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Unit 4 Pricing

Unit 4 covers pricing strategy in retail management, emphasizing the importance of retail planning, market research, and aligning pricing strategies with customer needs for increased satisfaction and profits. It outlines various pricing strategies, vendor management techniques, and the significance of marketing promotions to attract and retain customers. Additionally, it discusses consumer buying behavior, growth strategies, and global pricing considerations to effectively navigate the retail market.

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16 views3 pages

Unit 4 Pricing

Unit 4 covers pricing strategy in retail management, emphasizing the importance of retail planning, market research, and aligning pricing strategies with customer needs for increased satisfaction and profits. It outlines various pricing strategies, vendor management techniques, and the significance of marketing promotions to attract and retain customers. Additionally, it discusses consumer buying behavior, growth strategies, and global pricing considerations to effectively navigate the retail market.

Uploaded by

anime5manga150
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Unit 4: Pricing Strategy in Retail Management

Retail Planning and Strategy

Definition: Retail planning refers to setting business goals and devising strategies to achieve
those goals. It involves the alignment of marketing strategies, pricing strategies, and customer
service to attract and retain customers.

Importance: Effective planning ensures that the store’s pricing strategies align with the
target market's needs, leading to better customer satisfaction and increased profits.

Steps Involved:

 Market Research: Understand the market trends, competition, and consumer


behaviour.
 Objective Setting: Define financial and operational goals.
 Strategy Formulation: Create pricing models, promotional offers, and seasonal
discounts.
 Implementation: Apply the strategies across retail operations.
 Monitoring & Adjustment: Continuously track the performance of strategies and
adjust if necessary.

Retail Pricing Strategies

Definition: Retail pricing strategies determine how a product or service is priced to maximize
revenue while keeping customers satisfied.

Types of Pricing Strategies:

o Cost-Plus Pricing: Adding a fixed percentage or amount to the cost of the


product.
o Competitive Pricing: Pricing products similar to competitors.
o Penetration Pricing: Setting a low price initially to attract customers, and
then gradually increasing the price.
o Price Skimming: Setting a high price initially and then gradually lowering it
as demand decreases.
o Psychological Pricing: Setting prices that appear more attractive, e.g., $9.99
instead of $10.
o Discount Pricing: Offering reduced prices for promotions, clearances, or
seasonal sales.
o Value-Based Pricing: Pricing based on the perceived value to the customer
rather than the cost.

Vendor Management

Definition: Vendor management involves maintaining strong relationships with suppliers to


ensure the timely delivery of products and consistent pricing.

Importance: Efficient vendor management helps in negotiating better prices, bulk


purchasing discounts, and ensures stock availability.
Vendor Management Techniques:

o Regular communication and negotiation.


o Monitoring vendor performance in terms of quality and delivery.
o Developing long-term partnerships for better pricing agreements.

Marketing and Promotion

Nature and Scope: Marketing and promotion involve the activities aimed at boosting brand
visibility, increasing customer interest, and driving sales.

Key Components:

o Advertising: Informing customers about product prices and promotions


through various media such as TV, online ads, and print.
o Sales Promotions: Temporary offers such as buy-one-get-one-free, seasonal
discounts, or loyalty programs to attract buyers.
o Coupons and Discounts: Offering price reductions to increase sales and
customer footfall.

Understanding the Retail Market/Target Market

Retail Market: It refers to the environment in which goods and services are sold to
consumers for personal use.

Target Market: The specific group of consumers at which a retailer’s products and services
are aimed.

Importance of Pricing for Target Market: Setting prices that align with the purchasing
power, needs, and preferences of the target market is crucial for business success.

Consumer Buying Behaviour

Definition: The decision-making process by which consumers choose products, including


how much they are willing to pay.

Factors Influencing Buying Behaviour:

o Price Sensitivity: Customers may buy more when prices are low or
discounted.
o Brand Loyalty: Loyal customers may be willing to pay higher prices for
preferred brands.
o Perceived Value: Customers will compare the price with the perceived quality
or benefits of the product.

Promotions and Events

Importance of Promotions: Regular promotions attract new customers and maintain interest
among existing customers.
Types of Promotions:

o Seasonal Sales: Discounts during specific times like holidays or end-of-


season.
o Flash Sales: Limited-time offers to encourage quick purchases.
o Events: In-store events, launch parties, or community engagement activities to
promote new products and drive traffic.

Growth Strategies

Market Penetration and Market Expansion:

o Market Penetration: Increasing sales of existing products to the current


market through aggressive pricing or promotions.
o Market Expansion: Introducing products to new customer segments or
geographical areas with strategic pricing to attract these markets.

Strategies to Implement:

 Expanding into new markets through lower pricing to gain entry.


 Increasing brand loyalty through rewards programs that give pricing
advantages to loyal customers.

Global Retail Strategies

Global Pricing: Involves considering global market differences in income levels,


competition, and supply chain costs when setting prices.

Factors to Consider:

o Local Economic Conditions: Price sensitivity in different regions.


o Logistics and Import Costs: Transportation and taxes can affect pricing.
o Currency Fluctuations: Exchange rates may require dynamic pricing
adjustments.

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