1 / 17

Pricing Strategies in Retailing: Integrated and Adaptive Decision-making

This chapter explores the role of pricing in a retail strategy, emphasizing the need for integrated and adaptive decision-making. It examines the factors that influence retail pricing options, including consumer price elasticity, market segments by price sensitivity, government regulations, and competition. The chapter also presents a framework for developing a retail price strategy, along with various pricing policy choices and adjustment mechanisms.

jpotvin
Download Presentation

Pricing Strategies in Retailing: Integrated and Adaptive Decision-making

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Chapter 17 RETAIL MANAGEMENT: A STRATEGIC APPROACH, 10th Edition Pricing in Retailing BERMAN EVANS

  2. Chapter Objectives • To describe the role of pricing in a retail strategy and to show that pricing decisions must be made in an integrated and adaptive manner • To examine the impact of consumers; government; manufacturers, wholesalers, and other suppliers; and current and potential competitors on pricing decisions • To present a framework for developing a retail price strategy: objectives, broad policy, basic strategy, implementation, and adjustments

  3. Pricing Options for Retailers • Discount orientation: Low price and low cost • At-the-market orientation: Average price ,Middle class average to above average products • Upscale orientation: prestigious image store

  4. Figure 17-3: Factors Affecting Retail Price Strategy

  5. Consumer: Price Elasticity of Demand • The sensitivity of customers to price changes in terms of the quantities they will buy • Elastic – small percentage changes in price lead to substantial percentage changes in the number of units bought • Inelastic – large percentage changes in price lead to small percentage changes in the number of units bought

  6. Market Segments by Price Sensitivity • Economic consumers: Looking for lowest price all stores same • Status-oriented consumers: Different looking for prestige brands • Assortment-oriented consumers: looking for a strong selections and fair price • Personalizing consumers: the buy where they feel a bond with employees • Convenience-oriented consumers: nearby store

  7. The Government and Retail Pricing • Horizontal Price Fixing: Illegal agreement in fixing price among manufacturer ,wholesaler and retailer • Vertical Pricing Fixing: controlling price vertically between manufacturers ,wholesaler and retailer • Price Discrimination (Robinson-Patman Act) • Minimum Price Laws: prevent retailer to sell blow cost for specific product • Unit Pricing: • Item Price Removal :To advocate price removal ,pproduct code pricing • Price Advertising

  8. Competition and Retail Pricing • Market pricing – retailers often price similarly to each other and have less control over price because consumers can easily shop around • Administered pricing – firms seek to attract consumers on the basis of distinctive retailing mixes ,image prices

  9. Figure 17-4: A Framework for Developing a Retail Price Strategy

  10. Objectives and Pricing Market Skimming Market Penetration

  11. Price Policy Choices • No competitors will have lower prices; no competitors will have higher prices; or prices will be consistent with competitors • All items will be priced independently or the prices for all items will be interrelated to maintain image and ensure proper markups • Prices will be constant over a year or season; or prices will change if costs change

  12. Price Strategy • Demand-Oriented Pricing : based on consumer desired • Cost-Oriented Pricing based on consumer costs • Competition-Oriented Pricing based on consumer competitors prices

  13. Demand-Oriented Pricing • Psychological pricing • Price-quality association • Prestige pricing

  14. Customary Pricing Fixing price Variable Pricing Matching demand One-Price Policy Flexible Pricing Due to bargaining Odd Pricing Leader Pricing Multiple-Unit Pricing (Quantity) Price Lining (Floor and ceiling level of products) Price Strategy Concepts

  15. Reasons to Use Multiple-Unit Pricing • A firm could seek to have shoppers increase their total purchases of an item • This approach can help sell slow-moving and end-of-season merchandise • Price bundling may increase sales of related items

  16. Price Adjustments • Adaptive mechanism • Markdown • Additional markup • Employee discount

  17. Timing Markdowns • Early markdown policy: early lower even demand is fairly • Late markdown policy: Taking maximum opportunities to sell in original price • Staggered markdown policy: In ascertain period • Automatic markdown plan: Automatically controlled depends on stock • Storewide clearance : In special events

More Related