Pricing Objectives
The core pricing objectives used by Champs Sports is sales oriented. The use of this type of pricing objective is it comes with other smaller yet important goals on board that has helped the company to be successful in the market niche it operates. Firstly, use of the objective has helped the company experience growth in sales and increase its outlets throughout the United States. Through the utilization of this objective, Champs Sports managed to increase their volume of sold products by setting prices in a way that more and more sales are achieved. Their main reason for use such a strategy is that they assumed that growth in sales positively impacts the company profits (Uhlig, 2016). Thus, the decisions made on pricing are set in such a manner to increase sales volume. At some point, the company alter prices as well as undertake price modification with respect to those of its competitors for the purpose of sales improvement.
The targeted market share has drawn the company towards using sales oriented objective. Every company’s goal is to hold the largest proportion of market share. Therefore, Champs Sports is not an exception. The prices for the company products are set in such a manner that they are affordable to its target market enabling the Champs Sports to acquire it share of the market targeted. As a result of the use of these, the company has managed to become the largest specialty athletic footwear that is mall-based and with many apparel retailers all across North America. The company has 547 stores that are fully operational, and 517 of these stores are located in the United States, the United States Virgin Islands, Puerto Rico. The rest of the 30 remaining are located in Canada. This great success of the company has been contributed by efficient use of its pricing objective ("Champs Sports - Information", 2016).
Product life cycles pricing strategies
Just like other products in the market, Champs Sports products also undergo the five stages of product life cycle. The pricing strategies used by the company affects only four stage of the life cycle of the product. The five stages are development, introduction into the market, growth, maturity of the product, and decline of the product sales. For significance purposes, the pricing strategy used by Champs Sports price skimming to recapture the costs incurred in development as well as advertisement of the product. In price skimming, the company introduces its new developed products in the market at high prices because no competitor in the market has managed to come up with such a product.
The pricing strategies used have fostered identification of the company in the market as its newly introduced products are successful entering the exceptional growth period. The volume of sales derived from the sale of the introduced product is high as more and more buyers become aware of the product through vigorous promotions and advertisements (Khan & Billah, 2013). Through the pricing strategy, Champs Sports company has also been able to increase their profit margins.
After the product has stayed for long in the market, it reaches its maturity. Reason being that Champs Sports introduce new products that are not exactly similar to its product but serve the same purpose and might be slightly better and even lower priced. The company, therefore, restructures its pricing strategy and brings the prices down to try to beat the competition. Growing the market share becomes the new objective and is followed by immense discounting.
Pricing Factors
Economic considerations are one of the pricing factors used by Champs Sports. The company examines the demand and supply of footwear, accessories, equipment, and apparel throughout the United States Virgin Islands, Canada, the United States, and Puerto Rico. If the demand for these products in these markets is high, the company makes it products more expensive. A signal that the firm has used to gauge the level of demand for it’s the number of orders placed by its stores across the aforenamed locations. A higher number of orders indicate that the volume of sales is increasing, and more product need to be produced to cater for the demand. To increase marginal revenue from a single unit, the company raises its prices to cater for the marginal costs and take advantage of the prevailing economic situation to earn supernormal profits.
Substitutes available in the market that are produced by Champs Sports competitors is another pricing factor that is used. To drive sales and ensure the existence of the product in the market, Champs Sports prices its products that have close substitutes equal to the price charged by the competitor is just slightly above. The type of consumers or the market segment targeted by the company determines the prices to be charged. The positioning of the substitutes of the company competitors is used to determine the price to be set for a particular product (Jesnoewski, 2015). Lastly, consumer trend is put into consideration. If the trend in the market is that consumers tend to purchase items that are cheap, then Champs Sports readjusts its prices to make its product cheaper. This has helped it increase its sales volume while increasing profit margins.
References
Champs Sports - Information. (2016). Footlocker-inc.com. Retrieved 2 May 2016, from http://www.footlocker-inc.com/company.cfm?page=champs-sports
Jesnoewski, A. (2015). Five factors to consider when pricing products or services - Startup Smart. Startup Smart. Retrieved 2 May 2016, from http://www.startupsmart.com.au/advice/finance/five-factors-to-consider-when-pricing-products-or-services/
Khan, M. & Billah, U. (2013). Product Life Cycle Strategies in Emerging Markets: A Case Study from Pakistan. AJBMR, 2(11), 92-115. http://dx.doi.org/10.12816/0001263
Uhlig, D. (2016). Four Types of Pricing Objectives. Smallbusiness.chron.com. Retrieved 2 May 2016, from http://smallbusiness.chron.com/four-types-pricing-objectives-33873.html
