CHAPTER 7: PRICING IN RETAILING

Hi,

This posting I will explain about pricing in retailing.There are pricing options for retailers which are discount orientation, at the market orientation and upscale orientation. The factors affecting retail price strategy is consumers, government, manufacturers, wholesalers and other suppliers, current and potential competitors is the total effect on pricing strategy.

Price elasticity of demand is the sensitivity of customer to price changes in term of the quantities the will buy. Elastic is small percentage changes in price lead to substantial percentage changes in the number of units bought while inelastic is large percentage changes in price lead to small percentage changes in the number of units bought.

How do you determine the price that you pay is equivalent with the value?

Next, the government and retail pricing are horizontal price fixing, vertical pricing fixing, price discrimination, minimum price laws, unit pricing, item price removal and price advertising. Market pricing is retailers often price similarly to each other and have less control over price because consumers can easily shop around while administered pricing is firming seek to attract consumers on the basis of distinctive retailing mixes.

Price strategy was determined by demand-oriented pricing, cost-oriented pricing, and competition-oriented pricing.

The pro and cons of everyday low pricing. The pros are to reduced advertising expense, more predictable sales levels and fewer peaks and ebb of sales distribution while the cons are decreased excitement, potentially less store traffic due to specials and less “cherry-picking” by consumers who only purchase specials.

The reasons to use multiple-unit pricing are a firm could seek to have shoppers increase their total purchases of an item. Furthermore, this approached can help sell slow moving and end of season merchandise and price bundling may increase sales of related items.

Lastly, timing markdowns. Timing markdowns are early markdown policy, late markdown policy, staggered markdown policy, automatic markdown plan and storewide clearance.