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Retail Pricing Strategies

Retail Management
Course Code
RMG 200
Brent Barr

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Week 11
Pricing Practices:
1.1% Pricing Mindset
2.Deliver More Value
3.Price Strategically
4.Know Competition
5.Make pricing a process
Pricing Issues
Pricing Strategies (Everyday low pricing VS Hi-lo pricing [regular prices higher than
EDLP but frequently on sale at lower prices])
How should prices be set (Demand oriented pricing)
How do retailers set prices? (Cost-oriented Pricing)
Legal Issues in pricing
Price of Merchandise: Cost of Merchandise, Demand, Competitors
Methods for Setting Price:
Cost-Oriented Set price at a fixed percent over cost of merchandise
Demand-Oriented Charge as much customers are willing to pay
Competitor-Oriented Set price in relation to competitors prices
Factors affecting customers sensitivity to prices:
Income/Need for products (-)
Availability from Competitors/Frequency and Amount spent on product (+)
Line Pricing Marketers set floor and ceiling prices and set retail prices in-between
Price Adjustments: Markdown, Coupons, Rebates, Price Bundling, Multiple-Unit Pricing,
Variable Pricing
Reasons for markdowns: Get rid of Merch, Increase sales, Generate Cash, Increase traffic
for product
Coupons: Reduce the prices for people willing to clip coupons, induce customers to try
product, convert first timers to regulars, encourage large purchases, increase usage, protect
market share
Rebates: More advantageous cause they increase demand and retailer has no handling cost.
Price bundling: Offering 2 or more products at 1 price
Multiple-unit pricing: Bundling products of the same nature
Using Price to stimulate sales:
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