Company's Pricing

Pricing Methods Used by Coach Inc. to Attract and Retain Customers

Pricing is one of the most intricate aspects of any company attempting to attract a large number of consumers and turn them into loyal customers. As a result, corporations employ various techniques to entice consumers based on market demands. It is therefore critical to perform considerable market research before entering a specific market. This article examines the price methods used by Coach Inc. to attract and retain customers. Psychological pricing, market skimming, and optional-product pricing are among the most evident.

Psychological Pricing and Brand Image

In the market, there is a segment of buyers that associate cost with quality. To put it another way, the higher the price, the higher the quality, and vice versa. As such, corporations take advantage of this behavior and produce products to meet their desires, and this technique is regarded as psychological pricing. Coach, Inc. had a brand image that typified quality. Even at high prices, people would purchase their products including handbags since they felt they were of high quality. They had a fear that in case they lowered the prices, it would tarnish the brand image.

Market Skimming Strategy

Coach's pricing strategy is also illustrative of the market skimming technique, whereby a high price is set for new products with the aim of obtaining maximum revenues from customers who are willing to purchase the products at the given cost. It mainly works when loyal customers are involved. Since the customers already perceived their products to be of high quality, they had no problem purchasing them irrespective of the price. An essential characteristic of market skimming is that the product's image and quality ought to support the higher price, and this suits Coach Inc.

Optional-Product Pricing

The other strategy that may be indirectly associated with Coach's technique is the Optional-product pricing. In this criterion, a company provides optional products that go along with the main ones. Instead of reducing their prices, Coach introduced a "Poppy" line that was priced 30% lower than the usual Coach bags. In that regard, they focused on quality to propel the perceptions of value while introducing a secondary line with cheaper products.

Conclusion

Overall, the three foremost pricing mechanisms that apply to Coach, Inc. include psychological pricing, market skimming, and Optional-product pricing. Nonetheless, the company primarily emphasized on quality to support the higher prices. It also banked on the loyal customers who were more value-oriented rather than price-oriented.