describe the retail pricing decisions

5 common pricing strategies. 1. The Utility and Demand 3. A retail pricing strategy where retail price is set at double the wholesale price. To practice ethical pricing, you need to be able to spot the ethical issues that hinder fair pricing. It is a type of pricing which involves establishing a price higher than your competitors to achieve a premium positioning.You can use this kind of pricing when your product or service presents some unique features or core advantages, or when the company has a unique competitive advantage compared to its rivals. At the same time, pricing and price competition is the number one problem facing many marketing executive. A key consideration when you develop your pricing strategy is to understand your objectives when you price your products or services. Factors to Consider When Setting Prices. 1. Let us look at these. THE RETAIL PROCESSES. Yet, many companies do not handle pricing well. Types of pricing strategies 1. Product Cost: The most important factor affecting the price of a … Retail pricing decisions and product category competitive structure. If you continue browsing the site, you agree to the use of cookies on this website. Marketing Methods Used. Reaction of Competitors influence pricing decision: In determining a pricing policy, a company should not only consider the immediate effect of prices, but also give due weight to the reaction of competitors.It should call for an effective market intelligence of the competitors’ pricing decision. Many retailers benchmark their pricing decisions using keystone pricing (explained below), which essentially is doubling the cost of a product to set a healthy profit margin.However, in many instances, you'll want to mark up your products higher or lower than that, depending on a number of factors. Cost-plus pricing—simply calculating your costs and adding a mark-up; Competitive pricing—setting a price based on what the competition charges Pricing Policies • Guidelines, that ensure uniformity of pricing decisions within a retail operation • Types of policies • Below-market pricing: Discounts merchandise from the established market price to: • Build store traffic • Generate high sales and gross margin dollars per square foot of … Organizational Objectives: It affects the pricing decisions to a great extent. Figure-4 shows different pricing methods: The different pricing methods (Figure-4) are discussed below; […] Positioning of a retail store Slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising. For example, company may try to achieve 25% market shares in the relevant industry. Pricing decisions are taken in such a manner that enables the company to achieve targeted market share. Prices are based on three dimensions that are cost, demand, and competition. Pricing Objectives 6. Corporate End User Decisions are Equally Driven by Price and Impact on Business Continuity As we’ve just identified, project management and strategic, actionable decisions go into setting the price of a product. Technology has disrupted some of the logic behind these channel decisions, as digital storefronts have grown to be highly influential, easily accessible to global markets, and substantially cheaper than retail … And this year, after COVID-19, more and more retailers have closed their businesses. 9. Who is Your Client. Basically, the prices of products and services are determined by the interplay of five factors, viz., demand and supply conditions, production and associated costs, competition, buyer’s bargaining power and the perceived value. Consider a small company that manufactures specialty DVDs and sells them through different retail stores. Product Cost 2. Every organization runs to earn profits and so is the retail industry. Pricing a product ethically is a major decision for any business. The reason is that the price is a very sensitive issue for the customers in their purchasing behavior. At the end of fiscal 2019, Nike operated 384 retail stores in the United States. Now, let us discuss the factors affecting the pricing decisions briefly: Factor # 1. Retail price: choosing the right pricing strategy for your brand. In retail management, there are four basic steps which have to be followed so as to achieve the goals set. Internal Factors: […] Define retailing; Describe the firms involved in a supply chain; Summarize the key challenges facing retailers; Analyze the evolution of the retail industry. In a competitive industry, it is often not recommended to use keystone pricing as a pricing strategy due to … Pricing is a huge element of your marketing strategy as it determines how much of your product consumers buy and how much your firm makes. For example, if a cost of a product for a retailer is £100, then the sale price would be £200. (Image: Factors affecting pricing decisions) 1. Since 2017, there have been several major retail companies that have filed for bankruptcy. Being a process, retail management consists of several steps to be followed so as to achieve its goals. 10 different pricing strategies for your small business to consider. Extent of Competition in the Market 4. Describe the overall change in the structure of the retail … Lets understand these factors in detail. Bundle Pricing … April 2010; ... promotional models built on market-level data are considered as the best suited to describe the market behavior Describe retailing, the entities involved, and the impact of decisions on a retail business. The marketer should know the factors that influence the pricing decisions before setting the price of a product. The economy also has a tremendous effect on pricing decisions. Retail Pricing Cost Plus Pricing Mechanism. A company’s pricing decisions are affected by both internal and external environmental factors. Government and Legal Regulations 5. For example, the Robinson-Patman Act limits a seller’s ability to charge different customers different prices for … Pricing decisions are affected by federal and state regulations. Businesses who use ethical pricing strategies to sell their products and earn a profit are far more respected than those that hurt and defraud competitors or even consumers. There are number of factors affecting the pricing decisions and price is not determined simply, there are many factors affecting pricing decisions. Cost plus pricing works on the following principle: Cost Price of the product + Profit (Decided by the retailer) = Final price of the merchandise. The retail industry is constantly changing and there are always new challenges faced by the players in this competitive industry. Regulations are designed to protect consumers, promote competition, and encourage ethical and fair behavior by businesses. Here are ten different pricing strategies that you should consider as a small business owner. Thus, the actual pricing will have a lower influence in decision making. Before you set your pricing, work out the costs involved with running your business. Market share is a specific volume of sales determined in light of total sales in an industry. Pricing discusses the rationale and assumptions behind pricing decisions. Of these, 217 were Nike brand factory stores, while 29 were Nike brand inline stores. Generally, pricing strategies include the following five strategies. We would like to divide them as Internal Factors and External Factors. The factors affecting pricing decisions are varied and multiple. Pricing is often one of the most difficult things to get right in business. It explains the equilibrium of a firm and is the interaction of the demand faced by the firm and its supply curve. Pricing reflects on your brand — its a major driver of brand image (think Rolex and how its price adds to its appeal). The marketers should set the prices as per the organizational goals. The manufacturer’s selling price (MSP) is $15, which is what the retailers pay for the DVDs. Specific Pricing Strategies Odd pricing Practice of setting retail prices that end in the digits 5, 8, 9— such as $29.95, $49.98, or $9.99. Main factors affecting price determination of product are: 1. The retailers then sell the DVDs to consumers for an additional charge. However, not all retailers are experiencing the same adversity amid this global pandemic. ADVERTISEMENTS: An organization has various options for selecting a pricing method. There are several factors which affect the buying decision of the customers at a retail store. How profitable it will be many marketing executive and sells them through different retail stores product:... One of the dimensions or combination of dimensions to set the prices per. A must of sales determined in light of total sales in an industry regulations designed! Would be £200 marketer should know the factors affecting pricing decisions are taken such. % market shares in the structure of the retail industry is constantly changing there! Many factors affecting the pricing decisions are taken in such a manner that the. Of the demand faced by the firm and is the number one problem facing marketing! 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