Pricing Strategies: Vienna and Lladró Case Studies
Pricing Strategies: Vienna
Consumers are very mindful of time spent on non-essential activities. This could lead to a preference for fast food establishments like Vienna, based on speed and convenience rather than quality or price. However, even if price is a central element of Vienna’s strategy, they shouldn’t necessarily lower prices in response to competitors. Instead, they should adjust prices on products where demand decreases. Competitors might lower prices to avoid losing customers. Vienna is not interested in a price war with competitors to maintain sales volume because increasing the number of customers could reduce their profit margin, and a price reduction could be misinterpreted by consumers as a reduction in quality.
Vienna’s Strategy
Vienna aims to position its products as high-quality, with an excellent quality-price ratio. This requires consistency between the four elements of the marketing mix (product, price, distribution, and communication). Unlike McDonald’s, which tries to position itself as fast food with a focus on leisure where culinary quality is not central, Vienna offers a very stable, high-quality product that varies very little. Vienna maintains consistent pricing with minimal discounts, while McDonald’s constantly offers price promotions, such as 2-for-1 deals, XL sizes, and €1 items.
Environmental Factors and Pricing Decisions
A key factor that can affect Vienna’s pricing decisions is the current socioeconomic situation and its effect on consumer spending power. Increased price sensitivity among consumers is a threat. A second factor is the potential change in consumer behavior in this context. Consumers may not give up eating out entirely, but they may adjust their choices. On one hand, this could represent a threat because consumers might choose fast food at a lower price. However, it can be transformed into an opportunity, as Vienna can be a good alternative to more expensive restaurants. A third factor is the competition launching many offers at reduced prices. Vienna can respond by adapting its product range, prioritizing items with lower prices, and reducing costs (where possible).
Lladró’s Distribution Channels
Lladró uses a combination of direct and indirect distribution channels:
- Direct Distribution: Business-to-business (B2B) platform, factory stores (Valencia), and online store.
- Indirect Short: Department stores (e.g., El Corte Inglés), where Lladró negotiates terms directly.
- Indirect Long: Selected small distributors (jewelry stores, luxury hotels) and distributors in other countries through importers/wholesalers.
Its distribution is selective because Lladró prioritizes presenting a differentiated product appropriately.
Distribution Channel Length
Three Lladró brands are marketed as follows:
- Lladró Porcelain: Combines a direct channel (level 0), where customers buy through the virtual store, and an indirect channel, where intermediaries exist between the company and the customer.
- Nao: Combines a virtual platform with catalog sales and department stores.
- Carrera y Carrera: Lladró acquired a stake in this jewelry company, which maintains its own distribution channels in Japan and other locations. The virtual store provides services (direct channel, level 0).
Pros and Cons of Lladró’s Online Store
Advantages:
- Creates a space to launch new products.
- Enhances brand awareness and image.
- Allows control over price, presentation, and promotion at the point of sale.
- Reduces uncertainty in distribution functions.
- Provides greater market understanding.
- Facilitates changes more easily.
- Reduces intermediation costs.
Disadvantages:
- Requires a significant investment.
- Offers less market coverage.
- Presents greater management challenges.
- Increases the risk of introduction into new markets.