Lara Mode Case Summary

Price is the second most important factor consumers take into consideration during their purchase decision and therefor it is important that the product is worth the money so that it remains on the target list of customer throughout the buying process. The importance of keeping the prices online and in store the same is critical, since this discrimination will not work in the transparent fashion market where customers can track prices easily. Currently Lara Mode adopts a cost plus pricing strategy where they add 110%-150% profit margin on the cost price of its products. The clothes which Lara Mode buys in bulk gives them an advantage of economies of scale where their cost of sales decrease and therefor they earn high margins on their products

However, people have a variety of choices online therefor it is a better idea that prices stay competitive. Lara Mode has a high profit margin on their product and the management agrees that to stay competitive they sometimes reduce their margins, which they can also do online if necessary to stay competitive. Another widely used pricing technique is reference pricing which shows customers what the price of the product was before and how much it is now so that they can make a comparison and evaluate how much money they are saving. This will help customers evaluate if they are paying an amount for something that is worth the product. Another example of reference pricing could be comparing the prices of competitor’s product to Lara Mode s product, however it is not widely used on the web shops of well known companies since it is unethical to discriminate a competitor’s price on a companies own

The online store will add another medium of promoting Lara Mode and its products. There are many ways companies use their website to promote their brand. Firstly, all discounted sales are promoted on the front page of the website where customers can directly see that the company is offering discounts on their products, which will prompt them to make a purchase as shown in the snapshot of the web shop of Zara. When companies have a sale discount promotion, the idea is to inform the customer as quick as possible and the quickest way customers can know about a sale on a website is when it is promoted on the front page of the web shop. Secondly, social media platforms are also used for promotion purposes once the icons are places on the web shop. All major fashion companies have social media icons on their website, which informs customers that the company has a social media presence as well. Their social media platforms also inform customers about the presence of the website, which helps promoting both mediums through each other. All the latest trends and updates are published on the website so that customers are updated with the latest products and fashion trends, which can lead to loyal customers and eventually lead to higher and constant sales. There are many ways to promote products and discount offers on the website, but the public has to be informed about