Pricing in RetailingRETAIL MANAGEMENT: A STRATEGIC APPROACH 11th Edition11th EditionBERMAN EVANS1Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice HallChapter Objectives To describe the role of pricing in a retail strategy and to show that pricing decisions must be made in an integrated and adaptive manner To examine the impact that consumers, government, manufacturers, wholesalers and other suppliers, current/potential competitors have on pricing decisions To present a framework for developing a retail price strategy: objectives, broad policy, basic strategy, implementation, and adjustments2Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice HallPricing Options for RetailersDiscount orientation At-the-market orientation Upscale orientation3Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice HallFigure 17-1: Barnes no competitors will have higher prices; or prices will be consistent with competitors. All items will be priced independently or the prices for all items will be interrelated to maintain image and ensure proper markups. Price leadership will be exerted; competitors will be price leaders and set prices first; or prices will be set independent of competitors. Prices will be constant over a year or season; or prices will change if costs change.16Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice HallPrice StrategyPrice StrategyDemand-oriented pricing Cost-oriented pricing Competition-oriented pricing17Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice HallDemand-Oriented PricingDemand-Oriented Pricing Psychological pricingPsychological pricingPrice-quality associationPrestige pricing18Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice HallTable 17-4: Markup Equivalents19Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice HallFigure 17-7: How to Determine Direct Product Profitability20Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice HallIntegration of Approaches to Price StrategyIntegration of Approaches to Price StrategyIf prices are reduced, will revenues increase greatly? (Demand orientation) Should different prices be charged for a product based on negotiations with customers, seasonality, and so on? (Demand orientation) Will a given price level allow a traditional markup to be attained? (Cost orientation) What price level is necessary for a product requiring special costs? (Cost orientation) What price levels are competitors setting? (Competitive orientation) Can above-market prices be set due to a superior image? (Competitive orientation)21Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice HallFigure 17-8: Specific Pricing Decisions22Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice HallPrice Strategy ConceptsPrice Strategy ConceptsCustomary PricingEveryday Low PricingVariable PricingYield Management PricingOne-Price PolicyFlexible PricingContingency PricingOdd PricingLeader PricingMultiple-Unit PricingPrice Lining23Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice HallFigure 17-9: Wal-Mart and Everyday Low Pricing24Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice HallFigure 17-10: Odd Pricing25Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice HallReasons to Use Multiple-Unit PricingReasons to Use Multiple-Unit PricingA firm could seek to have shoppers increase their total purchases of an item. This approach can help sell slow-moving and end-of-season merchandise. Price bundling may increase sales of related items.26Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice HallPrice AdjustmentsPrice AdjustmentsAdaptive mechanismMarkdownAdditional markupEmployee discount27Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice HallFigure 17-11: Price Change Authorization Form28Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice HallTiming MarkdownsTiming MarkdownsEarly markdown policy Late markdown policy Staggered markdown policy Automatic markdown plan Storewide clearance29Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice HallFigure 17-12: Giant Eagle Going Beyond Everyday Low Pricing30Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice HallAll rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.31Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall