Recreational Equipment Incorporated, also REI is among the largest consumer-owned cooperatives in the US. Founded in 1938, REI is currently the largest consumer cooperative in America, operating in over 110 national stores besides the big online plus direct sales operation (REI, 2016). This business operation is founded on a passion for outdoor activities to educate, inspire and outfit individuals for outdoor stewardship and adventure. At its core, REI is a commitment towards getting people outside as well as leading healthy and active lives, protecting common natural spaces, plus pleasant people to make a difference. This paper aims at analyzing the third and fourth marketing mix, place and price that REI is currently employing.
Price
Pricing decisions take into account the profit margins plus the likely pricing responses from the competitors. Accordingly, pricing includes but not limited to the cost list, discounts, financings, as well as other options like leasing (QuickMBA, 2010). The pricing strategy that REI practices is related to their products. They use a premium pricing tactic because the products they sell are of high quality and so they want to demonstrate how unique and prestigious they are through prices. The company has the capability to compete with numerous price levels. It has its fixed priced merchandise, the online outlet, and the annual garage sale.
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REI’s garage pricing offers manufacturer’s overstocks, closeouts, special buys plus seconds (REI, 2016). The garage products are unobtainable through the company stores or in another place on REI.com at similar prices. Some merchandise on REI garage come marked for the period of specific sale events only and the prices are adjusted after the sale upward to their value before the sale. REI’s prices are subjected to changes without any notice. Furthermore, the company is not able to make price modifications on REI garage products so as to keep the costs low. So, they only honor the customer’s purchase price.
On REI.com sale items, the company is dedicated to offering customers the best rates on the quality equipment they need. REI also offers exclusive products plus events through which customers enjoy access to limited edition merchandise and events. Members also receive 10% back down on their eligible purchases as part of their REI annual dividend. There are offers several times each year, which include member-only coupons as well as other offers to attract customers. Members also enjoy special pricing on ski and bike shop services, REI Adventures trips, and classes (REI, 2016). REI MasterCard is another offer that members can apply for, in addition to stewardship opportunities. The above pricing strategy enables REI to reach new markets for its products at lower levels of price. The company also offers a lifetime membership at a one-time price of $20 subscription.
Management Challenges
Managing the pricing across all of the distribution channels
Limited flexibility because strategic price changes must be Okayed by the membership
The customer facing or sales team might not be capable of fully executing these pricing strategies
Place
Placement decisions are associated with the distribution channels that serve as the principal means of getting the merchandise to the target customers or market. Distribution decisions include channel member selection, levels of service, logistics and market coverage (QuickMBA, 2010). REI uses both online services and the mortar and traditional brick stores. The company currently distributes its merchandise to its customers and stores in a revolutionary way. 30 percent of REI’s sales are estimated to come from the ones in which customers place orders directly from home or one of REI’s stores and pick it up at their convenience. When customers buy products online, they also have the choice of having the product shipped to the nearby REI shop for in-store pickup (REI, 2016). In this case, the vendors of REI ship the merchandise directly from the central warehouse, entirely bypassing the company’s distribution center. This shipment allows the merchants to partner with REI, thus preventing REI from holding the inventory associated costs.
Although REI’s stores are located near recreational areas all through the United States, the company has a very robust online presence. The company’s current outlet is only available online (REI, 2016). REI’s website enables all interested outdoor customers a mean of obtaining their quality merchandise regardless of their distance. The site’s knowledge base also allows the customers to research and learn, thereby motivating people to undertake outdoor activities and quite probably require items from REI. The above plan focuses upon using the social media to determine online sales.
In conclusion, REI is a community focused retailer dedicated to offering quality outdoor gear to any person that requires it. The company makes use of a superior pricing strategy due to its high quality and unique products. REI combines regular priced products with REI garage sale and membership discounts and coupons. REI’s membership offers a distinctive advantage over shopping at the company without a group share. Besides, the company currently holds an active presence online besides using traditional brick stores. The website’s interfaces offer the customers various ways to shop.
Management Challenges
The supply chain is often fragmented as well as informal.
They only have brick and mortar locations in 32 states, meaning the brand awareness may be minimal in some areas of the US which limit some outreach to potential customers.
REI Outlet is entirely online and separate from the store, so customers cannot get outlet prices at the brick-and-mortar locations
References
QuickMBA. (2010). Marketing mix: The 4 Ps of marketing . Retrieved from < http://www.quickmba.com/marketing/mix/
REI, Inc. (2016). Recreational Equipment, Inc . Retrieved from < https://www.rei.com/
