Ch17 retailer pricingoptions

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Retail Marketing Price Setting
MKG410 CSU-Global Campus

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Ch17 retailer pricingoptions

  1. 1. 17-1Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice HallPricing Options for Retailers Discount orientation At-the-market orientation Upscale orientation
  2. 2. 17-2Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice HallPrice Elasticity of Demand The sensitivity of customers to price changesin terms of the quantities they will buy: Elastic – Small percentage changes inprice lead to substantial percentagechanges in the number of units bought. Inelastic – Large percentage changes inprice lead to small percentage changes inthe number of units bought.
  3. 3. 17-3Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice HallCompetition and Retail Pricing Market pricing – Retailers often pricesimilarly to each other and have lesscontrol over price because consumerscan easily shop around. Administered pricing – Firms seek toattract consumers on the basis ofdistinctive retailing mixes.
  4. 4. 17-4Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice HallFramework for Developing a Retail Price Strategy
  5. 5. 17-5Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice HallSpecificPricingObjectives
  6. 6. 17-6Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice HallPrice Policy Choices No competitors will have lower prices; nocompetitors will have higher prices; or prices willbe consistent with competitors. All items will be priced independently or the pricesfor all items will be interrelated to maintain imageand ensure proper markups. Price leadership will be exerted; competitors will beprice leaders and set prices first; or prices will beset independent of competitors. Prices will be constant over a year or season; orprices will change if costs change.
  7. 7. 17-7Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice HallHow toDetermineDirectProductProfitability
  8. 8. 17-8Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice HallIntegration of Approaches to Price Strategy If prices are reduced, will revenues increase greatly?(Demand orientation) Should different prices be charged for a productbased on negotiations with customers, seasonality,and so on? (Demand orientation) Will a given price level allow a traditional markup tobe attained? (Cost orientation) What price level is necessary for a product requiringspecial costs? (Cost orientation) What price levels are competitors setting?(Competitive orientation) Can above-market prices be set due to a superiorimage? (Competitive orientation)
  9. 9. 17-9Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice HallSpecific Pricing Decisions
  10. 10. 17-10Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice HallPrice Strategy Concepts Customary Pricing Everyday Low Pricing Variable Pricing Yield Management Pricing One-Price Policy Flexible Pricing Contingency Pricing Odd Pricing Leader Pricing Multiple-Unit Pricing Price Lining
  11. 11. 17-11Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice HallReasons to Use Multiple-Unit Pricing A firm could seek to have shoppers increasetheir total purchases of an item. This approach can help sell slow-moving andend-of-season merchandise. Price bundling may increase sales of relateditems.

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