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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
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 thresholds and reference prices
Price Thresholds and Reference Prices

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The time dimension
THE TIME DIMENSION

  • Formulation of Price Images

  • Temporary Price Offers

  • Seasonal ‘Sales’

  • Everyday Low Pricing




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%



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