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MERCHANDISE PRICING

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Prices are set for long periods of time. Customers expect ... Discounts to senior citizens. Personal selling. Gives authority to salesperson. One-price policy ... – PowerPoint PPT presentation

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Title: MERCHANDISE PRICING


1
MERCHANDISE PRICING
  • Chapter 10
  • Retailing

2
Chapter outline
  • Pricing objectives policies
  • Specific pricing policies
  • Using markups
  • Markdown management

3
Pricing objectives Policiesa. Interactive
pricing decisionsmust interact with these
decisions
  • Merchandise
  • Location
  • Promotion
  • Credit
  • Customer service
  • Store image
  • Legal constraints

4
Pricing objectives Policiesb. Pricing
objectives
1. Profit oriented objectives Target
return Profit maximization 2. Sales oriented
objectives 3. Status quo objectives
5
Pricing objectives Policiesc. Pricing policies
  • Pricing above the market
  • Mdse offerings
  • Services provided
  • Convenient locations
  • Extended hours of operation
  • Pricing at the market
  • Pricing below the market

6
Pricing objectives Policiesc. Pricing policies
  • Pricing at the market
  • Price zone
  • Pricing below the market

7
Pricing objectives Policiesc. Pricing policies
  • Pricing below the market

8
2. Specific pricing policies
  • Customary pricing
  • Variable pricing
  • Flexible pricing
  • One-price policy
  • Price lining
  • Odd pricing
  • Multiple unit pricing
  • Bundled pricing
  • Leader pricing
  • Bait switch pricing
  • Private label brand pricing

9
Customary Pricing
  • Prices are set for long periods of time
  • Customers expect these prices
  • Customers take for granted

10
Variable pricing
  • Demand cost force retailer to change
  • Flowers on Mothers Day
  • Valentines Day
  • Hotels Restaurants Weekend prices
  • Etc.

11
Flexible pricing
  • Base price on
  • Customer interest
  • Competitors price
  • Past relationship with customer (loyalty)
  • Customers bargaining skills
  • Discounts to senior citizens
  • Personal selling
  • Gives authority to salesperson

12
One-price policy
  • One set price
  • Charges all customers the same
  • Mr. Hussey of Macys
  • First to adopt 1-price policy

13
Price lining
  • Helps customers compare prices
  • Establishing price points within line
  • 29, 49, 69 mens slacks in dept store
  • Trading up
  • Moves customer from low to higher price
  • Trading down
  • Customer expresses desire to buy at lower

14
Odd Pricing
  • Prices end in odd numbers not even
  • Not 10.00 , but 9.98
  • Psychological effect on customer
  • Strategy for identifying markdowns
  • 9.99 25 off
  • 9.98 33 off
  • 9.97 50 off
  • 9.96 75 off clearance mdse

15
Multiple pricing
  • Price for a unit (3) is less than for one unit
  • Buy 3 for .99 /or/ 1 for .35
  • Encourages more customer buying
  • Reduces selling handling expenses

16
Bundled pricing
  • Selling distinct items as a package
  • Often at a special price
  • Look at Dell
  • Movies/grocery stores child care centers

17
Leader pricing
  • Used to attract customer into store
  • High demand product priced lower
  • Problem
  • High/Low prices gtEDLP
  • Loss Leaders
  • Price below cost
  • Care not to violate laws

18
Private label pricing
  • Re markup profit margin
  • Competitive advantage
  • Similar to National Brands
  • Convincing customers quality is same
  • Private Labels becoming Brands

19
Next class
  • Markups
  • Markdown management
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