4. Pricing strategy : A number of factors enter into retail pricing. They are important in varying degrees, and the retailers should take them all into consideration in arriving at the prices he will finally set. A retailer cannot sell below cost for any length of time without seriously impairing his financial resources; and except in unusual circumstances, the pressure of competition will not permit him to make a large profit indefinitely. Cost plus a reasonable profit is, therefore, the best general rule for price setting.
The unorganized retailer must adopt popular pricing strategy. He may pass on a part of the retail margin to the customers. The retailers get a profit margin o 10 to 25% and even more depending on the type of product. Indian customers even belonging to the rich class are price sensitive in respect of certain purchases, including retail purchases. Therefore, to retain and to attract more customers, the retailers may operate as a discount shop.
• The costs of such services are appreciable and so grades of trade have developed in which they are offered or not, according to the
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Such sales events are criticized by customers who can see no logical reason why prices of identical merchandise should be lower for one or two days than for the rest of the week. And then the prices being reshopd to the usual level thereafter. The week end special events of organized grocery chains are mostly of this
The pricing strategy that is normally in place would be the cost based pricing strategy. Because the company is small and has one owner this strategy works best. Knowing what the actual costs of the products are and marking it up to their desired profit per item price works well for the organization. With that being said there are seasonal items that the store provides to the consumer such as gear for sports. The company offers a few different pricing strategies during these times. For the family on a budget but has someone that plays sports, the company offers bundle pricing on specific brands. For other specific brands the company offers a competitive pricing strategy, they guarantee to beat the price of any competitor (Internet Center for Management and Business Administration, Inc., 2015). And for the high quality products the company has a premium pricing strategy in
As we learned from Chapter 12, price must be carefully determined and match with firm’s product, distribution, and communication strategies. (Hutt & Speh, 2012, p. 300) Therefore, there should be a strong market perspective in pricing. In order to build an effective pricing policy, marketers should focus on the value a customer places on a product or service. One of the most effective ways to do so is differentiating through value creation.
Setting prices too high would discourage purchasing and setting prices too low negatively affects revenue. While several pricing strategies exist, the use of a value-based pricing system, as implemented at Cabela’s, offers an optimal strategy that meet both customer expectations and company requirements.
As a large online retailer, the firm should not worry to charge a higher price to its certain customers. Otherwise, the customers should be happy as by just clicking a mouse or touching a screen, they have been able to shop and pay for their purchases without leaving the comfort of home. The firm could charge a low price to attract new customers, while extracting a higher price from loyal customers. As price discrimination increases, and price evaluation becomes easier, discriminated customers may choose to shop online elsewhere. But, price - changing online is not popular among shoppers. Some of them said it would bother them to find out that other people paid a lower price for the same
Price gouging is increasing the price of a product during crisis or disaster. The price is increased due to temporal increase in demand while supply remains constrained. In many jurisdictions, price gauging is widely considered as immoral and is illegal. However, from a market point of view, price gouging is a correct outcome of an efficient market.
The numerous retail stores create a global presence for the product. The pricing strategies that avoid the use of penetrating price strategy helps to uphold the brand image since it helps retain consistency in the high prices of the product. Also, the advertising method helps position the product as a preserve for the high social class. Finally, the presence of the online distribution makes it easy for the customers to get the products even in areas where the brand has not established retail stores.
Hennes & Mauritz (H&M) is a Swedish clothing retail company. The company was founded by Erling Pesson in 1947. The first H&M store was opened in Vaesteras, Sweden in 1947. The mission of H&M is to offer fashion and quality at the best price where “quality includes ensuring that products are manufactured in a way that is environmentally and socially sustainable” (H&M, vision & policy, n.d., para. 1). This essay is to highlight the current market analysis, pricing strategy, retail strategy, and competitive advantage analysis of the company.
A prestige pricing strategy was used, focusing on the overall value add which reflects the products features, benefits and advantages to satisfy the needs of the five target segment including: children, university students, urban commuters, outdoor enthusiasts and luxury trend followers (Hui and Wong, 2012) The strategy is based around the concept that the permanently high price levels, align with the maximum price the customers are willing to pay. This is recognized as the price ceiling, which focuses on the benefits and features that the backpack can bring to the customer enhancing their lifestyle (Ingenbleek & Van der Lans, 2013)
With supply solely, factors involved with regulation of the supply also control some aspects of demand. Things such as production costs and desired net profit can determine whether a business succeeds or not. Having a balance between quantity and price is the greatest control any business can have. Pricing is obviously one of the most beneficial, or destructive, parts of a business. Pricing is the first and most valuable thing an individual will look at, which will overrule most other judgments based off of quality and detail. Balancing the price, however, helps to create a pristine product, with just the right amount of detail that will fuel the market, while still generating a steady net income.
In a market there can be many types of pricing strategies. Some of these include: average pricing, marginal cost pricing, penetration pricing, skimming price, price discrimination, cost plus pricing, kinked price among others. Most of these strategies are based on the aim of profit maximisation. The pricing strategy differs under the different market structures like perfect competition, monopolistic competition, oligopoly and monopoly.
It is the situation when supplier sell the same product at different prices depends on the quantity purchased, not only it is inefficient but also anti competitive because the smaller companies may not receive the same prices as the bigger companies.
A fast food restaurant will have to have a good pricing strategy in order to ensure that competition does not push the firm out of business. This will ensure the restaurant remains competitive. For effective management of cash inflows, the management will require to create an environment whereby each item has been priced conspicuously and reflecting the cost of bringing the same to the table as well as the profit margins targeted by the restaurant (Mark 1998).
Rajagopal. "International Journal of Retail & Distribution Management." Emerald. Emerald Group Publishing Limited, 2011. Web. 21 Feb. 2014
For e.g. Cadbury put their prices at the same as most of their competitors and at the price their customers are able to pay. 2. Cost plus pricing Pricing methods which are based on the cost structure of Cadbury that are favoured by accountants because they are supposedly more accurate and reliable. Cadbury is trying to maximise it profits. This method works successfully because all costs need to be accurately accounted.
...e enough because the company has chosen the best possible way to increase the company performance. The pricing strategy is the company’s best strategy from all because it affected the sales revenue a lot. Although fluctuating the price is quite risky for a business since the customers might order from other companies if the company doesn’t do it properly, but XXX Company manage to done it well so far. The effectiveness might also be seen by the average of sales revenue between January to August from 2011 to 2013.