identified problem is …..
Question 1:
Using Payless and DSW, which of the current product mix
pricing strategies discussed in the text that apply these retailers
today?
Question 2:
How do the concepts of psychological pricing and reference
pricing apply to these companies’ strategies?
a. In what ways do these companies deviate from these
strategies?
Question 3:
What are the benefits of employing these strategies and what
are the drawbacks – discuss in detail.
Question 4:
Today, the designer/retailer collaboration has become an
established practice. For Payless, what might be 2-3 ways in which
Payless might still gain a competitive advantage using this tactic
in a new or unique way?
a. What are the strengths and weaknesses of these options?
b. How would these options differentiate Payless from its
competitors like DSW?
Question 5:
Which alternative would you recommend to Jones – and why?
a. Identify and defend what you think is their best
alternative
b. State the short-term or intended outcome of this plan
c. Discuss the long-term sustainability of this pricing
strategy
Case #14
John Mackey and Walter Robb, current Co-CEOs of Whole Foods,
both leaned back in their chairs as they sat facing each other.
Silent, and deep in their own thoughts, they each reflected back to
the “good old days” for Whole Foods – when the company was at the
top of the ‘organic grocery game,’ could command a premium price
for their products, and had no real competition to speak of.
Today however, that is not the case. Kroger, Trader Joes, The
Fresh Market – even Walmart for heaven’s sake – has become a
competitor in the organic arena. In addition, over and above
offering brand name organics many of these companies have also
moved – or are moving – to create their own private/store-label
organic brands. As there continues to be uncertainty with respect
to where the economy will really go next, both Mackey and Robb know
that they will be facing even more competition from these lower
priced alternative products.
That means that there will likely be more pressure than ever
– and therefore more scrutiny – placed on their experiment with the
new “365 by Whole Foods Market” store concept. The goal of these
smaller foot-print stores is to apply some of the lessons they have
learned in operating their larger stores, as well as the lessons
they have learned by watching the competition. As they reflected
today, Mackey and Robb are both wondering in particular about how
this new store concept will be received … since just a few weeks
ago, Walmart announced the closure of all of their smaller,
experimental Walmart Express stores.
And that’s why they’ve called you in to the Austin
headquarters today. They need your help in organizing their
thoughts as to not only what the ‘problems’ really are – but also
what the logical next steps are as a result. Before they fell
silent, you had jotted down these questions …
Copy and Paste the below questions in your write-up and place
your answers underneath each question.
Problem Identification – Accurately, clearly, and
completely identifies the relevant case specific problem
Problem Identification: The identified problem is …..
1. What exactly is Whole Foods “product” – and does it
deliver value to customers?
2. How has the competitive landscape changed in the last
decade for Whole Foods – and how have these changes left the
company in the position they find themselves in currently?
a. Do the new ‘competitors’ in the world of organics
pose a true competitive threat to Whole Foods? Explain why or why
not?
b. What other trends retailing trends in general are
having/have the potential to impact Whole Foods competitive
position? Explain.
3. Given the answers to these questions, what –
specifically – is the biggest issue the Whole Foods organization
has to address?
a. With respect to their targeting and positioning, what
challenges will the company face in the future as it continues to
grow and expand?
b. How (or can) the company work toward overcoming being
known as ‘Whole Paycheck’ – due to their premium prices – and find
a better balance in their overall marketing mix … especially in
light of the new 365 store concept?
4. Knowing that Mackey especially – as one of the
co-founders of the company – is possibly personally close to the
situation, what options would you provide to the CEOs to address
the issues they face?
a. What are the pros and the cons of each option?
b. How do/would these different options differentiate
Whole Foods from its competitors?
5. Which alternative would you recommend – and why?
a. Identify and defend what you think is their best
alternative
b. State the short-term or intended outcome of this plan
c. Discuss the long-term sustainability of this pricing
strategy
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