Beruflich Dokumente
Kultur Dokumente
At-the-market orientation
Retailer has average prices.
Offers good service and a nice atmosphere to middle-class shoppers, average to above-average quality products are stocked.
Margins are moderate to good, squeezed by retailers positioned as discounters or prestige stores, finds it hard to expand its price range.
Upscale orientation
A prestigious image is the retailers competitive advantage. A smaller target market, higher expenses and lower turnover mean customer loyalty, distinctive services & products and high per-unit profit margins.
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. Unitary elasticity Percentage changes in price are directly offset by percentage changes in quantity.
Status-oriented consumers perceive competing retailers as quite different; prefer upscale retailers with prestige brands and strong customer service; less interested in prices.
Assortment-oriented consumers seek retailers with a strong selection in the product categories being considered; want fair prices. Personalizing consumers shop where they are known and feel a bond with employees and the firm; will pay slightly aboveaverage prices. Convenience-oriented consumers shop because they must; want nearby stores with long hours; may use catalogs or the Web; will pay higher prices for convenience.
Administered pricing
Firms seek to attract consumers on the basis of distinctive retailing mixes. Occurs when people consider image, assortment, service, to be important; willing to pay above-average prices to unique retailers. Upscale department stores, fashion apparel stores, and expensive restaurants
If competition becomes too intense, a price war may eruptfirms continually lower prices below regular amounts and sometimes below their cost to lure consumers from competitors. Price wars are difficult to end and can lead to low profits, losses or even bankruptcy.
Market Skimming
Market Penetration
Appropriate if targeted segment is price insensitive, new competitors are unlikely to enter the market, added sales will greatly increase retail costs. Market penetration pricing an aggressive strategy; retailer seeks large revenues by setting low prices and selling many units. Profit per unit is low, but total profit is high if sales projections are reached. Appropriate if customers are price sensitive, low prices discourage actual and potential competition, and retail costs do not rise much with volume.
3. Price Strategy
Demand-oriented pricing
retailer sets prices based on consumer desires. it determines the range of prices acceptable to the target market. The top of this range is the demand ceiling, the most that people will pay for a good or service. studies customer interests and the psychological implications of pricing. Two aspects: pricequality association and prestige pricing.
Price Strategy
Demand-oriented pricing
Pricequality association concept many consumers feel high prices connote high quality and low prices connote low quality.
Important if:
competing products are hard to judge on bases other than price, consumers have little experience in judging quality (as with a new retailer), shoppers perceive large differences in quality among retailers or products, brand names are insignificant in product choice.
Prestige pricing assumes that consumers will not buy goods and services at prices deemed too low; too low a price means poor quality and status. Does not apply to all shoppers. Some people may be economizers and always shop for bargains.
Price Strategy
Cost-oriented pricing Retailer sets a price floor, the minimum price acceptable to the firm so it can reach a specified profit goal.
Markup pricing a retailer sets prices by adding per-unit merchandise costs, retail operating expenses and desired profit. The difference between merchandise costs and selling price is the markup.
Markups can be computed on the basis of retail selling price or cost but are typically calculated using the retail price. Why? (1) Retail expenses, markdowns and profit are always stated as a percentage of sales. Thus, markups expressed as a percentage of sales are more meaningful. (2) Manufacturers quote selling prices and discounts to retailers as percentage reductions from retail list prices (MRP).
(3) Retail price data are more readily available than cost data.
This is how a markup percentage is calculated. The difference is in the denominator:
Price Strategy
Competition-oriented pricing
retailer sets its prices in accordance with competitors. The price levels of key competitors are studied and applied.
Will a given price level allow a traditional markup to be attained? (Cost orientation)
What price level is necessary for a product requiring special costs? (Cost orientation) What price levels are competitors setting? (Competitive orientation) Can above-market prices be set due to a superior image? (Competitive orientation)
Price Lining Rather than stock merchandise at all price levels, retailers sell merchandise at a limited range of price points, with each point representing a distinct level of quality.
Retailers first determine their price floors and ceilings in each product category. They then set a limited number of price points within the range.
5. Price Adjustments
Markdowns and additional markups are needed due to competition, seasonality, demand patterns, merchandise costs and pilferage.
Markdown a markdown from an items original price is used to meet the lower price of another retailer, adapt to inventory overstocking, clear out shop-worn merchandise, reduce assortments and increase customer traffic. Additional markup increases an items original price because demand is unexpectedly high or costs are rising. Employee discount Some firms give employee discounts on all items and also let workers buy sale items before they are made available to the general public.
Timing Markdowns
Early markdown policy merchandise is offered at reduced prices while demand is still fairly active. Early markdowns free selling space for new merchandise. The retailers cash flow position can be improved. Late markdown policy a retailer gives itself every opportunity to sell merchandise at original prices. Staggered markdown policy discounts prices throughout a selling period.
Storewide clearance goal is to clean out merchandise before taking a physical inventory and beginning the next season; longer period is provided for selling merchandise at original prices; frequent markdowns can destroy a consumers confidence in regular prices