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.

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RETAIL PRICING

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Retail pricing

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

Price Elasticity


Examples of product category elasticities

Examples of Product Category Elasticities


Price thresholds and reference prices

Price Thresholds and Reference Prices

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Retail pricing

Multidimensional Framework for Retail Pricing


The comparative dimension

THE COMPARATIVE DIMENSION


Subjective and objective comparisons

Subjective and Objective Comparisons


Example of multi segment prices

Example of Multi-Segment Prices


The geographical dimension

THE GEOGRAPHICAL DIMENSION


Within company price level differences

Within-Company Price Level Differences


Localisation of the retail mix

Localisation of the Retail Mix


The assortment dimension

THE ASSORTMENT DIMENSION


Levels of item price awareness

Levels of Item Price Awareness (%)


Price recall determinants and process

Price Recall: Determinants and Process


Examples of price lining

Examples of Price Lining


The time dimension

THE TIME DIMENSION

  • Formulation of Price Images

  • Temporary Price Offers

  • Seasonal ‘Sales’

  • Everyday Low Pricing


Framing the price deal

Framing the Price Deal


Retail pricing

Seasonal Sales - Costs and Benefits


Gross margin impact of sales

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

Relative Merits of EDLP and High-Low Pricing


Overview

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


Retail pricing

  • 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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