Padini has successfully applied two concepts of consumer behaviour. The first one being market segmentation, targeting and positioning. The second concept which they have applied well is the marketing mix, which includes the 4Ps which are Product, Price, Place and Promotion (UKEssays, 2018).

The video below explains the Marketing 4P’s

Firstly, Padini does a good job in segmenting its market in terms of demographic, geographic as well as psychographic. Demographic segmentation includes dividing the market into groups based on a few factors and Padini mainly focuses on age, gender, income, and occupation to do continuous targeting. Padini has set up a total of 8 brands and the products are catered to babies all the way up to people of old ages, and for both male and female genders. Padini targets groups with the income ranging from RM1000-RM2000, RM2001-RM5000 and RM5001 & above (UKEssays, 2018). Padini also does geographic segmentation and they choose to focus on states such as Penang, Johor and Kuala Lumpur. Moreover, Padini also uses psycographic segmentation whereby they divide the industry into different groups based on social class and lifestyles.

Padini uses differentiation strategies of product and image to place the product in consumer’s minds. For instance, when a consumer wishes to buy a semi-formal with a classic stylish design, one of Padini’s product lines – Seed, instantly comes to mind. When a consumer wishes to buy products that is specifically for their kids, they think of Miki Kids. Moreover, when a consumer wishes to purchase female clothes with a younger and trendier style, they think of another one of Padini’s product lines – P & Co (UKEssays, 2018).

Moving on, for the marketing mix, the first one is product. Consumer goods are final goods that are bought from retail stores in order to satisfy both the wants and needs of customers. Products of Padini fall under consumer products which are categorized as shopping products and it has many other alternative brands such as Seed, Pdi, Padini Authentic, P & Co, Miki Maternity, Vincci, Vincci Accessories and Miki Kids. The focus of Padini is to emphasize on casual yet stylish fashion pieces that can be accepted on any occasion. Padini Authentic focuses on style on quality casual wear and targets teenagers who are mostly interested in modern shirts, trendy jeans, jackets, shirts and stylish dresses. Seed focuses on classic and casual designs and it has designs for men, women as well as kids. It focuses on urban office-wears and the products offered are usually jackets, coats, suits, classic office pants and knee-length skirts, semi-formal skirts, belts and classic jeans.

Pricing is one of the most important elements in the marketing mix and it can be difficult because if the pricing is too high or too low it could mean a loss of sales for the organization. Seed tends to have premium pricing, whereas Padini Authentic and Vincci are much more affordable. Both Padini Authentic and Vincci are low cost pricing and it puts more emphasis on the middle class customer base and it successfully attracts many customers due to the low price strategy.

For promotions, Padini has different promotions for every season which is spring, summer, fall and holidays. For instance, customers will get instant rebates of RM30 with purchases adding up to a total of RM150 or a rebate of RM70 with purchases adding up to a total of RM300 (UKEssays, 2018). When reaching the end of sales, Padini will add an extra 10% discount to the already existing 10% discounted price because they wish to push the sales to clear their stock.

For placement, Padini brings the ‘all in one’ concept, so that it’s convenient for customers. All Padini branches are located at shopping malls due to there being more people, for instance, Queensbay Mall and Gurney Plaza. With all brands being within reach in just one store, the option to shop is set to create a fashion revolution.

Reference

1. UKEssays. November 2018. Market and company analysis of Padini, viewed on 25^th May 2019,

<https://www.ukessays.com/essays/marketing/market-and-company-analysis-of-padini-marketing-essay.php?vref=1&gt;

Referencing pricing is a cognitive price benchmark which relies on past product prices and it also affects the purchase decisions of consumers (Kalwani, 1990). It uses a pre-set price as a reference for a certain product. This is then understood as the price at which users will compare with the price of a product. As such, the more expensive price will then become the reference product for that certain product. Reference pricing plays a very important role when it comes to making pricing decisions. However, before actions are taken to set a price for a product, there must first be thorough and extensive research that is done on competing products.

There are multiple methods that marketers use to influence reference prices in consumers’ minds. First and foremost, marketers influence through a product’s characteristics and communication. Since reference prices usually come from competing products, marketers tend to enhance the perception of a product in consumer’s eyes to make it more superior and can be compared to more pricy and expensive products. (C, Maximilian 2018)

Nordstrom Rack

This store is a very great example because they utilize reference pricing to sell their products. It carries overstocked inventory from not only Nordstrom but as well as other big name brands. On very few occasions will you see the same products being sold at both the regular store and the Rack. All of the products from Nordstrom Rack are in perfectly good conditions and on top of that, Nordstrom would never sell damaged products even if it’s at a clearance division. Hence, products from Nordstrom are never discounted for the lack of quality. Essentially, every Nordstrom Rack product has a price tag which lists the original price and as well as the reduced price that the customer would have to pay. This is an excellent and effective use of reference pricing because buyers who are interested can see exactly how much they’re saving if they opt to buy the product. Rationally, the buyers would also feel that they’re getting their money’s worth and it would influence their decision in a good way. (L, Jason 2010)

The California Public Employees’ Retirement System (Calpers) 

The California Public Employees’ Retirement System started to pay hospitals differently for its 450,000 members starting from 2011. It set a maximum contrition to the amount that it would eventually make toward what a hospital would be paid for both hip and knee surgery, cataract removal surgery, colonoscopies and several other elective procedures.  For instance, the maximum contribution that it set back in 2011 for hip or knee replacement surgery was $30,000 (Frakt, A 2016). A Calpers patient that received the surgery at or below this reference price paid the usual cost-sharing which was 20 percent of the cost as well as up to a maximum of $3,000. However, a patient that elected to use a hospital that charged up to, let’s say, $40,000, paid the usual cost-sharing in addition to the $10,000 above the reference price. As Calpers initiated this new approach, 41 of the several hundred hospitals in California could afford to provide hip and knee replacement procedures at or below $30,000 and with acceptable quality, as measured by things like low re-admission rates as well as high rates of use of guideline infection controls. Some hospitals ended up charging more than $100,000 for the procedures (Frakt, A 2016).

This video below also explains in clear detail how Calpers used reference pricing.

Reference

1.       C, Maximilian 2018, ‘Role of Reference Prices in Pricing Decisions – Reference Based Pricing’, Marketing Insider, viewed 25th May 2019,

<https://marketing-insider.eu/role-of-reference-prices/?fbclid=IwAR3pEIGhw7WfI9DeANrgvRMwRBZAfyuEv95FDik2nQKcy1fxCGGAJ1gh47k&gt;

2.       Frakt, A 2016, ‘How Common Procedures Became 20 Percent Cheaper for Many Caliofornians’,  The New Health Care, viewed 25th May 2019,

<https://www.nytimes.com/2016/08/09/upshot/how-common-procedures-got-20-percent-cheaper-for-many-californians.html&gt;

3.       L, Jason 2010, ‘Reference Pricing’, Marketing Examples, viewed 25th May 2019, <https://uwmktg301.blogspot.com/2010/02/reference-pricing.html?fbclid=IwAR0VkIKdxPqZTPtK3AyLgWf53VwDy6x_LgIxfXh4JUvTYDoPfq3iF06t5TE&gt;

4.       M. U. Kalwani, C. K. Yim and H. J. Rinne, A price expectations model of customer brand choice, Journal of Marketing Research, 27 (1990), 251-262. doi: 10.2307/3172584.