INSTITUTE - USB

DEPARTMENT - BBA
Bachelor of Business Administration
Retail Management
21BAT-374

Retail Pricing DISCOVER . LEARN .

EMPOWER 1
 Introduction to Retail
Management
CO1 To describe the concepts, functions, types and importance of Retail
Industry in India.

CO2 To interpret and analyze the requirements of Store Design and Visual
Merchandising in Retail Stores.

CO3 To classify the factors influencing the Retail consumer, consumer behavior
and decision making process

CO4 To evaluate Merchandise Management through retail operation and pricing

http://p2plogistics.co.uk/

CO5 To formulate Customer Relationship strategies by Personalization, Special

Treatment Benefits, Communication Benefits, Rewards and Loyalty
Programs

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 Retail Management - Pricing

The price at which the product is sold to the end

customer is called the retail price of the product.
Retail price is the summation of the
manufacturing cost and all the costs that retailers
incur at the time of charging the customer.

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Factors Influencing Retail Prices
• Retail prices are affected by internal and external factors

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Internal Factors
• Manufacturing Cost − The retail company considers both, fixed and variable costs of
manufacturing the product. The fixed costs does not vary depending upon the production
volume. For example, property tax. The variable costs include varying costs of raw material
and costs depending upon volume of production. For example, labor.
• The Predetermined Objectives − The objective of the retail company varies with time and
market situations. If the objective is to increase return on investment, then the company may
charge a higher price. If the objective is to increase market share, then it may charge a lower
price.
• Image of the Firm − The retail company may consider its own image in the market. For
example, companies with large goodwill such as Procter & Gamble can demand a higher
price for their products.
• Product Status − The stage at which the product is in its product life cycle determines its
price. At the time of introducing the product in the market, the company may charge lower
price for it to attract new customers. When the product is accepted and established in the
market, the company increases the price.
• Promotional Activity − If the company is spending high cost on advertising and sales
promotion, then it keeps product price high in order to recover the cost of investments. 5
External Factors
• Competition − In case of high competition, the prices may be set low to face the
competition effectively, and if there is less competition, the prices may be kept
high.
• Buying Power of Consumers − The sensitivity of the customer towards price
variation and purchasing power of the customer contribute to setting price.
• Government Policies − Government rules and regulation about manufacturing
and announcement of administered prices can increase the price of product.
• Market Conditions − If market is under recession, the consumers buying pattern
changes. To modify their buying behavior, the product prices are set less.
• Levels of Channels Involved − The retailer has to consider number of channels
involved from manufacturing to retail and their expectations. The deeper the level
of channels, the higher would be the product prices.
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Demand-Oriented Pricing Strategy
• Price Skimming − Initially the product is charged at a high price that
the customer is willing to pay and then it decreases gradually with
time.
• Odd Even Pricing − The customers perceive prices like 99.99, 11.49 to
be cheaper than 100.
• Penetration Pricing − Price is reduced to compete with other similar
products to allow more customer penetration.
• Prestige Pricing − Pricing is done to convey quality of the product.
• Price Bundling − The offer of additional product or service is
combined with the main product, together with special price.
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Cost-Oriented Pricing Strategy
• Cost plus Pricing − The company sets prices little above the
manufacturing cost. For example, if the cost of a product is Rs. 600 per
unit and the marketer expects 10 per cent profit, then the selling price is
set to Rs. 660.
• Mark-up Pricing − The mark-ups are calculated as a percentage of the
selling price and not as a percentage of the cost price.
• Break-even Pricing − The retail company determines the level of sales
needed to cover all the relevant fixed and variable costs. They break-
even when there is neither profit nor loss.
• Target Return Pricing − The retail company sets prices in order to
achieve a particular Return On Investment (ROI).
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Competition-Oriented Pricing
Strategy
• When a retail company sets the prices for its product depending on
how much the competitor is charging for a similar product, it is
competition-oriented pricing.
• Competitor’s Parity − The retail company may set the price as close as
the giant competitor in the market.
• Discount Pricing − A product is priced at low cost if it is lacking some
feature than the competitor’s product.

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Differential Pricing Strategy
• Customer Segment Pricing − The price is charged differently for
customers from different customer segments. For example, customers
who purchase online may be charged less as the cost of service is low
for the segment of online customers.
• Time Pricing − The retailer charges price depending upon time,
season, occasions, etc. For example, many resorts charge more for
their vacation packages depending on the time of year.
• Location Pricing − The retailer charges the price depending on where
the customer is located. For example, front-row seats of a drama
theater are charged high price than rear-row seats.

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ASSESSMENT PATTERN
Theory

Components Continuous Internal Assessment (CAE) Semester End Examination (SEE)

Marks 40 60

Total Marks 100

Sr. No. Type of Assessment Weightage of actual conduct

1 Assignment 10 per assignment

2 Exam 20 per MST

3 Quiz/Test 4 each quiz

4 Surprise Test 12 each test

5 Attendance and class performance 2

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APPLICATIONS
• Concept of Retail Management

• Concept and importance of retail layouts and retail design

• Importance and scope of retailing

• Understanding of various formats of retail management

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 References
1. Levy and Weitz, Retailing Management, 6th Edition Tata McGraw Hill
2. Bajaj, Tuli, Srivastava “Retail Management” 2nd Edition Oxford University Press
3. Gibson “Retail Management “4th Edition Jaico Publication House
4. Dunne Patrick M, Lusch Robert F, Griffith David A, Retailing, (5th Ed.), Thomson
South Western.
5. https://www.creativedisplaysnow.com/types-retail-store-layouts/#what-is-retail-
layout
6.https://www.indeed.com/career-advice/finding-a-job/what-is-visual-
merchandising

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THANK YOU