Macy’s Private Label Case Study
Macy’s Private Label Case Study
There are several private labels and several independent brand labels within Macy’s often amongst each other as a clever marketing technique. However what will attract customers to Macy’s is not the high priced brands but rather their private label brands that often closely mock the established brand style but for a much cheaper price point. People shopping at Macy’s are seeking a deal; otherwise they could shop at Nordstrom’s for a pair of 150-dollar jeans so people often come for the private labels.
Macy’s private labels are very clever because of their strategic placing which leads me to say that the private labels are more lucrative to the company than the major brands are. Starting with major brand DKNY which Macy’s sells their mission statement is, “The mission of the Donna Karan Company, as a design driven company, is to represent the international pulse of New York in the design, marketing and delivery of a complete lifestyle system to a global customer”.
DKNY is all about marketing to the New York style consumer who keeps up with East Coast styles and also runs on the more expensive side with a dress averaging around 200 dollars and jeans around 150 dollars. Although the brand is very trendy and made with quality materials one would expect at that price, it simply isn’t really the Macy’s target market. Macy’s consumer expects to shop for deals on the cheaper end as opposed to going to a competitor on the pricey side such as Nordstrom or Bloomingdales.
However Macy’s is very strategic in the placing of this brand because it’s generally right next to their private label INC and that proves smart because someone who loves a 300-dollar dress from DKNY can walk over a few feet to INC and find one very similar for much, much less. INC is also urban inspired young contemporary clothing however at a much cheaper price point than the clothing at DKNY. The average price for a dress from the INC department at Macy’s costs from 70-100 dollars.
Macy’s is very strategic in merchandising and generally will place INC directly next to brands such as DKNY so that when someone falls in love with that 300 dollar cocktail dress they can ask an associate for something similar and walk a few feet over to the INC department and get the same look for about 200 dollars less. This is smart because Macy’s typical consumer is on the lower end of the financial spectrum and they know people want expensive looks for less money.
They use the name brands as bait and lure shoppers in to ultimately buy something from a similar private label, which consumers love because they feel like they are getting a great deal. The INC marketing strategy is very clever and brings in more money than their brand name labels. Overall, INC has the better marketing strategy between the two labels because although people value quality they will take a great deal even if it means sacrificing a bit of quality. The clothing is just as trendy and it’s what ultimately brings in Macy’s target market consumers because they are generally shopping for a great deal.
This strategy of using brand names as bait has been the central reason for their success because their goal of maintaining reasonable price points for their customers is prevalent through their private label brands. It’s similar to if you are at the grocery store and want a box of Lucky Charms for 4 dollars then next to it is the same cereal but the store’s private label brand such as Kirkland for only 2 dollars. It’ll taste just a little bit different but not enough to tell the difference off the bat.
INC clearly isn’t the same quality of material as a 300-dollar DKNY dress; however at a glance no one can really tell if it’s DKNY or INC it just looks good and this is what matters to consumers at the end of the day. Macy’s should implement more private label brands because these are what make the sales for them. INC wins over DKNY because someone shopping at Macy’s is statistically proven due to finances to be more likely to buy a less expensive private label brand than the pricey brand name item.
University/College: University of Chicago
Type of paper: Thesis/Dissertation Chapter
Date: 27 September 2016
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