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Overview
1)Consideration in setting retail prices 2)Setting Retail Prices 3)Price Adjustments 4)Pricing Strategies 5)Pricing Techniques for increasing sales
Cost
2.
Price sensitivity
1. 2. 3. 4.
Elasticity effects Product with substitutes are price inelastic, necessities are price inelastic and products that are expensive relative to income is price elastic and reducing price competition
3.
Competition-collecting and using competitive price data Legal and Ethical Constraints-price discrimination(retailers charge diff prices for identical products to diff customers
4)
4)Legal and Ethical Constraints price discrimination(retailers charge diff prices for identical products to diff customers
Setting price based on price senstivity of consumers and cost of merchandise Limitation-
Mantained mark up=actual sales realised for merchandise costs (gross margin of product
Profit Impact of setting a retail price-Break even Number and Quantity
Promotional: Holidays, special events, even-out traffic Clearance: Obsolete, slow- and nonmoving, end-of-season
4)Pricing Strategies
1)High/low pricing-increases profit margin,creates sales and causes excitement 2)Everyday low pricing- assures customers of low prices ,reduces advertising expense and reduces stock outs and improves inventory management
Leader Pricing
Loss Leaders to get the shoppers inside. pricing certain items lower than normal to increase customers
Graded pricing to reflect quality, performance and durability
Price Lining
Reduces confusion and simplifies merchandising task and give buyers greater flexibility
99,9, 0.99 etc Practice of using a price that ends in odd number Effective when price senstivity is high
Odd Pricing