1. Does Cath Kidston's pricing strategy truly differentiate it from the competition?
2. Has Cath Kidston executed value-based pricing, cost-based pricing, or competition-based pricing? Explain.
3. Could Cath Kidston have been successful as a design-focused product marketer had it employed a low-price strategy? Explain.
4. Is Cath Kidston's pricing strategy sustainable? Explain.
This case study examines the pricing strategy of Cath Kidston, one UK-based company that sells furnishings, home and personal accessories as well as clothes, operating mainly in the UK, Europe and Asia regions.
How much are you willing to pay for a key ring? The market price charges just a bit more than $1. But would you pay $2 for a comparable product? How about $7? A low-price strategy is often used by companies if their products are not well differentiated. Although a low-price strategy might seem attractive, especially in an economic downturn, some companies are focusing on creating value for customers and adopting customer-valueadded pricing strategy. Cath Kidston Ltd is one UK-based company that understands that sometimes it pays to charge more. Cath Kidston's key rings sells for roughly $7 to $9.50, whereas the market price charges less than a third of that. To understand how Cath Kidston has succeeded with this pricing strategy, let's look at what makes the brand so special.
The cheery colors and fun patterns Cath Kidston created allows it not to focus on price-sensitive market segments but instead lure customers with a value-added pricing strategy. It is important for a brand to create something that people respond to with their hearts, which is a sure-fire way to breed success for a brand. Cath Kidston is one of the brands that is confident in its design style and fun in its character.
From Humble Beginnings
Cath Kidston Ltd was founded in 1993 when designer Cath Kidston opened a tiny shop in London's Holland Park with a $23,800 investment in her business, selling towels, vintage f abrics and wallpaper, and brightly painted "junk' furniture she remembered fondly from her childhood. Cath Kidston's cleaver re-working of traditional English country style made her tiny shop soon become a cult success. Today, the brand carries a wide product range, everything from furnishings, crockery, cutlery, cloths, toys, china, bed linen, and bags, to women's and children's wear and accessories, charging price premiums that fans are gladly paying.
In 2012, Cath Kidston had 57 shops and concessions in the UK, 2 in Ireland, 27 in Japan, 7 in South Korea, 3 in Thailand, and 1 in Taiwan. The business is also driven by successful web, mail-order, and wholesale divisions, with UK, Euro, and US transactional Web sites. Cath Kidston has become a powerhouse of British design and retail, up there with the likes of Burberry and Pringle.
Design is core part of Cath Kidston's brand. However, it is more than the vintage-inspired patterns and the stunning shop interiors. Walk into any Cath Kidston shop and you are able to "experience" the brand that other retail shops do not offer. And this "experience" permeates Cath Kidston's Web sites and all of its printed communications. If you are a fan, you can feel the essence of the brand in every aspect. In color psychology terms, Cath Kidston is pure spring-fun, creative, warm, inspiring, and young, adding a splash of color and vintage charm to a routine day.
Cath Kidston not only offers a wide product range but is actually a lifestyle store. You can buy almost everything for your home, children, or yourself. The broad product range maximizes the brand's appeal and means that it works for both gift and personal purchases. Cath Kidston allows its brand personality (fun and brightness) to shine through its brand identity (colors and typography), hence becoming a brand consumers can fall in love with.