Victoria's Secret Pricing Strategy

RABIATUL ALYA NAJIHAH

SMART

APPAREL INDUSTRY : VICTORIA’S SECRET

PRICING STRATEGY

3 INTRODUCTION
4-5
6 PRICING STRATEGY
7
8 WHY THE STRATEGY CONSIDER AS SMART
9
10 REASON COMPETITOR CANT MIMIC
11 VICTORIA’S SECRET
12
WHAT INSIGHT CAN OTHER
BUSINESS DRAW

FIRST LADY’S COMPANY SHOULD FOLLOW
THAT STRATEGY

WHAT FIRST LADY’S NEED TO DO

VIDEO PRESENTATION

REFERENCES

1.0 INTRODUCTION

The company I chose is Victoria's Secret. I chose victoria secret’s
because the Brand is in a state of global expansion. Victoria secret
is growing rapidly and expanding its business in many countries
from all over the continent. With excellent quality, a wide range of
well-known products and brands, it is successful in almost every
country it enters. Victoria's Secret is America's largest Lingerie
retailer, with sales in 2012 totalling $ 6.12 billion. The company
sells underwear, women's clothing, and beauty products through
its catalogue, websites, and stores. Victoria Secret is wholly
owned by the publisher 'L Brands'. The idea of s​ etting up a victoria
shop started with Roy Raymond buying his wife's underwear but
his shopkeeper looked at him with an awkward look that made him
uncomfortable to buy. From there, Roy Raymond and his wife
Gaye opened a world-renowned victoria’s secret shop so that the
guy in his position wouldn't feel like he was buying underwear. The
first store was located at Stanford Shopping Center, California in
1977. Raymond sold the company to Wexner a few years later,
and remained president. By 1995, Victoria's Secret had developed
into a $1.9 billion business with 670 nationwide stores. Victoria
Secret’s has become one of the largest and most valuable brands
among apparel industry in the world. In addition to being a women
wear retailer, Victoria’s Secret also carries a popular line of
fragrances, makeup, and skincare.

2.0 PRICING

STRATEGY

Victoria's Secret is a luxurious high-end brand and its prices
mirror the same. Since innerwear is an uncompromised product line,
customers buy it even if it is segmented in the higher price range. Its
premium pricing strategy attracts those who come from society. It
does not meet the needs of the masses. Their quality is premium and
supermodels as their brand faces make the price even more steeper.
Victoria's Secret is so successful and can beat competitors using
different advantages. Victoria's Secret brand focuses on lingerie in
ways that its competitors in the market could not compete with.
Victoria offers better design, recruits the best talent, and makes
customers feel like "they're shopping at a supermodel boudoir". Brand
marketing strategies using "angels" also help attract customers who
love uniqueness. Because Victoria's Secret is a specialized brand, it
can offer a better experience than its existing competitors. With this
positive differentiation value, victoria’s secret can increase VTC
(maximum amount that the customer when fully informed, would be
willing to pay) which allows them to use premium pricing strategy.
Victoria's Secret revealed on October 16, 2002 the launch of Pink, a
new fashion line aimed at teenagers and college-aged women. Pink
brand from The Victoria’s secret is a brilliant strategy for hooking
future customers. Victoria's Secret has been thinking ahead to create
a "gateway" to acquire a new customer segment. As the Pink
Collection is dedicated to teenagers, college students and younger
women in general, the prices are comparatively lower than other
branded products. Their collections range from £ 20 to £ 500. The
main reason why youngster really love victoria’s secret product
without thinking the prices is because of the luxurious experience
offered by the brand. Pink wallpaper, attractive rooms, friendly and
trained staff and this constant discovery strategy are what make
customers think that paying a higher price for the purchase of their
lingerie is a good investment.

PRICE SEGMENTATION

Any segmentation factor, segmented prices are a pure compromise. The
demographic concepts are linked only loosely to variations in market demand.
Some members of each price segment would be willing to pay more and some
members of each segment are unwilling to pay the price requested but may be
willing to pay some lower price that would remain profitable for the company.
Consequently, segmented pricing can often contribute to suboptimal market
interest and suboptimal sales revenue (Carl Obermiller,David Arnesen and Marc
Cohen, 2012).

Victoria’s secret uses price segmentation in its price. Price segmentation is the
most powerful tool which charges different prices to different people for their
products. Victoria’s secret have different pricing strategies depending on the
collection. Victoria's Secret prices tend to be higher than the Pink Collection, as
this latter is dedicated to teens, college students, younger women in general.
Victoria's Secret is more of a brand of high-end underwear. It's more precious than
most underwear brands, like Etam or Adore me. According to the official website,
Victoria's secret bra price can vary anywhere from £ 30, which would be their basic
sexy tee push up bra, all the way to £60, which is the Dream angel push up bra.
Their lingerie, with prices ranging from £ 20 to £453, can be very affordable but
very exclusive too. On the other hand PINK is more affordable, with costs of bra
ranging from £ 25 to £32. The explanation for the high prices in the Victoria’s
Secret is due to the quality for one, then their underwear is modelled by popular
models and making the item very in high demand. The brand itself is still really
popular and the customer pays for the item as well.

TARGET MARKET

The original goal when designing the Victoria's Secret retail store was to focus on
the men shopping for women's lingerie. While their target market is the middle-
class woman, the Secret PINK line from Victoria often attracts people slightly
outside the market, like the younger college age woman. The bright colours, trendy
designs, and younger and smaller dress cater to a more relaxed, laid-back
audience than the conventional Hidden line from Victoria. That line's product
selection often inspires young teenagers and girls of high school age to go
shopping in the store.

As we know victoria’s secret target income is middle class and above. so the
premium pricing strategy is very suitable to use because this group is able to buy it.
in addition, the products offered by Victoria’s secret are of high quality and have a
variety of unique designs. Therefore, these target customers are willing to pay for
their product even though the price is expensive.

3.0 WHY STRATEGY IS

CONSIDER SMART

The pricing strategy used by victoria secret is a smart pricing strategy because
match with the product it sells. Victoria’s secret makes their product prices so
high that they reflect their high value, luxury and premium products. Price
Prestige focuses on the value that customers may expect from a victoria’s
secret product rather than the actual value or cost of production. This
prestige pricing can enhance the awareness and perception of victoria’s
secret. Victoria’s secret can build customer perception that the brand has a
high value and status in their product due to its higher price than other
competitors. The fashion and technologies used by victoria’s secret fit this
pricing strategy as they can be marketed as luxurious, exclusive, and rare.

The purpose of Victoria's secret is to establish the perception that the goods
will have a better value than rival products, because the prices are higher. In
premium pricing, the company bets that the buyer does not investigate to
find out if the product is really a high quality item. Marketing executives want
consumers to believe the brand name itself is sufficient to persuade them
that the product is better than the competition's product.

In 1995, victoria’s secret has created a famous annual fashion show. In the
years that followed Victoria’s secret began to improve brand profile. The
series, managed by Ed Razek (L Brands' longtime chief marketing officer),
became an iconic part of the brand's face. Razek and his team were
responsible for selecting the models by hand to walk the stage. Because of
this, he became one of the most influential people in the modelling
community, helping Gisele Bündchen, Tyra Banks, and Heidi Klum to start
their careers.

Victoria’s secret estimating the value to the customer (VTC). VTC is the value
created by their product, distribution and promotion elements of the
marketing. with the previous explanation it can be concluded that victoria’s
secret uses customer-based pricing for their product.

4.0 REASON COMPETITOR CANT MIMIC VICTORIA’S SECRET PREMIUM PRICING STRATEGY

Patents: Holding a patent or
copyright on a product's design or
any other exclusive attribute is a
powerful barrier to any rivals who
may want to sell similar products.

Uniqueness: Victoria’s secret has In the United States, and
unique products and can. differentiate
their merchandise with higher prices elsewhere, L Brands products are

and a quality image protected by patents. Throughout

Victoria's fashion show is another Corporate America and
one of that brand's unique features.
The first broadcast was in 1990, but elsewhere, the products and
wasn't going public. The series began
broadcasting on the internet in 1999 features of victoria secret goods
and 2000. They took the best models
from around the world, and became are covered by patents.
known as the Secret Angels of
Victoria. The event was a huge event According to
with celebrities performing as
models marched to show off their https://www.lb.com/responsibilit
outfits on stage. Next, every year
the company contracts with y/product-
renowned jewelry designers to
produce their unique product known information/patents/victorias-
as a fantasy bra. The bra is adorned
with diamonds and all kinds of gems secret, among the products
and is sold for millions of dollars.
The most expensive is the 15 million patented by victoria are victoria’s
dollars that goes into Guinness's
world record books. Despite secret bra, victoria’s secret
criticism, victoria continues to be
one of the most girl's dream is to fragrance and victoria’s secret
own at least one product from their
amazing collection. pink. As a result, the uniqueness

The uniqueness of the Victoria’s and originality of the victoria
Secret product contributes to the
positive differentiation value that secret product cannot be
will allow the VTC to increase.
Therefore, Victoria’s Secret can use replicated by other competitors.
premium pricing strategy for their
products. This is to say, the victoria's

product is very exclusive at its

premium price.

5.0 WHAT INSIGHT CAN OTHER
BUSINESS DRAW

Increase Profits
The first benefit of using premium pricing is enhanced profits. Victoria's
secret of selling products at discounted prices or lower prices can make the
same profit by selling ten units of products which can only be generated by
selling one unit of your product. However, it is necessary to Victoria’s secret
to invest more in marketing and advertising such as email marketing
campaigns, victoria's secret coupon, freebies offering, semi-annual sales
and more. Therefore, in order to maximize profit, victoria’s secret needs to
include marketing costs in the price of the goods so that company will not
lose income.

Competitive edge
Victoria's secret enjoys a competitive advantage over its rivals including
True & Co, Adore Me, Nordstrom, American Eagle Outfitters, Calvin Klein
and ThirdLove by embracing premium pricing. That's because most
consumers assess a product's quality based on its price. They believe its
quality will better if the price of a product is higher. The product of Victoria
secret is perceived as a prestigious product merely because of its price and
the use of the correct marketing strategy. For example, the secret bra of
Initially victoria has features that make it worth its high price, but nowadays
nearly all bra have similar design. But the secret to Victoria is to enjoy a
competitive edge over its rival by using premium pricing.

Increased brand awareness
Premium pricing helps to raise awareness of Victoria's secret about their
brand. In the eyes of customers, high pricing makes Victoria's secret goods
prestigious. They think highly of it as they believe its quality will better when
the price of a product higher. Customer will speak more about victoria’s
secret brand and product. For example, people posting an expensive pair of
lingerie or perfume from Victoria’s secret on their social media. In this way,
they unintentionally promote Victoria’s secret product and brand to their
friends and family, which in spite of the high price of your products, brings

you more customers.

6.0 ANOTHER COMPANY THAT

SHOULD FOLLOW THAT

STRATEGY

First Lady Apparels (Malaysia)
Sdn. Bhd.

First Lady is synonymous with
high production, new, affordable
priced designs. A household brand
catering to the lifestyle needs
and demands for the Malay-
Muslim market since 1986. An in-
depth awareness of the market
and the industry's changing
dynamics has been crucial to the
continued success of First Lady.

Why First Lady should follow Financial values in the chart are available
and what wrong with the after First Lady Apparels (Malaysia) Sdn. Bhd.
current price practise? report is purchased.
Currently First Lady’s company use https://www.emis.com/php/company-
penetration pricing strategy. profile/MY/First_Lady_Apparels__Malaysia_
Penetration strategy used by First Lady _Sdn_Bhd_en_4183800.html
causes customers have a negative
perspective on the products produced
by First Lady. Customers think that the
products produced by the First lady are
not quality and unattractive which
makes this business unable to attract
public interest. Today, First Lady's sales
and profits are declining and falling.
The current price strategy used does
not help to increase the company's
profitability. Because of this, First
Lady’s company need to do something
to save the company from loss and
bankruptcy.

7.0 WHAT FIRST LADY’S NEEDS TO DO?

Companies need Rebranding First Lady’s products, and establish
product marketing so that customers are aware of the availability of
First Lady’s products on the market. Next, companies need to create
their own unique design with high quality that can be compared to
other competitors' products. However, the key to success in apparel
industry is First Lady’s needs to follow the current trends and desires
of the customers. An R&D needs to be done to know the customer's
needs and current trends before launching a new product.

The most important thing is that the first lady’s needs to change the
price strategy from penetration to premium strategy which is high
price with high quality. With this new pricing strategy, customers who
love branded clothing can be attracted. First lady can also change
customer perception of first lady products because people always
think that the higher the price of a product, the higher the quality of
the product. Customer impression of the store is very important to
encourage them to buy our products. The premium pricing strategy
used by Lady First’s may motivate customers to buy. That's because
most customers are more motivated to buy expensive products than
cheap ones. Profit is the most important thing in business and the
company's new pricing strategy can increase its profits. After all this is
done, the first lady will become a Company with a strong and fancy
brand also become more competitive with other competitors and may
dominate the domestic and foreign markets.

VIDEO PRESENTATION

https://youtu.be/reWYhuTvB9U

Woodruff, J. (2019, February 06). What is premium pricing strategy?
Retrieved from Small Business:

https://smallbusiness.chron.com/premium-pricing-strategy-1107.html

Bhasin, H. (2020, February 10). Premium Pricing- Definition,
Strategy, Advantage. Retrieved from Marketing91:
https://www.marketing91.com/premium-pricing/

Kasbekar, R. (2017). Unique Facts About Victoria’s Secret That
Many Fans Don’t Know. Retrieved from Procaffenation:

https://www.procaffenation.com/unique-facts-victorias-secret-fans/

Patents for Victoria Secret (n.d). Retrieved from LBrands:
https://www.lb.com/responsibility/product-
information/patents/patents

The Most Expensive Victoria Secret Fantasy Bra So Far (n.d).
Retrieved from Design Limited Edition:

https://www.designlimitededition.com/the-most-expensive-victorias-
secrets-fantasy-bra-so-far/

First Lady Apparels (Malaysia) Sdn. Bhd. (Malaysia) (n.d). Retrieved
from emis: https://www.emis.com/php/company-

profile/MY/First_Lady_Apparels__Malaysia__Sdn_Bhd_en_418380
0.html