Firstly, I would start off by stating the importance of pricing. This decision is important as customers have alternatives to choose from and are better informed these days, and they are in a position of seeking good value so retailers can increase value and stimulate sales by increasing benefits or reducing price.
Now, the question that left us pondering about would be how do new urban male set their retail prices then?
There are a few considerations on setting of retail prices. Theoretically, retailers maximize their profits by setting prices based on price sensitivity of customers and the cost of merchandise, also considering the prices being charged by competitors.
Price Sensitivity and Cost
Price sensitivity means “the degree to which a change in the price of something leads to a change in the amount sold or that could possibly be sold.”
Through the lecture notes, I have found out that it is an inverse relationship between price sensitivity and demand - price of the product increases, the sales of the product would decrease. It is because fewer customers feel the product is in good value. This relationship is true with most retailers.
However for NUM, the customers are believe to be less price sensitive. From an article I found online, Newurbanmale.com – embracing retail service culture (http://www.ace.org.sg/Site/Page.aspx?id=50976639-0AD5-4F3B-90B9-6E5EA027F44D), the founder of NUM, Shenzi Chua states that with the continuum of value-added and consistent good quality services, customers would then feel more worthwhile in purchasing their products. This is further supported by reviews from the net saying that NUM products are generally affordable though slightly expensive and well-liked for their quality.
Competition
Most retailers routinely collect price data about their competitors to adjust their prices to remain competitive.After much analysis and research, NUM competitors would consist of Quiksilver,Roxy and Bilabong.In terms of pricing, Quiksilver pricing would be among the top of the competitors which includes NUM
So, in this way, how do we reduce price competition between NUM and its competitors?
-Developing lines of private label merchandiseNUM Tees
NUM S_X Anniversary
NUM College Tees
NUM Party tanks
When NUM was launched in Singapore, NUM have develop their own lines of private label merchandise. One of the most popular private label merchandise was their Party Tanks which created quite an impact in the fashion industry. Now, NUM has also been introducing the concept tees and taglines which consist of cheeky tag lines. This launch has proven to be a success one as there more people wearing NUM products on the streets.
The NewUrbanMale concept is to be who you truly are, and to know what you truly want in life, this would undoubtedly bring confidence to a person. Therefore, to encourage their customers to be more expressive, the cheeky slogans features on the tank top – “because life is not a straight line”, “Boys are a good source of protein” are made for such a purpose too. Focusing on the party tanks, they carry a unique range of tanks such as the Singapore Estates where Singapore streets are printed on the tank (Jurong, Ang Mo Kio etc), Mister Series (Mister Impossible, Mister Messy etc) to name a few.
To sum up the considerations of setting the retail prices for NUM, we have found out that although it is true that price sensitivity still occurred within NUM but it does not cause a great impact on their pricing strategy. However, they do still take into notice the inverse relationship by not setting their price overly high, and take into consideration important factors like customer service and quality standard. (competitors – empty)
In terms of pricing at NUM, most of their merchandise is priced at a range of $26.00 for men’s underwear to $129.00 for a Boston Bag while their best sellers- party tanks are priced around $49.90 to $89.90. But, NUM’s sales are growing well despite their high pricing.
There are a few ways for retailers using pricing techniques for increasing sales. NUM has been using the approach of ODD Pricing where their price of products ends in 9. Such examples are their party tanks where they priced it at $69.90 to give a signal of low prices.
Moving on, we will touch on NUM’s variable pricing strategies and price discrimination.
For NUM, they offer the same price schedule to all customers – Self Selected Variable Pricing (second degree of discrimination).
Some examples would be:
Quantity Discounts refers to any reduction in price based on the purchase of a large quantity.This includes promotions such as BUY 2 GET 1 FREE and having 50% off for any two items purchased.
- Special Promotions
As for the pricing strategies, NUM engages in Hi-Lo Pricing instead of ELDP. High Low Pricing means discounting the initial prices through frequent sales promotions.
Hi- Lo:
- Higher profits through price discrimination
- More excitement
- Build short term sales and generate traffic
Like I mentioned above on the variable pricing, NUM uses self-selected variable pricing which is the second degree of discrimination. They engage in fairness – having promotions by offering the same prices to all customers. Therefore, they would be able to earn higher profits by using the variable pricing strategy, which is the second degree of discrimination. Also, by having occasional sales and promotions, they would be able to create more excitement to customers as since their pricing are high, the sales will help to boost up the profits even more and perhaps generate new traffic to their stores.
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