Wolverine Boots Value-Driven Pricing Strategy: An Essay Analysis
The Wolverine Boot value-driven pricing is influenced by factors such as cost structure, competitor, sustainable pricing, and market share and market size (Garner, 2022). The consumer brand perception of wolverine Boots will favor the value-driven pricing strategy. In 2020, the CEO of wolverine boots, Hoffman, stated that the company was planning on leveraging its brands that had the capacity to generate huge financial payback as they ventured into investing in the international markets (Garner, 2022). The Wolverine Boots Company uses iconic brands to leverage consumers’ buying habits. The iconic brands from wolverine Boots are already known in the market (Garner, 2022). The Wolverine Boots Company is a global company that enjoys a huge market share since it’s a larger company. Most consumers buy wolverine boots due to the benefits they obtain from such products, based on the consumer value of the product. The Wolverine Boots Company is already enjoying the superior brand perception of their products among their clients (Garner, 2022). The value-driven pricing strategy will also help the company penetrate newer markets as it seeks to invest in international markets.
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Estimated BEP
In 2022, Wolverine projected a whole fiscal year growth of 10.6 to 11.6% (Garner, 2022). The estimated revenue ranges from $ 2.670 billion to $ 2.695 billion. The expected fourth-quarter revenue is from $650 million to $675 million. The CFO, Mike Stonant, stated that the firm’s priority will be liquidating non-core inventory to increase the working capital projected for 2023 (Garner, 2022). The CEO, Hoffman, stated that the current earnings are at par with the firm’s new brand structure as per the fourth quarter (Garner, 2022). The liquidation of non-core inventory will provide the company with the required revenue to manage its operations as it invests more in iconic brands and international markets. The company will have to sell goods worth $650 million to $675 million within the fourth quarter to break even. The firm has sacrificed short-term profits to build a more robust supply chain system to reduce shipping costs and time. The company has also made other acquisitions to expand its market share and beyond its current market. The company has also used more money in warehousing, which will ensure long-term benefits such as faster delivery and lower cost of transportation (Garner, 2022). ROI is the return on investment. It is essential for the ROI to be positive in order to add value to Wolverine Boots Company. The ROI needs to be positive to add value to Wolverine Boots Company. The ROI is 12%. Higher profit margins will enable the company to return to its previous profit margins (Garner, 2022).
ROI=Current Value of Investment- Cost of Investment
Cost of Investment
Price elasticity
The Wolverine Boots prices are inelastic since most consumers prefer to buy iconic brands based on their value and benefits instead of products with lower pricing from competitor companies. The price inelasticity has favoured the company since most of its sales came from iconic brands. The sales volume of iconic brands has increased over the years, which has enabled the company to make certain acquisitions in the related industry (Perdigao, 2022). The company is also encountering challenges, such as congestion within its distribution centers in the United States of America. The majority of their wholesale consumers are now dealing with warehouse limitations and heavier inventories. Most brands like Keds, Sperry, Saucony, Sweaty Betty and Wolverine were affected by the delays in shipping which prevented the company from achieving its profit targets as well as revenue.
Best pricing strategy
The best pricing strategy would be the value pricing strategy. This is where the buyers relate the product’s value against the price being charged (Perdigao, 2022). The product’s value mostly influences the buyer’s priority, allowing the company to set a price that matches the product’s value. Wolverine Boots sets a price that their buyers are willing to buy the product, giving the company more leverage on pricing. The company can charge a higher markup since it will be charging the price the market will be willing to offer. The perceived value of wolverine boots could also increase (Perdigao, 2022). Value-based pricing is influenced by a number of factors, such as how the market identifies a value, the quantity of value placed by the buyers on the product, and how the competitor companies integrate into your value-centered pricing strategy. The value pricing strategy allows the company to upsurge profits, enter into new markets, and build a good brand perception. The wolverine boots have several consumer benefits, and the consumer will be willing to pay for such benefits.
References
Garner, S. (2022, February 23). Inside Brendan Hoffman’s plans for Wolverine: Rapid International Expansion, in-house collaborations & more. Footwear News. Retrieved November 4, 2022, from https://footwearnews.com/2022/business/retail/brendan-hoffmanwolverine-worldwide-strategy-1203247644/.
Perdigao, R. (2022). Preparing for the future of retail: embracing omnichannel (Doctoral dissertation).