5.2 Price

PRICE

Stella should both adapt then standardize her pricing to achieve the most success from this international expansion. Setting a low price (penetration pricing) before slowly standardizing price will be the most beneficial in New Zealand to achieving objectives (especially market share in the long-term) (section 4.2) and maximizing growth (Figure 11).

Adapt: Price Penetration • Engage customer and develop an understanding for the competitive environment (Kapferer, 2012) (Pwc, 2020). • Lower price to meet economic constraints: recovering consumer confidence since Covid and a social spending slightly lower (19.4% of GDP) than OECD countries (OECD, 2021)

Standardization: Premium Pricing once established in the market (8-12 months) • Stella can increase brand globalization and improve communication flow • Economy expected to rebound fully in 2021 (Smyth, 2020), Stella can capture increased spending with higher price point. • Premium pricing solidifies Stella’s position in the luxury market; Communicate value creation, superior brand performance & ethical practice (Kapferer, 2012) LOWER Price LOWER Quality HIGH Quality

Economic Pricing

Price Penetration

HIGH Price

Price Skimming Premium Pricing

Figure 11: Price Positioning Matrix (Authors own, 2020) Lowering price before progressively increasing price and the volume sold until demand ceases to grow, will help Stella to establish the NZ consumers ‘symbolic value’ (Kapferer, 2012). Once standardized, the price territory becomes fixed and becomes a global price strategy (Kapferer, 2020). Increasing prices however is risky as new customers may switch to competitors and may result in a decrease in demand since luxury fashion is price elastic (Kapferer, 2020).