Principles of marketing

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Principles of Marketing – MKTG 3010

HOMEWORK 3

PRICING A NEW PRODUCT: GAYNOR MINDEN POINTE SHOES

Please read the Homework 3 Instructions on Canvas first. This is an exercise in thinking about

setting prices for a new product. Because this is a real product, please don’t do any research

outside of the information below. Instead, try to imagine yourself in the situation described here,

before the product was released to market. A Google search will not reveal a “correct” answer;

there are many defensible prices that you can choose and justify well. (Be prepared to justify the

price you picked in class.)

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Eliza Gaynor Minden, founder and CEO of Gaynor Minden Inc., had to formulate a

strategy for taking a new product to market. She had created a new type of pointe shoe for ballet

dancers. Compared to traditional pointe shoes, her model had a variety of benefits – in fact it

seemed superior in almost every way. Yet the path to a place in the pointe shoe market was not

obvious: Minden had to decide whether to target professional dance companies or amateur dance

students, what price to charge for the shoes, and how best to communicate the advantages of her

product over the traditional pointe shoe, the basic design of which had hardly changed since the

days of Czarist Russia, a century ago.

Pointe Shoes

Dancing en pointe (French for “on point”) is a distinctive style in ballet and some modern

dance where a ballerina supports her weight wholly on the toes of one or both feet (see Exhibit

1). “Pointe work” is an advanced skill that requires strength and extensive training. To execute

steps properly while en pointe, a dancer has to have the strength to rise to her toes and hold

proper form. For professional dancers, this is the easy part; the real measure of skill and artistry

is to use this strength while appearing to move effortlessly across the stage – what writer Kevin

Conley calls “the central illusion of ballet.”

Dancers wear special pointe shoes that help in executing pointe work. These shoes have

a minimal design and profile, and are made with little more than satin, paper or burlap, glue, and

a few small nails. The chief distinguishing characteristic of a pointe shoe is the toe box,

traditionally made of layers of burlap, paper, and glue. The box is shaped with a small, slightly

rounded platform that gives dancers a small target area for pointe work. As this description

suggests, pointe shoes have a short lifetime: during a performance or intensive rehearsal, a

professional ballerina will wear out a pair of pointe shoes in less than two hours. Because most

pointe shoes are partially made by hand, they are expensive: most pairs retail for $60-$80. Major

dance companies spend over $500,000 each year on pointe shoes. Singapore Dance Theatre

reports that pointe shoes take up a “significant portion of our budget,” and they have established

a special donation program just for pointe shoes.

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The toe box takes the brunt of wear in pointe shoes. Dancers’ weight when en pointe is

entirely on the toes, which wears the box out quickly. In addition, the toe box is not ready for

performance when brand new. Before using a new pair of shoes, dancers break them in –

especially the toe boxes – so that they fit better and are quieter on stage. The process of breaking

in new pointe shoes can take bizarre-looking forms: slamming the shoes in doors, wetting them

with water or rubbing alcohol, or repeatedly bending and pushing on them. As the shoes’ toe

boxes begin to soften and wear out with use, some dancers add shellac or more glue to extend

their lives. All dancers also add some sort of padding to their toe boxes to enhance fit and to

make the shoe quieter. The most commonly used forms of padding are pieces of lamb’s wool,

paper towels, and gel pads.

The minimalistic design of a pointe shoe gives very little support and protection to the

dancers themselves. As with any professional athlete, ballerinas are prone to a range of overuse

injuries. Almost 80% of professional dancers dance with foot or ankle injuries, and ballerinas

are especially susceptible. A brief list of common pointe-linked injuries includes stress- and

impact-related injuries, such as sprains and stress fractures, sesamoiditis, ingrown and jammed

toenails, cuts and bruising, and plantar fasciitis, as well as abrasion-related injuries, such as

calluses, blisters, and bunions. Minor injuries can make dancing extremely painful, and more

serious injuries can shorten careers. Most professional ballerinas have some sort of foot and/or

ankle pain continuously throughout their dancing careers. Aside from the physical demands of

pointe work, Eliza Minden notes that another contributing factor to injury is stage construction.

Stages are normally designed for opera, not ballet, and the floors are made of concrete covered in

wood, creating a very unforgiving surface.

The demands of pointe work are great enough that young students are introduced to the

technique slowly and carefully. Normally, teachers require girls to be at least 10 years old before

beginning to learn pointe technique, and the beginning lessons are limited to about 10 minutes of

pointe-specific practice per week. For student dancers, pointe shoes last considerably longer

than an hour: six months is not an uncommon lifetime for early teenagers’ pointe shoes.

Despite the difficulty and chance for injury that come with dancing en pointe, many

dancers report a special affection for their pointe shoes, as if they are emblematic of the artistry

of dance. Rachael Weinberg wrote about pointe shoes :

“Even in the inanimate state they are inseparable from a sense of movement. No other

shoes evoke such associations. A sneaker, a wing tipped brogue, a sandal all have

associations but are sadly mere accessories. Anyone can wear that loafer but only

Cinderella can don the glass slipper, only Dorothy the ruby slippers. … Even when

[seen] alone, we can visualize the young mistress in whose service they will always be.”

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Eliza Minden’s Innovation

Minden started dancing ballet as a child in a family of dance experts. Her mother

founded the Connecticut Dance School, and her sister was a professional dancer. Minden danced

ballet as an amateur as she grew up and through college at Yale University. After graduating

from Yale, Minden continued her passion for ballet in management roles with various dance

companies. Managing dance companies gave her valuable experience in the administrative side

of performing arts.

Minden knew first-hand the strains of dancing en pointe and sympathized with the

dancers’ problems. One winter she went skiing for the first time in many years, and realized that

there had been innovations in ski design that had a big effect on her skiing performance: different

curvature of the outer ski edge was not just cosmetic; it noticeable enhanced performance. She

began to think about the design of pointe shoes, unchanged for a century, and wondered if it

would be possible to make a modern pointe shoe – one that would enhance dance performance

and possibly alleviate some strains of dancing en pointe.

When she returned home, she bought a pair of every brand of pointe shoe. She took them

to her father’s manufacturing business, Edwin Gaynor Company, and used a band saw to cut

every pair in half. Although she was quite familiar with pointe shoes, she was still surprised to

see the exact nature of the interior layers. One brand built its toe box with old crumpled

newspaper. This destructive experiment convinced Minden that it was possible to create a

technologically superior pointe shoe. For over a year, she investigated materials, and cast around

for a maker who would take on the challenge of developing the shoe with her. She eventually

found a shoemaker who specialized in custom work, such as creating matching shoes for bridal

parties. Minden researched materials and adjusted designs, and the shoemaker created

prototypes, sometimes just single shoes, that Minden took to dancers she knew to try on, and

showed to dance companies’ physicians and physical therapists. After several years of trial and

refinement, she settled on a design that looked like traditional a pointe shoe on the outside (see

Exhibit 2), but was constructed much differently inside. The final shoe used thermoplastic

elastomers to give the toe box structure and support, and cellular urethane to make the shoe

quiet, especially when landing a jump. Several other innovations were included in the shoe’s

design.

For the final version of Minden’s pointe shoe, variable costs per pair of shoes were

expected to be $37 for labor (e.g., cutting, sewing, preparing the sole and shank, blocking), $27

for materials (e.g., fabric, elastomers and related elements, ribbons), and $4 for packaging.

Fixed costs such as equipment purchase or lease, salaries, overhead, insurance, and loan

payments were estimated at $130,000 per year. The shoemaker’s manufacturing arrangements

were quite scalable, and able to accommodate volumes of up to 80,000 pairs of pointe shoes per

year without incurring additional fixed costs.

In sum, Minden’s new shoe had better support for the dancer’s foot, especially during the

motions required to bring the dancer’s weight en pointe, an exceptionally long-lasting toe box,

and construction that did not require dancers to break the shoe in before use. Minden had also

received patents for key elements of the shoes’ design, and had applied for more (there was no

patent on the shoe as a whole). Gaynor Minden shoes were ready for the market.

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Not long afterward, an independent and unsolicited study of pointe shoes was published

in The American Journal of Sports Medicine, comparing pointe shoes from five different brands:

Capezio, Freed, Leo’s, Grishko, and Gaynor Minden. The study found that Gaynor Minden

shoes had the lowest vertical compression stiffness (recall that the other brands need to be

broken in before use, but not Gaynor Mindens) and the highest vertical strength. Gaynor Minden

shoes were by far the most durable in fatigue testing, lasting three times longer than Grishkos

and 20 times longer than Freeds.

Minden now faced two inter-related strategic marketing decisions: who would be the

initial target market, professional dancers or amateur students? And what kind of price should

she set?

Economics of Performing Arts Organizations

For most performing arts groups, whether dance, music, or theater, the primary measure

of success was growth. For arts managers, larger budgets enable directors to stage bigger and

more challenging productions, and offer greater freedom to experiment. During decades of

growth, arts organizations used their surplus income to invest in larger performance halls,

higher-quality stagings and productions, larger staffs, more performers, and longer seasons.

But eventually growth in infrastructure expense tends to outpace growth in major sources

of revenue. For example, during 1987-97, overall ticket sales for professional performing arts

groups increased by an inflation-adjusted 50% – an impressive rise – but employment in non-

profit theaters rose by 161% and in orchestras and opera companies by 83%. Orchestras

typically scheduled their season of performances based on demand, but many reportedly

increased their season length in response to pressure from musicians’ labor unions for year-round

employment.

Arts organizations are revenue intensive: they cover current expenses with current

income and advance ticket sales, and most organizations do not have cash reserves. Accounts

payable tend to rise from year to year, especially after years with unexpectedly low earned

income from ticket sales. Many organizations feel caught in a self-perpetuating cycle where

bigger budgets require taking on more expenses to attract even bigger audiences and donations,

which then create the need for an even bigger budget, and so on.

Against this background, it might seem that dance companies would be willing to switch

to Gaynor-Minden shoes based on cost savings alone. However, Eliza Minden knew that

professional dancers, and artistic directors, sometimes reflexively dislike what they perceive as

market-based intrusions into their art. If a dance company were to adopt Gaynor-Minden shoes,

it would be through the influence of principal dancers, choreographers, and trusted trainers,

rather than through the company’s administration.

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Target Market Decision

Minden thought that her shoes would be attractive to professional dancers on the basis of

health and safety. Ballerinas as a group were the most susceptible to injury because of their

volume of pointe work. They should be most interested in preventing injuries and alleviating

sore toes, for the sake of comfort, performance, and career longevity. In addition, Gaynor

Minden shoes were noticeably quieter on stage than traditional pointe shoes. This benefit would

be especially important to professional dancers, who are held to the highest artistic standard but

who often perform in concert halls with first-class acoustics. Gwyneth Muller of the New York

City Ballet described the problem in a first performance in a brand-new theater in Chicago: “Our

pointe shoes made so much noise that when we ran across the stage in “Serenade,” we sounded

more like a herd of elephants than a group of ballerinas.”

Another reason to approach professional dancers was that there might be some

promotional benefit if young dancers see top professionals wearing Gaynor Minden shoes. From

Minden’s perspective, ballerinas were clearly the heaviest users of pointe shoes, going through

many pairs of traditional pointe shoes each week, and were therefore a concentrated and

desirable target group.

The alternative target market was dance students, from beginners (mostly age 10-12) to

more advanced students (through early adulthood). Nationwide, the number of dance students

was unknown, but undoubtedly vastly outnumbered professional dancers, with thousands of

dance schools in thousands of towns and cities. Students usually took lessons at a particular

dance studio or gym, and had the same teacher for a year or more. Ballet teachers at this level

ranged from advanced students to former professional dancers. Individual dance schools were

spread across the country with no connection among most schools, and no reliable or centralized

means of communication with them. Younger ballet students would presumably be less

interested in the durability of the Gaynor Minden shoe, since many would outgrow the shoes

before they wore out. But students (or their parents, who are paying for the first pairs of pointe

shoes) might value highly the injury-preventive design of the shoes, and their extra support when

rising to pointe position.

(On the following pages are condensed transcripts of interviews with college-age pointe

dancers, on how they picked the pointe shoes they use.)

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Interviewee: Olivia Nevitt Years dancing en pointe: 4

“I first went en pointe in 8 th

grade. It’s always a really big deal to get the opportunity to be en

pointe. Some schools go through pre-pointe classes; we were a little less formal. My teacher

was a little old Austrian dancer. She advised me to get Repettos [a pointe shoe brand] which

were softer, easier as a beginner to mold to my feet. I went to the store and got the shoes – a go-

to shoe for beginners.

“When I started getting more serious, I wanted something stronger that would show off my foot

better, more professional – something with nice color, nice shiny satin. I settled on Freeds.

They could take more modifications, like resin and ribbons. I tried on a bunch, did research, but

I was looking for higher quality and harder shoes because I became stronger. Then I took a 6-

month break, and when I returned I started with Repettos, then I bought another pair of Freeds.

“Usually for the first pair, your teachers have a rapport with a dealer or shoe store in the area. I

wasn’t really focused on brands. Some brands are known as “studio” brands, like Capezio –

they’re geared toward a more amateur dancer.

“A pair of pointe shoes usually lasts me about 10 months.

“There’s a real joy in purchasing a pair of pointe shoes. Other shoes, like running shoes, aren’t

the same. When I got here [to the university], I bought a pair of running shoes – it seems like

everyone runs here. They’re a nice brand, and I probably paid too much – but it’s not the same.

There’s a lot of mystery for young girls surrounding pointe shoes – older girls dance en pointe,

and that’s where you’re going.”

Interviewee: Erin Mayfield Years en pointe: 8

“For my first pair of pointe shoes, the studio picked them out – they were Blochs. They had a

wider box in the toe, were less constricting, which makes it easier. The shank was less hard.

They were medium hard, easier to break in.

“I tried several for fit – now I use a Grishko. I think I’ve had 11 pairs of shoes. They have to fit

the box of the foot, but with more constraint for the toes. I have a strong arch en pointe, so my

shoes get tired and floppy sooner. It took about a year for me to find this pair. Grishko has a

complicated fit – it’s good for my foot, small with a hard arch.

“To break my shoes in, I put them in a sock and hammer them in the right places. The sock

keeps them from getting marked up. A pair usually lasts me 6 months because of my hard arch.”

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Interviewee: Kate Feldman Years en pointe: 6

“I’m not dancing en pointe now because of an injury – I jumped and fell at an audition.

“It’s important to fit individual feet. For my first pair, the whole ballet school went to the store.

I got the wrong pair – I wasn’t able to get over the flat part of the sole, there was discomfort. If

an element of the fit is wrong, it’s very bad. I was using Capezio at first. They didn’t fit well,

but I didn’t know; I had no comparison. The teacher told me to try a ¾ shank, which allowed me

to get more over the shoe. Then I switched to Grishko, recommended by my dance teacher.

“The pointe shoe ribbons are sewn on by hand by the dancer – for fit, not cosmetics. At the

beginning, you experiment with different kinds, then find one you like, then stick with it. A

teacher or other dancer will make a recommendation, especially older dancers. They might

notice that you have the same kind of feet or something. Dance studios may also be linked to a

certain brand through a contact.

“A pair will last for a month with intense rehearsals. In my first year I went through one pair.

Over time, with stronger feet, you break in shoes more quickly. At my height I was dancing 5

days/week for about an hour each day, plus 3-5 hours/day on the weekends.

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Interviewee: Emily Swan Years en pointe: 8

“When I first bought pointe shoes, I was in about 6 th

grade. The company I danced with – lots of

times they had everyone buy the same shoes. But the first pre-pointe class is in ballet slippers.

The company bought everyone the same brand. I was in Capezio Pavlovas. I found out later that

they weren’t the greatest for my feet, after going to a different dance company. I had to start

over, and everybody was in Blochs. They were better. Once they understand that you’re going

to stay in ballet, then they buy specifically for your feet.

“You buy based on how wide your foot is, and how big your arch is – not standing, but the

curviness of your arch when pointing your toes. The Master Teacher said my problem was that

my foot wasn’t strong enough to get en pointe – I needed a shoe that would help.

“You know when you wear tennis shoes, your soles will wear unevenly? When I go up on

pointe, my foot tends to roll out a bit. I did something called ‘darning,’ where you sew rows of

thread into the toe of your shoe – it’s a bit old school – you add thread to push you from one side

to the other.

“Then my teachers wanted me to move on, and I went into Grishko. The problem with Grishkos

is that the box is tiny, and the satin is slippery, so I ended up falling a lot. I tried Glissés – I liked

them a lot – one Christmas season I went through 5 pairs, dancing 3 hours/day, 5 days/week for

The Nutcracker. Even with multiple pairs of the same model, they wear differently, and have

different construction. At one point, I took the right shoe from one pair, and the left from

another, because they fit best.

“I customize them by breaking the shank a bit by the metatarsul. When I put a new pair on, they

hurt by my big toe, so I use a bit of water to soften them.”

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Exhibit 1: Examples of ballerinas dancing en pointe.

Gillian Murphy, Principal Dancer, American

Ballet Theatre

Yekaterina Shipulina, Principal Dancer,

Bolshoi Ballet

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Exhibit 2: Gaynor-Minden and two traditional pointe shoe brands

Gaynor-Minden

Capezio

Grishko

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Exhibit 3: Sales Prices Of Selected Pointe Shoes

Pointe Shoe Brand and Model Sales Price

Bloch Balance European $59.46

Bloch Heritage $64.80

Capezio Pavlowa $64.32

Capezio Tendu II $74.04

Capezio Plie II $65.34

Chacott Veronese II $77.40

Freed Wing Block $86.34

Freed Studio II $81.00

Grishko Pro Quiet $79.14

Grishko Elite $77.34

Grishko Triumph $85.62

Suffolk Ensemble $96.90

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Exhibit 4: Anatomy of Pointe Shoe

Binding: the fabric channel through which the drawstring runs

Box or Block: the stiff toe cup that encases the toes

Box Liner: the soft fabric that lines the inside of the box

Girth: the measurement around the widest part of the foot, at the metatarsals at the ball of the

foot

High Profile: a pointe shoe box, often cylindrical, with a relatively large space between the

outer sole and the top of the foot

Low Profile: a pointe shoe box with a generally flat shape and a relatively small space between

the outer sole and the top of the box

Metatarsals: the five bones between the ankle and the toes. Pointe shoe fitting is especially

concerned with the area near the ball of the foot

Outer Sole: the bottom part of the shoe, usually made of synthetic or leather, which is in contact

with the floor when the dancer stands in the normal flat position

Platform: the part of the pointe shoe on which the dancer stands when en pointe

Pronation: the rolling inward of the foot so that when standing flat, more weight is on the ball of

the foot than on the outside

Quarter: the part of the shoe covering the sides and heel of the foot

Shank: the stiff insole that provides support

Sockliner: the soft fabric that lies directly underneath the foot and runs the length of the shoe

Supination: the rolling outward of the foot so that when standing flat, more weight is on the

outside of the foot than on the ball of the foot

Throat: the opening of the shoe nearest the toes

Vamp: the part of the shoe that covers the tops of the toes and the foot

Vamp Elastic: wide, firm elastic sewn at the throat of the shoe to extend the vamp and cover the

top of the foot

Winged Box: a box with extra-long, stiff sides

Source: www.dancer.com