1. Chapter 17 Pricing in Retailing RETAIL MANAGEMENT: A STRATEGIC
APPROACH,
10th Edition
BERMAN EVANS

2. Chapter Objectives
To describe the role of pricing in a retail strategy and to show that pricing decisions must be made in an integrated and adaptive manner
To examine the impact of consumers; government; manufacturers, wholesalers, and other suppliers; and current and potential competitors on pricing decisions
To present a framework for developing a retail price strategy: objectives, broad policy, basic strategy, implementation, and adjustments

3. Pricing Options for Retailers
Discount orientation : Low price and low cost
At-the-market orientation: Average price ,Middle class average to above average products
Upscale orientation: prestigious image store

4. Figure 17-3: Factors Affecting Retail Price Strategy

5. Consumer: Price Elasticity of Demand
The sensitivity of customers to price changes in terms of the quantities they will buy
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

6. Market Segments by Price Sensitivity
Economic consumers: Looking for lowest price all stores same
Status-oriented consumers: Different looking for prestige brands
Assortment-oriented consumers: looking for a strong selections and fair price
Personalizing consumers: the buy where they feel a bond with employees
Convenience-oriented consumers: nearby store

7. The Government and Retail Pricing
Horizontal Price Fixing: Illegal agreement in fixing price among manufacturer ,wholesaler and retailer
Vertical Pricing Fixing: controlling price vertically between manufacturers ,wholesaler and retailer
Price Discrimination (Robinson-Patman Act)
Minimum Price Laws: prevent retailer to sell blow cost for specific product
Unit Pricing:
Item Price Removal :To advocate price removal ,pproduct code pricing
Price Advertising

8. Competition and Retail Pricing
Market pricing – retailers often price similarly to each other and have less control over price because consumers can easily shop around
Administered pricing – firms seek to attract consumers on the basis of distinctive retailing mixes ,image prices

9. Figure 17-4: A Framework for Developing a Retail Price Strategy

10. Objectives and Pricing
Market
Skimming
Market
Penetration

11. Price Policy Choices
No competitors will have lower prices; no competitors will have higher prices; or prices will be consistent with competitors
All items will be priced independently or the prices for all items will be interrelated to maintain image and ensure proper markups
Prices will be constant over a year or season; or prices will change if costs change

12. Price Strategy Demand-Oriented Pricing : based on consumer desired
Cost-Oriented Pricing based on consumer costs
Competition-Oriented Pricing based on consumer competitors prices

13. Demand-Oriented Pricing
Psychological pricing
Price-quality association
Prestige pricing

14. Price Strategy Concepts
Customary Pricing
Fixing price
Variable Pricing
Matching demand
One-Price Policy
Flexible Pricing
Due to bargaining
Odd Pricing
Leader Pricing
Multiple-Unit Pricing (Quantity)
Price Lining (Floor and ceiling level of products)

15. Reasons to Use Multiple-Unit Pricing
A firm could seek to have shoppers increase their total purchases of an item
This approach can help sell slow-moving and end-of-season merchandise
Price bundling may increase sales of related items

16. Price Adjustments Adaptive mechanism Markdown Additional markup
Employee discount

17. Timing Markdowns
Early markdown policy: early lower even demand is fairly
Late markdown policy: Taking maximum opportunities to sell in original price
Staggered markdown policy: In ascertain period
Automatic markdown plan: Automatically controlled depends on stock
Storewide clearance : In special events