Retail pricing
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RETAIL PRICING PowerPoint PPT Presentation


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RETAIL PRICING. PRICE-DEMAND RELATIONSHIPS Elasticity, Sensitivity and Thresholds DIMENSIONS OF RETAIL PRICING COMPARATIVE DIMENSION Audits, spies and espionage! GEOGRAPHICAL DIMENSION All retailing is local retailing ASSORTMENT DIMENSION KVIs, awareness and price points TIME DIMENSION.

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RETAIL PRICING

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RETAIL PRICING

  • PRICE-DEMAND RELATIONSHIPS

    Elasticity, Sensitivity and Thresholds

  • DIMENSIONS OF RETAIL PRICING

  • COMPARATIVE DIMENSION

    Audits, spies and espionage!

  • GEOGRAPHICAL DIMENSION

    All retailing is local retailing

  • ASSORTMENT DIMENSION

    KVIs, awareness and price points

  • TIME DIMENSION


Price Elasticity


Examples of Product Category Elasticities


Price Thresholds and Reference Prices

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Multidimensional Framework for Retail Pricing


THE COMPARATIVE DIMENSION


Subjective and Objective Comparisons


Example of Multi-Segment Prices


THE GEOGRAPHICAL DIMENSION


Within-Company Price Level Differences


Localisation of the Retail Mix


THE ASSORTMENT DIMENSION


Levels of Item Price Awareness (%)


Price Recall: Determinants and Process


Examples of Price Lining


THE TIME DIMENSION

  • Formulation of Price Images

  • Temporary Price Offers

  • Seasonal ‘Sales’

  • Everyday Low Pricing


Framing the Price Deal


Seasonal Sales - Costs and Benefits


Gross Margin Impact of ‘Sales’

  • % styles marked down (extent):35.6%

  • Mean % mark down (depth):33.3%

  • Margin impact (extent x depth):11.8%


Relative Merits of EDLP and High-Low Pricing


OVERVIEW

  • Pricing typically far more complex in retailing than in manufacturing context

  • Microeconomic concepts (e.g., elasticity) relevant but require modification

  • Retail pricing has various dimensions: comparative, geographical, assortment, time

  • Keeping track of comparative price levels and comparative impressions, can be complex


  • Every local market is different and GIS helps with localization of prices

  • Gross margins may vary significantly within the assortment, due to leader-line pricing of KVIs (known value items)

  • Special offers can “minimise the cost of appearing competitive”

  • Few retailers offer true EDLP (everyday low pricing: most use short-term offers and/or seasonal sales


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