MarketingManagementPlayboy’sprincipaldis
Marketing Management
Playboy’s principal distritution channel until 1979 was a network of approximately 450 nonproprietary retail outlets throughout the United States, many of which also sold other brands of men’s premium shoes. Play boy’s shoes were sold wholesale to retailers at approximately 50 percent of the suggested retail price. Price increases usually were announced in February orAugust. The company did not offer its retail accounts quantity discounts.
Because producing high-quality men’s dress shoes demanded highly skilled labor and specialized facilities, Playboy’s entire product life had been manufactured at the company’s facility in Lynn, Massachusetts, through our most of the company’s history.As consumer preferences changed and fashion became more important in men’s shoes during the 1970s, Playboy began contracting with outside manufacturers to produce casual shoes that matched Playboy’s quality and feature specifications yet could extend the brand’s franchise to a younger age group. Playboy’s executives labeled these styles "outside" shoes, while those manufactured at the Lynn plant were called "inside" shoes, in 1985, the average prices the retailer paid Playboy for pair of inside shoes was $52 and, for a pair of outside shoes, $34. Variable manufacturing costs per pair of inside shoes were $40. The average cost of a pair of outside shoes to Playboy was $28.
Playboy sold approximately 160 inside shoe styles and 56 styles made by outside mahufacturers, Since there were 80 sizes to each style, Playboy’ total SKUs numbered around 17,280, and it carried an inventory in stock of over 64,000 pairs,Both internal and external production schedules for each style were set in advance, based on sales projections. Playboy rarely did "makeup" (styles not included in its regular product line, manufactured to the specification of a retailer) for a particular retail account.
Each of Playboy’s 16 salespeople was assigned a geographic territory and was responsible for retailer sales and service with the areA、Salespeople also were expected to perform "previews" at the beginning of fail and spring seasons as a method of increasing both consumer and trade sales, Previews consisted of a sales presentation at retail store, where the Playboy salesperson would display and explain the company’s entire line to store customers.During the preview, the customer was offered a price promotion of $10 off any pair of Playboy shoes. The retailer was responsible for absorbing the cost of the promotion, while the cost of advertising placed to stimulate retail traffic during the preview was shared between Playboy and the retailer. The Playboy sales person would spend time with the retailer’s salespeople and customers describing the quality and comfort of Playboy shoes.Company management believed that consumers were likely to "trade up" to a higher-priced brand if they understood the features and benefits of premium shoes. The managers believed that retail sales people often missed sales opportunities by assuming that casually dressed customers would not buy expensive high-quality shoes, and one of Playboy’s goals was to have retail salespeople try a pair of Playboy shoes on every customer. For some Playboy retail accounts, close to 30 percent of annual sales were made during the fall and spring previews.
Playboy management tracked the sales of every shoe style. If sales of a particular style slowed, management might elect to replace only the middle sizes, ensuring that Playboy would end up with the most popular sizes of a style before the style was terminated or "closed out".Established retail accounts had the option of purchasing close-outs at a 30 percent discount from the regular wholesale price.A、list of close-outs was sent to retail accounts twice each year. Retailers would often try to sell these styles at full retail price to increase their unit margins, then mark them down, as necessary.Close-outs accounted for